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01/19/2021 - Work Study - PacketPlease turn off cell phones during meeting and hold your questions for staff until the meeting has been adjourned Meeting materials are available on the City’s website: www.cityofportorchard.us or by contacting the City Clerk’s Office, 360.876.4407 The City of Port Orchard does not discriminate on the basis of disability. Contact the City Clerk’s office should you need special accommodations. City of Port Orchard Council Work Study Session January 19, 2021 6:30 p.m. The City is prohibited from conducting meetings unless the meeting is NOT conducted in-person and instead provides options for the public to attend through telephone, internet or other means of remote access, and also provides the ability for persons attending the meeting (not in-person) to hear each other at the same time. Therefore; Remote access only Link: https://us02web.zoom.us/j/88308959369 Zoom Meeting ID: 883 0895 9369 Zoom Call-In: 1 253 215 8782 1.Impact Fee Ordinance – Traffic Impact Fee Adjustment (Bond/Robertson) Page 2 Estimated Time: 20 minutes 2.McCormick Communities Development Agreement for Transportation (Bond/Robertson) Page 41 Estimated Time: 30 minutes 3.Transportation Update (Dorsey) Estimated Time: 20 minutes 4.Water & Sewer Credit Discussion (Crocker/Archer) Page 104 Estimated Time: 30 minutes Mayor: Rob Putaansuu Administrative Official Councilmembers: Bek Ashby (Mayor Pro-Tempore) Finance Committee Economic Development & Tourism Committee Transportation Committee, Chair KRCC/KRCC PlanPol-alt /KRCC TransPol PSRC-alt/PSRC TransPOL-Alt/PRTPO Shawn Cucciardi Finance Committee E/D & Tourism Committee, Chair Kitsap Economic Development Alliance Fred Chang Economic Development & Tourism Committee Land Use Committee Jay Rosapepe Utilities/Sewer Advisory Committee Land Use Committee Transportation Committee Lodging Tax Advisory Committee, Chair KRCC-alt John Clauson Finance Committee, Chair Utilities/Sewer Advisory Committee Kitsap Public Health District-alt Cindy Lucarelli Festival of Chimes & Lights Committee, Chair Utilities/Sewer Advisory Committee, Chair Kitsap Economic Development Alliance Scott Diener Land Use Committee, Chair Transportation Committee Department Directors: Nicholas Bond, AICP Development Director Mark Dorsey, P.E. Director of Public Works/City Engineer Tim Drury Municipal Court Judge Noah Crocker, M.B.A. Finance Director Matt Brown Police Chief Brandy Rinearson, MMC, CPRO City Clerk Meeting Location: Council Chambers, 3rd Floor 216 Prospect Street Port Orchard, WA 98366 Contact us: (360) 876-4407 cityhall@cityofportorchard.us City of Port Orchard Work Study Session Executive Summary Issue Title: Impact Fee Ordinance – Traffic Impact Fee Adjustment Meeting Date: January 19, 2021 Time Required: 20 minutes Attendees: Nicholas Bond Issue: Since 2015, when the current traffic impact fee was adopted, the project cost estimates for the projects in the City’s capital facilities plan have risen significantly. These projects include the Tremont Street project, which was estimated at $17,500,000 in 2015 and was completed at a cost of approximately $24,000,000. Additionally, since 2015 the City has completed the Bethel/Sedgwick Corridor Study and developers have provided more refined cost estimates for these projects. In 2019, the City hired TSI to prepare an updated traffic impact fee study and fee schedule. This study was completed in December 2020, and identified a proposed fee of $4,943 per peak pm trip. This is an increase from the current fee of $2,552 per peak pm trip. This fee increase will ensure that development pays its share of building out the transportation system in Port Orchard, and will allow the City to deliver projects more quickly than at the currently adopted amount. Adoption of this new fee ordinance cannot occur unless the McCormick Woods development agreement is also approved, since the McCormick Woods development agreement for transportation allows the City to move to a citywide fee amount, rather than the current system whereby McCormick Woods impact fees are collected and accounted for separately, for use on a narrower project list. Background: In 2015, the City adopted an impact fee ordinance and adopted traffic impact fees for the first time. The impact fee study adopted at that time recommended that the City reevaluate the traffic impact fee amount every 3-4 years. In late 2019, the City started this process, but the preparation of the fee study was delayed by the McCormick Communities Development Agreement for Transportation negotiation which is also a discussion item at the January work study meeting. Alternatives: If the City Council wishes to adopt a different impact fee amount, it should do so by amending the project list, which is the basis for the fee calculation in table 1 of the attached impact fee study. While removing projects will have the effect of lowering the impact fee amount, those projects would be ineligible for impact fee funding. Alternatively, the Council could choose to revise the denominator used in the fee calculation, but this would create future funding shortfalls that would need to be made up elsewhere. Lowering the denominator would increase the per trip fee amount, as could adding additional projects to the list. Action Requested at this Meeting: Review the draft impact fee ordinance and traffic impact fee study, and consider moving this item forward to the January 26, 2021 regular city council meeting. Inform staff whether an optional public hearing should be held for this ordinance. Page 2 of 110 Executive Summary 1 Page 2 of 2 Recommendations: City staff recommends that the City Council review and discuss the proposed impact fee ordinance and traffic impact fee study prior to the item being brought forward for consideration on February 9, 2021. The Council is also requested to inform staff whether an optional public hearing should be held for this ordinance. Attachments: Draft Ordinance including attachments. Page 3 of 110 ORDINANCE NO. __ -21 AN ORDINANCE OF THE CITY OF PORT ORCHARD, WASHINGTON, REGARDING TRANSPORTATION IMPACT FEES; AMENDING SECTION 20.182.060 OF THE PORT ORCHARD MUNICIPAL CODE TO ADOPT A NEW TRANSPORTATION IMPACT FEE SCHEDULE AND CLARIFYING ADOPTION PROCEDURES; ADDING A NEW SECTION 20.182.125 TO THE PORT ORCHARD MUNICIPAL CODE TO DESIGNATE THE CITY’S 6 YEAR/20 YEAR TRANSPORTATION IMPROVEMENT PLAN AS THE CAPITAL FACILITIES PLAN FOR TRANSPORTATION; PROVIDING FOR SEVERABILITY AND CORRECTIONS; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the State of Washington Growth Management Act, Chapter 36.70A RCW and related sections (“GMA”) requires the City to adopt a Comprehensive Plan that provides adequate public facilities to serve development; and WHEREAS, counties, cities, and towns that are required or choose to plan under RCW 36.70A.040 are authorized to impose impact fees on development activity as part of the financing for public facilities, provided that the financing or system improvements to serve new development must provide for a balance between impact fees and other sources of public funds and cannot rely solely on impact fees; and WHEREAS, RCW 82.02.050 -.110 and WAC 365-196-850 authorize counties, cities, and towns planning under the Growth Management Act (GMA) to impose impact fees for public streets and roads, publicly owned parks, open space, and recreation facilities, and school facilities, and fire protection facilities; and WHEREAS, the City of Port Orchard has adopted transportation, school, and park impact fees, as codified in subsection 20.182.060 of the Port Orchard Municipal Code (POMC) and Appendices A-C in Exhibit 1 of Ordinance 019-17; and WHEREAS, the City Council finds that new development activity in the City of Port Orchard will create additional demand and need for public facilities; and WHEREAS, the City of Port Orchard has previously adopted a transportation impact fee program pursuant to the authority provided in Chapter 82.02 RCW; and WHEREAS, in 2015 the City’s current transportation impact fee rate was established at $2,552 per new PM peak hour trip, with a separate impact fee rate of $560 per new PM peak hour trip applied to growth in the McCormick Woods PUD; and Page 4 of 110 Ordinance No. __-21 Page 2 of 5 WHEREAS, this year the City Council adopted the City’s 6 Year/20 Year Transportation Improvement Plan (TIP) as part of the City’s Comprehensive Plan (Ordinance 015-20); and WHEREAS, the City Council desires to adopt an updated transportation impact fee schedule to ensure that all projects on the current TIP receive appropriate impact fee funding per RCW Section 82.02.050; and WHEREAS, the City Council deems it in the best interests of the city of Port Orchard to formally designate the TIP as the “capital facilities plan” for the purpose of identifying the proposed transportation improvements reasonable and necessary to meet the future development needs of the service area consistent with the city’s level of service policy, as required by RCW 82.02.050; and WHEREAS, the City contracted with Transportation Solutions, Inc. to prepare an updated transportation impact fee rate study and recommended impact fee rate, which was provided to the City in December 2020 (Exhibit A); and WHEREAS, the City has prepared an updated transportation impact fee schedule based on the findings and recommendations of the study prepared by Transportation Solutions, Inc., and WHEREAS, on January 19, 2021, the City Council held a study session on the updated transportation impact fee schedule; and WHEREAS, on January 26, 2021, at its regular meeting the City Council considered the updated transportation impact fee schedule, and reviewed the ordinance proposed for its adoption; and WHEREAS, the transportation, parks and school impact fees are currently adopted as appendices to Chapter 20.182 of the Port Orchard Municipal Code, and WHEREAS, the City Council desires to directly adopt the transportation, parks, and school impact fees by ordinance, for ease of reference and use; and WHEREAS, this ordinance is exempt from the requirements of the State Environmental Policy Act (SEPA), Chapter 43,21C RCW, and the City’s environmental Page 5 of 110 Ordinance No. __-21 Page 3 of 5 regulations, Chapter 20.160 POMC; NOW, THEREFORE THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION 1. The City Council adopts all of the “Whereas” sections of this ordinance as findings in support of this ordinance. SECTION 2. Subsection 20.182.060 of the Port Orchard Municipal Code is hereby amended to read as follows: 20.182.060 Fee schedules and establishment of service area. (1) Impact fee schedules setting forth the amount of the impact fees to be paid by developers are listed in the appendices attached to the ordinance adopting this chapter, shall be adopted by ordinance of the City Council and incorporated herein by this reference. The road or transportation impact fee schedule is in Appendix A, park impact fees are in Appendix B and school impact fees are in Appendix C. The impact fee schedules may be revised at any time the city council deems just and appropriate. (2) For the purpose of road and park impact fees, the entire city shall be considered one service area. (3) For the purpose of school impact fees, the entire boundary of the school district shall be considered one service area. SECTION 3. A new subsection 20.182.125 is hereby added to the Port Orchard Municipal Code to read as follows: 20.182.125 Designation of Capital Facilities Plan for Transportation. The city designates the 6 Year/20 Year Transportation Improvement Plan (TIP) as the City’s comprehensive capital facilities plan for the purpose of identifying the proposed transportation improvements reasonable and necessary to meet the future development needs of the service area consistent with the city’s level of service policy, as required by RCW 82.02.050. The TIP identifies the specific subset of transportation improvements in the impact Page 6 of 110 Ordinance No. __-21 Page 4 of 5 fee project list that forms the basis for the transportation impact fee program. SECTION 4. Adoption of Transportation Impact Fee Schedule. The City hereby adopts a new transportation impact fee schedule which is included as a part of Exhibit A to this ordinance, in accordance with POMC 20.182.060. This transportation impact fee schedule shall become effective on the effective date established in Section 9 below and shall replace and supersede any previously adopted transportation impact fee schedule. SECTION 5. Park and School Impact Fees Unchanged. The park and school impact fee schedules that were previously adopted by the City Council shall remain in effect and are respectively shown on Exhibits B and C of this ordinance. SECTION 6. Sections 4 and 5 of this Ordinance are deemed of special effect and shall not be codified. SECTION 7. Severability. If any section, sentence, clause, or phrase of this ordinance should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity of constitutionality of any other section, sentence, clause, or phrase of this ordinance. SECTION 8. Corrections. Upon the approval of the city attorney, the city clerk, and/or code publisher is authorized to make any necessary technical corrections to this ordinance, including but not limited to the correction of scrivener’s/clerical errors, references, ordinance numbering, section/subsection numbers, and any reference thereto. SECTION 9. Effective Date. This ordinance shall be in full force and effect five (5) days after publication as provided by law. A summary of this ordinance in the form of the ordinance title may be published in lieu of publishing the ordinance in its entirety. PASSED by the City Council of the City of Port Orchard, APPROVED by the Mayor and attested by the City Clerk in authentication of such passage this 26th day of January 2021. Robert Putaansuu, Mayor Page 7 of 110 Ordinance No. __-21 Page 5 of 5 ATTEST: Brandy Rinearson, MMC, City Clerk APPROVED AS TO FORM: Sponsored by: Charlotte A. Archer, City Attorney *****, Council Member PUBLISHED: EFFECTIVE DATE: EXHIBIT A: TRANSPORTATION IMPACT FEE SCHEDULE WITH RATE STUDY (2021) EXHIBIT B: PARKS IMPACT FEE SCHEDULE (EXISTING) EXHIBIT C: SCHOOL IMPACT FEE SCHEDULE (EXISTING) Page 8 of 110 TRANSPORTATION IMPACT FEE RATE STUDY 2020 UPDATE FINAL REPORT December 2020 Prepared for: City of Port Orchard Prepared by: Transportation Solutions, Inc. 16932 Woodinville-Redmond Rd NE Suite A206 Woodinville, WA 98072 Page 9 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. i December 2020 Table of Contents 1. Introduction ....................................................................................................................................... 1 Definition of Impact Fees .................................................................................................................................... 1 Statutory Basis for Impact Fees .......................................................................................................................... 1 2. Impact Fee Analysis ............................................................................................................................ 2 Methodology ...................................................................................................................................................... 2 Current Impact Fee Methodology ...................................................................................................................... 2 Projects Eligible for Impact Fees ......................................................................................................................... 2 Eligible Project Costs ........................................................................................................................................... 3 Impact Fee Calculation ....................................................................................................................................... 3 Sample Transportation Impact Fees ................................................................................................................... 6 3. Additional Issues for Consideration ..................................................................................................... 6 Anticipated Annual Revenues from Impact Fees................................................................................................ 6 Anticipated Grant Revenue ................................................................................................................................ 6 Anticipated Need for Other Public Funds ........................................................................................................... 7 4. Transportation Impact Fee Rate Comparison ....................................................................................... 7 5. Credits and Adjustments ..................................................................................................................... 7 Impact Fee Credits .............................................................................................................................................. 7 Independent Fee Calculation .............................................................................................................................. 8 Construction Cost Index Adjustment .................................................................................................................. 8 6. Conclusions ........................................................................................................................................ 8 Appendices Appendix A. Transportation Impact Fee Project List Appendix B. Transportation Impact Fee Rate Schedule Appendix C. Comparison of 2019-2020 TIF Rates in Western Washington List of Tables Table 1. Impact Fee-Eligible Transportation Improvement Projects ...................................................................... 5 Table 2. Transportation Impact Fee Comparison for Typical Land Uses ................................................................. 6 Page 10 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. 1 December 2020 1. Introduction This document summarizes the development of an updated transportation impact fee rate for the City of Port Orchard. It describes the existing impact fee rate, the basis for the fee, the rate methodology, the impact fee project list, and the recommended fee rate. Definition of Impact Fees Impact fees are a comprehensive grouping of charges based on new development within a local municipality. These fees are assessed to pay for capital facility improvement projects necessitated by new development growth (including but not limited to parks, schools, and streets/roads). Transportation impact fees are collected to fund improvements that add capacity to the transportation system, accommodating the travel demand created by new development. The Revised Code of Washington (RCW) Section 82.02.050 identifies the intent of impact fees as the following:  To ensure that adequate facilities are available to serve new growth and development;  To promote orderly growth and development by establishing standards by which counties, cities, and towns may require, by ordinance, that new growth and development pay a proportionate share of the cost of new facilities needed to serve new growth and development; and  To ensure that impact fees are imposed through established procedures and criteria so that specific developments do not pay arbitrary fees or duplicative fees for the same impact. Statutory Basis for Impact Fees Transportation impact fees are a financing mechanism authorized by the Growth Management Act (GMA) of Washington State (see RCW 36.70A.070 and 82.02.050). State law imposes strict limitations on impact fees. These limitations are intended to assure property owners that the fees collected are reasonably related to their actual impacts and will not be used for unrelated purposes. If impact fees are imposed, the funds collected from developments can be expended only on transportation system improvements which are: (a) identified in the comprehensive plan as needed for growth, and (b) reasonably related to the impacts of the new development from which fees are collected. Specifically, condition (a) requires that impact fees are not used on improvements needed to remedy existing deficiencies. Those needs must be entirely funded from public sector resources. Condition (b) is satisfied if the local government defines a reasonable service area, identifies the public facilities within the service area that require improvement during the designated planning period, and prepares a fee schedule taking into account the type and size of the development as well as the type of public facility being funded. To achieve the goal of simplicity, impact fee calculations are applied on an average basis for the entire transportation system, rather than project-by-project. This is a key difference between impact fees and State Environmental Policy Act (SEPA) mitigation, whereby pro-rata shares of specific project improvements are collected. Pre-calculated impact fees are easier to administer than traditional SEPA development mitigation, at the point of development review. However, more complex administrative procedures are necessary to track Page 11 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. 2 December 2020 the funds collected from each development. This is necessary to assure that the funds are expended only on eligible transportation system improvements and to assure that impact fee revenues are used within six years. Fees not expended within six years must be refunded with interest to the current owner of the property. The methodology and results described below are consistent with the requirements of the GMA. The procedures and recommendations described herein can be formally enacted by an impact fee ordinance incorporating this memo by reference. 2. Impact Fee Analysis Methodology The conceptual basis for the transportation impact fee is that growth (i.e. new development) should pay a proportionate share of the cost to provide future transportation capacity. This proportionate share is calculated based on the estimated cost of growth-related transportation improvement projects identified in the Comprehensive Plan and on an estimate of growth’s share of capacity utilization for each project. The impact fee analysis is limited to projects that provide capacity improvements needed for growth. Projects related to maintenance, such as pavement overlays and physical obsolescence, as well as improvements necessary to mitigate existing capacity deficiencies, are not eligible for impact fee funding. However, agencies have been encouraged by the Department of Commerce to consider multimodal transportation improvements and, to that end, shoulder widening, sidewalks, bike lanes and parallel trails are reasonable to include as both motorized and nonmotorized capacity enhancements. Current Impact Fee Methodology The Port Orchard transportation impact fee program was developed and adopted in 2015 as ordinance number 023-15 and later reorganized under ordinance number 019-17. The impact fee methodology is based on proportionate growth share of impact fee eligible project costs. As of December 2020, the transportation impact fee rate is $2,552 per new PM peak hour trip. A separate impact fee rate of $560 per new PM peak hour trip is applied to growth in the McCormick Woods PUD. This rate represents the difference between the citywide rate and a GEM1 fee rate of $1,992 per trip which was required per the McCormick Woods Development Agreement adopted in 2005. Projects Eligible for Impact Fees Not all planned transportation projects and programs are eligible for impact fees. Planned improvement project are divided below into the following categories in order to establish a list of qualifying projects that will form the basis for the Port Orchard impact fee rate:  Project Improvements  Planned Transportation Projects needed within 20 years  Maintenance Projects Project Improvements Project improvements are transportation improvements necessary for a specific development that do not provide significant system benefits. These are typically low-volume local streets that serve driveways and parking areas. They may provide connections to other developments, but not for the purpose of Page 12 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. 3 December 2020 significant system capacity. Other project improvements include safety improvements and new access connections to existing arterials that serve only one development. Project improvements are typically required by other development regulations or as SEPA mitigation for specific development impacts not anticipated in the Comprehensive Plan. Project improvements are not eligible for impact fees. For the purpose of this rate analysis, roadway extensions that connected existing developments, but were not significant arterials, were considered project improvements that could be required under other City codes and regulations but would not be included in the impact fee calculation. Planned Transportation Projects The Port Orchard 2021-2040 Transportation Improvement Program (TIP) identifies transportation projects which are needed to serve traffic growth for the next twenty years. Projects with capacity benefits are eligible for impact fee funding. Capacity-related improvements may include adding turn lanes, lane widening or separating non-motorized modes, adding signals or roundabouts for intersection capacity, or other improvements. The methodology for roadway capacity calculation is described in the Transportation Element of the Comprehensive Plan. The proportional share of these projects reasonably related to growth are eligible for impact fees. Maintenance Projects Maintenance programs, general studies, and non-capital activities are generally not eligible for impact fees. A component of ongoing pavement preservation could be eligible for impact fees if it is demonstrated that growth increases the magnitude of pavement reconstruction requirements. For instance, if existing conditions require a two-inch asphalt overlay, but added traffic from growth requires a three-inch asphalt overlay to achieve the same pavement life, the cost of the additional inch of asphalt could be attributed to growth. If the overlay or reconstruction provides increased lane width, intersection improvements, or shoulder widening the cost of the expansion could be considered eligible. Eligible Project Costs Impact fee eligible projects and their estimated costs are identified in Table 1. These costs include various elements which are necessary for the construction of transportation improvements, including design, permitting, right-of-way, construction, and construction management. Ongoing or future maintenance is not an eligible impact fee cost. TIP projects which are not capacity-related, or which are considered maintenance projects/programs are not included in the TIF project list. Impact Fee Calculation The impact fee was calculated based on the increase in PM peak hour vehicle trips resulting from growth, the cost of improvements related to growth, and the City’s transportation financing strategy, as defined in the 2016 Comprehensive Plan. The calculation methodology is described below. Local Funding Responsibility Roadway projects are generally eligible for state and federal grant funds. These funds are not predictable and vary in amount by grantor. Additionally, cost-sharing agreements with Washington State Department of Transportation (WSDOT) and Kitsap County are anticipated to reduce some of the City’s project cost responsibility. This analysis assumes the City will be responsible for 50 percent of total impact fee-eligible project costs over the 20-year planning horizon, with the other 50 percent anticipated to be funded by grant and intergovernmental revenue roadway projects. Page 13 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. 4 December 2020 Exceptions were applied to the following projects which are anticipated to be fully funded by the City of Port Orchard or by local development, with no grants or intergovernmental revenue:  Bethel/Sedgwick Corridor Phase 1 Design (TIP #1.3)  Old Clifton Rd Design – 60% (TIP #1.5A)  Old Clifton Rd & Campus Parkway roundabout (TIP #1.5C)  Old Clifton Rd & McCormick Woods Dr roundabout (TIP #2.08)  Glenwood Connector Roadway (per development agreement)  Feigley Rd improvements (per development agreement) Proportionate Share of Project Cost Growth’s proportionate share of each improvement project was calculated as the proportion of added capacity which will be used by new development trips, per the Port Orchard travel demand model. The Port Orchard travel demand model was most recently updated and recalibrated in 2019. It incorporates trip generation data published in the Institute of Transportation Engineers (ITE) Trip Generation Manual, 10th Edition and calibrated to fit 2019 weekday PM peak hour traffic counts. The travel demand model trip distribution and traffic assignment procedures were calibrated based on regional and national guidance, including the Kitsap County travel demand model and Federal Highway Administration travel demand model calibration guidance, in addition to local engineering expertise and traffic counts. To generate 2040 PM peak hour travel demand forecasts, the calibrated 2019 PM travel demand model was modified to include housing and employment growth forecasts identified in the Port Orchard Comprehensive Plan. A total of 7,352 new weekday PM peak hour trips are anticipated citywide between 2019 and 2040. These new trips were assigned to the transportation network, resulting in traffic growth forecasts for each intersection and roadway segment on the TIF project list. The proportionate growth share of TIF project costs was calculated by dividing the 2019-2040 PM peak hour trip growth by the capacity contribution, in vehicles per hour, of each improvement project: [Proportionate Share of Project Cost] = ௉ெ ௣௘௔௞ ௛௥ ௧௥௜௣ ௚௥௢௪௧௛ ஺ௗௗ௘ௗ ௉ெ ௣௘௔௞ ௛௥ ௖௔௣௔௖௜௧௬ The resulting proportionate share for each TIF project is identified in Table 1. Total project costs and growth share are summarized below: Total TIF Project Cost $145,863,474 Anticipated Grant & Intergovernmental Revenue $78,597,474 Anticipated City & Developer (Non-Grant) Responsibility $67,266,000 Growth/Development Share of Project Cost $36,343,224 Page 14 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. 5 December 2020 Table 1. Impact Fee-Eligible Transportation Improvement Projects TIP ID1 Project Name Cost Estimate ($) Local Share2 ($) Growth Share3 (%) Growth Share ($) DA Glenwood Connector Roadway 2,000,000 2,000,000 100% 2,000,000 1.1 Tremont St Widening CN Phase 23,600,000 7,570,000 24% 1,851,656 1.3 Bethel/Sedgwick Corridor Ph. 1 Design 1,211,000 1,211,000 24% 293,489 1.4 Old Clifton Rd/Anderson Hill Rd Roundabout 2,420,000 968,000 81% 786,112 1.5A Old Clifton Rd Design – 60% 562,000 562,000 100% 562,000 1.5C Old Clifton Rd/Campus Pkwy Roundabout 1,600,000 1,600,000 100% 1,600,000 1.7 Vallair Ct Connector 2,498,000 1,249,000 8% 96,697 2.01 Sidney Ave (N) Widening 13,113,000 6,557,000 48% 3,144,444 2.02 Sedgwick Rd West Design/ROW 1,444,000 722,000 100% 722,000 2.03 Sedgwick Rd West Constr. 4,331,000 2,166,000 100% 2,165,500 2.04A Bethel/Sedgwick Corridor Ph. 1 ROW/Constr. 14,360,000 7,180,000 24% 1,740,094 2.04B Bethel/Sedgwick Corridor Ph. 2 17,498,000 5,249,000 28% 1,464,306 2.04C Bethel/Sedgwick Corridor Ph. 3 6,111,000 1,833,000 5% 97,776 2.04D Bethel/Sedgwick Corridor Ph. 4 9,179,000 4,590,000 45% 2,067,975 2.04E Bethel/Sedgwick Corridor Ph. 5 11,059,000 5,530,000 100% 5,529,500 2.05 Sidney Rd (S) Widening 7,820,000 3,910,000 66% 2,593,367 2.06 Pottery Ave (N) Widening 1,998,000 999,000 28% 277,500 2.07 Old Clifton Rd Shoulder & Ped. Impr. 3,372,000 1,686,000 100% 1,686,000 2.08 Old Clifton Rd/McCormick Woods Dr Roundabout 1,600,000 1,600,000 100% 1,600,000 2.09 Melcher St Widening 749,000 375,000 7% 25,279 2.1 Fireweed Rd Widening 468,000 234,000 5% 11,700 2.12 Sherman Ave Widening 656,000 328,000 5% 16,400 2.13 Tremont St Widening Ph. 2 - PO Blvd 10,684,000 5,342,000 100% 5,342,000 2.14 Pottery Ave (S) Widening 5,245,000 2,623,000 16% 415,119 2.16 Blueberry Rd Widening 749,000 375,000 22% 80,518 2.17 Geiger Rd Widening 468,000 234,000 5% 11,700 2.18 Salmonberry Rd Widening 281,000 141,000 21% 28,803 2.19 Piperberry Way Extension 468,000 234,000 11% 25,665 2.21 Old Clifton Rd/Feigley Rd Roundabout 243,000 122,000 26% 31,150 DA Feigley Rd Improvements 76,474 76,000 100% 76,474 Total 145,863,474 67,266,000 54% 36,343,224 1Project ID number in Port Orchard 2021-2040 Transportation Improvement Program. DA = development agreement project 2Portion of project cost which is anticipated to be funded by City of Port Orchard and developer funds (i.e. not funded by grants or intergovernmental revenue) 3Portion of added capacity which is used by growth (i.e. new development). Developer-funded projects are assigned 100% growth share. Page 15 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. 6 December 2020 Impact Fee Rate The citywide transportation impact fee rate was calculated by dividing the sum of the growth share of TIF project cost by the total citywide PM peak hour trip growth forecast, as shown: ୈୣ୴ୣ୪୭୮୫ୣ୬୲ ୱ୦ୟ୰ୣ ୭୤ ୮୰୭୨ୣୡ୲ ୡ୭ୱ୲ୱ େ୧୲୷୵୧ୢୣ ୔୑ ୲୰୧୮ ୥୰୭୵୲୦ = $ଷ଺,ଷସଷ,ଶଶସ ଻,ଷହଶ ୬ୣ୵ ୲୰୧୮ୱ = $4,943 / PM peak hour trip Sample Transportation Impact Fees Table 2 summarizes the fee rates which would be paid by several typical developments If the above calculated rate were adopted in an impact fee ordinance. A comprehensive transportation impact fee rate schedule is included in Appendix B. Table 2. Transportation Impact Fee Comparison for Typical Land Uses Land Use Type ITE LUC1 Trip Rate Per Unit 2015 TIF Rate ($/unit) 2020 TIF Rate ($/unit) Single-Family Home 210 0.99 DU 2,552 4,894 Low-Rise Multifamily 220 0.56 DU 1,582 2,768 Senior Attached Housing 252 0.26 DU 638 1,285 General Office 710 1.15 1,000 ft2 3,803 5,684 Shopping Center 820 2.51* 1,000 ft2 6,406 12,110 Light Industrial 110 0.63 1,000 ft2 2,476 3,114 1Land Use Code and trip rates per Institute of Transportation Engineers Trip Generation Manual 10th Edition *Includes 34% reduction for pass-by trips, per Institute of Transportation Engineers Trip Generation Handbook 3. Additional Issues for Consideration Anticipated Annual Revenues from Impact Fees The anticipated annual revenue from the proposed transportation impact fee, based on the travel demand growth forecast of 7,352 new trips by 2040, is shown below: ଷହ଴ ୲୰୧୮ୱ ୷ୣୟ୰ ∗$ସ,ଽସଷ ୔୑ ୲୰୧୮ = $1,730,050 / year The transportation impact fee is anticipated to generate an average of $1,730,050 per year. This represents a 20-year average and may be more or less in any given year. Anticipated Grant Revenue Transportation improvement projects are generally eligible for state and federal grant funds. These funds are not predictable and vary in amount by grantor. The financing plan in the Transportation Element identifies a 50 percent grant and intergovernmental funding goal for roadway projects. This assumption is applied in the impact fee rate calculation. Page 16 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. 7 December 2020 Anticipated Need for Other Public Funds The anticipated impact fee revenue does not fully fund the non-grant share of TIF project costs. The anticipated need for other public funds is summarized below: Total TIF Project Cost $145,863,474 Anticipated Grant & Intergovernmental Revenue $78,597,474 Growth/Development Share of Project Cost $36,343,224 Remaining Unfunded Commitment (2019-2040) $30,922,776 The City will need to identify other revenue sources to fund the remaining unfunded revenue commitment of $30,922,776 associated with the TIF projects. This represents an annual funding commitment of $1,546,139. 4. Transportation Impact Fee Rate Comparison The City of Bellingham Public Works Department has compiled a list of transportation impact fee rates for 79 public agencies in western Washington. The full comparison chart is included in Appendix B. Provided below are current transportation impact fee rates for several agencies which are located near Port Orchard. The updated impact fee rate of $4,943 per PM trip would be just above the western Washington average rate, but far from the highest in western Washington. Western WA Maximum Transportation Impact Fee: $14,064 (City of Sammamish) City of Poulsbo Transportation Impact Fee: $5,397 City of Gig Harbor Transportation Impact Fee: $5,020 Proposed Port Orchard Transportation Impact Fee: $4,943 Western WA Average Transportation Impact Fee: $4,363 City of Bainbridge Island Transportation Impact Fee: $1,687 Kitsap County Transportation Impact Fee: $700 Western WA Minimum Transportation Impact Fee: $589 (City of Oak Harbor) 5. Credits and Adjustments Impact Fee Credits An applicant may request a credit for impact fees in the amount of the total value of system improvements, including dedications of land, improvements, and/or construction provided by the applicant. Credits should be considered on a case-by-case basis and shall not exceed the impact fee payable. Claims for credit should be made before the payment of the impact fee. Credits for the construction should be provided only if the land, improvements, and/or the facility constructed are listed as planned transportation projects in the Rate Analysis and Impact Fee Ordinance. Credits are not generally given for code-based frontage improvements or right-or-way dedications, or direct access improvements to and/or within the subject development (project improvements) unless the improvement is part of a project listed in the Rate Analysis and Impact Fee Ordinance. Page 17 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. 8 December 2020 Independent Fee Calculation An applicant may submit an independent fee calculation for a proposed development activity. The documentation submitted should be prepared by a traffic engineer licensed in Washington State and should be limited to adjustments in the trip generation rates used in the fee calculation. Construction Cost Index Adjustment Transportation impact fees should be adjusted yearly to account for inflation. Annual adjustments will be based on the All-Urban Consumers Index (CPI-U) for the Seattle-Tacoma-Bellevue area for the previous 12-month period from December to December as specified by the Bureau of Labor Statistics, United States Department of Labor. The CPI adjustment would take effect on March 1. 6. Conclusions The recommended transportation impact fee rate is $4,943 per new PM peak hour trip. Page 18 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. December 2020 Appendix A. Transportation Impact Fee Project List Page 19 of 110 ID Project Name Cost Estimate ($) Local Share ($) Growth Share (%) Growth Share ($) DA Glenwood Connector Roadway 2,000,000 2,000,000 100% 2,000,000 1.1 Tremont St Widening CN Phase 23,600,000 7,570,000 24% 1,851,656 1.3 Bethel/Sedgwick Corridor Ph. 1 Design 1,211,000 1,211,000 24% 293,489 1.4 Old Clifton Rd/Anderson Hill Rd Roundabout 2,420,000 968,000 81% 786,112 1.5A Old Clifton Rd Design - 60%562,000 562,000 100% 562,000 1.5C Old Clifton Rd/Campus Pkwy Roundabout 1,600,000 1,600,000 100% 1,600,000 1.7 Vallair Ct Connector 2,498,000 1,249,000 8% 96,697 2.01 Sidney Ave (N) Widening 13,113,000 6,557,000 48% 3,144,444 2.02 Sedgwick Rd West Design/ROW 1,444,000 722,000 100% 722,000 2.03 Sedgwick Rd West Constr.4,331,000 2,166,000 100% 2,165,500 2.04A Bethel/Sedgwick Corridor Ph. 1 ROW/Constr.14,360,000 7,180,000 24% 1,740,094 2.04B Bethel/Sedgwick Corridor Ph. 2 17,498,000 5,249,000 28% 1,464,306 2.04C Bethel/Sedgwick Corridor Ph. 3 6,111,000 1,833,000 5% 97,776 2.04D Bethel/Sedgwick Corridor Ph. 4 9,179,000 4,590,000 45% 2,067,975 2.04E Bethel/Sedgwick Corridor Ph. 5 11,059,000 5,530,000 100% 5,529,500 2.05 Sidney Rd (S) Widening 7,820,000 3,910,000 66% 2,593,367 2.06 Pottery Ave (N) Widening 1,998,000 999,000 28% 277,500 2.07 Old Clifton Rd Shoulder & Ped. Impr.3,372,000 1,686,000 100% 1,686,000 2.08 Old Clifton Rd/McCormick Woods Dr Roundabout 1,600,000 1,600,000 100% 1,600,000 2.09 Melcher St Widening 749,000 375,000 7% 25,279 2.1 Fireweed Rd Widening 468,000 234,000 5% 11,700 2.12 Sherman Ave Widening 656,000 328,000 5% 16,400 2.13 Tremont St Widening Ph. 2 - PO Blvd 10,684,000 5,342,000 100% 5,342,000 2.14 Pottery Ave (S) Widening 5,245,000 2,623,000 16% 415,119 2.16 Blueberry Rd Widening 749,000 375,000 22% 80,518 2.17 Geiger Rd Widening 468,000 234,000 5% 11,700 2.18 Salmonberry Rd Widening 281,000 141,000 21% 28,803 2.19 Piperberry Way Extension 468,000 234,000 11% 25,665 2.21 Old Clifton Rd/Feigley Rd Roundabout 243,000 122,000 26% 31,150 DA Feigley Rd Improvements 76,474 76,000 100% 76,474 Total 145,863,474 67,266,000 54% 36,343,224 Total Project Cost $145,863,474 Local Share (Development + City) (%)46% Growth/Development Share ($)$36,343,224 2019-2040 PM Peak Hour Trip Growth (vph)7,352 2020 Transportation Impact Fee Rate ($/trip)$4,943 Remaining Unfunded Commitment ($)$30,922,776 Annual Funding Commitment ($/yr)$1,546,139 City of Port Orchard Transportation Impact Fee Project List - 2020 Update Page 20 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. December 2020 Appendix B. Transportation Impact Fee Rate Schedule Page 21 of 110 ITE ITE Trip Rate per Code1 Rate2 Unit3 210 Single-Family Detached Housing 0.99 DU $4,894 220 Low-Rise Multifamily Housing (1-2 floors)0.56 DU $2,768 221 Mid-Rise Multifamily Housing (3-10 floors)0.44 DU $2,175 230 Mid-Rise Residential w/ 1st Floor Commercial 0.36 DU $1,779 240 Mobile Home Park 0.46 DU $2,274 251 Senior Housing Detached 0.30 DU $1,483 252 Senior Housing Attached 0.26 DU $1,285 253 Congregate Care Facility 0.18 DU $890 254 Assisted Living 0.26 bed $1,285 260 Recreational Home 0.28 DU $1,384 270 Residential PUD 0.69 DU $3,411 - Accessory Dwelling Unit (≤ 450 sf)0.56 DU $2,768 - Accessory Dwelling Unit (> 450 sf)0.28 DU $1,384 1 City of Port Orchard Traffic Impact Fee Rate Schedule – Residential (2020 Update) Impact Fee per Unit 1 Institute of Transportation Engineers, Trip Generation Manual (10th Edition) 2 Trip generation rate per development unit for PM peak hour of the adjacent street traffic (4-6 PM) 3 DU = Dwelling Unit ITE Land Use Category1 Page 22 of 110 ITE Base Trip % Primary Net Trip Rate per Impact Fee Code1 Rate2 Trips Rate Unit3 per Unit 30 Intermodal Truck Terminal 1.87 *1.870 ksf $9,243 90 Park and Ride with Bus Service 0.43 *0.430 space $2,125 110 General Light Industrial 0.63 *0.630 KSF $3,114 130 Industrial Park 0.40 *0.400 KSF $1,977 140 Manufacturing 0.67 *0.670 KSF $3,312 150 Warehousing 0.19 *0.190 KSF $939 151 Mini Warehouse 0.17 *0.170 KSF $840 170 Utilities 2.27 *2.270 KSF $11,221 180 Speciality Trade Contractor 1.97 *1.970 KSF $9,738 310 Hotel 0.60 *0.600 room $2,966 311 All Suites Hotel 0.36 *0.360 room $1,779 312 Business Hotel 0.32 *0.320 room $1,582 320 Motel 0.38 *0.380 room $1,878 411 Public Park 0.11 *0.110 acre $544 416 Campground/RV Park 0.27 *0.270 site $1,335 430 Golf Course 0.28 *0.280 acre $1,384 432 Golf Driving Range 1.25 *1.250 tee $6,179 433 Batting Cages 2.22 *2.220 cage $10,973 434 Rock Climbing Gym 1.64 *1.640 KSF $8,107 435 Multi-Purpose Recreational Facility 3.58 *3.580 KSF $17,696 437 Bowling Alley 1.16 *1.160 KSF $5,734 444 Movie Theater 14.60 *14.600 screen $72,168 445 Multiplex Movie Theater 13.73 *13.730 screen $67,867 488 Soccer Complex 16.43 *16.430 field $81,213 490 Tennis Courts 4.21 *4.210 court $20,810 491 Racquet/Tennis Club 3.82 *3.820 court $18,882 492 Health Fitness Club 3.45 *3.450 KSF $17,053 493 Athletic Club 6.29 *6.290 KSF $31,091 495 Recreational Community Center 2.31 *2.310 KSF $11,418 520 Public Elementary School 1.37 *1.370 KSF $6,772 522 Public Middle/Junior High School 1.19 *1.190 KSF $5,882 530 Public High School 0.97 *0.970 KSF $4,795 537 Charter Elementary School 0.14 *0.140 student $692 538 School District Office 2.04 *2.040 KSF $10,084 540 Junior / Community College 1.86 *1.860 KSF $9,194 560 Church 0.49 *0.490 KSF $2,422 565 Day Care Center 11.12 44%4.893 KSF $24,185 566 Cemetery 0.46 *0.460 acre $2,274 571 Prison 0.05 *0.050 bed $247 575 Fire & Rescue Station 0.48 *0.480 KSF $2,373 590 Library 8.16 *8.160 KSF $40,335 610 Hospital 0.97 *0.970 KSF $4,795 620 Nursing Home 0.59 *0.590 KSF $2,916 630 Clinic 3.28 *3.280 KSF $16,213 640 Animal Hospital / Veterinary Clinic 3.53 *3.530 KSF $17,449 650 Freestanding Emergency Room 1.52 *1.520 KSF $7,513 710 General Office 1.15 *1.150 KSF $5,684 712 Single-Tenant Office (<5,000 sf)2.45 *2.450 KSF $12,110 715 Single Tenant Office (>5,000 sf)1.71 *1.710 KSF $8,453 720 Medical/Dental Office 3.46 *3.460 KSF $17,103 730 Government Office Building 1.71 *1.710 KSF $8,453 732 US Post Office 11.21 *11.210 KSF $55,411 733 Government Office Complex 2.82 *2.820 KSF $13,939 750 Office Park 1.07 *1.070 KSF $5,289 760 Research and Development Center 0.49 *0.490 KSF $2,422 770 Business Park 0.42 *0.420 KSF $2,076 2 MEDICAL OFFICE INDUSTRIAL LODGING RECREATIONAL INSTITUTIONAL City of Port Orchard Traffic Impact Fee Rate Schedule – Non-Residential LUC 1-799 (2020 Update) 1 Institute of Transportation Engineers, Trip Generation Manual (10th Edition)2 Trip generation rate per development unit, for PM Peak Hour of the adjacent street traffic (4-6 pm).3 DU = Dwelling Unit; KSF = 1,000 square feet; VSP = Vehicle servicing position * Pass-by and diverted trip rate data not available. Primary trip rates may be applied based on local data, development context, and engineering judgment ITE Land Use Category1 PORT AND TERMINAL Page 23 of 110 ITE Base Trip % Primary Net Trip Rate per Impact Fee Code1 Rate2 Trips3 Rate Unit4 per Unit 810 Tractor Supply Store 1.40 66%0.924 KSF $4,567 811 Construction Equipment Rental Store 0.99 74%0.733 KSF $3,621 812 Building Materials and Lumber Store 2.06 74%1.524 KSF $7,535 813 Free-Standing Discount Superstore (w/ Grocery)4.33 71%3.074 KSF $15,196 814 Variety Store 6.84 66%4.514 KSF $22,315 815 Free Standing Discount Store (w/o Grocery)4.83 83%4.009 KSF $19,816 816 Hardware/Paint Store 2.68 74%1.983 KSF $9,803 817 Nursery (Garden Center)6.94 74%5.136 KSF $25,385 818 Nursery (Wholesale)5.18 74%3.833 KSF $18,948 820 Shopping Center 3.81 66%2.515 KSF $12,430 823 Factory Outlet Center 2.29 66%1.511 KSF $7,471 840 Automobile Sales (New)2.43 100%2.430 KSF $12,011 841 Automobile Sales (Used)3.75 100%3.750 KSF $18,536 842 Recreational Vehicle Sales 0.77 100%0.770 KSF $3,806 843 Automobile Parts Sales 4.91 44%2.160 KSF $10,679 848 Tire Store 3.98 72%2.866 KSF $14,165 849 Tire Superstore 2.11 72%1.519 KSF $7,509 850 Supermarket 9.24 64%5.914 KSF $29,231 851 Convenience Market 49.11 49%24.064 KSF $118,948 853 Convenience Market w/Gas Pumps 49.23 17%8.369 VFP $41,368 854 Discount Supermarket 8.38 51%4.274 KSF $21,125 857 Discount Club 4.18 63%2.633 KSF $13,017 861 Sporting Goods Superstore 2.02 66%1.333 KSF $6,590 862 Home Improvement Superstore 2.33 58%1.351 KSF $6,680 863 Electronics Superstore 4.26 60%2.556 KSF $12,634 866 Pet Supply Superstore 3.55 66%2.343 KSF $11,581 867 Office Supply Superstore 2.77 66%1.828 KSF $9,037 875 Department Store 1.95 66%1.287 KSF $6,362 876 Apparel Store 4.12 66%2.719 KSF $13,441 879 Arts and Crafts Store 6.21 66%4.099 KSF $20,259 880 Pharmacy/Drug Store w/o Drive-Thru 8.51 47%4.000 KSF $19,771 881 Pharmacy/Drug Store w/ Drive-Thru 10.29 38%3.910 KSF $19,328 882 Marijuana Dispensery 21.83 100%21.830 KSF $107,906 890 Furniture Store 0.52 47%0.244 KSF $1,208 899 Liquor Store 16.37 64%10.477 KSF $51,787 911 Walk-in Bank 12.13 65%7.885 KSF $38,973 912 Drive-in Bank 20.45 65%13.293 KSF $65,705 918 Hair Salon 1.45 65%0.943 KSF $4,659 920 Copy, Print, and Express Ship Store 7.42 66%4.897 KSF $24,207 925 Drinking Place 11.36 100%11.360 KSF $56,152 930 Fast Casual Restaurant 14.13 57%8.054 KSF $39,811 931 Quality Restaurant 7.80 56%4.368 KSF $21,591 932 High Turnover (Sit-Down) Restaurant 9.77 57%5.569 KSF $27,527 933 Fast Food w/o Drive-Thru 28.34 57%16.154 KSF $79,848 934 Fast Food w/ Drive-Thru 32.67 50%16.335 KSF $80,744 935 Fast Food Restaurant w/ Drive-Thru w/o Indoor Seating 42.65 50%21.325 KSF $105,409 936 Coffee/Donut Shop w/o Drive-Thru 36.31 57%20.697 KSF $102,304 937 Coffee/Donut Shop w/ Drive-Thru 43.38 50%21.690 KSF $107,214 938 Coffee/Donut Shop w/ Drive-Thru w/o Indoor Seating (Espresso Stand)83.33 11%9.166 KSF $45,309 939 Bread/Donut/Bagel Shop w/o Drive-Thru 28.00 57%15.960 KSF $78,890 940 Bread/Donut/Bagel Shop w/ Drive-Thru 19.02 50%9.510 KSF $47,008 941 Quick Lubrication Vehicle Stop 4.85 72%3.492 VSP $17,261 942 Automobile Care Center 3.11 72%2.239 KSF $11,068 943 Automobile Parts and Service Center 2.26 72%1.627 KSF $8,043 944 Gasoline/Service Station 14.03 58%8.137 VFP $40,223 945 Gas Station w/Convenience Market 13.99 12%1.679 VFP $8,298 947 Self-Serve Car Wash 5.54 58%3.213 stall $15,883 948 Automated Car Wash 77.50 58%44.950 stall $222,188 950 Truck Stop 22.73 58%13.183 KSF $65,166 960 Super Convenience Market/ Gas Station 22.96 35%8.036 VFP $39,722 970 Winery 7.31 100%7.310 KSF $36,133 3 RETAIL City of Port Orchard Traffic Impact Fee Rate Schedule – Non-Residential LUC 800-999 (2020 Update) SERVICES 1 Institute of Transportation Engineers, Trip Generation Manual (10th Edition)2 Trip generation rate per development unit, for PM Peak Hour of the adjacent street traffic (4-6 pm).3 Average primary trip rates, per Trip Generation Handbook (3rd Edition), 2017. Additional primary rates based on similar land use and engineering judgment. Pass-by rates should be used with caution and refined using local data whenever possible. 4 DU = Dwelling Unit; KSF = 1,000 square feet; VSP = Vehicle servicing position ITE Land Use Category1 Page 24 of 110 City of Port Orchard 2020 Transportation Impact Fee Rate Update Transportation Solutions, Inc. December 2020 Appendix C. Comparison of 2019-2020 TIF Rates in Western Washington Page 25 of 110 $589 $700 $948 $1,244 $1,497 $1,558 $1,603 $1,687 $1,875 $2,013 $2,025 $2,111 $2,149 $2,153 $2,400 $2,453 $2,491 $2,500 $2,552 $2,632 $2,665 $2,731 $2,809 $2,959 $3,024 $3,163 $3,199 $3,213 $3,239 $3,257 $3,333 $3,355 $3,398 $3,508 $3,523 $3,524 $3,683 $3,705 $3,736 $3,815 $3,900 $3,985 $3,986 $3,995 $3,999 $4,190 $4,211 $4,287 $4,350 $4,363 $4,413 $4,461 $4,479 $4,500 $4,518 $4,895 $4,943 $5,020 $5,100 $5,293 $5,397 $5,573 $5,974 $6,074 $6,249 $6,300 $6,413 $6,475 $7,141 $7,224 $7,357 $7,397 $7,406 $7,561 $7,820 $7,944 $8,756 $8,882 $9,600 $11,630 $14,064 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 Oak Harbor Kitsap County Burien Tukwila Yelm Blaine Snohomish Bainbridge Island Mukilteo Lacey Bellingham Lynden Orting Vancouver Everett Snohomish County Sequim Granite Falls Port Orchard (Existing) Sumner Burlington Anacortes Sedro-Woolley (Proposed) Thurston County Battleground Ferndale University Place Olympia Enumclaw Lake Stevens Clark County Arlington Washougal SeaTac Stanwood Monroe Ridgefield Tumwater Shelton Kirkland Mill Creek Mount Lake Terrace Maple Valley Bonney Lake Federal Way Milton Woodinville Mercer Island Sultan W WA Average TIF* Edgewood Covington Pierce County Puyallup Kent Auburn Port Orchard (Proposed) Gig Harbor Mount Vernon Bellevue Poulsbo Des Moines Camas Buckley Edmonds Marysville Fife Newcastle Carnation Shoreline Redmond Shoreline Bothell La Center Renton Lynnwood Duvall Issaquah Kenmore North Bend Sammamish Chart TitleComparison of 2019-2020 TIF Base Rates in 74 Cities and 5 Counties in Western Washington With Bellingham and Whatcom County Cities Highlighted for Emphasis [Based on information available. Average includes both Cities and Counties. See TIF rate table on next page for additional details.] Data compiled Nov. 2019 by Chris Comeau, AICP-CTP, Transportation Planner, Bellingham Public Works ccomeau@cob.org or (360) 778-7946 *Western WA State Average TIF Cost Per P.M. Peak Hour (4:00 - 6:00pm) Vehicle or Person Trip Page 26 of 110 Page E-1 Port Orchard City Parks Plan 2011 PORT ORCHARD CITY PARKS PLAN Appendix E: Impact Fee Calculations E.1 Introduction This study of impact fees for parks and recreational facilities for the City of Port Orchard presents the methodology, summarizes the data, and explains the calculation of the fees. The methodology is designed to comply with the requirements of Washington law. This introduction describes the basis for parks and recreational impact fees, including: • Definition and Rationale of Impact Fees • Statutory Basis For Impact Fees • Methodology for Calculating Impact Fees • Need for Additional Parks and Recreational Facilities • Determining the Benefit of Parks and Recreational Facilities to Development • Methodology and Relationship to Port Orchard City Parks Plan • Level of Service and Calculations E 1.1 Definition and Rationale of Impact Fees Impact fees are charges paid by new development to reimburse local governments for the capital cost of public facilities that are needed to serve new development and the people who occupy the new development. New development is synonymous with "growth." Local governments charge impact fees on either of two bases. First, as a matter of policy and legislative discretion, they may want new development to pay the full cost of its share of new public facilities because that portion of the facilities would not be needed except to serve the new development. In this case, the new development is required to pay for virtually all the cost of its share of new public facilities. Page 27 of 110 Page E-2 Port Orchard City Parks Plan 2011 On the other hand, local governments may use other sources of revenue to pay for the new public facilities that are required to serve new development. If, RCW 82.02.050 (2) prohibits impact fees that charge 100% of the cost, but does not specify how much less than 100%, leaving that determination to local governments. However, such revenues are not sufficient to cover the entire costs of new facilities necessitated by new development; the new development may be required to pay an impact fee in an amount equal to the difference between the total cost and the other sources of revenue. There are many kinds of "public facilities" that are needed by new development, including parks and recreational facilities, fire protection facilities, schools, roads, water and sewer plants, libraries, and other government facilities. This study covers parks and recreational facilities for the City of Port Orchard, Washington. Impact fees for parks and recreational facilities are charged to all residential development within the City of Port Orchard. E1.2 Statutory Basis for Impact Fees RCW 82.02.050 - 82.02.090 authorizes local governments in Washington to charge impact fees. The impact fees that are described in this study are not mitigation payments authorized by the State Environmental Policy Act (SEPA). There are several important differences between impact fees and SEPA mitigations. Two aspects of impact fees that are particularly noteworthy are: 1) the ability to charge for the cost of public facilities that are "system improvements" (i.e., that provide service to the community at large) as opposed to "project improvements" (which are "on-site" and provide service for a particular development), and 2) the ability to charge small-scale development their proportionate share, whereas SEPA exempts small developments. Four types of public facilities can be the subject of impact fees: 1) public streets and roads; 2) publicly owned parks, open space and recreational facilities; 3) school facilities; and 4) fire protection facilities (in jurisdictions that are not part of a fire district). RCW82.02.050 (2) and (4) and RCW82.02.090 (7) Impact fees must be limited to system improvements that are reasonably related to, and which will benefit new development. RCW 82.02.050(3) (a) and (c). Local governments must establish reasonable service areas (one area, or more than one, as determined to be reasonable by the local government), and local governments must develop impact fee rate categories for various land uses. RCW 82.02.060(6) Impact fees cannot exceed the development's proportionate share of system improvements that are reasonably related to the new development. The impact fee amount shall be based on a formula (or other method of calculating the fee) that determines the proportionate share. RCW82.02.050(3)(b) and RCW82.02.060(1) Impact fees can be charged for new public facilities (RCW 82.02.060(1)(a)) and for the unused capacity of existing public facilities (RCW 82.02.060(7)) subject to the Page 28 of 110 Page E-3 Port Orchard City Parks Plan 2011 proportionate share limitation described above. Additionally, the local government must separate the impact fees from other monies, expend the money on CFP projects within 6 years, and prepare annual reports of collections and expenditures. RCW82.02.070(1)-(3) E 2 Methodology for Calculating Impact Fees Prior to calculating impact fee rates, several issues must be addressed in order to determine the need for, and validity of such fees: responsibility for public facilities, the need for additional park and recreational facilities, the need for revenue for additional parks and recreational facilities, and the benefit of new parks and recreational facilities to new development. In general, local governments that are authorized to charge impact fees are responsible for specific public facilities for which they may charge such fees. The City of Port Orchard is legally and financially responsible for the parks and recreational facilities it owns and operates within its jurisdiction. In no case may a local government charge impact fees for private facilities, but it may charge impact fees for some public facilities that it does not administer if such facilities are "owned or operated by government entities" (RCW 82.82.090(7). E 2.1 Need for Additional Park and Recreational Facilities The need for additional parks and recreational facilities is determined by using standards for levels of service for park and recreational facilities to calculate the quantity of facilities that are required. For the purpose of quantifying the need for parks and recreational facilities, this study uses the City's value of investment in parks and recreational facilities per capita. As greater growth occurs, more investment is required, therefore more parks and recreational facilities are needed to maintain standards. E 2.2 Determining the Benefit to Development The Washington State law regarding Impact Fees imposes three provisions of the benefit provided to development by impact fees: 1) proportionate share, 2) reasonably related to need, and 3) reasonably related to expenditure (RCW 80.20.050(3)). First, the "proportionate share" requirement means that impact fees can be charged only for the portion of the cost of public facilities that is "reasonably related" to new development. Second, fulfilling the requirement that impact fees be "reasonably related" to the development's need for public facilities, including personal use and use by others in the family (direct benefit), use by persons or organizations who provide goods or services to the fee-paying property (indirect benefit), and geographical proximity (presumed benefit). Impact fees for park and recreational facilities, however, are only charged to Page 29 of 110 Page E-4 Port Orchard City Parks Plan 2011 residential development in the City because the majority of benefits are to the occupants and owners of dwelling units. As a matter of policy, the City of Port Orchard elects not to charge parks and recreational impact fees to non-residential properties because there is insufficient data to document the proportionate share of parks reasonably needed by non-residential development. Lastly, the requirement that expenditures be "reasonably related" to the development that paid the impact fee includes that fee revenue must be earmarked for specific uses related to public facilities ensures that expenditures are on identifiable projects, the benefit of which can be demonstrated and that impact fee revenue must be expended within 6 years, thus requiring a timeliness to the benefit to the fee-payer. E 2.3 Methodology and Relationship to the Port Orchard City Parks Plan Impact fees for parks and recreational facilities in the City of Port Orchard are based on the value per capita of the City's existing investment in parks and recreational facilities for the population of the City. New development will be provided the same investment per capita, to be funded by a combination of general and capital improvement fund revenue and impact fees. The amount of the impact fee is determined by charging each new development for the average number of persons per dwelling unit multiplied times the amount of the investment per capita that is to be paid by growth. E3. Level of Service Standard Calculations The level of service, as defines as the capital investment per person, is calculated by multiplying the capacity of parks and recreational facilities times the average costs of those items. Within this calculation, there are two variables that benefit from further definition explanation: The value of parks and recreational inventory, and the Service population. E 3.1 Value of Parks and Recreational Inventory The value of the existing inventory of parks and recreational facilities is calculated by determining the value of each park as well as each recreational facility. The sum of all of the values equal the current value of the City's parks and recreational system E 3.2 Service Population The service population is the number of persons served by the inventory of parks and recreational facilities. Port Orchard's service population consists of the City's current 2011 population of 11,144 as provided by the Washington State of Financial Management. The forecast population for 2030 of is the projected population Page 30 of 110 Page E-5 Port Orchard City Parks Plan 2011 estimated for Comprehensive Planning efforts and adopted by all Kitsap County jurisdictions, through the County Wide Planning Policies. This figure is provided to estimate future population growth within the existing City boundaries and is utilized in calculating the annual portion of that growth rate for the Impact Fee calculations. E 3.3 Calculation of Park and Recreational Capital Investment per Person The City of Port Orchard's capital value per person is the standard the City uses to ensure that each resident receives an equitable amount of parks and recreational facilities. The City provides this value by investment in parks and recreational facilities that are most appropriate for each site and which respond to changing needs and priorities as the City grows and the demographics and needs of the population changes. Attachment E1(at the end of this Appendix) lists the types of land and recreational facilities that make up the City of Port Orchard's existing park system. Each component is listed in the first column, along with the capital value of each type of park land or recreational facility in the final column. The capital value for all City owned parks & recreational facilities in the inventory comes to a total of $7,228,929. This total value is divided by the service population of 11,144 for the City determines the current capital value per person of $649. (Please reference Attachment E2: Figure E1) E 4 PARKS AND RECREATIONAL FACILITY NEEDS This section calculates the value of parks and recreational facilities that are needed to serve growth, reduced by the typical proportion of project values that are grant or otherwise funded. Impact fees are related to the needs of growth through calculating the total value of parks and recreational facilities that are needed for growth. The calculation is accomplished by multiplying the capital investment per person times the number of new persons that are forecast for the City's growth. (Please reference Attachment E2: Figure E2) E 4.1 Calculation of Total Value Needed For Growth The calculations for the total value of Parks and Recreation Facilities needed to accommodate the forecasted growth is a tabulation of the level of service standard for capital investment per person from Figure E1 times the total amount of population growth forecast for the six year Impact Fee planning period. The resulting calculation shows the total value of parks and recreational facilities that are needed to serve the growth that is forecast for Port Orchard (Please reference Attachment E2: Figure E2). The result of Figure E2 illustrates that Port Orchard needs parks and recreational facilities valued at $1,928,434 in order to serve the growth of 2,973 additional people (forecast at an annual growth rate of 495 per year) who are expected to be added to the City's population during the six year Impact Fee planning period. Page 31 of 110 Page E-6 Port Orchard City Parks Plan 2011 E 4.2 Total Investment to be Paid by Growth The investment to be paid by growth is calculated by subtracting the amount of any revenues the City invests in infrastructure for growth from the total investment in parks and recreational facilities needed to serve growth. The previous calculation showed the total amount that is needed to invest in additional parks and recreation facilities in order to serve future growth. The proportionate share of that investment to be paid by growth is dependent upon the historic share of improvements provided by the City of Port Orchard through grants or other revenue streams. The proportionate share for development to pay for new facilities includes the City of Port Orchard historical use of local sources, such as real estate excise tax, grant funding, and other revenues to pay for part of the cost of parks and recreational facility capital costs. Revenues that are used for repair, maintenance or operating costs are not used to reduce impact fees because they are not used, earmarked or prorated for the system improvements that are the basis of the impact fees. The City's investment has averaged 50% of the cost of capital improvement projects for parks and recreational facilities (Please reference Attachment E2: Figure E3). The result of Figure E3 illustrates that Port Orchard expects to use $964,217 in grants and other revenues to serve the total needs of additional parks and recreational facilities to maintain the City’s standards for future growth, with the remaining $964,217 to be paid by growth as a proportionate share. E5 IMPACT FEE PER UNIT OF DEVELOPMENT In this section the investment in additional parks and recreational facilities to be paid by growth is used to calculate the park and recreational facilities growth cost per person which is then used to calculate the impact fee per dwelling unit. E 5.1 Growth Cost Per Person The growth cost per person is calculated by dividing the investment in parks and recreational facilities that is to be paid by growth by the amount of population growth during the six year Impact Fee planning period (Please reference Attachment E2: Figure E4). The result of Figure E4 illustrates the calculation of the cost per person of parks and recreational facilities that needs to be paid by growth is $324 per person. The amount to be paid by each new dwelling unit depends on the number of persons per dwelling unit. E 5.2 Impact Fee per Dwelling Unit The impact fee per dwelling unit is calculated by multiplying the growth cost per person by the number of persons per dwelling unit. The number of persons per dwelling unit is the factor used to convert the growth cost of parks and recreational facilities per Page 32 of 110 Page E-7 Port Orchard City Parks Plan 2011 person into impact fees per dwelling unit. The number of persons per dwelling unit data is based on the adopted 2008 Port Orchard Comprehensive Plan, Chapter 3. Housing; which sets an population household size of 2.5 persons per single family unit and a calculation of1.8 persons per Multi-family housing unit within the City of Port Orchard (Please reference Attachment E2: Figure E5 and E6 respectively). The resulting calculations of Figure E5 shows the calculation of the parks and recreational facilities impact fee of $811 per single family dwelling unit. The resulting calculations of Figure E6 show the calculation of the parks and recreational facilities impact fee of $584 per multi-family dwelling unit. Impact Fee amounts, upon adoption by City Council, are to be implemented and collected subject to the provisions of Port Orchard Municipal Code Section 16.70. E6. Summary This study of impact fees for parks and recreational facilities for the City of Port Orchard summarizes the methodology, presents the data, and explains the calculation of the fees that result in the recommended amounts. Similar sized Cities within Kitsap County have chosen to utilize much higher impact fee amounts, for example the City of Poulsbo recently raised their Park Impact Fee from $500 to $1,195 per unit. The proposed Park Impact Fees for the City of Port Orchard of $811 per single family dwelling unit and $584 per multi-family dwelling unit, although consistent with the City of Port Orchard level of service, still are well below the Washington State average of $ 2,849 per single family dwelling unit and $2,147 per multi-family dwelling unit respectively. (Sourced from the National Impact Fee Survey 2009, prepared by Clancy Mullen, Duncan Associates, Austin, TX on December 20, 2009) The methodology utilized for arriving at the City of Port Orchard impact fee amounts has been a statewide standard incorporated for numerous Washington State cities and is designed to comply with the requirements of Washington law. Page 33 of 110 INTENTIONAL BLANK PAGE CITY OF PORT ORCHARD COMPREHENSIVE PARKS PLAN Page 34 of 110 Page 35 of 110 Page 36 of 110 Page 37 of 110 Page 38 of 110 Page 39 of 110 Page 40 of 110 City of Port Orchard Work Study Session Executive Summary Issue Title: McCormick Communities Development Agreement for Transportation Meeting Date: January 19, 2021 Time Required: 30 minutes Attendees: Nicholas Bond (DCD Director), Jennifer Robertson (Special Counsel to the City), Mark Dorsey (PW Director), Noah Crocker (Finance Director) Issue: The City has been negotiating a new development agreement for transportation with McCormick Communities for the past year. This new agreement, if approved, would repeal and replace the old 2005 Transportation Agreement that was made between the prior property owner and the County. An updated agreement is desired because the 2005 Transportation Agreement predates annexation, is cumbersome, makes the administration of the City’s impact fee program unnecessarily complicated, restricts the City’s spending of impact fees collected in the McCormick Development Area, and does not reflect the desired outcomes in the City’s comprehensive plan. Some elements of the 2005 Transportation Agreement are proposed to be carried forward, including concurrency approvals, a reimbursement to the McCormick Land Company related to the Glenwood Connector Road and Feigley Road improvement projects, and agreement that right of way needed from the developer in the future will be provided as needed. The major changes concern the term of the agreement which was unclear in the 2005 Transportation Agreement. Under the proposed Development Agreement, the term is more certain would be 20 years going forward with possible extensions. The new Development Agreement also will eliminate the impact fee specific to McCormick Communities in favor of one citywide impact fee which makes administrative more uniform. Another significant change is that the new Development Agreement provides that the developer will build two transportation projects (Campus Parkway Roundabout (Project ID #1.5C) and McCormick Woods Drive/Old Clifton Road Roundabout (Project ID #2.08)) and will receive impact fee credits, vs. the reimbursement model from the previous agreement. The benefit of a citywide impact fee would be that fees collected in McCormick Woods would help pay for a greater share of improvements outside of McCormick Woods, such as the Bethel Avenue project. Finally, the proposed Development Agreement gives the City greater latitude in spending the impact fees that were collected under the 2005 Transportation Agreement which currently amounts to $772,097.79 (as of November 30, 2020). POMC 20.26 (Development Agreements) outlines the process for development agreement approval. Developers seeking a development agreement, must submit an application. In this case, the application for the development agreement was filed on December 7, 2020, and per the applicant’s request, was consolidated for review under POMC 20.22.020 (2) with permits PW20-031 and -032. These permits, a LDAP and SDP for the Campus Parkway Roundabout, were approved in a decision issued December 24, Action Requested at this Meeting: Review proposed development agreement, prior to proposed consideration on January 26, 2021. Page 41 of 110 Executive Summary 2 Page 2 of 2 2020. The proposed development agreement is related to these permits because a traffic impact fee credit is proposed for the construction of this roundabout by the developer. The Development Agreement is proposed for a February 9, 2021 public hearing, followed by consideration of an ordinance that would authorize the Mayor to execute the agreement. If the ordinance is approved, the City Council would be able to move forward with the adoption of an updated traffic impact fee at that same meeting. Background: In 2005, prior to annexation, Kitsap County entered into a development agreement with GEM1, LLC concerning transportation improvements in the vicinity of McCormick Woods. This agreement provided for an impact fee amount specific to the McCormick Woods area for projects in the McCormick Woods area, concurrency approval for all phases of the McCormick developments, reimbursement for projects constructed by the developer, provisions for the dedication of right of way, and a provision for the transfer of funds from Kitsap County to an annexing city should annexation occur. On May 27, 2009, Port Orchard annexed the property and therefore stepped into the shoes of the County as party to the 2005 Transportation Agreement. In 2015, GEM1 sold its entitlements and assigned all development agreements to McCormick Communities. GEM1 retained its rights to be reimbursed under this 2005 Transportation Agreement, and later transferred these rights to the McCormick Land Company, which continues to be reimbursed annually by the City per the 2005 Transportation Agreement. In 2015, the City adopted a traffic impact fee program. This program was unnecessarily complicated due to the existence of the 2005 Transportation Agreement. The City has been working to update its adopted impact fees, but this effort has been held up waiting for a new transportation development agreement with McCormick Communities. Alternatives: There are various alternatives that could be considered, but all would require agreement with McCormick Communities and McCormick Land Company. Other issues related to water and entitlement timelines will be negotiated and brought forward separately at a future date. Recommendations: City staff recommends that the City Council review and discuss the proposed Transportation Development Agreement, conduct a public hearing on the proposed agreement on February 9, 2021, and after hearing from the public, consider approval of the proposed development agreement. Attachments: Ordinance authorizing the mayor to sign the new Development Agreement, Proposed Development Agreement, 2005 Transportation Development Agreement, Page 42 of 110 ORDINANCE NO. __ -20 AN ORDINANCE OF THE CITY OF PORT ORCHARD, WASHINGTON, AUTHORIZING THE MAYOR TO EXECUTE A DEVELOMENT AGREEMENT WITH MCCORMICK COMMUNITIES, LLC; PROVIDING FOR SEVERABILITY AND CORRECTIONS; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, pursuant to RCW 36.70B.170, the City Council has the authority to review and enter into development agreements that govern the development and use of real property within the City; and WHEREAS, the City Council has adopted standards and procedures governing the City’s use of development agreements, codified at Chapter 20.26 of the Port Orchard Municipal Code (POMC); and WHEREAS, the City and McCormick Communities, LLC have prepared a Development Agreement to address the design, construction, and funding of certain transportation improvements within and near the McCormick Woods development in the vicinity of Old Clifton Road and Campus Parkway, as provided in “Exhibit A” of this Ordinance; and WHEREAS, McCormick Land Company is also a party to this Agreement as the Agreement will replace a 2005 Transportation Development Agreement under which McCormick Land Company is continuing to receive reimbursement for completion of transportation improvements; and WHEREAS, this Development Agreement was consolidated under POMC 20.22.020(2) with the following project permits: Land Disturbing Activity Permit (PW20-031) and Stormwater Drainage Permit (PW20-032); and WHEREAS, in accordance with RCW 36.70B.200, when a development agreement is related to a project permit application, the provisions of chapter 36.70C RCW shall apply to any appeal on the development agreement; and WHEREAS, on December 9, 2020, the City’s SEPA official issued a determination of non- significance for the proposed development agreement and consolidated permits under the Optional DNS process, and there have been no appeals; and WHEREAS, the Notice of Decision for these project permits was issued on December 24, 2020 and there have been no appeals; and Page 43 of 110 Ordinance No. __-21 Page 2 of 4 WHEREAS, on January 19, 2021, the City Council held a study session on the proposed development agreement; and WHEREAS, on February 9, 2021, the City Council held a public hearing on the proposed development agreement, and (comments received/not received, etc); and WHEREAS, the City Council, after careful consideration of the development agreement and all public comments and testimony, finds that the development agreement is consistent with the City’s Comprehensive Plan and development regulations, the Growth Management Act, Chapter 36.70A RCW, and that the amendments herein are in the best interests of the residents of the City; now, therefore, THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION 1. The City Council adopts all of the “Whereas” sections of this ordinance and all “Whereas” sections of the Development Agreement as findings in support of this ordinance. SECTION 2. The City Council approves of and authorizes the Mayor to execute a development agreement with McCormick Communities, LLC and McCormick Land Company, as provided in “Exhibit A” of this Ordinance. SECTION 3. Severability. If any section, sentence, clause or phrase of this Ordinance should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity of constitutionality of any other section, sentence, clause or phrase of this Ordinance. SECTION 4. Corrections. Upon the approval of the city attorney, the city clerk and/or code publisher is authorized to make any necessary technical corrections to this Ordinance, including but not limited to the correction of scrivener’s/clerical errors, references, Ordinance numbering, section/subsection numbers, and any reference thereto. SECTION 5. Effective Date. This Ordinance shall be published in the official newspaper of the city and shall take full force and effect five(5) days after posting and publication as required by law. A summary of this Ordinance may be published in lieu of publishing the entire Ordinance, as authorized by state law. Page 44 of 110 Ordinance No. __-21 Page 3 of 4 SECTION 6. Appeals. Since the Development Agreement is related to a project permit application, the provisions of chapter 36.70C RCW shall apply to the appeal of the decision of the development agreement. PASSED by the City Council of the City of Port Orchard, APPROVED by the Mayor and attested by the City Clerk in authentication of such passage this 26th day of January 2021. ____ Robert Putaansuu, Mayor ATTEST: _______ Brandy Rinearson, MMC, City Clerk APPROVED AS TO FORM: Sponsored by: Charlotte A. Archer, City Attorney ****, Council Member PUBLISHED: EFFECTIVE DATE: Page 45 of 110 Ordinance No. __-21 Page 4 of 4 EXHIBIT A: MCCORMICK COMMUNITIES, LLC, DEVELOPMENT AGREEMENT Page 46 of 110 Development Agreement for Funding Transportation Improvements Page 1 of 19 FG:54082696.4 [PROPOSED] DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF PORT ORCHARD AND McCORMICK FOR THE DEVELOPMENT AND FUNDING OF CERTAIN TRANSPORTATION IMPROVEMENTS THIS DEVELOPMENT AGREEMENT is made and entered into this day of , 2021, by and between the City of Port Orchard, a non-charter, optional code Washington municipal corporation, hereinafter the “City,” and McCormick Communities, LLC, a limited liability company organized under the laws of the State of Washington, together with McCormick Development Corporation, a Washington Corporation, hereinafter collectively the “Developer” or “McCormick” (together the “Parties”). In addition, McCormick Land Company, a Washington corporation, hereafter “MLC,” is a Party for purposes of Sections 7, 15 and such other sections as specifically refer to MLC. The Parties hereby agree as follows: RECITALS WHEREAS, the Washington State Legislature has authorized the execution of a development agreement between a local government and a person having ownership or control of real property within its jurisdiction (RCW 36.70B.170(1)); and WHEREAS, a development agreement must set forth the development standards and other provisions that shall apply to, govern, and vest the development, use and mitigation of the development of the real property for the duration specified in the agreement (RCW 36.70B.170(1)); and WHEREAS, a development agreement must be consistent with the applicable development regulations adopted by a local government planning under chapter 36.70A RCW (RCW 36.70B.170(1)); and WHEREAS, Port Orchard adopted Chapter 20.26 of the Port Orchard Municipal Code (“POMC”) which establishes the standards and procedures for Development Agreements in Port Orchard; and WHEREAS, Chapter 20.26 POMC is consistent with State law; and WHEREAS, the Developer has applied for a Development Agreement under Chapter 20.26 POMC and such Agreement has been processed consistently with the POMC and State law; and WHEREAS, this Development Agreement by and between the City of Port Orchard and the Developer (hereinafter the “Development Agreement”), relates primarily to the development of property owned by Developer within and near McCormick Woods in the vicinity of Old Clifton Road and Campus Parkway and that is more particularly described on Exhibits A-1, A-2, Page 47 of 110 Development Agreement for Funding Transportation Improvements Page 2 of 19 FG:54082696.4 B-1, and B-2 (hereinafter the “McCormick Property”); and WHEREAS, in 2005 the City’s predecessor in interest entered into a Development Agreement with Developer’s predecessor in interest for the development of certain transportation improvements; and WHEREAS, since that time, the City annexed the property and in accordance with RCW 36.70B.190 assumed jurisdiction and agreed to be bound by the 2005 Transportation Development Agreement; and WHEREAS, as part of that 2005 Agreement, the predecessor to the Developer (GEM 1, LLC) constructed some projects and payments for those projects are still on-going and will continue until GEM 1, LLC’s successor is fully reimbursed; and WHEREAS, since annexing this property, the City’s transportation plans have been updated; and WHEREAS, the City is in the process of adopting updated transportation impact fees; and WHEREAS, during this process, an in-depth look at the projects needed to meet the projected development by Developer and others in the City was performed; and WHEREAS, the updated transportation impact fees are based, in part, on the 2005 Development Agreement with the Developer’s predecessor as well as on the updated project list; and WHEREAS, the Developer did not acquire from GEM 1, LLC (“GEM 1”), and GEM 1 still retains, the right to reimbursement that accrued under the 2005 Transportation Agreement when GEM 1 constructed the Glenwood Connector Roadway and minor improvements to Feigley Road, the only projects identified in that 2005 agreement that have been constructed; and WHEREAS, the City has been paying such reimbursement to GEM 1 and its successor since 2008, and nothing in this Agreement changes or is intended to change the City’s obligation to continue paying such reimbursement to GEM 1; and WHEREAS, GEM 1 assigned its right to reimbursement to the McCormick Land Company in 2016, after which time, the City paid reimbursement to the McCormick Land Company (“MLC”); and WHEREAS, MLC continues to own property in Port Orchard; and WHEREAS, MLC has signed this Agreement to confirm that this Agreement will fully replace and supersede the 2005 Transportation Development Agreement (“2005 Transportation DA”); and Page 48 of 110 Development Agreement for Funding Transportation Improvements Page 3 of 19 FG:54082696.4 WHEREAS, the Developer now seeks to update the 2005 Transportation DA in conjunction with obtaining a permit to build the Campus Parkway Roundabout; and WHEREAS, the purpose of this Agreement is to carry forward and better define the concurrency evaluation that was part of the 2005 Transportation DA, to carry forward the impact fee reimbursement for MLC, and to establish an impact fee credit system for Developer to recover its costs of building the McCormick Projects described below; and WHEREAS, apart from concurrency and impact fee credits/reimbursement, this Agreement does not address development standards, vesting, or any other regulation that impacts how the McCormick Property will be developed; and WHEREAS, the Parties agree that the 2005 Transportation DA, as set forth in the traffic study attached to that 2005 Transportation DA, anticipated the generation of 4,935 PM peak hour trips. Based on the development activity since 2005, some of these “trips” have been absorbed. The parties believe it is advantageous to set forth the remaining capacity that may be utilized in future development phases and have confirmed the concurrency numbers as of the date of this Agreement; and WHEREAS, in consideration of the benefits conferred by this new Development Agreement, which reflect the current plans of both the City and the Developer and include confirmation of concurrency, a new project list, and a set impact fee credit calculation, the parties deem it in their best interests and the best interests of the community to repeal and replace the 2005 Transportation DA with this updated agreement; and WHEREAS, there are two projects identified on both Exhibit A to the 2005 Transportation DA and also on the City’s new TIP. As described in the new TIP, these projects are ID #1.5C, “Old Clifton Rd – Campus Pkwy Intersection and ID #2.08 Old Clifton Rd & McCormick Woods Dr. Intersection Impr”. These two projects are collectively referred to herein as “the McCormick Projects”; and WHEREAS, the McCormick Projects are eligible for credits under RCW 82.02.060(4); and WHEREAS, the following events have occurred in the processing of the Developer’s application: a) The Developer applied for this Development Agreement on December 4, 2020; and b) The Development Agreement is related to and has been consolidated under POMC 20.22.020(2) with the following project permits: Land Disturbing Activity Permit PW20-031 Stormwater Drainage Permit PW20-032 c) The Developer is ready and willing to commence construction on the project known as Old Clifton Rd - Campus Parkway Intersection (a roundabout project) and has applied for a Page 49 of 110 Development Agreement for Funding Transportation Improvements Page 4 of 19 FG:54082696.4 Land Disturbing Activity permit and Stormwater Drainage Permit to perform this project; d) The Old Clifton Rd – Campus Parkway Intersection is included in the City’s transportation plan upon which the updated impact fees are based and therefore the Developer may be reimbursed from the impact fees for that project; e) The City Council held a public hearing on [DATE] regarding this Development Agreement; f) After a public hearing, by Ordinance No. , the City Council authorized the Mayor to sign this Development Agreement with the Developer; AGREEMENT Section 1. The McCormick Projects. The two transportation projects described above as “the McCormick Projects” will serve the McCormick Property as well as provide connectivity and capacity for the City. The Campus Parkway Roundabout LDAP Permit #PW20-0031 and SDP Permit PW20-032 as well as the future development of the McCormick Woods Drive Roundabout, which will be permitted at a later date, are both subject to impact fee credit in accordance with this Agreement. Section 2. The McCormick Property. The McCormick Property comprises McCormick North, McCormick West, and McCormick Woods, which are legally described by parcel number in Exhibit A-1 and depicted on A-2, attached hereto and incorporated herein by this reference. The McCormick Projects will serve the McCormick Property and the credits authorized by this Development Agreement are only applicable to lots for which building permits are applied for after the date of this Agreement within the boundaries of the McCormick Property as defined on Exhibit A-1 and as shown on the Map attached hereto as Exhibit A-2. Section 3. Definitions. As used in this Development Agreement, the following terms, phrases and words shall have the meanings and be interpreted as set forth in this Section. a) “2005 Transportation Development Agreement” or “2005 Transportation DA” means the 2005 Development Agreement for Transportation which was executed between Kitsap County and Gem 1, LLC and dated April 25, 2005 and which was assumed by the City of Port Orchard upon annexation on May 27, 2009. b) “Adopting Ordinance” means the Ordinance which approves this Development Agreement, as required by RCW 36.70B.200 and Chapter 20.26 POMC.’ c) “Commence construction” as to the McCormick Projects means that the required permit(s) have issued and there are “boots on the ground” at the construction site. d) “Completion” as to the McCormick Projects means passing final inspection associated with the LDAP/SDP permits and providing the required 2-year warranty and Page 50 of 110 Development Agreement for Funding Transportation Improvements Page 5 of 19 FG:54082696.4 maintenance bond for the improvement(s). “CPI-U” means the percentage rate change for the All Urban Consumers Index (CPI-U) (1982-1984=100), not seasonally adjusted, for the Seattle-Tacoma-Bellevue area for that 12 month period from January 1st to December 31st Indexed as the Annual Average, as is specified by the Bureau of Labor Statistics, United States Department of Labor. Increases based on CPI-U shall take effect on March 1st of the following year. e) “Council” or “City Council” means the duly elected legislative body governing the City of Port Orchard. f) “Director” means the City’s Community Development Director. g) “Effective Date” means the effective date of the Adopting Ordinance. h) “Maximum credit” or “maximum reimbursement” means the maximum amount that is eligible for projects subject to this Agreement, or for past projects done by GEM 1/MLC, for which reimbursement or impact fee credits will be provided by the City to the Developer or MLC. i) “McCormick Project(s)” or “Project(s)” means the two transportation projects described above which serve both the McCormick Property and the greater community, as specified in Section 1 and as provided for in all associated permits/approvals, and all incorporated exhibits. Section 4. Exhibits. Exhibits to this Agreement are as follows: a) Exhibit A-1 – Parcel numbers of the McCormick Property that are subject to impact fee credit. b) Exhibit A-2 – Map depicting the boundaries of the McCormick Property that are subject to the impact fee credit in this Agreement. c) Exhibit B-1 – Parcel numbers of the McCormick Property with vested concurrency. d) Exhibit B-2 Map depicting the boundaries of the McCormick Property with vested concurrency . e) Exhibit C – Map showing the original boundaries for the 2005 Transportation DA which remains the reimbursement area for MLC Section 5. Parties to Development Agreement. The parties to this Agreement are: Page 51 of 110 Development Agreement for Funding Transportation Improvements Page 6 of 19 FG:54082696.4 a) The “City” is the City of Port Orchard, 216 Prospect Street, Port Orchard, WA 98366. b) The “Developer” or “Property Owner” or “McCormick” is a private enterprise which owns the McCormick Property in fee, and whose principal office is located at 12332 NE 115th Place, Kirkland, WA. c) GEM 1, LLC is the prior owner of the property that was subject to the 2005 Transportation DA, and MLC is the successor to GEM for purposes of reimbursement. MLC is located at ____________________, WA and is still receiving reimbursement from the City for transportation projects done under the 2005 Transportation DA. These payments will continue in accordance with Section 15 of this Agreement. Section 6. Projects are a Private Undertaking. It is agreed among the parties that the Projects are private improvements for which credits are required pursuant to RCW 82.02.060(4) and that the City has no interest in the improvements until such time as each Project is completed and dedicated to the City. Section 7. Term of Agreement. This Agreement shall commence upon the effective date of the Adopting Ordinance approving this Agreement and shall continue in force for a period of twenty (20) years unless extended or terminated as provided herein, provided that reimbursement to MLC pursuant to Section 15 shall survive expiration until full reimbursement is received by MLC. Following the expiration of the term or extension thereof, or if sooner terminated, this Agreement shall have no force and effect. Section 8. Repeal and Replacement of 2005 Transportation DA. In consideration of the benefits to the Developer provided by the timely construction of the McCormick Projects, the confirmation of concurrency, the agreement on a credit calculation for transportation impact fees which will be charged to the McCormick Property, and the continuation of reimbursement from impact fees to MLC, the Developer, MLC, and the City agree to rescind, and by execution of this Agreement do rescind, the 2005 Transportation Agreement, and replace it with this Development Agreement. Section 9. Concurrency. The Parties agree that City streets affected by development of the McCormick Property have the capacity to serve the McCormick Property in compliance with the City’s concurrency requirements so long as such development does not result in the generation of more than 3,806 PM peak hour trips, which is the number of remaining trips identified in Section 9 of the 2005 Transportation DA reserved for the McCormick Property identified on Exhibits B-1 and B-2. This remaining concurrency provided in the 2005 Transportation DA is being carried forward for the duration of this Agreement as set forth below. These trips are available as of December 15, 2020. Area Available PM Peak Trips Lots/Units for Residential 1 Map Designation on Ex. C McCormick North North • Village local center 659 (See Note 1) North Page 52 of 110 Development Agreement for Funding Transportation Improvements Page 7 of 19 FG:54082696.4 (residential + commercial • Single Family Residential 312 315 North Total McCormick North 971 McCormick West West • Multifamily 415 419 West • Single Family Residential 1,530 1,545 West Total McCormick West 1,945 McCormick Woods 697 640 Wd McCormick Woods Retail 63 N/A Wd McCormick Woods Conference (Golf Facilities) 122 N/A GC McCormick Woods legacy lots 8 8 Not depicted Total McCormick Woods 890 Grand Total 3,806 1 There are 659 PM Peak Trips available within the Village local center. Residential PM Peak Trips will be calculated per unit and commercial PM Peak trips will be calculated by use type and square footage. The defined areas for the assigned concurrency numbers above are listed by parcel number on Exhibit B-1 and shown (except for the eight legacy lots, which are vacant lots in prior subdivisions) on Exhibit B-2, which Exhibits are attached hereto and incorporated herein by this reference as if set forth in full. Residential development shall be limited by either the PM peak hour trips or the number of units, whichever is more restrictive. Commercial development shall be limited only by the PM peak hour trips. To the extent that McCormick in the future proposes residential or commercial development within the McCormick Property that will generate more than the number of PM peak hour trips shown in the above table, the City will make a new concurrency determination regarding the capacity of its street system at that time. Section 10. Project Schedule. The Developer will commence construction of the two McCormick Projects on the following schedule a) Work on the roundabout at the intersection of Old Clifton Road and Campus Parkway (Project ID #1.5C on the City’s TIP) (Permits #PW20-031 and PW20-032) shall commence no later than June 30, 2021, and Developer will complete construction in a timely and workmanlike manner. Such work shall be completed no later than September 30, 2022. b) Developer will submit a complete set of plans for a roundabout at the intersection of Old Clifton Road and McCormick Woods Drive (Project ID #2.08) no later than June 1, 2023 Page 53 of 110 Development Agreement for Funding Transportation Improvements Page 8 of 19 FG:54082696.4 and will commence construction of said roundabout no later than June 1, 2024, provided that the City has before then acquired the additional land, not owned by Developer, that is needed for this roundabout; and Developer will complete construction in a timely and workmanlike manner. Such work shall be completed no later than September 30, 2025 so long as the City has acquired the land necessary for the roundabout before June 1, 2024. If the City has not acquired the land necessary for the roundabout before June 1, 2024, but does so more than 24 months before expiration of this Agreement, Developer shall construct the roundabout with 24 months of such acquisition. Section 11. Project standards. Developer will finance, design, and construct these McCormick Projects to comply with City standards, including obtaining all necessary permits. The City will approve the plans before construction begins; and the City will accept responsibility for the operation of the Projects once construction is completed and a two-year warranty and maintenance bond is in place. A Project will be deemed completed when all of the following occurs: 1. The City deems it substantially complete; 2. All punch list items are finished; 3. The City releases the performance bond; 4. The Developer has put a 2-year warranty and maintenance bond in place; 5. The Developer has completed all property dedications; and 6. The Developer has provided the City with a Bill of Sale for the improvements containing the certified construction costs (stamped by licensed engineer) to the City for determination of the maximum credits available under this Agreement. The City will confirm completeness of the Project by issuing a Final Notice of Completeness to the Developer. Section 12. Project costs. The maximum amount of the credit (or reimbursement) for project costs performed under this Agreement shall be limited to no greater than the engineer’s estimate contained in the City’s transportation impact fee calculation, plus an annual inflator per the CPI-U, or, the actual costs incurred by the Developer, whichever is less. The credits provided under Section 14 below are limited to this maximum credit/reimbursement amount and once the project cost maximum(s) have been achieved through credits or direct reimbursement to Developer, the credits will no longer be available and full impact fees will be due for further development. Section 13. Applicable Impact Fees. The repeal and replacement of the 2005 Transportation DA results in all property owners both within and without the McCormick Property being subject to the City’s established city-wide impact fees as these now exist or may be modified in the future by the City Council. This Agreement further confirms that impact fees, permit fees, capital facilities charges, and other similar fees which are adopted by the City as of the Effective Date of this Agreement may be increased by the City from time to time, and made applicable to permits and approvals for the McCormick Property, as long as such fees and charges apply to similar applications and projects elsewhere in the City. All impact fees shall be paid as set forth in the approved permit or approval, or as addressed in chapter 20.182 of the Port Orchard Municipal Code, except as modified by this Agreement. Nothing in this Agreement restricts or prohibits the City from raising its fees, including transportation impact fees, and the Developer agrees to pay the impact fees at the rates that are in effect at the time when payment is due minus any credits applicable according to this Agreement. Section 14. Impact Fee Credits. The City hereby grants the Developer a credit against transportation impact fees for its costs to finance, design, and construct the McCormick Projects. Page 54 of 110 Development Agreement for Funding Transportation Improvements Page 9 of 19 FG:54082696.4 The credit is available to parcels located in the areas identified and shown on Exhibits A-1 and A-2. The credits will be calculated and applied as follows: a) Each parcel or lot that is developed within the McCormick Property credit area (Exhibits A-1 and A-2) will pay the City’s adopted impact fees until Developer provides documentation to the City that Developer has expended a minimum of $50,000 towards the design or construction of one of the McCormick Projects. At the time of this Agreement, the parties believe that Developer has already met this threshold, therefore, once Developer provides the documentation, the City will begin applying the credit described in this Agreement. b) Once McCormick provides documentation to the City of such $50,000 expenditure, the City will grant a credit in the amount of $1,000 per new home (or per peak pm trip for commercial/multifamily development) against its standard transportation impact fee for each application to develop a lot or parcel within the McCormick Property credit area (Exhibits A-1 and A-2) until such time as the credits granted by the City equal the amount of credit due to Developer under Section 12 above. This credit amount shall be adjusted as follows: i. The $1,000 credit shall be adjusted annually per the CPI-U, such adjustment to occur on March 1st of each year; ii. If the amount outstanding for reimbursement of project costs is less than the credit, then the lesser amount shall be provided as a credit; iii. If the City reimburses the Developer directly with SEPA mitigation funds received from another developer, then that amount shall be deducted dollar for dollar from the amount of project costs outstanding and the credits available will be reduced accordingly. c) Upon completion of each Project, Developer shall submit certified project costs to the City for review and acceptance by the City Engineer. Once these costs and executed Bill of Sale are reviewed and accepted by the City Engineer, the maximum credit due to Developer will be established and will equal the amount of the project costs as so certified in accordance with this subsection and Section 12. The City will grant the credits described in Subsection b) above against the transportation impacts fees that would otherwise be due for development of lots and parcels within the McCormick Property credit area as identified and shown on Exhibits A-1 and A-2. Such credits shall be provided until such time as the Developer receives full credit and/or reimbursement for its project costs or this Agreement terminates, whichever occurs first. The City agrees that these credits are consistent with RCW 82.02.060(4); that they are appropriate in light of the unusual circumstances described in the Recitals above; that they are consistent with the intent of POMC 20.182.080; and that the City Council has legislatively approved this Agreement and exempted these credits for development of the McCormick Projects from the specific provisions of POMC 20.182.080. Page 55 of 110 Development Agreement for Funding Transportation Improvements Page 10 of 19 FG:54082696.4 Section 15. McCormick Land Company Reimbursement. This Agreement reaffirms the City’s obligation to reimburse MLC for construction of the Glenwood Connector Roadway and minor improvements to Feigley Road. The maximum reimbursement amounts outstanding for these projects as of August 1, 2020 is $1,542,239.64. Regardless of any fee credits provided for in this Agreement, the City’s reimbursement for such project shall continue at the rate of $720.80 for each unit of housing constructed or for each PM Peak trip, or fraction thereof, for which an impact fee is assessed in the MLC reimbursement area as depicted on Exhibit C until such time as MLC is fully reimbursed or this Agreement expires, whichever occurs first. This reimbursement amount shall be increased annually by CPI-U (Seattle/Tacoma/Bellevue) for the most recent twelve-month period (January 1st to December 31st) prior to the date of the adjustment. Such adjustment shall take effect on March 1st of each year, commencing on March 1, 2021. Disbursements shall be made annually in January of each year based on the collections from January 1st to December 31st in the prior year, however in 2021, such payment shall only be from collections from August 1 to December 31, 2020 as payment from collections through July 31, 2020 has already occurred. MLC agrees to the repeal of the 2005 Transportation DA and accepts the continued reimbursement under this new Agreement and agrees to be bound by this new Agreement as shown by its signature to this Agreement. This Section 15 shall survive expiration of this Agreement and shall remain in effect until such time as MLC has been fully reimbursed under the terms of this Agreement for construction of the Glenwood Connector Roadway and minor improvements to Feigley Road. Section 16. Dedication of Public Lands. The Developer shall dedicate the land that it owns that is needed to construct the McCormick Projects prior to final completion of each Project. Neither Project shall be deemed completed until such dedications have occurred. In addition, consistent with Section 9 of the 2005 Transportation DA, to the extent that projects on the City’s TIP including Old Clifton Widening and the Feigley Road Roundabout require additional dedications of right-of-way from within the McCormick Property, McCormick will dedicate that portion of the additional right-of-way. Such dedications shall occur within a mutually agreeable timeframe prior to the bid solicitation for the project requiring additional right-of-way. Section 17. Default. a) Subject to extensions of time by mutual consent in writing, failure or delay by either Party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the Party alleging such default or breach shall give the other Party not less than thirty (30) days’ notice in writing, specifying the nature of the alleged default and the manner in which said default may be cured. During this thirty (30) day period, the Party charged shall not be considered in default for purposes of termination or institution of legal proceedings. b) After notice and expiration of the thirty (30) day period, if such default has not been cured or is not being diligently cured in the manner set forth in the notice, the other Party to this Agreement may, at its option, institute legal proceedings pursuant to this Agreement. In addition, the City may decide to file an action to enforce the City’s Codes, and to obtain penalties and costs as provided in the Port Orchard Municipal Code for violations of this Development Page 56 of 110 Development Agreement for Funding Transportation Improvements Page 11 of 19 FG:54082696.4 Agreement and the Code. Section 18. Termination. This Agreement shall terminate upon the expiration of the term identified in Section 7, which expiration date is [INSERT DATE]. Upon termination of this Agreement, the City shall record a notice of such termination in a form satisfactory to the City Attorney that the Agreement has been terminated. In addition, this Agreement shall automatically terminate and be of no further force and effect as to any single-family residence, any other residential dwelling unit or any non- residential building and the lot or parcel upon which such residence or building is located, when it has been approved by the City for occupancy and impact fees have been paid. Section 19. Extension and Modification. Any request for extension or modification, if allowed under the City’s code, shall be subject to the provisions contained in Chapter 20.26 POMC. Section 20. Effect upon Termination on Developer and MLC. Termination of this Agreement as to the Developer or as to MLC shall not affect any of the Developer’s or MLC’s respective obligations to comply with the City Comprehensive Plan and the terms and conditions or any applicable zoning code(s) or subdivision map or other land use entitlements approved with respect to the McCormick Property or the MLC property, or any other conditions specified in the Agreement to continue after the termination of this Agreement or obligations to pay assessments, liens, fees or taxes. Furthermore, if the Agreement expires without the project costs being fully recovered by impact fee credit or mitigation funds, the Developer will no longer be eligible to receive such credits. Provided, however, that Section 15 of this Agreement will survive termination if MLC has not yet been fully reimbursed and this Agreement will only expire as to MLC after both termination and full reimbursement have occurred. Section 21. Effects upon Termination on City. Upon any termination of this Agreement as to the McCormick Property, or any portion thereof, or as to MLC property, the entitlements, conditions of development, limitations on fees and all other terms and conditions of this Agreement shall no longer be vested hereby with respect to the property affected by such termination (provided that vesting of such entitlements, conditions or fees may then be established for such property pursuant to the then existing planning and zoning laws). The City will be under no obligation to provide any additional credits or reimbursement to Developer even if the project costs have not been fully recovered at the time of expiration or termination. Section 22. Assignment and Assumption. The Developer shall have the right to sell, assign or transfer this Agreement with all rights, title and interests therein to any person, firm or corporation at any time during the term of this Agreement with a sale of the underlying property. Developer shall provide the City with written notice of any intent to sell, assign, or transfer all or a portion of the McCormick Property, at least 30 days in advance of such action. A transfer by Developer will not impact the rights of MLC under this Agreement. This requirement for notice, however, does not apply to the sale by Developer of individual residential lots approved by the City for development of houses. Page 57 of 110 Development Agreement for Funding Transportation Improvements Page 12 of 19 FG:54082696.4 Section 23. Binding on Successors; Covenants Running with the Land. The conditions and covenants set forth in this Agreement and incorporated herein by the Exhibits shall run with the land and the benefits and burdens shall bind and inure to the benefit of the Parties. The Developer and every purchaser, assignee or transferee of an interest in the McCormick Property, or any portion thereof, shall be obligated and bound by the terms and conditions of this Agreement, and shall be the beneficiary thereof and a Party thereto, but only with respect to the McCormick Property, or such portion thereof, sold, assigned or transferred to it. Any such purchaser, assignee or transferee shall observe and fully perform all of the duties and obligations of a Developer contained in this Agreement, as such duties and obligations pertain to the portion of the McCormick Property sold, assigned or transferred to it. Section 24. Amendment to Agreement; Effect of Agreement on Future Actions. No waiver, alteration, or modification to any of the provisions of this Agreement shall be binding unless in writing, signed by the duly authorized representatives of the Parties, be consistent with Chapter 20.26 POMC, and, where considered substantive as determined by the Director, follow the same procedures set forth in Chapter 20.26 POMC. However, nothing in this Agreement shall prevent the City Council from making any amendment to its Comprehensive Plan, Zoning Code, Official Zoning Map or development regulations, or to impacts fees that affect the McCormick Property in the same manner as other properties, after the Effective Date of this Agreement. Section 25. Releases. a) General. Developer may free itself from further obligations relating to the sold, assigned, or transferred property, provided that the buyer, assignee or transferee expressly assumes the obligations under this Agreement as provided herein. b) Previously collected impact fees. Developer expressly waives and forever releases City from any and all claims it may have with regards to the amount or usage of any transportation impact fees which the City collected from property that was subject to the 2005 Transportation DA prior to the effective date of this Agreement. Developer further agrees that City can utilize these previously collected funds on any project it deems appropriate and is not limited to the projects outlined in the 2005 Transportation DA. These projects include, but are not limited, to the Old Clifton Road/Anderson Hill Road Roundabout (Project 2.07), the Old Clifton Road non-motorized shoulder and pedestrian improvements (Project 1.5A), Old Clifton Widening Design (Project 1.5A), and Bethel Avenue (Project 1.3). c) Obligations to Kitsap County Extinguished. This Agreement being a complete replacement to the 2005 Transportation DA, neither Party has any obligations to Kitsap County. Section 26. Notices. Notices, demands, correspondence to the City, MLC, and/or Developer (as applicable) shall be sufficiently given if dispatched by pre-paid first-class mail to the addresses of the parties as designated in “Written Notice” Section 38 below. Notice to the City shall be to the attention of both the City Clerk and the City Attorney. Notices to successors-in- interest of the Developer shall be required to be given by the City only for those successors-in- interest who have given the City written notice of their address for such notice. The parties Page 58 of 110 Development Agreement for Funding Transportation Improvements Page 13 of 19 FG:54082696.4 hereto may, from time to time, advise the other of new addresses for such notices, demands or correspondence. Section 27. Reimbursement for Agreement Expenses of the City. Developer agrees to reimburse the City for actual expenses incurred over and above fees paid by Developer as an applicant incurred by City directly relating to this Agreement, including recording fees, publishing fees and reasonable staff and consultant costs not otherwise included within application fees. This Agreement shall not take effect until the fees provided for in this section, as well as any processing fees owed to the City for the transportation project known as the Campus Parkway Roundabout are paid to the City. Upon payment of all expenses, the Developer may request written acknowledgement of all fees. Such payment of all fees shall be paid, at the latest, within thirty (30) days from the City’s presentation of a written statement of charges to the Developer. Section 28. Applicable Law, Resolution of Disputes, and Attorneys’ Fees. If any dispute arises between the City and Developer under any of the provisions of this Agreement, jurisdiction of any resulting litigation shall be filed in Kitsap County Superior Court, Kitsap County, Washington or the U.S. District Court for Western Washington. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. The non- prevailing Party in any action brought to enforce this Agreement shall pay the other Parties' expenses and reasonable attorney's fees. Section 29. No Third-Party Beneficiaries. Except as otherwise provided herein, this Agreement shall not create any rights enforceable by any party who is not a Party to this Agreement. Section 30. City’s right to breach. The parties agree that the City may, without incurring any liability, engage in action that would otherwise be a breach if the City makes a determination on the record that the action is necessary to avoid a serious threat to public health and safety, or if the action is required by federal or state law. Section 31. Developer’s Compliance. The City’s duties under the agreement are expressly conditioned upon the Developer’s or Property Owner’s substantial compliance with each and every term, condition, provision and/or covenant in this Agreement, including all applicable federal, state, and local laws and regulations and the Developer’s/Property Owner’s obligations as identified in any approval or project permit for the property identified in this Agreement. Section 32. Limitation on City’s Liability for Breach. Any breach of this Agreement by the City shall give right only to damages under state contract law and shall not give rise to any liability under Chapter 64.40 RCW, the Fifth and Fourteenth Amendments to the U.S. Constitution, or similar state constitutional provisions. Section_33. Third Party Legal Challenge. In the event any legal action or special proceeding is commenced by any person or entity other than a Party to challenge this Agreement or any provision herein, the City may elect to tender the defense of such lawsuit or individual claims in the lawsuit to Developer . In such event, Developer shall hold the City harmless from Page 59 of 110 Development Agreement for Funding Transportation Improvements Page 14 of 19 FG:54082696.4 and defend the City from all costs and expenses incurred in the defense of such lawsuit or individual claims in the lawsuit, including but not limited to, attorneys’ fees and expenses of litigation. The Developer shall not settle any lawsuit without the consent of the City. The City shall act in good faith and shall not unreasonably withhold consent to settle. Section 34. Specific Performance. The parties specifically agree that damages are not an adequate remedy for breach of this Agreement, and that the parties are entitled to compel specific performance of all material terms of this Development Agreement by any Party in default hereof. Section 35. Recording. This Agreement shall be recorded against the property with the real property records of the Kitsap County Auditor. During the term of the Agreement, it is binding upon the owners of the property and any successors in interest to such property. Section 36. Severability. If any phrase, provision or section of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, or if any provision of this Agreement is rendered invalid or unenforceable according to the terms of any statute of the State of Washington which became effective after the effective date of the ordinance adopting this Development Agreement, and either Party in good faith determines that such provision or provisions are material to its entering into this Agreement, that Party may elect to terminate this Agreement as to all of its obligations remaining unperformed. Section 37. Non-Waiver of Breach. The failure of a Party to insist upon strict performance of any of the covenants and agreements contained herein, or to exercise any option herein conferred in one or more instances shall not be construed to be a waiver or relinquishment of said covenants, agreements, or options, and the same shall be and remain in full force and effect. Section 38. Written Notice. All written communications regarding enforcement or alleged breach of this Agreement shall be sent to the parties at the addresses listed below, unless notified to the contrary. Unless otherwise specified, any written notice hereunder shall become effective upon the date of both emailing and mailing by registered or certified mail, and shall be deemed sufficiently given if sent to the addressee at the address stated below: McCORMICK: CITY: Eric Campbell 12332 NE 115th Place Kirkland, WA 98033 eric@mspgroupllc.com Nick Tosti 805 Kirkland Avenue, Suite 200 Kirkland, WA 98033 nicktosti@gmail.com Mayor City of Port Orchard 216 Prospect Street Port Orchard WA 98366 rputaansuu@cityofportorchard.us Copies shall also be transmitted to the City Clerk and City Attorney at the above address. Page 60 of 110 Development Agreement for Funding Transportation Improvements Page 15 of 19 FG:54082696.4 GEM 1, LLC / McCORMICK LAND COMPANY Doug Skrobut __________________ __________________ dskrobut@gmail.com Section 39. Time is of the essence. All time limits set forth herein are of the essence. The Parties agree to perform all obligations under this Agreement with due diligence. Section 40. Entire Agreement. The written provisions and terms of this Agreement, together with the Exhibits attached hereto, shall supersede all prior verbal statements of any officer or other representative of the parties, and such statements shall not be effective or be construed as entering into or forming a part of or altering in any manner whatsoever, this Agreement. The entire agreement between the parties with respect to the subject matter hereunder is contained in this Agreement and exhibits thereto. IN WITNESS WHEREOF, the parties have executed this Agreement on this day of , 2021. MCCORMICK COMMUNITIES, LLC CITY OF PORT ORCHARD By: By: Its: Its: Mayor GEM 1, LLC/McCORMICK LAND COMPANY By: Its: APPROVED AS TO FORM: APPROVED AS TO FORM: Patrick Schneider Jennifer S. Robertson Attorney for McCormick Attorney for Port Orchard Page 61 of 110 Development Agreement for Funding Transportation Improvements Page 16 of 19 FG:54082696.4 APPROVED AS TO FORM: ATTEST: Duana Kolouskova Brandy Rinearson Attorney for GEM 1, LLC/MLC Port Orchard City Clerk Page 62 of 110 Development Agreement for Funding Transportation Improvements Page 17 of 19 FG:54082696.4 NOTARY BLOCK FOR PORT ORCHARD STATE OF WASHINGTON ) ) ss. COUNTY OF KITSAP ) I certify that I know or have satisfactory evidence that Mr. Rob Putaansuu is the person who appeared before me, and said person acknowledged that he signed this instrument, on oath stated that he was authorized to execute the instrument and acknowledged it as the Mayor of Port Orchard to be the free and voluntary act of such Party for the uses and purposes mentioned in the instrument. Dated: 20 (print or type name) NOTARY PUBLIC in and for the State of Washington, residing at: My Commission expires: Page 63 of 110 Development Agreement for Funding Transportation Improvements Page 18 of 19 FG:54082696.4 NOTARY BLOCK FOR McCORMICK COMMUNITIES STATE OF WASHINGTON ) ) ss. COUNTY OF ) I certify that I know or have satisfactory evidence that Mr. is the person who appeared before me, and said person acknowledged that (he/she) signed this instrument, on oath stated that (he/she) was authorized to execute the instrument and acknowledged it as the of McCormick Communities, LLC to be the free and voluntary act of such Party for the uses and purposes mentioned in the instrument. Dated: 20 (print or type name) NOTARY PUBLIC in and for the State of Washington, residing at: My Commission expires: Page 64 of 110 Development Agreement for Funding Transportation Improvements Page 19 of 19 FG:54082696.4 NOTARY BLOCK FOR GEM 1 / McCORMICK LAND COMPANY STATE OF WASHINGTON ) ) ss. COUNTY OF ) I certify that I know or have satisfactory evidence that Mr. Doug Skorbut is the person who appeared before me, and said person acknowledged that (he/she) signed this instrument, on oath stated that (he/she) was authorized to execute the instrument and acknowledged it as the of GEM 1, LLC/McCormick Land Company to be the free and voluntary act of such Party for the uses and purposes mentioned in the instrument. Dated: 20 (print or type name) NOTARY PUBLIC in and for the State of Washington, residing at: My Commission expires: Page 65 of 110 McCormick North McCormick Woods 052301-4-023-2008 042301-3-010-2006 052301-4-027-2004 6031-000-131-0002 052301-4-024-2007 5552-000-045-0008 052301-4-025-2006 092301-1-005-2002 052301-4-026-2005 092301-4-004-2007 052301-4-013-2000 092301-1-009-2008 042301-3-011-2005 092301-4-005-2006 092301-4-003-2008 McCormick West 092301-4-002-2009 082301-2-002-2004 162301-1-021-2003 082301-2-003-2003 162301-1-020-2004 082301-1-013-2003 162301-1-019-2007 082301-2-004-2101 082301-1-010-2006 082301-1-014-2002 172301-2-002-2003 172301-2-004-2001 172301-2-003-2002 172301-2-006-2009 172301-2-005-2000 172301-2-007-2008 172301-3-004-2009 Exhibit A-1 McCormick Property List of Parcels Subject to Impact Fee Credit Page 66 of 110 North West Legend McCormick North McCormick West McCormick Woods North West Wd Exhibit A-2 McCormick Property Maps of Parcels/Areas Subject to Impact Fee Credit Wd Wd Wd Wd Wd Wd Wd Page 67 of 110 McCormick North McCormick Woods 052301-4-023-2008 042301-3-010-2006 052301-4-027-2004 6031-000-131-0002 052301-4-024-2007 5552-000-045-0008 052301-4-025-2006 092301-1-005-2002 052301-4-026-2005 092301-4-004-2007 052301-4-013-2000 092301-1-009-2008 042301-3-011-2005 092301-4-005-2006 092301-4-003-2008 McCormick West 092301-4-002-2009 082301-2-002-2004 162301-1-021-2003 082301-2-003-2003 162301-1-020-2004 082301-1-013-2003 162301-1-019-2007 082301-2-004-2101 082301-1-010-2006 Legacy Lots 082301-1-014-2002 5190-000-018-0009 172301-2-002-2003 6031-000-032-0002 172301-2-004-2001 6031-000-025-0001 172301-2-003-2002 6031-000-063-0004 172301-2-006-2009 5161-000-021-0009 172301-2-005-2000 5145-000-023-0008 172301-2-007-2008 5139-000-013-0008 172301-3-004-2009 6031-000-074-0001 Exhibit B-1 List of Parcels with Vested Concurrency Page 68 of 110 Legend McCormick North McCormick West McCormick Woods North West Wd Exhibit B-2 Map of Parcels/Areas with Vested Concurrency Golf Facilities GC 122 RESERVED PM PEAK TRIPS 971 1,944 634 North West GC GC Wd Wd Wd Wd Wd Wd See Exhibit B1 for legacy lots vested to concurrency with this agreement Page 69 of 110 Exhibit C Boundary of 2005 Traffic Agreement Page 70 of 110 Page 71 of 110 Page 72 of 110 Page 73 of 110 Page 74 of 110 Page 75 of 110 Page 76 of 110 Page 77 of 110 Page 78 of 110 Page 79 of 110 Page 80 of 110 Page 81 of 110 Page 82 of 110 Page 83 of 110 Page 84 of 110 Page 85 of 110 Page 86 of 110 Page 87 of 110 Page 88 of 110 Page 89 of 110 Page 90 of 110 Page 91 of 110 Page 92 of 110 Page 93 of 110 Page 94 of 110 Page 95 of 110 Page 96 of 110 Page 97 of 110 Page 98 of 110 Page 99 of 110 Page 100 of 110 Page 101 of 110 Page 102 of 110 Page 103 of 110 City of Port Orchard Work Study Session Executive Summary Issue Title: Water & Sewer Credit Discussion Meeting Date: January 19, 2021 Time Required: 30 minutes Attendees: N/A Action Requested at This Meeting: Provide any questions and comments on the proposed policy language and concept for changing the Water & Sewer Credit POMC Language. Summary: The City Council have been discussing the current Port Orchard Municipal Code regarding water and sewer credit for Capital facility charges since November 2017. Most recently, the City Council reviewed the current POMC on water & sewer credit for capital facility charges on 12.08.2020. The council discussed and agreed the current code language does not provide a meaningful incentive for developers to build infrastructure. Council requested the City staff evaluate credit options to provide an incentive without jeopardizing the City’s enterprise capital projects. Staff has discussed a credit for the additional capacity provided to the City from the completion of an infrastructure project beyond the need of the development. This will be referred to as the General Facility Charge Credit for excess capacity. General Facility Charge Credit Proposal: The credit will be the calculated value of the proportionate certified project cost for the excess capacity of the facility. The credit shall not exceed the value of the excess capacity created. The credit shall not exceed the amount of the total general facility charge due and payable to the utility that applies to the property or development requiring service because of the improvements Alternatives: N/A Recommendation: N/A Relationship to Comprehensive Plan: N/A Attachments: Sewer and Water Credit presentation. Follow-up Notes & Outcomes: Page 104 of 110 Sewer & Water Credit1.19.2021Page 105 of 110 Sewer and Sewer Credit•Council discussed the current credit structure in the POMC•It was discussed the current credit language doesn’t provide a meaningful incentive for developers to build infrastructure•Council requested the City staff evaluate Credit optionsGeneral Facility Charge Credit Proposal: Excessive CapacityStaff discussed a credit for the additional capacity provided to the City from the completion of an infrastructure project beyond the need of the development. The credit will be the calculated value of the proportionate certified project cost for the excess capacity of the facilityCredit shall not exceed the value of the excess capacity created. Credit shall not exceed the amount of the total general facility charge due and payable to the utility that applies to the property or development requiring service because of the improvementsPage 106 of 110 Sewer CFC Credit Example 1Project PercentageCertified Project Cost $ 2,500,000 Project Cost Attributed to Developer Connections $ 625,000 25%Project Cost Attributed to Excess (Future) Connections $ 1,875,000 75%Connections-Facilty CreatedDeveloper's Connections25025%Excess (Future) Connection75075%Total Connection (Facility)1,000 Estimate CFC RevenueCapital Facility Charge$ 8,525 Revenue from Developer's Connections$ 2,131,250 Revenue from Excess (Future) Connection$ 6,393,750 Revenue from Total Connection (Facility)$ 8,525,000 Developer Connections represents25% of the Connections for this facility or a total connection count of250.00 Developer portional project costs represents25% of the cost of building the facility or a total proportionate cost of $ 625,000 Developer is building the excess capacity which represents75% of the cost of building the facility or a total proportionate cost of $ 1,875,000 Developer is eligible for a total credit value of the lessor ofCertified excess capacity Proportional cost $ 1,875,000 Total developer connection fee revenue est. to be paid $ 2,131,250 Page 107 of 110 Sewer CFC Credit Example-2Project PercentageCertified Project Cost $ 2,500,000 Project Cost Attributed to Developer Connections $ 1,250,000 50%Project Cost Attributed to Excess (Future) Connections $ 1,250,000 50%Connections-Facilty CreatedDeveloper's Connections50050%Excess (Future) Connection50050%Total Connection (Facility)1,000 Estimate CFC RevenueCapital Facility Charge$ 8,525 Revenue from Developer's Connections$ 4,262,500 Revenue from Excess (Future) Connection$ 4,262,500 Revenue from Total Connection (Facility)$ 8,525,000 Developer Connections represents50% of the Connections for this facility or a total connection count of500.00 Developer portional project costs represents50% of the cost of building the facility or a total proportionate cost of $ 1,250,000 Developer is building the excess capacity which represents50% of the cost of building the facility or a total proportionate cost of $ 1,250,000 Developer is eligible for a total credit value of the lessor ofCertified excess capacity Proportional cost $ 1,250,000 Total developer connection fee revenue est. to be paid $ 4,262,500 Page 108 of 110 Sewer CFC Credit Example-3Project PercentageCertified Project Cost $ 2,500,000 Project Cost Attributed to Developer Connections $ 1,875,000 75%Project Cost Attributed to Excess (Future) Connections $ 625,000 25%Connections-Facilty CreatedDeveloper's Connections750 75%Excess (Future) Connection250 25%Total Connection (Facility) 1,000 Estimate CFC RevenueCapital Facility Charge$ 8,525 Revenue from Developer's Connections$ 6,393,750 Revenue from Excess (Future) Connection$ 2,131,250 Revenue from Total Connection (Facility)$ 8,525,000 Developer Connections represents75% of the Connections for this facility or a total connection count of 750.00 Developer portional project costs represents75% of the cost of building the facility or a total proportionate cost of $ 1,875,000 Developer is building the excess capacity which represents25% of the cost of building the facility or a total proportionate cost of $ 625,000 Developer is eligible for a total credit value of the lessor ofCertified excess capacity Proportional cost $ 625,000 Total developer connection fee revenue est. to be paid $ 6,393,750 Page 109 of 110 Discussion & QuestionsPage 110 of 110