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HomeMy WebLinkAboutAgenda Packet - CC - 2017.01.03City Council City of Burlingame Meeting Agenda - Final BURLINGAME CITY HALL 501 PRIMROSE ROAD BURLINGAME, CA 94010 Council Chambers7:00 PMTuesday, January 3, 2017 CLOSED SESSION - 6:30 p.m. - Conference Room A Approval of the Closed Session Agendaa. Closed Session Community Forum: Members of the Public May Address the Council on any Item on the Closed Session Agenda at this Time b. Adjournment into Closed Sessionc. Conference with Legal Counsel - Existing Litigation (Govt. Code 54956.9): Name of Case: Wyatt v. City of Burlingame, et al., ND Cal. d. 1. CALL TO ORDER - 7:00 p.m. - Council Chambers 2. PLEDGE OF ALLEGIANCE TO THE FLAG 3. ROLL CALL 4. REPORT OUT FROM CLOSED SESSION 5. UPCOMING EVENTS 6. PRESENTATIONS Presentation of Peace Officer Standards and Training Executive Certificate to Police Chief a. 7. PUBLIC COMMENTS, NON-AGENDA Members of the public may speak about any item not on the agenda. Members of the public wishing to suggest an item for a future Council agenda may do so during this public comment period. The Ralph M . Brown Act (the State local agency open meeting law) prohibits the City Council from acting on any matter that is not on the agenda. 8. APPROVAL OF CONSENT CALENDAR Consent calendar items are usually approved in a single motion, unless pulled for separate discussion . Any member of the public wishing to comment on an item listed here may do so by submitting a speaker slip for that item in advance of the Council’s consideration of the consent calendar. Page 1 City of Burlingame Printed on 12/29/2016 January 3, 2017City Council Meeting Agenda - Final Adoption of City Council Meeting Minutes from December 19, 2016a. Meeting MinutesAttachments: Confirmation of the Mayor's Council Assignments for 2017b. Staff Report Council Assignments Attachments: Adoption of a Resolution Appointing Barbara A. Dillon as an Interim Employee under California Government Code Section 21221(h) c. Staff Report Resolution Attachments: Adoption of a Resolution Awarding a Construction Contract to Marina Mechanical for the Police Department HVAC Improvements, City Project No. 84330, and Authorizing the City Manager to Execute the Construction Contract d. Staff Report Resolution Bid Summary Construction Contract Project Location Map Attachments: Adoption of a Resolution Awarding a Contract with IPS Group, Inc ., for the Procurement and Installation of Smart Parking Meters in the Downtown Area, City Project No. 84410, and Authorizing the City Manager to Execute the Agreement e. Staff Report Resolution IPS Group Inc Agreement Location Map Attachments: Adoption of a Resolution Authorizing Amendment of the City Manager ’s Employment Agreement to Provide a Salary Increase of 3% f. Staff Report Resolution Contract Amendment Attachments: Adoption of a Resolution Authorizing Expenditures for the Code Enforcement Functiong. Staff Report Resolution Attachments: Page 2 City of Burlingame Printed on 12/29/2016 January 3, 2017City Council Meeting Agenda - Final Approval of the Purchase of Max Solutions Field Scheduling Softwareh. Staff Report Field Scheduling Software Comparison Attachments: 9. PUBLIC HEARINGS (Public Comment) Public Hearing and Introduction of an Ordinance Rezoning Property from R -4 (High Density Multi-family Residential) to CAR (California Drive Auto Row) and Consideration of a General Plan Amendment to Designate Property from R -4 Incentive District to California Drive Mixed Use District; a Mitigated Negative Declaration Pursuant to the California Environmental Quality Act (CEQA); Design Review; and a Vesting Tentative Subdivision Map for a New Automobile Service Facility at an Existing Automobile Dealership on Property Located at 85 California Drive a. Staff Report Ordinance Revised Zoning Map PC Minutes (Draft) - 121216 PC Staff Report - 121216 PC Staff Report Attachments - 121216 Initial Study Initial Study Errata Mitigated Negative Declaration Mitigation Monitoring & Reporting Program Public Works Memo Re: Maps Project Plans Attachments: Public Hearing and Introduction of an Ordinance of the City Council of the City of Burlingame, Amending Title 21 – Historic Resource Preservation of the Burlingame Municipal Code by Adding Provisions Defining “Adaptive Re-Use” and Outlining Procedures for Granting Approval of a Conditional Use Permit for Adaptive Re -Use of Historic Resources within the City of Burlingame b. Staff Report Ordinance November 14, 2016 Planning Commission Minutes Attachments: Page 3 City of Burlingame Printed on 12/29/2016 January 3, 2017City Council Meeting Agenda - Final Introduction of an Ordinance Amending Chapter 13.36.040 of the Burlingame Municipal Code to Revise and Establish a ‘Two-Hour Parking’ Restriction from 2:00 P.M. to 6:00 P.M., Monday Through Friday, on Carolan Avenue from North Lane to Oak Grove Avenue c. Staff Report Ordinance Draft Revised Chapter 13.36.040 of the Burlingame Municipal Code TSPC Staff Report dated October 13 2016 Staff Presentation to TSPC dated November 10, 2016 Location Map Attachments: 10. STAFF REPORTS AND COMMUNICATIONS (Public Comment) Acceptance of the Comprehensive Annual Financial Report for the Year Ended June 30, 2016 a. Staff Report FY 2015-16 CAFR Attachments: Discussion of Commercial Linkage Fee and Residential Housing Impact Fee Nexus Studies b. Staff Report Commercial Impact Fee Nexus Study Residential Impact Fee Nexus Study Attachments: Implementation of a Pilot Program to Introduce a 15 MPH School Speed Limit Along Quesada Way between Trousdale Drive and Davis Drive c. Staff Report Location Map Attachments: 11. COUNCIL COMMITTEE AND ACTIVITIES REPORTS AND ANNOUNCEMENTS Councilmembers report on committees and activities and make announcements. 12. FUTURE AGENDA ITEMS 13. ACKNOWLEDGMENTS The agendas, packets and meeting minutes for the Planning Commission, Traffic, Parking & Safety Commission, Beautification Commission, Parks and Recreation Commission and Library Board of Trustees are available online at: www.burlingame.org. 14. ADJOURNMENT Page 4 City of Burlingame Printed on 12/29/2016 January 3, 2017City Council Meeting Agenda - Final Notice: Any attendees wishing accommodations for disabilities please contact the City Clerk at (650)558-7203 at least 24 hours before the meeting. A copy of the Agenda Packet is available for public review at the City Clerk's office, City Hall, 501 Primrose Road, from 8:00 a.m. to 5:00 p.m. before the meeting and at the meeting. Visit the City's website at www.burlingame.org. Agendas and minutes are available at this site. NEXT CITY COUNCIL MEETING - Next regular City Council Meeting - Tuesday,January 17, 2017 VIEW REGULAR COUNCIL MEETING ONLINE AT WWW.BURLINGAME.ORG - GO TO "CITY COUNCIL VIDEOS" Any writings or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection at the Water Office counter at City Hall at 501 Primrose Road during normal business hours. Page 5 City of Burlingame Printed on 12/29/2016 Agenda Item 8a Meeting Date: 1/03/17 Burlingame City Council December 19, 2016 Unapproved Minutes 1 BURLINGAME CITY COUNCIL Unapproved Minutes Regular Meeting on December 19, 2016 1. CALL TO ORDER A duly noticed regular meeting of the Burlingame City Council was held on the above date in t he City Hall Council Chambers. 2. PLEDGE OF ALLEGIANCE TO THE FLAG The pledge of allegiance was led by Anne LeClair. 3. ROLL CALL MEMBERS PRESENT: Beach, Brownrigg, Colson, Keighran, Ortiz MEMBERS ABSENT: None 4. REPORT OUT FROM CLOSED SESSION There was no closed session. 5. UPCOMING EVENTS Mayor Keighran reviewed the upcoming events taking place in the City. 6. PRESENTATIONS There were no presentations. 7. PUBLIC COMMENT There were no public comments. Agenda Item 8a Meeting Date: 1/03/17 Burlingame City Council December 19, 2016 Unapproved Minutes 2 8. CONSENT CALENDAR Mayor Keighran asked the Councilmembers and the public if they wished to remove any item from the Consent Calendar. No items were pulled. Councilmember Brownrigg made a motion to approve the Consent Calendar; seconded by Vice Mayor Ortiz. The motion passed unanimously by voice vote, 5-0. a. APPROVAL OF CITY COUNCIL MEETING MINUTES DECEMBER 5, 2016 City Clerk Hassel-Shearer requested Council’s approval of City Council Meeting Minutes for December 5, 2016. b. ADOPTION OF THE 2017 CITY COUNCIL CALENDAR City Clerk Hassel-Shearer requested Council’s approval of the 2017 City Council Calendar. c. ADOPTION OF A RESOLUTION DECLARING THE RESULTS OF THE MUNICIPAL ELECTION HELD ON NOVEMBER 8, 2016 City Clerk Hassel-Shearer asked Council to adopt Resolution Number 114-2016. d. ADOPTION OF A RESOLUTION AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND EXECUTE AN AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT WITH BUREAU VERITAS NORTH AMERICA, INC. FOR PLAN CHECK AND BUILDING INSPECTION SERVICES FOR FISCAL YEAR 2016-2017 TO INCREASE THE CONTRACT AMOUNT BY $419,000 TO COVER EXPECTED EXPENSES RELATED TO TWO LARGE CONSTRUCTION PROJECTS SUBMITTED TO THE BUILDING DIVISION FOR PERMITTING IN DECEMBER 2016 CDD Meeker asked Council to adopt Resolution Number 115-2016. e. ADOPTION OF A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN ADMINISTRATIVE SERVICES AGREEMENT WITH NAVIA BENEFIT SOLUTIONS TO ADMINISTER THE HEALTH FLEXIBLE SPENDING ARRANGEMENT AND DEPENDENT CARE FLEXIBLE SPENDING ARRANGEMENT (FSA) PLANS, AS WELL AS THE DENTAL AND VISION REIMBURSEMENT PLANS FOR CITY EMPLOYEES; AND AUTHORIZING THE CITY MANAGER TO EXECUTE A DIRECT DEBIT AND CREDIT AUTHORIZIATION AGREEMENT WITH NAVIA BENEFIT SOLUTIONS HR Director Loomis asked Council to adopt Resolution 116-2016. Agenda Item 8a Meeting Date: 1/03/17 Burlingame City Council December 19, 2016 Unapproved Minutes 3 f. ADOPTION OF A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE SIDE LETTER AGREEMENTS WITH THE POLICE OFFICERS ASSOCIATION, POLICE ADMINISTRATORS UNIT, TEAMSTERS AND THE AFSCME LOCAL 829 ADMINISTRATIVE AND MAINTENANCE UNITS HR Director Loomis asked Council to adopt Resolution Number 117-2016. 9. PUBLIC HEARINGS a. ADOPTION OF A RESOLUTION APPROVING AND LEVYING 2017 SAN MATEO COUNTY TOURISM BUSINESS IMPROVEMENT DISTRICT ASSESSMENTS ON HOTEL BUSINESSES WITHIN THE DISTRICT Finance Director Augustine asked Council to adopt Resolution Number 118-2016. Finance Director Augustine stated that at the November 7, 2016 City Council meeting, the Council accepted TBID’s report. She recommended that if there wasn’t a majority protest, Council should adopt Resolution Number 118-2016 to levy assessments for 2017 on hotel businesses within the district. Mayor Keighran asked the City Clerk if there was a majority protest. City Clerk Hassel-Shearer replied that she had not received any protests. Mayor Keighran opened the public hearing. No one spoke. Councilmember Colson made a motion to adopt Resolution Number 118-2016; seconded by Councilmember Beach. The motion passed unanimously by voice vote, 5-0. Councilmember Brownrigg expressed his appreciation for Ms. LeClair and the San Mateo County Tourism Bureau as hotels are the City’s largest source of income. Therefore, he stated it is with great pleasure that the City works with the Tourism Bureau. b. EXTENSION OF AN INTERIM URGENCY ORDINANCE REGULATING CULTIVATION AND PROHIBITING THE MANUFACTURE, PROCESSING, LABORATORY TESTING, LABELING, SOTRING, WHOLESALE, AND RETAIL DISTRIBUTION OF MARIJUANA IN THE CITY OF BURLINGAME PURSUANT TO GOVERNMENT CODE SECTION 65858(a) City Attorney Kane asked Council to adopt Ordinance 1935. City Attorney Kane stated that Ordinance 1935 is an extension of the urgency ordinance that Council adopted at the November 7, 2016 meeting. She stated that urgency ordinances require a 4/5ths vote. Agenda Item 8a Meeting Date: 1/03/17 Burlingame City Council December 19, 2016 Unapproved Minutes 4 City Attorney explained that the extension was necessary as the first urgency ordinance could only be imposed for 45 days. Therefore, staff is recommending extending the ordinance to allow time to research options and plan for the impact of the passage of Proposition 64. Councilmember Beach asked if Council would be considering more regulations on this subject in 2017. City Attorney Kane replied that the City can extend the ordinance one more time. She stated that pursuant to the Government Code, the City must undertake actions to address the factors that originally called for the urgency ordinance. Accordingly, she stated that the Council would be further discussing this matter during the next year. Mayor Keighran asked the City Clerk to read the title of the ordinance. City Clerk Hassel-Shearer read the title. Councilmember Beach made a motion to introduce the ordinance and waive further reading; seconded by Councilmember Brownrigg. The motion passed unanimously by voice vote, 5-0. Mayor Keighran opened up the public hearing for public comment. No one spoke. Mayor Keighran asked for a roll call vote on the ordinance. The Ordinance passed unanimously by roll call; 5-0. 10. STAFF REPORTS AND COMMUNICATIONS There were no staff reports. 11. COUNCIL COMMITTEE AND ACTIVITIES REPORTS AND ANNOUNCEMENTS Mayor Keighran asked Council if they would forgo reviewing their committee and activities report in order to proceed with the rotation. Councilmembers agreed. 12. FUTURE AGENDA ITEMS There were no future agenda items. 13. ACKNOWLEDGEMENTS a. NOVEMBER, 2016 PERMIT ACTIVITY Agenda Item 8a Meeting Date: 1/03/17 Burlingame City Council December 19, 2016 Unapproved Minutes 5 14. CEREMONIAL a. ROTATION OF MAYOR AND VICE MAYOR Mayor Keighran introduced Supervisor Dave Pine, former Councilmember John Root, and Hillsborough Mayor Marie Chuang. Mayor Keighran reviewed the Council’s past year. She discussed the fact that the Council started off the year with two new Councilmembers; Donna Colson and Emily Beach; who both hit the ground running. She reviewed the events of 2016 explaining that the City and Council had a lot on their plate from the beginning with the California Republican Party Convention. She noted the Council’s work in 2016; including the City’s inclusion in Peninsula Clean Energy and the discussion of a potential tax measure to fund bike paths and a new community center and other benefits for the City. As well, she spoke about the agreement the City reached with Caltrans to study El Camino Real and the importance of the Broadway Grade Separation. Mayor Keighran reviewed the work staff had done to repair trees, storm drains, streets and sidewalks in the City. Mayor Keighran discussed the importance of the current review of the General Plan. She explained how the community’s input will help Burlingame plan for the future. She stated that this included the need to build more housing. She reviewed the Summerhill project that will provide 25 units and the City’s plan to work with a developer to build affordable housing on Lots F and N. She thanked the City Council, city staff and residents for their hard work over the past year. Mayor Keighran stated that as the City continues to grow the City must grow intelligently so as to not only preserve the City’s history but also meet the needs of future generations. In closing, she stated that she looked forward to another productive year and asked the community to embrace and renew their collective commitment to the City. Mayor Keighran explained how the rotation in the City worked. She stated that in 1999 the Council adopted a formal rotation procedure to ensure that each councilmember will become mayor in a routine, pre- established order. With that she introduced Michael Brownrigg as the new Vice Mayor and Ricardo Ortiz as the new Mayor. Mayor Ortiz presented Mayor Keighran with a plaque to thank her for her year of work as Mayor. Mayor Ortiz discussed how well the Council worked together even when they disagreed. He thanked the staff for their hard work and commitment to the City. As well, he thanked the residents who served on the Commissions for their dedication to the community. Agenda Item 8a Meeting Date: 1/03/17 Burlingame City Council December 19, 2016 Unapproved Minutes 6 Mayor Ortiz stated that what makes Burlingame special is how involved residents get in the community from serving on city committees to attending council meetings and giving public comment. Mayor Ortiz thanked his family and friends for attending, including his parents who flew in from Colombia. 15. ADJOURNMENT Mayor Ortiz adjourned the meeting at 7:33pm. Respectfully submitted, Meaghan Hassel-Shearer City Clerk 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Meaghan Hassel-Shearer, City Clerk – (650) 558-7203 Subject: Confirmation of the Mayor’s Council Assignments for 2017 RECOMMENDATION Staff recommends the City Council review, make changes if necessary and approve the Mayor’s Council assignments for 2017. Exhibit:  2017 Council Assignments CITY OF BURLINGAME 2017 COUNCIL ASSIGNMENTS – Revised 1/03/17 Committee Schedule Comments Bold names are members, alternates in parentheses. 1 ABAG – City Delegate Quarterly Brownrigg (Ortiz) 2 Airport Land Use Commission Quarterly meetings held at Burlingame City Hall C/CAG subcom- mittee Ortiz (Beach) 3 Airport Round Table Meets quarterly on 1st Wednesday each month, 7 p.m. Ortiz (Brownrigg) 4 Audit Committee Meets 2-3 times per year, including once in December Brownrigg & Colson 5 Bay Area Water Supply and Conservation Agency (BAWSCA) Meets 3rd Thursday of every other month, starting January O'Mahony 6 Caltrain Modernization Policymaker Group Monthly Beach (Ortiz) 7 Central County Fire Board For 2016, meetings begin at 4 p.m. on: Feb. 10 at Burlingame Apr. 13 at Hillsborough Sept. 14 at Burlingame Dec. 14 at Hillsborough Minimum 2- year terms. Brownrigg joined in Dec. 2011, Keighran joined in Mar. 2013 Brownrigg & Keighran 8 Chamber of Commerce Liaison 2nd Tuesday of each month, noon-1:30 p.m. Brownrigg & Beach 9 City/County Association of Governments (C/CAG) 2nd Thursday of each month, 6:30 p.m. Ortiz (Beach) 10 City/Schools Liaison Committee 3 times a year, usually midweek at 9 a.m. Keighran & Ortiz 11 Civic Engagement Subcommittee As needed Beach & Keighran 12 Community Center Master Plan Advisory Committee As needed Keighran & Ortiz 13 Commute.org (formerly called Peninsula Congestion Relief Alliance Every other month on Tuesday or Thursday at 8 a.m. Beach (Brownrigg) 14 Dog Park Task Force As needed Keighran & Colson 15 Downtown Plan Implementation As needed Brownrigg & Colson 16 Economic Development Subcommittee 2nd Wednesday of the month, 8:30 a.m. Keighran & Colson 17 El Camino Subcommittee As needed Brownrigg & Beach 18 Emergency Services Council (quarterly) 3rd Thursday in January, April, June and September, 5:30 p.m. at Hall of Justice in Redwood City Beach (Brownrigg) 19 Fire ALS Joint Powers Authority On the 3rd Wednesday of January, May and September, at 6 p.m. Beach (Ortiz) 20 Grand Boulevard Task Force Quarterly, 10 a.m.- noon, location varies Beach (Brownrigg) 21 Housing Endowment and Regional Trust (HEART) Quarterly on Wednesdays at 3 p.m. Colson (Ortiz) 22 Peninsula Cities Consortium Quarterly, 8:15 a.m. (location rotates among 6 cities) Ortiz (Brownrigg) 23 Peninsula Clean Energy (PCE) 4th Thursday of every month , 7 p.m. at 400 Harbor Boulevard, Belmont Colson (Keighran) 24 Recreation Task Force As needed Keighran & Colson 25 San Mateo County Affordable Housing Task Force Monthly Colson (Keighran) 26 South Bay Waste Management Authority Quarterly, 2 pm, Thursdays Brownrigg (Beach) Members Elected or Selected to the Following, Not Appointed by Mayor 27 Peninsula Health Care District Long Term Planning Committee 6 times a year, generally Tuesday evenings Selected Brownrigg & Ortiz All Councilmembers Invited to Following Committees/Groups 28 Peninsula Division League of California Cities 4 dinner meetings per year, plus January reception for newly elected council members All 29 Council of Cities Usually 4th Friday of month, rotating city All 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Lisa K. Goldman, City Manager – (650) 558-7243 Subject: Adoption of a Resolution Appointing Barbara A. Dillon as an Interim Employee under California Government Code Section 21221(h) RECOMMENDATION Staff recommends the City Council adopt a resolution appointing Barbara A. Dillon as an Interim Employee under California Government Code Section 21221(h). BACKGROUND The City’s Human Resources Director retired at the end of December 2016. The City has contracted with Teri Black and Company to conduct a recruitment to fill the position. In order to ensure that the Human Resources Department is fully staffed during this transitional period, estimated to last until mid-February, the City Manager would like to appoint Barbara A. Dillon as an Interim Employee in a manner consistent with the Public Employees’ Pension Reform Act. (California Government Code Section 21221(h)). DISCUSSION The Public Employee’s Retirement Law generally prohibits CalPERS employers from hiring retirees unless they are first reinstated from retirement. An exception to this rule allows local agencies to hire retired annuitants pursuant to Government Code section 21221(h), provided certain key eligibility requirements are satisfied. Under Section 21221(h), a retiree may serve without reinstatement when the services of a retiree possessing specialized skills are needed during recruitment for a permanent appointment. The compensation for the appointment of a retiree shall not exceed the maximum monthly base salary paid to other employees performing comparable duties as listed on a publicly available pay schedule for the vacant position divided by 173.333 to equal an hourly rate. In addition, a retired annuitant appointed to a vacant position pursuant to Section 21221(h) shall not receive any benefits, incentives, compensation in lieu of benefits, or any other forms of compensation in addition to the hourly pay rate. Ms. Dillon served 15 years as the Human Resources Director for the City of Fairfield, retiring from that position in 2012. She is currently a Human Resources consultant who, in recent years, has assisted three area cities as an interim Human Resources Director. She has more than 25 years Appointment of Interim Human Resources Director January 3, 2017 2 of experience in labor/employee relations, recruitment and selection, compensation and pay, risk management, organization/employee development, and benefits administration. Ms. Dillon holds a Master’s Degree in Public Administration from the University of Southern California and a Bachelor’s Degree from the University of Pennsylvania. FISCAL IMPACT The annual salary range for the Human Resources Director in the City of Burlingame is $150,637 to $183,533. Ms. Dillon will be paid an hourly rate of $88.24, which is within the salary range, and she will work no more than 30 hours per week during this period. Funding for the position will be provided by the Human Resources Department operating budget. Exhibit:  Resolution RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME APPOINTING BARBARA A. DILLON AS AN INTERIM EMPLOYEE UNDER CALIFORNIA GOVERNMENT CODE SECTION 21221(h) WHEREAS, the City’s Human Resources Director retired at the end of December 2016, and the City is currently conducting a recruitment to fill the position; and WHEREAS, in order to ensure that the Human Resources Department is fully staffed during this transitional period, estimated to last until mid-February, the City Manager would like to appoint Barbara A. Dillon as an Interim Employee in a manner consistent with the Public Employees’ Pension Reform Act. (California Government Code Section 21221(h)); and WHEREAS, under California Government Code Section 21221(h), a CalPERS retiree may serve without reinstatement to the CalPERS system when the services of a retiree possessing specialized skills are needed during recruitment for a permanent appointment; and WHEREAS, the compensation for the appointment of a retiree shall not exceed the maximum monthly base salary paid to other employees performing comparable duties as listed on a publicly available pay schedule for the vacant position divided by 173.333 to equal an hourly rate; and WHEREAS, a retired annuitant appointed to a vacant position pursuant to Section 21221(h) shall not receive any benefits, incentives, compensation in lieu of benefits, or any other forms of compensation in addition to the hourly pay rate; and WHEREAS, Ms. Barbara A. Dillon served 15 years as the Human Resources Director for the City of Fairfield, retiring from that position in 2012, and is currently a Human Resources consultant who has assisted other cities as an interim Human Resources Director; and WHEREAS, Ms. Dillon has more than 25 years of experience in labor/employee relations, recruitment and selection, compensation and pay, risk management, organization/employee development, and benefits administration; and WHEREAS, the annual salary range for the Human Resources Director in the City of Burlingame is $150,637 to $183,533, and Ms. Dillon will be paid an hourly rate of $88.24, which is within the salary range. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURLINGAME RESOLVES AS FOLLOWS: The City Manager is authorized to appoint Barbara A. Dillon as an Interim Employee under California Government Code Section 21221(h). ____________________________ Ricardo Ortiz, Mayor I, Meaghan Hassel-Shearer, City Clerk of the City of Burlingame, do hereby certify that the foregoing Resolution was introduced at a regular meeting of the City Council held on the 3rd day of January, 2017, and was adopted thereafter by the following vote: AYES: Councilmembers: NOES: Councilmembers: ABSENT: Councilmembers: ____________________________ Meaghan Hassel-Shearer, City Clerk 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Syed Murtuza, Director of Public Works – (650) 558-7230 Subject: Adoption of a Resolution Awarding a Construction Contract to Marina Mechanical for the Police Department HVAC Improvements, City Project No. 84330, and Authorizing the City Manager to Execute the Construction Contract RECOMMENDATION Staff recommends that the City Council adopt the attached resolution awarding a construction contract to Marina Mechanical for the Police Department HVAC Improvements Project, in the amount of $564,250, and authorizing the City Manager to execute the construction contract. BACKGROUND The City Council has authorized funds to upgrade the Heating Ventilation and Air Conditioning (HVAC) at the Burlingame Police Station as part of the Capital Improvement Program. The existing HVAC systems have reached the end of their useful lives, and a new energy efficient HVAC system with digital controls will be installed for the Police Station. The project consists of replacement of the existing air handler, including supply and return fans, heating and cooling coils, dampers, valves, double duct boxes, pneumatic control system and air cooled condenser with a new system. The new system will include a new energy efficient air handler, and dual-duct variable air volume (VAV) boxes that are controlled by a direct digital control system. A temporary air handler will be necessary during the construction of the new improvements so that the Police Station can operate on a 24 hour, seven days basis without completely shutting down the system. Additional improvements were added to the project as bid alternates. Add alternate #1 includes replacement of two ductless split systems and roof top packaged unit including refrigerant piping, refrigerants, electrical, controls and structural work associated with their installation. Add alternate #2 includes replacement of the hot water heating boiler and circulating pumps, boiler piping, heating coil, neutralizing cartridge, electrical, controls and structural work associated with their installation. DISCUSSION The project, including the base bid and two bid alternates, was advertised for bids on November 1, 2016. The sealed bids were opened on December 13, 2016, and a total of three bids were Award of Construction Contract to Marina Mechanical for January 3, 2017 Police Station HVAC Improvements Project 2 received ranging from $499,400 to $738,000. Marina Mechanical is the lowest responsible bidder with its bid amount of $499,400, which is approximately 30% lower than the engineer’s estimate of $652,148. The contractor also submitted bid alternates costs for add alternates #1 and #2 in the amounts of $41,770 and $64,850 respectively. Staff recommends that City Council award the base bid and Bid Alternate #2 to take advantage of the favorable bid prices. Staff is not adding Bid Alternate #1 at this time as there may be a PG & E rebate associated with that work. Staff will evaluate options to reduce the costs associated with Bid Alternate #1, and will add it to the project if funds are available. Based on the review of the submitted bid proposal, staff finds that Marina Mechanical has met all the project requirements, and has a past history of performing similar work successfully for other agencies. As a result, staff recommends that the City Council award the project to Marina Mechanical and authorize the City Manager to execute the construction contract. Staff also recommends that the City Council authorize a 20% construction contingency budget to deal with unforeseen conditions with the existing fire alarm system and existing structure, which may potentially present problems during the construction. The project is anticipated to begin in March 2017 and be completed by September of 2017. FISCAL IMPACT Estimated Project Expenditures: The following are the estimated project construction expenditures: Construction Contract $564,250 Construction Management $87,000 Engineering Administration $25,000 Construction Contingency (20%) $135,250 Total $811,500 FUNDING AVAILABILITY There are adequate funds available in the Facilities Capital Improvement Program to complete the project as follows: Police Station HVAC Project, 322-84330 $570,000 Energy Efficiency Upgrade Project, 322-84630 $241,500 Total $811,500 Exhibits:  Resolution  Bid Summary  Construction Contract  Project Location Map RESOLUTION NO. _______ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME AUTHORIZING THE CITY MANAGER TO EXECUTE A CONSTRUCTION CONTRACT FOR THE POLICE DEPARTMENT HVAC IMPROVEMENTS PROJECT TO MARINA MECHANICAL CITY PROJECT NO. 84330 WHEREAS, on November 1, 2016, the City issued notice inviting sealed bid proposals for the Police Department HVAC Improvements, City Project No. 84330; and WHEREAS, on December 13, 2016, all proposals were received and opened before the City Clerk and representatives of the Public Works Department; and WHEREAS, Marina Mechanical submitted the lowest responsible base bid for the job in the amount of $499,400. NOW, THEREFORE, be it RESOLVED, and it is hereby ORDERED, that the Plans and Specifications, including all addenda, are approved and adopted; and BE IT FURTHER RESOLVED that the base bid, and bid alternative no. 2, of Marina Mechanical, for said project in the amount of $564,250, and the same hereby is accepted; and BE IT FURTHER RESOLVED that a contract be entered into between the successful bidder and the City of Burlingame for the performance of said work, and that the City Manager is authorized on behalf of the City of Burlingame to execute said contract and to approve the faithful performance bond and the labor materials bond required to be furnished by the contractor. _______________ _____ Mayor I, MEAGHAN HASSEL-SHEARER, City Clerk of the City of Burlingame, do hereby certify that the foregoing Resolution was introduced at a regular meeting of the City Council held on the 3RD day of January, 2017, and was adopted thereafter by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: _______________ _____ City Clerk POLICE STATION HVAC IMPROVEMENTSCity Project No. 84330BID SUMMARYBID OPENING: TUESDAY, DECEMBER 13, 2016 AT 2:00PM     ITEM ITEM DESCRIPTIONNo. QTY UNIT UNIT PRICE AMOUNT UNIT PRICE AMOUNT UNIT PRICE AMOUNT UNIT PRICE AMOUNT1 Base Bid 1 LS 1.00$                    652,148.00$           1.00$                    499,400.00$             1.00$                    683,933.00$             1.00$                    738,000.00$             2 Bid Alternate 1 1 LS 1.00$                    75,205.00$             1.00$                    41,770.00$               1.00$                    67,145.00$               1.00$                    92,000.00$               3 Bid Alternate 2 1 LS 1.00$                    61,524.00$             1.00$                    64,850.00$               1.00$                    45,308.00$               1.00$                    172,000.00$             652,148.00$     499,400.00$      683,933.00$      738,000.00$      TOTAL Base BID (Bid Item 1)ENGINEER'S ESTIMATEMARINA MECHANICALSAN LEANDRO CAMATRIX HG, INCCONCORD CATRAHAN MECHANICAL, INC. SAN RAFAEL, CAPage 1 of 1 AGREEMENT - 1 AGREEMENT FOR PUBLIC IMPROVEMENT BURLINGAME POLICE DEPARTMENT HVAC IMPROVEMENTS CITY PROJECT NO. 84330 THIS AGREEMENT, made in duplicate and entered into in the City of Burlingame, County of San Mateo, State of California on , 2017, by and between the CITY OF BURLINGAME, a Municipal Corporation, hereinafter called "City", and MARINA MECHANICAL, a California Corporation, hereinafter called "Contractor," W I T N E S S E T H : WHEREAS, City has taken appropriate proceedings to authorize construction of the public work and improvements herein provided for and to authorize execution of this Contract; and WHEREAS, pursuant to State law and City requirements, a notice was duly published for bids for the contract for the improvement hereinafter described; and WHEREAS, on January 3, 2017, after notice duly given, the City Council of Burlingame awarded the contract for the construction of the improvements hereinafter described to Contractor, which the Council found to be the lowest responsive, responsible bidder for these improvements; and WHEREAS, City and Contractor desire to enter into this Agreement for the construction of said improvements, NOW, THEREFORE, IT IS AGREED by the parties hereto as follows: 1. Scope of work. Contractor shall perform the work described in those Contract Documents entitled: Burlingame Police Station HVAC Improvements, City Project No. 84330. 2. The Contract Documents. The complete contract between City and Contractor consists of the following documents: this Agreement; Notice Inviting Sealed Bids, attached hereto as Exhibit A; the accepted Bid Proposal, attached hereto as Exhibit B; the specifications, provisions, addenda, complete plans, profiles, and detailed drawings contained in the bid documents titled “Police Station HVAC Improvements, City Project No. 84330” attached AGREEMENT - 2 as Exhibit C; the complete General Provisions and Special Provisions set forth in the State of California Standard Specifications for Construction of Local Streets and Roads, July 2006 edition, as promulgated by the California Department of Transportation; prevailing wage rates of the State of California applicable to this project by State law; and all bonds; which are collectively hereinafter referred to as the Contract Documents. All rights and obligations of City and Contractor are fully set forth and described in the Contract Documents, which are hereby incorporated as if fully set forth herein. All of the above described documents are intended to cooperate so that any work called for in one, and not mentioned in the other, or vice versa, is to be executed the same as if mentioned in all said documents. 3. Contract Price. The City shall pay, and the Contractor shall accept, in full, payment of the work above agreed to be done, the sum of five-hundred and sixty-four thousand, two-hundred fifty dollars ($564,250), called the “Contract Price”. This price is determined by the lump sum and unit prices contained in Contractor's Bid. In the event authorized work is performed or materials furnished in addition to those set forth in Contractor's Bid and the Specifications, such work and materials will be paid for at the unit prices therein contained. Said amount shall be paid in progress payments as provided in the Contract Documents. 4. Termination At any time and with or without cause, the City may suspend the work or any portion of the work for a period of not more than 90 consecutive calendar days by notice in writing to Contractor that will fix the date on which work will be resumed. Contractor will be granted an adjustment to the Contract Price or an extension of the Time for Completion, or both, directly attributable to any such suspension if Contractor makes a claim therefor was provided in the Contract Documents. The occurrence of any one or more of the following events will justify termination of the contract by the City for cause: (1) Contractor’s persistent failure to perform the work in accordance with the Contract Documents; (2) Contractor’s disregard of Laws or Regulations of any public body having jurisdiction; (3) Contractor’s disregard of the authority of the Engineer; or (4) Contractor’s violation in any substantial way of any provision of the Contract Documents. In the case of any one or more of these events, AGREEMENT - 3 the City, after giving Contractor and Contractor’s sureties seven calendar days written notice of the intent to terminate Contractor’s services, may initiate termination procedures under the provisions of the Performance Bond. Such termination will not affect any rights or remedies of City against Contractor then existing or that accrue thereafter. Any retention or payment of moneys due Contractor will not release Contractor from liability. Contractor’s services will not be terminated if Contractor begins, within seven calendar days of receipt of such notice of intent to terminate, to correct its failure to perform and proceeds diligently to cure such failure within no more than 30 calendar days of such notice. Upon seven calendar days written notice to Contractor, City may, without cause and without prejudice to any other right or remedy of City, terminate the Contract for City’s convenience. In such case, Contractor will be paid for (1) work satisfactorily completed prior the effective date of such termination, (2) furnishing of labor, equipment, and materials in accordance with the Contract Documents in connection with uncompleted work, (3) reasonable expenses directly attributable to termination, and (4) fair and reasonable compensation for associated overhead and profit. No payment will be made on account of loss of anticipated profits or revenue or other economic loss arising out of or resulting from such termination. 5. Provisions Cumulative. The provisions of this Agreement are cumulative and in addition to and not in limitation of any other rights or remedies available to the City. 6. Notices. All notices shall be in writing and delivered in person or transmitted by certified mail, postage prepaid. Notices required to be given to the City shall be addressed as follows: Kevin Okada, Senior Engineer City of Burlingame 501 Primrose Road Burlingame, California 94010 AGREEMENT - 4 Notices required to be given to Contractor shall be addressed as follows: Carl Koos, President – Construction Marina Mechanical 799 Thorton Street San Leandro, CA 94577 7. Interpretation As used herein, any gender includes the other gender and the singular includes the plural and vice versa. 8. Waiver or Amendment. No modification, waiver, mutual termination, or amendment of this Agreement is effective unless made in writing and signed by the City and the Contractor. One or more waivers of any term, condition, or other provision of this Agreement by either party shall not be construed as a waiver of a subsequent breach of the same or any other provision. 9. Controlling Law. This Agreement is to be governed by and interpreted in accordance with the laws of the State of California. 10. Successors and Assignees. This Agreement is to be binding on the heirs, successors, and assigns of the parties hereto but may not be assigned by either party without first obtaining the written consent of the other party. 11. Severability. If any term or provision of this Agreement is deemed invalid, void, or unenforceable by any court of lawful jurisdiction, the remaining terms and provisions of the Agreement shall not be affected thereby and shall remain in full force and effect. AGREEMENT - 5 IN WITNESS WHEREOF, two identical counterparts of this Agreement, consisting of five pages, including this page, each of which counterparts shall for all purposes be deemed an original of this Agreement, have been duly executed by the parties hereinabove named on the day and year first hereinabove written. CITY OF BURLINGAME, a Municipal Corporation By Lisa K. Goldman, City Manager Approved as to form: Kathleen Kane, City Attorney ATTEST: Meaghan Hassel-Shearer, City Clerk "CONTRACTOR" By Print Name: Marina Mechanical EXHIBIT A EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B EXHIBIT B 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Syed Murtuza, Director of Public Works – (650) 558-7230 Subject: Adoption of a Resolution Approving a Contract with IPS Group, Inc., for the Procurement and Installation of Smart Parking Meters in the Downtown Area, City Project No. 84410, and Authorizing the City Manager to Execute the Agreement RECOMMENDATION Staff recommends that the City Council adopt the attached resolution approving a contract with IPS Group, Inc., for the procurement and installation of Smart Parking Meters in the Downtown Area, in the not to exceed amount of $479,000, and authorizing the City Manager to execute the agreement. BACKGROUND The City of Burlingame has approximately 2,300 metered parking spaces in both the Broadway commercial area and the downtown Burlingame Avenue area. The majority of these spaces are equipped with single-space old parking meters. Residents and patrons have expressed concerns regarding these old parking meters, which accept coins but cannot accept credit cards. Over the last several years, the City has been working to improve the parking experience for residents and patrons in the commercial areas, and has implemented several strategies to improve parking conditions, including the implementation of smart parking meters along Burlingame Avenue, and credit card accepting pay stations at several long-term parking lots in the downtown area. In FY 2013-14, as part of the Downtown Burlingame Avenue Streetscape Project, the City Council implemented the first phase of a single-spaced smart parking meters system. Through a competitive Request for Proposal process, which included anticipation of several phases of implementation, the City selected IPS Group, Inc. (IPS) to provide 110 single-spaced smart parking meters along the downtown Burlingame Avenue core commercial area. For the last two years, both Public Works and Police Department staff have been monitoring the utilization and functionality of the recently installed IPS smart meters along Burlingame Avenue. Staff observed positive feedback regarding the functionality and reliability of these smart meters and recommends their expansion. Agreement with IPS Group, Inc., for the Installation of Smart Parking Meters January 3, 2017 2 DISCUSSION Staff issued a Request for Proposal to IPS Group, Inc., for the implementation of the second phase of the smart parking meter program as an outgrowth of the company’s initial response. This second phase included the procurement, installation, and turnkey services of replacing 656 single-spaced old meters with new IPS smart parking meters in the downtown Burlingame Avenue and Broadway commercial core areas as follows:  Chapin Avenue  Donnelly Avenue  Howard Avenue  Portions of Bellevue Avenue  Primrose Road  Park Road  Lorton Avenue  Highland Avenue  California Avenue  West Lane  Anita Road  Broadway IPS Group, Inc., submitted a proposal for the installation of 656 fifth-generation smart parking meters and 20 spare replacement units along with turnkey services in the amount of $479,000. The smart parking meters are proposed to be installed along the streets throughout the Burlingame Avenue downtown core area and along the Broadway commercial district as listed above, with the exception of parking lots. Because of continued changes in technologies related to parking lots metering/payment options, and because some of the parking lots are being proposed for development purposes, staff would like to further study the matter, evaluate the best technologies available, and propose options to the City Council at a future date. Upgrading from the existing old-fashioned parking meters to new IPS smart meters is relatively easy because the existing meter poles and housing can be salvaged and re-utilized. The new meters use a small solar panel to recharge the meter batteries, thus reducing the number of battery replacements. Additionally, staff is proposing to purchase 20 spare smart meter units and 68 battery packs (10% of total meters) as part of this procurement. In the event a unit experiences problems, replacements can be made relatively seamlessly to keep the meters in operation while repairs are made. For the data management and credit card transaction fees associated with the smart meters, IPS offers two options. Option 1, currently implemented for the recently installed 110 smart parking meters along Burlingame Avenue, is $5.75 per month per meter, as well as a $0.13 per credit card transaction fee. Option 2 is $8.00 per month per meter with a $0.06 per credit card transaction fee. Option 2 is tailored toward a large volume of credit card transactions, with an average of 15% less in fees compared to Option 1. At this time, staff recommends continuing with Option 1, and monitoring the credit card usage for the first six months after installation of the Agreement with IPS Group, Inc., for the Installation of Smart Parking Meters January 3, 2017 3 proposed 656 meters before considering changes. Switching to Option 2 may not be advisable and could be expensive if credit card usage does not reach a certain minimum threshold. The Broadway commercial area has the lowest parking rates, at $0.50 per hour. It is important to note that providing smart meters capability at this location may result in the City losing funds due to credit card transaction fees and data charges. Staff will monitor the credit card usage and associated financial impacts, and will return to Council if parking meter rate changes are necessary. FISCAL IMPACT The total cost of purchasing 656 smart parking meters is approximately $479,000, which includes shipping, installation, training, additional batteries and meters, extended warranty, and applicable taxes. In addition, there will be an ongoing data management/gateway fee and credit card transaction fee associated with the smart meters, which is estimated to range from approximately $61,000 to $65,000 annually. FUNDING AVAILABILITY There are adequate funds available in the FY 2016-17 Capital Improvement Program Budget to undertake the purchase and installation of the meters. The ongoing data charges and transaction fees will be funded through parking enterprise funds. Exhibits:  Resolution  IPS Group Inc. Agreement  Location Map RESOLUTION NO. _______ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME APPROVING A PROCUREMENT SERVICES AGREEMENT WITH IPS GROUP, INC., FOR THE INSTALLATION OF DOWNTOWN SMART PARKING METERS AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE AGREEMENT CITY PROJECT NO. 84410 RESOLVED, by the CITY COUNCIL of the City of Burlingame, California and this Council does hereby FIND, ORDER and DETERMINE AS FOLLOWS: 1. The public interest and convenience require execution of the agreement cited in the title above. 2. The City Manager be, and is hereby, authorized to sign said agreement for and on behalf of the City of Burlingame. 3. The City Clerk is hereby ordered and instructed to attest such signature. _____________________________ Mayor I, MEAGHAN HASSEL-SHEARER, City Clerk of the City of Burlingame, do hereby certify that the foregoing Resolution was introduced at a regular meeting of the City Council held on the 3rd day of January, 2017 and was adopted thereafter by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: _____________________________ City Clerk Page 1 of 7 AGREEMENT TO PROVIDE CONTRACT SERVICES TO THE CITY OF BURLINGAME THIS AGREEMENT is made and entered into in the City of Burlingame, County of San Mateo, State of California, by and between the City of Burlingame, a municipal corporation [hereinafter City], and IPS GROUP, INC., [hereinafter IPS], as of the ______ day of ______________, 2017. RECITALS (A) City wishes to establish a contractual relationship with IPS for the purchase of new, fully tested smart parking meters, related equipment, and services; and (B) City has determined the exact nature, scope, or budget for these services and materials; and (C) City has qualified IPS for providing these services and materials as to insurance and other provisions as specified in this Agreement; and (D) IPS represents that it is a qualified and competent supplier of the services and items to be purchased under this Agreement. IT IS AGREED AS FOLLOWS: 1. Scope of Services. IPS shall provide and complete all services as described in Exhibit A of this Agreement, which includes but are not limited to the following services: (A) IPS shall to provide new, fully tested smart parking meters, related equipment, and services. No used or previously owned parking meter equipment will be allowed. (B) IPS shall complete the installation of all parking meter equipment. Coordinated installation of all parking meter equipment will take place according to a pre- defined deployment plan created by the City and IPS. City shall have absolute discretion as to the placement of all parking meters and equipment and electronic format including rates, time limits, hours, and restrictions for each meter. (C) City may, from time to time, wish to implement available upgrades in meter hardware and software. Additional hardware costs will be paid by the City as provided for in a quote by IPS separate from or by mutual written amendment to this Agreement. The City maintains the sole authority to determine when and where such upgrades will be implemented. (D) IPS shall provide a full 48-month extended warranty in addition to the full standard 12-month warranty on all equipment. 1 | I P S M 5 M e t e r P r i c i n g Burlingame - Amendment 11-22-16 Prepared by: Contact: IPS Group, Inc. Mike Chiodo 5601 Oberlin Drive t: 858.226.0867 San Diego, CA 92121 f: 858.408.3352 Mike.chiodo@ipsgroupinc.com 2 | I P S M 5 M e t e r P r i c i n g PRODUCT OVERVIEW IPS Group Inc. has the pleasure of offering our Single-Space Parking Meter Solution and optional Vehicle Detection Sensor. Our latest fifth-generation meter, the M5, is the ultimate Single-Space Meter System. We will install a modern, technologically advanced mechanism that provides you with an effective, easy and cost-saving solution, while still accomplishing all the traditional benefits of single -space metering, especially, ease of operation to the motorist. With IPS, you will have:  The most experience in wireless single-space, credit card-enabled parking meters and integrated web-management system  An install base and customer references that can attest to the reliability of the system and the high level of customer service provided by IPS  The capability of meeting the performance requirements and product delivery schedule for the City Please refer to the demonstration video on our website for a tutorial on how to use an IPS meter: www.ipsgroupinc.com/parking-meters/how-to-use.htm N EXT G ENERATION IPS M ETER : M5  Patented meter mechanism accepts payment by credit/debit card, coins, tokens, smart card, pay-by-cell and optional NFC contactless payment  Wirelessly networked to a web-based management system – no additional communications infrastructure required  Retrofits into existing meter housings/poles, and maintains all current meter enforcement and collection processes  Built-in integration with Pay-by-cell, IPS sensor, and IPS Smart Collection System technologies  Supports demand-based pricing and real-time parking occupancy systems  Solar powered with rechargeable battery pack  PA-DSS and Level 1 PCI-DSS Certified IPS M5 Meter 3 | I P S M 5 M e t e r P r i c i n g W EB-B ASED M ANAGEMENT S YSTEM  No need for local software or new hardware installation  Comprehensive set of financial and technical reports, and administrative management tools  Data can be exported to software packages such as MS Excel, MS Access, and CSV  Always uses the latest in encryption and Internet security  Real-time data available 24/7/365  Intuitive point-and-click user operation V EHICLE D ETECTION S ENSOR  Calculate paid vs. actual occupancy trends to improve enforcement efficiency  Provide directed enforcement to in-file handhelds  Reset meter when vehicle leaves space  Push parking availability to the public via maps  Complete reporting on space utilization W HY IS THE IPS SYSTEM SO COST EFFEC TIVE ? IPS does not require any installation or ongoing maintenance of expensive me sh networking infrastructure that would need to be installed on street, utility and/or light poles, consuming City resources and electricity. IPS only requires the installation of our credit card enabled single -space parking meter. The communication backbone of the meter serves as the communication link between the sensor system and the back office management system, saving a tremendous amount of ongoing data costs. REMAINDER OF PAGE LEFT INTENTIONALLY BLANK 4 | I P S M 5 M e t e r P r i c i n g PRICING CAPITAL PURCHASE IPS is very pleased to provide the following capital costs for the IPS meter system. This pricing does not include any meter housings to pole installation services, as IPS is providing a retrofit solution using current on-street meter housings. Additional services can be supplied upon request. No applicable taxes are included in any pricing below. CREDIT CARD ENABLED PARKING METERS Item Meters Cost per Meter Ext Cost IPS M5: Credit Card Enabled Single-Space Meter: Mobile Payment and Sensor enabled meters (with ips equip or integration with 3rd party) (includes 12 month warranty, RFID tag, meter top, FOB San Diego, CA) 676 $475.00 $321,100 Shipping 676 $7.50 $5,070 Installation, Training and System Commissioning* (includes hardware and software training for finance, meter maintenance, enforcement and overall database management system) 656 $10.00 $6,560 Batteries (3 cell batteries) 68 $30 $2,040 Extended Warranty (for each additional 48 month period) 676 $170.00 $114,920 Subtotal (without extended warranty) $334,770 Total (with extended warranty) $449,690 REQUIRED ONGOING FEES Item – per meter per month Option 2 Total Annually Secure Wireless Gateway / Data Fee* & Management System License Fee $8.00 $62,976 Per Credit Card Gateway Fee $0.06 TBD 5 | I P S M 5 M e t e r P r i c i n g * base data fee includes all base data requirements for the meter, including real time reporting of credit card transactions and maintenance alerts. Add $2.75 per meter per month for real time transactions associated with coins or real time notifications of parking viola tions as detected by sensors.* NOTE: Price per meter (per unit) is the total fixed price for the equipment. Additional ongoing costs associated with wireless services, management system access, and credit card fees are ongoing and outlined above. All pricing does not include any applicable state or local taxes that are required to be paid by the city currently or in the future. Credit card fees are not inclusive of any additional fees charged by the Customer’s Bank or Processor. Ongoing fees are subjec t to annual adjustment due to increases in Inflation as published by the US Bureau of Labor Statistics for All Items Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average, and will not exceed 3% annually. METER INSTALLATION & TRAI NING:  Installation fees cover the costs of all on-site services to install the IPS meter mechanism. This does not cover the costs of pole installation or housing installation if required. There is a minimum fee of $2,500 for installation services.  Future fees will be quoted on an as needed basis. Reimbursement for future travel expenses (food, lodging, transportation, hotel and flight accommodation will also be included for all on-site personnel and will be submitted in line with the GSA Domestic Per Diem Rates along with additional labor rates based on $75 per hour. DELIVERY TERMS  Delivery – Standard lead time is 60 days from Notice to Proceed. Can bring this forward based on current inventory levels.  Freight – FOB – San Diego, CA PAYMENT TERMS  Net 30  A service charge of 1.5% per month or the lawful prevailing rate, whichever is lower, will be applied to all invoices which are past due. ---------------------------------------------------------------------------------------------------------------- 6 | I P S M 5 M e t e r P r i c i n g OPTIONAL PAY -BY-CELL / REMOTE PAYMENT SYSTEM IPS is pleased to provide pricing details for our optional integration with pay -by-cell phone systems, which will be seamlessly integrated into the IPS management system via the wirelessly enabled single space meter system. No applicable taxes are included in any pricing below. ONGOING COST Item Cost per Transaction 3rd Party Integration Pay-by-Cell Data Push Fee $0.10 IPS Park Smarter Mobile Payment Solution $.06 Note: (pay-by-cell service and data feed provided by 3rd party to be mutually agreed by City and IPS) * assumes 5 transactions per space per month for calculation purposes only This is the data charge to push real-time payments to the meters. (alternate pricing of $1.25 per meter per month unlimited pay-by-cell transactions vs. per transaction pricing). Note: pay-by-cell service and real time data pushed to the meter will drain battery life more rapidly. REMAIN DER OF PAGE IS INTENTIONALLY LEFT BLANK 7 | I P S M 5 M e t e r P r i c i n g SPARE PARTS | WARRANTY | CUSTOMER SUPPORT M5 M ETER S PARE P ARTS I NVENTORY IPS recommends that the City maintain a ready spare parts inventory. Actual quantity of spares will depend on the total number of meters in service. IPS can assist with further recommendations for total quantity and type of spare parts to have on-hand. P ARTS PRICE PER UNIT QTY PER 100 METERS Card Entry Die Casting $19.00 3 Keypad Assembly $25.00 5 Complete Top Cover (with Lexan insert) $69.00 3 Lexan for Top Cover $15.00 3 Validator Connector Board $15.00 3 Validator Connection Cable $5.00 3 Battery Pack 795-600-H3 (non-rechargeable) $30.00 5 Solar Panel / Comms Board (GSM) $165.00 n/a Solar Panel / Comms Board (CDMA) $165.00 n/a Coin Validator $69.00 5 Main Board $165.00 3 Display Board $89.00 3 Display Board with NFC $139.00 n/a Expiry Indicator (rear) $15.00 3 Battery Charging Assembly (11 meters per assembly) $115.00 n/a Coin Entry Slot $2.00 3 Hybrid Card Reader (non EMV) $49.00 5 EMV Hybrid Card Reader $125.00 n/a Battery Door Cover $2.00 3 RFID Meter Housing Tag Assembly $10.00 3 8 | I P S M 5 M e t e r P r i c i n g IPS LIMITED WARRANTY IPS will provide a limited warranty for any new meter or sensor product manufactured and supplied by IPS for 12 months against defects in materials and workmanship from the point of installation or 15 months from the date of delivery, whichever is sooner, and 90 days from the date of delivery received in the case of spare or repaired products. IPS does not cover defects caused by improper care or use, lack of preventative maintenance, and does not warranty any defects due to vandalism or other factors contained as a part of the Force Majeure clause below. Additional Provisions:  IPS must have the opportunity to assist in the initial dep loyment and system installation.  Repair or replacement under warranty of any defective product (including any meter or subcomponent) does not extend the warranty period for that product or subcomponent.  IPS will either repair or replace products or subcomponents, at our discretion, that are found to be defective within the defined warranty period.  Returns for credit will only apply once IPS has received defective product (including any meter or subcomponent) and confirmed that defects were within the warra nty period and are covered under the terms and conditions of the warranty provided. Exclusions:  Warranty voided with use of imitation or non-genuine IPS replacement parts, un- authorized alterations, abuse, vandalism, improper handling or general misuse to the equipment (hardware or software), including attempted repairs that result in damage.  Force Majeure: IPS shall not be liable for any warranty provisions where such product failure is as a result of Acts of Nature (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (whether war is declared or not), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalizat ion, government sanction, blockage, embargo, labor dispute, strike, lockout or interruption or failure of electricity (or cellular telecommunication failures caused by any of the events or causes described above). Preventative Maintenance (Meters):  Preventative maintenance will be similar to current single-space parking meters. However, the primary elements will be a working battery, card reader and coin validator.  Meters surfaces should be kept clean with mild soap and water.  The card reader heads should be cleaned with a cleaning card every 1-2 months to ensure optimum performance. Cleaning cards may be purchased from IPS.  At 9-12 month increments, the coin validator shall be visually inspected for any damage or debris. Compressed air may be used to keep the card reader and coin acceptor clear of debris, every 9-12 months.  Additional preventative maintenance shall be administered by City Staff at such time as it is apparent to be necessary, even if it should occur on a more frequent basis than described herein.  City, at its own cost and expense, shall keep the equipment in good repair, condition and working order after warranty expiration. PREPARED BY: IPS GROUP, INC. 7737 KENAMAR COURT SAN DIEGO, CA 92121 U.S.A. WWW.IPSGROUPINC.COM CONTACT: CHAD P. RANDALL CHIEF OPERATING OFFICER IPS GROUP, INC. DIRECT: 858.404.0607 FAX: 858.403.3352 CHAD.RANDALL@IPSGROUPINC.COM RFP FOR DOWNTOWN SMART PARKING METER PROJECT CITY PROJECT NO. 84410 DUE FRIDAY, NOVEMBER 4, 2016 CITY OF BURLINGAME, CALIFORNIA  
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  ‐   ‐  ‐‐     ‐‐ ‐ ‐                 ‐   ‐      ‐    Certificate of Compliance This award acknowledges that Single Space Parking Meter (SSPM) V 4.1.0 has successfully completed the Payment Application Data Security Standard Assessment performed by Tevora, Inc. A Qualified Security Assessor (QSA) Valid: October 22 2013 Expires: October 21 2016 This designation is subject to re-qualification at 36-month intervals. ©2013 Tevora, Inc. Ray Zadjmool, President Tevora Business Solutions, Inc. This designation is subject to re-qualification at 36-month intervals. ©2013 Tevora, Inc. Certified Customer Name: IPS Group Certified Customer Address: 5601 Oberlin Drive, Suite 100 San Diego, CA 92121 Certified Service Area: Single Space Parking Meter (SSPM) v 4.1.0 Certified for PA-DSS version: v 2.0 This certificate is only issued to organizations that have met PA-DSS Security Standards program requirements. This certificate is for the sole purpose of indicating compliance with the Payment Card Industry PA -DSS Security Standards pro- gram. Tevora Business Solutions makes no express or implied warranty or representations with respect to whether the customer 's systems are secure against compromise. Customers must retain all detailed assessment documentation for review upon request by organizations authorized under PA -DSS Security Standards program. Tevora Business Solutions retains all detailed documentation and working papers in order to comp ly with PA-DSS Security Standards program requirements. Customers are responsible for maintaining compliance with the Payment Card Industry PA -DSS Security Standards. Periodic and ongoing reassessments are requirements under the PA-DSS Security Standards program. Significant customer changes may re- quire reassessment. It is understood that Tevora’s assessment represents a point in time interpretation of the customers adherence to the Payment Card Industry PA-DSS Security Standards (v. 2.0) based upon the standardized documents and procedures provided under Payment Certificate of Compliance This award acknowledges that IPS Group Inc. has successfully completed the Payment Card Industry Assessment Level 1 Service Provider performed by Tevora, Inc. A Qualified Security Assessor (QSA) Valid: October 14 2015 Expires: October 13 2016 This designation is subject to re-qualification at 12-month intervals. ©2015 Tevora, Inc. Ray Zadjmool, President Tevora Business Solutions, Inc. This designation is subject to re-qualification at 12-month intervals. ©2015 Tevora, Inc. Certified Customer Name: IPS Group Inc. Certified Customer Address: 5601 Oberlin Drive, Suite 100 San Diego, CA 92121 Certified Service Area: Back Office Services Account Management Payment Gateway/Switch Intermediary Payment Transmission for Processing Certified Co-Location Sites: San Diego, CA This certificate is only issued to organizations that have met PCI security program requirements. This certificate is for the sole purpose of indicating compliance with PCI security programs. Tevora, Inc. makes no express or implied warranty or representations with respect to whether the customer's systems are secure against compromise. Customers must retain all detailed assessment documentation for review upon request by organizations authorized under PCI se- curity programs. Tevora, Inc. retains all detailed documentation and working papers in order to comply with PCI security pro- gram requirements. Customers are responsible for maintaining compliance with the PCI Standard. Periodic and ongoing reassessments are require- ments under PCI security programs. Significant customer changes may require reassessment. It is understood that Tevora’s assessment represents a point in time interpretation of the customers adherence to the PCI Dat a Se- curity Standards (v. 3.1) based upon the standardized documents and procedures provided under PCI security programs. 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Kathleen Kane, City Attorney – (650) 558-7204 Subject: Adoption of a Resolution Authorizing Amendment of the City Manager’s Employment Agreement to Provide a Salary Increase of 3% RECOMMENDATION Staff recommends that the City Council adopt the attached resolution authorizing the Mayor to execute an amendment to City Manager Lisa Goldman’s employment agreement to increase her salary by 3% effective the first pay period in January 2017. BACKGROUND City Manager Lisa Goldman began her service with the City of Burlingame on December 27, 2012. On December 7, 2016, the City Council met with Ms. Goldman in closed session to review her performance after her fourth year in office. Additionally, and outside of Ms. Goldman’s presence, the Council discussed adjusting her salary. DISCUSSION In recognition of Ms. Goldman’s positive performance evaluation and existing market rates for comparable positions, the City Council decided at the December 7 closed session to increase the City Manager’s salary by 3%, the same percentage increase that the Department Heads and Unrepresented Employees are receiving. In order to increase her salary, Section 5 of the employment agreement must be amended to increase the monthly salary from $18,780.82 per month to $19,344.24 effective the first pay period in January. FISCAL IMPACT The financial impact for the remainder of this fiscal year is approximately $4,220. The City Manager’s Office budget can absorb this amount using existing funds. Exhibits:  Resolution  Third Amendment to City Manager’s Employment Agreement RESOLUTION NO. ______ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME AUTHORIZING AMENDMENT OF THE CITY MANAGER’S EMPLOYMENT AGREEMENT TO PROVIDE A SALARY INCREASE OF 3% WHEREAS, City Manager Lisa K. Goldman began her service with the City on December 27, 2012; and WHEREAS, the City Council has conducted performance evaluations for Ms. Goldman upon completion of each year with the City, all of which have been positive; and WHEREAS, the City Council determined, following the evaluati on on December 7, 2016, that a salary increase of 3% was warranted in recognition of Ms. Goldman’s successful performance, effective at the beginning of the first pay period in January 2017; and WHEREAS, all other terms and conditions of Ms. Goldman’s em ployment are to remain as provided in her original employment agreement; NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Burlingame authorizes the Mayor to execute the attached Third Amendment to Ms. Goldman’s City Manager Employment Agreement, to increase Ms. Goldman’s gross salary by 3%, effective the first pay period in January 201 7, and leaving all other terms and conditions of employment as provided in the City Manager Employment Agreement. Ricardo Ortiz, Mayor I, Meaghan Hassel-Shearer, City Clerk of the City of Burlingame, do hereby certify that the foregoing resolution was introduced at a regular meeting of the City Council held on the 3rd day of January, 2017, and was adopted thereafter by the following vote: AYES: Councilmembers: NOES: Councilmembers: ABSENT: Councilmembers Meaghan Hassel-Shearer, City Clerk THIRD AMENDMENT TO THE AGREEMENT BETWEEN THE CITY OF BURLINGAME AND LISA K. GOLDMAN FOR EMPLOYMENT AS CITY MANAGER OF THE CITY OF BURLINGAME This amendment is entered into this ________________ day of January, 2017, by and between the City of Burlingame, a Municipal Corporation existing under the laws of the State of California, herein called the “City,” and Lisa K. Goldman (“Ms. Goldman”), as follows: RECITALS A. Ms. Goldman is currently serving as City Manager for the City of Burlingame pursuant to that contract denominated “Agreement Between the City of Burlingame and Lisa K. Goldman for Employment as City Manager of the City of Burlingame” (“Employment Agreement”), entered into on November 19, 2012, and amended on January 6, 2014, and January 5, 2015. B. Ms. Goldman has successfully completed her fourth year with the City. Subsequent to a performance evaluation, the City Council determined that her salary should be increased by 3%. C. Both parties are amenable to this change and desire that all other terms and conditions of the existing Employment Agreement remain in full force and effect. AMENDMENT TO EMPLOYMENT AGREEMENT NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS: 1. Paragraph 5, Monthly Compensation, of the Employment Agreement shall be amended to provide that the City shall pay Ms. Goldman a salary of $19,344.24 per month. 2. All other terms and conditions of the Employment Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the City and Ms. Goldman have executed this Amendment as of the date indicated above. CITY OF BURLINGAME LISA K. GOLDMAN Ricardo Ortiz, Mayor ATTEST: APPROVED AS TO FORM: Meaghan Hassel-Shearer, City Clerk Kathleen Kane, City Attorney 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Kathleen Kane, City Attorney – (650) 558-7204 Subject: Adoption of a Resolution Authorizing Expenditures for the Code Enforcement Function RECOMMENDATION Staff recommends that the City Council adopt the attached resolution authorizing expenditures in excess of $100,000 for the code enforcement function. BACKGROUND The City’s code enforcement function has been staffed according to various models in the years since its inception. At first, it was staffed by a part -time employee. Later, it was staffed on a 50% basis through a shared services agreement with the City of Millbrae. In an effort to increase efficiency, the Council determined to bring the function back in-house after the prior incumbent retired. The position was thereafter filled at a full-time level by a City employee who achieved good results. However, after that employee left the City, it has been difficult to staff the position. While the City was prepared to offer a competitive salary, the cost of living in the area combined with the need for specialized expertise has made the position difficult to fill. After a recruitment failed to yield viable candidates for the role, the City determined to use a contractor to support the function. The City contracted with CSG Consultants, Inc., to fill the position with an experienced code enforcement officer. Under a part-time schedule, the function has been competently covered by CSG through its employee Rachel Norwitt. The contract is budget -neutral to the City, as the annual costs are within the fully loaded salary and benefits previously authorized by the Council. DISCUSSION While the contract costs for the code enforcement function average around $7,000 a month, it is likely that the cumulative costs of the contract will exceed the Council approval threshold of $100,000. Therefore, staff requests that Council approve such payments, subject to the available budget for the function as a whole. The City may revisit the job description and requirements and go back out for a new recruitment in the future, but the existing contract arrangement and the individual filling the role are performing well, and staff recommends that the current staffing model be continued. Authorization of Code Enforcement Contract Funding January 3, 2017 2 FISCAL IMPACT The financial impact of the authorization sought here provides for approximately $7,000 a month in contract costs, which are within the existing budget for the code enforcement function. Exhibit:  Resolution RESOLUTION NO. ______ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME AUTHORIZING PAYMENT TO CSG CONSULTANTS, INC. IN EXCESS OF $100,000 FOR THE PROVISION OF CODE ENFORCEMENT SERVICES WHEREAS, the City has previously entered into a contract with CSG Consultants, Inc., to provide code enforcement services; and WHEREAS, such services have been competently rendered; and WHEREAS, the cumulative costs of such services are likely to exceed $100,000; and WHEREAS, Council consent is required for payments of more than $100,000 on a single contract; and WHEREAS, the services provided are within the budgeted amount as reviewed and set by Council for the code enforcement function. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Burlingame authorizes payments in excess of $100,000 to CSG Consultants, Inc., for code enforcement services, to be reviewed and processed in the regular manner for invoiced services charged to the City. Ricardo Ortiz, Mayor I, Meaghan Hassel-Shearer, City Clerk of the City of Burlingame, do hereby certify that the foregoing resolution was introduced at a regular meeting of the City Council held on the 3rd day of January, 2017, and was adopted thereafter by the following vote: AYES: Councilmembers: NOES: Councilmembers: ABSENT: Councilmembers Meaghan Hassel-Shearer, City Clerk 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Margaret Glomstad, Parks and Recreation Director – (650) 558-7307 Subject: Approval of the Purchase of Max Solutions Field Scheduling Software RECOMMENDATION Staff recommends that the City Council approve the purchase of Max Solutions field scheduling software in the amount of $7,200. The purchase will require an additional budget appropriation of $7,200 for the Parks and Recreation General Fund operating budget for the purchase of the software and annual maintenance fee. BACKGROUND City staff schedule over 15,000 hours of City and Burlingame School District field usage. The current process is complex and staff-time intensive. In addition, field users have expressed to the Parks and Recreation Commission and staff their frustration that it is difficult to view available times in the current system, which detracts from the efficient scheduling of fields. In an attempt to streamline the field rental and allocation process, staff updated the existing Field Use Policy to address community concerns, and they researched other scheduling options to improve efficiency, transparency, and user access. Staff looked for an online system that could automate the request, payment, insurance submission, and permit issue process as well as display field use in real-time. Only three programs had a standalone field scheduling software module: Civic Permits, Maximum Solutions, and Book King. DISCUSSION Staff set up presentations with each company. Following the presentation, staff compiled a detailed analysis of the benefits and functionalities of each software program (Exhibit A). The key aspects reviewed were: 1. Public interface - intuitive and easy to manage, includes mass editing of reservations and automated adjustments of permits. 2. The ability to define “blocks of time.” 3. The ability to define time based on the day of the week, the season, daylight availability, etc. 4. The option for a detailed list of amenities tied to each facility. 5. The ability to accept credit cards - preferably with no additional expense to the City. Purchase of Max Solution Field Scheduling Software January 3, 2017 2 6. The pricing structure. Civic Permits is the system currently used by the San Mateo Union High School District. This software’s interface is not intuitive; it does not have mass editing; and it does not permit “blocks of time”. In addition, users do not have access to an individualized user calendar; the software does not list amenities at each facility; and payments need to be made by check. Although there are many drawbacks to this system, it is the most cost-effective flat rate software program. Max Solutions has an interface that appears to be more intuitive. The software provides the option to mass edit; it has the ability to schedule with “blocks of time”; it has the flexibility to define hours of use by season, by week and daylight hours; and it lists amenities at each facility. Max Solutions accepts credit cards consistent with the existing payment system, and pricing is by user. Although Book King has an acceptable interface, it does not have the option to mass edit, and it does not allow the “blocking of time”. This program lists amenities at each facility and accepts credit cards, but it would require the City to contract with another credit card processor. Pricing for this program is by facility. Staff recommends the purchase of Max Solutions Field Scheduling Software program due to the program’s flexibility and functionality, as described above. The program will improve staff’s ability to manage the field scheduling process and billing; allow the public to see the field schedule in real-time; and improve the scheduling experience of the users of the fields. FISCAL IMPACT The first year cost (including website set up and training) is $7,200 for five users. A request for the additional budget appropriation needed for the purchase will be included in the fiscal year 2016-17 Mid-year review. The ongoing annual expense will be $4,200; this sum will need to be included as part of future Parks and Recreation General Fund operating budgets. Exhibit:  Field Scheduling Software Comparison Field Scheduling Software Comparison Cost/Functionalities Civic Permits Max Solutions (5 user/10 user) Book King Set Up Cost $1,250 $3,000 $4,399.69 Annual cost $2,099 $4,200/$4,800 $2,519.88 – 150 Field limitation First Year Cost $3,349 $7,200/$7,800 $6,919.57 Accepts Credit Card^ No Yes Yes (with additional fee) Pricing Structure N/A Per Administrator Per Facility Comprehensive Capabilities* 1 3 2 Customer Interface* 1 3 2 Mass Edit Feature (Users can edit large groups of requested times simultaneously) No Yes No Complex Facilities (If/Then Situation) ^ No Yes Yes Amenities Listed by Facility No Yes Yes Interactive User Calendar^ No Yes (including automating editing via drag and drop feature) Yes Ability to Create “block of time” for User Group scheduling^ No Yes No *Ranking: 3 = exceptional, 2 = above average, 1 = basic (below current tech standards) ^Indicates features that are needed to provide customers with efficient rental process 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: William Meeker, Community Development Director – (650) 558-7255 Subject: Public Hearing and Introduction of an Ordinance Rezoning Property from R-4 (High Density Multi-family Residential) to CAR (California Drive Auto Row) and Consideration of a General Plan Amendment to Designate Property from R-4 Incentive District to California Drive Mixed Use District; a Mitigated Negative Declaration Pursuant to the California Environmental Quality Act (CEQA); Design Review; and a Vesting Tentative Subdivision Map for a New Automobile Service Facility at an Existing Automobile Dealership on Property Located at 85 California Drive RECOMMENDATION The City Council should: 1. Introduce the following ordinance by title only, waiving further reading: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BURLINGAME AMENDING THE CITY’S ZONING MAP BY REZONING PROPERTY FROM HIGH DENSITY MULTI-FAMILY RESIDENTIAL (R-4) TO CALIFORNIA DRIVE AUTO ROW (CAR) 2. Conduct a public hearing and consider all public testimony related to the Ordinance; a General Plan Amendment to designate property from R-4 Incentive District to California Drive Mixed Use District; a Mitigated Negative Declaration pursuant to the California Environmental Quality Act (CEQA); Design Review; and a Vesting Tentative Subdivision Map for a new automobile service facility at an existing automobile dealership. 3. Following conclusion of the public hearing, provide direction to staff regarding any desired changes to the Ordinance and related project entitlements. 4. Direct staff to place adoption of the proposed Ordinance and resolutions memorializing the City Council’s action related to all project entitlements on the January 17, 2017 regular meeting agenda of the City Council. 85 California Drive – New Automobile Service Facility January 3, 2017 2 BACKGROUND Project Description: The applicant is proposing to construct a new automobile service facility at an existing automobile dealership (Putnam Subaru). The proposal includes demolishing a small office at the rear of the existing showroom building, the existing autom obile service facility, and the existing Hertz rental office. The proposed 15,866 SF building consists of 10,352 SF of enclosed building area and 5,514 SF of covered drive aisle area. The existing Subaru showroom building would remain. The new service facility would consist of 16 service bays, parts and tool rooms, a service writer office, and customer lounge. The project site is located at the southwest corner of California Drive and Bayswater Avenue. The site consists of six separate parcels; four parcels and portions of a fifth and sixth parcel would be combined into one parcel for the proposed project (see Vesting Tentative Subdivision Map and attached diagram). The remaining fifth and sixth parcels at the corner of Bayswater Avenue and Highland Avenue would be combined into one parcel as a part of this process, and would continue to be used for storing new vehicle inventory. The proposed lot combination requires applications for a General Plan Amendment to change the land use designation of a portion of the site from R-4 Incentive District to California Drive Mixed Use District and Rezoning a portion of the parcel from R-4 (high density multi-family residential) to CAR (California Drive Auto Row). The proposal complies with the off-street parking requirement by providing a total of 15 parking spaces at the front of the site. The front of the site would also contain a vehicle display area. Customers will enter the facility from Bayswater Avenue and drive into one of two service drive lanes until greeted by a service writer. The vehicles would then be driven to the service facility for servicing. Two new curb cuts will be installed along Bayswater Avenue for the new service facility. The existing curb cut along Bayswater Avenue near the corner will be reduced in width; the existing curb cut further west along Bayswater Avenue will be eliminated. Application Elements:  Rezoning: Required to change a portion of a site from R-4 (high density multi-family residential) to CAR (California Drive Auto Row).  General Plan Amendment: Required to change the land use designation of a portion of the site from R-4 Incentive District to Calif ornia Drive Mixed Use District.  Mitigated Negative Declaration: A determination that with mitigation measures there will be no significant environmental effects as a result of this project.  Design Review: Required f or the new automobile service facility at an existing automobile dealership.  Vesting Tentative Subdivision Map: Required to combine four existing parcels and portions of a fifth and sixth parcel into one parcel. 85 California Drive – New Automobile Service Facility January 3, 2017 3 A copy of the December 12, 2016 Planning Commission staff report is attached and provides a full discussion and analysis of the proposed project, including conditions of approval recommended by the Planning Commission on December 12, 2016. Planning Commission Action: On December 12, 2016, the Planning Commission reviewed the proposed project, including the Rezoning and General Plan Amendment. The Commission voted 7-0-0-0 to recommend approval of the applicant’s requests for a Rezoning, General Plan Amendment, Mitigated Negative Declaration, Design Review, and Vesting Tentative Subdivision Map. Since the City Council is the final decision-making body regarding the request for Rezoning and General Plan Amendment, the Planning Commission’s action was in the form of a recommendation to the City Council. The City Council may consider the following findings regarding the project entitlements: Rezoning Findings:  The rezoning is appropriate and consistent with the intent of the General Plan and Zoning Ordinance in that the project includes rezoning of a portion of the property which currently contains no structures (Assessor’s Parcel 029-242-020 and a portion of 029-242-230) from the R-4 (high density multi-family residential) to the CAR (California Drive Auto Row) zone, which will bring the entire combined site into one zoning designation and would be consistent with the proposed California Drive Mixed Use District general plan designation; that the City of Burlingame Zoning Regulations indicate that retail sales and service of automobiles is a permitted use within the CAR Zoning District and that the proposed project conforms to all development regulations for the CAR Zoning District. General Plan Amendment Findings:  The change is consistent with the policies of the General Plan and in particular the Land Use Element of the General Plan in that the proposal includes changing the land use designation of a portion of the property that currently contains no structures and is currently being used to store vehicles associated with the automobile dealership (Assessor’s Parcel 029-242-020 and a portion of 029-242-230) from the R-4 Incentive District to the California Drive Mixed Use District within the Downtown Specific Plan, which will bring the entire combined site into one designation and would be consistent with the adjacent California Drive Mixed Use District general plan designation; that the change in land use designation will not alter the land use patterns in the area since the area is currently being used to store vehicles and is an extension of the existing California Drive Mixed Use District; that the City of Burlingame General Plan indicates that this designation consists of the Auto Row area along California Drive between Burlingame and Peninsula Avenues dominated by automobile-related uses, and that auto showrooms, hotel, or retail uses are permitted on the ground floor, that automobile dealerships and services facilities are an important part of the City’s economy, and that the proposed service facility will continue to provide a needed service for the community, and therefore the proposed 85 California Drive – New Automobile Service Facility January 3, 2017 4 automobile service facility would be consistent with the California Drive Mixed Use Distr ict general plan designation. Commercial Design Review Findings:  The proposed project is compatible with the City’s commercial design review criteria in that the proposal consisting of prefinished horizontal metal and aluminum composite panel siding, painted steel and aluminum trim, and an aluminum anodized storefront system is consistent with the pattern of diverse architectural styles that characterize the city’s auto- row commercial area, and is consistent with the architectural style, mass, and bulk of the existing showroom building; that the proposal is consistent with the design guidelines established in Chapter 5 of the Downtown Specific Plan (Design & Character); and that 879 SF of new landscaping in the ground and six new street trees along California Drive and Bayswater Avenue will be planted to enrich the existing commercial neighborhood. Vesting Tentative Subdivision Map Findings:  The proposed vesting tentative subdivision map, together with the provisions for its design and improvement, is consistent with the Burlingame General Plan and consistent with the provisions of the Subdivision Map Act; that the site is physically suited for the proposed type and density of development in that the proposed Vesting Tentative Subdivision Map, together with the provisions for its design and improvement, is consistent with the Burlingame General Plan and consistent with the provisions of the Subdivision Map Act; that the site is physically suited for the proposed type of development in that it provides an automobile service facility use in an area identified as suitable for such use in the Burlingame General Plan; that the project provides ample vehicular and pedestrian circulation to serve the project, and is consistent with required development standards including setbacks, lot coverage and building height. FISCAL IMPACT None. Exhibits:  Ordinance  Revised Zoning Map  PC Minutes (Draft) – 121216  PC Staff Report - 121216  PC Staff Report Attachments – 121216  Initial Study  Initial Study Errata  Mitigated Negative Declaration  Mitigation Monitoring & Reporting Program  Public Works Memo Re: Maps  Project Plans ORDINANCE NO. __________ 1 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BURLINGAME AMENDING THE CITY’S ZONING MAP BY REZONING PROPERTY FROM HIGH DENSITY MULTI-FAMILY RESIDENTIAL (R-4) TO CALIFORNIA DRIVE AUTO ROW (CAR) The City Council of the City of Burlingame hereby ordains as follows: Division 1. Factual Background WHEREAS, on April 9, 2015, Kent Putnam filed an application with the City of Burlingame Community Development Department – Planning Division requesting approval of a new automobile service facility at an existing automobile dealership, which included Assessor’s Parcel 029-242-020 (the easterly 50-feet of Lot 6, Block 13, Supplementary Map No. 1 of the Town of Burlingame) and the easterly ten-feet of Assessor’s Parcel 029-242-230 (the easterly 60-feet, excepting therefrom the easterly 50-feet, of Lot 6, Block 13, Supplementary Map No. 1 of the Town of Burlingame) from High Density Multi-Family Residential (R-4) to California Drive Auto Row (CAR); and WHEREAS, the rezoning is appropriate and consistent with the intent of the Zoning Ordinance in that the from High Density Multi-Family Residential (R-4) to California Drive Auto Row (CAR) will bring the entire combined site into one zoning designation and would be consistent with the proposed California Drive Mixed Use District designation represented in the Burlingame Downtown Specific Plan; and WHEREAS, the City of Burlingame Zoning Regulations indicate that service of automobiles is a permitted use within the California Drive Auto Row (CAR) zone and that the proposed project conforms to all development regulations for the California Drive Auto Row (CAR) zone; and WHEREAS, after considering all written and oral testimony presented at the December 12, 2016 public hearing regarding the proposed amendment, the Planning Commission voted 7-0-0-0 to recommend to the City Council, adoption of an ordinance amending the City’s zoning map as described herein; and WHEREAS, at its regular meeting of January 3, 2017 the Burlingame City Council conducted a duly noticed public hearing to consider the Planning Commission’s recommendation to amend the City’s zoning map and following conclusion of the public hearing and consideration of all written and oral testimony provided during the hearing, introduced an ordinance, by title only, waiving further reading, amending the City’s zoning map as described herein. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURLINGAME DOES ORDAIN AS FOLLOWS: ORDINANCE NO. __________ 2 Division 2. The Burlingame zoning map is hereby amended as follows: Changing the zoning designation of Assessor’s Parcel 029-242-020 (the easterly 50-feet of Lot 6, Block 13, Supplementary Map No. 1 of the Town of Burlingame) and the easterly ten-feet of Assessor’s Parcel 029-242-230 (the easterly 60-feet, excepting therefrom the easterly 50-feet, of Lot 6, Block 13, Supplementary Map No. 1 of the Town of Burlingame) from High Density Multi-Family Residential (R- 4) to California Drive Auto Row (CAR) Division 3. This ordinance, or a summary as applicable, shall be published as required by law and shall become effective 30-days thereafter. ____________________________________ Ricardo Ortiz, Mayor I, Meaghan Hassel-Shearer, City Clerk of the City of Burlingame, do hereby certify that the foregoing ordinance was introduced at a regular meeting of the City Council held on the 3rd day of January, 2017, and adopted thereafter at a regular meeting of the City Council held on the 17th day of January, 2017, by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ___________________________________ Meaghan Hassel-Shearer, City Clerk BURLINGAME CITY HALL 501 PRIMROSE ROAD BURLINGAME, CA 94010 City of Burlingame Meeting Minutes - Draft Planning Commission 7:00 PM Council ChambersMonday, December 12, 2016 a.85 California Drive, zoned CAR and R-4 - Application for Mitigated Negative Declaration, General Plan Amendment, Rezoning, Design Review, and Vesting Tentative Subdivision Map for a new automobile service facility at an existing automobile dealership (Alan Cross, Proto Inc., applicant and architect; Kent Putnam, property owner) (143 noticed) Staff Contact: Ruben Hurin 85 California Dr - Staff Report 85 California Dr - Attachments 85 California Dr - Plans 85 California Dr - NOI 85 California Dr - MND/IS 85 California Dr - Public Works Memorandum 85 California Dr - Vesting Tentative Subdivision Map Attachments: All Commissioners had visited the property. There were no ex -parte communications to report. Chair Loftis noted that he reviewed the recording from the prior hearing on this matter. Senior Planner Hurin provided an overview of the staff report. Noted that Catherine Wade from CirclePoint (the environmental consultant) is also present to respond to questions. Questions of Staff: >Clarified that the Council recommendation will include all aspects of the application. (Hurin - yes.) Chair Loftis opened the public hearing. Kent Putnam and Alan Cross (architect) represented the applicant: Commission Comments/Questions: >Noted that the windows on the rear have been eliminated. The roof plans calls for skylights, but they don't show on the plans. (Putnam - yes. Cross - confirmed that it was an oversight on the roof plan.) >Requested clarification on where visitor parking will be located. (Cross - area fronting California Drive has a portion reserved for customer parking and inventory display.) Public Comments: There were no comments from the public. Chair Loftis closed the public hearing. Commission Discussion: Page 1City of Burlingame Printed on 12/20/2016 December 12, 2016Planning Commission Meeting Minutes - Draft >Noted that most of the mitigation measures are pretty standard; has no issues with the environmental analysis - it is acceptable. >Want to encourage the viability of the dealership. >The concern regarding the size of the remaining lot has been alleviated; is a buildable property now. >Project is supportable. >Has some concern about rezoning a portion of the residentially zoned property to CAR zoning . Happy that the project will require the City Council to discuss the issue. Chair Loftis made a motion, seconded by Commissioner Bandrapalli, to recommend the the City Council approval the requests. Chair Loftis called for a voice vote, and the motion passed by the following vote: Aye:DeMartini, Loftis, Gum, Terrones, Bandrapalli, Sargent, and Gaul7 - Page 2City of Burlingame Printed on 12/20/2016 PROJECT LOCATION 85 California Drive Item No. 8a Regular Action Item Item No. 8a Regular Action Item City of Burlingame Mitigated Negative Declaration, General Plan Amendment, Rezoning, Design Review, and Vesting Tentative Subdivision Map Address: 85 California Drive Meeting Date: December 12, 2016 Request: Application for Mitigated Negative Declaration, General Plan Amendment, Rezoning, Design Review, and Vesting Tentative Subdivision Map for a new automobile service facility at an existing automobile dealership. Applicant: Kent Putnam APN: 029-242-020,-030,-040,-050 & portion of -230 Designer: Alan Cross, Proto Inc. Lot Area: 24,925 SF (0.57 acres) combined Property Owner: Kent Putnam General Plan: Commercial Uses: Service & Special Sales Zoning: CAR and R-4 Burlingame Downtown Specific Plan: California Drive Mixed Use District & R-4 Incentive District Adjacent Development: Automobile sales and service and multifamily residential. Project Summary: The project site is located at the southwest corner of California Drive and Bayswater Avenue. The project site consists of six separate parcels; four parcels and portions of a fifth and sixth parcel would be combined into one parcel for the proposed project (see Vesting Tentative Subdivision Map and attached diagram). Staff would note that the remaining fifth and sixth parcels at the corner of Bayswater Avenue and Highland Avenue would be combined into one parcel as a part of this process, and would continue to be used for storing new vehicle inventory. The proposed lot combination requires applications for a General Plan Amendment to change the land use designation of a portion of the site from R-4 Incentive District to California Drive Mixed Use District and Rezoning a portion of a parcel from R-4 (high density multifamily residential) to CAR (California Drive Auto Row). The site is surrounded by automobile sales and service facilities; there is an existing two-story multifamily residential building to the south. The project site currently contains a one-story Subaru showroom building, a one-story Subaru automobile service facility, a Hertz automobile rental office located in the service facility building and automobile storage for Subaru and Hertz on a paved parking area. The proposal includes demolishing a small office at the rear of the existing showroom building (115 SF), the existing service facility and Hertz rental office (2,620 SF) and building a new automobile service facility for Subaru. The proposed 15,866 SF building consists of 10,352 SF of enclosed building area and 5,514 SF of covered drive aisle area. The existing showroom building would remain. The new service facility would consist of 16 service bays, parts and tool rooms, a service writer office and customer lounge. The front of the lot would contain an outdoor vehicle display area and customer/employee parking. The following applications are being requested for the proposed project:  Mitigated Negative Declaration, a determination that with mitigation measures there will be no significant environmental effects as a result of this project;  General Plan Amendment to change the land use designation of a portion of the site from R-4 Incentive District to California Drive Mixed Use District;  Rezoning of a portion of a site from R-4 (high density multifamily residential) to CAR (California Drive Auto Row);  Design Review for a new automobile service facility at an existing automobile dealership; and  Vesting Tentative Subdivision Map to combine four existing parcels and portions of a fifth and sixth parcel into one parcel. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 2 Summary of Changes: Since the February 22, 2016 environmental scoping and design review study meeting, the following changes have been made to the project: 1. Adjusted Property Line to Increase Lot Area of Remaining R-4 Lot: The remaining R-4 lot (currently comprised of two 50’ x 100’ lots) at the corner of Bayswater and Highland Avenues currently measures 10,000 SF in area (100’ x 100’). With the initially proposed project, the remaining R-4 lot was being reduced to 7,200 SF in area (72’ along Bayswater Avenue x 100’ along Highland Avenue). The project has been revised to increase the remaining R-4 lot from 7,200 SF to 9,000 SF in area (90’ along Bayswater Avenue x 100’ along Highland Avenue). This was achieved by shifting the property line 19’-0” closer to the rear of the proposed building (previously located 20’-0” away from the rear of the building). However, given that the proposed building is now located 1’-0” away from the property line, the previously proposed windows along the rear of the building were eliminated to comply with Building and Fire Codes. Please refer to revised sheets A.101, A.201, and A.301. 2. Extended the Covering above the Service Drive Aisle: Previously, only the portion of the service drive aisle closest to Bayswater Avenue contained a covering. The project has been revised to extend the covering above the entire service drive aisle leading to the service area (additional 5,514 SF of covering) (see revised Roof Plan, sheet A.202). 3. Added a Parts Storage Mezzanine: In order to provide the service facility an additional area for parts storage without increasing the footprint of the building, the project was revised to include a 1,627 SF parts storage mezzanine (see revised sheet A.201). As a result, the overall height of the building increased by 1’-0” (from 24’-1½” to 25’-1½”) (see revised building elevations, sheet A.301). Based on the parking ratios for the showroom, service, and storage uses proposed on the site, the off-street parking requirement increased from 14 to 15 parking spaces; a total of 15 parking spaces are proposed on-site (see revised Site Plan, sheet A.101). Environmental Review: The February 22, 2016 Planning Commission meeting included environmental scoping and design review for the proposed project. An Initial Study was prepared by Circlepoint, dated November 2016. Based on the Initial Study, a Mitigated Negative Declaration has been prepared for review by the Planning Commission. As presented the Mitigated Negative Declaration identified issues that were "less than significant with mitigation incorporation" in the areas of aesthetics, air quality, biological resources, cultural resources, geology/soils, hazards/hazardous materials, noise, and transportation and traffic. Based upon the mitigation measures identified in the Initial Study, it has been determined that the proposed project can be addressed by a Mitigated Negative Declaration since the Initial Study did not identify any adverse impacts which could not be reduced to acceptable levels by mitigation (please refer to the attached Mitigated Negative Declaration/Initial Study No. 595-P). The mitigation measures in the Initial Study have been incorporated into the recommended conditions of approval (in italics). The Mitigated Negative Declaration was circulated for public review on November 23, 2016. The 20-day review period ends on December 12, 2016; as of the printing date of this staff report, no comments have been submitted on the Mitigated Negative Declaration. Design Review : Design Review is required for new automobile service facility pursuant to Code Section 25.57.010 (c) (1). Design Review was instituted for commercial projects in 2001 with the adoption of the Commercial Design Guidebook. On May 11, 2009 the Planning Commission approved an application for Design Review for façade changes to the existing Subaru showroom; the project was completed in December, 2010. The existing Subaru showroom building to be retained contains stucco walls, a slate tile clad pilaster, an aluminum anodized storefront system, aluminum composite paneling and painted steel and aluminum trim across the upper portion of the building. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 3 The proposed new automobile service facility requires an application for Design Review and is subject to Section 5.0 - Design & Character of the Downtown Specific Plan (see attached). The proposed service facility building contains prefinished horizontal metal and aluminum composite panel siding, painted steel and aluminum trim and an aluminum anodized storefront system. Please refer to the proposed building elevations (sheet A.301) provided by the designer. As measured from the average top of curb level along California Drive, the proposed building measures 25’-1½” in height and therefore is in compliance with building height regulations (55’-0” maximum allowed; Conditional Use Permit required for any building exceeding 35’-0”). The proposed ground floor ceiling height is 19’-10” where 15’-0” is the minimum required. General Plan and Zoning: This application includes combining four parcels and portions of a fifth and sixth parcel into one parcel for the proposed project. The remaining fifth and sixth parcels at the corner of Bayswater Avenue and Highland Avenue would be combined into one parcel as a part of this process, and would continue to be used for storing new vehicle inventory. The proposed project requires applications for a General Plan Amendment to change the land use designation of a portion of the site from R-4 Incentive District to California Drive Mixed Use District and Rezoning a portion of a parcel from R-4 (high density multifamily residential) to CAR (California Drive Auto Row). The Burlingame General Plan designates this site for Service and Special Sales. In 2010 the City Council adopted the Burlingame Downtown Specific Plan, which serves as an element of the General Plan. Within the Downtown Specific Plan, the majority of the site is located in the California Drive Mixed Use District; the remaining portion of the site is located in the R-4 Incentive District. The California Drive Mixed Use District is described as follows: The Auto Row area is the area along California Drive between Burlingame and Peninsula Avenues. Automobile-related uses dominate in this area. Auto showrooms, hotel or retail uses are permitted on the ground floor, and housing, offices or hotel uses can be allowed on upper floors. Non-auto uses should be carefully considered to ensure compatibility with the area's traditional focus on automobile businesses; retail, personal and business services, and hotels require a conditional use permit, as do commercial uses greater than 5,000 square feet. The project site is predominantly located in the CAR zoning district designated primarily for automobile-related uses, with the remaining portion of the site located in the R-4 District designated primarily for high-density multifamily residential land uses. Off-Street Parking and Trip Generation: Off-street parking is required for the existing automobile sales showroom and the proposed automobile service facility. Based on the existing automobile showroom (1,539 SF @ 1:600 SF parking ratio) and proposed automobile service facility (8,725 SF @ 1:800 SF parking ratio) and parts storage mezzanine (1,627 SF @ 1:1,000 SF parking ratio), a total of 15 off-street parking spaces are required. The proposal complies with the off-street parking requirement by providing a total of 15 parking spaces at the front of the site. The front of the site would also contain a vehicle display area. Customers will enter the facility off Bayswater Avenue and drive into one of two service drive lanes until greeted by a service writer. The vehicles would then be driven to the service facility for servicing. Two new curb cuts will be installed along Bayswater Avenue for the new service facility. The existing curb cut along Bayswater Avenue near the corner will be reduced in width; the existing curb cut further west along Bayswater Avenue will be eliminated. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 4 The following is an excerpt from Section 16, Transportation and Traffic, of the Initial Study, which provides a summary of the proposed project’s expected trip generation compared with the existing on-site use: “The project site currently occupies two separate parcels that are fully developed with a showroom building, an automobile service facility, an automobile rental office, and automobile storage on a paved parking area. The existing service facility generates an estimated 75 daily vehicle trips—6 during the AM peak hour and 8 during the PM peak hour. The anticipated trip generation for the proposed project was estimated using standard rates published by the Institute of Transportation Engineers (ITE) in Trip Generation Manual, 9th Edition, 2012 for “Automobile Care Center”. The proposed project is expected to generate an average of 125 daily trips, with 26 trips during the AM peak hour and 36 during the PM peak hour. San Mateo County generally requires a traffic report if a project generates over 500 trips per day or 100 trips during the peak hour or where other possible adverse effects are identified. Because the project’s expected trip generation would be below these thresholds, operational impacts to traffic and level-of-service (LOS) standards would be less than significant.” With respect to the proposed modifications to the curb cuts along Bayswater Avenue, the Initial Study notes the following: “Sight distance along Bayswater Avenue at the project driveways was evaluated based on sight distance criteria contained in the Highway Design Manual published by Caltrans. Both California Drive and Bayswater Avenue within the project vicinity are relatively flat and straight, and sight lines for the proposed driveways would be satisfactory, so long as parked vehicles along the project frontages do not obstruct sight lines. Mitigation Measure TRA-2 would avoid potential safety impacts at these access points. Mitigation Measure TRA-2: On-street parking to the east and west of the outbound driveways on Bayswater Avenue shall be prohibited by painting red curb for a distance of approximately 20 feet on either side.” Landscaping/Street Trees: No landscaping or vegetation exists on the site. Two new areas of landscaping, totaling 879 SF, are proposed to be planted in the areas designated for bioretention (see sheet A.101). There are seven street trees, six evergreen pear trees (Pyrus kawakamii) and one maidenhair tree (Ginkgo biloba), along Bayswater Avenue in front of the project property. All seven street trees would be removed and replaced with four new street trees along Bayswater Avenue. Two evergreen pear trees and one maidenhair tree would be removed to accommodate new curb cuts for the new service facility. The remaining four evergreen pear trees would also be removed and replaced with four maidenhair trees. The applicant would obtain the required tree removal permits from the Parks and Recreation Director pursuant to the Burlingame Municipal Code Chapter 11.04, Street Trees. There are no street trees currently existing along California Drive in front of the project property. As part of the project, two new 24-inch box ‘Redspire’ Callery pear (Pyrus calleryana ‘Redspire’) street trees would be planted along California Drive to satisfy the Burlingame Parks Division. Additionally, two new areas of landscaping, totaling 879 square feet, would be planted in the areas designated for bioretention. This space intentionally left blank. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 5 Table 1 - Compliance with CAR Regulations Lot Area: 24,925 SF Plans date stamped: December 5, 2016 Proposed Allowed/Required Use: automobile service facility automobile service facility allowed as a permitted use in the CAR District Setbacks and Build-to-line: Front (California Drive): 80'-0" (18% of the of existing building is located at front property line) ¹ no minimum required (at least 60% of building must be located at front property line) Interior Side Setback: 0'-0" no minimum required Exterior Side Setback (Bayswater Ave): 0'-0" no minimum required Rear Setback: 1’-0” no minimum required Building Height: 25’-1½” 55’-0” maximum >35’-0” with CUP Ground Floor Ceiling Height: 19’-10” 15’-0” minimum Off-Street Parking: 15 spaces 15 spaces ¹ The proposed project is not required to comply with the build-to-line requirement since the project consists of an addition and not a new development. February 22, 2016 Environmental Scoping and Design Review Study Meeting: At the February 22, 2016, Planning Commission environmental scoping and design review study meeting, the Commission provided the comments and questions listed below (see attached February 22, 2016 Planning Commission Minutes). There were no changes to the design of the building. Please refer to the applicant's written response, dated December 5, 2016, for responses to the questions and comments listed below, as well as a summary of the changes made to the project since the design review meeting. Responses provided by staff are found on the following page. Comments addressed by applicant (see applicant's written response dated December 5, 2016 for answers to these comments/questions):  Will both vehicle storage lots on Bayswater be affected?  Would it be possible to get rendered elevations or 3-D rendering from corner of California and Bayswater to get a better idea of building massing?  Is there a plan to add street trees elsewhere, or alternates that would not remove as many?  Have you spoken to the residents of the apartment building next door? This space intentionally left blank. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 6 Comments addressed by city staff: 1. Would like to evaluate the remaining R-4 parcel for viability. The General Plan emphasizes making room for housing. ▪ As previously noted in the staff report, the project has been revised to increase the remaining R-4 lot from 7,200 SF to 9,000 SF in area (90’ along Bayswater Avenue x 100’ along Highland Avenue). There are several multifamily residential buildings on Highland Avenue, south of Bayswater Avenue, most of which are located on narrower 50’ wide lots measuring 10,000 SF in area. Planning records show that these multifamily buildings range in size from 9 to 14 units, or 39 to 60 dwelling units/acre. Based on the General Plan designation of 51 plus dwelling units/acre for high density multifamily residential, the remaining R-4 lot (9,000 SF proposed) could accommodate at least 10 units. In order to provide an incentive to encourage high density residential uses, buildings or structures up to 55’-0” in height are allowed by right within the R-4 Incentive District. Based on the proposed 9,000 SF lot size, a four-story building above at-grade parking containing 3-4 units per floor would yield 12-16 units. Lastly, the remaining R-4 parcel currently consists of two 50’ x 100’ lots. Combining these two lots into one large lot would encourage development of a more viable multifamily residential project. 2. Concerned to have the R-4 lot remain as car storage when the Downtown Specific Plan encourages residential development. ▪ The automobile storage use is considered to be an existing nonconforming use. Since there is no change proposed to the use of this lot with this application, the use may remain until it is redeveloped in the future. 3. Consider traffic issues. ▪ Please refer to the ‘Off-Street Parking and Trip Generation’ section on pages 3 through 4 of the staff report, as well as the ‘Transportation and Traffic’ section on pages 61 through 66 of the Initial Study. In summary, the Transportation and Traffic analysis in the Initial Study concludes that operational impacts to traffic and level-of-service standards from the proposed project would be less than significant. The existing service facility generates an estimated 75 daily vehicle trips - 6 during the AM peak hour and 8 during the PM peak hour. The proposed project is expected to generate an average of 125 daily trips - 26 trips during the AM peak hour and 36 during the PM peak hour. San Mateo County generally requires a traffic report if a project generates over 500 trips per day or 100 trips during the peak hour or where other possible adverse effects are identified. Because the project’s expected trip generation would be below these thresholds, operational impacts to traffic and level-of-service (LOS) standards would be less than significant. 4. Concern with noise with service building up against adjacent apartment building. Evaluate current noise levels compared to anticipated noise levels after construction. ▪ The following are excerpts from Section 12, Noise, of the Initial Study, which analyzes the potential noise impacts from operation of the proposed automobile service facility. Illingworth and Rodkin, Inc., prepared a Noise and Vibration Assessment for the project in August 2016. In summary, the Noise analysis in the Initial Study concludes that operational impacts to noise standards from the proposed project would be less than significant. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 7 “The nearest noise sensitive receptors are an apartment building that adjoins the site to the southeast and single family residences located across Highland Avenue, about 150 feet from the site. Based on the results of the noise monitoring survey, existing daytime traffic noise levels at the single and multi-family residences were measured to be in the range of 53 to 57 dBA L eq with maximum ambient levels in the range of 67 to 76 dBA L max . The Noise Element of the General Plan sets forth noise and land use compatibility standards to guide development, and noise goals and policies to protect citizens from the harmful and annoying effects of excessive noise. Suggested outdoor noise levels suitable for single- and multi-family residential land uses would range up to 60 dBA CNEL, according to the General Plan. The General Plan also establishes 45 dBA CNEL as the indoor noise level planning criterion. Once operational, service activities would generate CNEL levels of 44 to 47 dBA at the north facing façade of the apartment building, about 35 dBA in the apartment courtyard area, and 37 to 44 dBA at the closest residences across Highland Avenue. These levels would be well below the 60 dBA CNEL criteria. The primary sources of noise anticipated at the existing residences are service center activities, oil deliveries, and vehicle circulation. According to the project plans, both the service center entrance and exit would face away from noise sensitive areas. The service center entrance would be located approximately 25 feet and facing away from the adjoining apartment building; therefore, partial acoustical shielding would be provided from the service building itself. The residences across Highland Avenue would have partial line-of-sight to the service center exit and are located about 190 to 250 feet from the proposed roll-up door location. Assuming a worst-case scenario noise level of 65 dBA Leq during full service operations at a distance of 50 feet from, and in direct line-of-sight of an open bay, operational noise levels are calculated to be 47 to 50 dBA Leq at the north-facing façade of the apartment building, about 38 dBA Leq in the apartment courtyard area, and 40 to 47 dBA Leq at the closest residences across Highland Avenue. These levels would be well below the 60 dBA CNEL threshold. Given this, any permanent increases in noise levels would not be perceptible, and this impact would be less than significant.” Vesting Tentative Subdivision Map for Lot Combination: The Vesting Tentative Subdivision Map application and project application are reviewed together by the Planning Commission. Please refer to the attached memorandum prepared by the Department of Public Works – Engineering Division, dated December 8, 2016. The Planning Commission’s action on the map application should be in the form of a recommendation to the City Council. The Vesting Tentative Subdivision Map shows how the existing six lots would be combined into two lots; the proposed project site (Parcel B) and the remaining R-4 parcel (Parcel A). Parcel B would have 107 feet of street frontage along California Drive and 211.17 feet of street frontage along Bayswater Avenue, and would measure 24,925 SF in area. In the CAR District, the minimum requirement is a 5,000 SF lot with 50 feet of street frontage. Parcel B as proposed is in compliance with lot size and street frontage requirements. Parcel A would have 100 feet of street frontage along Highland Avenue and 90 feet of street frontage along Bayswater Avenue, and would measure 9,000 SF in area. In the R-4 District, the minimum requirement is a 5,000 SF lot with 55 feet of street frontage from lots measuring 7,000 SF to 9,999 SF in area. Parcel A as proposed is in compliance with lot size and street frontage requirements. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 8 Public Facilities Impact Fees: The purpose of public facilities impact fees is to provide funding for necessary maintenance and improvements created by development projects. Public facilities impact fees are based on the uses, the number of dwelling units, and the amount of square footage to be located on the property after completion of the development project. New development that, through demolition or conversion, will eliminate existing development is entitled to a fee credit offset if the existing development is a lawful use under this title, including a nonconforming use. Based on proposed service facility (10,352 SF of enclosed building area) and providing a credit for the existing service facility (2,620 SF) and showroom office (115 SF) to be demolished, the required Public Facilities Impact Fee for this development project is: $17,498.58 (see table below). One-half of the public facilities impact fees payment will be required prior to issuance of a building permit issuance; the second half of the payment will be required before the final framing inspection. Service Area Auto Service Facility 10,352 SF¹ (industrial) (fee based on per 1,000 SF) Existing Auto Service 2,620 SF (industrial) (fee based on per 1,000 SF) Existing Showroom Office 115 SF (commercial) (fee based on per 1,000 SF) General Facilities & Equipment $305 x 10.4 = $3,172.00 $305 x 2.62 = $799.10 $640 x 0.12 = $76.80 Libraries not applicable not applicable not applicable Police $48 x 10.4 = $499.20 $48 x 2.62 = $125.76 $102 x .012 = $12.24 Parks & Recreation $56 x 10.4 = $582.40 $56 x 2.62 = $146.72 $118 x 0.12 = $14.16 Streets & Traffic $1,146 x 10.4 = $11,918.40 $1,146 x 2.62 = 3,002.52 $1,810 x 0.12 = 217.20 Fire $118 x 10.4 = $1,227.20 $118 x 2.62 = $309.16 $248 x 0.12 = $29.76 Storm Drainage $628 x 10.4 = $6,531.20 $628 x 2.62 = $1,645.36 $442 x 0.12 = $53.04 Subtotal $23,930.40 $6,028.62 $403.20 Total $23,930.40 - $6,028.62 (credit for existing service building) - $403.20 (credit for existing showroom office) $17,498.58 ¹ Based on enclosed building area. Staff Comments: See attached comments from the Building, Parks, Engineering, Fire, and Stormwater Divisions. This space intentionally left blank. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 9 Findings for a Mitigated Negative Declaration: For CEQA requirements the Planning Commission must review and approve the Mitigated Negative Declaration, finding that on the basis of the Initial Study and any comments received in writing or at the public hearing that there is no substantial evidence that the project will have a significant (negative) effect on the environment. Suggested Findings for Mitigated Negative Declaration: In accordance with CEQA Guidelines Section 15183, the environmental analysis in the Initial Study was conducted to determine if there were any project-specific effects that are peculiar to the project or its site. Based on the environmental analysis, it was determined that the proposed project would have no adverse environmental impacts on the environmental in the areas of agriculture and forestry services, greenhouse gas emissions, hydrology and water quality, land use and planning, mineral resources, population/housing, public services, recreation, and utilities and service systems. Although the environmental analysis did find that the project could have a significant effect in the areas of aesthetics, air quality, biological resources, cultural resources, geology/soils, hazards and hazardous materials, noise, transportation and traffic, and mandatory findings of significance, mitigations measures were identified to reduce adverse impacts to acceptable levels. Therefore, based on the Initial Study there will be no significant environmental effects as a result of this project. Findings for a General Plan Amendment: In acting on the request for a General Plan Amendment to change the land use designation of a portion of the site from R-4 Incentive District to California Drive Mixed Use District, the Planning Commission should state the reasons why they feel such action is appropriate. The Commission must state why the changes are consistent with the policies of the General Plan and in particular the Land Use Element of the General Plan. Suggested Findings for a General Plan Amendment: That the proposal includes changing the land use designation of a portion of the property which currently contains no structures and is currently being used to store vehicles associated with the automobile dealership (Assessor’s Parcel 029-242-020 and a portion of 029-242-230) from the R-4 Incentive District to the California Drive Mixed Use District within the Downtown Specific Plan, which will bring the entire combined site into one designation and would be consistent with the adjacent California Drive Mixed Use District general plan designation; that the change in land use designation will not alter the land use patterns in the area since the area is currently being used to store vehicles and is an extension of the existing California Drive Mixed Use District; that the City of Burlingame General Plan indicates that this designation consists of the Auto Row area along California Drive between Burlingame and Peninsula Avenues dominated by automobile-related uses, and that auto showrooms, hotel or retail uses are permitted on the ground floor, that automobile dealerships and services facilities are an important part of the City’s economy, and that the proposed service facility will continue to provide a needed service for the community, and therefore the proposed automobile service facility would be consistent with the California Drive Mixed Use District general plan designation; therefore the general plan amendment may be found to be consistent with the policies of the Land Use Element of the General Plan. Findings for a Rezoning: In acting on the request to rezone a portion of a parcel from R-4 (high density multifamily residential) to CAR (California Drive Auto Row), the Planning Commission should state the reasons why they feel such action is appropriate and consistent with the intent of the General Plan and Zoning Ordinance. Code Section 25.04.010 states that the zoning plan is established for the following purposes: to promote public health, safety and welfare; preserve a wholesome serviceable and attractive community which increases the safety and security of home life; promote harmonious character and economy among property, building construction and civic services; establish regulations to limit the location, uses, height, bulk, lot coverage, street setback, yard sizes and occupancy of building structures and land; encourage remodeling of existing residential structures; preserve residential neighborhood character of single family structures and accessory structures and provide for the best general civic use to protect the common rights and interests of all. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 10 Suggested Findings for a Rezoning: That the project includes rezoning of a portion of the property which currently contains no structures (Assessor’s Parcel 029-242-020 and a portion of 029-242-230) from the R-4 (high density multifamily residential) to the CAR (California Drive Auto Row) zone, which will bring the entire combined site into one zoning designation and would be consistent with the proposed California Drive Mixed Use District general plan designation; that the City of Burlingame Zoning code indicates that retail sales and service of automobiles is a permitted use within the CAR Zoning District and that the proposed project conforms to all development regulations for the CAR Zoning District; therefore the rezoning may be found to be consistent with the intent of the General Plan and Zoning Ordinance. Design Review Criteria: The criteria for Commercial Design Review as established in Ordinance No. 1652 adopted by the Council on April 16, 2001 are outlined as follows: 1. Support of the pattern of diverse architectural styles that characterize the city’s commercial areas; 2. Respect and promotion of pedestrian activity by placement of buildings to maximize commercial use of the street frontage, off-street public spaces, and by locating parking so that it does not dominate street frontages; 3. On visually prominent and gateway sites, whether the design fits the site and is compatible with the surrounding development; 4. Compatibility of the architecture with the mass, bulk, scale, and existing materials of existing development and compatibility with transitions where changes in land use occur nearby; 5. Architectural design consistency by using a single architectural style on the site that is consistent among primary elements of the structure, restores or retains existing or significant original architectural features, and is compatible in mass and bulk with other structure in the immediate area; and 6. Provision of site features such as fencing, landscaping, and pedestrian circulation that enriches the existing opportunities of the commercial neighborhood. Suggested Findings for Design Review: That the proposal consisting of prefinished horizontal metal and aluminum composite panel siding, painted steel and aluminum trim and an aluminum anodized storefront system is consistent with the pattern of diverse architectural styles that characterize the city’s commercial areas and is consistent with the architectural style and mass and bulk with the existing showroom building to remain and with other automobile sales and service buildings in the area; that the proposal is consistent with the design guidelines established in Chapter 5 of the Downtown Specific Plan (Design & Character); and that 879 SF of new landscaping in the ground and six new street trees along California Drive and Bayswater Avenue will be planted to enrich the existing commercial neighborhood; therefore the project may be found to be compatible with the requirements of the City’s design review criteria. Findings for Vesting Tentative Subdivision Map: In order to approve a Vesting Tentative Subdivision Map, the Commission and Council must find that the proposed Vesting Tentative Subdivision Map, together with the provisions for its design and improvement, is consistent with the Burlingame General Plan and consistent with the provisions of the Subdivision Map Act, and that the site is physically suited for the proposed type and density of development. Suggested Findings for Vesting Tentative Subdivision Map: That the proposed Vesting Tentative Subdivision Map, together with the provisions for its design and improvement, is consistent with the Burlingame General Plan and consistent with the provisions of the Subdivision Map Act; that the site is physically suited for the proposed type of development in that it provides an automobile service facility use in an area identified as suitable for such use in the Burlingame General Plan; that the project provides ample Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 11 vehicular and pedestrian circulation to serve the project, and is consistent with required development standards including setbacks, lot coverage and building height; therefore the project may be found to be compatible with the criteria listed above. Planning Commission Action: The Planning Commission should hold a public hearing. Affirmative action to recommend the following items should be taken separately by resolution including the conditions representing mitigation for the Mitigated Negative Declaration (in italics below) and any conditions from the staff report and/or that the commissioners may add. The reasons for any action should be clearly stated. 1. Mitigated Negative Declaration 2. General Plan Amendment 3. Rezone 4. Design Review 5. Vesting Tentative Subdivision Map Since the City Council is the final decision-making body regarding the request for General Plan Amendment and Rezoning of a portion of the subject site, the Planning Commission’s action should be in the form of a recommendation to the City Council, since the entire application will be forwarded to the City Council for consideration. Please note that the conditions below include mitigation measures taken from the Mitigated Negative Declaration/Initial Study (shown in italics). If the Commission determines that these conditions do not adequately address any potential significant impacts on the environment, then an Environmental Impact Report would need to be prepared for this project. The mitigations will be placed on the building permit as well as recorded with the property and constitute the mitigation monitoring plan for this project. At the public hearing the following mitigation measures and conditions should be considered: 1. that the project shall be built as shown on the plans submitted to the Planning Division date stamped December 5, 2016, sheets A.001 through A.611 and C1.0 through C3.0; 2. that prior to issuance of a building permit for construction of the project, the project construction plans shall be modified to include a cover sheet listing all conditions of approval adopted by the Planning Commission, or City Council on appeal; which shall remain a part of all sets of approved plans throughout the construction process. Compliance with all conditions of approval is required; the conditions of approval shall not be modified or changed without the approval of the Planning Commission, or City Council on appeal; 3. that any changes to the size or envelope of building, which would include changing or adding exterior walls or parapet walls, shall require an amendment to this permit; 4. that any changes to building materials, exterior finishes, windows, architectural features, roof height or pitch, and amount or type of hardscape materials shall be subject to Planning Division or Planning Commission review (FYI or amendment to be determined by Planning staff); 5. that the maximum elevation at the top of the roof parapet shall not exceed elevation 55.70’ for a maximum height of 25’-1½”, and that the top of each floor and final roof ridge shall be surveyed and approved by the City Engineer as the framing proceeds and prior to final framing and roofing inspections. Should any framing exceed the stated elevation at any point it shall be removed or adjusted so that the final height of the structure with roof shall not exceed the maximum height shown on the approved plans; Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 12 6. that the conditions of the Building Division’s December 29, 2015 and April 14, 2015 memos, the Park's Division's January 5, 2016 and April 17, 2015 memos, the Engineering Division’s January 8, 2016 and April 14, 2015 memos, the Fire Division’s April 13, 2015 memo, and the Stormwater Division’s February 15, 2016 and April 22, 2015 memos shall be met; 7. that the on-site parking spaces shall be used only by the visitors and employees of the automobile showroom and service facility on this site and shall not be leased or rented for storage of automobiles or goods either by individuals or businesses not on this site or by other businesses for off-site parking; 8. that prior to issuance of a building permit for the project, the applicant shall pay the first half of the public facilities impact fee in the amount of $8,749.29, made payable to the City of Burlingame and submitted to the Planning Division; 9. that prior to scheduling the final framing inspection, the applicant shall pay the second half of the public facilities impact fee in the amount of $8,749.29, made payable to the City of Burlingame and submitted to the Planning Division; 10. that the project shall comply with the Construction and Demolition Debris Recycling Ordinance which requires affected demolition, new construction and alteration projects to submit a Waste Reduction plan and meet recycling requirements; any partial or full demolition of a structure, interior or exterior, shall require a demolition permit; 11. that demolition or removal of the existing structures and any grading or earth moving on the site shall not occur until a building permit has been issued and such site work shall be required to comply with all the regulations of the Bay Area Air Quality Management District; 12. that during construction, the applicant shall provide fencing (with a fabric screen or mesh) around the project site to ensure that all construction equipment, materials and debris is kept on site; 13. that storage of construction materials and equipment on the street or in the public right-of-way shall be prohibited; 14. that the applicant shall comply with Ordinance 1503, the City of Burlingame Storm Water Management and Discharge Control Ordinance; 15. that the project shall meet all the requirements of the California Building and Uniform Fire Codes, in effect at the time of submittal, as amended by the City of Burlingame; The following five (5) conditions shall be met during the Building Inspection process prior to the inspections noted in each condition: 16. that prior to scheduling the foundation inspection, a licensed surveyor shall locate the property corners, set the building footprint and certify the first floor elevation of the new structure(s) based on the elevation at the top of the form boards per the approved plans; this survey shall be accepted by the City Engineer; 17. that prior to scheduling the framing inspection, the project architect, engineer or other licensed professional shall provide architectural certification that the architectural details such as window locations and bays are built as shown on the approved plans; if there is no licensed professional involved in the project, the property owner or contractor shall provide the certification under penalty of perjury. Certifications shall be submitted to the Building Division; Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 13 18. that prior to scheduling the roof deck inspection, a licensed surveyor shall shoot the height of the roof parapet and provide certification of that height to the Building Division; 19. that prior to final inspection, Planning Division staff will inspect and note compliance of the architectural details (trim materials, window type, etc.) to verify that the project has been built according to the approved Planning and Building plans; Mitigation Measures from Initial Study Aesthetics 20. The project developer shall install low-profile, low-intensity lighting directed downward to minimize light and glare. Exterior lighting shall be low mounted, downward casting, and shielded. In general, the light footprint shall not extend beyond the periphery of each property. Implementation of exterior lighting fixtures on all buildings shall also comply with the standard California Building Code (Title 24, Building Energy Efficiency Standards) to reduce the lateral spreading of light to surrounding uses, consistent with Burlingame Municipal Code Section 18.16.030 that requires that all new exterior lighting for commercial developments be designed and located so that the cone of light and/or glare from the light element is kept entirely on the property or below the top of any fence, edge or wall. Air Quality 21. The contractor shall implement the following BMPs: 1) All exposed surfaces (e.g., parking areas, staging areas, soil piles, graded areas, and unpaved access roads) shall be watered two times per day. 2) All haul trucks transporting soil, sand, or other loose material off-site shall be covered. 3) All visible mud or dirt tracked onto adjacent public roads shall be removed using wet power vacuum street sweepers at least once per day. The use of dry power sweeping is prohibited. 4) All vehicle speeds on unpaved roads shall be limited to 15 miles per hour (mph). 5) All roadways, driveways, and sidewalks to be paved shall be completed as soon as possible. Building pads shall be laid as soon as possible after grading unless seeding or soil binders are used. 6) Idling times shall be minimized either by shutting equipment off when not in use or reducing the maximum idling time to 5 minutes (as required by the California airborne toxics control measure Title 13, Section 2485 of California Code of Regulations (CCR)). Clear signage shall be provided for construction workers at all access points. 7) All construction equipment shall be maintained and properly tuned in accordance with manufacturer’s specifications. All equipment shall be checked by a certified mechanic and determined to be running in proper condition prior to operation. 8) Post a publicly visible sign with the telephone number and person to contact at the Lead Agency regarding dust complaints. This person shall respond and take corrective action within 48 hours. The Air District’s phone number shall also be visible to ensure compliance with applicable regulations. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 14 23. All diesel-powered off-road equipment larger than 25 horsepower and operating on the site for more than two continuous days shall, at a minimum, meet U.S. EPA particulate matter emissions standards for Tier 4 engines or equivalent. 24. If construction activities would commence anytime during the nesting/breeding season of native bird species potentially nesting near the site (typically February through August in the project region), a pre- construction survey for nesting birds shall be conducted by a qualified biologist within two weeks of the commencement of construction activities. If active nests are found in areas that could be directly affected or are within 150 feet of construction and would be subject to prolonged construction-related noise, a no-disturbance buffer zone shall be created around active nests during the breeding season or until a qualified biologist determines that all young have fledged. The size of the buffer zones and types of construction activities restricted within them will be determined by taking into account factors such as the following:  Noise and human disturbance levels at the construction site at the time of the survey and the noise and disturbance expected during the construction activity;  Distance and amount of vegetation or other screening between the construction site and the nest; and  Sensitivity of individual nesting species and behaviors of the nesting birds. Biological Resources 25. Prior to the removal of any trees, the project applicant shall evaluate if the on-site trees meet the requirement to be considered a “protected” tree. A permit shall be obtained from the Parks and Recreation Department prior to the removal of a protected tree. Cultural Resources 26. In the event archaeological resources are encountered during construction, work shall be halted within 100 feet of the discovered materials and workers shall avoid altering the materials and their context until a qualified professional archaeologist has evaluated the situation and provided appropriate recommendations. If an archaeological site is encountered in any stage of development, a qualified archeologist will be consulted to determine whether the resource qualifies as an historical resource or a unique archaeological resource. In the event that it does qualify, the archaeologist will prepare a research design and archaeological data recovery plan to be implemented prior to or during site construction. The archaeologist shall also prepare a written report of the finding, file it with the appropriate agency, and arrange for curation of recovered materials. 27. A discovery of a paleontological specimen during any phase of the project shall result in a work stoppage in the vicinity of the find until it can be evaluated by a professional paleontologist. Should loss or damage be detected, additional protective measures or further action (e.g., resource removal), as determined by a professional paleontologist, shall be implemented to mitigate the impact. Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 15 28. In the event that human remains are discovered during project construction, there shall be no further excavation or disturbance of the site or any nearby area reasonably suspected to overlie adjacent human remains. The county coroner shall be informed to evaluate the nature of the remains. If the remains are determined to be of Native American origin, the Lead Agency shall work with the Native American Heritage Commission and the applicant to develop an agreement for treating or disposing of the human remains. Geology and Soils 29. Project design and construction shall adhere to Title 18, Chapter 18.28 of the Burlingame Municipal Code, and demonstrate compliance with all design standards applicable to the California Building Code Zone 4 would ensure maximum practicable protection available to users of the buildings and associated infrastructure. 30. Project design and construction, including excavation activities, shall comply with Chapter 33 of the CBC, which specifies the safety requirement to be fulfilled for site work. This would include prevention of subsidence and pavement or foundations caused by dewatering. 31. The applicant shall prepare a monitoring program to determine the effects of construction on nearby improvements, including the monitoring of cracking and vertical movement of adjacent structures, and nearby streets, sidewalks, utilities, and other improvements. As necessary, inclinometers or other instrumentation shall be installed as part of the shoring system to closely monitor lateral movement. The program shall include a pre-condition survey including photographs and installation of monitoring points for existing site improvements. Hazards and Hazardous Materials 32. The contractor shall comply with Title 8, California Code of Regulations/Occupational Safety and Health Administration (OSHA) requirements that cover construction work where an employee may be exposed to lead. This includes the proper removal and disposal of peeling paint, and appropriate sampling of painted building surfaces for lead prior to disturbance of the paint and disposal of the paint or painted materials. 33. The applicant shall contract a Certified Asbestos Consultant to conduct an asbestos survey prior to disturbing potential asbestos containing building materials and following the Consultant’s recommendations for proper handling and disposal. 34. Workers handling demolition and renovation activities at the project site will be trained in the safe handling and disposal of any containments with which they are handling or disposing of on the project site. Noise 35. The following measures, in addition to the best practices specified in Impact 3, shall be implemented to reduce vibration impacts from construction activities to a less-than-significant level:  For all construction proposed to be located within 20 feet of adjacent structures, a construction vibration-monitoring plan would need to be implemented to document conditions prior to, during and after vibration generating construction activities. All plan tasks shall be undertaken under the direction of a licensed Professional Structural Engineer in the State of California and be in accordance with industry accepted standard methods. The construction vibration monitoring plan should be implemented to include the following tasks: Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 16 - Perform a photo survey, elevation survey, and crack monitoring survey for each identified structure. Surveys shall be performed prior to any construction activity and after project completion and shall include internal and external crack monitoring in structures, settlement, and distress and shall document the condition of foundations, walls and other structural elements in the interior and exterior of said structures. - Designate a person responsible for registering and investigating claims of excessive vibration. The contact information of such person shall be clearly posted on the construction site. - Make appropriate repairs or compensation where damage has occurred as a result of construction activities. - The results of all vibration monitoring shall be summarized and submitted in a report shortly after substantial completion of each phase identified in the project schedule. The report will include a description of measurement methods, equipment used, calibration certificates, and graphics as required to clearly identify vibration-monitoring locations. An explanation of all events that exceeded vibration limits will be included together with proper documentation supporting any such claims. Transportation and Traffic 36. Prior to issuance of grading and building permits, the project applicant shall submit a Traffic Control Plan. The Traffic Control Plan would indicate how parking for construction workers would be provided during construction and ensure a safe flow of traffic in the project area during construction. The requirements within the Traffic Control Plan include, but are not limited to, the following: truck drivers would be notified of and required to use the most direct route between the site and U.S. 101, as determined by the City Engineering Department; all site ingress and egress would occur only at the main driveways to the project site; specifically designated travel routes for large vehicles would be monitored and controlled by flaggers for large construction vehicle ingress and egress; warning signs indicating frequent truck entry and exit would be posted on adjacent roadways if requested; and any debris and mud on nearby streets caused by trucks would be monitored daily and may require instituting a street cleaning program. 37. On-street parking to the east and west of the outbound driveways on Bayswater Avenue shall be prohibited by painting red curb for a distance of approximately 20 feet on either side. Ruben Hurin Senior Planner c. Alan Cross, Proto, Inc., applicant and designer Kent Putnam, property owner Mitigated Negative Declaration, General Plan Amendment, Rezoning, 85 California Drive Design Review, and Vesting Tentative Subdivision Map 17 Attachments: Applicant’s Response Letter - dated December 5, 2016 February 22, 2016 Planning Commission Minutes Application to the Planning Commission Parcel Map and Zoning Diagram Downtown Specific Plan Diagram Design & Character of the Downtown Specific Plan – Section 5.0 Staff Comments Proposed Resolutions Notice of Public Hearing – Mailed December 12, 2016 Aerial Photo Separate Attachments: Mitigated Negative Declaration/Initial Study and Appendices, dated November 2016 5.0 Design & Character 5- 5.0 Design & Character This chapter contains design guidelines and development standards that will guide and define the character of new development in the Downtown Specific Plan area. The design guidelines are intended to implement the vision and goals of the Specific Plan, as presented in the other chapters. The design guidelines are not directive, but are intended to establish the guiding principles for ensuring good design that effectively implement the goals and policies, as well as land use decisions, of the Downtown Specific Plan. The Design Guidelines are crafted to: • Provide property owners and developers with a clear vision of the type and quality of development the city desires and expects in Downtown. • Serve as a set of guiding design principles for public officials, developers, designers and the community to use, which are sensitive to the conditions of each subarea of the planning area. • Give the City of Burlingame tools to evaluate and guide project design. • Supplement the Commercial Design Guidebook with guidelines and standards specific to Downtown. The guidelines and standards that have been developed for the Downtown Specific Plan area are based on the land uses and character of each Downtown subarea. The Subareas are described in the Land Use Chapter (Chapter 3) of this plan. Within the Specific Plan area, any actions proposing substantial physical changes to any parcel of land or existing structure, or the proposed construction of new structures, shall be subject to Design Review as out- lined in Section 25.57 of the Burlingame Municipal Code. Applications shall be reviewed for consistency with all applicable Downtown Specific Plan and General Plan provisions, and applicable City ordinances and standards. Design guidelines and standards in both the Downtown Specific Plan and the Commercial Design Guidebook apply to all downtown projects and provide the basis for design review. 5.1 DOWNTOWN ARCHITECTURAL SETTING Downtown Burlingame was the focal point of the City during its early development, and over the years it has continued to be the symbolic center of the community. It continues to be a defined, identifiable place with distinct boundaries and a unique urban scale. A range of architectural styles and periods are represented within Downtown and serve to create a distinctive character for the area, one that is highly valued by the City’s residents and that leaves a lasting, positive impression upon visitors. New buildings and rehabilitation projects should draw from and build upon this character. 5.0 Design & Character 5- In the commercial areas, there is a consistency and cohesion of archi- tectural styles. Many buildings utilize classical proportions, and are enriched with detailing such as pilasters, wood detailing, and embossed relief. There are also some fine modern buildings, which overall are compatible in scale and detail with more historical examples. The "core" area centered around Burlingame and Howard Avenues func- tions as a defined retail center. In the residential neighborhoods, styles are more varied. Cohesion is achieved by compatibility in building scale and massing, along with consistently lush landscaping. All buildings within each area of Downtown should contribute to the area’s identity as a part of Downtown Burlingame. The core commer- cial areas centered on Burlingame and Howard Avenues should have a lively mix of buildings at different heights and styles. Ground floor retail should relate to Downtown’s traditional storefronts by using large display windows, kickplates, and clerestory and transom windows. In the California Drive commercial areas, development may be lower in intensity but should continue to build on the Downtown core’s classic, restrained styling. In the residential areas, new projects should rein- force the fine-grained scale and quiet amenity that exists. The variety of architectural styles is an asset to Downtown, and both historically inspired and modern styles should be accommodated. Regardless of architectural style and approach, new buildings should exhibit fine-grained, pedestrian-friendly scale and details. 5.2 DESIGN STANDARDS FOR COMMERCIAL AND MIXED USE AREAS The commercial areas of Downtown Burlingame have historically been the most active, public places in the community. New commercial and mixed use buildings should contribute to the existing “Main Street” character. They should enhance the pedestrian nature of Downtown, defining the street as a public place, with active storefronts, windows, FIGURE 5-1: The core commercial areas centered on Burlingame and Howard Avenues features a range of architectural styles and periods. FIGURE 5-2: Commercial and mixed use development projects in the Downtown Specific Plan area are subject to the City of Burlingame’s Commercial Design Guidebook. 5.0 Design & Character 5- and doors at ground level. Architecture should include the type of well-crafted architectural details that are common to Burlingame, and convey that architectural heritage in terms of material, color, propor- tion, window type, and overall composition. Commercial and mixed use development projects in the Downtown Specific Plan area are subject to the City of Burlingame’s Commercial Design Guidebook. In addition, the following recommendations apply specifically to Downtown development: 5.2.1 PEDESTRIAN USE AND CHARACTER 5.2.1.1 Entrances Commercial entrances should be recessed from the façade, creating a small alcove. This establishes a more definitive sense of entry and affords an alternative view of merchandise in the display windows. Existing recessed entries should be retained. The doors of a commercial storefront typically contain large glass panels with vertical proportions that present a visual connection to the streetscape. Storefronts should continue to exhibit this pattern, whether a new project or the re-use of an existing space. 5.2.1.2 Ground-Level Corner Uses High activity-generating uses are especially encouraged at the Burlingame Avenue and Howard Avenue intersections with side streets. Store façades along side streets should be designed to help entice pedestrians onto the side streets. To achieve this, the façades should include windows and continuation of the architectural details from the main storefront extending across the sidestreet façade. Entries to elevator lobbies should not be located at these intersections where they would serve to diminish pedestrian activity at these highly visible locations. FIGURE 5-3: Commercial entrances should be recessed from the facade, creating a small alcove. FIGURE 5-4: Corner parcels are encouraged to incorporate special features such as rounded or cut corners, special corner entrances, display windows, corner roof features, etc. but should avoid monumentally-scaled elements such as towers. 5.0 Design & Character 5- 5.2.1.3 Ground Level Treatment The unique community character created by the mixture of building ages and architectural styles should be maintained. All street-frontage establishments should provide primary access directly to the street. Particular attention should be given to craftsmanship and detailing within the pedestrian’s range of touch and view. For instance, the use of special storefront detailing and façade ornamentation such as plant- ers, flower boxes, and special materials can reinforce the pedestrian nature of the street. To ensure ease in caring for landscaping, major remodels and new projects should provide outdoor water spigots and electric sockets. When businesses have access to water, they can more easily care for their plants and trees, and keep the streets cleaned as well. 5.2.1.4 Site Access Curb cuts are prohibited on Burlingame Avenue and should be avoided to the extent feasible on Howard Avenue and California Drive. Any on-site parking garage should be accessed in a safe, attractive manner and should not significantly detract from pedestrian flow, nor interfere with the orderly flow of traffic on public streets and within parking lots. Where possible, parking garage access should be from the side streets or alleys. In some cases, access to on-site parking could be provided from city-owned parking lots. FIGURE 5-6: Downtown Burlingame is characterized by relatively narrow building increments, predominantly 15 to 50 feet in width. FIGURE 5-5: Particular attention should be given to craftsmanship and detailing within the pedestrian’s range of touch and view. 50' 25'25'15'15' 5.0 Design & Character 5-5 5.2.2 ARCHITECTURAl ComPATIBIlITy 5.2.2.1 Building Scale Table 3-2 in Chapter 3 specifies basic building standards such as setbacks and height. Beyond conforming to the basic building mass, new development should preserve the rhythm and fine- grained pedestrian scale of existing buildings within the commercial districts by respecting the relatively narrow building increments, which typically range from 15 feet to no more than 50 feet in width. To be consistent with the existing character of Downtown Burlingame, to provide a welcoming retail environment, and to accommodate a range of potential uses over the lifetime of the building, first floors should have a floor to finished ceiling height of at least 15 feet. New development should also be sensitive to the human scale of Downtown with sensitivity to building height. Buildings should not overwhelm the pedestrian experience on the street and should account for the relationship between building height and street width. Where building mass and height might overwhelm the pedestrian experience on the street, design strategies such as upper floor setbacks and articulated building mass should be considered to ensure comfortable human scale. FIGURE 5-7: Buildings should not overwhelm the pedestrian experience on the street and should account for the relationship between building height and street width. Wider Narrow FIGURE 5-8: Building scale should preserve he rhythm and fine-grained pedestrian character of downtown, particularly at the pedestrian level. Ground floor bays with narrow, pedestrian-scaled increments 15'-50'15'-50'15'-50' Upper floors may have wider bays as part of an overall composition Minimum 15' floor-to-ceiling height on ground floor 5.0 Design & Character 5- FIGURE 5-9: oN-SITE STRUCTURED PARKING IN CommERCIAl AND mIXED USE AREAS A. Wrapped on Ground Level An above-ground parking structure where non-parking uses such as retail spaces are integrated into the ground level of the building along the street frontage of the parcel. The parking structure may be exposed to the building street frontage on upper levels, with appropriate design and screening. Application: Municipal parking structure. B. Wrapped on All Levels An above-ground parking structure where non-parking uses are integrated into the building along the entire street frontage of the parcel on all levels of the building. The parking structure is totally hidden behind a "liner building" of non-parking uses. Application: Projects with relatively large amount of parking provided on-site. Typically requires a relatively large site to accommodate the parking structure and liner building. C. Underground A parking structure that is fully submerged underground and is not visible from the street. Depending on amount of parking provided, may also include a level of at-grade parking hidden behind non- parking uses such as retail. Application: Can be suitable for projects on relatively small sites, as well as larger sites. Could also be combined with in-lieu arrangement, where some parking is provided on-site (such as for residential uses) and other parking is provided off-site in a municipal facility through in-lieu fees. Parking Structure Retail Parking Structure Retail Residential/Office Residential/Office Residential/Office Underground Parking Upper-Level Courtyard Ground-Level Courtyard Parking Structure Retail Residential/Office Residential/Office Residential/Office Underground Parking Retail Residential/Office Residential/Office Residential/Office 5.0 Design & Character 5- 5.2.2.2 on-Site Structured Parking Given the density and premium land values Downtown, new projects will likely provide on-site parking in enclosed garage structures or under- ground. However, the parking should not overwhelm the character of the project or detract from the pedestrian environment. Ground level enclosed parking should be fronted or wrapped with actively occupied spaces such as storefronts and lobbies. Access to parking shall be designed so that it is not prominent and ties into the adjacent architectural style. 5.2.2.3 Upper-Story Setbacks – Burlingame Avenue Frontages While the height limit allowed by conditional use permit is 55 feet on Burlingame Avenue, many existing buildings and in particular, many buildings with historic character, have façades of a smaller scale. New buildings and building additions should reinforce the historic pattern with heights and setbacks oriented to the many two- and three-story buildings. Where neighboring buildings are three stories or lower in height, newer taller buildings should consider matching lower façades to those of adjoining lower buildings and setting upper floors back at least 10 feet from the lower façade. 5.2.2.4 Myrtle Road Mixed Use Area The unique mix of residential and commercial uses in the Myrtle Road Mixed Use area offers an opportunity to create a niche district with its own style distinct from other parts of downtown. Recognizing the varied auto-related commercial character of the area, new development and redevelopment projects within the Myrtle Road Mixed Use Area should be encouraged to feature a blend of both commercial and residential design features. Design features could include corrugated metal roofs and sidings, simple multi-paned metal rimmed windows, and recycled "green" building materials. Buildings may even draw inspiration from the style of utilitarian buildings found in such mixed use districts such as sheds and quonset huts. The creation of this commercial, live/work identity for the Myrtle Road area will allow it to be a unique subarea of Downtown Burlingame that accommodates infill while respecting existing uses. FIGURE 5-11: Design features such as corrugated metal roofs and sidings, simple multi-paned metal rimmed windows, and recycled "green" building materials can maintain the existing varied character of the Myrtle Road Mixed Use Area. FIGURE 5-10: Where neighboring buildings are three stories or lower in height, newer taller buildings should consider matching lower facades to those of adjoining lower buildings with upper floors set back. 5.0 Design & Character 5- 5.2.3 ARCHITECTURAl DESIGN CoNSISTENCy 5.2.3.1 Facade Design To maintain the present scale and character of buildings in Downtown, large uninterrupted expanses of horizontal and vertical wall surface should be avoided. Building façades should respond to the relatively narrow increments of development (15 to 50 feet) with variation in fenestration, building materials and/or building planes. Facades should have generous reveals such as inset doorways and windows. Doors, windows, and details should be in keeping with pedestrian scale, as opposed to a monumental scale that is out of proportion to the surrounding context. Design details should be authentic and have purpose, rather than being applied or strictly decorative. Facades should have a variation of both positive space (massing) and negative space (plazas, inset doorways and windows). Facades on both new and rehabilitated buildings should include the elements that make up a complete storefront including doors, display windows, bulkheads, signage areas and awnings. New buildings need not mimic an “historic” architectural style (and in fact should avoid imitation that results in caricatures) but should include a level of archi- tectural detailing and quality of materials that complements existing buildings. Where older exiting buildings are renovated, preservation of existing architectural details and materials is encouraged. Even if separate businesses function within the same building, the overall design of the façade should be consistent. Individual businesses should not break the basic lines, material and concept of the façade. Storefronts can be demarcated from each other within the same build- ing by subtle variations in the color or pattern of surfaces of doors, tiling, signage or entries. Corner parcels are encouraged to incorporate features such as rounded or cut corners, corner entrances, display win- dows, corner roof features, wrap-around awnings/overhangs, blade signs, etc. FIGURE 5-12: Facades on both new and rehabilitated buildings should include the elements that make up a complete storefront including doors, display windows, bulkheads, signage areas and awnings. Interesting Roofline or Profile Cornice and Ornamentation Recessed Windows Create Shade and Shadow Building Ornament Recesses in Facade Create Interest and Depth Transom Windows High Quality Storefront Glazing Awnings Within Building Bays Street Entrance Doors Every 50 Feet Maximum, 15-25 Feet Preferred Signage to be Integral with Building Design Ornamental Base, 18" to 30" Height Compositional Change in Facade Every 15 to 50 Feet FIGURE 5-13: Even if separate businesses function within the same building, the overall design of the façade should be consistent. Individual businesses should not break the basic lines, material and concept of the facade. Large Space Large Space Small Space Small Space 15'-50'15'-50'15'-50'15'-50'15'-50'15'-50' 5.0 Design & Character 5- 5.2.3.2 Windows General Windows are important for providing "eyes on the street" and enliven- ing streetscapes. Building walls should be punctuated by well-propor- tioned openings that provide relief, detail and variation on the façade. Windows should be inset from the building wall to create shade and shadow detail. The use of high-quality window products that contrib- ute to the richness and detail of the façade is encouraged. Reflective glass is considered an undesirable material because of its tendency to create uncomfortable glare conditions and a forbidding appearance. The use of materials that are reflected in the historic architecture pres- ent in the Downtown area is encouraged. Display Windows Display windows should be designed to enliven the street and provide pedestrian views into the interior of the storefront. Size, division and shape of display windows should maintain the established rhythm of the streetscape. Glass used in the display windows should be clear so it is possible to see inside, and display cases that block views into stores are strongly discouraged. Noticably tinted glazing is discouraged and mirrored/reflective glass is not permitted. 5.2.3.3 Awnings Awnings should be designed to be decorative, complimentary to the overall facade design, and provide effective weather and sun protec- tion. The placement of awnings should relate to the major architec- tural elements of the facade, avoiding covering any transom windows or architectural elements such as belt courses, decorative trim and simi- lar features. The position of awnings should also relate to the pedes- trian and provide a sense of shelter, with awnings situated to corre- spond to the tops of doorways and scale of pedestrians rather than high up on the facade with a monumental scale. Separate awnings should be used over individual storefront bays as defined by the col- umns or pilasters rather than placing a continuous awning across the FIGURE 5-15: Awnings should be designed to be decorative, complimentary to the overall facade design, and provide effective weather and sun protection. FIGURE 5-14: Size, division and shape of display windows should maintain the established rhythm of the streetscape 5.0 Design & Character 5-0 building frontage. Backlit awnings that visually appear as large light sources will not be permitted. 5.2.3.3 Materials Building materials should be richly detailed to provide visual interest; reference should be made to materials used in notable examples of his- toric Downtown architecture. Metal siding and large expanses of stuc- co or wood siding are also to be avoided, except in the Myrtle Mixed Use area. Roofing materials and accenting features such as canopies, cornices, and tile accents should also offer color variation. Character and richness in Downtown can be enhanced from the incor- poration of details and ornamentation into the design of the buildings. These elements can include elements that have been traditionally used such as cornices, brackets or moldings. 5.2.3.4 Rear and Side Facades Because the side streets and alleys in Downtown are highly visible and are used for both pedestrian access and vehicular access, rear and side façades that are visible from the public realm should exhibit sophisti- cated levels of design and materials. Rear and side façades of existing buildings should be improved with design features and quality materi- als where possible. Buildings should have windows and doors oriented to the alleys and side streets. Entry doors, garage doors and windows should be attractive and durable. Where buildings abut public parking lots, they are strongly encouraged to have rear entrances in addition to their principal street entrances. Rear facades may look like the back of a building, but still be pleasant and inviting. Service facilities such as trash enclosures and mechanical equipment should be screened with enclosures and devices consistent with the building architecture in form, material and detail. Roofs and trellises are recommended for screening views from above. Whenever possible, trash and recycling enclosures should be consolidated and designed to serve several adjacent businesses provided they do not become over- FIGURE 5-16: Rear and side facades that are visible from the public realm should exhibit sophisticated levels of design and materials of a quality similar to front facades. Buildings facing public parking lots are strongly encouraged to have rear entrances in addition to their principal street entrances. FIGURE 5-17: Service facilities such as trash enclosures and mechanical equipment should be screened with enclosures and devices consistent with the building architecture in form, material and detail. 8 0 Downtown Precise Plan A rea-Specific Standards, Guidelines and Pro t o t y p e s 8.Open Space Requirements For residential/mixed-use projects, a minimum of 30 percent of the site area must be devot- ed to open space.The Zoning Administrator may reduce the requirements for residential/mixed-use projects where it is found that such a reduction improves the quality of the project. 9.Development on Public Parking Lot A mixed-use development is allowed on one public parking lot in Area H. The development is subject to the requirements for Area H with these additional requirements or exceptions: a .Vehicular access shall be from Hope Street, Bryant Street or an adjacent alley; b .Existing public parking shall be replaced on-site; and c .Parking for private development shall be provided in accordance with Section II.C, except that the parking requirement cannot be met by paying in-lieu fees. See Guidelines: Development on Public Parking Lot. S e rvice facilities such as trash enclosures and mechanical equipment should be screened with enclosures and devices consistent with the build - ing architecture in form, material and detail. 8 8 13.Guidelines for Rears of Buildings Because the alleys in downtown are highly visible and are used for both pedestrian access and vehicular service access, rear facades should exhibit high levels of design and materials qual- ity similar to front facades. Rear facades of existing buildings should be improved with design features and quality materials where possible. Buildings should have windows and doors oriented to the alley. Entry doors, garage doors and windows should be attractive and durable. Service facilities such as trash enclosures and mechanical equipment should be screened with enclosures and devices consistent with the building architecture in form, material and detail. Roofs and trellises are recommended for screening views from above. Where security devices are desired or warranted, designs should be artful with decorative grillwork that enhances the overall building design. Alley areas should be well lit but should be designed so as not to adversely impact adjacent properties. Downtown Precise Plan A rea-Specific Standards, Guidelines and Pro t o t y p e s Trash and loading areas should be well screened from view in structures that are consistent with the building design in both materials and detailing. 5.0 Design & Character 5- sized or too ungainly. Care should be taken to ensure refuse areas do not become noxious or smelly. Where security devices are desired or warranted, designs should be art- ful with decorative grillwork that enhances the overall building design. Alley areas should be well lit but should be designed so they are attrac- tive and do not adversely impact adjacent properties and detract from the ambiance of Downtown. 5.2.4 SITE DESIGN AND AMENITIES 5.2.4.1 Building Coverage In order to create well-defined street spaces consistent with the scale of Downtown Burlingame, side yards are generally discouraged in favor of contiguous building façades along the street. However, narrow mid-block pedestrian passages that encourage through- block pedestrian circulation and/or arcaded spaces that create wider sidewalk areas for cafés, etc. are encouraged. 5.2.4.2 Open Space Private open space within Downtown is not intended to provide recreational or large landscaped areas, since this is a more urban environment. However, open space is an important element and should be used to articulate building forms, promote access to light and fresh air, and maintain privacy for Downtown residents. In residential mixed-use developments, most open space should be used to provide attractive amenities for residents, including interior courtyards and perimeter landscaping. Balconies and rooftop terraces are encouraged. Commercial development should typically have less open space in order to maintain a direct pedestrian relationship and continuous storefront streetscape. Entry alcoves, courtyards, and employee open space are examples. Open space for nonresidential projects should provide a visual amenity for the development and an attractive buffer to adjacent residential uses where applicable. FIGURE 5-18: Open spaces such as retail plazas and outdoor seating areas should be located at building entries, or along or near well- traveled pedestrian routes to encourage frequent and spontaneous use. FIGURE 5-19: In residential mixed-use developments, most open space should be used to provide attractive amenities for residents, including interior courtyards and perimeter landscaping. 5.0 Design & Character 5- Open spaces such as retail plazas and outdoor seating areas should be located at building entries, or along or near well-traveled pedestrian routes to encourage frequent and spontaneous use. Amenities should be functional as well as visually appealing, with seating, tables, canopies and covering trellises. Plazas and open spaces should be generously landscaped with trees, planters and vines. Permeable paving and/or creative site planning elements such as rain gardens are encouraged to alleviate the impacts of paved areas on drainage. Low walls may be used to screen service and mechanical areas, create spatial definition and to provide seating. Low walls should be designed of quality materials that are complementary to the architecture of the primary structure(s) on the property. 5.2.5 RESIDENTIAl mIXED-USE DEVEloPmENTS WITHIN COMMERCIAL AREAS 5.2.5.1 Setbacks To reinforce the Downtown commercial character of Downtown Burlingame, mixed-use buildings with a residential component shall conform to the setback standards for commercial projects (outlined in Table 3-1 in Chapter 3). The Community Development Director may allow increased side and rear setbacks to enhance the residential portion of a mixed-use project provided the setbacks do not detract from the commercial storefront character of the Downtown district. Setbacks and overall building form should maintain the human scale of Downtown and be in keeping with the character of the surround- ings, with emphasis on mainintaining an active street edge and sidewalk boundary. 5.2.5.2 Noise and Ground Vibrations Projects with a residential component on California Drive should be designed to minimize noise impacts on residents from the Caltrain FIGURE 5-20: To reinforce the Downtown commercial character of Downtown Burlingame, mixed-use buildings with a residential component shall conform to the setback standards for commercial projects. 5.0 Design & Character 5- FIGURE 5-21: Parking garage access should be integrated into the overall design of the building façade and should minimize disruptions along the street frontage. line. A noise analysis prepared by a qualified acoustical engineer shall be required for all residential projects fronting California Drive. The acoustical engineer’s report shall identify any noise impacts and mea- sures to reduce these impacts to acceptable levels. 5.2.5.3 Parking Design Parking for residential uses shall be provided on-site per Downtown Specific Plan and zoning code requirements. Parking garage access should be integrated into the overall design of the building façade, should minimize disruptions along the street frontage, and impact should be softened with choice of materials and design details. Wherever possible, access should be provided from rear alleyways, or the least conspicuous location. Conveniently located and accessed bicycle parking is encouraged. 5.2.5.4 Service Areas Design of service areas shall be consistent with the general guidelines for rears of buildings in the commercial districts. On- site trash and recycling receptacles should be consolidated in an enclosure that is easily accessible for garbage pickup from a street or alley, and should be designed to serve multiple buildings whenever possible. 5.2.5.5 Ground-Level Treatment Commercial frontages should meet the general guidelines for ground-level treatment in the commercial districts. Commercial spaces should have a depth of at least 40 feet to ensure viability for a range of potential commercial tenants. Residential and commercial entrances should be separate and distinct. Common residential entries shall be designed in a manner to minimize their appearance at street level, so as not to adversely impact pedestrian character at street level. Stoops for residential units may also be appropriate in some instances. 5.0 Design & Character 5- 5.2.5.6 Development Massing Mixed use buildings will typically be taller than many of the existing buildings in Downtown. This additional height requires particular attention to the massing of the buildings to ensure an appropriate transition with the surrounding development. New residential development on larger parcels should echo the narrow parcel increments that characterize Downtown, with sensitivity to the traditional building size and storefronts. 5.2.5.7 Facade Treatment To maintain the scale and character of the Downtown district, large, uninterrupted expanses of horizontal and vertical wall surface should be avoided. Building façades should respond to the relatively narrow patterns of development (15 to 50 feet) with variation in fenestration, building materials and/or building planes. Stoops and balconies can enliven façades and allow "eyes on the street." Corner parcels are encouraged to incorporate special features such as rounded or cut corners, special corner entrances, display windows, cor- ner roof features, etc. but should avoid monumentally-scaled elements such as towers. Mixed use buildings should continue architectural treat- ments from the front around to exposed side and rear façades, and should include windows on any exposed wall. 5.2.5.8 Roof Treatment Mixed-use buildings with a residential component should exhibit rooflines and architectural character consistent with the Downtown commercial character. Rooftop equipment shall be concealed from view and/or integrated within the architecture of the building and screened for noise. Roof terraces are encouraged for enjoyment by residents, and green roofs and cool/white roofs are encouraged to mitigate heat transmission. FIGURE 5-22: New residential development on larger parcels should echo the narrow parcel increments that characterize Downtown, with sensitivity to the traditional building size and storefronts. 5.0 Design & Character 5-5 5.2.5.9 Lighting Exterior lighting features shall be of an intensity and design to main- tain the small town ambiance of Downtown. Exterior lighting shall be designed and located so that the cone of light and/or glare from the lighting element is kept entirely on the property or below the top of any fence, edge or wall. 5.2.5.10 open Space Open Space in mixed use projects falls into three categories: public- oriented open space, semi-public open space, and private open space. Design and landscaping should respond to the particular use and nature of each type of open space: • Public-oriented open space designed to be accessed by the general public, such as entry plazas. Public-oriented open space should be welcoming and include pedestrian-scaled amenities that invite social interaction such as benches and planters. • Semi-public open space such as outdoor dining areas and residential courtyards. These spaces have a more limited access, defined by elements such as low walls, landscaping elements, and decorative gates. For mixed use projects with a residential component, open space should include evergreen trees for screening, specimen trees for visual color, and attractive shrubs and ground cover. Low walls and planters may be used to provide privacy between open space areas and residences. Semi-public open spaces should also be designed with pedestrian-scaled amenities that invite informal social interaction such as seating areas, clustered mailboxes, and inset doorways. • Private open space such as balconies, patios, and stoops. Private open space can be defined with elements such as railings, low walls, but should be encouraged to maintain views and provide interaction with the street and other more publicly- oriented open spaces to provide "eyes on the street." FIGURE 5-23: Corner parcels are encouraged to incorporate special features such as rounded or cut corners, special corner entrances, display windows, corner roof features FIGURE 5-24: mixed-use buildings with a residential component should exhibit an architectural character consistent with the Downtown commercial character. Rooflines can emphasize significant elements such as entries and bays Corner buildings should be used to reinforce important intersections. A retail entry can strengthen the corner. 5.0 Design & Character 5- 5.2.6 mIXED-USE DEVEloPmENT oN PUBlIC PARKING LOTS For infill development on City-owned public parking lots, all development regulations and guidelines for the respective district apply. In addition, all required parking for the new development as well as parking to replace all existing spaces shall be provided on-site in a parking structure, ideally with access from an alley and one of the adjacent side or cross-streets. Where possible, parking structures should be provided underground. An above- grade parking structure may be considered when it can be located on the rear of the lot, with appropriate commercial uses along the front and sides. Rooftop parking may also be possible in certain situations. Infill buildings should be carefully designed and detailed so that scale and massing responds to the traditional small Downtown parcel scale and pro- vides a sensitive transition to adjacent residential neighborhoods. Passageways connecting the parking lot development with nearby com- mercial streets should be carefully detailed to enhance the pedestrian expe- rience by leading pedestrians to the active shopping areas. Passageways should include windows and doors from the adjacent building, seating, planting and attractive lighting. Where the passageway meets the new building, a carefully designed transition such as a plaza open space should occur and a continuation of the passageway to the side street should be considered. Bicycle parking should be incorporated into the passageway design whenever possible. FIGURE 5-25: An above-grade parking structure may be considered when it can be located on the rear of the lot, with appropriate commercial uses along the front and sides. FIGURE 5-26: Passageways connecting the parking lot development with nearby commercial streets should be carefully detailed to enhance the pedestrian experience by leading pedestrians to the active shopping areas. 5.0 Design & Character 5- 5.3 DESIGN STANDARDS FOR RESIDENTIAL AREAS Residential buildings in Downtown Burlingame offer higher density development than elsewhere in the City, providing a lifestyle for those who want to live within walking distance of the Downtown commercial areas and transit opportunities. New buildings will mediate this density with thoughtful design and details that create attractive, livable residential environments. Buildings should contribute to an appealing neighborhood character and should employ recognizable residential design details such as visible residential entries, porches, bay windows and roof overhangs, and balconies and small outdoor areas. Below are recommendations for the architectural treatment and organization of buildings and open space, and the suggested criteria for reviewing projects during the design review process. 5.3.1 ARCHITECTURAl DIVERSITy Residential projects should respect the diversity of building types and styles in the residential areas Downtown and seek to support it by applying the following principles: • Design buildings to maintain general compatibility with the neighborhood. • Respect the mass and fine scale of adjacent buildings even when using differing architectural styles. • Maintains the tradition of architectural diversity, but with human scale regardless of the architectural style used. • Create buildings with quality materials and thoughtful design to last into the future. 5.3.2 PEDESTRIAN USE AND CHARACTER 5.3.2.1 Entrances Primary pedestrian access to all ground-level uses should be from the sidewalk along the public street. Entries should be clearly defined features of front façades. Common entrances for multiple units are FIGURE 5-27: Buildings should contribute to an appealing neighborhood character and should employ recognizable residential design details such as visible residential entries, porches, bay windows and roof overhangs, and balconies and small outdoor areas. 35MAYFIELD PRECISE PLAN 4USFFU&MFWBUJPOB 'BDBEFTTIPVMEJODMVEFQPSDIFT QSPKFDUJOHFBWFTBOEPWFSIBOHT BOEPUIFSUSBEJUJPOBMBSDIJUFDUVSBMFMFNFOUTUIBUQSPWJEFSFTJEFOUJBMTDBMFBOEIFMQCSFBLVQCVJMEJOHNBTT#VJMEJOH&OUSBODFTTIPVMECFFBTZUPJEFOUJGZBOEEJTUJOHVJTIFEGSPNUIFSFTUPGUIFCVJMEJOHɨFZTIPVMECFQBSUPGBDMFBSFOUSZTFRVFODF FYUFOEJOHGSPNUIFQVCMJDTJEFXBMLUPUIFQSJWBUFGSPOUEPPS&OUSBODFTGSPNQBTFPTNBZCFBMMPXFEPOBMJNJUFECBTJTɨFGPMMPXJOHFOUSBODFFMFNFOUTBSFSFDPNNFOEFEB 4UPPQTBOEPS0QFO1PSDIFTTIPVME GBDFUIFTUSFFUBUSFHVMBSJOUFSWBMT XIJDIDPSSFTQPOEUPUIFWFSUJDBM NPEVMFTPGCVJMEJOHVOJUTɨFTUPPQT TIPVMECFXJEFFOPVHIGPSQFPQMFUP TJUPOBOEUPNBLFFOUSJFTJOWJUJOH 0QFOQPSDIFTTIPVMEIBWFBUUSBDUJWF CBMVTUSBEFSBJMJOHTBOEBSPPGUIBU DPNQMFNFOUTUIFQJUDIBOENBUFSJBMPG UIFNBJOSPPG C 4UBJSTTIPVMECFCPYFEBOEGSBNFE CZBUUSBDUJWFTUFQQFECVMLIFBET XBMMT  PSCBMVTUSBEFSBJMJOHT#VMMOPTFUSFBET BSFSFDPNNFOEFE0QFOPSinPBUJOHw FYUFSJPSTUBJSTTIPVMEOPUCFVTFE D -PX)FEHFT 'FODFTBOEPS&OUSZ (BUFTTIPVMECFVTFEUPEFmOFUIF FEHFCFUXFFOUIFQVCMJDTUSFFUBOE QSJWBUFQSPQFSUZ E 0SOBNFOUBM-JHIUJOHPGQPSDIFTBOE XBMLTUPIJHIMJHIUFOUSBODFTBOEBEE TFDVSJUZ F -BOETDBQF&MFNFOUTTVDIBTUSFMMJTFT  BSCPST BOETQFDJBMMBOETDBQFNBUFSJBMT Low Hedges, Fences and/or entr gates should be used to define the edge between public and private property. Facades should include prches, projecting eaves and overhangs, and other traditional architectural elements to provide a residential scale. FIGURE 5-28: Entries should be clearly defined features of front façades, and are encouraged to have appropriately-scaled, usable gathering spaces that invite informal social interaction with neighbors. 5.0 Design & Character 5- encouraged to have appropriately-scaled, usable gathering spaces at or adjacent to entrances that invite informal social interaction with neighbors. 5.3.2.2 Ground Level Treatment Residential development may have a finished floor elevation up to 5 feet above sidewalk level to provide more interior privacy for residents. Entry porches or stoops along the street are encouraged to bridge this change in elevation and connect these units to the sidewalk to minimize any physical separation from the street level. The street-level frontage should be visually interesting with frequent unit entrances and clear orientation to the street. 5.3.2.3 Site Access Curb cuts should be minimized to promote traffic and pedestrian safety and create cohesive landscaping and building façades. A maximum of two curb cuts should be provided for projects requiring 30 parking spaces or more; for projects with less than 30 spaces, only one curb cut should be provided. One-way driveways should have curb cuts with a fully depressed width no greater than 12 feet; two-way curb cuts should be no greater than 22 feet. On-site bicycle parking for residents is encouraged. 5.3.3 ARCHITECTURAl ComPATIBIlITy 5.3.3.1 Development Massing The residential areas within Downtown Burlingame have a range of building heights, and so particular attention must be paid to the massing of new buildings to ensure an appropriate transition with surrounding development. Massing and street façades shall be designed to create a residential scale in keeping with Burlingame neighborhoods. FIGURE 5-29: The street-level frontage should be visually interesting with frequent unit entrances and strong orientation to the street. FIGURE 5-30: Articulation, setbacks, and materials should minimize massing, break down the scale of buildings, and provide visual interest. Orient doorways and windows to create a strong relationship with the street. Clearly defined entries that are proportional to size of building and use. Stoops provide transition to street, gathering place, define private space. 5.0 Design & Character 5- Articulation, setbacks, and materials should minimize massing, break down the scale of buildings, and provide visual interest. 5.3.3.2 on-Site Structured Parking Given the density and premium land values Downtown, new projects will likely provide on-site parking in enclosed garage structures, underground, or in “semi-depressed” garages that are partially underground and partially above ground. Parking should not be allowed to dominate the character of the project. Where enclosed parking is at ground level, it should be fronted or wrapped with habitable uses when possible. If it is not possible to fully wrap the parking, it should be incorporated into the design of the facade. Semi-depressed parking (partly below ground and partly exposed above ground) should be screened with architectural elements that enhance the streetscape such as stoops, porches, or balcony overhangs. 5.3.3.3 Roof Treatment Interesting and varied roof forms are encouraged. Rooflines should emphasize and accentuate significant elements of the building such as entries, bays, and balconies. Rooftop equipment shall be concealed from view and/or integrated within the architecture of the building. 5.3.4 ARCHITECTURAl DESIGN CoNSISTENCy 5.3.4.1 Facade Design Facades should include projecting eaves and overhangs, porches, and other architectural elements that provide human scale and help break up building mass. All exposed sides of a building should be designed with the same level of care and integrity. Facades should have a variation of both positive space (massing) and negative space (plazas, inset doorways and windows). FIGURE 5-31: Where enclosed parking is at ground level, it should be fronted or wrapped with uses that can be occupied such as lobbies and living space when possible. Palo Alto:PTOD Overlay Zone -California Avenue Section 18.66.050 Context-Based Design d.L andscaping such as trees,shrubs, vines or groundcover is incorpo- rated into surface parking lots; e.Street parking is utilized for visitor or customer parking and is designed in a manner to enhance tra c calm- ing on the street . a.Parking is located behind buildings,below grade or,where those options are not feasible,screened by landscaping,low walls,etc.; b.Structured parking is fronted or wrapped with habitable uses when possible; c.Parking that is semi-depressed is screened with architectural elements that enhance the streetscape such as stoops,balcony overhangs,and /or ar t ; 6. Parking DesignParkingneedsshall be accommodated but shall not be allowed to over whelm the character of theprojectordetractfromthepedestrianenvironment,such that : Landscaping should be incorporated into any surface parking lots. Parking should be wrapped by habitable uses when possible. Semi-depressed parking can be used to raise residential uses to provide privacy and op- por tunities for stoops and porches. Occupied space such as a lobby screens parking from sidewalk. Occupied space screens parking from sidewalk. FIGURE 5-32: Semi-depressed parking should be screened with architectural elements that enhance the streetscape such as stoops, porches, or balcony overhangs. Stoop Ventilation with decorative grillwork 5.0 Design & Character 5-0 Elements such as entrances, stairs, porches, bays and balconies should be visible to people on the street. Corner parcels are encouraged to incorporate features such as corner entrances, bay windows, and corner roof features, but should avoid monumentally-scaled elements such as towers. 5.3.4.2 Windows Building walls should be accented by well-proportioned openings that provide relief, detail and variation on the façade. Windows should be inset generously from the building wall to create shade and shadow detail. The use of high-quality window products that contribute to the richness, detail, and depth of the façade is encouraged. Windows with mullions should have individual window lights, rather than applied "snap-in" mullions that lack depth and are not integral to the window structure. Reflective glass is undesirable because of its tendency to create uncomfortable glare conditions and a visual barrier. Where residential uses are adjacent to each other, windows should be placed with regard to any open spaces or windows on neighboring buildings so as to protect the privacy of residents. 5.3.4.3 Materials Building materials should be richly detailed to provide visual interest. The use of materials that are reflected in the historic architecture present in the neighborhood is encouraged. Metal siding and large expanses of stucco or wood siding are also to be avoided. Roofing materials and accenting features such as canopies, cornices, tile accents, etc. should also offer color variation. Residential building materials should include quality details such as wrought iron, wood-framed windows, wood brackets and tile roofs. 5.3.5 SITE AMENITIES 5.3.5.1 Setbacks Table 3-2 in Chapter 3 specifies basic building standards such as setbacks and height. Building setbacks are intended to create FIGURE 5-34: Windows should be inset generously from the building wall to create shade and shadow detail. FIGURE 5-33: Residential facades should include projecting eaves and overhangs, porches, and other architectural elements that provide human scale and help break up building mass. 5.0 Design & Character 5- a transition between the hardscape, urban environment of the commercial areas and the suburban setting in the surrounding neighborhoods. Setbacks have multiple purposes, including providing sunlight, places for landscaping, and areas for activity and recreation. Building setbacks should be appropriately landscaped to provide screening and introduce trees and plantings in this area. Landscaped setback areas should be integrated with buildings by providing openings in the building walls that connect the perimeter landscaping with interior courtyards and landscape pathways. Landscaping should be planned in relation to surrounding vegetative types with special consideration being given to native species where possible. Pathways and courtyards should be made of pervious materials to allow groundwater absorption. 5.3.5.2 Open Space Private on-site open space within the Downtown area is not intended to provide recreational space or large landscaped areas, since this is a more urban environment. However, open space is an important element for residential buildings and should be used to effectively articulate building forms, promote access to light and fresh air, and maintain privacy for Downtown residents. In residential development, most open space should be used to provide attractive amenities for residents, including interior courtyards, outdoor seating options and perimeter landscaping. Balconies and rooftop terraces are encouraged. Where open space is situated over a structural slab, podium or rooftop it should have a combination of landscaping and high quality paving materials, including elements such as planters, medium-sized trees, and use of textured and/or colored paved surfaces. Planters may be designed to not only accommodate colorful ornamental landscaping, but could also accommodate garden plots for "urban agriculture." Trees should be selected from the City's tree list. FIGURE 5-35: Where open space is situated over a structural slab, podium or rooftop it should have a combination of landscaping and high quality paving materials, including elements such as planters, mature trees, and urban agriculture. 5.0 Design & Character 5- 5.4 ADDITIONAL DESIGN STANDARDS FOR ALL AREAS OF DOWNTOWN 5.4.1 LAND USE TRANSITIONS Where appropriate, when new projects are built adjacent to existing lower-scale residential development, care shall be taken to respect the scale and privacy of adjacent properties. 5.4.1.1 Massing and Scale Transitions Transitions of development intensity from higher density development building types to lower can be done through different building sizes or massing treatments that are compatible with the lower intensity surrounding uses. Massing and orientation of new buildings should respect the massing of neighboring structures by varying the massing within a project, stepping back upper stories, reducing mass by composition of solids and voids, and varying sizes of elements to transition to smaller scale buildings. 5.4.1.2 Privacy Privacy of neighboring structures should be maintained with windows and upper floor balconies positioned so they minimize views into neighboring properties, minimizing sight lines into and from neighboring properties, and limiting sun and shade impacts on abutting properties. 5.4.1.3 Boundaries Where appropriate, when different land uses or building scales are adjacent, boundaries should be established by providing pedestrian paseos and mews to create separation, rather than walls or fences. FIGURE 5-36: Transitions of development intensity from higher density development building types to lower can be done though building types or treatments that are compatible with the lower intensity surrounding uses. Boundaries can be established by providing pedestrian paseos and mews to create separation, rather than walls or fences. Transition Area Medium Density Low Density High Density buffer / paseobuffer / mewsTransition Elements 2-Story 3-Story Low Density 1-2 Story street / mews4-Story FIGURE 5-37: Transitions can also be made by stepping massing down within a project, with lower building elements providing a buffer between taller elements and adjacent lower-density development. 5.0 Design & Character 5- FIGURE 5-39: Example of two different land use intensities joined with a common paseo pathway. FIGURE 5-38: Following a cooperative, rather than defensive design approach for the spaces between buildings results in a more coherent downtown feel, as opposed to a collection of unrelated projects. PL PL DEFENSIVE Fence separates projects COOPERATIVE Plaza/pathway visually unites buildings 5.0 Design & Character 5- 5.4.2 SHADoW ImPACTS Every building invariably casts some shadows on adjoining parcels, public streets, and/or open spaces. However, as the design of a project is developed, consideration should be given to the potential shading impacts on surroundings. Site plans, massing, and building design should respond to potential shading issues, minimizing shading impacts where they would be undesirable, or conversely maximizing shading where it is desired. As part of the design review process, development in the Specific Plan Area that is proposed to be taller than existing surrounding structures should be evaluated for potential to create new shadows/ shade on public and/or quasi-public open spaces and major pedestrian routes. At a minimum, shadow diagrams should be prepared for 9 AM, 12 noon, and 3 PM on March 21st, June 21st, September 21st, and December 21st (approximately corresponding to the solstices and equinoxes) to identify extreme conditions and trends. If warranted, diagrams could also be prepared for key dates or times of day — for example, whether a sidewalk or public space would be shaded at lunchtime during warmer months. FIGURE 5-40: Sample shadow analysis shows the range of shading conditions through the year. Proposed Project Proposed Project Proposed Project 9 am 12 noon 3 pm March 21st March 21st March 21st Proposed Project Proposed Project Proposed Project June 21st June 21st June 21st Proposed Project Proposed Project Proposed Project September 21st September 21st September 21st Proposed Project Proposed Project Proposed Project December 21st December 21st December 21st 5.0 Design & Character 5-5 5.4.3 SUSTAINABIlITy AND GREEN BUIlDING DESIGN Project design and materials to achieve sustainability and green building design should be incorporated into projects. Green building design considers the environment during design and construction and aims for compatibility with the local environment: to protect, respect and benefit from it. In general, sustainable buildings are energy efficient, water conserving, durable and nontoxic, with high-quality spaces and high recycled content materials. The following considerations should be included in site and building design: • Resilient, durable, sustainable materials and finishes. • Flexibility over time, to allow for re-use and adaptation. • Optimize building orientation for heat gain, shading, daylighting, and natural ventilation. • Design landscaping to create comfortable micro-climates and reduce heat island effects. • Design for easy pedestrian, bicycle, and transit access, and provide on-site bicycle parking. • Maximize on-site stormwater management through landscaping and permeable pavement. • On flat roofs, utilize cool/white roofs to minimize heat gain. • Design lighting, plumbing, and equipment for efficient energy use. • Create healthy indoor environments. • Pursue adaptive re-use of an existing building or portion of a building as an alternative to demolition and rebuilding. • Use creativity and innovation to build more sustainable environments. One example is establishing gardens with edible fruits, vegetables or other plants as part of project open space, or providing garden plots to residents for urban agriculture. To reduce carbon footprint, new projects are encouraged to follow the standards and guidelines of the Leadership in Energy and Environmental Design (LEED) Green Building Rating System, developed by the U.S. Green Building Council (USGBC), and pursue LEED certification if appropriate. FIGURE 5-41: Use of shading devices to control solar loads in summer and gain passive heat in winter. FIGURE 5-42: Minimize stormwater runoff to impermeable areas with landscaping, green roofs, and rain gardens when possible. Winter Sun Summer Sun South facing windows with shading devices to control overheating in Summer Direct sunlight through south facing windows would improve passive heating in Winter 5.0 Design & Character 5- 5.4.4 lANDSCAPE TREES The City of Burlingame has a long history of proactive tree planting and proper tree care. From the late 1800’s when trees were planted along El Camino Real and Easton Drive to the current day, Burlingame has enjoyed the many benefits trees provide to an urban area. Burlingame's longtime commitment to trees is evidenced by recogni- tion as a "Tree City USA" for 30 consecutive years. This is the longest streak in the County, 5th longest in the State and one of the longest in the Country for receiving this award. In Downtown Burlingame, trees include street trees lining sidewalks and roadways (typically within the public right-of-way), as well as trees on private property in settings such as landscaped setback areas, court- yards, and roof gardens. Chapter 4: Streetscapes & Open Space) provides guidance for street trees within the public right-of-way. Landscape trees on private prop- erty have equal importance as part of the "urban forest," in contrib- uting environmental and aesthetic benefits to downtown. Trees are important for their beauty, shade and coolness, economic benefits, and role in reducing energy use, pollution, and noise. The City of Burlingame has an Urban Forest Management Plan that includes policies and management practices for both city and private trees. Maintaining existing trees is a priority, and large trees on private property are protected by City Ordinance. Any tree with a circumfer- ence of 48 inches or more when measured 54 inches above the ground is a "Protected Tree." A permit is required to remove or heavily prune a protected tree. Consistent with Burlingame's status as "Tree City USA," new projects are required to incorporate trees into landscape and private open space plans. Property owners should consult the Burlingame Urban Forest Management Plan for design considerations, planting techniques, and maintenance guidance. FIGURE 5-43: Consistent with Burlingame's status as "Tree City USA," new projects are required to incorporate trees into landscape and private open space plans. 85 California Drive (CAR) 85 CALIFORNIA DRIVE PROJECT PROPOSED MITIGATED NEGATIVE DECLARATION/ INITIAL STUDY Prepared for City of Burlingame November 2016 Prepared by Circlepoint 46 S 1st Street, San Jose, CA 95113 408.715.1515 | www.circlepoint.com Page left intentionally blank City of Burlingame 85 CALIFORNIA DRIVE PROJECT Proposed Mitigated Negative Declaration Prepared by: Circlepoint 46 S 1st Street San Jose, CA 95113 Prepared for: City of Burlingame Community Development Department 501 Primrose Road Burlingame, CA 94010 November 2016 Page Intentionally Left Blank 85 CALIFORNIA DRIVE PROJECT PROPOSED MITIGATED NEGATIVE DECLARATION (MND) November 2016 Pursuant to the California Environmental Quality Act (CEQA) Division 13, Public Resources Code City of Burlingame Community Development Department Planning Division 501 Primrose Road Burlingame, CA 94010 Project Description The proposed project site is located at the southwest corner of Bayswater Avenue and California Drive and encompasses four parcels and a portion of a fifth parcel (APN 029-242-020, -030, - 040, -050 and a portion of -230). The project site is bordered by California Drive to the north, Bayswater Avenue to the west, a Mazda dealership to the east, and a two-story multifamily residential building to the south. Automobile sales and service facilities are also located adjacent to the site across California Drive and Bayswater Avenue. The project site is located in the Burlingame Downtown Specific Plan (Downtown Specific Plan) area. Within the Downtown Specific Plan, the majority of the site is located in the California Drive Mixed Use District; the remaining portion of the site is located in the R-4 Incentive District. The project site is located in the California Drive Auto Row (CAR) zoning district designated primarily for automobile-related uses. The remaining portion of the site is located in the R-4 District designated primarily for high-density multifamily residential land uses. The project would construct a new 14,239-square-foot automobile service facility with a 1,627- square-foot parts storage mezzanine at the site (8,725 square feet of enclosed building area and 5,514 square feet of covered drive aisle area). This would include demolition of a 115-square- foot office at the rear of the existing showroom and the existing 2,620-square-foot service facility and Hertz rental office. The existing showroom on the northeast end of the site would remain. As part of the project, the new service facility would be constructed over four parcels and a portion of a fifth parcel, and the parcels would be combined into one, totaling 24,925 square feet (0.57 acres). The remaining portion of the fifth parcel, outside of the project site, would continue to be used for storing new vehicle inventory. The service facility would consist of 16 service bays, parts and tool rooms, a service writer office and a customer lounge. The front of the lot would contain an outdoor vehicle display area and 15 parking spaces for customers and employees. The total construction duration is estimated to be eight months. Determination A Mitigated Negative Declaration (MND) is proposed by the City of Burlingame for the project. The Initial Study and supporting documents have been prepared to determine if the project would result in potentially significant or significant impacts to the environment (Exhibit A, Initial Study). On the basis of the Initial Study, it has been determined that the proposed action, with the incorporation of the mitigation measures described below, will not have a significant effect on the environment. The 17 mitigation measures identified in the Initial Study are listed in Table 1a below. The supporting technical reports that constitute the record of proceedings upon which this determination is made are available for public review at the City of Burlingame Community Development Department office at 501 Primrose Road, Burlingame CA 94010, between 8:00 am and 5:00 pm, Monday through Friday. Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Aesthetics Mitigation Measure AES-1: The project developer shall install low-profile, low-intensity lighting directed downward to minimize light and glare. Exterior lighting shall be low mounted, downward casting, and shielded. In general, the light footprint shall not extend beyond the periphery of each property. Implementation of exterior lighting fixtures on all buildings shall also comply with the standard California Building Code (Title 24, Building Energy Efficiency Standards) to reduce the lateral spreading of light to surrounding uses, consistent with Burlingame Municipal Code Section 18.16.030 that requires that all new exterior lighting for commercial developments be designed and located so that the cone of light and/or glare from the light element is kept entirely on the property or below the top of any fence, edge or wall. Less than Significant with Mitigation Incorporated Air Quality Mitigation Measure AQ-1: The contractor shall implement the following BMPs: 1) All exposed surfaces (e.g., parking areas, staging areas, soil piles, graded areas, and unpaved access roads) shall be watered two times per day. 2) All haul trucks transporting soil, sand, or other loose material off-site shall be covered. 3) All visible mud or dirt tracked onto adjacent public roads shall be removed using wet power vacuum street sweepers at least once per day. Less than Significant with Mitigation Incorporated Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact The use of dry power sweeping is prohibited. 4) All vehicle speeds on unpaved roads shall be limited to 15 miles per hour (mph). 5) All roadways, driveways, and sidewalks to be paved shall be completed as soon as possible. Building pads shall be laid as soon as possible after grading unless seeding or soil binders are used. 6) Idling times shall be minimized either by shutting equipment off when not in use or reducing the maximum idling time to 5 minutes (as required by the California airborne toxics control measure Title 13, Section 2485 of California Code of Regulations (CCR)). Clear signage shall be provided for construction workers at all access points. 7) All construction equipment shall be maintained and properly tuned in accordance with manufacturer’s specifications. All equipment shall be checked by a certified mechanic and determined to be running in proper condition prior to operation. 8) Post a publicly visible sign with the telephone number and person to contact at the Lead Agency regarding dust complaints. This person shall respond and take corrective action within 48 hours. The Air District’s phone number shall also be visible to ensure compliance with applicable regulations. Air Quality Mitigation Measure AQ-2: All diesel-powered off- road equipment larger than 25 horsepower and operating on the site for more than two continuous days shall, at a minimum, meet U.S. EPA particulate matter emissions standards for Tier 4 engines or equivalent Less than Significant with Mitigation Incorporated Biological Resources Mitigation Measure BIO-1: If construction activities would commence anytime during the nesting/breeding season of native bird species potentially nesting near the site (typically February through August in the project region), a pre- construction survey for nesting birds shall be Less than Significant with Mitigation Incorporated Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact conducted by a qualified biologist within two weeks of the commencement of construction activities. If active nests are found in areas that could be directly affected or are within 150 feet of construction and would be subject to prolonged construction-related noise, a no-disturbance buffer zone shall be created around active nests during the breeding season or until a qualified biologist determines that all young have fledged. The size of the buffer zones and types of construction activities restricted within them will be determined by taking into account factors such as the following:  Noise and human disturbance levels at the construction site at the time of the survey and the noise and disturbance expected during the construction activity;  Distance and amount of vegetation or other screening between the construction site and the nest; and  Sensitivity of individual nesting species and behaviors of the nesting birds. Biological Resources Mitigation Measure BIO-2: Prior to the removal of any trees, the project applicant shall evaluate if the on-site trees meet the requirement to be considered a “protected” tree. A permit shall be obtained from the Parks and Recreation Department prior to the removal of a protected tree. Less than Significant with Mitigation Incorporated Cultural Resources Mitigation Measure CUL-1: In the event archaeological resources are encountered during construction, work shall be halted within 100 feet of the discovered materials and workers shall avoid altering the materials and their context until a qualified professional archaeologist has evaluated the situation and provided appropriate recommendations. If an archaeological site is encountered in any stage of development, a qualified archeologist will be Less than Significant with Mitigation Incorporated Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact consulted to determine whether the resource qualifies as an historical resource or a unique archaeological resource. In the event that it does qualify, the archaeologist will prepare a research design and archaeological data recovery plan to be implemented prior to or during site construction. The archaeologist shall also prepare a written report of the finding, file it with the appropriate agency, and arrange for curation of recovered materials. Cultural Resources Mitigation Measure CUL-2: A discovery of a paleontological specimen during any phase of the project shall result in a work stoppage in the vicinity of the find until it can be evaluated by a professional paleontologist. Should loss or damage be detected, additional protective measures or further action (e.g., resource removal), as determined by a professional paleontologist, shall be implemented to mitigate the impact. Less than Significant with Mitigation Incorporated Cultural Resources Mitigation Measure CUL-3: In the event that human remains are discovered during project construction, there shall be no further excavation or disturbance of the site or any nearby area reasonably suspected to overlie adjacent human remains. The county coroner shall be informed to evaluate the nature of the remains. If the remains are determined to be of Native American origin, the Lead Agency shall work with the Native American Heritage Commission and the applicant to develop an agreement for treating or disposing of the human remains. Less than Significant with Mitigation Incorporated Geology and Soils Mitigation Measure GEO-1: Project design and construction shall adhere to Title 18, Chapter 18.28 of the Burlingame Municipal Code, and demonstrate compliance with all design standards applicable to the California Building Code Zone 4 would ensure maximum practicable protection available to users of the buildings and associated infrastructure. Less than Significant with Mitigation Incorporated Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Geology and Soils Mitigation Measure GEO-2: Project design and construction, including excavation activities, shall comply with Chapter 33 of the CBC, which specifies the safety requirement to be fulfilled for site work. This would include prevention of subsidence and pavement or foundations caused by dewatering. Less than Significant with Mitigation Incorporated Geology and Soils Mitigation Measure GEO-3: The applicant shall prepare a monitoring program to determine the effects of construction on nearby improvements, including the monitoring of cracking and vertical movement of adjacent structures, and nearby streets, sidewalks, utilities, and other improvements. As necessary, inclinometers or other instrumentation shall be installed as part of the shoring system to closely monitor lateral movement. The program shall include a pre-condition survey including photographs and installation of monitoring points for existing site improvements. Less than Significant with Mitigation Incorporated Hazards and Hazardous Materials Mitigation Measure HAZ-1: The contractor shall comply with Title 8, California Code of Regulations/Occupational Safety and Health Administration (OSHA) requirements that cover construction work where an employee may be exposed to lead. This includes the proper removal and disposal of peeling paint, and appropriate sampling of painted building surfaces for lead prior to disturbance of the paint and disposal of the paint or painted materials. Less than Significant with Mitigation Incorporated Hazards and Hazardous Materials Mitigation Measure HAZ-2: The applicant shall contract a Certified Asbestos Consultant to conduct an asbestos survey prior to disturbing potential asbestos containing building materials and following the Consultant’s recommendations for proper handling and disposal. Less than Significant with Mitigation Incorporated Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Hazards and Hazardous Materials Mitigation Measure HAZ-3: Workers handling demolition and renovation activities at the project site will be trained in the safe handling and disposal of any containments with which they are handling or disposing of on the project site. Less than Significant with Mitigation Incorporated Noise Mitigation Measure NOI-1: The following measures, in addition to the best practices specified in Impact 3, shall be implemented to reduce vibration impacts from construction activities to a less-than-significant level:  For all construction proposed to be located within 20 feet of adjacent structures, a construction vibration-monitoring plan would need to be implemented to document conditions prior to, during and after vibration generating construction activities. All plan tasks shall be undertaken under the direction of a licensed Professional Structural Engineer in the State of California and be in accordance with industry accepted standard methods. The construction vibration monitoring plan should be implemented to include the following tasks:  Perform a photo survey, elevation survey, and crack monitoring survey for each identified structure. Surveys shall be performed prior to any construction activity and after project completion and shall include internal and external crack monitoring in structures, settlement, and distress and shall document the condition of foundations, walls and other structural elements in the interior and exterior of said structures.  Designate a person responsible for registering and investigating claims of excessive vibration. The contact information of such person shall be clearly posted on the construction site.  Make appropriate repairs or compensation Less than Significant with Mitigation Incorporated Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact where damage has occurred as a result of construction activities.  The results of all vibration monitoring shall be summarized and submitted in a report shortly after substantial completion of each phase identified in the project schedule. The report will include a description of measurement methods, equipment used, calibration certificates, and graphics as required to clearly identify vibration- monitoring locations. An explanation of all events that exceeded vibration limits will be included together with proper documentation supporting any such claims. Transportation and Traffic Mitigation Measure TRA-1: Prior to issuance of grading and building permits, the project applicant shall submit a Traffic Control Plan. The Traffic Control Plan would indicate how parking for construction workers would be provided during construction and ensure a safe flow of traffic in the project area during construction. The requirements within the Traffic Control Plan include, but are not limited to, the following: truck drivers would be notified of and required to use the most direct route between the site and U.S. 101, as determined by the City Engineering Department; all site ingress and egress would occur only at the main driveways to the project site; specifically designated travel routes for large vehicles would be monitored and controlled by flaggers for large construction vehicle ingress and egress; warning signs indicating frequent truck entry and exit would be posted on adjacent roadways if requested; and any debris and mud on nearby streets caused by trucks would be monitored daily and may require instituting a street cleaning program. Less than Significant with Mitigation Incorporated Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Transportation and Traffic Mitigation Measure TRA-2: On-street parking to the east and west of the outbound driveways on Bayswater Avenue shall be prohibited by painting red curb for a distance of approximately 20 feet on either side. Less than Significant with Mitigation Incorporated William Meeker, City of Burlingame Date Community Development Director Page Intentionally Left Blank EXHIBIT A City of Burlingame 85 CALIFORNIA DRIVE PROJECT Initial Study Prepared by: Circlepoint 46 S 1st Street San Jose, CA 95113 Prepared for: City of Burlingame Community Development Department 501 Primrose Road Burlingame, CA 94010 November 2016 Page left intentionally blank Initial Study 85 California Drive TABLE OF CONTENTS Initial Study and Environmental Checklist Form ............................................................................. 1 Environmental Factors Potentially Affected ................................................................................... 2 Determination ................................................................................................................................. 3 Project Description .......................................................................................................................... 4 Environmental Impact Checklist ...................................................................................................... 8 1 Aesthetics ............................................................................................................................ 8 2 Agriculture ......................................................................................................................... 11 3 Air Quality .......................................................................................................................... 13 4 Biological Resources .......................................................................................................... 19 5 Cultural Resources ............................................................................................................. 23 6 Geology and Soils .............................................................................................................. 26 7 Greenhouse Gas Emissions................................................................................................ 31 8 Hazards and Hazardous Materials ..................................................................................... 34 9 Hydrology and Water Quality ............................................................................................ 40 10 Land Use and Planning .................................................................................................. 45 11 Mineral Resources ......................................................................................................... 47 12 Noise .............................................................................................................................. 48 13 Population and Housing ................................................................................................ 56 14 Public Services ............................................................................................................... 58 15 Recreation ..................................................................................................................... 60 16 Transportation and Traffic ............................................................................................. 61 17 Utilities and Service Systems ......................................................................................... 67 18 Mandatory Findings of Significance .............................................................................. 71 i Initial Study 85 California Drive LIST OF TABLES Table 1 Comparison of BAAQMD’s Land Use Screening Criteria and the Project Size .............. 16 Table 2 Summary of Noise Measurement Data ......................................................................... 49 Table 3 Typical Vibration Levels Expected from Construction Equipment ................................ 51 Table 4 Calculated Construction Noise Levels for Each Phase of Construction at a Distance of 50 Feet ....................................................................................................................................... 54 Table 5 Trip Generation Summary ............................................................................................. 64 LIST OF FIGURES Figure 1 Project Site and Surrounding Land Use Map Figure 2 Noise Monitoring Locations LIST OF APPENDICES A Project Plans B California Historical Resources Information System Records Search C Geotechnical Investigation D Phase I Environmental Site Assessment E Noise and Vibration Assessment F Transportation Impact Analysis ii Initial Study 85 California Drive INITIAL STUDY AND ENVIRONMENTAL CHECKLIST FORM CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) 1. Project Title 85 California Drive 2. Lead Agency City of Burlingame 501 Primrose Road Burlingame, CA 94010 3. Contact Person and Phone Number Ruben Hurin, Senior Planner Telephone: (650) 558-7256 E-Mail: rhurin@burlingame.org 4. Project Location 85 California Drive Burlingame, CA 5. San Mateo County Parcel Number APN 029-242-020 APN 029-242-030 APN 029-242-040 APN 029-242-050 APN 029-242-230 (portion) 6. Project Sponsor’s Name and Address Alan Cross 566 Folsom Street San Francisco, CA 94105 7. General Plan Designation Commercial Uses: Service & Special Sales California Drive Mixed Use District R-4 Incentive District 8. Zoning California Drive Auto Row R-4 9. Description of Project See project description below 10. Surrounding Land Uses and Setting See project description below 1 Initial Study 85 California Drive ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a “potentially significant impact” as indicated by the checklist on the following pages. Aesthetics Agriculture and Forestry Resources Air Quality Biological Resources Cultural Resources Geology and Soils Greenhouse Gas Emissions Hazards and Hazardous Materials Hydrology and Water Quality Land Use and Planning Mineral Resources Noise Population and Housing Public Services Recreation Transportation and Traffic Utilities and Service Systems Mandatory Findings of Significance 2 Initial Study 85 California Drive DETERMINATION On the basis of this initial study: D I find that the proposed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared. I:8J I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in th is case because revisions in the project have been made by or agreed to by the project proponent. A MITIGATED NEGATIVE DECLARATION will be prepared . D I find that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required . D I find that the proposed project MAY have a "potentially significant impact" or "potentially significant unless mitigated" impact on the environment, but at least one effect 1} has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2} has been addressed by mitigation measures based on the earlier analysis as described on attached sheets. An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed . D I find that although the proposed project could have a significant effect on the environment, because all potentially significant effects (a} have been analyzed adequately in an earlier EIR or NEGATIVE DECLARATION pursuant to applicable standards, and (b) have been avoided or mitigated pursuant to that earlier EIR or NEGATIVE DECLARATION, including revisions or mitigation measures that are imposed upon the proposed project, nothing further is required. f I Date Community Development Director 3 Initial Study 85 California Drive PROJECT DESCRIPTION Existing Project Setting The proposed project site is located at the southwest corner of Bayswater Avenue and California Drive and encompasses four parcels and a portion of a fifth parcel (APN 029-242-020, -030, - 040, -050 and a portion of -230). The project site is bordered by California Drive to the north, Bayswater Avenue to the west, a Mazda dealership to the east, and a two-story multifamily residential building to the south. Automobile sales and service facilities are also located adjacent to the site across California Drive and Bayswater Avenue. Existing Conditions and Land Use The project site is located in the Burlingame Downtown Specific Plan (Downtown Specific Plan) area. Within the Downtown Specific Plan, the majority of the site is located in the California Drive Mixed Use District; the remaining portion of the site is located in the R-4 Incentive District. The project site is located in the California Drive Auto Row (CAR) zoning district designated primarily for automobile-related uses. The remaining portion of the site is located in the R-4 District designated primarily for high-density multifamily residential land uses. The project site occupies five separate parcels, is relatively level (with an average slope of 2 percent), and two parcels are developed with a single-story Subaru showroom building, a single- story Subaru automobile service facility, a Hertz automobile rental office located in the service facility building, and automobile storage for Subaru and Hertz on a paved parking area. The site is completely covered by 24,925 square feet of impervious surfaces and does not contain any vegetation or landscaping. California Drive and Bayswater Avenue provide access to the site (Figure 1). Automobile dealerships surround the project site to the north, east, and west, and residential land uses are located to the south. The Burlingame Caltrain Station is located 0.25 miles northwest of the project site. Washington Elementary School is located 0.2 miles north of the project site, St. Catherine of Siena School is located 0.2 miles southwest, and Burlingame High School is located 0.4 miles northwest. Washington Park is located 0.3 miles northwest of the project site and Pershing Park is within 0.5 miles southwest. Proposed Project Components The project would construct a new 14,239-square-foot automobile service facility with a 1,627- square-foot parts storage mezzanine at the site (8,725 square feet of enclosed building area and 5,514 square feet of covered drive aisle area). This would include demolition of a 115-square- foot office at the rear of the existing showroom and the existing 2,620-square-foot service facility and Hertz rental office. The existing showroom on the northeast end of the site would remain. As part of the project, the new service facility would be constructed over four parcels and a portion of a fifth parcel, and the parcels would be combined into one, totaling 24,925 square feet (0.57 acres). The remaining portion of the fifth parcel, outside of the project site, would continue to be used for storing new vehicle inventory. The new service facility would be 4 Initial Study 85 California Drive one story (25 feet and 1.5 inches in height), which conforms to the 55-foot height limit for the CAR zoning district. The service facility would consist of 16 service bays, parts and tool rooms, a service writer office and a customer lounge. The front of the lot would contain an outdoor vehicle display area and 15 parking spaces for customers and employees, as required under the City’s parking ordinance (Burlingame Municipal Code Chapter 25.70, Off-Street Parking). The total site area disturbed for the project would be 21,426 square feet (0.49 acres). The project would provide 879 square feet of bioretention landscaping area and replace 96 percent of the existing impervious area on the site (replacing 9,957 square feet and adding new impervious areas of 10,590 square feet), for a total impervious area of 20,547 square feet. The project plans are included as Appendix A of this initial study. Design and Landscaping The proposed new automobile service facility requires an application for Commercial Design Review and is subject to Section 5.0 – Design & Character of the Downtown Specific Plan. The proposed building contains prefinished horizontal metal and aluminum composite panel siding, painted steel and aluminum trim, and an aluminum anodized storefront system. No landscaping or vegetation exists on the site. There are seven street trees—six evergreen pear trees (Pyrus kawakamii) and one maidenhair tree (Ginkgo biloba)—along Bayswater Avenue in front of the project property; no other street trees exist around the perimeter of the site. All seven street trees would be removed and replaced with four new street trees along Bayswater Avenue. Two evergreen pear trees and one maidenhair tree would be removed to accommodate new curb cuts for the new service facility. The remaining four evergreen pear trees would also be removed and replaced with four maidenhair trees. The applicant would obtain the required tree removal permits from the Parks and Recreation Director pursuant to the Burlingame Municipal Code Chapter 11.04, Street Trees. As part of the project, two new 24- inch box ‘Redspire’ Callery pear (Pyrus calleryana ‘Redspire’) street trees would be planted along California Drive to satisfy the Burlingame Parks Division. In addition, the project applicant would need to comply with the City’s Tree Ordinance, which may require additional planting. Additionally, two new areas of landscaping, totaling 879 square feet, would be planted in the areas designated for bioretention. Utilities The project would require plumbing and electrical improvements to accommodate the new service facility. The Burlingame Public Works Department provides water and wastewater service to the project site. The project site is connected to the City’s utility infrastructure which includes an existing 6-inch domestic water service line, 6-inch sanitary sewer line, and 6-inch fire service line. The new building would tie-in to these existing lines with a new 1-inch domestic water service line, new 4-inch sanitary sewer line, and new 4-inch fire service line. The project site is connected to an existing 15-inch stormwater line and the new building would tie-in to this existing line to convey stormwater infrastructure with a new 8-inch stormwater line. New electrical and gas lines would also be constructed. The project would comply with the 2013 California Building Code, 2013 California Mechanical Code, 2013 California Electrical Code, and 5 Initial Study 85 California Drive 2013 California Plumbing Code, including all amendments as adopted in Ordinance 1889, as well as the 2013 California Energy Efficiency Standards. Access and Circulation The project site is located south of U.S. Highway 101 (US 101) and north of El Camino Real, both major traffic corridors providing access to Burlingame. The project location is also easily accessible from the Burlingame Caltrain station. The existing curb cut on California Drive would remain and continue to provide ingress to the site for visitors to the existing showroom; the existing curb cut on Bayswater Avenue near the corner of Bayswater Avenue and California Drive would be reduced in width and would continue to provide egress from the site. Two new curb cuts would be installed on Bayswater Avenue to provide a path for vehicles to circulate through the service facility. Construction The proposed construction methods are considered to be conceptual and are subject to review and approval by the City of Burlingame. For the purposes of this environmental document, the analysis considers the construction plan as described below. The existing buildings, concrete, and paving on the site would be demolished and removed as part of the project. Temporary construction fencing and run-off filter booms would be placed at the perimeter of the site to protect water quality from potential contaminants in stormwater runoff emanating from the construction site. Underground utilities that would be affected include water, sewer, fire sprinkler, and telecommunication lines. These systems would be upgraded to meet the needs of the proposed construction. The new construction would consist of a concrete pad on piers and a pre-fabricated metal building with added architectural siding. The project assumes approximately 300 cubic yards of soil export. All soil would be off-hauled to Ox Mountain (Half Moon Bay) or a similarly appropriate facility. The hauling trucks would access the site by heading south on California Drive from US 101 (Broadway interchange), making a right turn onto Peninsula Avenue, a right turn onto Highland Avenue, a right turn onto Bayswater Avenue, and stopping in front of the site. Once full, the trucks would continue down Bayswater Avenue in order to turn back onto California Drive and proceed in either the north or south direction, depending on the final destination of the off-haul. Once excavation is complete, construction workers would fill it with rebar and concrete to install the piers and slab. The slab would be installed for the proposed building structure to resist potential underground vertical and horizontal uplift pressures. Once the slab is in place, the pre-fabricated metal building would be constructed. Upon completion of the building, the parking and driveway areas will be brought to grade with compacted base-rock and asphalt. 6 Initial Study 85 California Drive The total construction duration is estimated to be eight months. Construction would occur during the construction hours allowed by the Burlingame Municipal Code, Section 18.07.110, specifically: Weekdays: 8:00 am – 7:00 pm Saturdays: 9:00 am – 6:00 pm No construction allowed on Sundays and Holidays Project Approvals The project requires the following approvals from the City: • Rezoning a portion of the site from R-4 (high-density multifamily residential) to CAR (California Drive Auto Row) • General Plan Amendment to change the land use designation of a portion of the site from R-4 Incentive District to California Drive Mixed Use District • Lot Merger to combine four existing parcels into one parcel and Lot Line Adjustment • Commercial Design Review for a new automobile service facility at an existing automobile dealership • Adoption of a Mitigated Negative Declaration (MND) – California Environmental Quality Act (CEQA) clearance 7 Initial Study 85 California Drive ENVIRONMENTAL IMPACT CHECKLIST 1 Aesthetics Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Have a substantial adverse effect on a scenic vista? b) Substantially damage scenic resources, including, but not limited to, trees, rock outcroppings, and historic buildings within a state scenic highway? c) Substantially degrade the existing visual character or quality of the site and its surroundings? d) Create a new source of substantial light or glare which would adversely affect day or nighttime views in the area? Setting The City of Burlingame is located within San Mateo County, east of the Santa Cruz Mountains and west of the San Francisco Bay (Bay). Burlingame is surrounded by the City of Millbrae to the northwest, the Bay to the east, the City of San Mateo to the southeast, and the Town of Hillsborough to the southwest. Most of the City is located on gently sloping valley floor and is a highly developed, urban/suburban area. The western portions of the City are located on foothills rising to the Santa Cruz Mountains that offer scenic views of the Santa Cruz Mountains, the Bay, and the East Bay Hills. The project site lies within the California Drive Auto Row (CAR) portion of the Burlingame Downtown Specific Plan area. This area is zoned as California Drive Mixed Use District and is primarily used for auto sales. While other uses are permitted in the Downtown Specific Plan, the document cautions that non-auto uses should be carefully considered to ensure compatibility with the area’s traditional focus on automobile businesses. The project site is currently covered by 24,925 square feet of impervious surfaces and contains no vegetation or landscaping. Other automobile dealerships surround the site to the north, east, and west, and a two-story multifamily residential building borders the site to the south. 8 Initial Study 85 California Drive Discussion a) Have a substantial adverse effect on a scenic vista? (No Impact) According to the City of Burlingame General Plan, important vistas include the hillside leading to the Skyline Ridge as seen from the Bay plain, and the Bay as seen from the hillside. The project would not impact either scenic resource. Public views of the foothills rising to the Santa Cruz Mountains are obscured by existing development and landscaping in the project vicinity. The new development would be one story (25 feet and 1.5 inches in height) and would be well under the 55-foot height limit for the CAR zoning district. Therefore, no impact to scenic vistas would occur. b) Substantially damage scenic resources, including, but not limited to, trees, rock outcroppings, and historic buildings within a state scenic highway? (No Impact) The intent of the California Scenic Highway Program is to protect and enhance California’s natural beauty and to protect the social and economic values provided by the state’s scenic resources. State scenic highways are officially designated by Scenic Highways Advisory Committee. According the General Plan Scenic Roads and Highways Element, the project is not located near a state scenic highway. Therefore, no impact would occur. c) Substantially degrade the existing visual character or quality of the site and its surroundings? (Less than Significant) Construction Construction of the project would involve demolition, earthmoving operations, and grading activities. Temporary fencing, construction equipment, construction vehicles, staging areas, and associated construction debris would be visible on the project site for the duration of construction (approximately eight months). The visual character and quality of the site would change for a temporary period of time, depending on the work and equipment used. However, the visual effects of construction activities would be similar to other types of development and construction that typically occur within the area and are temporary in nature. Operation The project proposes to continue the existing use of the site for automobile service and sales. The project would replace an existing automobile service facility (14 feet and 6 inches in height) with a new automobile service facility (25 feet and 1.5 inches in height). While the height of the new service building would be approximately 10 feet taller than the existing building, it is within the 55-foot height limit for the CAR zoning district. The new automobile service facility would require an application for Commercial Design Review and would be subject to Section 5.0, Design & Character, of the Downtown Specific Plan. The project’s appearance, which would include prefinished horizontal metal and aluminum composite panel siding, painted steel and aluminum trim, and an aluminum anodized storefront system, would be consistent with surrounding automobile dealerships. As such, the project would not substantially degrade the existing visual character or quality of the site and the impact would be less than significant. 9 Initial Study 85 California Drive d) Create a new source of substantial light or glare which would adversely affect day or nighttime views in the area? (Less than Significant with Mitigation Incorporated) The project site is currently developed and urbanized. Streetlights, exterior commercial lighting, and vehicular lights exist in the surrounding area and along adjacent corridors. The new building would contribute additional sources of light; however, exterior lighting shall be designed and installed to comply with existing regulations to reduce light pollution. Glass surfaces on the proposed structure would also result in increased sunlight reflection, ambient light, and glare beyond existing conditions. This is considered a potentially significant impact. The following mitigation measure is anticipated to reduce this impact to a less-than-significant level. Mitigation Measure AES-1: The project developer shall install low-profile, low-intensity lighting directed downward to minimize light and glare. Exterior lighting shall be low mounted, downward casting, and shielded. In general, the light footprint shall not extend beyond the periphery of each property. Implementation of exterior lighting fixtures on all buildings shall also comply with the standard California Building Code (Title 24, Building Energy Efficiency Standards) to reduce the lateral spreading of light to surrounding uses, consistent with Burlingame Municipal Code Section 18.16.030 that requires that all new exterior lighting for commercial developments be designed and located so that the cone of light and/or glare from the light element is kept entirely on the property or below the top of any fence, edge or wall. 10 Initial Study 85 California Drive 2 Agriculture In determining whether impacts to agricultural resources are significant environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Department of Conservation as an optional model to use in assessing impacts on agriculture and farmland. Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non-agricultural use? b) Conflict with existing zoning for agricultural use, or a Williamson Act contract? c) Involve other changes in the existing environment which, due to their location or nature, could result in conversion of Farmland, to non-agricultural use? Setting The project site is fully developed with a single-story Subaru showroom building, a single-story Subaru automobile service facility, a Hertz automobile rental office located inside the service facility building, and automobile storage for Subaru and Hertz on a paved parking area. The United States Department of Agriculture Natural Resources Conservation Service soil map delineates the project site as Urban Land. The California Department of Conservation, Natural Resources Agency 2010 map of Important Farmland identifies Burlingame as Urban and Built Up Land. There are no agricultural resources located on or near the project site. 11 Initial Study 85 California Drive Discussion a) Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non-agricultural use? (No Impact) and b) Conflict with existing zoning for agricultural use, or a Williamson Act contract? (No Impact) and c) Involve other changes in the existing environment which, due to their location or nature, could result in conversion of Farmland, to non-agricultural use? (No Impact) There are no active agricultural lands or lands under a Williamson Act contract on or adjacent to the project site. The project site is not designated for agricultural uses in the General Plan Land Use Map; therefore, the project would not conflict with existing zoning for agricultural use. Furthermore, the proposed project site is located in an urban setting within the Downtown Specific Plan area, which contains land use policies intended to promote and expand development. Consequently, the project would not result in farmland conversion to non- agricultural use. Therefore, no impact would occur. 12 Initial Study 85 California Drive 3 Air Quality Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Conflict with or obstruct implementation of the applicable air quality plan? b) Violate any air quality standard or contribute substantially to an existing or projected air quality violation? c) Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non-attainment under an applicable federal or state ambient air quality standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)? d) Expose sensitive receptors to substantial pollutant concentrations? e) Frequently create objectionable odors affecting a substantial number of people? Setting Federal, state, and regional agencies regulate air quality, including the U.S. Environmental Protection Agency (EPA), the California Air Resources Board (CARB), and the Bay Area Air Quality Management District (BAAQMD). EPA and CARB have adopted ambient air quality standards for criteria pollutants, which include tropospheric ozone (O3), carbon monoxide (CO), nitrogen dioxide (NO2), sulfur dioxide (SO2), particulate matter, and lead. Ambient air quality standards also regulate reactive organic gases (ROG) and nitrogen oxides (NOx) because they are precursors to O3 formation. Particulate matter standards include regulations for particles with a diameter of 10 micrometers or less (PM10) and particles with a diameter of 2.5 micrometers or less (PM2.5). The San Francisco Bay Area (Bay Area) air basin, which includes the City of Burlingame, is designated as non-attainment for O3 and PM2.5 under both federal and state standards, and non- attainment for PM10 under the more stringent state standards, which means that the Bay Area does not meet the ambient air quality standards for these air pollutants. The highest O3 levels in the Bay Area occur in the eastern and southern inland valleys that are downwind of air pollutant sources. High O3 levels can aggravate respiratory and cardiovascular diseases, reduce lung function, and increase coughing and chest discomfort. Elevated concentrations of PM10 and PM2.5 are the result of both regional and localized emissions. High particulate matter levels can aggravate respiratory and cardiovascular diseases, reduce lung function, increase mortality (e.g., lung cancer), and result in reduced lung function growth in children. 13 Initial Study 85 California Drive In June 2010, BAAQMD adopted thresholds of significance to assist in the review of projects under CEQA. These thresholds were designed to establish the level of air pollutant emissions that could cause significant environmental impacts under CEQA. BAAQMD’s adoption of significance thresholds contained in the 2011 CEQA Air Quality Guidelines was called into question by an order issued March 5, 2012, in California Building Industry Association (CBIA) v. BAAQMD (Alameda Superior Court Case No. RGI0548693). The order requires BAAQMD to set aside its approval of the thresholds until it has conducted environmental review under CEQA. The ruling made in the case concerned the environmental impacts of adopting the thresholds and how the thresholds would indirectly affect land use development patterns. In August 2013, the Appellate Court struck down the lower court’s order to set aside the thresholds. However, this litigation remains pending as the California Supreme Court recently accepted a portion of CBIA’s petition to review the appellate court’s decision to uphold BAAQMD’s adoption of the thresholds. The specific portion of the argument to be considered is in regard to whether CEQA requires consideration of the effects of the environment on a project (as contrasted to the effects of a project on the environment). Given that the existing court ruling retains the use of the CEQA thresholds, the 2011 CEQA Air Quality Guidelines are applied to this project. Sensitive Receptors There are groups of people more affected by air pollution than others. CARB has identified the following persons who are most likely to be affected by air pollution: children under 16, the elderly over 65, athletes, and people with cardiovascular and chronic respiratory diseases. These groups are classified as sensitive receptors. Locations that may contain a high concentration of these sensitive population groups include residential areas, hospitals, daycare facilities, elder care facilities, elementary schools, and parks. The closest off-site sensitive receptors are residences located at an adjacent apartment building at 32 Highland Avenue as shown in Figure 2. There are other residences located across Highland Avenue, about 150 feet from the project site. Discussion a) Conflict with or obstruct implementation of the applicable air quality plan? (Less than Significant) As noted above in the setting discussion, the Bay Area Air Basin is in non-attainment for state and federal standards for O3, PM2.5 and PM10. Steps needed to achieve compliance with these regulations have been identified, as described below. The state-mandated regional air quality plan is the Clean Air Plan. The Clean Air Plan includes 55 control measures that are intended to reduce air pollutant emissions in the Bay Area either directly or indirectly. The control measures are divided into five categories that include: 14 Initial Study 85 California Drive  Measures to reduce stationary area sources  Mobile source measures  Transportation control measures  Land Use and local impact measures  Energy and climate measures A project would be determined to conflict with or obstruct implementation of the Clean Air Plan (CAP) if it would be inconsistent with the regional growth assumptions, in terms of population, employment, or regional growth in Vehicle Miles Traveled (VMT). The emission strategies in the CAP were developed, in part, on regional population, housing, and employment projections prepared by the Association of Bay Area Governments (ABAG). The project is consistent with the General Plan designation of California Drive Mixed Use District and California Drive Auto Row (CAR) zoning district for the site. As such, it can be assumed that the use of this site for commercial purposes is already included in the CAP. The project would not directly increase the City’s population as it does not include residential units. Implementation of the project would construct a new 9,634-square-foot automobile service facility at the site. This would include demolition of a 115-square-foot office at the rear of the existing showroom and the existing 2,620-square-foot service facility and Hertz rental office. The existing showroom on the northeast end of the site would remain. As part of the project, the new service facility would be constructed over the four parcels and a portion of the fifth parcel, and the parcels would be combined into one, totaling 24,925 square feet (0.57 acres). According to the Traffic Impact Assessment (TIA) prepared for the project, no significant increase in traffic is anticipated with project implementation. The County of San Mateo’s Traffic Impact Study Requirements establishes a significance threshold which considers a project’s impact to traffic significant if its implementation increases daily trips by 500. The project is expected to generate 125 daily trips, on average, which is significantly lower than the 500 trips threshold. Consequently, development of the project would not conflict with population and VMT projections used to develop the Clean Air Plan planning projections (see Section 16, Transportation and Traffic). The project would not obstruct implementation of these plans, and therefore no impact would occur. b) Violate any air quality standard or contribute substantially to an existing or projected air quality violation? (Less than Significant with Mitigation Incorporated) BAAQMD has established thresholds of significance for the non-attainment air pollutants and their precursors. These thresholds are for ozone precursor pollutants (ROG and NOx), PM10 and PM2.5, and apply to construction and operational impacts. According to BAAQMD’s Urban Land Use Emissions Model (UREBMIS), if a project’s size is below the established screening level size, then the project would not result in the emission of significant levels of operation-related emissions, and/or their precursors.1 Although there is no specific UREBMIS classification for a car dealership, the proposed project is closest, in size and 1 Note that CalEEMod version 2013.2.2 has replaced URBEMIS and uses more recent vehicle emissions data that result in lower emissions than the URBEMIS model. 15 Initial Study 85 California Drive operations type, to the “General Light Industrial” land use. The operational and construction- related emissions thresholds are shown below in Table 1. Table 1 Comparison of BAAQMD’s Land Use Screening Criteria and the Project Size Operational pollutants (square feet) Operational Greenhouse Gas Emissions (square feet) Construction Pollutants (square feet) BAAQMD’s Land Use Screening Size 541,000 121,000 259,000 Project Size 24,295 24,295 24,295 Source: Circlepoint, 2016. Under the BAAQMD CEQA Guidelines; the screening criterion for this land use is 541,000 square feet for operational pollutants and their precursors, and 121,000 square feet for operational greenhouse gas emissions. Additionally, the screening criterion for construction criteria pollutants is 259,000 square feet for the “General Light Industrial” land use. Given that the total project footprint is 24, 925 square feet, the project size is well below the BAAQMD screening level for construction and operational criteria pollutants and GHG significant impacts. Carbon monoxide emissions from project-related traffic would be the pollutant of greatest concern at the local level. Congested intersections with a large volume of traffic have the greatest potential to cause high localized concentrations of carbon monoxide. Air pollutant monitoring data indicate that carbon monoxide levels have been at healthy levels (i.e., below federal and state standards) in the Bay Area since the early 1990s. As a result, the region has been designated as in attainment for the standard. There is an ambient air quality monitoring station in Redwood City that measures carbon monoxide concentrations. The highest measured level over any 8-hour averaging period during the last 3 years is less than 2 parts per million (ppm), compared to the ambient air quality standard of 9.0 ppm. The project would generate traffic during construction and operation that would emit carbon monoxide. The project would increase traffic by an estimated 125 trips per day. BAAQMD screening guidance indicates that projects would have a less than significant impact to carbon monoxide levels if project traffic projections indicate traffic levels would not increase at any affected intersection to more than 44,000 vehicles per hour. That condition would not occur in the area affected by the project. Furthermore, according to BAAQMD, implementation of the BAAQMD’s standard permit Best Management Practices (BMPs) described in Mitigation Measure AQ-1 below, would be reduce construction-related potential impacts to a less-than-significant level. Mitigation Measure AQ-1: The contractor shall implement the following BMPs: 1) All exposed surfaces (e.g., parking areas, staging areas, soil piles, graded areas, and unpaved access roads) shall be watered two times per day. 16 Initial Study 85 California Drive 2) All haul trucks transporting soil, sand, or other loose material off-site shall be covered. 3) All visible mud or dirt tracked onto adjacent public roads shall be removed using wet power vacuum street sweepers at least once per day. The use of dry power sweeping is prohibited. 4) All vehicle speeds on unpaved roads shall be limited to 15 miles per hour (mph). 5) All roadways, driveways, and sidewalks to be paved shall be completed as soon as possible. Building pads shall be laid as soon as possible after grading unless seeding or soil binders are used. 6) Idling times shall be minimized either by shutting equipment off when not in use or reducing the maximum idling time to 5 minutes (as required by the California airborne toxics control measure Title 13, Section 2485 of California Code of Regulations (CCR)). Clear signage shall be provided for construction workers at all access points. 7) All construction equipment shall be maintained and properly tuned in accordance with manufacturer’s specifications. All equipment shall be checked by a certified mechanic and determined to be running in proper condition prior to operation. 8) Post a publicly visible sign with the telephone number and person to contact at the Lead Agency regarding dust complaints. This person shall respond and take corrective action within 48 hours. The Air District’s phone number shall also be visible to ensure compliance with applicable regulations. Project operation would not cause a violation of any air quality standards or contribute substantially to an existing or projected air quality violation. With implementation of Mitigation Measure AQ-1, the temporary effects of fugitive dust from grading and construction activities would be reduced to a less-than-significant level. c) Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non-attainment under an applicable federal or state ambient air quality standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)? (Less than Significant) Past, present and future development projects contribute to the region’s adverse air quality impacts on a cumulative basis. By its very nature, air pollution is largely a cumulative impact. No single project is sufficient in size by itself, to result in nonattainment of ambient air quality standards. Instead a project’s individual emissions contribute to existing cumulatively significant adverse air quality impacts. If a project’s contribution to the cumulative impact is considerable, then the project’s impact on air quality would be considered significant. The BAAQMD CEQA Guidelines state that a significant air quality impact would result if the project would result in a cumulatively considerable net increase of any criteria pollutant or a precursor to that pollutant for which the project region is non-attainment under an applicable national or state ambient air quality standard. Given the nature of the proposed use, the operational criteria pollutant screening size for the project is 541,000 square feet for 17 Initial Study 85 California Drive operational pollutants/precursors, and 121,000 square feet for greenhouse gas emissions. The project would operate at 24,925 square feet, and would thus be below the screening criteria developed by BAAQMD for the “General Light Industrial” land use. Therefore, the project would not exceed the pollutant emissions thresholds and the project’s contribution to cumulative air quality impacts is not considered cumulatively considerable. d) Expose sensitive receptors to substantial pollutant concentrations? (Less than Significant with Mitigation Incorporated) Operation of the project would not be expected to cause any localized emissions that could expose sensitive receptors (including infants and children as most sensitive) to unhealthy air pollutant levels. The proposed car dealership and service center would undertake day-to-day operations (such as car sales/repair) by connecting to the statewide electrical grid. No stationary sources of TACs (typically factories, refineries, power plants, etc.), are proposed as part of the project. Construction activity would generate dust and equipment exhaust on a short-term temporary basis. The project would not introduce any new sensitive receptors to the area. Construction equipment and associated heavy-duty truck traffic could generate diesel exhaust, which is a known TAC. Diesel exhaust and PM2.5 can pose both potential health and nuisance impacts to nearby receptors. Sensitive receptors within close proximity to construction activity are at a higher risk of being exposed to TACs, and the subsequent health impacts associated with exposure to high levels of DPM and PM2.5. The closest off-site sensitive receptors are located in an apartment building on the southern border of the project site, approximately 20 feet away. With implementation of Mitigation Measures AQ-1 and AQ-2, potential impacts to nearby sensitive receptors would be reduced to a less-than-significant level. Mitigation Measure AQ-2 represents the application of Best Available Control Technology to construction equipment in order to minimize TAC emissions. Mitigation Measure AQ-2: All diesel-powered off-road equipment larger than 25 horsepower and operating on the site for more than two continuous days shall, at a minimum, meet U.S. EPA particulate matter emissions standards for Tier 4 engines or equivalent.2 e) Frequently create objectionable odors affecting a substantial number of people? (Less than Significant) The project would generate localized emissions of diesel exhaust during construction; however, equipment operation and truck activity during construction hours would be a temporary condition. These emissions may be noticeable from time to time by adjacent receptors. However, they would be localized and are not likely to adversely affect people off site. No sources of significant objectionable odors are anticipated with the construction of the car dealership. Therefore potential impacts associated with the creation of frequently occurring objectionable odors would be less than significant. 2 Tier 4 standards require that vehicles with engines up to 560 kilowatts substantially reduce emissions of NOx and PM through the use on control technologies (e.g., advanced exhaust after treatment). 18 Initial Study 85 California Drive 4 Biological Resources Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Have a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special-status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? b) Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies, regulations or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? c) Have a substantial adverse effect on federally protected wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) or state-protected wetlands, through direct removal, filling, hydrological interruption, or other means? d) Interfere substantially with the movement of any native resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors, or impede the use of native wildlife nursery sites? e) Conflict with any local policies or ordinances protecting biological resources, such as a tree preservation policy or ordinance? f) Fundamentally conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan? Setting The biological resources occurring on and near the project site were evaluated by Pacific Biology on September 11, 2016. The project site is located in an urban area and is surrounded by dense commercial development. The project site, which is currently used as a car dealership, is completely developed and paved. Ivy (Hedera sp.), a non-native and invasive species, grows along the fence-line and several non-native trees are located on the adjacent sidewalk. 19 Initial Study 85 California Drive Discussion a) Have a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special-status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? (Less than Significant with Mitigation Incorporated) The California Natural Diversity Data Base (CNDDB) was reviewed to identify the location of special-status species documented in surrounding areas, and the suitability of on-site habitats to support special-status species was evaluated during the September 2016 site visit. Based on the CNDDB, no special-status species have been documented on the project site or within approximately 2 miles of the site. The project site does not provide suitable habitat for any regionally occurring special-status plant or wildlife species for the following reasons: (1) the site is in a densely developed urban area and is isolated from areas of natural habitat; (2) the site is developed/paved and is used as a car dealership; (3) there are no wetlands, creeks, woodlands, or other habitats present associated with locally occurring special-status species; and (4) vegetation on the site is limited to invasive ivy (along the fence-line) and to several non-native trees planted along the adjacent sidewalk. Therefore, no special-status plant or wildlife species are expected to occur or to be impacted by the project. However, the trees on the sidewalk bordering the project site and in other nearby locations provide potential nesting habitat for common, urban-adapted bird species. The active nests of most native bird species are protected by the Migratory Bird Treaty Act (16 U.S.C. 704) and the California Fish and Game Code (Section 3503). The proposed project would require the removal of several trees, which could result in the loss of an active bird nests. Additionally, construction noise has the potential to disturb nesting birds potentially occurring in nearby areas. Therefore, the loss of an active bird nest protected by the Migratory Bird Treaty Act and/or the California Fish and Game Code would be a potentially significant impact. Incorporation of Mitigation Measure BIO-1 would reduce this impact to a less-than-significant level. Mitigation Measure BIO-1: If construction activities would commence anytime during the nesting/breeding season of native bird species potentially nesting near the site (typically February through August in the project region), a pre-construction survey for nesting birds shall be conducted by a qualified biologist within two weeks of the commencement of construction activities. If active nests are found in areas that could be directly affected or are within 150 feet of construction and would be subject to prolonged construction-related noise, a no- disturbance buffer zone shall be created around active nests during the breeding season or until a qualified biologist determines that all young have fledged. The size of the buffer zones and types of construction activities restricted within them will be determined by taking into account factors such as the following:  Noise and human disturbance levels at the construction site at the time of the survey and the noise and disturbance expected during the construction activity; 20 Initial Study 85 California Drive  Distance and amount of vegetation or other screening between the construction site and the nest; and  Sensitivity of individual nesting species and behaviors of the nesting birds. b) Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies, regulations or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? (No Impact) During the September 2016 site visit, a search was conducted for riparian habitats and other sensitive plant communities. There is no riparian habitat or other sensitive plant communities on the project site. Therefore, no impacts to riparian habitat and other sensitive plant communities would occur. c) Have a substantial adverse effect on federally protected wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) or state-protected wetlands, through direct removal, filling, hydrological interruption, or other means? (No Impact) During the September 2016 site visit, a search was conducted for creeks, wetlands, and other potentially jurisdictional resources. There are no creeks or wetlands present on or bordering the project site. Therefore, no impacts to federally protected wetlands and other waters would occur. d) Interfere substantially with the movement of any native resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors, or impede the use of native wildlife nursery sites? (Less than Significant) Wildlife corridors are described as pathways or habitat linkages that connect discrete areas of natural open space otherwise separated or fragmented by topography, changes in vegetation, and other natural or manmade obstacles such as urbanization. The project site is paved/developed and is surrounded by dense commercial development and does not connect areas of natural open space. Therefore, the project site is not part of an expected wildlife movement corridor. For these reasons, the proposed project would not substantially interfere with the local or regional movement of wildlife species and related impacts would be less than significant. e) Conflict with any local policies or ordinances protecting biological resources, such as a tree preservation policy or ordinance? (Less than Significant with Mitigation Incorporated) The City of Burlingame defines a protected tree as any tree with a trunk circumference of 48 inches or more measured 54 inches above the ground; a permit from the Parks and Recreation Department is required to remove a protected tree. The proposed project would require the removal of seven non-native trees in the right-of-way along the sidewalk. The diameter at breast height (dbh) of the trees to be removed was not measured during the site visit, but it is possible that the dbh of one or more of the trees is greater than 48 inches. Therefore, in the absence of complying with the requirements of the local tree protection ordinance, related 21 Initial Study 85 California Drive impacts are potentially significant. Incorporation of Mitigation Measure BIO-2 would reduce this impact to a less-than-significant level. Mitigation Measure BIO-2: Prior to the removal of any trees, the project applicant shall evaluate if the on-site trees meet the requirement to be considered a “protected” tree. A permit shall be obtained from the Parks and Recreation Department prior to the removal of a protected tree. f) Fundamentally conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan? (No Impact) The site is not part of or near an existing Habitat Conservation Plan or Natural Communities Conservation Plan or any other local, regional, or state habitat conservation plan. Therefore, the proposed project would not conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan. Therefore, no related impact would occur. 22 Initial Study 85 California Drive 5 Cultural Resources Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Cause a substantial adverse change in the significance of a historical resource as defined in §15064.5? b) Cause a substantial adverse change in the significance of a unique archaeological resource pursuant to §15064.5? c) Directly or indirectly destroy a unique paleontological resource or site or unique geologic feature? d) Disturb any human remains, including those interred outside of formal cemeteries? Setting A cultural records search for the project site was conducted through the California Historical Resources Information System (CHRIS) at the Northwest Information Center (NWIC) in September 2016 (see Appendix B). The results of this records search are discussed below. Discussion a) Cause a substantial adverse change in the significance of a historical resource as defined in §15064.5? (Less than Significant) The existing structures on the project site proposed for demolition were developed between 1946 and 1956. The project site is not included in the Burlingame Downtown Specific Plan IS/MND list of historic structures. There are 23 structures within the Burlingame Downtown Specific Plan area that were identified as potentially eligible for the CRHP and the NRHP. In addition, there are 51 structures within the downtown area that convey certain aspects of Burlingame’s history and heritage, but are not eligible for the CRHR and NRHP. However, none of these potentially historic resources are on the project site. According to the CHRIS records search, no recorded buildings or structures are located within the proposed project area. Therefore, the impact would be less than significant. b) Cause a substantial adverse change in the significance of a unique archaeological resource pursuant to §15064.5? (Less Than Significant with Mitigation Incorporated) At the time of Euroamerican contact the Native Americans that lived in the area were speakers of the Ramaytush language, part of the Costanoan language family. According to the CHRIS search, the proposed project area contains no recorded archaeological resources. Native American resources in this part of San Mateo County have been found in areas marginal to the 23 Initial Study 85 California Drive San Francisco Bayshore, and inland near intermittent and perennial watercourses. The project site is located within alluvial valley lands approximately 0.5 miles from the San Francisco Bayshore. Given the similarity of these environmental factors, there is a moderate potential for unrecorded Native American resources in the proposed project area. Review of historical literature and maps gave no indication of the possibility of historic-period activity within the project area. As such, there is a low potential for unrecorded historic-period archaeological resources in the project area. Given the moderate possibility for unknown Native American archaeological resources in the proposed project area, there is a potential to discover unidentified archaeological resources during construction activities. This is considered a potentially significant impact. Implementation of the Mitigation Measure CUL-1 below would reduce this potentially significant impact to less than significant. Mitigation Measure CUL-1: In the event archaeological resources are encountered during construction, work shall be halted within 100 feet of the discovered materials and workers shall avoid altering the materials and their context until a qualified professional archaeologist has evaluated the situation and provided appropriate recommendations. If an archaeological site is encountered in any stage of development, a qualified archeologist will be consulted to determine whether the resource qualifies as an historical resource or a unique archaeological resource. In the event that it does qualify, the archaeologist will prepare a research design and archaeological data recovery plan to be implemented prior to or during site construction. The archaeologist shall also prepare a written report of the finding, file it with the appropriate agency, and arrange for curation of recovered materials. c) Directly or indirectly destroy a unique paleontological resource or site or unique geologic feature? (Less Than Significant with Mitigation Incorporated) No known paleontological resources have been recorded at the project site or within the vicinity. Further, the site is fully developed. A Subaru dealership and service facility currently occupy the site. Given this, the probability of encountering paleontological resources is low. However, construction activities could potentially destroy unknown paleontological resources. This would be a potentially significant impact. In the event that paleontological resources are discovered during site development, implementation of Mitigation Measure CUL-2 would mitigate this potentially significant impact to less-than-significant level. Mitigation Measure CUL-2: A discovery of a paleontological specimen during any phase of the project shall result in a work stoppage in the vicinity of the find until it can be evaluated by a professional paleontologist. Should loss or damage be detected, additional protective measures or further action (e.g., resource removal), as determined by a professional paleontologist, shall be implemented to mitigate the impact. 24 Initial Study 85 California Drive d) Disturb any human remains, including those interred outside of formal cemeteries? (Less Than Significant with Mitigation Incorporated) It is possible that unmarked burials may be unearthed during project construction. This is considered a potentially significant impact. If human remains are uncovered, the project applicant would comply with the California Health and Safety Code Section 7050.5 regarding human remains, and the California Public Resources Code Section 5097.98 regarding the treatment of Native American human remains. As a result, implementation of Mitigation Measure CUL-3 would reduce the potential impact to less than significant. Mitigation Measure CUL-3: In the event that human remains are discovered during project construction, there shall be no further excavation or disturbance of the site or any nearby area reasonably suspected to overlie adjacent human remains. The county coroner shall be informed to evaluate the nature of the remains. If the remains are determined to be of Native American origin, the Lead Agency shall work with the Native American Heritage Commission and the applicant to develop an agreement for treating or disposing of the human remains. 25 Initial Study 85 California Drive 6 Geology and Soils Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: i) Rupture of a known earthquake fault, as delineated on the most recent Alquist- Priolo Earthquake Fault Zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42. ii) Strong seismic ground shaking? iii) Seismic-related ground failure, including liquefaction? iv) Landslides? b) Result in substantial soil erosion or the loss of topsoil? c) Be located on geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on- or off-site landslide, lateral spreading, subsidence, liquefaction, or collapse? d) Be located on expansive soil, as defined in Table 18-1-B of the Uniform Building Code (1994, as it may be revised), creating substantial risks to life or property? e) Have soils incapable of adequately supporting the use of septic tanks or alternative wastewater disposal systems where sewers are not available for the disposal of wastewater? Setting Burlingame is in the Coast Ranges geomorphic province, in eastern San Mateo County, adjacent to the San Francisco Bay. Qualified geotechnical engineers completed a geotechnical investigation for the project in February 2016 and determined that the project site is suitable to support commercial development with adherence to provided development recommendations. Appendix C includes this report. 26 Initial Study 85 California Drive According to the geotechnical investigation, soil conditions encountered beneath the pavement at the site consisted generally of 1- to 4-foot-thick surface soil layer of artificial fill. The fill was generally underlain by native topsoil, which graded into stiff to very stiff alluvial deposits. The Bay Area is a seismically active area and is subject to the effects of future earthquakes. Most of Burlingame, including the Downtown Specific Plan area, is essentially flat (less than 1 percent slope) and is underlain by geologic materials consisting mostly of dense clay and clayey sand alluvial fan deposits dating 1.6 million to 10,000 years. These soils tend toward general stability and have a low infiltration rate (less than 0.2 inches per hour). The project site is located on the southwest corner of Bayswater Avenue and California Drive and is generally relatively level. In addition to the vehicle showroom, a service facility, and a car rental facility, there are various concrete and paved areas. A retaining wall is also present at the site. Discussion a) Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: i) Rupture of a known earthquake fault, as delineated on the most recent Alquist-Priolo Earthquake Fault Zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42. (No Impact) Four historically active faults are located within 15.5 miles of the project site:  San Andreas Fault (approximately 3.0 miles west)  San Gregorio Fault (approximately 9.9 miles northeast)  Monte Vista-Shannon Fault (approximately 10.9 miles southeast)  Hayward (Total Length) Fault (approximately 15.5 miles east) The Alquist-Priolo Earthquake Fault Zoning Act (1972) and the Seismic Hazards Mapping Act (1990) direct the State Geologist to delineate regulatory zones to assist cities and counties in preventing the construction of buildings used for human occupancy on the surface trace of active faults. According to the California Department of Conservation, the project site is not located within an Alquist-Priolo Earthquake Fault Zone, nor is Burlingame affected by Alquist- Priolo Earthquake Fault Zones. Additionally, no known surface expression of fault traces cross the site. The geotechnical investigation further confirmed that there are no indications of active faults at the project site. Therefore, no impact would occur. ii) Strong seismic ground shaking? (Less than Significant with Mitigation Incorporated) The City is in relative proximity to historically active faults; as such, there is potential for development within the sphere to be subject to strong seismic ground shaking, including the project site. The intensity of earthquake ground motions would depend on the characteristics of the generating fault, distance to the fault and rupture zone, earthquake magnitude, 27 Initial Study 85 California Drive earthquake duration, and site-specific geologic conditions. The San Andreas Fault is the closest active fault to the project site, and lies approximately 3.0 miles to the southwest. Numerous active and potentially active Bay Area faults are capable of producing moderate to major earthquakes that could cause severe ground shaking at the site in the future. As stated in the Burlingame Downtown Specific Plan IS/MND, Burlingame soils are reasonably stable under seismic conditions. Given this, implementation of the project would expose people and structures to strong seismic ground shaking if an earthquake were to occur in the area. Adherence to Mitigation Measure GEO-1 would reduce the potential impact to a less-than- significant level. Mitigation Measure GEO-1: Project design and construction shall adhere to Title 18, Chapter 18.28 of the Burlingame Municipal Code, and demonstrate compliance with all design standards applicable to the California Building Code Zone 4 would ensure maximum practicable protection available to users of the buildings and associated infrastructure. iii) Seismic-related ground failure, including liquefaction? (Less than Significant) Because the project site is in a seismically active region, some potential for seismic-related ground failure exists. The project site is flat and is underlain predominately by stiff to very stiff alluvial deposits. Given this, the potential for significant seismic settlement is low. The Association of Bay Area Governments mapped the project site as having low potential for liquefaction. Therefore, the impact would be less than significant. iv) Landslides? (No Impact) The downtown area of Burlingame experiences a grade change of approximately 15 feet (less than 1 percent slope). The area is relatively flat, without steep or unstable slopes, and does not have an irregular surface. As such, natural slope instability does not affect the project site. Landslides are not considered a hazard in the area. Therefore, no impact would occur. b) Result in substantial soil erosion or the loss of topsoil? (Less than Significant) The project site is developed with a single-story Subaru showroom building, a single-story Subaru automobile service facility and Hertz automobile rental office, and paved parking areas. The site is completely covered by 24,925 square feet of impervious surfaces and does not contain vegetation or landscaping. The existing 115-square-foot office at the rear of the existing showroom, the existing 2,620-square-foot service facility, and Hertz rental office would be demolished and removed as part of the project and a new, larger service facility would be constructed. Construction activities would be required to comply with the provisions in Appendix J of the 2007 California Building Code (CBC) in regards to grading, excavating, and earthwork construction. Soil erosion after construction would be controlled by implementation of approved landscape and irrigation plans, as needed. After construction, the site would still be completely covered with impervious surfaces, with the exception of 805 square feet of bioretention landscaping. Therefore, there would be little exposed soil on that site that would contribute to soil erosion effects. Further, conformance to 28 Initial Study 85 California Drive the City grading standards and the county Stormwater Management Plan would prevent substantial erosion as a result of construction and implementation associated with the project. Therefore, the impact would be less than significant. c) Be located on geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on- or off-site landslide, lateral spreading, subsidence, liquefaction, or collapse? (Less than Significant) As previously discussed, the project site is not located in an area with high susceptibility to landslide effects or liquefaction owing to its flat topography. Groundwater depth is estimated to be 21 to 24 feet bgs and was not encountered during borings conducted during the geotechnical investigation. For these reasons, the geotechnical report also determined the potential for lateral spreading to be low. Furthermore, soils at the project site are predominantly stiff to very stiff clays and sands. Therefore, the potential for differential seismic settlement is low. Given the above, the impact would be less than significant. d) Be located on expansive soil, as defined in Table 18 1 B of the Uniform Building Code (1994, as it may be revised), creating substantial risks to life or property? (Less than Significant with Mitigation) The primary concern stated in the geotechnical is the presence of existing fill and weak soil. The project design and construction, including excavation activities, would be required to comply with Chapter 33 of the CBC, which specifies the safety requirements to be fulfilled for site work and protection of adjacent properties from damage during excavation (Mitigation Measure GEO-2). This would include the prevention of subsidence or pavement or foundations caused by dewatering. The project would also be required to adhere to Chapter 18 of the CBC as outlined in Mitigation Measure GEO-1, which sets forth building construction standards including, but limited to, expansive soils. Additionally, the geotechnical report prepared for the project includes recommendations for site work, grading, building foundations (to the adjacent properties), flatwork, retaining walls, and pavements. Adherence to Mitigation Measures GEO-1, GEO-2, and GEO-3 would reduce the impact to a less-than-significant level. Mitigation Measure GEO-2: Project design and construction, including excavation activities, shall comply with Chapter 33 of the CBC, which specifies the safety requirement to be fulfilled for site work. This would include prevention of subsidence and pavement or foundations caused by dewatering. Mitigation Measure GEO-3: The applicant shall prepare a monitoring program to determine the effects of construction on nearby improvements, including the monitoring of cracking and vertical movement of adjacent structures, and nearby streets, sidewalks, utilities, and other improvements. As necessary, inclinometers or other instrumentation shall be installed as part of the shoring system to closely monitor lateral movement. The program shall include a pre-condition survey including photographs and installation of monitoring points for existing site improvements. 29 Initial Study 85 California Drive e) Have soils incapable of adequately supporting the use of septic tanks or alternative wastewater disposal systems where sewers are not available for the disposal of wastewater? (No Impact) The project site would dispose of wastewater using existing wastewater infrastructure operated by the City of Burlingame. No aspect of the project would entail any new use of septic tanks or alternative wastewater disposal systems. Therefore, no related impact would occur. 30 Initial Study 85 California Drive 7 Greenhouse Gas Emissions Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Generate greenhouse gas emissions, either directly or indirectly, that may have a significant impact on the environment? b) Conflict with an applicable plan, policy or regulation adopted for the purpose of reducing the emissions of greenhouse gases? Setting Atmospheric greenhouse gases (GHGs) absorb and re-emit the majority of outgoing infrared radiation (i.e., heat energy) from the Earth’s surface. This natural phenomenon, known as the greenhouse effect, is responsible for maintaining a habitable climate. Carbon dioxide (CO2) and water vapor are the most abundant GHGs, but others also include methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). These GHGs are released into the atmosphere through a variety of natural processes and human activities. The U.S. Environmental Protection Agency (EPA), the California Air Resources Board (CARB), and the Bay Area Air Quality Management District (BAAQMD) regulate greenhouse gas emissions within the Bay Area Air Basin. According to the BAAQMD May 2011 CEQA Guidelines, GHG emissions-based significance thresholds for a land use development project is less than 1,100 metric tons per year and for stationary-source projects less than 10,000 metric tons per year. Land use projects with emissions above the 1,100 metric ton per year threshold would then be subject to a GHG efficiency threshold of 4.6 metric tons per year per capita. Projects with emissions above the thresholds would be considered to have an impact, which, cumulatively, would be significant. According to the Burlingame Downtown Specific Plan IS/MND, the City adopted the Burlingame Climate Action Plan in June 2009 with the goal of reducing the City’s GHG emissions to 286,402 MT CO2e by 2020.3 Although the Burlingame Climate Action Plan is not an established Climate Action Plan, the City also conforms to the state GHG reduction target for 2050 (that GHG emissions would be reduced to 80 percent below 1990 levels) set forth in Executive Order (EO) S-03-05. Additionally, EO B-30-15 establishes an interim statewide GHG emission reduction target of 40 percent below 1990 GHG levels by 2030. The construction and operation of all new buildings in the City are required to comply with energy efficiency standards included in Title 24 of the California Code of Regulations. Title 24 identifies specific energy efficiency requirements for building construction and systems operations that are intended to ensure efficient energy usage over the long-term life of the building. 3 Downtown Burlingame Specific Plan IS/MND, May 2010. 31 Initial Study 85 California Drive Discussion a) Generate greenhouse gas emissions, either directly or indirectly, that may have a significant impact on the environment? (Less than Significant with Mitigation Incorporated) GHG emissions associated with development of the proposed project would occur over the short-term during construction activities, consisting primarily of GHG emissions from equipment exhaust and construction worker and vendor trips. There would also be long-term operational GHG emissions associated with increased vehicular traffic within the project vicinity, energy and water usage, and solid waste disposal. Emissions for the proposed project are discussed below and were analyzed using the BAAQMD CEQA Air Quality Guidelines. Construction Neither BAAQMD nor the City has an adopted threshold of significance for construction-related GHG emissions. Nonetheless, BAAQMD encourages the incorporation of best management practices to reduce GHG emissions during construction where feasible and applicable. Best management practices may include, but are not limited to: using alternative fueled (e.g., biodiesel, electric) construction vehicles/equipment for at least 15 percent of the fleet; using at least 10 percent local building materials; and recycling or reusing at least 50 percent of construction waste or demolition materials. Since the sources of construction-related GHGs include exhaust, BAAQMD suggests following the same detailed guidance as for criteria air pollutants and precursors (see Mitigation Measure AQ-1). Implementing Mitigation Measure AQ-1 would reduce the contribution to the existing air quality to a less than significant level. Selecting specific equipment that meet the U.S. EPA particulate matter standards for Tier 2 engines or equivalent (see Mitigation Measure AQ-2) would reduce the emissions by construction to a less than significant level. Operation Due to the project size, operational period GHG emissions would be less than significant. BAAQMD identified screening criteria for the sizes of land use projects that could result in significant GHG emissions in their May 2011 update to the CEQA Air Quality Guidelines. For operational impacts, the screening project size is identified at 121,000 square feet for general light industrial land uses. Since the project proposes to operate 24,925 square feet of facility services, it is concluded that emissions would be below the BAAQMD significance threshold of 1,100 MT of CO2e annually. Impacts associated with the generation of greenhouse gas emissions, directly or indirectly, would be less than significant with project implementation. b) Conflict with an applicable plan, policy or regulation adopted for the purpose of reducing the emissions of greenhouse gases? (Less than Significant) As stated above, the project would be subject to the most recent requirements under rule making developed at the state and local level regarding greenhouse gas emissions and would be subject to local policies that may affect emissions of greenhouse gases. These include the BAAQMD May 2011 CEQA Guidelines for GHG emissions, the Burlingame Downtown Specific 32 Initial Study 85 California Drive Plan, and the Burlingame Climate Action Plan. These regulations identify emissions levels for which the project would not be expected to substantially conflict with existing California legislation adopted to reduce statewide GHG emissions. As established earlier, the project would implement best management practices and mitigation measures in compliance to all the above mentioned regulations. Therefore, project implementation would not conflict with an applicable plan, policy, or regulation adopted for the purpose of reducing the emissions of GHGs, and any impacts would be less than significant. 33 Initial Study 85 California Drive 8 Hazards and Hazardous Materials Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Create a significant hazard to the public or the environment through the routine transport, use, or disposal of hazardous materials? b) Create a significant hazard to the public or the environment through reasonably foreseeable upset and accident conditions involving the release of hazardous materials into the environment? c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one-quarter mile of an existing or proposed school? d) Be located on a site which is included on a list of hazardous materials sites compiled pursuant to Government Code Section 65962.5 and, as a result, would it create a significant hazard to the public or the environment? e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project result in a safety hazard for people residing or working in the project area? f) For a project within the vicinity of a private airstrip, would the project result in a safety hazard for people residing or working in the project area? g) Impair implementation of or physically interfere with an adopted emergency response plan or emergency evacuation plan? h) Expose people or structures to a significant risk of loss, injury or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? Setting The project site is currently developed with a single-story Subaru showroom building, a single- story Subaru automobile service facility, a Hertz automobile rental office located in the service facility building and automobile storage for Subaru and Hertz on a paved parking area. The site 34 Initial Study 85 California Drive is completely covered by 24,925 square feet of impervious surfaces and does not contain any vegetation or landscaping. A Phase I Environmental Site Assessment (ESA) was conducted by AEI Consultants in August 2016 to identify and evaluate any potential hazards to human health in the vicinity of the project site (Appendix D). The existing structures on the project site proposed for demolition were developed between 1946 and 1956. The current tenant has been on the property since the early 2000s. The existing surface parking lot was formerly developed with a gasoline station from approximately 1943 to 1959. This portion of the subject property was identified in an EDR search as a “case-closed” Leaking Underground Storage Tank (LUST) site. Files reviewed at the San Mateo County Environmental Health Department (SMCEHD) showed that a 550-gallon waste oil underground storage tank (UST) was removed from the site in 1990. Groundwater sampling at the time returned low levels of LUFT 5 metals (cadmium, chromium, lead, zinc and nickel), and tested negative for detectable traces of Volatile Organic Compounds (VOCs) derived from gasoline. Following the groundwater testing, the case was closed in 1995, thereby classifying the LUST case as a Controlled Recognized Environmental Condition (CREC). Additionally, historic property photographs indicate a potential tank pad located north of the existing parking lot and it is unclear from available information whether or not these gasoline USTs were located on or off site. Given this, the existing parking lot represents a Recognized Environmental Condition (REC). Furthermore, the existing buildings were constructed before the 1976 Toxic Substances and Control Act, and therefore have the potential to contain asbestos and lead-based paint. Health hazards associated with asbestos include increased risks of cancer and respiratory-related illnesses and diseases, while lead may cause a range of health effects, including behavioral problems, learning disabilities, seizures, and death. Exposure to groundwater contamination, asbestos, polychlorinated biphenyls (PCBs), and lead-based paint during construction and demolition activities could result in a potentially significant hazard to human health unless properly mitigated. Discussion a) Create a significant hazard to the public or the environment through the routine transport, use, or disposal of hazardous materials? (Less than Significant) Implementation of the project would construct a new 14,239-square-foot automobile service facility with a 1,627-square-foot parts storage mezzanine at the site. This would include demolition of a 115-square-foot office at the rear of the existing showroom and the existing 2,620-square-foot service facility and Hertz rental office. Common chemicals used in commercial settings include cleaners, toners, correction fluid, paints, and maintenance materials. Use of these types of products would not involve substantial use, transport, and disposal of hazardous materials. During construction of the project, paint, building material finishing products, and automotive oil would be used as well. However, such materials would be used temporarily and typically do not generate hazardous air pollutant emissions or pose a long-term threat to human health or the environment. Improper disposal could increase risk of exposure for nearby residents 35 Initial Study 85 California Drive through direct contact or by adversely affecting soil, groundwater, or other surface waters. However, any hazardous materials transportation, use, and disposal as part of the project would be subject to federal and state hazardous materials laws and regulations. Primary federal laws pertaining to hazardous materials and wastes include the Resource Conservation and Recovery Act of 1976 (RCRA) and the Comprehensive Environmental Responsibility, Compensation, and Liability Act of 1980 (CERCLA). RCRA includes procedures and requirements for managing hazardous materials and for cleanup of hazardous materials releases. CERCLA delineates the liability for contamination between current property owners and others. The Hazardous Materials Transportation Act regulates the transport of hazardous materials. The federal government delegates enforcement authority to the states. With adherence to such regulations regarding the transport, use, and disposal of hazardous materials, the project would not create a significant hazard to the public or the environment through the routine transport, use, or disposal of hazardous materials, and any impacts would be less than significant. b) Create a significant hazard to the public or the environment through reasonably foreseeable upset and accident conditions involving the release of hazardous materials into the environment? (Less than Significant with Mitigation Incorporated) According to the Phase I prepared for the project site, the project site has documented hazardous material use and storage associated with the past property uses. The property is documented to have one removed UST; however, historic property photographs indicate a second potential gasoline tank pad located north of the existing parking lot. Given that it is unclear from available information whether or not this gasoline UST was located on or off site, the project site remains a REC. Groundwater testing at the time of closure returned low levels of LUFT 5 metals (cadmium, chromium, lead, zinc and nickel), and tested negative for detectable traces of VOCs derived from gasoline. Construction The former gasoline tank pad described above was located in what is currently an existing parking lot on site that would not be disturbed during project construction; as such, construction workers would be unlikely to encounter potential residual contamination resulting from the gasoline UST. As stated above, no significant hazardous chemicals were found to be in the groundwater at the initial time of testing. Additionally, groundwater is presumed to be present at an estimated depth of 21 to 24 feet below ground surface (bgs), while excavation would only extend to a depth of 4 feet. Given the above, construction workers would be unlikely to come into contact with groundwater or residual soil contamination, and there would be no significant risk of exposure to contaminants during construction. The project would require demolition of structures that could potentially expose construction workers, or others, to asbestos and lead-based paint products, if present. Implementation of Mitigation Measures HAZ 1 through HAZ-3 would reduce impacts associated with demolition and construction to a less-than-significant level. 36 Initial Study 85 California Drive Mitigation Measure HAZ-1: The contractor shall comply with Title 8, California Code of Regulations/Occupational Safety and Health Administration (OSHA) requirements that cover construction work where an employee may be exposed to lead. This includes the proper removal and disposal of peeling paint, and appropriate sampling of painted building surfaces for lead prior to disturbance of the paint and disposal of the paint or painted materials. Mitigation Measure HAZ-2: The applicant shall contract a Certified Asbestos Consultant to conduct an asbestos survey prior to disturbing potential asbestos containing building materials and following the Consultant’s recommendations for proper handling and disposal. Mitigation Measure HAZ-3: Workers handling demolition and renovation activities at the project site will be trained in the safe handling and disposal of any containments with which they are handling or disposing of on the project site. Operation The project would connect to the existing municipal services, which would not use the extraction of groundwater for supply. Given that the entire project site would be covered with impervious surfaces; employees and visitors to the building would not come into contact with potentially contaminated soil or groundwater from the unresolved UST. Given this, no special protective elements would need to be incorporated with the building design, because potential exposure would be negligible. With implementation of the above-mentioned mitigation measures, impacts associated with reasonably foreseeable upset and accident conditions involving the release of hazardous materials into the environment would be reduced to a less-than-significant level. c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one-quarter mile of an existing or proposed school? (Less than Significant) Washington Elementary School is the nearest school to the project site, approximately 0.17 miles north. Saint Catherine of Siena School is also located in close proximity to the project site, approximately 0.2 miles southwest of the project site. Bridge Point Academy is located approximately 0.25 miles northeast. Demolition of the existing building would potentially involve the handling and disposal of hazardous waste products, including asbestos, lead, motor and transmission oils, etc. Most of these substances are typically found within commercial sites. Additionally, the excavation and grading associated with construction activities at the project site could result in encountering potentially contaminated soils, soil vapors, and groundwater. Handling of such substances would be regulated by federal and state hazardous materials laws that would minimize the risk of exposure to nearby land uses, including schools. Additionally, implementation of Mitigation Measures HAZ-1 through HAZ-3 would further reduce potential risk of exposure to nearby land uses. As described above, the project would continue existing automotive land uses on the project site. Common chemicals used in automotive facilities include oils, solvents, acids, paints, etc. 37 Initial Study 85 California Drive The project would not involve the use of new hazardous products and chemicals that are not currently in use on the site.. As such, the project would have a less-than-significant impact to schools within 0.25 miles of the project site. d) Be located on a site which is included on a list of hazardous materials sites compiled pursuant to Government Code Section 65962.5 and, as a result, would it create a significant hazard to the public or the environment? (Less than Significant with Mitigation Incorporated) According to the Phase I ESA, the property at 85 California Drive was not identified on the California Department of Toxic Substances Control (DTSC) Hazardous Waste Tracking System (HWTS) or on the DTSC Envirostor Database. However, the project site was identified in the Leaking Underground Storage Tanks (LUST), San Mateo Co. BI, and CORTESE databases. As stated above, the project site contained one known UST, which was removed in the early 1990s, and for which a “closed-case” ruling was issued based on groundwater testing results. The second potential UST site remains an REC because there is no available historic information confirming or denying its existence. Given this, a potential hazard exists on the project site; however, with incorporation of the precautionary measures outlined in Mitigation Measures HAZ-1 through HAZ-3, any potential risk to the public or the environment as a result of this UST would be less than significant. e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project result in a safety hazard for people residing or working in the project area? (No Impact) San Francisco International Airport (SFO) is approximately 3 miles northwest of the project site; however, the project site does not fall within any of the airport’s “safety compatibility zones” and is, therefore, not considered as being within an area of potential danger involving the operation of SFO 4. Therefore, no impact would occur. f) For a project within the vicinity of a private airstrip, would the project result in a safety hazard for people residing or working in the project area? (No Impact) There are no private airstrips within the project vicinity. Therefore, there would be no safety hazard impacts to people residing or working in the project area due to operations at private airstrips. g) Impair implementation of or physically interfere with an adopted emergency response plan or emergency evacuation plan? (Less than Significant) The project would build the new structure on previously developed commercial land. Access points to the site would be constructed to ensure proper access for emergency vehicles. The 4 The City/County Association of Governments of San Mateo County, 2012. Comprehensive Airport Land Use Compatibility Plan for the Environs of San Francisco International Airport. November 2012. Available at: http://ccag.ca.gov/wp-content/uploads/2014/10/Consolidated_CCAG_ALUCP_November-20121.pdf. 38 Initial Study 85 California Drive City does not have an established evacuation plan. However, the proposed project would adhere to the guidelines established within the Safety Element of the General Plan. Additionally, the Safety Operations Plan between the Cities of Burlingame and Hillsborough would be implemented in the case of an emergency, and the project would comply with procedures determined by the Safety Operations Plan, if such an event arose5. Furthermore, the project plans would be subject to review and approval by the City and the Fire Department prior to issuance of a building permit. Therefore, the project would not conflict with and adopted emergency response or evacuation plan and the impact would be less than significant. h) Expose people or structures to a significant risk of loss, injury or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? (No Impact) The project site and surrounding vicinity are entirely developed. The area does not contain, nor is it adjacent to, wildlands. Accordingly, implementation of the project would not result in the exposure of people or structures to significant loss, injury, or death involving wildland fires and no impact would occur. 5 City of Hillsborough, 2007. Emergency Operations Plan. Available at: http://www.hillsborough.net/DocumentCenter/View/591. 39 Initial Study 85 California Drive 9 Hydrology and Water Quality Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Violate any water quality standards or waste discharge requirements? b) Substantially deplete groundwater supplies or interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre-existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted)? c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, in a manner which would result in substantial erosion of siltation on- or off-site? d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount of surface runoff in a manner which would result in flooding on- or off-site? e) Create or contribute runoff water which would exceed the capacity of existing or planned stormwater drainage systems or provide substantial additional sources of polluted runoff? f) Otherwise substantially degrade water quality? g) Place housing within a 100-year flood hazard area as mapped on a federal Flood Hazard Boundary or Flood Insurance Rate Map or other flood hazard delineation map? h) Place within a 100-year flood hazard area structures which would impede or redirect flood flows? i) Expose people or structures to a significant risk of loss, injury or death involving flooding, including flooding as a result of the failure of a levee or dam? j) Inundation of seiche, tsunami, or mudflow? 40 Initial Study 85 California Drive Setting San Mateo County is within the San Francisco Bay portion of the Coast Range Geologic Province. Annual average precipitation in San Mateo County is reported at approximately 19.6 inches. The State Water Resources Control Board (SWRCB) and the Regional Water Quality Control Board (RWQCB) monitor water quality in the Bay Area. These agencies oversee the implementation of the National Pollutant Discharge Elimination System (NPDES) stormwater discharge permits. The SWRCB has implemented a NPDES Construction General Permit for the State of California for projects disturbing 1 or more of acres of soil, requiring dischargers to obtain coverage under the General Permit, file a Notice of Intent (NOI), and prepare a stormwater pollution prevention plan (SWPPP) prior to commencement of construction. As project construction would disturb 0.46 acres, it is exempt from these Construction General Permit requirements. The City participates in the San Mateo Countywide Pollution Prevention Program (STOPPP), and is required to implement Low Impact Development (LID) BMPs under Municipal Regional Stormwater Permit (MRP) (Provision C.3.b.). LID practices include source control BMPs, site design BMPs, and stormwater treatment BMPs onsite or at a joint stormwater treatment facility. Burlingame Water Division of the Public Works Department, which purchases treated water from the San Francisco Public Utilities Commission, provides potable water to the project site. Approximately 85 percent of the water supply comes from the Hetch Hetchy watershed in the Sierra Nevada Mountains and approximately 15 percent comes from local watersheds. The project area does not contain any natural surface drainage. Stormwater runoff is entirely contained within a storm drainage system that utilizes Burlingame Creek, Ralston Creek, and Terrace Creek for drainage purposes. The project site does not include any surface waters; the nearest body of surface water to the subject property is the San Francisco Bay, located approximately 1 mile east of the project site. Groundwater is estimated to be at a depth of 21 to 34 feet bgs. According to the Federal Emergency Management Agency (FEMA) Flood Insurance Rate Map (FIRM), the project site is located within Zone B, which is an area subject to inundation by a 0.2 percent annual chance flood event. Discussion a) Violate any water quality standards or waste discharge requirements? (Less than Significant) Construction of the new building would involve ground disturbing activities such as trenching, grading, demolition, and vegetation removal. The maximum depth of these activities could be approximately 4 feet below ground surface. As groundwater depth is estimated at 21 to 34 feet bgs, groundwater would not be expected to be encountered during construction activities. Construction activities also have the potential to result in runoff that contains sediment and other pollutants that could degrade water quality if not properly controlled. Sources of pollution associated with construction include chemical substances from construction materials and hazardous or toxic materials, such as fuels. During the construction of this project, less than 41 Initial Study 85 California Drive 1 acre of soil would be disturbed. Therefore, as stated above, the project would not be subject to a State NPDES General Construction Permit and SWRCB requirements would not apply. Project operation would continue the existing automobile sales and service land uses on the site. The expanded service facility would generate wastewater and pollutants associated with automobile sales and service land uses, as the existing facility does currently. The project would add required bioretention areas per C.3 requirements on site to capture and filter pollutants and would not be expected to violate water quality standards or waste discharge requirements. Therefore, impacts associated with water quality standards and wastewater discharge requirements would be less than significant. b) Substantially deplete groundwater supplies or interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre-existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted)? (No Impact) The project site is fully paved and developed and does not directly contribute to groundwater recharge. The groundwater basin in the existing project site is not currently utilized for potable water. The project does not include plans to use groundwater resources for future uses. The project would not substantially deplete groundwater, as there is no plan to create water wells on the site and the site would continue to receive municipal water from the City of Burlingame Water Division of Public Works. Therefore, no impact would occur. c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, in a manner which would result in substantial erosion of siltation on- or off-site? (Less than Significant) and d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount of surface runoff in a manner which would result in flooding on- or off-site? (Less than Significant) There are no natural drainage features within downtown Burlingame. The existing drainage pattern entails the use of lined channels, culverts, and underground pipes, all of which eventually drain into the San Francisco Bay. Project construction would involve ground- disturbing activities. As noted, the project size is below the 1-acre threshold, so project construction would not be subject to the NPDES General Construction Permit that imposes strict requirements and control on construction and post-construction activities. Once operational, the amount of surface runoff generated by the project is not expected to increase compared to existing conditions. Under existing conditions, the impervious surface area is 21,426 square feet; with project implementation, the impervious surface area would total 20,547 square feet. Thus, the area of impervious surface would represent a net decrease of 897 square feet with project implementation. 42 Initial Study 85 California Drive Therefore, surface runoff would not increase and the new building would not significantly alter the existing drainage patterns. No new water-intensive activities are proposed that would contribute substantial additional runoff that could exceed the capacity of stormwater drainage systems in the area. The project site is connected to existing 15-inch stormwater lines and the new building would tie-in to these existing lines to convey stormwater infrastructure. Additionally, with compliance to state and local regulations and the implementation of BMPs, impacts to drainage patterns and surface runoff, resulting in erosion or siltation would be minimized. As such, the project would not contribute substantial amounts of sediment to storm drain systems or alter existing drainage patterns to the extent that would result in flooding on- or off-site. The impact would be less than significant. e) Create or contribute runoff water which would exceed the capacity of existing or planned stormwater drainage systems or provide substantial additional sources of polluted runoff? (Less than Significant) and f) Otherwise substantially degrade water quality? (Less than Significant) As stated above in 9c and 9d, the proposed project would not alter the existing impervious surface to a point at which the drainage, and surface runoff, in the area would be affected. Since the project does not disturb more than 1 acre of soil, it would not be subject to NPDES General Construction Permit requirements. However, the project would be subject to the requirements of Provision C.3 of the Municipal Regional Stormwater NPDES Permit. No new significant sources of polluted runoff would be created. With compliance to state and local regulations and the implementation of BMPs, potential impacts would be less than significant. g) Place housing within a 100-year flood hazard area as mapped on a federal Flood Hazard Boundary or Flood Insurance Rate Map or other flood hazard delineation map? (No Impact) and h) Place within a 100-year flood hazard area structures which would impede or redirect flood flows? (No Impact) According to the Burlingame Downtown Specific Plan IS/MND, the project site is categorized by FEMA as Zone B (500-year floodplain), which is an area subject to inundation by a 0.2 percent annual chance flood event. Therefore, no impact would occur. i) Expose people or structures to a significant risk of loss, injury or death involving flooding, including flooding as a result of the failure of a levee or dam? (Less than Significant) The closest dam to the project site is Crystal Springs Dam, located approximately 5 miles southwest of the project site. Due to the dam’s distance from the project site, it does not pose extensive safety hazards to the project; the 5-mile distance would significantly reduce the 43 Initial Study 85 California Drive velocity of moving water, and consequently any possible impacts in the unforeseen incidence of dam failure would not expose people or structures within the project vicinity to a significant risk of loss, injury, or death. Additionally, the dam is currently undergoing renovations to enhance the safety of the structure in the event of a major earthquake.6 Implementation of the project would not significantly change the existing conditions or expose people or structures to significant risk due to failure of a levee or a dam. Therefore, the impacts due to development in Flood Hazard Areas would be less than significant. j) Inundation of seiche, tsunami, or mudflow? (Less than Significant) Tsunamis are large ocean waves generated by earthquakes and can be damaging to lowland coastal areas. The project site is approximately 10 miles away from the Pacific coast, and the risk of damage due to a tsunami is low. According to the Burlingame Downtown Specific Plan IS/MND, downtown Burlingame is located 25 feet above sea level, and any large wave would have dissipated to less than 18 feet by the time it reaches the City. Large earthquakes can also generate oscillating waves in enclosed bodies of water (seiche), such as bays, lakes, and reservoirs. The project site is located approximately 1 mile west of the San Francisco Bay, and 3 miles northeast of the Crystal Springs Reservoir. Since the project site is not located in the immediate vicinity of any bays, lakes, or reservoirs, the probability of a seiche from either the San Francisco Bay or the Crystal Springs Reservoir having enough momentum to affect the property site is low. Furthermore, as no steep slopes are located in close proximity to the project site, the possibility of inundation by landslides or mudflows would be remote. Therefore, the impact would be less than significant. 6 County of San Mateo Public Works. 2015. Crystal Springs Dam Bridge Replacement Project. Available: http://publicworks.smcgov.org/crystal-springs-dam-bridge-replacement-project. Accessed September 22, 2016. 44 Initial Study 85 California Drive 10 Land Use and Planning Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Physically divide an established community? b) Conflict with any applicable land use plan, policy, or regulation of an agency with jurisdiction over the project (including, but not limited to the general plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? c) Conflict with any applicable habitat conservation plan or natural community conservation plan? Setting The project site is located within the Downtown Specific Plan area. Within the Downtown Specific Plan, the majority of the site is located in the California Drive Mixed Use District; the remaining portion of the site is located in the R-4 Incentive District. The project site is predominantly located in the CAR zoning district designated primarily for automobile-related uses, with the remaining portion of the site located in the R-4 District designated primarily for high-density multifamily residential land uses. Discussion a) Physically divide an established community? (No Impact) As previously discussed, the project would replace an existing automobile service facility with a new automobile service facility. Though a portion of the site is currently zoned R-4 and would require rezoning to CAR, this portion is currently paved and being used for parking and vehicle storage. The project proposes to continue the existing land use on the site. Given this, the project would not result in physical division of an established community; therefore, no impact would occur. b) Conflict with any applicable land use plan, policy, or regulation of an agency with jurisdiction over the project (including, but not limited to the general plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? (Less than Significant) Within the Downtown Specific Plan, the majority of the project site is located in the California Drive Mixed Use District; the remaining portion of the site is located in the R-4 Incentive District. The project site is located in the CAR zoning district designated primarily for automobile-related 45 Initial Study 85 California Drive uses. The remaining portion of the site is located in the R-4 District designated primarily for high-density multifamily residential land uses. As part of the project, the latter portion of the site would be rezoned from R-4 to CAR. Therefore, the project would not conflict with any applicable land use plans or policies, and no impact would occur. c) Conflict with any applicable habitat conservation plan or natural community conservation plan? (No Impact) According to the Burlingame Downtown Specific Plan IS/MND, the site is not part of or near an existing Habitat Conservation Plan, Natural Community Conservation Plan, or any other local, regional, or state habitat conservation plan. As such, the proposed project would not conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan. Therefore, no impact would occur. 46 Initial Study 85 California Drive 11 Mineral Resources Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Result in the loss of availability of a known mineral resource that would be of value to the region and the residents of the state? b) Result in the loss of availability of a locally important mineral resource recovery site delineated on a local general plan, specific plan, or other land use plan? Setting The California Geological Survey (CGS) is responsible under the Surface Mining Control and Reclamation Act (SMARA) for classifying land into Mineral Resource Zones (MRZs) based on the known or inferred mineral resource potential of that land. Based upon available data, the project site and area surrounding the project limits have been classified as MRZ-1, which is defined as “areas where geologic information indicates no significant mineral deposits are present.”7 This finding is reflected in the San Mateo County General Plan Mineral Resources map. Discussion a) Result in the loss of availability of a known mineral resource that would be of value to the region and the residents of the state? (No Impact) and b) Result in the loss of availability of a locally important mineral resource recovery site delineated on a local general plan, specific plan, or other land use plan? (No Impact) The project site is currently developed and not used for mineral recovery activities. Moreover, no known mineral resources exist within the project site or surrounding area, as indicated by The Mineral Resource Zones and Resource Sectors San Francisco and San Mateo Counties Maps 8 and the San Mateo County General Plan. Implementation of the project would not result in the loss of availability of a known mineral resource of value to the region and residents of the state, nor of a locally important mineral resource recovery site. Therefore, no impact would occur. 7 California Department of Conservation. Guidelines for Classification and Designation of Mineral Lands. Available: http://www.conservation.ca.gov/smgb/guidelines/documents/classdesig.pdf. Accessed: July 2016. 8 California Geological Survey. 1983. Mineral Resource Zones and Resource Sectors, Special Report 146, Plates 2.3 and 2.43, San Francisco and San Mateo Counties. 47 Initial Study 85 California Drive 12 Noise Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Expose persons to or generate noise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies? b) Exposure of persons to or generation of excessive groundborne vibration or groundborne noise levels? c) A substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project? d) A substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing without the project? e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project expose people residing or working in the project area to excessive noise levels? f) For a project within the vicinity of a private airstrip, would the project expose people residing or working in the project area to excessive noise levels? Setting Illingworth and Rodkin, Inc., prepared a Noise and Vibration Assessment for the project in August 2016 (Appendix E). This assessment includes details of the analysis and provides background information on noise and vibration. Noise-sensitive receptors in the vicinity of the project site include residential land uses located to the south along Highland Avenue. The site is primarily surrounded by other car dealerships and service facilities. The nearest noise sensitive receptors are an apartment building that adjoins the site to the southeast and single family residences located across Highland Avenue, about 150 feet from the site. Based on the results of the noise monitoring survey, existing daytime traffic noise levels at the single and multi-family residences were measured to be in the range of 53 to 57 dBA Leq with maximum ambient levels in the range of 67 to 76 dBA Lmax. Additionally, commercial businesses located adjacent to the project site are considered as well. SFO is approximately 3 miles northwest of the site. The noise environment at the site is dominated by traffic along California Drive, with intermittent high noise levels generated by 48 Initial Study 85 California Drive Caltrain passenger trains traveling on tracks about 265 feet east of the site. Local traffic and existing site activities also contribute to the ambient noise environment. A noise monitoring survey was performed on Thursday, August 4, 2016 to quantify ambient noise levels in the project area. The noise monitoring survey included four short-term (ST) noise measurements in the vicinity of the site. Additional spot measurements were made on site to identify and quantify noise levels generated by existing on-site noise generating activities. Noise monitoring locations are shown in Figure 2. Data collected during the short-term (10-minute) measurements are summarized in Table 2. Table 2 Summary of Noise Measurement Data Noise Measurement Location (time) Lmax L(1) L(10) L(50) L(90) Leq Primary Noise Source(s) ST-1: 40 feet from center of California Drive (11:00-11:10 am) 80 75 71 65 58 68 Traffic on California Dr., Caltrain ST-2: 40 feet from center of Bayswater Ave, center of block (11:30-11:40 am) 74 65 60 55 51 57 Traffic on California Dr., Local Traffic on Bayswater Ave. ST-3: 32 Highland Ave, 50 feet from center of road (11:50 am -12:00 pm) 67 61 56 51 48 53 Traffic on California Dr., Local Traffic on Highland Ave. ST-4: 32 Highland Ave., northern façade (12:10-12:20 pm) 76 62 57 53 50 56 Traffic on California Dr., Jet Overflight, Local Traffic Source: Illingworth & Rodkin, 2016. Notes: Lmax = maximum A-weighted noise level during the measurement period; L(1), L(10), L(50), L(90) = A-weighted noise levels that are exceeded 1%, 10%, 50%, and 90% of the time during the measurement period; Leq = average A- weighted noise level during the measurement period. The Noise Element of the General Plan sets forth noise and land use compatibility standards to guide development, and noise goals and policies to protect citizens from the harmful and annoying effects of excessive noise. Suggested outdoor noise levels suitable for single- and multi-family residential land uses would range up to 60 dBA CNEL, according to the General Plan. The General Plan also establishes 45 dBA CNEL as the indoor noise level planning criterion. The City of Burlingame General Plan establishes recommended noise emission standards for construction equipment operating within the City in Table 4-6 of the General Plan. The General Plan also states that no construction noise shall be emitted past the property line so as to create a noise level increase of more than 5 dBA Lmax above ambient Lmax noise levels. 49 Initial Study 85 California Drive Allowable hours of construction within the City are between 8:00 am and 7:00 pm on weekdays and 9:00 am and 6:00 pm on Saturdays, pursuant to the City of Burlingame Municipal Code Chapter 18.07.110. Construction is not allowed on Sundays and holidays. Discussion a) Expose persons to or generate noise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies? (Less than Significant) Implementation of the project would increase noise on and off site from existing conditions during the eight-month construction period. The noise generated by construction activities would temporarily elevate noise levels at the adjacent residences and would exceed the Burlingame General Plan Standard (5 dBA Lmax above ambient Lmax levels) within 50 feet of the shared property line with the multi-family residences. However, exposure to construction noise above the threshold would occur for a period of less than twelve months, and would therefore not exceed the Burlingame General Plan standard at the multi-family residence’s courtyard. The proposed project would not result in a significant increase in traffic volumes in the project vicinity (see Section 16, Transportation and Traffic, and Appendix F). Project-generated traffic would increase traffic noise levels by less than 1 dBA, and as a result, the traffic noise increase associated with the project would not be detectable. Once operational, service activities would generate CNEL levels of 44 to 47 dBA at the north facing façade of the apartment building, about 35 dBA in the apartment courtyard area, and 37 to 44 dBA at the closest residences across Highland Avenue. These levels would be well below the 60 dBA CNEL criteria. Given the above, the project would not conflict with any local plans and ordinances, and any noise-related impacts would be less than significant. b) Exposure of persons to or generation of excessive groundborne vibration or groundborne noise levels? (Less than Significant with Mitigation Incorporated) A significant impact would be identified if the construction of the project would generate groundborne vibration levels at adjacent structures exceeding 0.3 inches per second peak particle velocity (in/sec PPV) because these levels would have the potential to result in “architectural” damage to normal buildings. Construction activities are anticipated to include demolition of existing structures, site preparation work, grading and excavation, trenching, new building framing and finishing, and paving. It is assumed that pile driving would not be needed for project construction. Project construction activities, such as drilling, the use of jackhammers, rock drills and other high-power or vibratory tools, and rolling stock equipment (tracked vehicles, compactors, etc.) may generate substantial vibration in the immediate vicinity of the work area. Vibration levels would vary depending on soil conditions, construction methods, and equipment used. Table 3 50 Initial Study 85 California Drive presents typical vibration levels that could be expected from construction equipment at a distance of 25 feet. Table 3 Typical Vibration Levels Expected from Construction Equipment Equipment PPV at 25 feet (in/sec) Approximate Lv at 25 feet (VdB) Pile Driver (Impact) upper range 1.158 112 typical 0.644 104 Pile Driver (Sonic) upper range 0.734 105 typical 0.170 93 Clam shovel drop 0.202 94 Hydromill (slurry wall) in soil 0.008 66 in rock 0.017 75 Vibratory Roller 0.210 94 Hoe Ram 0.089 87 Large bulldozer 0.089 87 Caisson drilling 0.089 87 Loaded trucks 0.076 86 Jackhammer 0.035 79 Small bulldozer 0.003 58 Source: Transit Noise and Vibration Impact Assessment, United States Department of Transportation, Office of Planning and Environment, Federal Transit Administration, May 2006. Project construction would be located up to approximately 5 feet from the multi-family residential structure located at 32 Highland Avenue, just east of the site property line. Structures located across California Drive and Bayswater Avenue are about 70 to 90 feet from the site. Additionally, the existing portion of the Subaru showroom, which would remain, is located directly adjacent to the site. Construction would be located as close as about 180 feet from residences located across Highland Avenue. Impact or vibratory pile driving is not anticipated as part of project construction activities. Based on the levels shown in Table 3, vibration could exceed 0.3 in/sec PPV when located within 51 Initial Study 85 California Drive about 20 feet of existing structures.9 Vibration levels produced by heavy equipment (vibratory rollers, clam shovel drops) during construction are calculated to be 0.045 in/sec PPV or less at a distance of 70 feet, 0.03 in/sec PPV or less at a distance of 90 feet, and 0.01 in/sec PPV or less at a distance of 180 feet. Vibration levels would be lower at structures located further from the construction and as construction moves away from the outer property lines of the site. Vibration levels during heavy construction may occasionally be perceptible at the surrounding car dealerships and service areas, but would typically be below ambient vibration levels generated during on-site operations and would not approach the 0.3 in/sec PPV threshold for architectural damage. Vibration levels at the residences located south of Highland Avenue are not anticipated to be perceptible above ambient vibration and, again, would not approach the 0.3 in/sec PPV threshold. However, vibration levels at the multi-family building located adjacent to the shared property line adjoining the site to the southeast could exceed the 0.3 in/sec PPV threshold when construction activities are located within 20 feet. Vibration levels could also exceed the 0.3 in/sec PPV threshold at the existing Subaru facilities when construction activities are located within 20 feet. This would be a potentially significant impact. Mitigation Measure NOI-1 would reduce this impact to a less-than-significant level. Mitigation Measure NOI-1: The following measures, in addition to the best practices specified in Impact 3, shall be implemented to reduce vibration impacts from construction activities to a less-than-significant level:  For all construction proposed to be located within 20 feet of adjacent structures, a construction vibration-monitoring plan would need to be implemented to document conditions prior to, during and after vibration generating construction activities. All plan tasks shall be undertaken under the direction of a licensed Professional Structural Engineer in the State of California and be in accordance with industry accepted standard methods. The construction vibration monitoring plan should be implemented to include the following tasks:  Perform a photo survey, elevation survey, and crack monitoring survey for each identified structure. Surveys shall be performed prior to any construction activity and after project completion and shall include internal and external crack monitoring in structures, settlement, and distress and shall document the condition of foundations, walls and other structural elements in the interior and exterior of said structures.  Designate a person responsible for registering and investigating claims of excessive vibration. The contact information of such person shall be clearly posted on the construction site.  Make appropriate repairs or compensation where damage has occurred as a result of construction activities. 9 These levels are based on calculations assuming normal propagation conditions, using a standard equation of PPVeqmt - PPVref * (25/D) 1.5, from FTA, May 2006. 52 Initial Study 85 California Drive  The results of all vibration monitoring shall be summarized and submitted in a report shortly after substantial completion of each phase identified in the project schedule. The report will include a description of measurement methods, equipment used, calibration certificates, and graphics as required to clearly identify vibration-monitoring locations. An explanation of all events that exceeded vibration limits will be included together with proper documentation supporting any such claims. c) A substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project? (Less than Significant) Typically, project-generated noise increases would result from large increases in ancillary traffic or the addition of loud machinery during project operation (e.g., generators). A significant permanent increase in ambient noise levels would occur if the noise level increase due to project-generated noise was 3 dBA CNEL or greater for existing levels exceeding 60 dBA CNEL or was 5 dBA CNEL or greater for where noise levels would remain at or below 60 dBA CNEL. Existing ambient noise levels at the nearest receptors were measured to be in the range of 53 to 57 dBA Leq, while maximum existing levels were above 60 dBA CNEL. The proposed project would not result in a significant increase in traffic volumes in the project vicinity (see Section 16, Transportation and Traffic, and Appendix F). Project-generated traffic would increase traffic noise levels by less than 1 dBA, and as a result, the traffic noise increase associated with the project would not be detectable. The primary sources of noise anticipated at the existing residences are service center activities, oil deliveries, and vehicle circulation. According to the project plans, both the service center entrance and exit would face away from noise sensitive areas. The service center entrance would be located approximately 25 feet and facing away from the adjoining apartment building; therefore, partial acoustical shielding would be provided from the service building itself. The residences across Highland Avenue would have partial line-of-sight to the service center exit and are located about 190 to 250 feet from the proposed roll-up door location. Assuming a worst-case scenario noise level of 65 dBA Leq during full service operations at a distance of 50 feet from, and in direct line-of-sight of an open bay, operational noise levels are calculated to be 47 to 50 dBA Leq at the north-facing façade of the apartment building, about 38 dBA Leq in the apartment courtyard area, and 40 to 47 dBA Leq at the closest residences across Highland Avenue. These levels would be well below the 60 dBA CNEL threshold. Given this, any permanent increases in noise levels would not be perceptible, and this impact would be less than significant. d) A substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing without the project? (Less than Significant) Project construction is anticipated to last approximately eight months, of which only six months would involve exterior construction. As described in the Project Description above, all construction would occur between the hours designated by the Burlingame Municipal Code. Project construction activities that are expected to impact noise levels within the project vicinity 53 Initial Study 85 California Drive include demolition, site preparation, grading/excavation, trenching, exterior/interior building, and paving, all of which would utilize heavy construction equipment. In general, the loudest phases of construction would be during demolition and excavation of the project site. During construction, maximum noise levels would vary depending on the equipment used and the distance of the construction activities from nearby sensitive receptors. Table 4 below shows the calculated construction noise levels for each phase of construction at a distance of 50 feet. Table 4 Calculated Construction Noise Levels for Each Phase of Construction at a Distance of 50 Feet Construction Phase ‘Typical’ Construction Equipment Burlingame GP Construction Emission Levels Leq Lmax Leq Lmax Demolition (14 Days) 78 81 78 80 Site Preparation (60 Days) 82 85 74 75 Grading and Excavation (40 Days) 74 78 71 75 Trenching (10 Days) 74 78 71 75 Building – Exterior (61 Days) 75 81 73 75 Building – Interior (66 Days) Minimal Off-Site Paving (10 Days) 78 80 78 80 Source: Illingworth & Rodkin, 2016. The nearest sensitive receptors would be at the apartment buildings adjacent to the project site. The maximum construction noise levels would be anticipated to be in the range of 84 to 91 Lmax at a distance of 25 feet and 67 to 74 dBA Lmax at a distance of 180 feet based on typical construction equipment noise levels. According to the Burlingame standards, outdoor noise levels for residential areas should not exceed 60 dBA CNEL. Hourly average noise levels in the multi-family courtyard area, assuming a credible “worst-case” distance of 50 feet from construction and about 10 dBA of shielding from the building, would be anticipated to be 64 to 72 dBA Leq based on typical construction equipment, and 61 to 68 dBA Leq based on the Burlingame noise emission standards. Maximum noise levels in the multi-family courtyard area would be anticipated to be 68 to 75 dBA Lmax based on typical construction equipment, and 65 to 70 dBA Lmax based on the Burlingame noise emission standards. Noise generated by construction activities would, thus, temporarily elevate noise levels at the adjacent residences and would exceed the Burlingame General Plan Standard (5 dBA Lmax above ambient Lmax levels) within 50 feet of the shared property line with the multi-family residences. 54 Initial Study 85 California Drive However, exposure to construction noise above the threshold would occur for a period of less than twelve months, and thus would not exceed the Burlingame General Plan standard. Occupants of the multi-family homes would have the option of closing their windows, which would be anticipated to provide about 20 to 25 dBA of noise attenuation from exterior noise. Construction would not occur during nighttime hours, when residents would be expected to be most sensitive to noise. This analysis assumes that construction activities will be conducted in accordance with the General Plan and Municipal Code guidelines and standards, as described below:  Pursuant to the Municipal Code, noise-generating construction activities are limited to the hours of 8:00 am and 7:00 pm on weekdays and 9:00 am and 6:00 pm on Saturdays. Construction is not allowed on Sundays and holidays.  Construction equipment noise emissions will be in compliance with the recommended noise emission standards for construction equipment operating within the City. With adherence to the above-mentioned guidelines and standards, the noise impacts resulting from project construction would be considered less than significant. e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project expose people residing or working in the project area to excessive noise levels? (No Impact) and f) For a project within the vicinity of a private airstrip, would the project expose people residing or working in the project area to excessive noise levels? (No Impact) The closest airport to the project site is SFO, which lies approximately 3 miles to the northwest. There are no private airstrips near the project site. The project site is not within the SFO’s Noise Compatibility Zone. Given this, there would be no impact to people within the project vicinity as a result of excessive noise from aircraft and airport operations. 55 Initial Study 85 California Drive 13 Population and Housing Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Induce substantial population growth in an area, either directly (for example, by proposing new homes and businesses) or indirectly (for example, through extension of roads or other infrastructure)? b) Displace substantial numbers of existing housing, necessitating the construction of replacement housing elsewhere? c) Displace substantial numbers of people, necessitating the construction of replacement housing elsewhere? Setting According to the Association of Bay Area Governments (ABAG), the population in the City of Burlingame was 29,342 in January 2010, and the population is expected to grow by 3.9 percent before 2020 and an additional 2.9 percent between 2020 and 2030. As described in the Plan Bay Area Forecast of Jobs, Population and Housing, jobs in the City are expected to increase by 33,290 between 2010 and 204010. Overall, the community is becoming increasingly built-out due to the lack of undeveloped acreage within the City boundary. Discussion a) Induce substantial population growth in an area, either directly (for example, by proposing new homes and businesses) or indirectly (for example, through extension of roads or other infrastructure)? (No Impact) The project proposes to replace an existing automobile service facility with a new automobile service facility at an existing Subaru dealership. The project does not propose any new residential land uses. The Subaru dealership currently has 10 employees and has no immediate plans to hire more employees. The project does not propose the extension of roads or other infrastructure. Therefore, the project would not directly or indirectly induce substantial population growth and no impact would occur. 10 ABAG, 2013. Plan Bay Area: Final Forecast of Jobs, Population and Housing. Available at: http://planbayarea.org/pdf/final_supplemental_reports/FINAL_PBA_Forecast_of_Jobs_Population_and_ Housing.pdf. 56 Initial Study 85 California Drive b) Displace substantial numbers of existing housing, necessitating the construction of replacement housing elsewhere? (No Impact) and c) Displace substantial numbers of people, necessitating the construction of replacement housing elsewhere? (No Impact) The project would replace an existing automobile service facility with a new automobile service facility at an existing Subaru dealership. While the project would require rezoning of a portion of the site from R-4 to CAR, no existing residences are located within the project site. Therefore, neither housing nor people would be displaced by the project and no impact would occur. 57 Initial Study 85 California Drive 14 Public Services Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times, or other performance objectives for any of the public services: i) Fire protection? ii) Police protection? iii) Schools? iv) Parks? v) Other public facilities? Setting The Central County Fire Department (CCFD) provides fire protection services within Burlingame, Millbrae, and Hillsborough. Currently, the department operates six Engine Companies and one Truck Company out of six fire stations, with two stations in each city. CCFD’s daily staffing consists of seven captains, seven firefighter/paramedics, eight firefighters, and one battalion chief on duty to provide fire, emergency medical services (EMS), and rescue services to approximately 70,000 residents and visitors. The closest fire station is located 0.8 miles northwest of the project site at 799 California Drive. The current average response time across all CCFD stations is 5 minutes and 16 seconds; however, response times to the project site would likely be faster due to the proximity of the California Drive fire station.11 The Burlingame Police Department (BPD) provides emergency services to the City of Burlingame. BPD has one police station located at 1111 Trousdale Drive. The BPD employs 67 total employees, including 39 sworn officers. The average emergency response time between January 1, 2016 and June 30, 2016 was 5 minutes and 41 seconds.12 Burlingame contains five neighborhood schools that serve Kindergarten through grade 5 (K-5), one middle school for grades 6 through 8, and one high school. 11 Rubina Ellam, Administrative Assistant; Central County Fire Department; Personal Communication; July 27, 2016. 12 Melissa Mortz, Administrative Secretary to the Chief of Police; Personal Communication; July 29, 2016. 58 Initial Study 85 California Drive Discussion a) Result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times, or other performance objectives for any of the public services: i) Fire protection? (No Impact) The project would demolish an existing automobile service facility and construct a new automobile service facility at an existing Subaru dealership. No new residences or businesses are proposed; therefore, the project would not result in an increase in population or employees on site. The CCFD would continue to serve the project site, and no additional staff, facilities, or equipment would be needed as a result of project implementation. Therefore, no impact to fire protection services would occur. ii) Police protection? (No Impact) The project would demolish an existing automobile service facility and construct a new automobile service facility at an existing Subaru dealership. No new residences or businesses are proposed; therefore, the project would not result in an increase in population or employees on site. The BPD would continue to serve the project site, and no additional staff, facilities, or equipment would be needed as a result of project implementation. Therefore, no impact to police protection services would occur. iii) Schools? (No Impact) As no new residences or businesses are proposed, the project would not result in an increase in population or employees. As the project would not result in a population increase, or a corresponding increase in school-aged children, no impact to schools would occur. iv) Parks? (No Impact) and v) Other public facilities? (No Impact) Washington Park, located about 0.3 miles northwest of the project site, is the closest public park to the project site. As discussed above, the project does not propose residential land uses and would not increase the population in Burlingame. Thus, the project would not increase in the use of public parks, recreational facilities, or other public facilities, and would not require the provision of new or physically altered park facilities. Implementation of the project would not alter access to parks or public facilities during construction or operation. Therefore, no impact would occur. 59 Initial Study 85 California Drive 15 Recreation Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Would the project increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? b) Does the project include recreational facilities or require the construction or expansion of recreational facilities which might have an adverse physical effect on the environment? Setting Burlingame has approximately 22 recreation sites that consist of 13 parks, 4 playgrounds, a community garden, bocce ball courts, a recreation center, and an aquatic center.13 The 18.9- acre Washington Park is located approximately 0.3 miles northwest of the project site. The 1.1- acre Pershing Park is located approximately 0.5 miles southwest of the project site. Discussion a) Would the project increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? (No Impact) and b) Does the project include recreational facilities or require the construction or expansion of recreational facilities which might have an adverse physical effect on the environment? (No Impact) As discussed above, the project does not propose residential land uses and would not increase the population in Burlingame. Thus, the project would not increase the use of existing neighborhood parks or other recreational facilities. The proposed project does not include recreational facilities, nor would it require the expansion of existing recreational facilities. Therefore, no impact would occur. 13 City of Burlingame Parks and Recreation. Burlingame Parks and Recreation Facilities Guide. Available at: http://www.burlingame.org/modules/showdocument.aspx?documentid=10656. Accessed: August 2, 2016 60 Initial Study 85 California Drive 16 Transportation and Traffic Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Cause an increase in traffic which is substantial in relation to the existing traffic load and capacity of the street system (i.e., result in a substantial increase in either the number of vehicle trips, the volume-to-capacity ratio on roads, or congestion at intersections)? b) Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designated roads or highways? c) Result in a change in air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks? d) Substantially increase hazards due to a design feature (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? e) Result in inadequate emergency access? f) Conflict with adopted policies, plans, or programs supporting alternative transportation (e.g., bus turnouts, bicycle racks)? Setting W-Trans prepared a Transportation Impact Analysis (TIA) for the project in September 2016 (see Appendix F). The TIA estimates the expected trip generation potential for the proposed project and analyzes the project’s potential impacts at proposed access points and on alternative modes of transportation. The study area for transportation/traffic includes California Drive and Bayswater Avenue, which run along the frontage of the project site. California Drive generally runs in the north-south direction and is an undivided, four-lane roadway with two travel lanes in each direction and on- street parallel parking provided along both sides of the street. The posted speed limit is 30 miles per hour (mph). Bayswater Avenue runs in the east-west direction and has two travel lanes (one in each direction) with on-street parallel parking provided along both sides of the street. The posted speed limit is 25 mph. The project site is located west of US 101 and east of El Camino Real; both are major traffic corridors providing access to Burlingame. Transit facilities serving the project site include public 61 Initial Study 85 California Drive transit and pedestrian and bicycle facilities. Two major public mass transit operators, the San Mateo Transit District (SamTrans) and Caltrain, provide service adjacent to Burlingame. SamTrans Routes 46 and 292 provide access to the project site. The project site is also approximately 0.25 miles from the Burlingame Caltrain station. The project site is in the vicinity of two major Congestion Management Program (CMP) corridors: along Highway 82 (El Camino Real) from Trousdale Drive to East Third Avenue, and on Highway 101 spanning from Broadway Avenue to Peninsula Avenue. Both corridors are located less than one mile from the project site. The project site currently occupies two separate parcels that are fully developed with a showroom building, an automobile service facility, an automobile rental office, and automobile storage on a paved parking area. The existing service facility generates an estimated 75 daily vehicle trips—6 during the AM peak hour and 8 during the PM peak hour.14 Currently, the project site is accessed by two full-access driveways along California Drive approximately 70 feet and 150 feet south of the California Drive/Bayswater Avenue intersection, respectively, and two full access driveways along Bayswater Avenue approximately 15 feet and 110 feet west of the intersection, respectively. Discussion a) Cause an increase in traffic which is substantial in relation to the existing traffic load and capacity of the street system (i.e., result in a substantial increase in either the number of vehicle trips, the volume-to-capacity ratio on roads, or congestion at intersections)? (Less than Significant with Mitigation Incorporated) and b) Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designated roads or highways? (Less than Significant with Mitigation Incorporated) Construction The project assumes approximately 300 cubic yards of soil export. All soil would be off-hauled to Ox Mountain (Half Moon Bay) or a similarly appropriate facility. The hauling trucks would access the site by heading south on California Drive from US 101 (Broadway interchange), making a right turn onto Peninsula Avenue, a right turn onto Highland Avenue, a right turn onto Bayswater Avenue, and stopping in front of the site. Once full, the trucks would continue down 14 Estimated trip generation uses standard rates published by the ITE Trip Generation Manual, 9th edition, 2012. 62 Initial Study 85 California Drive Bayswater Avenue in order to turn back onto California Drive and proceed in either the north or south direction, depending on the final destination of the off-haul. Soil transport from the site could cause traffic impacts in the vicinity of the project site during construction which would be a potentially significant impact. Implementation of a Traffic Control Plan (Mitigation Measure TRA-1) would reduce the impact to less than significant. Mitigation Measure TRA-1: Prior to issuance of grading and building permits, the project applicant shall submit a Traffic Control Plan. The Traffic Control Plan would indicate how parking for construction workers would be provided during construction and ensure a safe flow of traffic in the project area during construction. The requirements within the Traffic Control Plan include, but are not limited to, the following: truck drivers would be notified of and required to use the most direct route between the site and U.S. 101, as determined by the City Engineering Department; all site ingress and egress would occur only at the main driveways to the project site; specifically designated travel routes for large vehicles would be monitored and controlled by flaggers for large construction vehicle ingress and egress; warning signs indicating frequent truck entry and exit would be posted on adjacent roadways if requested; and any debris and mud on nearby streets caused by trucks would be monitored daily and may require instituting a street cleaning program. Operation The anticipated trip generation for the proposed project was estimated using standard rates published by the Institute of Transportation Engineers (ITE) in Trip Generation Manual, 9th Edition, 2012 for “Automobile Care Center” (942). Expected trip generation potential for the proposed project is indicated in Table 5 with deductions taken for trips made to and from the portion of “Automobile Sales” to be demolished at the site. The proposed project is expected to generate an average of 125 daily trips, with 26 trips during the AM peak hour and 36 during the PM peak hour. San Mateo County generally requires a traffic report if a project generates over 500 trips per day or 100 trips during the peak hour or where other possible adverse effects are identified.15 Because the project’s expected trip generation would be below these thresholds, operational impacts to traffic and level-of-service (LOS) standards would be less than significant. 15 County of San Mateo, Department of Public Works – Roadway Services. Traffic Impact Study Requirements. September 1, 2013. 63 Initial Study 85 California Drive Table 5 Trip Generation Summary Land Use Units Daily AM Peak Hour PM Peak Hour Rate Trips Rate Trips In Out Rate Trips In Out Existing Automobile Care Centera 6 service stalls 12.48 75 -- -- -- -- -- -- -- -- Automobile Care Center 2.62 ksfb -- -- 2.25 6 4 2 3.11 8 4 4 Proposed Automobile Care Center 16 service stalls 12.48 200 -- -- -- -- -- -- -- -- Automobile Care Center 14.239 ksf -- -- 2.25 32 21 11 3.11 44 21 23 Total Net New Trips 125 26 17 9 36 17 19 a Daily rates for a Saturday were used since no daily rates are provided for this land use. b ksf = 1,000 square feet Source: W-Trans, 2016. c) Result in a change in air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks? (No Impact) As discussed in 8e above, SFO is approximately 3 miles northwest of the project site; however, the project site does not fall within any of the airport’s “safety compatibility zones” and is, therefore, not considered as being within an area of potential danger involving the operation of SFO.16 No aircraft use would be required for construction or operation of the project. As such, the project would not lead to an increase in air traffic, and no impact would occur. d) Substantially increase hazards due to a design feature (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? (Less than Significant with Mitigation Incorporated) With the project, access to the site would change. California Drive would continue to have an existing driveway provide access to the site. The existing driveway located immediately adjacent to the California Drive/Bayswater Avenue intersection would be modified to serve 16 The City/County Association of Governments of San Mateo County, 2012. Comprehensive Airport Land Use Compatibility Plan for the Environs of San Francisco International Airport. November 2012. Available at: http://ccag.ca.gov/wp-content/uploads/2014/10/Consolidated_CCAG_ALUCP_November-20121.pdf. 64 Initial Study 85 California Drive inbound vehicles only. Bayswater Avenue would have three driveways located west of the intersection of California Drive/Bayswater Avenue: the first driveway would serve outbound vehicles only, located approximately 35 feet to the west; the second driveway would serve inbound vehicles only, located 100 feet to the west; and the third driveway would serve outbound vehicles only, located 175 feet to the west. The changes in access would result in two one-way circulation patterns for the site. Patrons would access the existing car sales use via the inbound driveway on California Drive, just south of the intersection of California Drive/Bayswater Avenue, and outbound vehicles would use the driveway on Bayswater Avenue just west of the intersection. The Auto Service Center would be accessed via the inbound and outbound driveways located 100 and 175 feet west of the intersection, respectively. Sight distance along Bayswater Avenue at the project driveways was evaluated based on sight distance criteria contained in the Highway Design Manual published by Caltrans. Both California Drive and Bayswater Avenue within the project vicinity are relatively flat and straight, and sight lines for the proposed driveways would be satisfactory, so long as parked vehicles along the project frontages do not obstruct sight lines. Mitigation Measure TRA-2 would avoid potential safety impacts at these access points. Mitigation Measure TRA-2: On-street parking to the east and west of the outbound driveways on Bayswater Avenue shall be prohibited by painting red curb for a distance of approximately 20 feet on either side. The project site design has been required to conform to the City of Burlingame and the San Mateo County design standards and the site design is not expected to create any impacts to pedestrians, bicyclists, or traffic operations. The TIA determined that no internal site circulation or access issues have been identified that would cause a traffic safety problem or any unusual traffic congestion or delay. Therefore, impacts associated with potential increases in hazards due to project design features would be less than significant. e) Result in inadequate emergency access? (No Impact) The project would be easily accessible to emergency vehicles. All lane widths within the project would meet the minimum width that can accommodate emergency vehicles and the final emergency vehicle access plan would be subject to final approval from the Fire Department. Additionally, emergency vehicles have the right of way during an emergency when their sirens are turned on, and other vehicles are required to pull over to the side of the road. No internal site circulation or access issues have been identified that would cause a traffic safety problem or any unusual traffic congestion or delay. Therefore, impacts to emergency access would be less than significant. f) Conflict with adopted policies, plans, or programs supporting alternative transportation (e.g., bus turnouts, bicycle racks)? (No Impact) The project site is located approximately 0.25 miles southeast of the Burlingame Caltrain Station. SamTrans also operates two routes in the vicinity of the project site: Route 292 and Route 46. Transit facilities serving the project site would be expected to adequately serve the proposed project. The project would not interfere with any existing bus routes and would not 65 Initial Study 85 California Drive remove or relocate any existing bus stops. Pedestrian and bicycle facilities serving the project site would be expected to be adequate. The project proposes to reduce the width of some of the existing driveways, which would improve pedestrian comfort on these facilities. Given the above, there would be no impact to plans, policies, or programs supporting alternative modes of transportation. 66 Initial Study 85 California Drive 17 Utilities and Service Systems Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? b) Require or result in the construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? c) Require or result in the construction of new storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? d) Have sufficient water supplies available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed? e) Result in a determination by the wastewater treatment provider which serves or may serve the project that it has adequate capacity to serve the project’s projected demand in addition to the provider’s existing commitments? f) Be served by a landfill with sufficient permitted capacity to accommodate the project’s solid waste disposal needs? g) Comply with federal, state, and local statutes and regulations related to solid waste? Setting The Burlingame Public Works Department administers the City’s water system. According to the Downtown Specific Plan IS/MND, the City receives its water supply from the San Francisco Public Utilities Commission (SFPUC) which obtains 85 percent of its water supply from Hetch Hetchy Reservoir and 15 percent from local watersheds. The City also uses well water and recycled water for supplying non-potable water used for irrigation. According to the City of Burlingame 2015 Urban Water Management Plan, the City’s average water demand is 3.99 million gallons per day (mgd), or 76 percent of the City’s 5.23 mgd allotted supply. Generally, 41 percent of water consumption is from single-family residential uses, 17 percent by multi-family residential uses, 12 percent by industrial uses, 13 percent from commercial uses, 5 percent from irrigation uses, and 5 percent from institutional uses. 67 Initial Study 85 California Drive The City’s Public Works Department services the project site’s water and wastewater system. Wastewater flows are carried to the Waste Water Treatment Plant (WWTP) at 1103 Airport Boulevard, which serves the entire City of Burlingame as well as approximately one-third of the Town of Hillsborough. According to the Downtown Specific Plan IS/MND, average daily flow through the WWTP is 3.2 mgd, or 58 percent of the facility’s 5.5 mgd capacity. Burlingame’s stormwater system conveys runoff from upstream residential tributary areas through the Downtown area and east towards the San Francisco Bay. The Street and Sewer Division of the Burlingame Department of Public Works maintains the stormwater infrastructure within the City. The aging downtown system is exceeding design capacity, which makes the downtown area prone to flooding during large storm events. The existing site is completely paved, and drains to a catch basin in the northern portion of the site and curbside gutters that empty to a 15 inch stormwater drain line along Myrtle Road. Recology San Mateo (Recology) provides solid waste, recycling, and organic materials collection, transportation, and disposal services to the City of Burlingame. Recology hauls recyclables and organic solid waste to the Shoreway Environmental Center in San Carlos, CA for sorting. The solid waste and recyclables are processed and sent to the appropriate facility. Solid waste is sent to the Ox Mountain Landfill in Half Moon Bay, CA. This facility has a maximum throughput of 3,598 tons per day and had a remaining capacity of 21,180,000 cubic yards (as of December 31, 2015). When the 2001 permit was issued, Ox Mountain Landfill’s estimated closure date was 2023. 17 The project would require plumbing and electrical improvements to accommodate the new service facility. The Burlingame Public Works Department provides water and wastewater service to the project site. The project site is connected to the City’s utility infrastructure which includes an existing 6-inch domestic water service line, 6-inch sanitary sewer line, and 6-inch fire service line. The new building would tie-in to these existing lines with a new 1-inch domestic water service line, new 4-inch sanitary sewer line, and new 4-inch fire service line. The project site is connected to an existing 15-inch stormwater line and the new building would tie-in to this existing line to convey stormwater infrastructure with a new 8-inch stormwater line. New electrical and gas lines would also be constructed. The project would comply with the 2013 California Building Code, 2013 California Mechanical Code, 2013 California Electrical Code, and 2013 California Plumbing Code, including all amendments as adopted in Ordinance 1889, as well as the 2013 California Energy Efficiency Standards. Discussion a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? (No Impact) The project site is fully developed with automobile-related land uses and the project does not propose a change in land use. As a result, no specific changes to the wastewater treatment plan 17 CalRecycle. 2015. Facility/Site Summary Details: Corinda Los Trancos Landfill (OX Mtn) (41-AA-0002). Available at http://www.calrecycle.ca.gov/SWFacilities/Directory/41-AA-0002/Detail. Accessed September 22, 2016. 68 Initial Study 85 California Drive would be required to treat these flows. Therefore, no impacts related to the RWQCB wastewater treatment requirements would be expected. b) Require or result in the construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? (Less than Significant) The project site is fully developed with automobile-related land uses and the lot is paved. As discussed above, the new building would tie-in to the City’s existing water and wastewater infrastructure. The project would increase water demand and wastewater generation because the square footage of the building would increase from the existing site. Given the proposed improvements for the project, water and wastewater infrastructure serving the project site is anticipated to continue to have capacity to handle the project and would not require construction of additional facilities. Therefore, the impact would be less than significant. c) Require or result in the construction of new storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? (Less than Significant) Given that the project would result in a negligible net increase of 397 square feet in impervious surface area on site, existing facilities would be capable of handling stormwater runoff. Additional BMPs per C.3 stormwater requirements, such as bioretention landscaping areas, would assist in conveying additional stormwater runoff and no expansion of stormwater facilities would be required. The impact would be less than significant. d) Have sufficient water supplies available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed? (Less than Significant) The project site is currently developed for automobile-related land uses, and has an estimated existing water demand of 13 gallons per day (gpd). From 2011-2015, Burlingame consumed an average of 3.99 million gallons per day (mgd)18. The project is estimated to require an additional 5 gpd (for a total of 18 gpd). According to the Burlingame Downtown Specific Plan IS/MND and the Urban Water Management Plan, the City is allocated 5.23 mgd (5,230,000 gpd), and proposed development efforts outlined for the downtown area are not expected to exceed its total water supply through 2030. Furthermore, the Burlingame Downtown Specific Plan IS/MND accounted for this project and concluded that it would result in a negligible impact to water supplies. Therefore, the impact would be less than significant. e) Result in a determination by the wastewater treatment provider which serves or may serve the project that it has adequate capacity to serve the project’s projected demand in addition to the provider’s existing commitments? (Less than Significant) The project does not propose a change in land use. The WWTP located at 1103 Airport Boulevard has an average yearly flow is 3.2 mgd (3,200,000 gpd), and a total plant capacity of 18 Erler & Kalinowski, Inc., June 2016. City of Burlingame 2015 Urban Water Management Plan. 69 Initial Study 85 California Drive 5.5 mgd (5,500,000 gpd). The project would replace an existing automobile service facility with a larger service facility (increasing the size by over 11,600 square feet), slightly increasing the intensification of the existing use on site. No high wastewater generators would be part of the expanded service facility (see the Project Description). The number of employees at the site would not be expected to increase as a result of the project. Therefore, the generation of wastewater would not significantly increase with project implementation, and this impact would be less than significant. f) Be served by a landfill with sufficient permitted capacity to accommodate the project’s solid waste disposal needs? (Less than Significant) The Ox Mountain Landfill had a remaining capacity of 27 million tons in 2011. There is currently a 15-year agreement for this facility, which will expire in 2018. According to AWI, which owns and operates the Ox Mountain Landfill, the landfill has a remaining life period that extends beyond the existing 15-year agreement at current disposal rates. The proposed project would continue the existing automobile-related land uses. The proposed project would likely increase the overall solid waste generation for the site because the project would increase in size. However, such an increase would be negligible and the City’s landfill would continue to have ample capacity for such an increase. Therefore, impacts related to solid waste disposal would be less than significant. g) Comply with federal, state, and local statutes and regulations related to solid waste? (No Impact) The project does not propose to change the existing land use, and therefore would not result in the generation of unique types of solid waste that would conflict with existing regulations applicable to waste disposal. The project would be required to comply with Burlingame’s solid waste disposal requirements, including recycling programs established under Assembly Bill (AB) 939. As a result, the project would comply with federal, state, and local statutes and regulations related to solid waste and there would be no impact. 70 Initial Study 85 California Drive 18 Mandatory Findings of Significance Issues Would the project: Significant or Potentially Significant Impact Less Than Significant Impact with Mitigation Incorporated Less than Significant No Impact a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? b) Does the project have impacts that are individually limited, but cumulatively considerable? (“Cumulatively considerable” means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects)? c) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? Discussion a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? (Less than Significant with Mitigation Incorporated) The project site is located in a densely developed area and contains no valuable or sensitive habitats. While trees located on and near the site may provide habitat for nesting birds, Mitigation Measure BIO-1 described above would ensure that impacts to biological resources would be less than significant. There is a possibility of encountering buried cultural resources during construction; however, Mitigation Measures CUL-1 through CUL-3 would ensure that any impacts would be less than significant. 71 Initial Study 85 California Drive b) Does the project have impacts that are individually limited, but cumulatively considerable? (“Cumulatively considerable” means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects)? (Less than Significant) The existing project site is currently developed for automobile-related uses, which would continue under the proposed project. The project would have potential impacts to aesthetics, biological resources, cultural resources, geology and soils, hazards and hazardous materials, land use and planning, noise, and transportation and traffic. Incorporation of mitigation measures would reduce these impacts to a less-than-significant level. Although the proposed project would construct a new automobile service facility that would increase the square footage from existing conditions, such an increase would not be substantial enough to make a cumulatively considerable contribution. Furthermore, the project site is governed by the City’s General Plan, Downtown Specific Plan, and the Burlingame Municipal Code. The project would require a Lot Merger and Lot Line Adjustment to combine four parcels and a portion of a fifth parcel into one, as well as a General Plan Amendment to change the portion of the fifth parcel from R-4 to CAR land use. The project would continue existing land uses on the site and would be consistent with CAR District regulations. c) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? (Less than Significant) The implementation of the mitigation measures identified herein would reduce all potential impacts to a less-than-significant level. Therefore, the project would thus not result in impacts that would cause substantial adverse effects on human beings, either directly or indirectly. 72 85 California Drive IS/MND Figure Source: Google Earth, 2016; Circlepoint, 2016 1 FEET Project Site and Surrounding Land Use Map 4402200 660 Legend Project Site CALI F O R N I A D R I V E HIGHLAND AVENUEPENINSULA AVENUECALIFORNIA DRIVE MIXED USE DISTRICT CALIFORNIA DRIVE MIXED USE DISTRICT R-4 INCENTIVE DISTRICT MYRTLE MIXED USE AREA CALIFORNIA DRIVE MIXED USE DISTRICTR-4 INCENTIVE DISTRICT BAYSWATER DRIVE 85 California Drive IS/MND Figure Source: Google Earth, 2016; Circlepoint, 2016 2Noise Monitoring Locations 440FEET2200 660 Legend CALI F O R N I A D R I V E HIGHLAND AVENUEPENINSULA AVENUEST-1 ST-2 ST-3 ST-4 Project Site Short-term Noise Measurement EXHIBIT C City of Burlingame 85 CALIFORNIA DRIVE PROJECT Initial Study Errata Prepared by: Circlepoint 46 S 1st Street San Jose, CA 95113 Prepared for: City of Burlingame Community Development Department 501 Primrose Road Burlingame, CA 94010 December 2016 C-1 Page Intentionally Left Blank C-2 INITIAL STUDY ERRATA Revisions to the 85 California Drive Project Initial Study are necessary in light of revisions to the project that were not updated in the text of the Initial Study prior to public circulation of the environmental document, and to correct parcel information and a typographical error. Throughout this erratum, bold, underlined text represents language that has been added to the Initial Study; text with strikethrough represents text that has been deleted from the Initial Study. Pursuant to CEQA Guideline 15073.5 (b), recirculation of an Initial Study/Mitigated Negative Declaration would be required from a “substantial revision” to the project. CEQA Guidelines 15073.5 (b) defines a “substantial revision” as follows: • A new, avoidable significant effect that requires new mitigation measures to be added to reduce the effects to less than significant • The lead agency determines that the proposed mitigation measures or project revisions will not reduce potential effects to less than significance and new measures or revisions are required. Changes to the project have not resulted in new avoidable or unavoidable significant environmental effects or new mitigation measures. As demonstrated below, the changes to the project description have not changed the overall conclusions in the IS/Proposed MND. Therefore, pursuant to CEQA Guidelines 15073.5, recirculation of the IS/Proposed MND is not required. SUMMARY OF CHANGES Subsequent to public circulation, it was determined that the existing R-4 lot at the corner of Bayswater Avenue and Highland Avenue is comprised of two parcels with a single Assessor’s Parcel Number (APN), whereas the initial study erroneously stated that this lot consisted of only one parcel. The initial study has been updated to reflect that the project site would include a total of four parcels and portions of a fifth and sixth parcel. The project applicant revised the project plans to adjust the rear lot line of the proposed project site so as to encompass a smaller area of the existing R-4 lot at the corner of Bayswater Avenue and Highland Avenue. This resulted in a decrease in the size of the proposed project site from the originally proposed 24,925 square feet to 23,012 square feet—a net decrease of 1,913 square feet. The proposed building footprint did not change as part of this revision to the project plans. C-3 TEXT CHANGES TO THE INITIAL STUDY The following text changes were made to the project description on page 4 to correct and update project information. The proposed project site is located at the southwest corner of Bayswater Avenue and California Drive and encompasses four parcels and a portions of a fifth and sixth parcel (APN 029-242-020, -030, -040, -050 and a portion of -230). The project site is bordered by California Drive to the north, Bayswater Avenue to the west, a Mazda dealership to the east, and a two-story multifamily residential building to the south. Automobile sales and service facilities are also located adjacent to the site across California Drive and Bayswater Avenue. The following text changes were made to the project description on page 4 to correct and update project information. The project site occupies fivesix separate parcels, is relatively level (with an average slope of 2 percent), and two parcels are developed with a single-story Subaru showroom building, a single-story Subaru automobile service facility, a Hertz automobile rental office located in the service facility building, and automobile storage for Subaru and Hertz on a paved parking area. The site is completely covered by 24,92523,012 square feet of impervious surfaces and does not contain any vegetation or landscaping. California Drive and Bayswater Avenue provide access to the site (Figure 1). The following text changes were made to the project description on pages 4-5 to correct and update project information. The project would construct a new 14,239-square-foot automobile service facility with a 1,627-square-foot parts storage mezzanine at the site (8,725 square feet of enclosed building area and 5,514 square feet of covered drive aisle area). This would include demolition of a 115-square-foot office at the rear of the existing showroom and the existing 2,620-square-foot service facility and Hertz rental office. The existing showroom on the northeast end of the site would remain. As part of the project, the new service facility would be constructed over four parcels and a portions of a fifth and sixth parcel, and the parcels would be combined into one, totaling 24,92523,012 square feet (0.570.53 acres). The remaining a portions of the fifth and sixth parcel, outside of the project site, would be combined into one 9,000-square-foot parcel and continue to be used for storing new vehicle inventory. The new service facility would be one story (25 feet and 1.5 inches in height), which conforms to the 55-foot height limit for the CAR zoning district. The service facility would consist of 16 service bays, parts and tool rooms, a service writer office and a customer lounge. The front of the lot would contain an outdoor vehicle display area and 15 parking spaces for customers and employees, as required under the City’s parking ordinance (Burlingame Municipal Code Chapter 25.70, Off-Street Parking). C-4 The following text changes were made to Section 1, Aesthetics, on page 8 to update project information. The project site is currently covered by 24,92523,012 square feet of impervious surfaces and contains no vegetation or landscaping. Other automobile dealerships surround the site to the north, east, and west, and a two-story multifamily residential building borders the site to the south. The following text changes were made to Section 3, Air Quality, on page 15 to correct a typographical error and correct and update project information. The project would not directly increase the City’s population as it does not include residential units. Implementation of the project would construct a new 9,63414,239- square-foot automobile service facility with a 1,627-square-foot parts storage mezzanine at the site. This would include demolition of a 115-square-foot office at the rear of the existing showroom and the existing 2,620-square-foot service facility and Hertz rental office. The existing showroom on the northeast end of the site would remain. As part of the project, the new service facility would be constructed over the four parcels and a portions of the fifth and sixth parcel, and the parcels would be combined into one, totaling 24,92523,012 square feet (0.570.53 acres). According to the Traffic Impact Assessment (TIA) prepared for the project, no significant increase in traffic is anticipated with project implementation. The County of San Mateo’s Traffic Impact Study Requirements establishes a significance threshold which considers a project’s impact to traffic significant if its implementation increases daily trips by 500. The project is expected to generate 125 daily trips, on average, which is significantly lower than the 500 trips threshold. Consequently, development of the project would not conflict with population and VMT projections used to develop the Clean Air Plan planning projections (see Section 16, Transportation and Traffic). The project would not obstruct implementation of these plans, and therefore no impact would occur. The following text changes were made to Section 3, Air Quality, on pages 17-18 to update project information. The BAAQMD CEQA Guidelines state that a significant air quality impact would result if the project would result in a cumulatively considerable net increase of any criteria pollutant or a precursor to that pollutant for which the project region is non-attainment under an applicable national or state ambient air quality standard. Given the nature of the proposed use, the operational criteria pollutant screening size for the project is 541,000 square feet for operational pollutants/precursors, and 121,000 square feet for greenhouse gas emissions. The project would operate at 24,92523,012 square feet, and would thus be below the screening criteria developed by BAAQMD for the “General Light Industrial” land use. Therefore, the project would not exceed the pollutant emissions thresholds and the project’s contribution to cumulative air quality impacts is not considered cumulatively considerable. C-5 The following text changes were made to Section 6, Geology and Soils, on page 28 to update project information. The project site is developed with a single-story Subaru showroom building, a single- story Subaru automobile service facility and Hertz automobile rental office, and paved parking areas. The site is completely covered by 24,92523,012 square feet of impervious surfaces and does not contain vegetation or landscaping. The existing 115- square-foot office at the rear of the existing showroom, the existing 2,620-square-foot service facility, and Hertz rental office would be demolished and removed as part of the project and a new, larger service facility would be constructed. Construction activities would be required to comply with the provisions in Appendix J of the 2007 California Building Code (CBC) in regards to grading, excavating, and earthwork construction. Soil erosion after construction would be controlled by implementation of approved landscape and irrigation plans, as needed. The following text changes were made to Section 7, Greenhouse Gas Emissions, on page 32 to update project information. Due to the project size, operational period GHG emissions would be less than significant. BAAQMD identified screening criteria for the sizes of land use projects that could result in significant GHG emissions in their May 2011 update to the CEQA Air Quality Guidelines. For operational impacts, the screening project size is identified at 121,000 square feet for general light industrial land uses. Since the project proposes to operate 24,92523,012 square feet of facility services, it is concluded that emissions would be below the BAAQMD significance threshold of 1,100 MT of CO2e annually. Impacts associated with the generation of greenhouse gas emissions, directly or indirectly, would be less than significant with project implementation. The following text changes were made to Section 8, Hazards and Hazardous Materials, on pages 34-35 to update project information. The project site is currently developed with a single-story Subaru showroom building, a single-story Subaru automobile service facility, a Hertz automobile rental office located in the service facility building and automobile storage for Subaru and Hertz on a paved parking area. The site is completely covered by 24,92523,012 square feet of impervious surfaces and does not contain any vegetation or landscaping. A Phase I Environmental Site Assessment (ESA) was conducted by AEI Consultants in August 2016 to identify and evaluate any potential hazards to human health in the vicinity of the project site (Appendix D). C-6 The following text changes were made to Section 18, Mandatory Findings of Significance, on page 72. Furthermore, the project site is governed by the City’s General Plan, Downtown Specific Plan, and the Burlingame Municipal Code. The project would require a Lot Merger and Lot Line Adjustment to combine four parcels and a portions of a fifth and sixth parcel into one, as well as a General Plan Amendment to change the portions of the fifth and sixth parcels from R-4 to CAR land use. The project would continue existing land uses on the site and would be consistent with CAR District regulations. CONCLUSION The text changes above reflect a reduction in the proposed size of the project site by 1,913 square feet, correction of erroneous parcel information, and correction of a typographical error. The proposed location and footprint of the automobile service facility building was not changed, nor were any other project components that were analyzed in the Initial Study. The adjustment to the proposed rear lot line of the project site would result in a reduction of the automobile service facility building setback from 20 feet to 1 foot, abutting a currently vacant lot that is and would continue to be used for vehicle storage. This would not result in any new impacts not previously identified in the Initial Study and would not change any of the impact conclusions or mitigation measures identified therein. Therefore, pursuant to CEQA Guidelines 15073.5, recirculation of the IS/Proposed MND is not required. C-7 Page Intentionally Left Blank C-8 City of Burlingame 85 CALIFORNIA DRIVE PROJECT Mitigated Negative Declaration Prepared by: Circlepoint 46 S 1st Street San Jose, CA 95113 Prepared for: City of Burlingame Community Development Department 501 Primrose Road Burlingame, CA 94010 December 2016 1 Page Intentionally Left Blank 2 85 CALIFORNIA DRIVE PROJECT MITIGATED NEGATIVE DECLARATION (MND) December 2016 Pursuant to the California Environmental Quality Act (CEQA) Division 13, Public Resources Code City of Burlingame Community Development Department Planning Division 501 Primrose Road Burlingame, CA 94010 Project Description The proposed project site is located at the southwest corner of Bayswater Avenue and California Drive and encompasses four parcels and portions of a fifth and sixth parcel (APN 029-242-020, - 030, -040, -050 and a portion of -230). The project site is bordered by California Drive to the north, Bayswater Avenue to the west, a Mazda dealership to the east, and a two-story multifamily residential building to the south. Automobile sales and service facilities are also located adjacent to the site across California Drive and Bayswater Avenue. The project site is located in the Burlingame Downtown Specific Plan (Downtown Specific Plan) area. Within the Downtown Specific Plan, the majority of the site is located in the California Drive Mixed Use District; the remaining portion of the site is located in the R-4 Incentive District. The project site is located in the California Drive Auto Row (CAR) zoning district designated primarily for automobile-related uses. The remaining portion of the site is located in the R-4 District designated primarily for high-density multifamily residential land uses. The project would construct a new 14,239-square-foot automobile service facility with a 1,627- square-foot parts storage mezzanine at the site (8,725 square feet of enclosed building area and 5,514 square feet of covered drive aisle area). This would include demolition of a 115-square- foot office at the rear of the existing showroom and the existing 2,620-square-foot service facility and Hertz rental office. The existing showroom on the northeast end of the site would remain. As part of the project, the new service facility would be constructed over four parcels and portions of a fifth and sixth parcel, and the parcels would be combined into one, totaling 23,012 square feet (0.53 acres). The remaining portions of the fifth and sixth parcel, outside of the project site, would be combined into one 9,000-square-foot parcel and continue to be used for storing new vehicle inventory. The service facility would consist of 16 service bays, parts and tool rooms, a service writer office and a customer lounge. The front of the lot would contain an outdoor vehicle display area and 15 parking spaces for customers and employees. The total construction duration is estimated to be eight months. 3 Determination A Mitigated Negative Declaration (MND) is proposed by the City of Burlingame for the project. The Initial Study and supporting documents have been prepared to determine if the project would result in potentially significant or significant impacts to the environment (Exhibit A, Initial Study). On the basis of the Initial Study, it has been determined that the proposed action, with the incorporation of the mitigation measures described below, will not have a significant effect on the environment. The 17 mitigation measures identified in the Initial Study are listed in Table 1a below. A Mitigation Monitoring and Reporting Program (MMRP) is included as Exhibit B. The public review period occurred from Wednesday, November 23, 2016 to Monday December 12, 2016 and no comments were received during that time. On the basis of the Initial Study and the whole record, it has been determined that the proposed action, with the incorporation of the mitigation measures described below, would not have a significant effect on the environment. The supporting technical reports that constitute the record of proceedings upon which this determination is made are available for public review at the City of Burlingame Community Development Department office at 501 Primrose Road, Burlingame CA 94010, between 8:00 am and 5:00 pm, Monday through Friday. Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Aesthetics Mitigation Measure AES-1: The project developer shall install low-profile, low-intensity lighting directed downward to minimize light and glare. Exterior lighting shall be low mounted, downward casting, and shielded. In general, the light footprint shall not extend beyond the periphery of each property. Implementation of exterior lighting fixtures on all buildings shall also comply with the standard California Building Code (Title 24, Building Energy Efficiency Standards) to reduce the lateral spreading of light to surrounding uses, consistent with Burlingame Municipal Code Section 18.16.030 that requires that all new exterior lighting for commercial developments be designed and located so that the cone of light and/or glare from the light element is kept entirely on the property or below the top of any fence, edge or wall. Less than Significant with Mitigation Incorporated 4 Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Air Quality Mitigation Measure AQ-1: The contractor shall implement the following BMPs: 1) All exposed surfaces (e.g., parking areas, staging areas, soil piles, graded areas, and unpaved access roads) shall be watered two times per day. 2) All haul trucks transporting soil, sand, or other loose material off-site shall be covered. 3) All visible mud or dirt tracked onto adjacent public roads shall be removed using wet power vacuum street sweepers at least once per day. The use of dry power sweeping is prohibited. 4) All vehicle speeds on unpaved roads shall be limited to 15 miles per hour (mph). 5) All roadways, driveways, and sidewalks to be paved shall be completed as soon as possible. Building pads shall be laid as soon as possible after grading unless seeding or soil binders are used. 6) Idling times shall be minimized either by shutting equipment off when not in use or reducing the maximum idling time to 5 minutes (as required by the California airborne toxics control measure Title 13, Section 2485 of California Code of Regulations (CCR)). Clear signage shall be provided for construction workers at all access points. 7) All construction equipment shall be maintained and properly tuned in accordance with manufacturer’s specifications. All equipment shall be checked by a certified mechanic and determined to be running in proper condition prior to operation. 8) Post a publicly visible sign with the telephone number and person to contact at the Lead Agency regarding dust complaints. This person shall respond and take corrective action within 48 hours. The Air District’s phone number shall also be visible to ensure compliance with applicable regulations. Less than Significant with Mitigation Incorporated 5 Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Air Quality Mitigation Measure AQ-2: All diesel-powered off- road equipment larger than 25 horsepower and operating on the site for more than two continuous days shall, at a minimum, meet U.S. EPA particulate matter emissions standards for Tier 4 engines or equivalent Less than Significant with Mitigation Incorporated Biological Resources Mitigation Measure BIO-1: If construction activities would commence anytime during the nesting/breeding season of native bird species potentially nesting near the site (typically February through August in the project region), a pre- construction survey for nesting birds shall be conducted by a qualified biologist within two weeks of the commencement of construction activities. If active nests are found in areas that could be directly affected or are within 150 feet of construction and would be subject to prolonged construction-related noise, a no-disturbance buffer zone shall be created around active nests during the breeding season or until a qualified biologist determines that all young have fledged. The size of the buffer zones and types of construction activities restricted within them will be determined by taking into account factors such as the following:  Noise and human disturbance levels at the construction site at the time of the survey and the noise and disturbance expected during the construction activity;  Distance and amount of vegetation or other screening between the construction site and the nest; and  Sensitivity of individual nesting species and behaviors of the nesting birds. Less than Significant with Mitigation Incorporated 6 Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Biological Resources Mitigation Measure BIO-2: Prior to the removal of any trees, the project applicant shall evaluate if the on-site trees meet the requirement to be considered a “protected” tree. A permit shall be obtained from the Parks and Recreation Department prior to the removal of a protected tree. Less than Significant with Mitigation Incorporated Cultural Resources Mitigation Measure CUL-1: In the event archaeological resources are encountered during construction, work shall be halted within 100 feet of the discovered materials and workers shall avoid altering the materials and their context until a qualified professional archaeologist has evaluated the situation and provided appropriate recommendations. If an archaeological site is encountered in any stage of development, a qualified archeologist will be consulted to determine whether the resource qualifies as an historical resource or a unique archaeological resource. In the event that it does qualify, the archaeologist will prepare a research design and archaeological data recovery plan to be implemented prior to or during site construction. The archaeologist shall also prepare a written report of the finding, file it with the appropriate agency, and arrange for curation of recovered materials. Less than Significant with Mitigation Incorporated Cultural Resources Mitigation Measure CUL-2: A discovery of a paleontological specimen during any phase of the project shall result in a work stoppage in the vicinity of the find until it can be evaluated by a professional paleontologist. Should loss or damage be detected, additional protective measures or further action (e.g., resource removal), as determined by a professional paleontologist, shall be implemented to mitigate the impact. Less than Significant with Mitigation Incorporated 7 Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Cultural Resources Mitigation Measure CUL-3: In the event that human remains are discovered during project construction, there shall be no further excavation or disturbance of the site or any nearby area reasonably suspected to overlie adjacent human remains. The county coroner shall be informed to evaluate the nature of the remains. If the remains are determined to be of Native American origin, the Lead Agency shall work with the Native American Heritage Commission and the applicant to develop an agreement for treating or disposing of the human remains. Less than Significant with Mitigation Incorporated Geology and Soils Mitigation Measure GEO-1: Project design and construction shall adhere to Title 18, Chapter 18.28 of the Burlingame Municipal Code, and demonstrate compliance with all design standards applicable to the California Building Code Zone 4 would ensure maximum practicable protection available to users of the buildings and associated infrastructure. Less than Significant with Mitigation Incorporated Geology and Soils Mitigation Measure GEO-2: Project design and construction, including excavation activities, shall comply with Chapter 33 of the CBC, which specifies the safety requirement to be fulfilled for site work. This would include prevention of subsidence and pavement or foundations caused by dewatering. Less than Significant with Mitigation Incorporated Geology and Soils Mitigation Measure GEO-3: The applicant shall prepare a monitoring program to determine the effects of construction on nearby improvements, including the monitoring of cracking and vertical movement of adjacent structures, and nearby streets, sidewalks, utilities, and other improvements. As necessary, inclinometers or other instrumentation shall be installed as part of the shoring system to closely monitor lateral movement. The program shall include a pre-condition survey including photographs and installation of monitoring points for existing site improvements. Less than Significant with Mitigation Incorporated 8 Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact Hazards and Hazardous Materials Mitigation Measure HAZ-1: The contractor shall comply with Title 8, California Code of Regulations/Occupational Safety and Health Administration (OSHA) requirements that cover construction work where an employee may be exposed to lead. This includes the proper removal and disposal of peeling paint, and appropriate sampling of painted building surfaces for lead prior to disturbance of the paint and disposal of the paint or painted materials. Less than Significant with Mitigation Incorporated Hazards and Hazardous Materials Mitigation Measure HAZ-2: The applicant shall contract a Certified Asbestos Consultant to conduct an asbestos survey prior to disturbing potential asbestos containing building materials and following the Consultant’s recommendations for proper handling and disposal. Less than Significant with Mitigation Incorporated Hazards and Hazardous Materials Mitigation Measure HAZ-3: Workers handling demolition and renovation activities at the project site will be trained in the safe handling and disposal of any containments with which they are handling or disposing of on the project site. Less than Significant with Mitigation Incorporated Noise Mitigation Measure NOI-1: The following measures, in addition to the best practices specified in Impact 3, shall be implemented to reduce vibration impacts from construction activities to a less-than-significant level:  For all construction proposed to be located within 20 feet of adjacent structures, a construction vibration-monitoring plan would need to be implemented to document conditions prior to, during and after vibration generating construction activities. All plan tasks shall be undertaken under the direction of a licensed Professional Structural Engineer in the State of California and be in accordance with industry accepted standard methods. The construction vibration monitoring plan should be implemented Less than Significant with Mitigation Incorporated 9 Table 1a Summary of Mitigation Measures Environmental Factor Mitigation Measure Level of Environmental Impact to include the following tasks:  Perform a photo survey, elevation survey, and crack monitoring survey for each identified structure. Surveys shall be performed prior to any construction activity and after project completion and shall include internal and external crack monitoring in structures, settlement, and distress and shall document the condition of foundations, walls and other structural elements in the interior and exterior of said structures.  Designate a person responsible for registering and investigating claims of excessive vibration. The contact information of such person shall be clearly posted on the construction site.  Make appropriate repairs or compensation where damage has occurred as a result of construction activities.  The results of all vibration monitoring shall be summarized and submitted in a report shortly after substantial completion of each phase identified in the project schedule. The report will include a description of measurement methods, equipment used, calibration certificates, and graphics as required to clearly identify vibration- monitoring locations. An explanation of all events that exceeded vibration limits will be included together with proper documentation supporting any such claims. 10 EXHIBIT B City of Burlingame 85 CALIFORNIA DRIVE PROJECT Mitigation, Monitoring, and Reporting Program Prepared by: Circlepoint 46 S 1st Street San Jose, CA 95113 Prepared for: City of Burlingame Community Development Department 501 Primrose Road Burlingame, CA 94010 December 2016 B-1 Page Intentionally Left Blank B-2 MITIGATION, MONITORING, AND REPORTING PROGRAM Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing Aesthetics Mitigation Measure AES-1: The project developer shall install low- profile, low-intensity lighting directed downward to minimize light and glare. Exterior lighting shall be low mounted, downward casting, and shielded. In general, the light footprint shall not extend beyond the periphery of each property. Implementation of exterior lighting fixtures on all buildings shall also comply with the standard California Building Code (Title 24, Building Energy Efficiency Standards) to reduce the lateral spreading of light to surrounding uses, consistent with Burlingame Municipal Code Section 18.16.030 that requires that all new exterior lighting for commercial developments be designed and located so that the cone of light and/or glare from the light element is kept entirely on the property or below the top of any fence, edge or wall. Less than Significant with Mitigation Incorporated Project Applicant Project design and construction Air Quality Mitigation Measure AQ-1: The contractor shall implement the following BMPs: 1) All exposed surfaces (e.g., parking areas, staging areas, soil piles, graded areas, and unpaved access roads) shall be watered two times per day. 2) All haul trucks transporting soil, sand, or other loose material off- site shall be covered. 3) All visible mud or dirt tracked onto adjacent public roads shall be Less than Significant with Mitigation Incorporated Project Applicant/ Contractor Project design and construction B-3 Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing removed using wet power vacuum street sweepers at least once per day. The use of dry power sweeping is prohibited. 4) All vehicle speeds on unpaved roads shall be limited to 15 miles per hour (mph). 5) All roadways, driveways, and sidewalks to be paved shall be completed as soon as possible. Building pads shall be laid as soon as possible after grading unless seeding or soil binders are used. 6) Idling times shall be minimized either by shutting equipment off when not in use or reducing the maximum idling time to 5 minutes (as required by the California airborne toxics control measure Title 13, Section 2485 of California Code of Regulations (CCR)). Clear signage shall be provided for construction workers at all access points. 7) All construction equipment shall be maintained and properly tuned in accordance with manufacturer’s specifications. All equipment shall be checked by a certified mechanic and determined to be running in proper condition prior to operation. 8) Post a publicly visible sign with the telephone number and person to contact at the Lead Agency regarding dust complaints. This person shall respond and take corrective action within 48 hours. The Air District’s phone number shall also be visible to ensure compliance with applicable regulations. B-4 Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing Air Quality Mitigation Measure AQ-2: All diesel- powered off-road equipment larger than 25 horsepower and operating on the site for more than two continuous days shall, at a minimum, meet U.S. EPA particulate matter emissions standards for Tier 4 engines or equivalent. Less than Significant with Mitigation Incorporated Project Applicant/ Contractor During construction Biological Resources Mitigation Measure BIO-1: If construction activities would commence anytime during the nesting/breeding season of native bird species potentially nesting near the site (typically February through August in the project region), a pre- construction survey for nesting birds shall be conducted by a qualified biologist within two weeks of the commencement of construction activities. If active nests are found in areas that could be directly affected or are within 150 feet of construction and would be subject to prolonged construction- related noise, a no-disturbance buffer zone shall be created around active nests during the breeding season or until a qualified biologist determines that all young have fledged. The size of the buffer zones and types of construction activities restricted within them will be determined by taking into account factors such as the following:  Noise and human disturbance levels at the construction site at the time of the survey and the noise and disturbance expected during the construction activity; Less than Significant with Mitigation Incorporated Project Applicant/ Qualified Biologist Before construction B-5 Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing  Distance and amount of vegetation or other screening between the construction site and the nest; and  Sensitivity of individual nesting species and behaviors of the nesting birds. Biological Resources Mitigation Measure BIO-2: Prior to the removal of any trees, the project applicant shall evaluate if the on-site trees meet the requirement to be considered a “protected” tree. A permit shall be obtained from the Parks and Recreation Department prior to the removal of a protected tree. Less than Significant with Mitigation Incorporated Project Applicant/ City During construction Cultural Resources Mitigation Measure CUL-1: In the event archaeological resources are encountered during construction, work shall be halted within 100 feet of the discovered materials and workers shall avoid altering the materials and their context until a qualified professional archaeologist has evaluated the situation and provided appropriate recommendations. If an archaeological site is encountered in any stage of development, a qualified archeologist will be consulted to determine whether the resource qualifies as an historical resource or a unique archaeological resource. In the event that it does qualify, the archaeologist will prepare a research design and archaeological data recovery plan to be implemented prior to or during site construction. The archaeologist shall also prepare a Less than Significant with Mitigation Incorporated Project Applicant/ Qualified Archaeologist /City During construction B-6 Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing written report of the finding, file it with the appropriate agency, and arrange for curation of recovered materials. Cultural Resources Mitigation Measure CUL-2: A discovery of a paleontological specimen during any phase of the project shall result in a work stoppage in the vicinity of the find until it can be evaluated by a professional paleontologist. Should loss or damage be detected, additional protective measures or further action (e.g., resource removal), as determined by a professional paleontologist, shall be implemented to mitigate the impact. Less than Significant with Mitigation Incorporated Project Applicant/ Qualified Paleontologist /City During construction Cultural Resources Mitigation Measure CUL-3: In the event that human remains are discovered during project construction, there shall be no further excavation or disturbance of the site or any nearby area reasonably suspected to overlie adjacent human remains. The county coroner shall be informed to evaluate the nature of the remains. If the remains are determined to be of Native American origin, the Lead Agency shall work with the Native American Heritage Commission and the applicant to develop an agreement for treating or disposing of the human remains. Less than Significant with Mitigation Incorporated Project Applicant/ CIty During construction Geology and Soils Mitigation Measure GEO-1: Project design and construction shall adhere to Title 18, Chapter 18.28 of the Burlingame Municipal Code, and demonstrate compliance with all design standards applicable to the Less than Significant with Mitigation Incorporated Project Applicant Project design, prior to issuance of building permit B-7 Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing California Building Code Zone 4 would ensure maximum practicable protection available to users of the buildings and associated infrastructure. Geology and Soils Mitigation Measure GEO-2: Project design and construction, including excavation activities, shall comply with Chapter 33 of the CBC, which specifies the safety requirement to be fulfilled for site work. This would include prevention of subsidence and pavement or foundations caused by dewatering. Less than Significant with Mitigation Incorporated Project Applicant Design and construction Geology and Soils Mitigation Measure GEO-3: The applicant shall prepare a monitoring program to determine the effects of construction on nearby improvements, including the monitoring of cracking and vertical movement of adjacent structures, and nearby streets, sidewalks, utilities, and other improvements. As necessary, inclinometers or other instrumentation shall be installed as part of the shoring system to closely monitor lateral movement. The program shall include a pre-condition survey including photographs and installation of monitoring points for existing site improvements. Less than Significant with Mitigation Incorporated Project Applicant Project design, prior to issuance of building permit Hazards and Hazardous Materials Mitigation Measure HAZ-1: The contractor shall comply with Title 8, California Code of Regulations/ Occupational Safety and Health Administration (OSHA) requirements that cover construction work where an employee may be exposed to lead. Less than Significant with Mitigation Incorporated Project Applicant/ Contractor During construction B-8 Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing This includes the proper removal and disposal of peeling paint, and appropriate sampling of painted building surfaces for lead prior to disturbance of the paint and disposal of the paint or painted materials. Hazards and Hazardous Materials Mitigation Measure HAZ-2: The applicant shall contract a Certified Asbestos Consultant to conduct an asbestos survey prior to disturbing potential asbestos containing building materials and following the Consultant’s recommendations for proper handling and disposal. Less than Significant with Mitigation Incorporated Project Applicant Project design, prior to issuance of a building permit Hazards and Hazardous Materials Mitigation Measure HAZ-3: Workers handling demolition and renovation activities at the project site will be trained in the safe handling and disposal of any containments with which they are handling or disposing of on the project site. Less than Significant with Mitigation Incorporated Project Applicant/ Contractor During construction Noise and Vibration Mitigation Measure NOI-1: The following measures, in addition to the best practices specified in Impact 3, shall be implemented to reduce vibration impacts from construction activities to a less-than-significant level:  For all construction proposed to be located within 20 feet of adjacent structures, a construction vibration-monitoring plan would need to be implemented to document conditions prior to, during and after vibration generating construction activities. All plan tasks shall be undertaken Less than Significant with Mitigation Incorporated Project Applicant/ Contractor During construction B-9 Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing under the direction of a licensed Professional Structural Engineer in the State of California and be in accordance with industry accepted standard methods. The construction vibration monitoring plan should be implemented to include the following tasks:  Perform a photo survey, elevation survey, and crack monitoring survey for each identified structure. Surveys shall be performed prior to any construction activity and after project completion and shall include internal and external crack monitoring in structures, settlement, and distress and shall document the condition of foundations, walls and other structural elements in the interior and exterior of said structures.  Designate a person responsible for registering and investigating claims of excessive vibration. The contact information of such person shall be clearly posted on the construction site.  Make appropriate repairs or compensation where damage has occurred as a result of construction activities.  The results of all vibration monitoring shall be summarized and submitted in a report shortly after substantial completion of B-10 Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing each phase identified in the project schedule. The report will include a description of measurement methods, equipment used, calibration certificates, and graphics as required to clearly identify vibration-monitoring locations. An explanation of all events that exceeded vibration limits will be included together with proper documentation supporting any such claims. Transportation and Traffic Mitigation Measure TRA-1: Prior to issuance of grading and building permits, the project applicant shall submit a Traffic Control Plan. The Traffic Control Plan would indicate how parking for construction workers would be provided during construction and ensure a safe flow of traffic in the project area during construction. The requirements within the Traffic Control Plan include, but are not limited to, the following: truck drivers would be notified of and required to use the most direct route between the site and U.S. 101, as determined by the City Engineering Department; all site ingress and egress would occur only at the main driveways to the project site; specifically designated travel routes for large vehicles would be monitored and controlled by flaggers for large construction vehicle ingress and egress; warning signs indicating frequent truck entry and exit would be posted on adjacent roadways if requested; and any debris Less than Significant with Mitigation Incorporated Project applicant Design phase, prior to issuance of a grading/ building permit B-11 Mitigation, Monitoring, and Reporting Program Environmental Factor Mitigation Measures Level of Environmental Impact Responsible Party Timing and mud on nearby streets caused by trucks would be monitored daily and may require instituting a street cleaning program. Transportation and Traffic Mitigation Measure TRA-2: On-street parking to the east and west of the outbound driveways on Bayswater Avenue shall be prohibited by painting red curb for a distance of approximately 20 feet on either side. Less than Significant with Mitigation Incorporated Project Applicant / CIty Before project operation B-12 MEMORANDUM To: Honorable Mayor and City Council Date: December 21, 2016 From: Syed Murtuza, Director of Public Works – (650) 558-7230 Subject: Vesting Tentative Subdivision Map for a Two Lot Subdivision, Lands of 1063 Bayswater LLC and 65 California Drive LLC. RECOMMENDATION Staff recommends that the City Council approve the proposed Vesting Tentative Subdivision Map for lot combination of six existing lots (Assessor’s Parcels 029-242-020, -030, -040, -050, and - 230) into two lots, subject to the following conditions: 1. Final parcel map for the two lot subdivision must be filed by the applicant within the two-year time period as allowed by the Subdivision Map Act and the City’s Subdivision Ordinance. 2. No developmental approvals are part of this mapping action. 3. All property corners shall be set in the field and be shown on the map. 4. The final parcel map shall show the widths of the right-of-way for California Drive, Bayswater Avenue and Highland Avenue including the centerlines of right-of-way, bearings and distances of centerline and any existing monuments in the roadway. 5. All new frontage improvements including but not limited to sidewalk, driveway, curb and gutter must be approved by the Public Works Department and installed by the development. BACKGROUND On December 12, 2016, the Planning Commission recommended the City Council approval of the vesting tentative subdivision map with the above listed conditions. Exhibit: • Vesting Tentative Subdivision Map civil engineers and surveyors ROSENBLUM, INC. 1630 Oakland Road, Suite A114, San Jose, CA 95131 www.uandr.com UNDERWOOD& (408) 453-1222 DATE: 02-16-2016PROJECT : J15066 civil engineers and surveyors ROSENBLUM, INC. 1630 Oakland Road, Suite A114, San Jose, CA 95131 www.uandr.com UNDERWOOD& (408) 453-1222 DATE: 09-30-2016PROJECT : J15066 civil engineers and surveyors ROSENBLUM, INC. 1630 Oakland Road, Suite A114, San Jose, CA 95131 www.uandr.com UNDERWOOD& (408) 453-1222 DATE: 02-16-2016PROJECT : J15066 1 STAFF REPORT AGENDA ITEM NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: William Meeker, Community Development Director – (650) 558-7255 Subject: Public Hearing and Introduction of an Ordinance of the City Council of the City of Burlingame, Amending Title 21 – Historic Resource Preservation of the Burlingame Municipal Code by Adding Provisions Defining “Adaptive Re-Use” and Outlining Procedures for Granting Approval of a Conditional Use Permit for Adaptive Re-Use of Historic Resources within the City of Burlingame RECOMMENDATION The City Council should: 1. Request that the City Clerk read the title of the following ordinance: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BURLINGAME, AMENDING TITLE 21 – HISTORIC RESOURCE PRESERVATION OF THE BURLINGAME MUNICIPAL CODE BY ADDING PROVISIONS DEFINING “ADAPTIVE RE-USE” AND OUTLINING PROCEDURES FOR GRANTING APPROVAL OF A CONDITIONAL USE PERMIT FOR ADAPTIVE RE-USE OF HISTORIC RESOURCES WITHIN THE CITY OF BURLINGAME 2. By motion, waive further reading and introduce the proposed ordinance. 3. Conduct a public hearing on the proposed ordinance. 4. Following closure of the public hearing, discuss the proposed ordinance and determine whether to bring it back for adoption at a future meeting. 5. Direct the City Clerk to publish a summary of the ordinance at least five days before proposed adoption. If introduced, the ordinance, along with a resolution verifying that the actions of the City Council are in compliance with the provisions of the California Environmental Quality Act (CEQA), will be presented for adoption at the January 17, 2017 regular meeting of the City Council. Amendment to Title 21 – Adaptive Re-Use January 3, 2017 2 BACKGROUND On June 16, 2014, the City Council adopted Ordinance 1899 adding Title 21 – Historic Resource Preservation to the Burlingame Municipal Code. As adopted, the ordinance establishes a historic preservation program applicable to any property deemed historic (with consent of the property owner) within the geographic area of the city covered by the Burlingame Downtown Specific Plan. The program establishes a series of incentives available to owners of historic properties to encourage the preservation of designated structures. To date, no property owner has taken advantage of the program. DISCUSSION Available Incentives for Designated Properties: Once designated as historic resources, properties listed on the local, State or Federal register of historic properties are eligible for the following incentives:  Mills Act Contract  Federal Historic Preservation Tax Incentives  Use of the California Historic Building Code  Historic Variances  Fee Reduction The following is a brief overview of the benefits of each incentive: Mills Act Contract: Property taxes (exclusive of any special assessments) for a designated property are recalculated based upon a revised valuation that is based upon the annual net income potential of the property as a rental property. A capitalization rate of roughly 13.75% is applied to the net income of the property. Typically the property tax reduction realized through the Mills Act Program may be anywhere from 40% to 70%, dependent upon local economic conditions. In Burlingame, the property tax for a property valued at $1.1 million, with an annual general property tax levy of $11,000, would be reduced to roughly $3,818 per year. Since the City receives 17% of the property tax levy, the revenue to the City would be reduced from $1,870 to $649 based upon this example. Federal Historic Preservation Tax Incentives: Federal Historic Preservation Tax Incentives are available to owners of designated historic resources. A 20% tax credit for rehabilitation of designated structures is available to property owners. Further, a 10% tax credit for rehabilitation of non-historic, non-residential structures built prior to 1936 is also available to non-designated properties meeting this criterion. The incentive is a “tax credit” not a “tax reduction”; there is a one-to-one dollar reduction in taxes paid by qualifying individuals. California Historic Building Code: Greater flexibility granted in construction to permit sensitive solutions to meeting the intent of building codes in a manner that does not negatively impact the character-defining features of the historic resource. Amendment to Title 21 – Adaptive Re-Use January 3, 2017 3 Historic Variances: Title 21 contains a provision that permits owners of designated historic resources to apply for historic variances in order to provide flexibility in application of development standards so that character defining aspects of the structure may be maintained when erecting additions to these properties. This section permits the Planning Commission to consider the historic status of the property as a factor that denies a property owner of pr ivileges enjoyed by other property owners in the vicinity and within the same zoning district. Fee Reduction: Owners of designated historic properties may receive a 25% reduction in any fees applicable to requests for entitlement requests and for building permits for approved additions to the historic resource. Adaptive Reuse as an Additional Incentive: As is frequently the case with historic resources, the purpose for which a structure was initially built may not be one that is appropriate or desirable in the present contemporary setting based upon current zoning regulations (e.g. a warehouse situated within what is now a pedestrian- oriented commercial area). Further, conversion of such a structure to a use that would be permitted under current zoning regulations can often result in the need for modifications to the property that negatively impact those character-defining features that supported designation as a historic resource (at least in those instances where architectural character is the basis for designation). Adaptive re-use of historically significant properties is an accepted means of ensuring preservation of a structure while permitting an economically viable use of the property with minimal, if any, impact upon its historic character. Adaptive Reuse Procedure: For purposes of the amendment to Title 21 – Historic Resource Preservation, “Adaptive Reuse” is defined as “repurposing a designated historic resource for different uses or functions than those for which it was originally designed while retaining the original historic features of the resource”. The basic structure of the process for granting approval of Adaptive Reuse is identical to that used for all requests for Conditional Use Permits, requiring that the Planning Commission adopt the following findings as they relate to an application before it, and as stated in Chapter 25.52 (Conditional Use Permits) of Title 25 of the Burlingame Municipal Code (Zoning Regulations):  The proposed use, at the proposed location, will not be detrimental or injurious to property or improvements in the vicinity and will not be detrimental to the public health, safety, general welfare or convenience;  The proposed use will be located and conducted in a manner in accord with the Burlingame general plan and the purposes of this title; and  The planning commission may impose such reasonable conditions or restrictions as it deems necessary to secure the purposes of this title and to assure operation of the use in a manner compatible with the aesthetics, mass, bulk and character of existing and potential uses on adjoining properties in the general vicinity. Amendment to Title 21 – Adaptive Re-Use January 3, 2017 4 Additional Findings Specific to Adaptive Reuse: In order to ensure that the purpose of the Adaptive Reuse incentive is met, the following additional findings would be required when granting a Conditional Use Permit for Adaptive Reuse of an historic resource:  Use of the property for a purpose other than that for which it was originally designed, and in a manner that would not normally be permitted within the zoning district in which the resource is situated, is necessary in order to enhance the economic viability of retaining the resource and its notable characteristics in a manner that ensures the continued maintenance of the resource; and  Any alterations to the resource that are necessary to accommodate the adaptive re-use of the resource shall be designed and completed in a manner consistent with the Secretary of Interior Standards for Rehabilitation, and shall be subject to any discretionary approvals required pursuant to Title 25 of the Burlingame Municipal Code (Zoning Ordinance). Relationship to Other Entitlements that May be Required to Accommodate a Use: In some instances it may be necessary for a property owner or tenant requesting approval of a Conditional Use Permit for Adaptive Reuse of an historic property to physically modify the structure in order to accommodate the proposed use, triggering an application for Commercial Design Review. If this occurs, modifications to the structure must be made in a manner consistent with the Secretary of Interior Standards for Rehabilitation, which will ensure that any changes maintain the historic character of the structure and modifications are implemented in a sensitive and compatible manner with this character. Planning Commission Review: The Planning Commission conducted a public hearing and considered the proposed amendment at its meeting of November 14, 2016, and recommended adoption by the City Council with one modification: Section 21.04.120(4)(B) was revised from reading “Any alterations to the resource that are necessary to accommodate the adaptive re-use…” to “Any alterations to the resource that will promote the adaptive re-use…” FISCAL IMPACT None. Exhibits:  Ordinance  November 14, 2016 Planning Commission Minutes ORDINANCE NO. __________ 1 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BURLINGAME, AMENDING TITLE 21 – HISTORIC RESOURCE PRESERVATION OF THE BURLINGAME MUNICIPAL CODE BY ADDING PROVISIONS DEFINING “ADAPTIVE RE-USE” AND OUTLINING PROCEDURES FOR GRANTING APPROVAL OF A CONDITIONAL USE PERMIT FOR ADAPTIVE RE-USE OF HISTORIC RESOURCES WITHIN THE CITY OF BURLINGAME The City Council of the City of Burlingame hereby ordains as follows: Division 1. Factual Background WHEREAS, on June 16, 2014 the City Council adopted Ordinance 1899 adding Title 21 – Historic Resource Preservation to the Burlingame Municipal Code. As adopted, the ordinance establishes an historic preservation program applicable to any property deemed historic (with consent of the property owner) within the geographic area of the City covered by the Burlingame Downtown Specific Plan; and WHEREAS, once designated as historic resources, properties listed on the local, State or Federal register of historic properties are eligible for the following incentives: Mills Act Contract, Federal Historic Preservation Tax Incentives, Use of the California Historic Building Code, Historic Variances, and Fee Reduction; and WHEREAS, to date, no property owners have come forward to voluntarily request designation of their property as an historic resource, nor have any of the existing incentives for historic properties been utilized; and WHEREAS, it is frequently the case with historic resources that the purpose for which a structure was initially built may not be one that is appropriate or desirable in the present contemporary setting based upon current zoning regulations (e.g. a warehouse situated within what is now an pedestrian-oriented commercial area); and WHEREAS, “Adaptive Reuse” of historic resources is an accepted means of repurposing such a property for different uses or functions than those for which it was originally designed while retaining the original historic features of the resource; and WHEREAS, on November 14, 2016, the Burlingame Planning Commission considered an amendment to Title 21 – Historic Resource Preservation of the Burlingame Municipal Code that adds “Adaptive Reuse” as an incentive for preservation of historic resources, and outlines the procedure (Conditional Use Permit) for property owners to seek approval of adaptive reuse of their historic resource. Following a duly noticed public hearing on that date, and after considering all oral and written public testimony regarding the proposed amendment, the Commission moved to recommend that the City Council adopt the proposed amendment; and ORDINANCE NO. __________ 2 WHEREAS, on January 3, 2017 the Burlingame City Council introduced the proposed ordinance amending Title 21 – Historic Resource Preservation by title only, waiving further reading, and conducted a duly noticed public hearing; considered the Planning Commission’s recommendation, and all written and oral testimony from the public regarding the proposed amendment and, following conclusion of the public hearing, directed that the proposed ordinance be placed on the January 17, 2017 City Council agenda for adoption. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURLINGAME DOES ORDAIN AS FOLLOWS: Division 2. The Burlingame Municipal Code, Title 21 – Historic Resource Preservation is amended as follows: Section 21.04.020 Definitions shall be amended to read as follows: (a) “Adaptive Reuse” means repurposing a designated historic resource for different uses or functions than those for which it was originally designed while retaining the original historic features of the resource. (b) “Alteration” means any change or modification, through public or private action, to the character-defining or significant exterior physical features of properties affected by this title. Such changes may be changes to or modification of structure, architectural details, or visual characteristics, grading, surface paving, the addition of new structures, and the placement or removal of any significant objects such as signs, plaques, light fixtures, street furniture, walls, fences, steps, plantings, and landscape accessories affecting the significant visual and/or historical qualities of the property. (c) “Demolition” means any act or process that destroys in part or in whole an historic resource. (d) “Designated Historic Resource” means a parcel or part thereof on which an historic resource is situated and any abutting parcel or part thereof constituting part of the premises on which the historic resource is situated, and which has been designated an historic resource in the Burlingame Historic Register, California Register of Historic Places and/or National Register of Historic Places. (e) “Historic Resource” means improvements, buildings, structures, signs, or other objects of scientific, aesthetic, educational, cultural, architectural, or historical significance to the owner, citizens of the City and the State of California, the Bay Area region, or the nation which may be eligible for local designation for historic preservation by the City pursuant to the provisions of this title. An historic resource is either included in the Register or may be added in accordance with Section 21.04.080. ORDINANCE NO. __________ 3 (f) “Improvement” means any building, structure, , fence, gate, landscaping, tree, wall, parking facility, work of art, or other object constituting a physical feature of real property, or any part of such feature. (g) “Inventory” refers to the October 6, 2008 Inventory of Historic Resources – Burlingame Downtown Specific Plan which identifies resources in the City which may be considered historical. Owners of property which were included in the Inventory are eligible to apply to be included on the Burlingame Historic Register. (h) “Ordinary Maintenance and Repair” means any work, for which a building permit is not required by law, where the purpose and effect of such work is to correct any deterioration of or damage to a structure or any part thereof and to restore the same to its condition prior to the occurrence of such deterioration or damage. (i) “Preservation” means the identification, study, protection, restoration, or acquisition of historic resources. (j) “Register” refers to the Burlingame Historic Register. Inclusion on the Register results from submittal of an application to the Community Development Department by the property owner, with exception of the two structures and one tree grove in the City which are listed on the California Register of Historic Places and/or National Register of Historic Places, as referenced in Section 21.40.040 of this Title. (k) “Secretary of the Interior Standards for Rehabilitation” means the standards promulgated by the National Park Service that provide guidance for the preservation, rehabilitation, restoration and reconstruction of historic properties. (l) “Significant Feature” means the natural or man-made elements embodying style or type of historic resource, design, or general arrangement and components of an improvement, including but not limited to, the kind, color, and texture of the building materials, and the type and style of all windows, doors, lights, signs, and other fixtures appurtenant to such improvement. 21.04.120 Preservation Incentives shall be amended to read as follows: (a) The Commission is authorized to develop and implement preservation incentive programs that are consistent with this Chapter. Incentives shall be made available for properties listed on the Register that undergo maintenance or alteration consistent with the Secretary of the Interior Standards for Rehabilitation. (1) State Historic Building Code. The Building Official is authorized to use and shall use the California State Historic Building Code (SHBC) for projects involving designated historic resources. The SHBC provides alternative building regulations for the rehabilitation, preservation, restoration, or relocation of ORDINANCE NO. __________ 4 structures designated as historic resources. The SHBC shall be used for any designated historic resource in the City’s building permit procedure. (2) Fee Reduction. Any permit fees for minor or major exterior modifications to historic resources done in accordance with the Secretary of the Interior Standards for Rehabilitation shall be reduced by 25% provided that the work is consistent with the historic criteria under which the property was designated an historic resource. (3) Development Standard Flexibility. (A) Parking Standards. i. Additional floor area may be added to existing single-family residences that are nonconforming due to substandard parking without providing parking according to current standards, provided that the aggregate of all additional floor area constructed following the date of designation of the structure as a historic resource does not exceed 50% of the floor area existing as of the date of designation as a resource. For multiple-family developed properties, adding units in accordance with existing zoning standards shall not require the property owner to bring existing nonconforming parking into compliance with current parking requirements, though code-required parking shall be provided for any new units created. ii. Designated historic commercial structures may add up to an aggregate of 15 percent of the existing floor area as of the date of designation of the property as a historic resource, not to exceed 500 square feet, without providing additional parking and without bringing any existing nonconformity into compliance with the current zoning regulations, subject to review and approval by the Commission. The addition must be removed or otherwise approved under governing procedures if the historic building is demolished. (B) Historic Variances. i. Owners of designated properties may apply for variances from development standards applicable to the property in instances where the deviation from the standard is warranted in order to preserve the historic character of the property. The property’s status as a designated historic resource may be used as a basis for determining whether the property owner is denied privileges ORDINANCE NO. __________ 5 enjoyed by other property owners in the vicinity and within the same zoning district. The procedure for requesting approval of an historic variance shall be the same as that required for other forms of variances, as specified in Title 25 of the Burlingame Municipal Code (Zoning Ordinance). (4) Adaptive Reuse. Owners of designated properties may apply for a conditional use permit for any use that is not ordinarily permitted, or conditionally permitted, within the zoning district in which the designated resource is situated, pursuant to the purpose, findings and conditions expressed in Chapter 25.52 Conditional Use Permits of Title 25 of the Burlingame Municipal Code (Zoning Ordinance), and the following additional findings: (A) Use of the property for a purpose other than that for which it was originally designed, and in a manner that would not normally be permitted within the zoning district in which the resource is situated, is necessary in order to enhance the economic viability of retaining the resource and its notable characteristics in a manner that ensures the continued maintenance of the resource; and (B) Any alterations to the resource that will promote the adaptive re-use of the resource shall be designed and completed in a manner consistent with the Secretary of Interior Standards for Rehabilitation, and shall be subject to any discretionary approvals required pursuant to Title 25 of the Burlingame Municipal Code (Zoning Ordinance). (5) Mills Act Contracts. (A) Mills Act contracts granting property tax relief shall be made available by the City of Burlingame only to owners of properties listed in the Burlingame Historic Resources Register, as well as properties located within the City of Burlingame that are listed in the National Register of Historic Places and/or the California Register of Historical Places. Properties that have been previously listed on the above-mentioned register(s), but that have been removed from the register(s) and are no longer listed, shall not be eligible for a Mills Act contract with the City. (B) Mills Act contracts shall be made available pursuant to California law. The Community Development Department shall make available appropriate Mills Act application materials. The Mills Act application may be processed concurrently with the Historic Resource Application. (C) Mills Act contract applications shall be made to the Community Development Director or his/her designee, who shall within 30 days of ORDINANCE NO. __________ 6 receipt of a completed application, prepare and make recommendations on the contents of the contract for consideration by the City Council. A fee for the application will be required consistent the City’s adopted fee schedule, to cover all or portions of the costs of the preparation of the contract or an amount set by City Council Resolution may be charged. (D) The City Council shall, in public hearing, resolve to approve, approve with conditions, or deny the proposed contract. Failure to pass a motion approving the application shall be deemed a denial. Should the City Council fail to act on the proposed contract within one year of its receipt of the proposal, the proposal shall be deemed denied. (E) A Mills Act contract application that has failed to be approved by the City Council cannot be resubmitted for one year from the date of City Council action, or where the Council fails to take action, within one year from the date that the application is deemed denied pursuant to (4) above. (6) Preservation Easements. Preservation easements on the facades of buildings designated as an historic resource may be acquired by the City or nonprofit group through purchase, donation, or documentation pursuant to California Civil Code 815. (7) Official Recognition/Awards. The Commission, on an annual basis, may recognize those projects involving designated historic resources that have demonstrated a high level of commitment to maintaining or restoring the historic integrity of the resource. The Community Development Department may nominate all projects implemented within a calendar year for award consideration by the Commission. Division 3. This ordinance, or a summary as applicable, shall be published as required by law and shall become effective 30-days thereafter. ____________________________________ Ricardo Ortiz, Mayor I, Meaghan Hassel-Shearer, City Clerk of the City of Burlingame, do hereby certify that the foregoing ordinance was introduced at a regular meeting of the City Council held on the 3rd day of January 2017, and adopted thereafter at a regular meeting of the City Council held on the 17th day of January 2017, by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ORDINANCE NO. __________ 7 ABSENT: COUNCILMEMBERS: ___________________________________ Meaghan Hassel-Shearer, City Clerk BURLINGAME CITY HALL 501 PRIMROSE ROAD BURLINGAME, CA 94010 City of Burlingame Meeting Minutes - Draft Planning Commission 7:00 PM Council ChambersMonday, November 14, 2016 c.Consideration of a Proposed Amendment to Title 21 – Historic Resource Preservation of the Burlingame Municipal Code adding Procedures for Granting Approval of Conditional Use Permits for Adaptive Reuse of Historic Properties Staff Report Ordinance - Adaptive Reuse Attachments: Commissioner Gaul was recused as he owns a property that would be subject to the ordinance. Planning Manager Gardiner provided an overview of the staff report. Questions of staff: >Does this apply to any work being done on a historic building? Minor vs. major work? (Gardiner: The amendments are related to the use of the building, as opposed to how the physical resource itself is utilized. For example, an office use be allowed on the ground floor of a historic building where office would not be allowed otherwise. The physical aspect of the project would still be subject to design review.) Chair Loftis opened the public hearing. Public comments: None. Chair Loftis closed the public hearing. Commission discussion: >Allows for additional historic preservation options for any property listed in the inventory that might not be viable in its current state. This could help make an historic adaptation viable. >Well-written document. Makes a lot of sense. >Concern with the word "necessary" on page 3 of the staff report in that it is not defined and could be abused. It might encourage another use that would not be desirable, even if a conforming use were viable. (Kane: Could say "promote" the economic viability of retaining the economic resource. It would not be an all-or-nothing criterion, and would preserve the commission's flexibility to determine whether it is the kind of promotion of economic viability it would want to support. It is a finding that would need to be made.) Commissioner Gum made a motion, seconded by Commissioner Terrones, to recommend approval to the City Council with the following change: >Change the word "necessary" to "promote" in Section 21.04.120(4)(B). The motion carried by the following vote: Aye:DeMartini, Loftis, Gum, and Terrones4 - Page 1City of Burlingame Printed on 12/15/2016 November 14, 2016Planning Commission Meeting Minutes - Draft Absent:Bandrapalli, and Sargent2 - Recused:Gaul1 - Page 2City of Burlingame Printed on 12/15/2016 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Syed Murtuza, Director of Public Works – (650) 558-7230 Kathleen Kane, City Attorney – (650) 558-7204 Subject: Introduction of an Ordinance Amending Chapter 13.36.040 of the Burlingame Municipal Code to Revise and Establish a ‘Two-Hour Parking’ Restriction from 2:00 P.M. to 6:00 P.M., Monday Through Friday, on Carolan Avenue from North Lane to Oak Grove Avenue RECOMMENDATION Staff recommends that the City Council hold a Public Hearing to introduce the attached ordinance amending Chapter 13.36.040 of the Burlingame Municipal Code to establish a ‘‘Two-Hour’ parking restriction from 2:00 P.M. to 6:00 P.M., Monday Through Friday, along both sides of Carolan Avenue from North Lane to Oak Grove Avenue, by: 1. Requesting that the City Clerk read the title of the attached ordinance. 2. By motion, waiving further reading and introducing the proposed ordinance. 3. Conducting a public hearing on the proposed ordinance. 4. Discussing the proposed ordinance and determining whether to bring it back for second reading and adoption. 5. Directing the City Clerk to publish a summary of the ordinance at least five days before proposed adoption. BACKGROUND Carolan Avenue between Oak Grove Avenue and North Lane is a two-lane roadway with on- street parking on both sides of the street. Currently, there is a two-hour parking restriction on the west side of the street, from 8:00 a.m. to 6:00 p.m., Monday through Friday; and no parking restriction on the east side of the street. The current parking restriction was initially set to be a deterrent for long-term parking by commuters and downtown employees. Historically, the on- street parking in this area has been primarily used by Burlingame High School students. Recently, a high school student and school staff member requested changes be made to the two- hour parking restriction to allow for more accessibility to students. During a review of the parking conditions, signage, and enforcement practice, it was discovered that although current enforcement practice for this location was favorable to student parking, it was not consistent with the signage. Ordinance Introduction for Amending Two-Hour January 3, 2017 Parking Restriction along Carolan Avenue 2 DISCUSSION Staff reviewed the current signage and parking conditions, and met with school officials to try to better understand and address their concerns. After a comprehensive review of available options, staff initially identified a permit parking program to address the matter. The matter was discussed by the Traffic Safety and Parking Commission (TSPC) at their October 13, 2016, and November 10, 2016 meetings. At both meetings Police Chief Eric Wollman appeared before the commission and answered their questions. After the October TSPC meeting and based on the discussion by the commission, it became evident that this option would require significant staffing resources and create logistical issues to manage a permit program. These concerns included the number of permits issued, potential cost to students, permit abuse, and whether the school or the City should issue the permits. In order to more effectively address the problem, both Police and Public Works staff believe that changing the on-street parking restriction to 2:00 p.m. to 6:00 p.m. would address the needs expressed by the students and school staff while being consistent and fair in terms of enforcing the parking restrictions. Additionally, this restriction would also be applied to the east side of Carolan Avenue to simplify the restriction limits for both the public and the enforcement staff. At the November 10, 2016 meeting, the TSPC discussed the matter for the secon d time and unanimously supported the recommendation to the City Council. Based on engineering analysis, public input, and recommendation from the TSPC, staff is requesting that the City Council introduce the attached ordinance to revise the two-hour parking restriction along Carolan Avenue. The proposed change would allow the students to continue to park on-street during school session and after school activities without fear of getting a parking citation, while acting as a deterrent for employees and commuters trying to park along this section of Carolan Avenue. After the implementation, staff will continue monitoring the parking conditions, and may propose additional changes as deemed necessary. FISCAL IMPACT There will be minimal costs associated with making and installing parking restriction signage, which will be absorbed within the Public Works Department’s operation budget. Exhibits:  Ordinance  Draft Revised Chapter 13.36.040 of the Burlingame Municipal Code  TSPC Staff Report dated October 13, 2016  TSPC Presentations dated November 10, 2016  Location Map ORDINANCE NO. ____ AN ORDINANCE OF THE CITY OF BURLINGAME AMENDING CHAPTER 13.36.040 OF THE BURLINGAME MUNICIPAL CODE TO REVISE AND ESTABLISH A ‘TWO-HOUR PARKING’ RESTRICTION FROM 2:00 P.M. TO 6:00 P.M., MONDAY THROUGH FRIDAY, ALONG CAROLAN AVENUE BETWEEN OAK GROVE AVENUE AND NORTH LANE The CITY COUNCIL of the CITY OF BURLINGAME does hereby ordain as follows: Section 1. Factual Background and Findings. WHEREAS, the City has received requests from Burlingame High School staff and students who park along Carolan Avenue regarding the limitations to the two-hour parking restrictions on the west side of the street; and WHEREAS, the east side of Carolan Avenue, between Oak Grove Avenue and North Lane, currently has no parking restrictions; WHEREAS, the west side of Carolan Avenue, between Oak Grove Avenue and North Lane, currently has a two-hour parking restriction, 8:00 a.m. to 6:00 p.m., Monday through Friday; and WHEREAS, the Public Works and Police Departments reviewed the current parking restrictions and determined that a revision to the parking restriction along Carolan Avenue, between Oak Grove Avenue and North Lane, would address the parking concerns of the Burlingame High School students and staff; and WHEREAS, on October 13, 2016, and on November 10, 2016, the Traffic Safety and Parking Commission (TSPC) discussed this matter; and at the conclusion of the November meeting, the TSPC unanimously recommended the revision of the on-street parking restriction from 2:00 p.m. to 6:00 p.m., Monday through Friday, along both sides of the above mentioned section of Carolan Avenue. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURLINGAME DOES ORDAIN AS FOLLOWS: Section 2. The City Council hereby amends ‘Chapter 13.36.040 Two-hour parking’ of the Burlingame Municipal Code as follows: Section (9) of Chapter 13.36.040 shall be amended to read as follows: “Carolan Avenue, east side, from one hundred (100) feet northerly of Toyon Drive to four hundred sixty (460) feet northerly of Toyon Drive; and east side, from Cadillac Way to Broadway” Sub-Chapter (c), Section (1) of Chapter 13.36.040 shall be added to read as follows: (c) 2:00 p.m. to 6:00 p.m.: (1) “Carolan Avenue, from Oak Grove Avenue to North Lane” Section 3. The Public Works Director is hereby directed to install required parking signs and to take all other necessary actions to amend this parking restriction along Carolan Avenue, between Oak Grove Avenue and North Lane. Section 4. The City Clerk is directed to publish this ordinance in the manner required by law. _________________________________ Ricardo Ortiz, Mayor I, Meaghan Hassel-Shearer, City Clerk of the City of Burlingame, do hereby certify that the foregoing ordinance was introduced at a public hearing conducted at a regular meeting of the City Council held on the 3rd day of January, 2017, and adopted thereafter at a regular meeting of the City Council held on the 17th day of January, 2017, by the following vote: AYES: Councilmembers: NOES: Councilmembers: ABSENT: Councilmembers: __________________________________ Meaghan Hassel-Shearer, City Clerk DRAFT REVISED CHAPTER 13.36.040 OF THE BURLINGAME CODE (WITH EDITS) 13.36.040 Two-hour parking. It is unlawful for the driver of any vehicle to park such vehicle, unless elsewhere in this title otherwise provided, for a longer period than two (2) hours between the hours designated any day, excepting Sundays and holidays, upon any part of the following streets, or portions of streets: (a) 8:00 a.m. to 6:00 p.m.: (1) Adrian Road, west side, one hundred fifty-five (155) feet southerly from the southeast end of the curb return of David Road; (2) Anita Road, west side, from Peninsula Avenue one hundred and forty-five (145) feet north toward Bayswater Avenue; (3) Bayswater Avenue from El Camino Real to Park Road; south side, from California Drive to the Southern Pacific Railroad right-of-way; (4) Bellevue Avenue, except the south side from Primrose Road to Almer Road; (5) Burlingame Avenue, from Myrtle to Carolan Avenue; south side from Occidental to El Camino Real; (6) California Drive, west side, from Carmelita Avenue to Palm Drive; from Burlingame Avenue to Peninsula Avenue; from Oak Grove Avenue four hundred (400) feet northwards to 755 California Drive, except areas designated for thirty (30) minute parking; (7) Capuchino Avenue from four hundred (400) feet southerly of the centerline of Broadway to Lincoln Avenue; (8) Carmelita Avenue, south side, from El Camino Real to Chula Vista Avenue; (9) Carolan Avenue, west side, from Oak Grove Avenue to Burlingame Avenue; east side, from one hundred (100) feet northerly of Toyon Drive to four hundred sixty (460) feet northerly of Toyon Drive; and east side, from Cadillac Way to Broadway; (10) Chapin Avenue, from Chapin Lane to El Camino Real; (11) Chula Vista Avenue from the centerline of Broadway to four hundred ten feet (410) southerly of the centerline of Broadway; (12) Douglas Avenue; (13) East Lane, east side, from Burlingame Avenue to Howard Avenue; (14) El Camino Real service road between Dufferin Avenue and Murchison Drive; (15) Howard Avenue, south side, from Crescent Avenue to El Camino Real and from California Drive to the Southern Pacific Railroad right -of-way; (16) Laguna Avenue from two hundred eighty feet (280) southerly to five hundred ten (510) feet northerly of the centerline of Broa dway; (17) Lorton Avenue, west side, from Bayswater Avenue to Howard Avenue; east side, from Howard Avenue one hundred twenty (120) feet south toward Bayswater and forty (40) feet north toward Burlingame Avenue; (18) Magnolia, west side, from Trousdale Drive to Plaza Lane; (19) North Carolan Avenue with three (3) parking spaces along the lot front of 1361 North Carolan Avenue; (20) Occidental Avenue, from El Camino Real to Ralston Avenue; (21) Paloma Avenue from three hundred ten (310) feet southerly of the centerline of Broadway to Lincoln Avenue; (22) Park Road, except the west side, from Howard Avenue to Bayswater Avenue; (23) Primrose Road, west side, from Howard Avenue to El Camino Real; (24) Ralston Avenue, from Occidental Avenue to El Camino Real; (25) Rollins Road from ninety (90) feet northerly of Toyon Drive to four hundred sixty (460) feet northerly of Toyon Drive; (26) South Lane, both sides; (27) Trousdale Drive, north side, from the curb return of Trousdale Drive and California Drive to ninety (90) feet west of said curb return; (28) Trousdale Drive, south side, from the curb return of Marco Polo Way to forty (40) feet east of said curb return; (29) Marco Polo Way, east side, from the curb return of Trousdale Drive to forty (40) feet south of said curb return; (30) Crescent Avenue, both sides, from the curb return of Ralston Avenue to the curb return of Howard Avenue; (31) 1600 block of Howard Avenue, both sides, from the curb return of Crescent Avenue to the curb return of Occidental Avenue; (32) Newlands Avenue, both sides; (33) Cypress Avenue, both sides, from El Camino Real to twenty (20) feet southerly of the centerline of Central Avenue (between the addresses of 1500 and 5141); (34) Carol Avenue, both sides, from El Camino Real to Barroilhet Avenue; and (35) East Carol Avenue, both sides, from Carol Avenue to Barroilhet Avenue. (b) 9:00 a.m. and 4:00 p.m.: (1) Carmelita Avenue, north side, between Chula Vista Avenue and El Camino Real; (2) Magnolia Avenue, east side, from three hundred (300) feet north of the center line of Trousdale Drive to Murchison Drive; (c) 2:00 p.m. and 6:00 p.m.: (1) Carolan Avenue, between Oak Grove Avenue and North Lane. DRAFT REVISED CHAPTER 13.36.040 OF THE BURLINGAME CODE 13.36.040 Two-hour parking. It is unlawful for the driver of any vehicle to park such vehicle, unless elsewhere in this title otherwise provided, for a longer period than two (2) hours between the hours designated any day, excepting Sundays and holidays, upon any part of the following streets, or portions of streets: (a) 8:00 a.m. to 6:00 p.m.: (1) Adrian Road, west side, one hundred fifty-five (155) feet southerly from the southeast end of the curb return of David Road; (2) Anita Road, west side, from Peninsula Avenue one hundred and forty-five (145) feet north toward Bayswater Avenue; (3) Bayswater Avenue from El Camino Real to Park Road; south side, from California Drive to the Southern Pacific Railroad right-of-way; (4) Bellevue Avenue, except the south side from Primrose Road to Almer Road; (5) Burlingame Avenue, from Myrtle to Carolan Avenue; south side from Occidental to El Camino Real; (6) California Drive, west side, from Carmelita Avenue to Palm Drive; from Burlingame Avenue to Peninsula Avenue; from Oak Grove Avenue four hundred (400) feet northwards to 755 California Drive, except areas designated for thirty (30) minute parking; (7) Capuchino Avenue from four hundred (400) feet southerly of the centerline of Broadway to Lincoln Avenue; (8) Carmelita Avenue, south side, from El Camino Real to Chula Vista Avenue; (9) Carolan Avenue, from one hundred (100) feet northerly of Toyon Drive to four hundred sixty (460) feet northerly of Toyon Drive; and east side, from Cadillac Way to Broadway; (10) Chapin Avenue, from Chapin Lane to El Camino Real; (11) Chula Vista Avenue from the centerline of Broadway to four hundred ten feet (410) southerly of the centerline of Broadway; (12) Douglas Avenue; (13) East Lane, east side, from Burlingame Avenue to Howard Avenue; (14) El Camino Real service road between Dufferin Avenue and Murchison Drive; (15) Howard Avenue, south side, from Crescent Avenue to El Camino Real and from California Drive to the Southern Pacific Railroad right -of-way; (16) Laguna Avenue from two hundred eighty feet (280) southerly to five hundred ten (510) feet northerly of the centerline of Broadway; (17) Lorton Avenue, west side, from Bayswater Avenue to Howard Avenue; east side, from Howard Avenue one hundred twenty (120) feet south toward Bayswater and forty (40) feet north toward Burlingame Avenue; (18) Magnolia, west side, from Trousdale Drive to Plaza Lane; (19) North Carolan Avenue with three (3) parking spaces along the lot front of 1361 North Carolan Avenue; (20) Occidental Avenue, from El Camino Real to Ralston Avenue; (21) Paloma Avenue from three hundred ten (310) feet southerly of the centerline of Broadway to Lincoln Avenue; (22) Park Road, except the west side, from Howard Avenue to Bayswater Avenue; (23) Primrose Road, west side, from Howard Avenue to El Camino Real; (24) Ralston Avenue, from Occidental Avenue to El Camino Real; (25) Rollins Road from ninety (90) feet northerly of Toyon Drive to four hundred sixty (460) feet northerly of Toyon Drive; (26) South Lane, both sides; (27) Trousdale Drive, north side, from the curb return of Trousdale Drive and California Drive to ninety (90) feet west of said curb return; (28) Trousdale Drive, south side, from the curb return of Marco Polo Way to forty (40) feet east of said curb return; (29) Marco Polo Way, east side, from the curb return of Trousdale Drive to forty (40) feet south of said curb return; (30) Crescent Avenue, both sides, from the curb return of Ralston Avenue to the curb return of Howard Avenue; (31) 1600 block of Howard Avenue, both sides, from the curb return of Crescent Avenue to the curb return of Occidental Avenue; (32) Newlands Avenue, both sides; (33) Cypress Avenue, both sides, from El Camino Real to twenty (20) feet southerly of the centerline of Central Avenue (between the addresses of 1500 and 5141); (34) Carol Avenue, both sides, from El Camino Real to Barroilhet Avenue; and (35) East Carol Avenue, both sides, from Carol Avenue to Barroilhet Avenue. (b) 9:00 a.m. and 4:00 p.m.: (1) Carmelita Avenue, north side, between Chula Vista Avenue and El Camino Real; (2) Magnolia Avenue, east side, from three hundred (300) feet north of the center line of Trousdale Drive to Murchison Drive; (c) 2:00 p.m. and 6:00 p.m.: (1) Carolan Avenue, between Oak Grove Avenue and North Lane. 1 STAFF REPORT AGENDA NO: MEETING DATE: October 13, 2016 To: Traffic Safety & Parking Commission Date: October 13, 2016 From: Eric Wollman, Chief of Police – (650) 777-4123 Subject: Item 6.b - Consideration of Adding Carolan Avenue to the Residential Permit Parking Program RECOMMENDATION Staff recommends that the Traffic Safety and Parking Commission review the existing parking situation on Carolan Avenue between North Lane and Oak Grove, and concur with the staff’s recommendation to add this area to the City’s Residential Parking Permit Program. BACKGROUND Presently, Carolan Avenue between North Lane and Oak Grove has 2 hour parking limit on the west side of the street. The east side of the street that fronts Burlingame High School has no restricted parking. Historically Burlingame High School students have parked on the east side of Carolan free from restrictions. This works out well for students and affords them worry free parking for their entire school day. The west side of the street has a 2 hour parking restriction. The purpose of this 2 hour restriction is to discourage Caltrain riders, downtown employees and people going to the airport from parking for long periods of time on this public street. Students also use this 2 hour zone to park during the school day. There are approximately 60 parking spaces on the west side of the street, and 40 on the east. It is very evident that most are used by students. The police department has managed the student’s parking needs, but it has recently come to the department’s attention that the current practice of enforcement is not completely consistent with the signage posted for the area. When the police parking enforcement officers do enforce the 2 hour limit, this enforcement has a major impact on the student’s, due to their inability to move their cars during school. DISCUSSION The enforcement of the 2 hours zones on the west side of Carolan is causing students to receive citations and is taking away parking spaces for the school students. To assist the school community in their parking needs, I am recommending that this area be considered for addition to the City’s Residential Parking Permit Program. To accomplish this request, 2 hour parking signs would be added to the east side of the street, and approximately 100 residential parking permits would be made available to the students of Burlingame High School. The students would be able to park on either side of Carolan for the entire school day, and the police department would Carolan Avenue Parking October 13, 2016 2 continue to enforce the 2 hour zones consistently throughout the day for other citizens needing to park and visit local businesses. The majority of this parking is needed for students. If the police continue to enforce the 2 hour zone in this area it will force students to find parking in the neighborhoods surrounding the school, which will bring over 100 additional vehicles into the neighborhoods. Since, the only property affected by the proposal is the Burlingame High School, hence it meets the requirements of two third majority support from property owners on the affected street. Staff has had initial discussions with the High School officials who have indicated strong support for the proposed approach. FISCAL IMPACT There will be staff time involved in selling the permits, and the cost of adding additional 2 hour parking signs to the east side of Carolan, which can be absorbed in the both Police and Public Works Department’s operations budgets. The cost of an annual parking permit is $53.00. Exhibits:  Residential Parking Permit Program Pamphlet  Residential Parking Permit Program Policy  Map of Residential Parking Permit Program Area CAROLAN AVENUE PARKING RESTRICTION UPDATE Traffic Safety and Parking Commission November 10, 2016 BACKGROUND At the October 13,TSPC meeting,Chief Wollman reported on a parking issue along the west side of Carolan Avenue. Staff proposed an option for the students to purchase a permit which would allow them to park along Carolan beyond the 2-hour restriction. The Commission discussed the benefits and drawbacks of such a restriction, while also taking in public comment. Charging students for the permits Number of permits to be issued Who would administer permits? Abuse of permits Students on campus for extended amount of time Preference for students who live further away Staff reviewed the Commissioner’s concerns and public comments to refine and revise the proposal. In addition to the proposal,staff will share observations and data collection efforts with the TSPC. DISCUSSION EXISTING CONDITIONS Carolan Avenue (west side):2-hour parking restriction,from Oak Grove to North Lane. Carolan Avenue (east side):No parking restrictions along Burlingame High School Frontage. Burlingame High School’s on-site parking capacity:177 parking spaces BHS’s 2016 enrollment:1,421 students,696 Seniors and Juniors. BHS students utilize the school’s on-site parking,as well as on-street parking (Carolan and Oak Grove),and the Aquatic Center’s parking lot. DISCUSSION CAROLAN ON-STREET PARKING (MORNING SURVEY) DISCUSSION CAROLAN ON-STREET PARKING (AFTERNOON SURVEY) DISCUSSION CAROLAN ON-STREET PARKING (EVENING SURVEY) DISCUSSION CAROLAN ON-STREET PARKING (SURVEY OBSERVATIONS) Based on measured length,there is space for about 50 on-street parking spaces on the east side of Carolan.In the morning there were about 45 vehicles parked. On the west side,there is space for about 70 parking spaces.In the morning there were about 56 vehicles parked During the afternoon,about 75%of the vehicles remained from the morning period on both sides of the street. During the evening on east side of Carolan,it was determined that about 10%(5 vehicles) of vehicles parked were long-term,with 5%(3 vehicles)along the west side. Staff recommends including and revising the two-hour parking restriction on both the east and west sides of Carolan respectively.The restricted hours would be from 2 P.M.to 6 P.M.,Monday through Friday.This proposal would eliminate the Commission’s concerns regarding a new permit program,discourage long-term parking by employees and commuters,and allow BPD to enforce without bias.Staff would review the possibility of striping parking spaces to increase/maintain capacity. QUESTIONS AND COMMENTS 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Carol Augustine, Finance Director – (650) 558-7222 Subject: Acceptance of the Comprehensive Annual Financial Report for the Year Ended June 30, 2016 RECOMMENDATION Staff recommends that the City Council accept the Comprehensive Annual Financial Report (CAFR) for the fiscal year 2015-16. BACKGROUND Following the close of each fiscal year, the City’s external auditors conduct an audit of the City’s financial records and assist in the compilation of the Comprehensive Annual Financial Report (CAFR). The paramount objective of general purpose external financial reporting is accountability. The goal of a financial statement audit is to provide users with a reasonable assurance from an independent source that the information presented in the statements is reliable. The audit for the fiscal year ended June 30, 2016 was just recently completed. DISCUSSION The 2015-16 fiscal year audit is the first annual audit performed by Maze & Associates as the City’s external auditors. The firm conducts their audits in accordance with generally accepted auditing standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. The standards require that the auditors plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. On a sample basis, they examine evidence supporting the amounts and disclosures in the financial statements. The audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. Based on the auditor’s initial risk assessment, this first audit included a very thorough review of the City’s internal accounting controls; an extensive sampling of purchasing, payroll, investment, and banking transactions; careful attention to proper governmental reporting requirements; and an analysis of trends for operational sustainability. The auditor’s unmodified (“clean”) opinion is presented as the first item in the financial section of the CAFR (page 1). In accordance with Government Auditing Standards, the auditors also issue a Comprehensive Annual Financial Report 2015-16 January 3, 2017 2 report of recommendations to City management identifying any areas for improvement in the City’s internal control over financial reporting. The City’s Audit Committee, currently comprised of Councilmembers Michael Brownrigg and Donna Colson, recently met with staff and the auditors to discuss the audit reports, results, and recommendations. Each year, the City participates in the CAFR award program administered by the Government Finance Officers of America (GFOA), and has been successful in obtaining the award each fiscal year since 1989-90. Staff has submitted the City’s FY 2015-16 CAFR to the GFOA program and is confident that the report will again merit the GFOA Certificate of Achievement for Excellence in Financial Reporting. The fiscal year 15-16 CAFR is posted to the City’s web site (Finance Department web page) at 2015-16 CAFR. Management’s Discussion and Analysis Government Accounting Standards require a Management’s Discussion and Analysis (referred to as MD&A) to be included with the audited financial statements, with the intent of giving readers an objective and easily readable analysis of the City’s financial performance for the year. The MD&A includes a discussion of the basic financial statements, some condensed financial information, an analysis of the City’s financial position, and results of operations on both a City- wide and Fund basis. The Management’s Discussion and Analysis begins on page 5 of the CAFR. As noted in the document, the financial standing of the City remains relatively strong. The City’s total revenues increased $6.2 million over the prior year, and total expenses increased slightly over $2.9 million – nearly $1.6 million in governmental activities (2.9 percent) and $1.4 million in the City’s business-type activities (5.5 percent). The business-type activities consist of self- supporting functions (largely comprised of the City’s Water and Wastewater utilities operations). The government-wide financial statements, which provide a broad overview of the City’s finances, indicate that the City’s net position increased $27.9 million (17.8 percent) during the fiscal year ending June 30, 2016: $7.9 million due to governmental activities and $20 million due to business-type activities. Governmental revenues were up nearly $4.7 million from the prior year - due largely to increases in transient occupancy, property, and sales tax revenues - as the Bay Area continued to lead the state in economic growth. New GASB standards that relate to the recording and reporting of pension costs and liabilities were implemented in the prior year’s CAFR. As a result, governmental net position (reported in the government-wide financial statements) was reduced significantly, creating a negative balance in the unrestricted net position of the City’s governmental activities. Note that all governmental agencies that conform to governmental accounting standards were impacted by this change, which reflects only a change in accounting principle, not an actual change in financial condition. As the net pension liability diminishes, the unrestricted portion of the City’s net position will improve. In fiscal year 2015-16, the City’s unrestricted net position increased $5.2 million to a positive $0.5 million. Comprehensive Annual Financial Report 2015-16 January 3, 2017 3 General Fund Status General Fund highlights for the 2015-16 fiscal year are summarized in the MD&A. A separate disclosure, the Budgetary Comparison Schedule for the General Fund, is included in the CAFR (page 117) after Required Supplementary Information. The General Fund experienced a surplus for the year, as revenues of the fund exceeded expenditures and net transfers by slightly more than a half million dollars. The largest positive budget variance was reported for transient occupancy tax revenues, which totaled nearly $6.1 million, nearly $2.4 million higher than in the previous fiscal year. Property and sales tax revenues were up a combined $2.7 million over the prior year, an additional reflection of strong property values, high tourist demand, and consumer confidence. Many of these revenue increases were anticipated at mid-year and were reflected in the adjusted budget for the year. Still, actual revenues came in $0.4 million higher than the adjusted budget, a positive variance of 0.7 percent. Budgetary savings (positive expenditure variances) within the General Fund were experienced in all departments, resulting in expenditures of $2.8 million (roughly 5.9 percent) less than budgeted for the fiscal year. Although not as sizeable as in the prior year, this is a relatively large variance: Slightly over $1.0 million in budgetary savings was experienced in salaries and benefits (3.7 percent) indicating a moderate vacancy rate. (The budget is established assuming full staffing throughout the year.) The highest percentage of budgetary savings was in Community Development. Although large amounts were encumbered for professional services contracts related to the multi-year General Plan Update project, much of that work will not occur until later in the current fiscal year. Higher budgetary savings were also experienced in the Library, Department, largely due to a higher personnel vacancy rate than that experienced city-wide. Since local government expenditure budgets (appropriations) serve as the legal level of budgetary control, some level of savings will be realized in any fiscal year. In addition, budgets are developed based on year-round occupancy of all authorized staff positions. In periods of high turnover or other reasons for an increased level of staff vacancies, higher budgetary savings may be experienced. Storm Drain Fund Status The Storm Drainage Fund was shown as a major governmental fund in the CAFR for the first time in fiscal year 2014-15. Although fee revenues to the fund (over $2.7 million) remained level with the prior year, transfers of $1.4 million (as compared to less than $0.4 million in fiscal year 2014- 15) were made to support capital improvements to the City’s storm drain infrastructure. The additional transfer of $1.4 million for debt service on previously issued bonds resulted in a fund balance of just over $2.6 million. With all bond proceeds from previous years having been appropriated for current storm drain projects, the City issued a third bond series ($9,855,000) in March 2016 so that Storm Drain projects are appropriately funded without interruption or the need to borrow from other funds. Comprehensive Annual Financial Report 2015-16 January 3, 2017 4 Proprietary Funds Proprietary Funds are used to account for activities that are fueled by charges for the services provided by each fund. Enterprise Funds account for external activities (largely utilities), while Internal Service Funds (ISFs) account for internal (interdepartmental) activities. The City maintains enterprise funds to account for the activities of its water and wastewater operations. Charts depicting the historical financial performance of these two funds are included in the MD&A. The funds are self-supporting: the sale of water and provision of wastewater services to customers generate the revenue needed to support the operations and capital needs of these utilities. Both utilities experienced an increase in net position in fiscal year 2015-16, largely due to a transfer of the funding for capital projects back to the appropriate fun ds: $5.4 million for the Water Fund and $6.5 million for the Sewer Fund. In prior years, this funding was reported in the Capital Projects Fund, and the capital assets transferred back to the enterprise funds upon completion. Therefore, these additions represent funds that have been budgeted for capital projects that are not yet complete. Aside from this transfer, the net position for both funds was relatively stable: the Water Fund unrestricted net position decreased $281,200 (3.2 percent); the Sewer Fund unrestricted net position rose $880,800 (10.9 percent). The Solid W aste Management Fund and Landfill Fund are both fueled by a surcharge on garbage rates. The Solid Waste Fund accounts for City costs of street cleaning, the household hazardous waste program, steam cleaning of City receptacles and other related activities, and provides a rate stabilization reserve for rate payers. Conversely, the Landfill Fund accounts for post closure maintenance and monitoring of the City’s old landfill site. The City reports its obligation to ensure that the City’s landfill site is properly maintained going forward as a post-closure liability, which results in a deficit position for the fund. However, the landfill surcharge should serve not only to maintain the site, but also to reduce the unfunded portion of the post-closure liability in future years. Other enterprise funds consist of the Parking Fund and the Building Fund. The Parking Fund increased nearly $2.6 million, the result of increased revenues from parking activity coupled with a marked decrease in expenditures. The costs of parking enforcement activities, which had previously been included In the Parking Fund budget, were moved to the General Fund (Public Safety) budget in fiscal year 2015-16. The Building Fund experienced close to $1.0 million in increased net position, as revenues from permit and plan check activities were $0.6 million higher than the prior year. The City’s six Internal Service Funds (ISFs) are utilized to report activities that provide insurance, facilities, vehicles and equipment, and information technology services to support the City’s various programs and functions. The City’s OPEB (Other Post-Employment Benefits) Fund was created in fiscal year 2013-14 to account for funding of the external trust account established to meet the City’s retiree medical obligations. Surcharges on departmental payrolls provide revenue to the OPEB ISF; retiree medical premiums and monthly contributions to the trust account comprise the fund’s expenditures. This fund retains a relatively small balance as the City forwards any remaining departmental charges to the trust fund, where higher interest earnings are obtained than can be achieved in the City’s investment portfolio. Comprehensive Annual Financial Report 2015-16 January 3, 2017 5 The combined net positions reported in all of the ISFs increased in fiscal year 2015-16 due largely to the favorable claims development within both the City’s general liability and workers’ compensation programs. The City strives to maintain an appropriate level of reserves in these funds to protect against unusual losses beyond normal experience. Charges to the departments are calibrated so as to cover costs of insurance and the payment of claims, though demands of these funds have varied considerably in recent fiscal years. As of June 30, 2016, all of the ISFs maintain adequate balances, and internal (departmental) charges for services should require only small adjustments in future years. Other Funds The MD&A discusses changes in the City’s Capital Projects Fund and Debt Service Fund, which are considered major funds for financial statement purposes. Capital project expenditures totaled $7.2 million. Leading the list of spending on capital projects during the fiscal year was the US 101/Broadway Interchange project ($1.6 million during the fiscal year), followed by City-wide Storm Drain Neighborhood Improvements ($1.2 million) and $1.2 million in spending on the 2015 Annual Street Resurfacing project. Debt activities for the year were limited to debt service payments on the City’s outstanding debt, which included $5.8 million in principal payments and $2.6 million in interest and administrative costs. As noted in the document’s Letter of Transmittal, the City’s AA+ general obligation credit rating was last re-affirmed by Standard & Poor’s in June 2016. The City also has nine non-major governmental funds, all of which are considered Special Revenue Funds. (Special revenue funds are used to account for the proceeds of governmental revenues that are restricted or committed for purposes other than debt service or capital projects.) Details of these funds are reported in the Combining Financial Statements beginning on page 122 of the CAFR. The City’s largest special revenue funds are the Gas Tax and Measure A Funds. Transactions in these funds consist largely of transfers to the Capital Projects Fund for street and transportation-related projects. The impact of the 2015-16 fiscal year results for the City’s General Fund on the current year budget continues to be analyzed in conjunction with a monthly budget-to-actual review. A review of all of the City’s funds, an update on the status of major projects and priorities, and a n update of economic conditions will be presented to the Council with the mid-year report and budget adjustments in March. At that time, the long-term financial forecast will also be revised. FISCAL IMPACT Acceptance of the City’s CAFR has no direct impact on City resources. However, obtaining an unqualified opinion from the auditor is an important independent verification and validation of the City’s financial management practices and a prerequisite to receiving the GFOA award. An award-winning CAFR contributes to the City’s excellent bond rating. Exhibit:  City of Burlingame Fiscal Year 2015-16 Comprehensive Annual Financial Report 2016 CITY OF BURLINGAME Fiscal Year Ended June 30, 2016 ••••••••••••••••••••••••••••••••••••••••••••••• ............................................... '91• B\Jft~N~~ME I I Comprehensive Annual Financial Report June 30, 2016 City of Burlingame, California COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2016 Prepared by City of Burlingame Finance Department Comprehensive Annual Financial Report June 30, 2016 INTRODUCTORY SECTION CITY OF BURLINGAME, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2016 TABLE OF CONTENTS Finance Director's Letter of Transmittal ............................................................................................ . Certificate of Achievement -Government Finance Officers Association .......................................... viii Elected and Appointed Officials......................................................................................................... ix City of Burlingame Organizational Chart............................................................................................ x City of Organization by Critical Service Area ............................................................................................. xi City of Burlingame Finance Department Organization Chart............................................................. xii Organizational Compass............................................................................................................................................... Xiii FINANCIAL SECTION Independent Auditor's Report.................................................................................................................. 1 Management's Discussion and Analysis.................................................................................................... s Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position ........................................................................................................... 25 Statement of Activities ............................................................ .................................................... 26 Fund Financial Statements: Balance Sheet-Governmental Funds......................................................................................... 30 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position............................................................................................... 31 Statement of Revenues, Expenditures, and Changes in Fund Balances -Governmental Funds................................................................................... 32 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities................................. 33 Statement of Net Position -Proprietary Funds .......................................................................... 36 Statement of Revenues, Expenses, and Changes in Fund Net Position -Proprietary Funds...................................................................................... 38 Statement of Cash Flows -Proprietary Funds;............................................................................ 40 Statement of Net Position -Fiduciary Funds.............................................................................. 42 Notes to the Basic Financial Statements (The Notes to the Basic Financial Statements are an integral part of the basic financial statements.)........................................................................... 43 Required Supplementary Information: Cost-Sharing Multiple-Employer Defined Benefit Pension Plan Schedule of Proportionate Share of the Net Pension Liability......................................................... 108 Cost-Sharing Multiple-Employer Defined Benefit Pension Plan Schedule of Contributions.............. 109 Agent Multiple Employer Defined Benefit Pension Plan Schedule of Changes in the Net Pension Liability and Related Ratios ................................................................. 110 Agent Multiple Employer Defined Benefit Pension Plan Schedule of Contributions......................... 111 FINANCIAL SECTION (continued) Required Supplementary Information (Continued): Other Post-Employment Benefits................................................................................................ 112 Modified Approach for the City's Infrastructure......................................................................... 113 Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual - General Fund.............................................................................................................................. 117 Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual - Storm Drainage Special Revenue Fund...................................................................................... 118 Combining Financial Statements and Other Supplementary Information: Combining Balance Sheet -Non major Governmental Funds..................................................... 122 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -Non major Governmental Funds ................................................................. 124 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual -Non major Governmental Funds............................................. 126 Combining Statement of Net Position -Internal Service Funds ................................................. 132 Combining Statement of Revenues, Expenses, and Changes in Net Position -Internal Service Funds.................................................................................... 133 Combining Statement of Cash Flows -Internal Service Funds ................................................... 134 Combining Statement of Changes in Assets and Liabilities -All Agency Funds.......................... 136 STATISTICAL SECTION Net Position by Component......................................................................................................... 144 Change in Net Position ................................................................................................................ 146 Fund Balance of Governmental Funds......................................................................................... 149 Changes in Fund Balance of Governmental Funds...................................................................... 150 Assessed Values of Taxable Property.......................................................................................... 152 Net Taxable Assessed Value History............................................................................................ 154 Property Tax Rates -Direct and Overlapping Governments....................................................... 155 Top Ten Property Taxpayers........................................................................................................ 156 Property Tax Levies and Collections............................................................................................ 157 Governmental Activities Tax Revenues by Source ...................................................................... 159 Ratios of Outstanding Debt by Type............................................................................................ 160 Ratios of General Bonded Debt Outstanding.............................................................................. 161 Computation of Direct and Overlapping Debt............................................................................. 162 Legal Debt Margin Information ................................................................................................... 163 Pledged Revenue Coverage ....................... ... ..... ... ................ ......... ............ .. . . . ....... ...................... 164 STATISTICAL SECTION, Continued Demographic and Economic Statistics......................................................................................... 165 Principal Employers..................................................................................................................... 166 Full-Time Equivalent City Government Employees by Function.................................................. 167 Operating Indicators by Function................................................................................................ 168 Capital Asset Statistics by Function............................................................................................. 170 Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards................................................. 171 Comprehensive Annual Financial Report June 30, 2016 INTRODUCTORY SECTION Comprehensive Annual Financial Report June 30, 2016 December 19, 2016 'fhe City of BurHngame City Hall -501 Pr imrose Road Bur lingame, California 94010-399 7 650-558-7200 To the Honorable Mayor, Members of the City Council, and residents of Burlingame: I am pleased to submit the City of Burlingame's Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2016. This financial report contains a complete set of audited financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) as promulgated by the Governmental Accounting Standards Board (GASB). Responsibility for the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City, and in particular, the Finance Department. Information contained in this report is based upon a comprehensive framework of internal controls that has been established for this purpose . The objective of internal controls is to provide reasonable, rather than absolute, assurance that the CAFR information is accurate in all material aspects. The Management's Discussion and Analysis section of the financial report provides information on the City's financial position and should be read in conjunction with the financial statements . As required by GAAP, the financial statements present the government and its component units that are considered to be fiscally interdependent. For financial reporting purposes, the City's basic financial statements include all funds, boards, commissions, and authorities that are controlled by or are dependent upon the Burlingame City Council. The California Government Code requires an annual audit of the basic financial statements of the City . The accounting firm Maze & Associates performed the audit for the fiscal year ended June 30, 2016 . The independent auditor's report on the general purpose financial statements is included in the financial section of this report and states that the City's basic financial statements present fairly, in all material respects, the financial position of the City as of June 30, 2016, and the results of its operations and the cash flows of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles. For the year ended June 30, 2016 , single audits were not required in accordance with the provisions of the Single Audit Act, as threshold expenditure requirements from federal funding were not reached during the fiscal year . Government Profile The City of Burlingame is a California general law City incorporated in 1908 that operates under the Council-Manager form of government. A five-member City Council is elected at large to four-year terms and serves as the board of directors. The City Council selects a Mayor and Vice Mayor from its members annually. A City Manager is appointed by the City Council and serves as the chief executive officer. The City Manager is responsible for all municipal functions. A City Attorney is appointed by the City Council to serve as chief legal advisor for the governing body and the administration. The City's municipal services include: police and fire protection; public works; community development; parks and recreation; library services; water, sewer, parking, solid waste, and storm drainage. General government activities include finance, human resources, legal services, and city administration. The City employs approximately 205 full-time employees. An executive team helps the City Manager lead the City organization. It includes eight department directors, the City Attorney, and the City Clerk. The Burlingame City limits contain approximately six square miles. The City is located in San Mateo County, on the western shore of the San Francisco Bay approximately 10 miles south of San Francisco. According to the State Department of Finance, the population for the City of Burlingame is 29,700. The population has remained fairly level, increasing by 1.2% over the past five years. Budget Process The City adopts an annual budget for all funds except its Debt Service Funds. Major funds include the General, Capital Projects, Debt Service, Water, Sewer, Parking, Waste Management, Landfill, and Building Funds. Budgets are prepared on the same basis of accounting as the associated financial statements. The City's formal budget is employed as a management control device during the year, and it is adopted annually for all City funds, except for the fiduciary funds and certain special revenue funds where appropriate. Consistent with most governmental entities, the City's budget is based on a modified accrual basis of accounting under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the related liability is incurred. The City budget includes information regarding estimated costs (or outlays) and revenue (or cash inflows) for identified programs, projects, and levels of service to meet the needs of the City. All annual appropriations lapse at the end of the fiscal year except in the Capital Projects Fund, because capital improvement projects typically span more than one fiscal year. Appropriations for capital projects lapse when projects are completed, placed into service, accounted for as capital assets, or abandoned at the discretion of the City and/or City Council. Budget amendments that increase a fund's appropriations require majority approval by the City Council. Certain budgetary re-allocations within departments require approval by the Finance Director and department heads. Budget amendments between departments are approved by the Finance Director and City Manager. A mid-year budget status report and a long-term financial forecast for the next five years are presented to the City Council as part of an ongoing assessment and evaluation of budgetary performance, with special attention to the General Fund and certain other major funds. 11 The City Council encourages all Burlingame residents and business community members to participate in the development ofthe City budget. The Council holds three public meetings to provide guidance on the budget: a goal-setting session in January, and budget study sessions in March and May. The City Council solicits input at each of the meetings. Community members may also submit their ideas directly to City staff. Under these policy directives and guidance, departments prepare their budget requests in support of their programs for submission in early April. Expenditure assumptions are based on known factors such as collective bargaining agreements, current pay and benefit policies, consumer price indices, and other information available from expert third-parties or governing authorities. Budget requests are reviewed by the Finance Department for technical compliance to City budget instructions. The Proposed Budget is prepared and delivered to the City Council in May. The City Council reviews the Proposed Budget before the final budget is formally adopted in June at a public hearing, which gives residents an additional opportunity to comment on the spending plan. Assessment of Economic Condition Along with most cities along the San Francisco peninsula, the City has fully recovered from the 2008- 2010 recession, as evidenced by rebounds in the City's largest revenue sources. In fact, the City's top three revenues streams (transient occupancy tax, property tax and sales tax) have long surpassed pre- recessionary amounts, and now constitute over 85% of the City's General Fund revenues. Key indicators of the City's economic health are job growth, real estate values, and retail activity. Employment The San Francisco Bay Area continued to lead the state in job expansion; the unemployment rate remains one of the lowest in the State of California, based upon recent Employment Development Department (EDD) data. The unemployment rate in San Mateo County held steady at 3.1% in November 2016. Comparatively, the State of California's unemployment rate stood at 5.5%. At these healthy rates, which effectively reflect full employment, the pace of job growth has leveled off somewhat. The region's labor market is showing signs of saturation after years of strong growth in professional, technological, and business service employment. Average salaries are well above the California average, and are expected to remain so in the near future. Real Estate & Property Taxes Property taxes, which are based on assessed value, are one of the City's largest revenue sources, accounting for 26.7% of the City's General Fund revenue. Fiscal year 2015-16 property tax receipts were $17.6 million, up approximately 5.8% from the prior year. According to data obtained from the San Mateo County Assessor, the City has 8,000 parcels, with a total assessed value of over $9 billion, an increase of $568.4 million, or 6.78% since last year. Residential assessed values grew by 7.1%, while commercial assessed values grew by 5.8%. 111 According to DataQuick, the median price of homes sold in Burlingame during the month of October 2016 was $2.9 million, which is a 44.9% increase compared to the same time last year. However, only 24 homes were sold. County-wide, 389 homes were sold, with a median value of $1 million, a 7.5% year- over-year increase in sales price since October 2015. The area's housing supply shortage is a primary driver of high housing costs. Combined with the increase in real income, it is increasingly apparent that lower-income residents are getting priced out of the county. Sales and Use Taxes Burlingame is a highly desirable residential community and upscale commercial location with attractive shopping districts. Burlingame borders the Town of Hillsborough, an affluent community that is 100% residential. Therefore, in many cases, Burlingame businesses have the opportunity to serve the commercial needs of Hillsborough residents, and benefit from the additional disposable income from neighboring communities. Numerous national retailers are located in the Burlingame Avenue Business District, making the area competitive with regional shopping malls. In addition, the city is known for its upscale restaurants and businesses that attract patrons from throughout the entire San Francisco Bay Area. The City owns and manages most of the parking spaces located within the shopping districts and works with local merchants to maximize the shopping experience. Sales and use taxes accounted for 19.4% of General Fund revenue in fiscal year 2015-16. Sales and use tax revenues were $12.8 million, which is nearly 15.6% higher than the prior year's receipts of $11.1 million. Nearly $1 million of the tax receipts were the result of a "true up" from the end of the state's decade-long "triple flip" revenue swap; this "true up" is considered a one-time anomaly. The top 25 sales tax producers in Burlingame account for approximately 49.5% of total sales tax revenue, and include several auto dealers, hotels, and general merchandise stores. Although taxable transactions in the city's largest sector -Autos and Transportation -leveled off somewhat toward the end of the fiscal year, all major business groups fared well as a whole. Activity in both casual and fine dining remained particularly strong, while other gains were seen in electronics/appliance and specialty stores. It is interesting to note that the City's share of the countywide use tax pool jumped over 14 percent compared to the same four quarters in fiscal year 2014-15. Use tax is the responsibility of the buyer rather than the seller, and does not involve a California "point of sale". Therefore, the tax is coded to the county of use and then distributed to each jurisdiction in the county on a pro rata share of taxable sales. While these receipts represent only 15-17% of the total sales tax revenues (and are categorized by major industry group along with point-of-sale receipts), the increase reflects a continued acceleration of online shopping for merchandise shipped from out of state. Tourism and Business Travel Burlingame's 12 major hotels provide convenient overnight accommodations for business travelers and tourists using San Francisco International Airport (SFO), with a total of approximately 3,742 rooms available for rental. Hotel occupancy rates are indicative of continued improvement in the economy. As the City's largest revenue source, transient occupancy tax revenues account for over 39% of all General Fund revenues, and grew by $2.3 million (10.1%) compared to the prior year. Although combined occupancy rates remained relatively consistent at 84%, average room rates within the city increased approximately 10.1%, thanks to the success of many Bay Area sports teams and increased tourism. As reported by the San Francisco Airport, total domestic and international airport passengers increased by 6.6% since fiscal year 2014-15. lV Financial Information Accounting System, Budgetary Control & Fund Accounting: All governmental and fiduciary fund types use the modified accrual basis of accounting. Revenues are recorded when measurable and available, rather than when received, and expenses are recorded when the liability is incurred, rather than when paid. Conversely, the accrual basis of accounting is used for proprietary funds. All governmental fund types are accounted for on a spending (or funds flow) measurement focus. Only current assets and current liabilities are generally included on the governmental fund balance sheets. Internal Controls: City management is responsible for establishing and maintaining adequate internal controls to ensure that City assets are protected from loss, theft, or misuse and to assure that adequate accounting data is compiled to allow for the preparation of financial statements that conform to generally accepted accounting principles. Internal controls are designed to provide reasonable, but not absolute assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits to be derived, and that cost-benefit analysis requires prudent estimates and judgments by management. The Finance Department establishes internal accounting controls to provide management reasonable assurance regarding the safeguarding of assets and the reliability of financial records for preparing financial statements and maintaining asset accountability. The City's finance staff and the independent auditor consider the internal controls over financial reporting in planning and performing the annual audit. The independent auditors test the City's internal controls and make inquiries into the staffs knowledge of fraud or the occurrence of fraud. Cash Management: The City pools cash from all operating sources to manage cash flow and invest idle funds. The Finance Director serves as the City's Treasurer and manages the portfolio of funds in accordance with the City Council's adopted Investment Policy and Government Code Sections 53601 and 56535. The Finance Director submits a quarterly investment report to the Council. The Council also reviews and approves the City's Investment Policy early in each fiscal year. Risk Management: The City is a member of the Association of Bay Area Governments Pooled Liability Assurance Network Corporation (ABAG PLAN), a non-profit public benefit corporation established to provide liability insurance, claims, risk management, and legal defense services to participating members. The program provides the City with liability coverage up to a maximum of $10 million, with the City maintaining a self-insured retention of $0.3 million. The City also maintains workers' compensation coverage to a maximum of $5 million, with a self-insured retention of $0.5 million per claim. The City maintains reserves for all claims below its self-insured retention in separate Internal Service Funds, and charges the costs of the program to operating departments. An actuarial study of the current obligations for the General Liability and Workers' Compensation Funds was completed in May 2015, and the related accruals for current and expected claims have been included in the year-end results for these funds. The City has implemented and is in compliance with Governmental Accounting Standards Board Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues. v Debt Administration: The City has an AA+ underlying general obligation credit rating, an AA+ rating for its water and wastewater debt, and an A+ rating for the storm drain debt as issued by Standard & Poor's Rating Service. The AA+ general obligation credit rating was re-affirmed in June 2016. In fiscal year 2015- 16, the City had 14 outstanding bonds or loans, including a taxable bond issue for pension obligations, two loans from the State of California Water Resources Control Board for improvements to the Burlingame Wastewater Treatment Plant, one capital lease, a loan from the California Energy Commission, and a storm drain revenue bond issued under the Internal Revenue Service's Build America Bond program. The City annually evaluates each outstanding debt obligation that is subject to arbitrage rebate requirements and determined that there was no arbitrage rebate liability as of June 30, 2016. As of June 30, 2016, the City's general obligation debt limit was $338.2 million, which represents 3.75% of total assessed valuation based on assessments at 100% of full market value, in accordance with California Government Code Section 43605. With only the 2006 Pension Obligation Bonds ($15 million outstanding) considered to be general obligation debt, the City's legal debt margin was $323 million. Additional information pertaining to the City's outstanding long-term debt can be found under Long- Term Debt (Note 6) in the Notes to the Basic Financial Statements and in the Statistical Section under Legal Debt Margin information. Certificate of Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended June 30, 2015. The City has received the award for 15 consecutive years. To receive the award, a government must publish a readable and well organized annual financial report. The report must satisfy both generally accepted accounting principles and applicable legal requirements. The certificate is valid for one year. Staff believes that the City's current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements. Vl Acknowledgments Special thanks go to Fariba Ghahremani for her tireless efforts in overseeing the fiscal year-end close, annual audit, and compilation of these financial reports. Amy Bernardo, Senior Accountant, and Sabrina Lee, Accountant, were also instrumental in ensuring the integrity of the data and its accurate presentation . Their diligent work, as well as the contributions of other members of the Finance Department, ensured the successful completion of this document. The City Council's continued support in fiscal matters, especially in the maintenance of a long-term, sustainable financial vision, is essential and sincerely appreciated. The financial health of the City is a direct result of their vigilant fiduciary stewardship . Respectfully submitted, Lisa K. Goldman City Manager Vll Carol Augustine Finance Director & Treasurer Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Burlingame California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2015 Executive Director/CEO viii CITY OF BURLINGAME, CALIFORNIA ELECTED AND APPOINTED OFFICIALS FISCAL YEAR ENDED JUNE 30, 2016 CITY COUNCIL Ann Keighran, Mayor ................................................................... November 2017 Ricardo Ortiz, Vice Mayor ......................................................... November 2017 Michael Brownrigg ....................................................................... November 2017 Emily Beach .................................................................................. November 2019 Donna Colson ................................................................................ November 2019 CITY MANAGER Lisa K. Goldman DEPARTMENT DIRECTORS Community Development .................................................. William Meeker Finance Director and Treasurer ........................................ Carol Augustine Central County Fire (JPA) Chief ........................................... John Kammeyer Human Resources ..................................................................... Leslie Loomis Library ................................................................................. Bradley McCulley Parks and Recreation ..................................................... Margaret Glomstad Police ......................................................................................... Eric Wollman Public Works ............................................................................. Syed Murtuza CITY CLERK CITY ATTORNEY Meaghan Hassel-Shearer Kathleen Kane ix x [ C ity Atto rn ey ] Fi nance Accounting/Budget Business License General Gov't Information Technology Payroll Treasurer Utility Billing Parks & Recreati on Aquatics Golf Range Park Maintenance Preschool & Youth Senior Citizens Special Classes Special Events Sports Teens Trees CITY OF BURLINGAME, CALIFORNIA ORGANIZATIONAL CHART C iti ze ns of Burl ingame C ity Cou nc il C ity Ma nager City Clerk Fir e Disaster Preparedness Prevention Suppression Training Ememency Medical Services Public Education Community Develop ment Building Inspection Plan Revil!w Building Code Compliance C.E.QA Design Review Economic Development General Plan Zoning Human Reso urces Benefits Labor/Employee Relations Organizational Development Recruitment & Selection Risk Management Po li ce Communication Investigation Parking Enforcement Patrol City Commissions Library Branch Children 's Circulation Reference Public Works Engineering Equipment Maintenance Facilities Maintenance Sewer Street Lighting Streets & Storm Drains Wastewater Treatment Water CITY OF BURLINGAME FISCAL YEAR 2015-16 CITY ORGANIZATION BY CRITICAL SERVICE AREA General Government City Attorney In-house counsel, risk management, and code enforcement City Clerk Elections, City records, public noticing, and maintenance of municipal code City Manager Supervision of departments and implementation of City policy and strategy Finance Revenue management, disbursements, budget and forecasting, payroll, financial reporting, treasury, purchasing, information technology, telecom and utility billing, business licenses, cashiering and front-desk customer service, and solid waste Human Resources Salary and benefits administration, employment, health and safety, employee training and wellness, and collective bargaining Public Works Engineering Administration of capital improvement program including major and minor repair and replacement of city infrastructure Water & Sewer Delivery of potable water, treatment and discharge of sanitary flows in accordance with environmental, health and safety guidelines Streets & Storm Drainage Street sweeping, transportation and regional shuttles, streetlights, and stormwater management and compliance xi Public Safety Police Community patrol, 911 communications and dispatch, crime prevention, special weapons and tactics (SWAT), K-9 Program, traffic safety, parking enforcement, and community outreach Central County Fire Department GPA) Fire suppression and prevention, emergency medical services, and disaster preparedness for the Town of Hillsborough and the City of Burlingame Leisure and Neighborhood Services Library City literacy advocacy, circulation of written and digital media, special programs, and community education for citizens, children, and teens Parks Operation and maintenance of urban forest, landscaping, City parks, and infrastructure Recreation Recreational, educational and after-school programs for pre-school children, youth, and seniors Community Development Building Plan checking, inspection, complaint response, development review and consultation, and building research and development Planning Public outreach, Climate Action Plan, land use, economic development, plan checks, and code and zoning enforcement CITY OF BURLINGAME, CALIFORNIA FINANCE DEPARTMENT ORGANIZATION CHART FOR FISCAL YEAR 2015-16 Carol Augustine Finance Director & Treasurer I I I Administration -Office ~ Information Technology Support, lnterdept. Mail, - Agenda Delivery Fariba Ghahremani Larry Hackman Sandra Barocio Deputy Finance Director f-Senior Analyst, Host System Office Assistant II - Redwood City Staff Finance /City Clerk Support I I I ~. Sid Jackson Ed Gigliotti Financial Reporting & Utility Billing & Senior Analyst, Desktop Systems Interdepartmental Mail '-- Accounting Operations --Business License L- Agenda Delivery Treasury Redwood City Staff Andrea Brown Geeta Nair-Parsons '- Amy Bernardo ,_ Accounting Technician ~ Accounting Technician Senior Accountant Utility Billing, Business Payroll License & Customer Svc Renee Halcon Lisa Rancatore Sabrina Lee Accounting Assistant I ,_ Accounting Assistant Ill - Utility Billing & '-Accountant Cash Disbursements -A/P Customer Service Elaine Wong Margaret Ono ._ Accounting Assistant I '- Accounting Technician Utility Billing & Business Revenues -A/R Licen se Kirsten lvazes ~ Office Assistant I Customer Service CITY OF BURLINGAME ORGANIZATIONAL COMPASS The City of Burlingame is an organization that exists to sel(Ve1lnd benefit the community. We deliver unsurpassed municipal services that enhance the quality of life for 6ili-citizens. As employees of the City of Burlingame, we recognize the leadership role we play in the community and we hold ourselves accountable to those we serve. We value the partnership that exists between the organization and community and strive to foster and maintain that relationship. As such, we are committed to the tenets of the Organizational Compass: ~p~~~li'JJRVICE THAT IS RESPONSIVE TO AND MEE~~'~;?! NEEDS • Being dedicated to the community we serve • Involving and understanding our community • Anticipating and adapting to the changing needs of our citizens AN ETHICAL ORGANIZATION THAT INTERACTS WITH THE PUBLIC AND EACH OTHER IN AN HONEST AND PROFESSIONAL MANNER BY: • Treating people with respect and dignity .-'Taking responsibility for our decisions, statements and actions to the organization and community • Dealing with differences and conflicts in a professional, respectful and authentic fashion ONE ORGANIZATION THAT FOSTERS POSITIVE RELATIONSHIPS AND TEAMWORK BY: • Being part of the solution • Creating and maintaining constructive relationships while respecting individual contributions • Focusing on the issues and needs of the organization and community · • Encpilf{gf'.Jlk behavior that builds confidence and self-esteem r () · • Emf,ha'slzing self-initiative, constant improvement and employee involvement} CJ POSITIVE LEADERSHIP THAT IS NURTURING AND FORWARD-THINKING BY: • Recognizing the leadership role all employees play in the community • E. nc. ouraging innovation and creativity j' • Leading by example ~ • Being supportive, humanistic and compassionate As City employees we embrace the Organizational Compass and will be guided by its points. xiii (~ CJ Comprehensive Annual Financial Report June 30, 2016 FINANCIAL SECTION Comprehensive Annual Financial Report June 30, 2016 INDEPENDENT AUDITOR'S REPORT To the Honorable Members of the City Council City of Burlingame, California Report on Financial Statements We have audited the accompanying financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund Information of the City of Burlingame as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the Table of Contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Accountancy Corporation 3478 Buskirk Ave nu e, Suite 2 15 Pleasant Hill, CA 94523 1 T 925.930.0902 F 925.930.0135 E maze@mazeassociates.com w mazeassociates.com Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Burlingame as of June 30, 2016 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principles Management adopted the provisions of the following Governmental Accounting Standards Board Statement, which became effective during the year ended June 30, 2016 as discussed in Note 1C and Note 3B to the financial statements: Statement No. 72 -Fair Value Measurement and Application The emphasis of this matter does not constitute modifications to our opinion. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management's Discussion and Analysis and other Required Supplementary Information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements as a whole. The Introductory Section, Supplemental Information and Statistical Section as listed in the Table of Contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. 2 The Supplemental Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplemental Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 8, 2016 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Pleasant Hill, California December 8, 2016 3 Comprehensive Annual Financial Report June 30, 2016 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 This is Management's Discussion and Analysis of financial activities for the fiscal year ended June 30, 2016. This information should be read together with the transmittal letter, financial statements, and notes to the basic financial statements to better understand the City of Burlingame's (the City) financial position. The City has prepared its annual financial report in accordance with accounting principles generally accepted in the United States of America (GAAP) and all Governmental Accounting Standards Board (GASB) pronouncements that affect the City. Financial Highlights for Fiscal Year 2015-16 (ending June 30) Key financial highlights for the year are as follows: • In total, City assets and deferred outflows of resources exceed liabilities and deferred inflows of resources by $184.9 million, or a $27.9 million increase compared to beginning net position. • Enterprise Fund net position increased by $20.0 million to nearly $93.0 million. Of this amount, $26.0 million was unrestricted net position and available for use at the City's discretion. • Governmental fund balances increased $11.4 million, to nearly $86.1 million. Of this amount, approximately $11.1 million, or 12.9%, was unassigned fund balance and available for spending at the City's discretion. • General Fund revenues increased by $4.2 million in fiscal year 2015-16, an increase of 6.9% of prior year performance of $61.9 million. The increase in revenue was driven by a $2.4 million increase in current year collections of transient occupancy (hotel) taxes, and a $2.7 million increase in combined property and sales tax revenues. • Amendments to various revenue sources in the General Fund budget in the amount of $4.6 million were authorized by the City Council at mid-year, as these improved revenues became evident early in the fiscal year. • The General Fund ending fund balance increased from $29.5 million to nearly $30 million. Of this amount, over $18.6 million has been assigned -intended to be used for specific purposes. Overview of the Financial Statements This section introduces the reader to the City's three basic financial statements: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the basic financial statements. The report also contains supplemental information to help the reader develop a full understanding of the City's financial activities. Government-Wide Statements The government-wide financial statements include the Statement of Net Position and the Statement of Activities. These statements provide a broad overview of the City's finances. They are presented in a manner that is similar to private-sector business. 5 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 The Statement of Net Position presents complete information on the City's assets and deferred outflows of resources, as well as liabilities and deferred inflows of resources, with the difference reported as net position. Changes in net position that occur over time may serve as an indicator of the City's financial position. The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported using the "accrual basis of accounting." Changes are reported when the underlying event causing the changes occurs, regardless of the timing of the related cash flows. Therefore, revenue and expenses are reported in this statement for some items that will result in cash flows in future years, such as revenues related to uncollected taxes or earned but unused employee leave. Both government-wide financial statements distinguish between governmental activities, such as City functions that are supported by taxes and intergovernmental revenue, and other activities that are self- supporting. The self-supporting functions are called "business-type activities" or enterprise funds. They are intended to recover all or a significant portion of their costs through user fees and charges for services. Governmental activities include general government administration, public safety (such as police, fire and 911-dispatch), public works, community development, parks, recreation and library, shuttle bus operations, and financing and other activities. The self-supporting, business-type activities include water, sewer service, parking, waste management, landfill and building inspection. Fund Financial Statements A fund is a grouping of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal and accounting requirements. The City's funds can be divided into three categories: governmental, proprietary and fiduciary. Governmental Funds Governmental funds account for tax supported functions reported as governmental activities in the governmental-wide financial statements. Governmental funds use the "current financial resources" measurement focus, with an emphasis on having sufficient resources to meet expenditures in the short- term - a 12 month fiscal year. These statements focus on how cash and other financial assets can be readily converted to available resources for spending on City services. They also show fund balances that are left at the end of the fiscal year and distinguish between amounts that are restricted versus funds that are available for spending. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term financing decisions. Both the Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental activities and governmental funds. 6 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 The City has four major governmental fund types: General, Capital Projects, Storm Drainage and Debt Service. Information is presented separately in the Governmental Funds Balance Sheet and in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances for these funds. Financial information for the remaining governmental funds is combined into a single, aggregated presentation called Non-Major Governmental Funds. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements located elsewhere in the report. Proprietary Funds Proprietary funds are used to account for services and activities for which a fee is charged to customers in exchange for City provided goods or services. Proprietary funds use the "economic resources" measurement focus, which concentrates on how transactions and events have affected the fund's total economic resources. The City maintains two different types of proprietary funds. Business-Type Activities or Enterprise Funds: These are funds that are used to report business-type activities in the governmental-wide financial statements. The City has six enterprise funds: Water, Sewer, Parking, Waste Management, Landfill and the Building Fund. Internal Service Funds: These funds are used to allocate costs internally among the City's functions. The City uses internal service funds to account for the maintenance and replacement of its fleet and rolling stock; maintenance of City buildings and facilities; general liability; workers' compensation; and information technology and administrative support. These funds are included in the governmental activities of the government-wide financial statements because their activities support governmental programs. The internal service funds are then combined into a single, aggregated presentation in the proprietary fund financial statements. Individual data for the internal services funds is provided in the form of combining statements. Fiduciary Funds Fiduciary funds are used to account for financial resources held for the benefit of parties outside the City government. The City holds these funds in a custodial capacity or as an agent for individuals, private organizations, or other governmental units such as the State of California or the United States. Fiduciary funds are not reflected in the government-wide financial statements because the resources of these funds are not available to support the City's governmental activities. Government-Wide Financial Analysis All financial statements are presented in conformance with GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis {MD&A} -for State and Local Governments. Prior year information is made available for a comparative analysis of government-wide data. Analysis of Net Position The City had a total net position of $184.9 million as of June 30, 2016. Net position increased by 17.7% from beginning total net position of $157 million. Assets and deferred outflows of resources as of the end of June 30, 2016 were $384.3 million, reflecting a 8.2% positive change from the prior year due to a $27 million increase in current assets and deferred outflows of resources as well as a $2.2 million growth in capital assets. Liabilities and deferred inflows of resources increased only slightly -by 0.7% ($1.3 million) -despite a $2.2 increase in long-term debt. 7 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2 016 The largest portion of the City's net position is its net investment in capital assets totaling $133 .6 million. Capital assets are the aggregate value of land, buildings, and improvements that are used to provide services . Their value is reported net of related debt because the funds to repay the debt come from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending . An additional portion of the City's net position , $50 .8 million (27 .5%} represents resources that are subject to restrictions that may only be used for debt service, to construct specified capital projects or within the confines of special revenue programs . These resources include amounts held by the City's t r ustee ($12 .7 million). The remaining $38 million is largely restricted for capital improvements, as well as street repair and maintenance . Unrestricted net pos ition can be used to finance day-to-day ope rations without constraints established by debt covenants or other legal requirements or restrictions . Due to the implementation of GASB 68 and the recording of a net pension liability beginning as of June 30, 2015 , the Ci t y's unrestricted net position on June 30, 2016 was less than $0 .5 million . As the net pens ion liability will likely remain a long term liability for several decades, unrestricted net pos ition is ex pected to remain at ve ry low levels for quite some time. At the end of the fiscal year, both governmental and business-type activities had positive net positions. City of Burlingame Comparative Statement of Net Positio n June 30, 2016 an d 2015 (Amounts In Mimons) Governme ntal Business-Type Activities Activities Totals 2015 2016 2015 2016 2015 2016 Assets: Cu rren t and ot he r assets $98.33 $109.17 $39.57 .$56.0 8 $137.90 $165 .25 Cap it al asset s 110 .49 111.38 10 1.95 10 3.30 212.44 214.68 Total assets: 208.82 220.55 141.52 1 59.38 35 0.34 379 .93 Deferred Outflows: 3.44 3.04 1.35 1.39 4 .79 4.43 Liabi lities: Cu rrent liabil ities 13 .59 10.16 4 .32 5.49 17.91 15.65 othe r liabiliti es 0.81 1.26 0 .86 0 .98 1.67 2.24 l ong t er m liabili ies 104.14 115.68 62.82 60.4 5 166.96 176.13 Tota l liabirll:ie.s: 118 .54 127 .10 68.00 66.92 186.54 194 .02 Deferred Inflows: 9 .69 4.57 1.90 0 .89 11.59 5.46 Net Position: Net investmen t in capit al assets 74 .35 79.02 50.48 54 .59 124.83 13 3 .61 Rest ricted 36.45 38.41 0 .45 12.37 36.90 50 .78 Unrest ricted (26 .77) (25 .51) 22 .04 26 .00 (4 .73 ) 0 .49 To t al net position: $84.03 $9 1.92 $72.97 $92 .96 $157.00 $184.88 8 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 City of Burlingame Statement of Activities For the Fiscal Years Ended June 30, 2016 and 2015 (Amounts in millions) Governmental Businesss-Type Activities Activities 2015 2016 2015 2016 Revenues: Program revenues: Charges for services $9.08 $8.90 $37.05 $36.91 Operating grants and contributions 1.13 0.59 -- Capital grants and contributions 0.74 0.44 -- General revenues: Property taxes 16.68 17.65 -- Sales taxes 11.10 12.83 -- Transient occupancy taxes 23.70 26.09 -- Other taxes 4.70 4.59 -- Other general revenue 1.25 0.23 -0.39 Total revenues: 68.38 71.32 37.05 37.30 Expenses: Governmental Activities General government 4.23 4.27 -- Public safety 23.01 26.30 -- Public works 8.27 8.31 -- Community development 1.15 1.16 -- Parks, recreation and library 15.83 13.79 -- Shuttle operations 0.13 0.14 -- Financing and other activities 2.42 2.64 -- Business-Type Acti vi ti es Water --11.47 12.80 Sewer service --10.14 10.96 Waste management --0.48 0.49 Landfill --0.07 0.06 Parking --1.30 0.45 Building inspection --1.37 1.42 Total expenses: 55.04 56.61 24.83 26.18 Increase/( decrease) in net position before transfers 13.34 14.71 12.22 11.12 Investment income (expenses) 0.48 1.29 (1.45) 0.76 Transfers 3.13 (8.11) (3.13) 8.11 Change in net position: 16.95 7.89 7.64 19.99 Net position -beginning 67.08 84.03 65.33 72.97 Net position -ending $84.03 $91.92 $72.97 $92.96 9 Total 2015 2016 $46.13 $45.81 1.13 0.59 0.74 0.44 16.68 17.65 11.10 12.83 23.70 26.09 4.70 4.59 1.25 0.62 105.43 108.62 4.23 4.27 23.01 26.30 8.27 8.31 1.15 1.16 15.83 13.79 0.13 0.14 2.42 2.64 11.47 12.80 10.14 10.96 0.48 0.49 O.o? 0.06 1.30 0.45 1.37 1.42 79.87 82.79 25.56 25.83 (0.97) 2.05 -- 24.59 27.88 132.41 157.00 $157.00 $184.88 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Governmental Activities Governmental activities increased the City's net position by nearly $7.9 million, with a total net position of $91.9 million at the end of the fiscal year. The increase was attributable to total governmental revenues that exceeded total expenses by $16 million, prior to net transfers out of $8.1 million. Program revenues decreased 9.3% due largely to decreased levels in both operating and capital grants and contributions. 6 .0 5 .0 4.0 3 .0 2.0 1.0 0 .0 •2015 General Government •2016 Public Safety Public Works Governmental Activities Two-Year Comparative Program Revenues Fiscal Year 2015 and 2016 (Amounts in millions) Community Development Parks, Recreation, Shuttle Operations and library General revenues increased nearly $4 million (6 .9%), led by a $2.4 million increase in transient occupancy tax revenues, which totaled $26 .1 million over the year. In addition, property and sales tax revenues were up a combined $2.7 million over the prior year. The robust growth in these tax revenues was a result of a continued strengthening in tourist demand and improved consumer confidence when compared with the prior year. 10 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Governmental Activities {Continued) Governmental Expenses - by Program Fiscal Year 2015-16 • General Government • Public Safety • Public Works • Community Development • Parks, Recreation, and Library • Shuttle Operations • Financing and other activities Governmental Activities - Net Expense by Program Fiscal Year 2015-16 • General Government • Public Safety • Public Works • Community Development • Parks, Recreation, and Library • Shuttle Operations •Financing and other activities Expenses from governmental activities increased approximately $1.6 million, for a total of $56.6 million for the fiscal year. Expenses in most functional areas were only slightly higher than incurred in the prior fiscal year, however, spending in the category of public safety increased by $3.3 million. The increase was due in part to sick leave balances (approximately $1 million) that were not previously included in the liability for compensated absences, as well as parking enforcement activities, which were moved to the department's General Fund budget. (Metering and parking meter collection costs were retained by the Parking Enterprise Fund, a business-type activity.) Accelerated depreciation of fire vehicles contributed to a $0.5 million increase in the cost of fire services. Parks, recreation and library activities experienced the only decrease in the cost of governmental activities when compared to the prior year. The $2 million decrease in spending was due in large part to the completion of the Millennium Project, a $3.5 million renovation of the historic Burlingame Public Library's main branch, in fiscal year 2014-15. The overall departmental spending increase across all departments was 2.6%. There was a $0.2 million (8.9%) year over year increase in financing activities, which represents debt service and amortization of premiums and discounts on previously issued debt. The majority of these governmental activities are financed from City taxes. However, the $8.9 million collected in charges for services (reported as program revenues) for these various activities served to offset the departmental spending associated with some services. Program revenues overall covered approximately 15 .7% of governmental expenses over the fiscal year. The above charts of expenses and net cost of the City's various governmental activities have been derived from the Statement of Activities. The first pie chart reflects expenses incurred in each area as a percentage of the total expense of governmental activities ($56.6 million in fiscal year 2015-16). This compares with the relative net cost after applying program revenues derived from each area's activity. The total net cost of governmental activities ($46.7 million in fiscal year 2015-16) must be funded out of the City's general revenues -primarily taxes and investment earnings. Areas with the highest program revenues (i.e. Public Works; Parks, Recreation and Library) are able to offset relatively more costs than activities that have fewer opportunities to derive program revenues (such as Public Safety). 11 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Business-Type Activities The net position for business-type activities increased by nearly $20 million, or 27.4%, from a beginning net position of $73.0 million. $11.9 million of the increase was due to the reporting of capital projects which had been funded but not yet completed by year end, within the appropriate utility. In prior years, these projects were categorized as governmental activities, and transferred to the business activities only upon completion. In fiscal year 2015-16, enterprise operations produced total operating revenue (consisting largely of revenues from charges for services) of nearly $37 million, a decrease of $0.1 million, or a 0.3% reduction from fiscal year 2014-15 operating revenues. After experiencing a $1.8 million combined drop in revenue in the prior year due to a reduction in water consumption and sales in response to the state's severe draught, the Water and Sewer enterprises leveled off somewhat, with revenues only slightly less than in fiscal year 2014-15 ($0.3 million, or 1 %). Business-type expenses totaled $26.2 million. Operating expenses increased by $1.4 million or 5.4% from prior year expenses of $24.8 million. Again, this increase was largely attributable to operating expenses of the Water and Sewer activities, which experienced higher water wholesale rates (28%) and increases in personnel costs. Expenses in the Parking enterprise were down due to the reclassification of parking enforcement costs ($0.5 million) to governmental activities. This change was made to better align these costs to the associated revenues generated from parking violations, a function of public safety. Still, the changes in net position (the year-over-year difference between business-type revenues plus deferred outflows of resources, and expenses plus deferred inflows of resources) reported a healthy increase for these enterprise activities. Unlike the governmental activities, program revenues cover total expenses in the business-type activities, with no contribution from City taxes. The City is able to adjust water, sewer, solid waste, parking rates, and building permit fees to cover expenditures and future liabilities. Financial Analysis of City Funds Governmental Funds The Governmental Funds financial statements provide information on the short-term inflows, outflows, and balances of resources that are available for spending over the 12-month fiscal period. The goals of the funds are to have sufficient resources available to finance City services within each fiscal year. In particular, the unassigned fund balance may serve as a measure of City funds that are available for spending in the short-term. The General Fund, Capital Projects Fund, and the Debt Service Funds, or collectively, the 'major funds' are reported separately in the basic Financial Statements. A separate accounting of the City's ten non-major governmental funds can be found in the Combining Statements located in the Other Supplementary Information section of the CAFR. 12 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYS I S FOR THE FISCAL VEAR ENDED JUNE 30, 2016 Governmental Funds {Continued) To t al Governm ental Fun ds (A m o unts I n M illio n s) 6/30/2016 7/1/2015 Net Position/Fund 6/30/2016 Ne t Position/Fund Fun d Desc r iption Balance Nonspendable Bala nce Ge n e r al Fun d $29 .98 $0.3 4 $29.46 Ca pital Pro j ect s 3 4 .60 -3 3 .10 St o rm Drain age 2 .63 -2 .5 8 Debt Se rvi c e Fun d 1 2 .71 0 .57 3 .96 N o n-M aj o r Fun ds 6.13 -5.58 Tot al $86.05 $0.91 .$74.68 General Fund Yr-ov e r-Yr Change 7/1/2015 Net Position/Fund Non.s pendable Balance $0 .2 2 $0.52 -1.50 -0 .05 0.38 8 .75 -0.55 $0.60 $11.37 The General Fund is the City's main operating fund . Revenues and expenditures are monitored year- round to maintain a balanced budget. General Fund revenues were nearly $66 .2 million in fiscal year 2015-16, reflecting a $4 .2 million increase from the prior year's performance of $61 .9 million . Expenditures totaled $47.5 million, which is $3 .1 million more than in the prior year. Revenues were sufficient to cover all operating expenditures . Revenues less operating expenditures before transfers were $18.7 million . The General Fund transferred $6 .4 million out to the Debt Service Fund to pay for governmental debt, and nearly $14.8 million to the Capital Projects Fund. The large influx for capital spending was approved to pay for project-related expenditures ($4 .3 million), and to bolster the Renewal and Replacement Reserve ($10.5 million), established in the prio r fiscal year in recognition of the City's large backlog of facility needs. Detailed notes on the transfers can be found in the lnterfund Transfer section (Note 4 in the Notes to the Basic Financia l Statements). The General Fund balance as of June 30, 2016, was nearly $30 million, representing an increase of $0.5 million from the prior year fund balance of $29.5 million. Only $0 .3 million of the fund balance was categorized as "nonspendable"; the City Council assigned $18 .2 million as reserves for specific purposes as described in Note 12 of the Notes to the Basic Financial Statements, and approximately $0.4 million represents contractual obligations which will carry forward to the next fiscal year (encumbrances). The remaining $11 million represents unassigned amounts . Capital Projects Fund The Capital Projects Fund accounts for the resources used to acqui r e, develop, and construct capital improvements or to purchase major capital equipment. The City capitalizes equipment with a cost basis of at least $5,000 and has an estimated useful life in excess of one year. Structures, improvements, and infrastructure with a value of at least $250,000 are also capitalized . All capital assets are valued at historical cost. Major outlays for capital assets and improvements are capitalized as projects are constructed . For more information on capital assets , please refer to the Notes to the Basic Financial Statements under Capital Assets (Note 5). The Capital Projects Fund had revenues of $0 .5 million, received in large part from state and local grants ($0.4 million) including two Measure A grants for street resurfacing projects . Projects were funded mainly by $19.1 million in transfers from other funds to support ongoing construction costs and to set aside funds for previously appropriated projects . In fiscal year 2015-16, the General Fund contributed 13 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Capital Projects Fund (Continued) $14.8 million, $10.5 million of which funded the City's Renewal and Replacement Reserve. $1.6 million of bond proceeds, as well as $1.4 million from storm drainage fees, were transferred in to the Capital Projects Fund for storm drain, facilities, and street projects. The Measure A and Gas Tax special revenue funds provided a combined total of over $1.2 million. Capital project expenditures totaled $7.2 million, a decrease of $6.7 million from prior year expenditures of $13.9 million, as capital projects in the enterprise funds are no longer reported in the City's governmental Capital Project Fund (while under construction) for reporting purposes. The Capital Projects fund balance at the end of the fiscal year was $34.6 million, or an increase of $1.5 million from the prior year ending balance. Other than the $13.5 million reserve for Renewal and Replacement, the entire fund balance is assigned for the construction of specific capital projects. During fiscal year 2015-16, major governmental capital project expenses, exceeding $1 million included: • US 101/Broadway Interchange -$1.6 million This project is divided into 5 stages of construction, with the project currently mid-way through Stage 4. Total project construction costs of $65 million are anticipated, with a total City contribution of $3 million for construction. The project is scheduled for completion in late summer of 2017. • Citywide Storm Drain Neighborhood Improvements -$1.2 million This project was completed in August 2016. • 2015 Annual Street Resurfacing Project -$1.2 million Funded by State Gas Tax, San Mateo County Measure A, and Measure M funds, this project consisted of performing asphalt base-failure repairs, asphalt overlay, micro-sealing, pavement reconstruction, concrete curb and gutter repairs, and traffic striping improvements on certain City streets and parking lots. Debt Service Fund The Debt Service Fund is used to account for resources used to repay general long-term debt and to record the payment of principal and interest as well as other expenditures related to debt administration. Principal payments on outstanding debt reduced general government debt by $5.8 million for the year. The General Fund contributed $6.4 million to the Debt Service Fund for governmental debt service payments, and the Storm Drainage Fund contributed $1.4 million required to meet obligations relating to the Storm Drain Revenue Bonds. A significant portion of the 2010 Storm Drain Bonds were taxable Build America Bonds; the Internal Revenue Service provided an annual interest subsidy of approximately $0.2 million for this issuance. Debt service expenditures represent principal payments, interest charges, and administrative costs of debt such as fiscal agent fees on existing governmental debt. A more detailed description of the City's outstanding debt and the long-term obligations associated with each issue can be found in the Notes to the Basic Financial Statements under Long-Term Debt (Note 6). 14 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Storm Drainage Fund The Storm Drainage Fund was added as a special revenue fund in fiscal year 2009-10 to fund needed improvements to the City's infrastructure and to pay debt service on certain revenue bonds issued to fund storm drain capital projects. The voter-approved initiative requires that the funds be accounted for separately, given their intended purpose. The voters approved the new fee in May 2009, and revenues are collected through an assessment on property tax bills . The storm drain fee will sunset after 30 years. Neighborhood storm drainage improvements continued in fiscal year 2015-16. As in the prior year, the storm drain fee generated over $2 .7 million in revenue. The funds are dedicated to debt service on the use of storm drain revenue bonds and to fund improvements on a pay-as-you-go basis . Revenue bonds issued with a pledge of storm drain fee revenues are used as a funding source for these projects in the Capital Projects Fund . In February 2016 the City issued a third round of Storm Drainage Revenue Bonds, for additional capital funding of $9.9 million . The fund balance increased only slightly during the fiscal year, as revenues from the storm drain fee and interest earnings were just adequate to fund combined capital appropriations ($1.4 million) and debt service expense ($1 .4 million) for the fiscal year. Non-Major Governmental Funds The Measure A and Gas Tax Funds are the largest of the City's non-major governmental funds, together constituting approximately 61.7% of non-major fund balance. While Measure A revenues remained level with the prior year at nearly $0.8 million Gas Tax revenues decreased 20.4% to approximately $0.7 million. Together, the funds served to fuel traffic and street improvements in the Capital Projects Fund. Non-major governmental fund balances in total increased $0.6 million, as revenues received in these funds exceeded the expenditures associated with the legally specified purpose of each of the funds . Proprietary Funds The City's proprietary fund statements provide the same type of information found in the government- wide financial statements. Proprietary funds consist of the City 's six enterprise funds (Water, Sewer, Waste Management, Landfill, Parking, and the Building Enterprise funds) and six Internal Service Funds (General Liability, Workers' Compensation, Facilities Services, Equipment Services, OPEB and Information Technology Services funds). Operations of the City 's Enterprise funds are accounted for as business activities. Tot al Enterp rise Fun ds (Am o unts In M illions) 6/30/2016 7/1/2015 6/30/20 1 6 Net Investme nt in 7/1/201 5 Net lnve,stm e nt in Yr-over-Yr Change Fun d Des cr iption Net Positio n Capital Assets Net Positi o n Ca pital Ass ets Net Position W at er $24.29 $9.97 $18 .92 $10.00 $5.37 Sew er 52.29 37.57 42.06 33.55 10.23 Wast e M a nagem e nt 4.18 -3 .73 -0.45 La n dfill (2.16) -(2.54) -0.38 Parking 1 1.3 1 7 .0 4 8 .74 6.93 2.57 Bu ildi ng 3.06 -2.07 -0.99 Tot al $92.97 $54.58 $72.98 $50.48 $19.99 15 CI T Y OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Water Fund The Water Fund continues to maintain a stable financial position as in the prior year. Revenues decreased by about $0.2 million or 1.6%, year-over-year, while expenses increased by $1.4 million. Water revenue decreased due to lower sales volumes, which fell approximately 12% -nearly 130 million gallons less than the prior fiscal year -as a result of continued conservation efforts . The Water Fund revenue includes monthly reimbursements from the City's facilities for the usage of water. Water expenses increased mostly due to a 28% increase in the wholesale water rate . The Water Division had three open staff positions, creating some savings, but not enough to offset the increase in the cost of wholesale water. Net position of the water enterprise increased by $5.4 million, due largely to the transfer of water capital projects funding t hat was included in the pr io r year 's Capital Project Fund balance. Mi lli ons Water Fund Hi st ori ca l Fin anci al Perfonn anc e Fi scal Yea rs 2012-.16 ~Tot a l Revenue: -Total Expenses: _._Net Posit ion, ex cl ud ing net inv estment in capit a l assets and capit al projects: $8 +-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-! $6 +-~~~~~~~~~~~~~~~~~~~~~~~~--< FY12 FY13 FY14 FV15 FY16 Sewer Fund The Sewer Fund continues to maintain a stable financial as in the prior year. The fund's overall net position (including cap ital assets) increased from $42.1 million to nearly $52.3 million due largely to the inclusion of $6.5 million of sewer capital projects funding that was included in the prior year's Capital Project Fund balance. Net investment in capital assets increased slightly over $4 million as associated debt payable decreased by $1.6 million, and assets were placed in service from construction in progress ($2 .5 million). The largest portion of net position ($37 .6 million) relates to this net investment in capital assets , representing 71.9 % of the utility's total net position . An unrestricted net position of $8.9 million reflects an increase of $0 .9 million from the prior year, a reflection of the r elatively positive results of operations for the year. Appro ximately 29 .3% of net revenue is irrevocably pledged to the prompt payment of debt service relating to futu re payments of principal and interest on revenue bonds previously issued . 16 1. CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 As a large portion of sewer charges are based on water consumption, sewer se rvice revenues remained flat. There has been no annual rate increase for sewer service imposed in calendar years 2013 through 2016 . Total expenses of the Sewer Fund were also relatively flat, with a slight decrease in insurance costs for the utility. As with the Water Fund, the Sewer Fund will also finance future capital improvements on a pay-as-you- go basis . The sewer rate structure includes an annual set-aside of $4.2 million to pay for capital improvements to the Burlingame Wastewater Treatment Plant and repair and maintenance of the sewer collection system. Millio ns $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Parking Fund Sew e r Fund Hi stori cal Fi n anci al Pe rfo rm an ce Fi sca l Yea r s 2012-16 ~T ot a l Rev e nu e: ~T ot a l Ex pen ses: ~Net Positio n , ex clud i ng n et i nvestme nt i n capita l asset s an d c ap ital p rojects: & ------ ------ --------_. - ~ FY12 FY13 FY14 FY15 FY16 The goals of the Parking Fund are to cover the costs of operating and improving the City's parking districts and produce sufficient revenue to re-invest in the capital assets of the Burlingame and Broadway Avenue shopping districts, which are served by the City's parking lots. The fund 's overall ending net position, including capital assets, increased nearly $2 .6 million over the prior year ending net position of $8.7 million. Because much of the fund ($7 million) is invested in capital assets , the increase is reported in unrestricted net position, and largely reflected in higher cash balances. Revenue in the Parking Fund increased by $0 .08 million (nearly 3%), due p r imarily to an incr ease in parking activity. Largely concentrated in the City's retail centers, the increase is reflective of continued economic growth. Parking expenses decreased by 65 .6% (approximately $0 .9 million). As previously mentioned, parking enforcement activities, which had been included in the Parking Enterprise Fund in the prior year, have been moved to the General Fund (Public Safety) budget. This revenue reclassification , which was approved with the 2015-16 fiscal year budget, allows proper matching of enforcement costs with citation revenues (which ar e credited to the General Fund). This will allow for a healthier increase in the Pa r king enterprise, which is needed to fund futu r e parking facilit ies . 17 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Waste Management and Landfill Funds The City is a member of the South Bayside Waste Management Authority {SBWMA), a joint powers authority that contracts with external vendors for solid waste collection and disposal as well as collection of inert recyclable materials, yard waste and other organic materials. The Waste Management Fund accounts for certain other services that are provided or paid for directly by the City. The costs of these services, which include the cleaning of sidewalks, parking lots and garbage cans/liners, door-to- door hazardous waste pickup and street sweeping, are built into garbage collection rates for both residential and commercial customers . Operating revenues of the Waste Management fund totaled $0 .8 million. In addition, a surcharge on garbage collection rates fund the costs associated with the long-term monitoring requirements of the former city landfill. The Landfill Fund reports a deficit position of $2.1 mil lion due to the status of the City's obligation to mediate closure and post-closure activities relating to the City's old landfill. On an annual basis, the City reports to CalRecycle (Department of Resources Recycling and Recovery) the estimated costs of post-closure and corrective action as adjusted for inflation and current year expenditures pertaining to mediation . The landfill closu r e and post closure liability decreased slightly ($0 .07 million) during the fiscal year, and the ending net position was improved by $0.4 million . I nternal Se rvice Funds The Internal Service Funds {ISFs) are al located among the City's various functions and are therefore considered to account for governmental activities for financial statement purposes. The internal service funds ex perienced an increase in net position of nea r ly $1.4 million . Most of this increase was due to continued improvement in the City's insurance ISFs -the Gene ral Liability and Workers' Fund Liability funds ex perienced decreased claims and l itigation liabilities based on an actuarial study completed in September 2016 . General Fund Budget ary Highlights Detailed information on variances can be found in the General Fund Statement of Revenues, Ex penditure and Changes in Fund Balance, Budget and Actual. The adopted fiscal year 2015-16 General Fund b udget assumed fairly robust gains in operating r evenue, based on the economic recovery evidenced in recent years . Revenue growth of 10.1% was fo r ecast over the revenues antic i pated in the prior year's adopted budget . Final collections totaled nearly $66 .2 m i llion, an increase of 6 .9 % over prior year actuals . Several key revenue budgets were adjus t ed upward at mid-year to reflect improvements in General Fund receipts. Still , overall revenues exceeded the year's adjusted budget by slightly ove r 1% {$0.7 million). Total Revenue Dol la r Change Pe r centage Change City of Bu r lingame Histor ical General Fund Revenues {Amount s In M illion s} Flf12 FY 13 FV14 $4 6 .3 1 $51.29 $55 .63 3 .05 4.97 4.3 4 7.04% 10.7 4% 8 A 6% 18 FY15 $61.9 1 6.28 11.29% FY16 $66.1 6 4 .25 6 .86% CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Increases in General Fund revenue were due largely to the following: • Transient occupancy tax revenue performed nearly $0.9 million better than budget, with an 10.1% growth over prior year results . • Property tax revenues for the year increased nearly $1 million (5 .8%) over the prior year results, in line with the budget as adjusted at midyear. • Sales and use tax revenue ended the year at $12.8 million, due largely to the end of the "triple flip " - a series of revenue swapping procedures by the State which began in 2004 to secure debt service payments for the State's Economic Recovery Bonds. The final "true-up" process yielded a one -time bump in sales tax revenues of nearly $1 million. General Fund revenues are expected to continue an upward trend over the next fiscal year as the economy continues to improve, albeit more modestly than in the past few yea rs. Burlingame's fiscal health relies largely on growth in the travel and tourism industry, and increased consumer confidence . Total Ope ratiing Expenditmes Do11a r Change Perce ntage Change City o f Bu ril ingame Histor ica'I Gen e ra l Fund Exp enditur es (Am0unt s ~n M illions) FY12 FY13 FY1 4 $36.68 $37 .6 1 $40 .14 2 .1 5 0 :93 2 .53 6 .23% 2 .53% 6 .72% FY15 fY 1,6 $4 4.4 1 $4 7 -4 6 4 .2 7 3 .0 5 10.63% 6 .&8 % The fiscal year 2015-16 adopted General Fund budget assumed operating expenditures of $49 .4 million, a growth of 3.3% from the prior year budget. During the fiscal year, the City had few significant budget adjustments; budgets were closely monitored City w ide , as reflected in positive budget variances in all functional areas . Total budgetary (e x penditure) savings for the fund were appro ximately $2 .8 million (5.6 %). 19 CITY OF BURLINGAME, CALIFORN I A MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 General Fund Budgetary Highlights {Continued) Ge ner al Fund Hi stori ca l Reven u e s& Ex p e ndi t ures Fi scal Yea rs 2012-16 Milli o ns $70 $65 $60 $55 $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 so -- - FY12 General Fund Reserve Policy ...,_Total Reven ue -Total Ope rating Expe ndit ures ~ ~ - - FY13 FY14 FY 15 __._ -- FY1 6 The chart below illustrates the amounts of General Fund balance assigned as various reserves for the past five years. In January 2015 , the Council adopted a General Fund Reserve Policy which established reserve levels based on an analysis of risks specific to the City, including vulnerability to extreme events and public safety concerns, revenue source stability, expenditure volatility, liquidity, leverage, and adequacy of infrastructure funding . The policy established targeted levels for an Economic Stability Reserve and a Catastrophic Reserve (24% and 2%-9% of budgeted revenues , respectively), as well as a Contingency Reserve amount of $0.5 m i llion. Based on an updated risk analysis, the policy was revised in October 2015 to replace the initial range for the Catastrophic Reserve to a fi xed $2 million. The actual reserve levels are adopted by resolution with each annual budget, but may be modified by resolution throughout the year based on recommendations by the Finance Director as economic fo r ecasts or other changes dictate. Each reserve is reported as an assignment of the City's General Fund balance. 20 CITY OF BUR LI NGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCA L YEAR ENDED JUNE 30, 2016 General Fund Reserve Policy {Continued) City of Burlingame City Council A ssigned General Fund Reserves (Amounts In Millions) FY12 FY 13 FY1 4 Economic St ability Reserve $6.00 $5.00 $6.00 Catast rophic Rese rve 2.00 2.00 2 .00 OP EB Reserve 3 .0 0 4 .8 0 Gene r al Plan Reserve 0.50 Co ntingency Reserve 0 .5 0 0 .50 0 .50 Tot al Reserves 11.SO 12.30 9.00 Encumbrances 0 .16 0 .16 0 .4 1 Total Assigned Fund Balance $11.66 $12.46 $9.41 FYlS $13 .30 4.50 0 .5 0 18.30 0 .47 $18.77 FY16 $15.7 0 2.00 0.5 0 18.20 0 .44 $18.64 As a measure of the General Fund liquidity, it is useful to compare its unrestricted fund balance (including commitments and assignments of fund balance) to annual operating expenditures . As of June 30, 2016, the unrestricted fund balance of $29 .6 million ($30 million less non-spendable fund balance of $0 .3 million) represents 62 .5% of General Fund operating expenditures of $47 .5 million . Expenditu r es : Fund Bal ance: % of Exp ense s: ·City o f Bu r lingame G e ner al Fund Ba l ance as a Perce ntage of Ope r ating Expe nditures (Amounts In Millions) FY12 $3 6 .68 15.52 4 2 .3% FY13 $37.61 19 .95 53 .0 % FY14 $40 .14 22.89 57.0% FY15 $44.41 2 9 .46 66.3% Capital Assets and Debt Administration Capital Assets FY16 $47 .4 6 29.98 63 .2 % Improvements that lengthen an asset's useful life are not capitalized unless the improvements increase its service potential. Furthermore , maintenance costs are expensed in the period incurred . The City maintains an inventory of roads and parking lots and performs periodic assessments to establish the condition levels . The City uses the modified approach for roads and parking lots as alternative to depreciation. Additional information can be found in the CAFR's Required Supplementary Information, Note 4 -Modified Approach for the City's Infrastructure. As reported in the Statement of Net Position, capital assets for the governmental and business-type activities totaled $214 .7 million on June 30, 2016, net of depreciation. Capital assets increased by 1.1 % from prior fiscal year. The investments in capital assets include : land, construction in progress, buildings, improvements, machinery and equipment, facilities, roads, streets, utilities infrastructure, and sto r m drains . 21 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Capital As sets {Continued) cap ital Asset s, Net of Accu m u l ated Dep reci at ion June 30, 2016 (Amounts In M illion s) Govern ment al Activities Bus i n ess-Type Activ it i es 21115 21116 %Change 2015 2016 %Ch ange La n d an d ot h e r asset s n ot b e i ng depreci at ed $40.33 $40.94 1.5% $6.93 $7.5 9 9.5% Facilit i es, i n f rastructu re and eq ui p m e nt $70.16 $70 .44 0.4% $95 .02 $95 .71 0.7% Tot al $110 .49 $111.38 0 .8% $101.95 $103 .30 1.3% Total 2()15 21116 %·Ch ange $4 7.26 $48 .53 2.7% $165 .18 $166 .15 0 .6% $212.44 $214.68 1.1% All depreciable capital assets we re depreciated from t hei r acquisition date to the end of the current fisca l year for t he government-wide financial statement presenta ti on. Governmental fund financial statements reco r d capital asse t purchases as ex penditu res during the yea r . Ongoing proj ec t s a re accounted for as "con struction in progress." Additional info r ma t ion about Capital Assets can be found in the Notes to the Bas ic Financial Statements under Note 5 -Capital Assets . Long -T e rm Obliga t ions Due to last year's i mplement ation of the (GASB) Governmental Accounting Sta nda r ds Boa r d 's new pension reporting rules encapsulated in GASB Statements and 68 and 71 , t he City 's St atement of Net Po si tion now r eflects unfunded pension liabilities. The GASB standards requi r e the Cit y to com p ute its unfunded liabilities by as certaining "net pension liability" o r t he difference between a p lan 's total pension liabili t y and the assets avai lable to pay fo r such liability at a specifi c ti me . As of June 30, 20 1 6, the net pension l iability fo r the City was computed to be $47 million . Outstandi ng Lo ng-Term Obl igati ons June 30, 2016 (Amount s I n Million s) Governmental Activi t i es Bus i ness-Type Activit i es Total 2015 2016 %Change 2015 2016 %Change 2015 2016 %Change Bo nds Due i n M or e t h an One Yea r $5 0.01 $55.44 10.8% $49.55 $46.67 -5.8% $99 .56 $102 .11 2.6% Bonds Du e W ith i n On e Yea r 4.73 4 .26 -9.7% 2.55 2.63 2.9% 7.28 6.89 -5 .3% Cl ai m s and Li t igat i o n 7.02 6.42 -8.5% 0.0% 7.02 6.42 -8.5% Landfi ll Cl osu r e 0.0% 3.08 3.02 -2.1% 3.08 3.02 -2.1% OPEB Obliga ti on 13 .01 13.03 0 .1% 2.95 2.95 0.1% 15.96 15.98 0.1% Net Pe nsi on Li ab i lity 111 34 .5 6 39 .15 13.3% 7.21 7.83 8.7% 41.77 46.98 12.5% Com p e nsa t ed A bse n ces 1.36 2.49 82.8% 0.28 0.25 -12.1% 1.64 2.74 67.5% Tota l : $110.69 $120 .79 9.1% $65 .62 $63 .35 -3.5% $17 6.31 $184.14 4 .4% (1) Duri ng f i sca l yea r 20 14-15, t he City i m p l em ented GA SB St at e m e nt s 68 an d 71, w hich requ i r e t h e r ecor d i ng of n et p e n si on li ability an d p e nsi on r el at ed deferred i nf l ow s an d outfl ow s o n t h e f i na n ci al stat e m e nts . 22 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 As of June 30, 2016, the City had total long-term obligations of 184.1 million, an increase of $7.8 million from the prior year. Bonded debt outstanding grew by 2.2 million due to the issuance of 9.8 million in Strom Drainage Revenue Bonds in February of 2016. More than half ($59.7 million) of the City's total long-term outstanding debt relates to storm drain revenue bond financing and other governmental activities; the remainder ($49.3 million) is comprised of loans and revenue bonds previously issued to support various capital projects overseen by the Water and Sewer enterprises. In the fiscal year ended June 30, 2016, the City paid nearly $8.5 million in principal payments on long term debt. Short of additional debt financings, these obligations will decrease over time as principal amounts are paid off. In addition, the City has several other long-term obligations. Landfill closure and post-closure liabilities are determined in order to capture the estimated cost of municipal solid waste landfill closure and post- closure care as required by federal and state regulations. Funds are then set aside to ensure adequate funding for the post-closure costs of the former Burlingame landfill, including the annual costs of monitoring and maintaining the former landfill, as the costs are incurred. Funding for this liability is currently provided through a portion of solid waste rates charged to City ratepayers. The liability for landfill post-closure care costs decreased slightly, and revenues to the fund were sufficient to provide a $0.4 million increase of net position in fiscal year 2015-16. Economic Factors and Next Year's Budget and Rates The following factors were taken into consideration in preparing the fiscal year 2016-17 budget: Revenue Projections: The City prepared a five-year forecast of revenues and expenditures for the General Fund. The adopted budget for 2016-17 assumed growth of approximately 8.2% in total General Fund revenue before transfers compared to the prior year adopted budget, largely due to positive changes in the economy evident in the 2015-16 fiscal (prior) year to date. Expenditures: General Fund operating expenditures are expected to grow approximately 5.8%. Fiscal year 2016-17 departmental budgets of $52.3 million provide for increases in pension costs, health care premiums for active employees, and slight increases in capital outlay. Overall appropriations including transfers ($59.9 million) reflect a 5% increase from the 2015-16 adopted budget; the City Council again set aside $3 million to fuel the City's new Renewal & Replacement Reserve in the Capital Projects Fund. General Fund Capital Improvements: The City Council earmarked nearly $4.7 million for capital improvements in the Five Year CIP Plan. Water and Sewer Rate Adjustments: Water and sewer rate adjustments, usually implemented early in the calendar year, were awaiting the completion of rate studies for these utilities as of fiscal year end. The draught had a significant impact on both water and sewer operations, and increases in the cost of wholesale water would indicate that future rate increases are needed. Note that a progressively tiered rate structure is in place for most single-family residential customers. The tiered structure allows for increased volumetric charges for higher water units consumed. Sewer charges are largely based on water consumption. Solid Waste Rate Adjustments: The City provides solid waste services through a joint exercise of powers agreement (JPA) and a franchise with a private contractor. Rates are adjusted each calendar year based on updated costs of solid waste collection and material processing service, including landfill post-closure costs, street sweeping, recycling and other diversion programs. No solid waste rate adjustment is proposed for calendar year 2017. 23 CITY OF BURLINGAME, CALIFORNIA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Requests for Information The financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. Individuals are encouraged to make inquiries or requests for additional financial information at: Burlingame Department of Finance City Hall 501 Primrose Road, Burlingame, CA 94010 (650) 558-7200 24 CITY OF BURLINGAME, CALIFORNIA STATEMENT OF NET POSITION June 30, 2016 Governmental Business-Type Activities Activities Total ASSETS Cash and investments $ 87,984,067 $ 50,020,314 $ 138,004,381 Receivables (net of uncollectible amounts) Due from consumers 188,827 4,631,281 4,820,108 Due from other governments 782,392 747,779 1,530,171 Other receivables 7,045,179 232,488 7,277,667 Inventory 57,189 57,189 Prepaid items and deposits 809,907 8,571 818,478 Cash and investments, restricted 12,291,592 447,984 12,739,576 Internal balance 9,250 (9,250) Capital assets: Land and other assets not being depreciated 40,940,812 7,589,833 48,530,645 Facilities, infrastructure, and equipment, net of depreciation 70,438,569 95,707,044 166,145,613 Total assets 220,547,784 159,376,044 379,923,828 DEFERRED OUTFLOWS OF RESOURCES Deferred amount of bond refunding 587,851 587,851 Deferred outflows related to pension 3,036,923 802,770 3,839,693 Total deferred outflows of resources 3,036,923 1,390,621 4,427,544 LIABILITIES Accounts payable 2,290,343 1,927,881 4,218,224 Retentions payable 272,126 5,104 277,230 Accrued payroll 1,785,500 1,785,500 Accrued interest 690,934 661,965 1,352,899 Deposits 1,113,294 714,160 1,827,454 Unearned revenue 151,008 263,395 414,403 Claims and litigation Due in one year 597,000 597,000 Due in more than one year 5,821,000 5,821,000 Compensated absences Due in one year 247,899 66,292 314,191 Due in more than one year 2,246,602 183,288 2,429,890 Landfill closure and post closure costs Due in one year 201,153 201,153 Due in more than one year 2,816,146 2,816,146 Net OPEB obligation Due in more than one year 13,025,134 2,948,952 15,974,086 Long-term debt Due in one year 4,264,835 2,627,331 6,892,166 Due in more than one year 55,436,869 46,670,282 102,107,151 Net pension liability, due in more than one year 39,153,198 7,833,882 46,987,080 Total liabilities 127,095~742 66,919,831 194,015,573 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pension 4,567,357 890,856 5,458,213 NET POSITION Net investment in capital assets 79,019,269 54,587,115 133,606,384 Restricted for: Restricted amounts held with trustee 12,291,592 447,984 12,739,576 Capital projects 21,919,904 11,918,928 33,838,832 Burlingame Avenue Special Assessment District 418,403 418,403 Street and sidewalk repair and maintenance 3,783,908 3,783,908 Total restricted net position 38,413,807 12,366,912 50,780,719 Un restricted (25,511,468) 26,001,951 490,483 Total net position s 91,921,608 s 92,955,978 s 184,877,586 See accompanying Notes to the Basic Financial Statements 25 Functions/Pro~rams Governmental activities: General government $ Public safety Public works Community development Parks, recreation, and library Shuttle operations Financing Total governmental activities Business-type activities: Water Sewer Waste management Landfill Parking Building Total business-type activities Total government-wide $ CITY OF BURLINGAME, CALIFORNIA Statement of Activities For the year ended June 30, 2016 Program Revenues Exeenses 4,275,344 26,295,760 8,312,031 1,161,617 13,786,264 137,321 2,638,217 56,606,554 12,822,471 10,959,647 486,634 55,631 445,326 1,420,031 26,189,740 82,796,294 Operating Charges for Grants and Services Contributions $ 122,718 $ 12,060 1,009,389 300,503 3,477,170 4,141 890,008 3,405,576 210,674 63,200 8,904,861 590,578 15,157,780 15,634,340 778,490 437,212 2,649,256 2,255,825 36,912,903 $ 45,817,764 $ 590,578 General revenues: Taxes: Property taxes Sales taxes Transient occupancy tax Other taxes Other general revenue Total general revenues Investment income (expense) Transfers Capital Grants and Contributions $ 438,506 438,506 $ 438,506 Total general revenues and transfers Change in net position Net position -beginning Net position -ending See accompanying Notes to the Basic Financial Statements 26 Total $ 134,778 1,309,892 3,919,817 890,008 3,616,250 63,200 9,933,945 15,157,780 15,634,340 778,490 437,212 2,649,256 2,255,825 36,912,903 $ 46,846,848 Net (Expense} Revenue and Changes in Net Position Governmental Business-type Activities Activities Total $ {4,140,566) $ (4,140,566} (24,985,868} {24,985,868) (4,392,214} (4,392,214) {271,609} (271,609} {10,170,014} (10,170,014) {74,121) {74,121} !2,638,217) (2,638,217} !46,672,609) (46,672,609} $ 2,335,309 2,335,309 4,674,693 4,674,693 291,856 291,856 381,581 381,581 2,203,930 2,203,930 835,794 835,794 10,723,163 10,723,163 {46,672,609} 10,723,163 {35,949,446} 17,645,289 17,645,289 12,827,673 12,827,673 26,092,240 26,092,240 4,588,489 4,588,489 233,464 382,251 615,715 61,387,155 382,251 61,769,406 1,291,892 762,339 2,054,231 {8,113,777) 8,113,777 54,565,270 9,258,367 63,823,637 7,892,661 19,981,530 27,874,191 84,028,947 72,974,448 157,003,395 $ 91,921,608 $ 92,955,978 $ 184,877,586 27 Comprehensive Annual Financial Report June 30, 2016 GOVERNMENTAL FUND FINANCIAL STATEMENTS The General Fund accounts for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in another fund. The General Fund supports essential City services such as police and fire protection, street maintenance, libraries, parks, and recreation. The Storm Drainage Fund -This fund is to account for the storm drainage fees collected due to an assessment approved by the majority of the parcel owners in the City voting at a special election on May 5, 2009. The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs (other than those paid for by the Proprietary Funds). The Capital Projects Fund accounts for City capital projects funded by the General Fund or other governmental funds, or any projects funded by multiple sources. 29 CITY OF BURLINGAME, CALIFORNIA BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2016 Storm Capital Non major Total General Drainage Debt Service Projects Governmental Governmental Fund Fund Fund Fund Funds Funds Assets: Cash and investments $ 26,809,634 $ 2,Sl5,816 $ 231,700 $ 35,023,288 $ 6,091,221 $ 70,671,659 Accounts receivable 7,186,554 142,508 267,959 299,872 7,896,893 Due from other funds 44,059 9,250 81,298 134,607 Prepaids and deposits 235,317 574,590 809,907 Cash and investments, restricted 11,980,065 224,122 12,204,187 Total assets $ 34,275,564 $ 2,658,324 $ 12,795,605 $ 35,596,667 $ 6,391,093 $ 91,717,253 Liabilities: Accounts payable $ 954,209 $ 721,526 $ 87,517 $ 1,763,252 Due to other funds $ 81,298 44,059 125,357 Retentions payable 272,126 272,126 Accrued payroll 1,785,500 1,785,500 Deposits 1,113,294 1,113,294 Advance from other funds 101,497 101,497 Unearned revenue 151,008 151,008 Total liabilities 4,105,508 81,298 993,652 131,576 5,312,034 Deferred Inflows Unavailable Revenues 191,908 $ 23,593 4,462 126,605 346,568 Total deferred inflows 191,908 23,593 4,462 126,605 346,568 Fund Balances: Nonspendable 336,814 574,590 911,404 Restricted 2,634,731 11,980,065 224,122 6,195,291 21,034,209 Committed 20,874,431 20,874,431 Assigned 18,637,867 13,500,000 32,137,867 Unassigned 11,003,467 159,652 (62,379) 11,100,740 Total fund balances 29,978,148 2,634,731 12,714,307 34,598,553 6,132,912 86,058,651 Total liabilities, deferred inflows and fund balances $ 34,275,564 $ 2,658,324 $ 12,795,605 $ 35,596,667 $ 6,391,093 $ 91,717,253 See accompanying Notes to the Basic Financial Statements 30 CITY OF BURLINGAME, CALIFORNIA Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2016 Fund balance -total governmental funds Amounts reported for governmental activities in the statement of net assets are different because: CAPITAL ASSETS Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. LONG TERM LIABILITIES Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Compensated absences Long-term debt Net OPEB obligation Net Pension Liability Interest on long-term debt is not accrued in the funds, but rather is recognized as an expenditure when due. DEFERRED INFLOWS AND OUTFLOWS Deferred outflows are not current assets or financial resources; and deferred inflows are not due and payable in the current period and are therefore not reported in the governmental funds Deferred Outflows Deferred Inflows Unavailable Revenues ALLOCATION OF INTERNAL SERVICES FUND NET ASSETS Internal service funds are used by management to charge the costs of fleet management, building maintenance, information technology and risk management to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statements of net assets. Net assets of governmental activities See accompanying Notes to the Basic Financial Statements. 31 $ $ 86,058,651 109,777,084 (2,424,969) (59,701,704) (13,025,134) (37,808,323) (690,934) 2,899,109 (4,414,420) 346,568 10,905,680 91,921,608 CITY OF BURLINGAME, CALIFORNIA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE VEAR ENDED JUNE 30, 2016 Storm Capital Non major Total General Drainage Debt Service Projects Governmental Governmental Fund Fund Fund Fund Funds Funds REVENUES: Property taxes $ 17,645,289 $ 17,645,289 Sales and use taxes 12,827,673 12,827,673 Transient occupancy taxes 26,092,240 26,092,240 Other taxes 3,153,550 3,153,550 Charges for services -fees 4,470,276 $ 2,712,328 $ 736,224 7,918,828 Charges for services -licenses and permits 86,154 86,154 Fines, forfeitures, and penalties 864,393 864,393 Investment income 757,153 172,362 $ 17,985 88,210 1,035,710 Intergovernmental taxes 1,434,939 1,434,939 Grant revenue 22,230 $ 478,665 574,121 1,075,016 Other revenue 236,185 154,612 390,797 Total revenues 66,155,143 2,884,690 172,597 478,665 2,833,494 72,524,589 EXPENDITURES: Current: General government 4,477,403 27,281 372,877 39,088 4,916,649 Public safety 24,625,068 72,603 359,707 25,057,378 Public works 4,662,203 2,667,342 7,329,545 Community development 1,405,793 1,405,793 Parks, recreation, and library 12,234,914 287,177 203,079 12,725,170 Shuttle operations 137,321 137,321 Capital Outlay 53,994 3,831,164 3,885,158 Debt service: Principal 5,832,447 5,832,447 Interest 2,632,548 2,632,548 Total expenditures 47,459,375 8,492,276 7,231,163 739,195 63,922,009 REVENUES OVER (UNDER) EXPENDITURES 18,695,768 2,884,690 {8,319,679) {6,752,498) 2,094,299 8,602,580 OTHER FINANCING SOURCES (USES): Transfers in 3,106,045 7,819,410 19,129,254 95,500 30,150,209 Transfer out (21,285,231) (2,829,679) (1,641,004) (10,874,803) (1,633,269) (38,263,986) Issuance of bonds 9,855,000 9,855,000 Premium of bonds 1,045,133 1,045,133 Total other financing (uses) sources {18,179,186) {2,829,679) 17,078,539 8,254,451 {1,537,769) 2,786,356 Net change in fund balances 516,582 55,011 8,758,860 1,501,953 556,530 11,388,936 FUND BALANCES: Beginning of year 29,461,566 2,579,720 3,955,447 33,096,600 5,576,382 74,669,715 End of year $ 29,978,148 $ 2,634,731 $ 12,714,307 $ 34,598,553 $ 6,132,912 $ 86,058,651 See accompanying Notes to the Basic Financial Statements 32 CITY OF BURLINGAME, CALIFORNIA RECONCILIATION OF THE STATEMENT OF REVENUES EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Net change in fund balances -total governmental funds Amounts reported for governmental activities in the statement of activities are different because: CAPITAL ASSETS TRANSACTIONS Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The capital outlay expenditures are added back to fund balance Expenses being added due to difference in capital outlay and capital asset additions Depreciation expense on capital assets is reported in the Government-Wide Statement of Activities and Changes in Net Assets, but they do not require the use of current financial resources. Therefore, depreciation expense is deducted from the fund balance. LONG TERM DEBT PROCEEDS AND PAYMENTS Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds. Accrued interest calculated on bonds payable Amortization of bond premium Proceeds from issuance of long-term debt Premium on refunding bonds The repayment of the principal of long-term debt consumes the current financial resources of governmental funds. This transaction, however, has no effect on net assets: Principal payments ACCRUAL OF NON-CURRENT ITEMS Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. This change reflects a increase in compensated absences that occurred during the year Pension Expense Net other post-employment benefits obligation expense Unavailable revenues recognized as revenue ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY Internal Service funds are used by management to charge the costs of certain activities, such as fleet management, building maintenance, information technology and risk management to individual funds. The portion of the net revenue (expense) of these Internal Service Funds arising out of their transactions with governmental funds is reported with governmental activities, because they service those activities. Change in net position -All Internal Service Funds Change in net position of governmental activities See accompanying Notes to the Basic Financial Statements 33 $ 11,388,936 $ 3,885,158 (123,683) (2,814,427) (108,140) 102,471 (9,855,000) (1,045,133) 5,832,447 (1,133,483) 41,098 (16,526) 346,568 1,392,375 7,892,661 Comprehensive Annual Financial Report June 30, 2016 PROPRIETARY FUND FINANCIAL STATEMENTS The Water Fund is used to account for the provision of water services to residents of Burlingame and some residents of areas adjacent to the City. All activities necessary to provide such services are accounted for in this fund, including administration, operations, maintenance, financing, and billing/collections. The Sewer Fund is used to account for the provision of sewer services to the residents of Burlingame and some residents of areas adjacent to the City. All activities necessary to provide such services are accounted for in this fund, including administration, operations, maintenance, financing, and billing/collections. The Waste Management Fund is used to account for the provision of solid waste services to the residents of Burlingame, excluding the revenues and expenditures associated with the collection, processing, and disposal of solid waste and recyclable materials which are provided by a solid waste provider servicing member cities of the South Bay Waste Management Authority. The Landfill Fund is used to account for the landfill closure costs and post-closure monitoring services. The Parking Fund is used to account for the activities of the City's parking districts. The Building Fund was established to account for the activities of the City's building permits and inspection division. 35 CITY OF BURLINGAME, CALIFORNIA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2016 Enterprise Funds Waste Water Sewer Management Fund Fund Fund ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Current assets: Cash and investments $ 17,242,60S $ lS,804,685 $ 4,625,442 Receivables (net of uncollectible amounts): Due from consumers 2,030,773 2,600,508 Due from other governments 747,779 Other receivables 45,689 42,225 78,689 Prepaids and deposits Inventory Total current assets 19,319,067 19,195,197 4,704,131 Noncurrent assets: Cash and investments, restricted 447,984 Advances to other funds Capital assets: Land and other assets not being depreciated 583,549 1,254,436 Facilities, infrastructure, and equipment, net of depreciation 31,153,437 63,262,498 Total noncurrent assets 31,736,986 64,964,918 Total assets 51,056,053 84,160,115 4,704,131 Deferred outflows of resources: Deferred amount on bond refunding 389,871 197,980 Deferred outflows related to pensions 283,516 238,425 38,815 Total deferred outflows of resources 673,387 436,405 38,815 Total assets and deferred outflows of resources $ 51,729,440 $ 84,596,520 $ 4,742,946 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Current liabilities: Accounts payable $ 828,469 $ 845,705 $ 49,433 Due to other funds 4,625 4,625 Accrued Interest 220,403 441,562 Retentions payable 5,104 Deposits 11,400 Unearned revenue 36,630 226,765 Claims and litigation due in one year Bonds payable due in one year 1,086,694 1,540,637 Compensated absences due In one year 32,933 20,239 346 Landfill closure and post-closure liability due in one year Total current liabilities 2,221,154 3,084,637 49,779 Noncurrent liabilities: Advances from other funds Bonds payable 21,067,757 25,602,525 Landfill closure and post closure liability Other post-employment benefits obligation payable 1,003,617 950,574 89,605 Claims and litigation Compensated absences 69,758 80,219 3,407 Net pension liability 2,766,712 2,326,687 378,775 Total noncurrent liabilities 24,907,844 28,960,005 471787 Total liabilities 27,128,998 32,044,642 521,566 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions 314,626 264,587 43,074 Total liabilities and deferred inflows of resources $ 27,443,624 $ 32,309,229 $ 564,640 NET POSITION Net investment in capital assets $ 9,972,406 $ 37,571,752 Restricted for capital projects 5,678,697 5,326,767 Restricted amounts held with trustee 447,984 Restricted for advances Unrestricted 8,634,713 8,940,788 $ 4,178,306 Total net position $ 24,285,816 $ 52,287,291 $ 4,178,306 See accompanying Notes to the Basic Financial Statements 36 Enterprise Funds Governmental Activities- Landfill Parking Building Internal Fund Fund Fund Total Service Funds $ 829,753 $ 6,067,437 $ 5,450,392 $ 50,020,314 $ 17,312,408 4,631,281 747,779 76,008 37,567 15,089 13,229 232,488 43,497 8,571 8,571 57,189 867,320 6,091,097 5,463,621 55,640,433 17,489,102 447,984 87,405 101,497 5,751,848 7,589,833 1,291,109 95,707,044 1,602,297 7,042,957 103,744,861 1,791,199 867,320 13,134,054 5,463,621 159,385,294 19,280,301 587,851 464 129 973 111577 802,770 137,814 464 129,973 111577 1,390,621 137,814 $ 867,784 $ 13,264,027 $ 5,575,198 $ 160,775,915 $ 19,418,115 $ 7,143 $ 27,579 $ 169,552 $ 1,927,881 $ 527,091 9,250 661,965 5,104 702,760 714,160 263,395 597,000 2,627,331 1,128 11,646 66,292 3,327 201,153 201,153 208,296 28,707 883,958 6,476,531 1,127,418 46,670,282 2,816,146 2,816,146 496,698 408,458 2,948,952 5,821,000 18,621 11,283 183,288 66,205 4,526 1,268,349 1,088,833 7,833,882 1,344,875 2,820,672 1,783,668 1,508,574 60,452,550 7,232,080 3,028,968 1,812,375 2,392,532 66,929,081 8,359,498 514 144,235 123,820 890,856 152,937 $ 3,029,482 $ 1,956,610 $ 2,516,352 $ 67,819,937 s 8,512,435 $ 7,042,957 $ 54,587,115 $ 1,602,297 913,464 11,918,928 447,984 87,405 101,497 $ {2,161,698) 3,350,996 $ 3,058,846 26,001,951 9,114,481 $ {2,161,698) $ 11,307,417 $ 3,058,846 $ 92,955,978 $ 10,905,680 37 CITY OF BURLINGAME, CALIFORNIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Enterprise Funds Waste Water Sewer Management Fund Fund Fund OPERATING REVENUES: Water sales $ 14,966,780 Sewer service charges: City of Burlingame users $ 14,328,706 Other agencies 1,305,634 Special surcharges $ 778,490 Parking fees Charges for services 191,000 Other revenue 20,659 32,742 Total operating revenues 15,178,439 15,634,340 811,232 OPERATING EXPENSES: Salaries and benefits 2,331,853 2,114,077 307,216 Supplies and services 1,037,427 4,662,219 178,516 Water purchases 6,524,393 Depreciation 1,977,771 3,089,579 Insurance claims and expenses 51,803 197,249 902 Total operating expenses 11,923,247 10,063,124 486,634 Operating income 3,255,192 5,571,216 324,598 NONOPERATING REVENUES {EXPENSES): Investment income (expense) 271,269 250,656 77,914 Interest expense (899,224) (896,523) Net nonoperating revenues (expenses) (627,955) (645,867) 77,914 Income before transfers 2,627,237 4,925,349 402,512 Transfers in 3,904,112 6,334,306 162,073 Transfers out (1,167,108) (1,031,524) (115,200) Net change in net position 5,364,241 10,228,131 449,385 NET POSITION: Net position -beginning (deficit) 18,921,575 42,059,160 3,728,921 Net position -end of year (deficit) $ 24,285,816 $ 52,287,291 $ 4,178,306 See accompanying Notes to the Basic Financial Statements 38 Enterprise Funds Governmental Activities- Landfill Parking Building Internal Fund Fund Fund Total Service Funds $ 14,966,780 14,328,706 1,305,634 $ 437,212 1,215,702 $ 2,649,256 2,649,256 $ 2,255,825 2,446,825 $ 10,187,487 328,850 382,251 613,842 437,212 2,649,256 2,584,675 37,295,154 10,801,329 16,260 145,482 889,414 5,804,302 6,377,773 39,371 212,659 528,232 6,658,424 2,049,054 6,524,393 86,638 5,153,988 588,831 547 2,385 252,886 651,461 55,631 445,326 1,420,031 24,393,993 9,667,119 381,581 2,203,930 1,164,644 12,901,161 1,134,210 83,975 78,525 762,339 258,165 (1,795,747} 83,975 78,525 (1,033,408) 258,165 381,581 2,287,905 1,243,169 11,867,753 1,392,375 636,385 11,036,876 (355,394) (253,873) (2,923,099) 381,581 2,568,896 989,296 19,981,530 1,392,375 (2,543,279) 8,738,521 2,069,550 72,974,448 9,513,305 $ (2,161,698} $ 11,307,417 $ 3,058,846 $ 92,955,978 =$===1=0=,9=0=5,=68=0= 39 CITY OF BURLINGAME, CALIFORNIA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Water Fund CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers $ 15,175,807 Receipts from other funds Payments to other funds (1,015) Payments to suppliers (7,381,494) Payment to employees for services (2,481,868) Net cash provided by (used in) operating activities 5,311,430 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers (to)/from other funds 2,737,004 Net cash provided by (used in) noncapital financing activities 2,737,004 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets (761,217) Principal paid on long-term debt (1,218,305) Interest paid on long-term debt (908,371) Net cash provided by (used in) capital and related financing activities (2,887,893} CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on investments 271,269 Net cash provided by (used in) investing activities 271,269 Net increase (decrease) in cash and equivalents 5,431,810 CASH AND CASH EQUIVALENTS: Beginning of year 11,810,795 End ot year s lZ 212 605 RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Operating income $ 3,255,192 Adjustments for noncash activities: Depreciation and amortization 1,977,771 Changes in assets and liabilities: Receivables (1,191) Prepaid I Inventories Deferred outflows 444 Due to other funds (1,015) Accounts payable 232,129 Deposits 1,500 Retentions payable Unearned revenue (2,941) Compensated absences (18,228) Claims and litigations liabilities Net pension liabilities 221,489 Other post-employment benefits obligation 1,178 Deferred inflows {354,898) Total adjustments 2,056,238 Net cash provided by (used in) operating activities s 5 311130 RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET POSITION Cash and investments -current s 17,242,605 Cash and investments, restricted Cash and cash equivalents on statement of cash flows s lZ 242 605 See accompanying Notes to the Basic Financial Statements 40 Enterprise Funds Waste Sewer Management Fund Fund $ 15,485,999 $ 2,031,098 (1,015) (4,091, 717) (130,392) (2,220,110) (329,927) 9,173,157 1,570,779 5,302,782 46,873 5,302,782 46 873 (5,540,330) (1,585,975) (921,367) (8,047,672} 250,656 77,914 250,656 77 914 6,678,923 1,695,566 9,573,746 2,929,876 s l 6 252 669 s 1 625 112 $ 5,571,216 $ 324,598 3,089,579 (375,106) 1,219,866 (10,203) (4,291) (1,015) 762,647 49,026 5,104 226,765 15,422 (326) 186,263 30,323 939 170 (298,454} {48,587) 3,601,941 1,246,181 s 9 lZ3.15Z s l.5ZO ZZ9 s 15,804,685 s 4,625,442 447,984 s 16 252 669 s 4 625 442 41 CITY OF BURLINGAME, CALIFORNIA STATEMENT OF NET POSITION FIDUCIARY FUNDS JUNE 30, 2016 ASSETS Cash and investments Accounts receivable Total assets LIABILITIES Accounts payable Due to other governmental units Total liabilities $ $ $ $ See accompanying Notes to the Basic Financial Statements 42 Agency Funds 144,080 887,989 1,032,069 153,709 878,360 1,032,069 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Definition of the Reporting Entity The City of Burlingame (the City) was incorporated in 1908 as a California general law city. Burlingame is a full-service city providing all municipal services, including police, fire, library, parks, recreation, street and storm drain maintenance, and water and sewage treatment. It is governed by a five member City Council, whose members are each elected to a four year term. The Mayor of the City is a one-year rotating chair of the City Council. As a government agency, the City is exempt from both federal income taxes and state franchise taxes. The accompanying financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the City's operations and so data from these units are combined with data of the City as the primary government. For financial reporting purposes, the City's financial statements include all funds, boards and commissions, and authorities that are controlled by or are dependent on the City's legislative branch, the City Council. Control by or dependence on the City was determined on the basis of budget adoption, taxing authority, outstanding debt, or the City's obligation to fund any deficits that may occur. Blended Component Units The following unit is a legally separate component unit for which the City is financially accountable, and therefore, the related financial activities have been blended with the City's financial reporting: Burlingame Financing Authority In November 1995, the City formed an authority known as the Burlingame Financing Authority (Authority). The Authority provides services entirely to the City. The purpose of this Authority is to issue bonds to finance the construction of public capital improvements through the lease of certain land and existing improvements or a pledge of revenue. Facilities are leased by the Authority to the City pursuant to lease agreements. The Authority is comprised of members of the City Council. The City and the Authority have a financial and operational relationship and the financial activities of the Authority have been included in the financial statements of the City as a blended component unit. The Authority's financial activities are presented in the Debt Service Fund as part of the governmental fund statements. The books and records of the Authority are maintained by the City. Additional financial data for the Authority may be obtained from the Finance Department, 501 Primrose Road, Burlingame, CA 94010. 43 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Definition of the Reporting Entity (Continued) Non-Disclosed Organizations There are other agencies that provide services within the City, which are independently governed, and also maintain financial books and records that are separate from the City. Agency Funds The fiduciary fund consists of various agency funds, which account for various programs, activities, or funds held by the City in a custodial capacity or as an agent for individuals, private organizations, and other government units. The City's basic financial statements, except for certain cash held by the City as a fiscal agent, do not reflect, for example, the operations of the Burlingame School District, the Burlingame Library Trustees, nor the Hotel and Business Improvement Districts. A complete listing of agency funds can be found in the Fiduciary Fund Financial Statements. Central County Fire Department Effective July 1, 2010, City fire employees became employees of Central County Fire Department (CCFD). CCFD is a Joint Powers Authority (JPA) which provides fire, emergency medical, and disaster preparedness services to the City and the Town of Hillsborough. CCFDS also provide fire and emergency medical services to the City of Millbrae through a contract. CCFD is governed by a four member board of directors and a Chief Administrative Officer. Generally, the City is allocated 60% of total direct costs in support of the ongoing operations and maintenance of CCFD, whose administration, books, and records are maintained by the Town of Hillsborough and are therefore, subject to a separate annual audit. This cost allocation is reflected as a receivable (if total actual direct costs are less than budgeted or expected direct costs) or payable (if total actual direct costs exceed budgeted or expected direct costs) on the City's Statement of Net Position. CCFD is a stand- alone employer recognized by the California Public Employees' Retirement System (CalPERS). B. Basis of Accounting, Measurement Focus, and Presentation The City's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities. 44 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basis of Accounting, Measurement Focus, and Presentation (Continued) GASB requires that the accounts of the City be organized on the basis of funds, each of which is considered a separate accounting entity. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The operations of each fund are accounted for in a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. Financial reporting standards established by GASB require that the financial statements described below be presented. Government-Wide Financial Statements The Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities, and represent a consolidation of all financial activities for the entire City. Fiduciary activities of the City are not included in these statements. The Government-Wide Financial Statements are presented on an economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds. Accordingly, all of the City's current and long-term assets and liabilities, including capital assets, infrastructure assets, and long- term liabilities, are included in the accompanying Statement of Net Position as of June 30. The Statement of Activities presents changes in net position since July 1, the beginning of the fiscal year. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred, regardless of the timing of the related cash flows. For example, property tax revenue is recognized in the year of levy, and all other revenue is recognized when services have been rendered. The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Governmental Fund Financial Statements Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balances for all major governmental funds and nonmajor funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the Government-Wide Financial Statements. The City has presented all major funds that met the qualifications for major fund reporting. 45 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued) JUNE 30, 2016 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basis of Accounting, Measurement Focus, and Presentation {Continued) Governmental Fund Financial Statements (Continued) Major funds are funds whose revenues, expenditures/expenses, assets, or liabilities (excluding extraordinary items) are at least 10% of corresponding totals for all governmental or enterprise funds and at least 5% of the aggregate amount for all governmental and enterprise funds. The identification and separate reporting of major funds serves to highlight financial activities which may be particularly important to financial statement users. Non major funds are reported in aggregate in a separate column in the Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balances. The City reports the following major governmental funds: The General Fund is the general operating fund of the City. It is used to account for all financial resources and transactions except those required to be accounted for in another fund. The Storm Drainage Fund is used to account for the storm drainage fees collected as a result of an assessment approved by the majority of the parcel owners in the City voting at a special election on May 5, 2009. The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs (other than those paid by the proprietary funds). The Capital Projects Fund is used to account for resources used to acquire or develop facilities or major capital improvements. All governmental funds are accounted for on a spending or current financial resources measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in current net position. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are taxpayer-assessed tax revenues (such as property taxes, sales taxes, transient occupancy taxes, and franchise taxes), certain grant revenues, and earnings on investments. 46 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basis of Accounting, Measurement Focus, and Presentation (Continued) Governmental Fund Financial Statements (Continued) Expenditures are recorded in the accounting period in which the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis of accounting, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Other revenues which may be accrued include other taxes, intergovernmental revenues, interest, and charges for services. Again, grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenses. It is the City's policy to first apply restricted resources to such programs, followed by unrestricted resources if necessary. Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Position; a Statement of Revenues, Expenses, and Changes in Fund Net Position; and a Statement of Cash Flows for each major proprietary fund. A column representing internal service funds is also presented in these statements. However, internal service fund balances and activities are combined with the Governmental Activities in the Government-Wide Financial Statements. The City reports the following major proprietary (enterprise) funds: The Water Fund is used to account for the activities of the City's water supply system. The Sewer Fund is used to account for the activities of the City's sewage collection system and the Wastewater Treatment Plant. The Waste Management Fund is used to account for the activities of the City's franchised garbage collections and recycling program. 47 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basis of Accounting, Measurement Focus, and Presentation (Continued) Proprietary Fund Financial Statements (Continued) The Landfill Fund is used to account for the landfill closure costs and post-closure monitoring services. The Landfill Fund was created in 2014 by separating landfill activities from the Waste Management Fund. $3,088,654 of the Waste Management Fund beginning fund balance was moved to the Landfill Fund in the year it was created. The Parking Fund is used to account for the activities of the City's parking districts. The Building Fund is used to account for the activities of the City's building division. Proprietary funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. The primary operating revenues of the City's enterprise and internal service funds include water and sewer service, connection fees, sewer discharge permits, garbage and recycling collection surcharges, building inspections, parking fees and permits, information technology support, vehicle and facilities maintenance, and risk management activities provided to the various departments in the City. All other revenues are reported as nonoperating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses. The Internal Service Funds are used to account for the servicing of self-insurance, allocation of funding for the retiree medical benefit trust fund, vehicle maintenance and acquisition, facilities maintenance, and information technology maintenance and acquisitions made for City departments or agencies on a cost-reimbursement basis. Fiduciary Fund Financial Statements The Fiduciary Funds are used to account for the resources held by the City in a custodial capacity or as an agent for individuals, private organizations, other government units such as the State of California, and/or other funds The City maintains agency funds for the Library Trustees, Hotel, Downtown and Broadway Business Improvement Districts (BIDs) fees, the elementary and high school districts. Fiduciary Fund Financial Statements include a Statement of Net Position and represent the related activity for the City's Agency Funds. 48 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Fair Value Hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs -other than quoted prices included within level 1-that are observable for an asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for an asset or liability. If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. D. Deferred Outflows and Inflows of Resources In addition to assets, the statement of financial position or balance sheet reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position or balance sheet reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. E. Capital Assets Capital assets, which include land, roads and parking lots, buildings and structures, improvements other than buildings, machinery and equipment, infrastructure assets, and construction in progress, are reported in the applicable governmental or business-type activities columns in the government- wide financial statements. The City capitalizes equipment and improvements having an estimated useful life in excess of one year and acquisition cost of at least $5,000. 49 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) F. Compensated Employee Absences The City permits its employees to accumulate vacation hours up to a maximum of two years of annual accrual. Depending on the bargaining unit, Sick leave is accumulated up to 2000 or 2080 hours. Upon retirement unused sick leave is reported to CalPERS and converted to service credit in accordance with CalPERS rules and procedures. Depending on the bargaining unit, an employee may elect to be compensated for up to 600 hours of unused sick leave and the remainder can be reported to Cal PERS for conversion to service credit. At retirement or termination, employees receive compensation for any unused vacation leave balance, any accrued compensatory time, and administrative leave for management employees. Such cash payments are recognized as expenditures of the government-wide and proprietary funds. Governmental Business Total Balance on June 30, 2015 $ 1,364,486 $ 283,788 $ 1,648,274 Additions 2,017,222 415,892 2,433,114 Payments (887,207) (450,100) (1,337,307) Balance on June 30, 2016 $ 2,494,501 $ 249,580 $ 2,744,081 Due Within One Year $ 247,899 $ 66,292 $ 314,191 Noncurrent Portion $ 2,246,602 $ 183,288 $ 2,429,890 G. Inventories and Prepaid Items Inventories are reported at a cost basis. The cost is recorded, using a weighted average, as an expenditure at the time an individual item is consumed rather than when purchased. Inventories are reflected as nonspendable in the General Fund balance and are, therefore, unavailable for appropriation. The City's inventory consists of small tools, auto shop supplies, and fuel. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The inventories and prepaid items recorded in the governmental funds do not reflect current appropriable resources and, thus, are reported as part of nonspendable fund balance. 50 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H. Property Taxes Property taxes are collected for a twelve-month period effective July 1 by the County Tax Collector. Property tax is levied each September 1 on the assessed values as of the prior January 1 for all real and personal property located in the City. Once the levy rates are approved, the actual claim to property taxes arises and is enforceable. Taxes are billed once a year in late October and are payable in two equal installments due by December 10 and April 10 (of the following year). Taxes are considered delinquent if paid after the due dates. As a result of the implementation of Article XIII (a) of the California State Constitution in fiscal year 1978-1979, the City does not have the power to levy property taxes or to set property tax rates based on the financial requirements of the various funds. Instead, the City receives remittances from the County. These remittances are based either on a flat 1% rate applied to the fiscal year 1975-1976 full value of the property, or on 1% of the sales price of the property on sales transactions and construction which occur after the fiscal year 1975-1976 valuation. Values on properties (exclusive of increases related to sales transactions and construction) can rise at a maximum of 2% per year or the amount of increases to the California Consumer Price Index, whichever is less. City property tax revenues are recognized when levied to the extent that they result in current receivables. Article XIII (a), Section lB, of the California State Constitution allows property taxes in excess of the 1% limit to fund general obligation bond debt service when such bonds are approved by two-thirds of the local voters. On October 12, 1993, the County Board of Supervisors adopted and implemented the Alternative Method of Tax Apportionment (Teeter Plan). The Teeter Plan applies to secured taxes only and provides a consistent predictable cash flow for taxes since they are apportioned to the City as if the tax levy had been collected in full. In 2009, the State shifted 8% of local property tax revenue as part of a long-term borrowing tactic to balance the State budget, under Proposition 14. I. Use of Estimates and Reclassifications The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 51 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 2 -BUDGETS AND BUDGETARY ACCOUNTING A. Basis of Budgeting A formal budget is employed as a management control device during the year for the City, and is adopted annually for all City funds, except for the fiduciary funds and certain special revenue funds where appropriate. Consistent with most governmental entities, the City's budget is based on a modified accrual basis of accounting under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the related liability is incurred. Budgets for the General Fund and Special Revenue Funds are adopted on a basis consistent with accounting principles generally accepted in the United States (GAAP). The City budget includes information regarding estimated costs (or outlays) and revenue (or cash inflows) for identified programs, projects, and levels of service to meet the needs of the City. All annual appropriations lapse at the end of the fiscal year except in the Capital Projects Fund because capital improvement projects typically span more than one fiscal year. Appropriations for capital projects lapse when projects are completed, placed into service, accounted for as capital assets, or abandoned at the discretion of the City and/or City Council. Budget amendments that increase a fund's appropriations require majority approval by the City Council. Certain budgetary re-allocations within departments require approval by the Finance Director and department heads. Budget amendments between departments are approved by the Finance Director and City Manager. A mid-year budget status report and long-term financial forecast for the next five years is presented to the City Council as part of an ongoing assessment and evaluation of budgetary performance, with special attention to the General Fund and certain other major funds. Budgetary financial data is included in the required supplementary information for the General Fund and Storm Drainage Fund. Final budgetary data excludes the amount reserved for encumbrances in order to properly compare these amounts to actual expenditures. Budget Development and Adoption The City Council encourages all Burlingame residents and business community members to participate in the development of the City budget. The Council holds three public meetings to provide guidance on the budget: a goal-setting session in January, and budget study sessions in March and May. The City Council solicits input at each of the meetings. Community members may also submit their ideas directly to City staff. Under these policy directives and guidance, departments prepare their budget requests in support of their programs in January for submission in early April. Expenditure assumptions are based on known factors such as collective bargaining agreements, current pay and benefit policies, consumer price indices, and other information available from expert third-parties or governing authorities. 52 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 2 -BUDGETS AND BUDGETARY ACCOUNTING (Continued) A. Basis of Budgeting (Continued) Budget Development and Adoption (Continued) Budget requests are reviewed by the Finance Department for technical compliance to City budget instructions. The Proposed Budget is prepared and delivered to the City Council in May. The City Council reviews the Proposed Budget before the final budget is formally adopted in June at a public hearing, which gives residents an additional opportunity to comment on the spending plan. A separate publication presenting this information is available from the City of Burlingame, Finance Department, 501 Primrose Road, Burlingame, CA 94010. General Fund and Storm Drainage Fund Budgetary Comparison Schedules are also included in the Required Supplementary Information, which has information regarding budget to actual performance for the General Fund and Storm Drainage Fund. Expenditures exceeded budgetary appropriations for the year ended June 30, 2016, as follows: Expenditures Excess of Appropriation Fund Local Grant Fund $ 171,852 The City does not include an estimated revenue assumption in the budget for local grants because these amounts represent one-time revenues. As such, the related expenses are treated as one-time in nature. Therefore, no annual appropriation is assumed. The City also does not budget annually for its Debt Service Funds. NOTE 3 -CASH AND INVESTMENTS The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds. This pooled cash is invested to enhance interest earnings in accordance with City investment policy guidelines established by the City Treasurer. The pooled interest earned is allocated to the funds based on cash and investment balances in these funds at the end of each accounting period. The City has the following cash and investments at June 30, 2016: Government-Wide Statement of Net Position Governmental Business-Type Activities Activities Fiduciary Funds Total Cash and investments $ 87,984,067 $ 50,020,314 $ 144,080 $ 138,148,461 Cash and investments, restricted 12,291,592 447,984 12,739,576 Total cash and investments s 100,275,659 s 50,468,298 s 144,080 s 150,888,037 53 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 3 -CASH AND INVESTMENTS (Continued) The City's cash and investments at June 30, 2016 in more detail: Cash and Investments Held with Treasury Deposits Deposits -unrestricted Deposits -restricted Total deposits Investments -unrestricted U.S. Treasury Bond/Note Federal Agency Obligations Certificates of Deposit Commercial paper Corporate notes San Mateo County Investment Pool California Local Agency Investment Funds Total investments Unrestricted, held with Treasury Restricted, held with Treasury Total Cash and Investments Held With Treasury Restricted Cash Held with Fiscal Agent Cash held by fiscal agent -Bank of New York Cash held by fiscal agent -Deutsche Bank Cash held by fiscal agent -J. P. Morgan Chase Cash held by fiscal agent -Bank of Sacramento Total restricted cash and investments held with fiscal agent Total Cash and Investments 54 Fair Value $ 13,093,381 12,291,592 25,384,973 18,707,131 32,215,372 2,021,292 2,993,645 20,671,755 714,370 48,179,499 125,503,064 136,902,852 1,693,593 138,596,445 11,843,299 136,766 87,405 224,122 12,291,592 $ 150,888,037 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 3 -CASH AND INVESTMENTS (Continued) A. Deposits Custodial Credit Risk Custodial credit risk for deposits is the risk that the City will not be able to recover its deposits or will not be able to recover collateral securities in the possession of an outside party if a depository institution fails. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit exposure to custodial credit risk for deposits or investments, other than the following provision applicable to deposits. The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. The fair value of pledged securities must equal at least 110% of the City's cash deposits. State law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City's total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements. The carrying amounts of the City's cash deposits were $13,014,506 at June 30, 2016. Bank balances before reconciling items were $14,101,566 at that date, the total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City's name as discussed above. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. B. Investments Pooled Investments and Investment by City Treasury Cash of the respective funds is pooled and invested principally in U.S. Treasury and agency securities and short-term investments such as the State of California (State) Local Agency Investment Fund (LAIF) and the San Mateo County Investment Pool. 55 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 3 -CASH AND INVESTMENTS (Continued) B. Investments (continued) The LAIF is a pool of State cash and investments and those of California cities and local agencies. The State's investment policy is consistent with the City's policy, and, although State and City investments are pooled, the State does not have access to City funds. The State Treasurer administers LAIF, which charges for the service by retaining a percentage of investment earnings. State regulations permit the City to place up to $65,000,000 in LAIF, plus any bond proceeds related to construction of a City facility. The San Mateo County (the County) Pooled Investment Fund is managed by the County Treasurer, and, as required by State law, an investment advisory committee made up of representatives of those cities and local agencies who invest in the pool meets quarterly with the County Treasurer to review the investment portfolio. The County's investment policy is consistent with the City's policy, and although the City's and County's investments are pooled, the County does not have access to City funds. Valuation For the purposes of the Statement of Cash Flows, the City considers cash and cash equivalents to be cash on hand, demand deposits, and highly liquid investments with original maturities of three months or less at the time of acquisition. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. Interest income from investment of pooled cash is allocated to the funds based on monthly cash balances. Investments are presented at fair value except as noted below. The fair value of participants' position in the investment pools is the same as the value of the investment pools' shares and investment income includes changes in fair value (i.e., realized and unrealized gains or losses). Money market funds (such as short-term, highly liquid debt instruments including bankers' acceptances and securities notes, bills, and bonds of the U.S. government and its agencies), and participating interest-earning investment contracts (such as negotiable certificates of deposit, certificates of deposit, and repurchase agreements) that have a remaining maturity at the time of purchase of one year or less, are carried at amortized cost which approximates fair value. Certain disclosure requirements, if applicable, for deposits and investment risks such as interest rate risk and custodial credit risk are required to be disclosed in the financial statements. 56 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued) JUNE 30, 2016 NOTE 3 -CASH AND INVESTMENTS (Continued) B. Investments {continued) • Fair Value Hierarchy • Interest Rate Risk • Credit Risk o Overall o Custodial Credit Risk o Concentrations of Credit Risk In addition, other disclosures are specified, including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end, and other disclosures. For purposes of the Statement of Cash Flows of the proprietary fund types, cash and cash equivalents include all investments, as the City operates an internal cash management pool which maintains the general characteristics of a demand deposit account. Fair Value Hierarchy The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The following is a summary of the fair value hierarchy of the fair value of investments of the City as of June 30, 2016: Investments by Fair Value Level: U.S. Treasury Bond/Note Federal Agency Obligations Commercial paper Corporate notes California Local Agency Investment Fund San Mateo County Investment Pool Subtotal Investments measured at Amortized Cost: Certificates of Deposit Total Investments Levell $ 18,707,131 $ 18,707,131 57 Level2 $ 32,215,372 2,993,645 20,671,755 48,179,499 714,370 $ 104,774,641 Total $ 18,707,131 32,215,372 2,993,645 20,671,755 48,179,499 714,370 2,021,292 $ 125,503,064 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 3 -CASH AND INVESTMENTS (Continued} B. Investments (Continued) Investments classified in Level 1 of the fair value hierarchy are valued using quoted prices in active markets. Federal agency securities, Certificates of Deposit, Commercial paper totaling and Corporate notes classified in Level 2 of the fair value hierarchy, are valued using matrix pricing techniques maintained by various pricing vendors. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices. The California Local Agency Investment Fund and the San Mateo County Investment Pool, classified in Level 2 of the fair value hierarchy, are valued based on the fair value factor provided by the Treasurer of the State of California and the San Mateo County, which are calculated as the fair value divided by the amortized cost of the investment pool. Fair value is defined as the quoted market value on the last trading day of the period. These prices are obtained from various pricing sources by our custodian bank. Interest Rate Risk To minimize exposure to fair value losses caused by rising interest rates and to meet the liquidity needs of the City, the City's investment policy limits its investment portfolio to a maturity of less than 5 years. 12 Months 13 to 24 25to 60 Percentage Investment Type or less Months Months Total of Portfolio U.S. Treasury Bond/Note $ 4,006,640 $ 14,700,491 $ 18,707,131 14.91% Federal Agency Obligations $ 4,002,030 2,158,130 26,055,212 32,215,372 25.67% Certificates of Deposit 1,007,603 504,220 509,469 2,021,292 1.61% Commercial paper 2,993,645 2,993,645 2.39% Corporate notes 2,368,535 6,7S4,248 11,548,972 20,671,755 16.47% California Local Agency Investment Fund 48,179,499 48,179,499 38.39% San Mateo County Investment Pool 714,370 714,370 0.57% Total Investments $ 59,265,682 $ 13,423,238 $ 52,814,144 $125,503,064 100.00% 58 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 3 -CASH AND INVESTMENTS (Continued) B. Investments (Continued) Credit Risk State law limits investments in commercial paper and corporate bonds to be rated in a category "A" or its equivalent or better by nationally recognized statistical rating organizations (NRSROs). It is the City's policy to limit its investments in these investment types to the top rating issued by NRSROs, including raters Standard & Poor's, Fitch Ratings, and Moody's Investors Service (Moody's). Investment Type: Fair Value: Moody's Rating U.S. Treasury Bond/Note $ 18,707,131 Aaa Federal Agency Obligations 32,215,372 Aaa Corporate Notes: IBM Corp Global Notes 841,873 Aa3 Texas Instrument Corp Note 1,526,662 Al Caterpillar Financial SE Group Corp Note 1,665,652 A2 Toyota Motors Credit Corp 800,573 Aa3 Exxon Mobil Corp Notes 947,332 Aaa General Electric Cap Corp Notes 1,669,514 Al GlaxoSmithKline Cap Inc. Notes 1,671,177 A2 Johnson & Johnson Corporate Note 1,693,786 Aaa American Express Crd Crp Note (Callable) 1,775,611 A2 Wells Fargo & company Notes 1,807,028 A2 JP Morgan Securities 1,124,120 A3 US Bancorp (Callable) Corporate Notes 1,805,056 Al Band of New York Mellon NT (Callable) 1,821,396 Al Branch Banking & Trust Corp Note 1,521,975 A2 Certificates of Deposit 2,021,292 FDIC Insured Commercial paper 2,993,645 Not Rated California -Local Agency Investment Fund 48,179,499 Not Rated San Mateo County Investment Pool 714,370 Not Rated $ 125,503,064 Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are held by the counterparty. All of the City's investments in securities are held in the name of the City. The City's custody agreement policy prohibits counterparties holding securities not in the City's name. 59 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 3 -CASH AND INVESTMENTS (Continued) C. Investments in LAIF The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance available for withdrawal is based on the accounting records maintained by the State, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, floating rate Securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills and corporations. As of June 30, 2016, these investments have an average maturity of 167 days. D. Investments in San Mateo County Pooled Investment Fund The City invests in the San Mateo County Pooled Investment Fund (SMCPIF), an external investment pool. The pool determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available, and valuations are based on amortized cost or best estimate for those securities where market value is not readily available. The responsibility for managing the SMCPIF resides with the County Treasurer. The County Board of Supervisors, in consultation with the Treasurer, establishes an eight member County Treasury Oversight Committee pursuant to California Government Code Section 27130. The investment program is supervised within the guidelines set forth in the investment policy developed by the Treasurer, reviewed and approved annually by the County Treasury Oversight Committee and the County Board of Supervisors. The SMCPIF fair value factor is determined by dividing all SMCPIF participants' total aggregate fair value by total aggregate amortized cost resulting in a factor of 0.92210. The financial statements for the San Mateo County are available in the San Mateo County website at www.co.sanmateo.ca.us. 60 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 4 -INTERFUND TRANSFERS AND TRANSACTIONS A. Transfers Between Funds With Council approval, resources may be transferred from one City fund to another. The purpose of the majority of transfers is to allocate resources from the fund that receives them to the fund where they will be spent without a requirement for repayment. Less often, a transfer may be made to open or close a fund. Transfers between funds for the year ending June 30, 2016, are as follows: Transfer In Debt Service Capital Projects Solid Waste Transfers Out General Fund Fund Fund Non Major Water Fund Sewer Fund Fund Parking Fund Total Out General Fund $ 6,404,731 $ 14,785,000 $ 95,500 $ 21,285,231 Storm Drain Fund 15,000 1,414,679 1,400,000 2,829,679 Debt Service Fund 1,641,004 1,641,004 Capital Projects Fund $ 3,904,112 $ 6,334,306 636,385 10,874,803 Non Major 330,019 1,303,250 1,633,269 Water Fund 1,167,108 1,167,108 Sewer Fund 1,031,524 1,031,524 Solid Waste Fund 115,200 115,200 Parking Fund 355,394 355,394 Building Enterprise Fund 91,800 162,073 253,873 Total In $ 3,106,045 $ 7,819,410 $ 19,129,254 $ 95,500 $ 3,904,112 $ 6,334,306 162,073 636,385 41,187,085 B. Advances Between Funds The funds below had made advances, which were not expected to be repaid within the next fiscal year. These long-term interfund advances were used for capital improvement project funding and are expected to be repaid out of future revenues. The balances outstanding as of June 30, 2016 are as follows (dollars in thousands): Advances To General Fund Total Advances From Advances From Equipment Services Fund $ 101,497 $ 101,497 Total Advances To $ 101,497 $ 101,497 On December 3, 2012, the City Council authorized an appropriation of $400,000 to implement a computer aided dispatch and records management system. Funding for this project was provided by an advance from the Equipment Services Fund to the General Fund. A four year promissory note between funds was executed, which requires annual payments of principal and interest at an interest rate of 1.00%, which is based upon historical investment yields typically earned by the LAIF. 61 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 4 -INTERFUND TRANSFERS AND TRANSACTIONS (Continued) C. lnterfund Receivables and Payables During the course of operations, transactions may occur between funds to account for goods received or services rendered. Transactions between funds that are representative of lending or borrowing arrangements outstanding at the end of the fiscal year are referred to as advances to/from other funds, which represent the noncurrent portion of any interfund loans. All other outstanding balances between funds are reported as due to/from other funds. Any other residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. D. Internal Balances Internal balances are presented only in the government-wide financial statements. They represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental and business-type activities. Due From Debt Service Non-major Water Sewer Total Due Due To Fund Funds Fund Fund From Capital Projects Fund $ 81,298 $ 81,298 Debt Service Fund $ 4,625 $ 4,625 9,250 General Fund $ 44,059 44,059 Totals $ 81,298 $ 44,059 $ 4,625 $ 4,625 $ 134,607 62 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 5 -CAPITAL ASSETS All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed and donated capital assets are valued at their estimated fair market value on the date contributed. Furthermore, the book value of grant-funded assets is shown net of any grant reimbursement revenue. Capital outlay is recorded as expenditures in the General, Capital Projects, and other governmental funds and as an asset in the government-wide financial statements to the extent that the City's capitalization threshold is met. Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Interest incurred during the construction phase of the capital assets of business-type activities is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Except for roads and parking lots covered by the modified approach, depreciation has been provided on capital assets excluding land and construction in progress. Depreciation of all capital assets is charged as an expense against operations each year and the total amount of depreciation taken over the years, called accumulated depreciation, is reported on the Statement of Net Position as a reduction in the book value of capital assets. Depreciation is provided using the straight-line method which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The City has assigned the useful lives listed below to capital assets. Type of Asset Buildings and structures Improvements Machinery and equipment Infrastructure Years 10-100 10-100 5-15 10-100 The modified approach is an alternative to depreciation that may be applied for eligible infrastructure capital assets. The City has elected to follow the modified approach for paved roads and parking lots. No depreciation is reported for these assets nor are amounts capitalized in connection with improvements that lengthen the lives of the roads and parking lots, unless the improvements also increase their service potential. Rather, costs for both maintenance and preservation of these assets are expensed in the period incurred. The City maintains an inventory of the roads and parking lots and performs periodic condition assessments to establish the condition levels of the systems. Additional information regarding the condition of paved roads can found in the required supplementary information. 63 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 5 -CAPITAL ASSETS (Continued) Intangible Assets In 2010, the City adopted GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets. GASB Statement No. 51 established accounting and financial reporting requirements for intangible assets to reduce inconsistencies, enhancing the comparability of the accounting and financial reporting of such assets among state and local governments. The statement also provides authoritative guidance that specifically addresses the nature of the intangible assets that are internally created by the governmental entity. Examples of intangible assets include easements, land use rights, and computer software. The City capitalizes intangible assets with an acquisition cost of at least $5,000 and an estimated useful life in excess of one year. Artwork and historical artifacts of the City held for public exhibition or promotion of education and public service rather than financial gain are not capitalized and are expensed when incurred. As of June 30, 2016, the City does not have intangible assets. A. Capital Asset Activity from Governmental Activities Capital asset activity for the year ended June 30, 2016, relating to governmental activities was as follows: Total Governmental Activities Balance Balance Jul}'. 01, 2015 Increases Decreases Transfers June 30, 2016 Capital assets not being depreciated: Land $ 6,407,198 $ 6,407,198 Pavement accounted for using the modified approach 32,947,987 32,947,987 Construction in progress 968,314 $ 3,685,296 $ {3,067,983) 1,585,627 Total capital assets, not being depreciated 40,323,499 3,685,296 {3,067,983) 40,940,812 Capital assets being depreciated: Buildings and structures 41,848,107 7,025 $ (7,180} 152,942 42,000,894 Improvements other than buildings 31,738,035 7,182 1,378,465 33,123,682 Machinery and equipment 18,672,091 596,873 (167,350) 114,487 19,216,101 Infrastructure 53,362,891 1,422,089 54,784,980 Total capital assets, being depreciated 145,621,124 611,080 (174,530} 3,067,983 149,125,657 Less accumulated depreciation for: Buildings and structures 15,796,564 842,842 {7,180} 16,632,226 Improvements other than buildings 27,504,437 475,442 27,979,879 Machinery and equipment 14,569,659 1,237,201 (167,350) 15,639,510 Infrastructure 17,587,700 847,773 18,435,473 Total accumulated depreciation 75,458,360 3,403,258 (174,530} 78,687,088 Total capital assets, being depreciated, net 70,162,764 (2, 792,178) 3,067,983 70,438,569 Governmental activities capital assets, net $ 110,486,263 $ 893,118 $ 111,379,381 64 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 5 -CAPITAL ASSETS (Continued) B. Capital Asset Activity from Business-Type Activities Capital asset activity for the year ended June 30, 2016, relating to business-type activities was as shown below. Total Business-type Activities Balance Balance July 01, 2015 Increases Transfers June 30, 2016 Capital assets not being depreciated: Land $ 6,357,188 $ 6,357,188 Construction in progress 5751796 $ 612241617 $ (5,567,768) 1,232,645 Total capital assets, not being depreciated 6,932,984 6,224,617 (5,567,768) 7,589,833 Capital assets being depreciated: Buildings and structures 2,949,994 2,949,994 Improvements other than buildings 155,735,179 214,297 5,281,012 161,230,488 Machinery and equipment 6,300,028 60,554 286,756 6,647,338 Total capital assets, being depreciated 164,985,201 274,851 5,567,768 170,827,820 Less accumulated depreciation for: Buildings and structures 1,279,122 61,212 1,340,334 Improvements other than buildings 64,137,417 4,748,663 68,886,080 Machinery and equipment 41550,249 344113 4,894,362 Total accumulated depreciation 69,966,788 5,153,988 75,120,776 Total capital assets, being depreciated, net 95,018,413 (4!879,137) 5,567,768 95,707,044 Business-type activities capital assets, net $ 101,951,397 $ 1!345,480 $ 103,296,877 c. Depreciation Expense Depreciation expense was charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program for the current year were as follows: Governmental activities: General government Public safety Public works Parks, recreation, and library Total depreciation expense -governmental activities Business-type activities: Water Sewer Waste Management Parking Total depreciation expense -business-type activities 65 $ $ $ $ Less: Internal Depreciation Service Fund Net 149,652 $ 149,652 431,744 431,744 1,665,883 $ {588,831} 1,077,052 1,155,979 1,155,979 3,403,258 $ (588,831} $ 2,814,427 1,977,771 3,089,579 86,638 5,153,988 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6 -LONG-TERM DEBT Government-Wide Financial Statements In the government-wide financial statements, long-term debt and other financial obligations are reported as liabilities in the appropriate activities or proprietary funds. Bond premiums, discounts, and deferred gains and losses at refunding are deferred and amortized over the life of the bonds using the straight-line method. Issuance costs are expensed in the year incurred. Governmental Fund Financial Statements The governmental fund financial statements do not present long-term debt, which is shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. Governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuance reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 66 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) The following is a summary of changes in long-term debt related to governmental and business-type activities during the fiscal year ended June 30, 2016: Beginning Ending Amounts Balance Balance Due Within Descrietion June 30, 2015 Additions Reductions June 30, 2016 One Year Governmental Activities: Lease Revenue Refunding Bonds, Series 2004 $ 730,000 $ (730,000) -Unamortized Premium 1,495 (1,495) Pension Obligation Bonds, Series 2006 17,695,000 (2,645,000) $ 15,050,000 $ 2,905,000 Storm Drainage Revenue Bonds, Serles 2010 8,715,000 (230,000) 8,485,000 -Unamortized Premium 173,030 (7,790) 165,240 (7,790) Storm Drainage Revenue Bonds, Series 2012 9,945,000 (280,000) 9,665,000 -Unamortized Premium 250,447 (10,657) 239,790 (10,657) Lease Revenue Refunding Bonds, Series 2010 6,225,000 (955,000) 5,270,000 990,000 -Unamortized Premium 326,189 (54,365) 271,824 (54,365) Lease Revenue Bonds, Series 2012 9,495,000 (210,000) 9,285,000 215,000 -Unamortized Premium 221,805 (8,066) 213,739 (8,066) Master Equipment Lease Purchase Agreement, 2011 683,639 (220,773) 462,866 227,805 California Energy Commission, 2012 274,884 (46,674) 228,210 48,105 Storm Drainage Revenue Bonds, Series 2016 $ 9,855,000 (515,000) 9,340,000 -Unamortized Premium 1,045,133 (20,099) 1,025,034 (40,197) Total Governmental Activities $ 54,736,489 $ 10,900,133 $ (5,934,918) $ 59,701,704 $ 4,264,835 Business-Type Activities: State Water Resource Loan -2003 $ 7,324,822 $ (530,955) $ 6,793,867 $ 544,229 State Water Resource Loan -2010 5,021,158 (227,416) 4,793,742 234,011 Water and Wastewater Revenue Bonds, Series 2007 20,445,000 (920,000) 19,525,000 950,000 -Unamortized Premium 20,307 (1,194) 19,113 (1,194) -Unamortized Discount (3,801) 224 (3,577) 224 Water and Wastewater Refunding Bonds, Series 2011 4,790,000 (290,000) 4,500,000 290,000 -Unamortized Premium 451,380 (34,722) 416,658 (34,722) Water and Wastewater Refunding Bonds, Series 2013 12,790,000 (710,000) 12,080,000 735,000 -Unamortized Premium 1,263,027 (90,216) 1,172,811 (90,216) Total Business-Type Activities $ 52,101,893 $ (2,804,280} $ 49,297,613 $ 2,627,331 67 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) A. Long-Term Debt from Governmental Activities Lease Revenue Refunding Bonds, Series 2004 -Original Issue $6,705,000 On August 4, 2004, the Burlingame Financing Authority (Authority) issued bonds to refund and defease all of the Authority's outstanding Lease Revenue Bonds, Series 1995, which financed certain improvements to the City's Main Library, purchased a Reserve Facility for deposit in the reserve fund for the bonds, and paid costs of issuance of the bonds. The bonds are limited obligations of the Authority payable solely from revenues, consisting primarily of base rental payments to be paid by the City and from amounts on deposit in certain funds and accounts held under the trust agreement. A premium of $197,330 was paid and was amortized over the life of the bonds. During fiscal year 2015-16, the City paid off the bond with final principal payment amount of $730,000. Pension Obligation Bonds, 2006 Series A Bonds -Original Issue $32,975,000 In September 2006, the City issued $32,975,000 in taxable pension obligation bonds. The City is obligated to make payments to the California Public Employees' Retirement System (CalPERS) as a result of retirement benefits accruing to members of CalPERS. The City's statutory obligation includes, among others, the requirement to amortize the unfunded accrued actuarial liability {UAAL) and to make contributions with respect to such retirement benefits. The proceeds of the bonds were used to provide funds to allow the City to refund its current UAAL with respect to retirement benefits accruing to members of Cal PERS and to prepay a portion of its contribution to CalPERS for the fiscal year ended June 30, 2007. The obligation of the City to make payments with respect to the bond is an absolute and unconditional obligation of the City, and payment of principal and of interest is not limited to any special source of funds. Principal on the bonds is payable annually on June 1. Interest on the bonds is payable semi-annually June 1 and December 1. During fiscal year 2015-16, the City made principal and interest payments totaling $2,645,000 and $972,057, respectively. The bonds mature on June 1, 2036, and the underlying serial and term bonds carry an interest rate that varies from 5.2% to 5.5%. For The Year Ending June 30 Principal 2017 $ 2,905,000 2018 3,175,000 2019 460,000 2020 505,000 2021 555,000 2022-2026 3,085,000 2027-2031 1,795,000 2032-2036 2,570,000 $ 15,050,000 68 Interest $ 829,042 670,225 496,648 471,500 443,891 1,699,162 1,027,490 448,244 $ 6,086,202 Total $ 3,734,042 3,845,225 956,648 976,500 998,891 4,784,162 2,822,490 3,018,244 $ 21,136,202 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6 -LONG-TERM DEBT (Continued) A. Long-Term Debt from Governmental Activities (Continued) Lease Revenue Refunding Bonds, Series 2010 -Original Issue $8,205,000 In 2010, the Authority issued $8,205,000 of Lease Revenue Refunding Bonds, Series 2010 to refund and defease all of the Authority's outstanding Lease Revenue Bonds, Series 2001, which financed certain improvements to the City's Corporation Yard and paid the costs of issuance of the bonds. The bonds are limited obligations of the Authority payable solely from revenues, consisting primarily of base rental payments to be made by the City, and amounts on deposit in certain funds and accounts on deposit in certain funds and accounts held under the trust agreement. A premium of $579,892 was paid and will be amortized over the life of the bonds. The transaction resulted in an economic gain of $1,150,926 and a reduction of $2,575,952 in future debt service payments. Principal is due annually on June 1, commencing on June 1, 2007. Interest on the bonds is payable semiannually on June 1 and December 1, commencing on December 1, 2010. During fiscal year 2015-16, the City made principal and interest payments totaling $955,000 and $212,175, respectively. The bonds mature on June 1, 2021, and the underlying serial and term bonds carry an interest rate that varies from 2.5% to 4.0%. For The Year Ending June 30 Principal Interest Total 2017 $ 990,000 $ 173,975 $ 1,163,975 2018 1,020,000 144,875 1,164,875 2019 1,050,000 114,275 1,164,275 2020 1,085,000 82,775 1,167,775 2021 1,125,000 39,375 1,164,375 5,270,000 555,275 5,825,275 Plus: Unamortized premium 271,824 271,824 $ 5,541,824 $ 555,275 $ 6,097,099 69 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) A. Long-Term Debt from Governmental Activities (Continued) Storm Drainage Revenue Bonds, Series 2010 -Original Issue $9,805,000 Series 2010A-1 Tax-Exempt $2,635,000 Series 2010A-2 Taxable -Build America Bonds $7,170,000 The Authority issued Storm Drainage Revenue Bonds, Series 2010 to provide funds to the City to finance certain improvements to the City's Storm Drainage System and fund a reserve account for the bonds. The bonds are limited obligations of the Authority payable solely from revenues generally consisting of installment payments to be made by the City and from amounts on deposit in certain funds and accounts held under the trust agreement. The installment payments are special obligations of the City under the 2010 Installment Sale Agreement and are separately secured by a pledge of the system revenues of the Storm Drainage System. System revenues are required to be at least equal to 110% of the maximum annual debt service for all outstanding installment payments and all outstanding parity obligations during each fiscal year. The system revenues consist primarily of Storm Drainage Fees approved by a majority of the parcel owners in the City voting at a special election May 5, 2009. The bonds include $2,635,000 in tax-exempt bonds and $7,170,000 in taxable Build America Bonds under the American Recovery and Reinvestment Act of 2009 (Recovery Act). Pursuant to the Recovery Act, the City expects to receive a cash subsidy payment from the United States Treasury up to 35% of the interest payable on the Series 2010A-2 bonds on or about each interest payment date. The Refundable Credits received by the City constitute system revenues and are pledged to the payment of installment payments under the Installment Sale Agreement. The tax-exempt series was issued at a premium of $210,326, which will be amortized over the life of the bonds. Principal is due annually on July 1, commencing July 1, 2011. Interest on the bonds is payable semiannually on January 1 and July 1, commencing on January 1, 2011. During fiscal year 2015-16, the City made principal and interest payments on the tax-exempt series totaling $230,000 and $67,825, respectively. Principal and interest payments on the taxable series totaled $0 and $388,874, respectively, net of the Build America Bonds interest subsidy. The bonds mature on July 1, 2038, and the underlying serial and term bonds carry interest rates which vary from 3.0% to 6.8%. 70 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) A. Long-Term Debt from Governmental Activities (Continued) Storm Drainage Revenue Bonds, Series 2010 (continued) Storm Drainage -Series 2010A-1-Tax Exempt Governmental For The Year Ending June 30 Principal Interest 2017 $ $ 56,325 $ 2018 240,000 46,725 2019 250,000 34,225 2020 265,000 20,975 2021 275,000 9,975 2022 285,000 1,315,000 168,225 Plus: Unamortized premium 165,240 $ 1,480,240 $ 168,225 $ Storm Drainage -Series 2010B Taxable -Build America Bonds Governmental For The Year Ending June 30 Principal Interest Subsidy 2017 $ 475,245 $ (155,025) 2018 475,245 (155,025) 2019 475,245 (155,025) 2020 475,245 (155,025) 2021 475,245 {155,025) 2022-2026 $ 1,260,000 2,189,367 (714,172) 2027-2031 1,890,000 1,628,662 (531,270) 2032-2036 2,350,000 900,735 (293,820) 2037-2039 1,670,000 116,585 (38,030) $ 7,170,000 $ 7,211,574 $ (2,352,417) 71 Total 56,325 286,725 284,225 285,975 284,975 285,000 1,483,225 165,240 1,648,465 Total $ 320,220 320,220 320,220 320,220 320,220 2,735,195 2,987,392 2,956,915 1,748,555 $ 12,029,157 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) A. Long-Term Debt from Governmental Activities (Continued) Master Equipment Lease Purchase Agreement, February 2011 -Principal $1,500,000 In February 2011, the City (Lessee) entered into a lease purchase agreement with Holman Capital in the amount of $1.5 million, as authorized by a resolution of the City Council, for replacement of existing technology infrastructure that had exceeded its useful life. The City has accounted for the lease purchase agreement as a capital lease, which includes an option to purchase the equipment prior to the end of the lease term. The agreement includes a provision which requires transfer of ownership of the equipment to the City at the end of the lease term, and a purchase option during the term of the lease. The lease purchase agreement requires bi-annual rental payments to the lessor during the lease term beginning February 24, 2011, at an interest rate of 3.2%. Principal and interest payments are payable on September 1 and March 1. During fiscal year 2015-16, the City made principal and interest payments totaling $220,773 and $19,873, respectively. For The Year Ending June 30 Principal Interest Total 2017 $ 227,805 $ 12,841 $ 240,646 2018 235,061 5,585 240,646 $ 462,866 $ 18,426 $ 481,292 California Energy Commission, LED Streetlight Turnkey, 2012 -Principal $405,300 In May 2012, the City received a loan from the California Energy Commission to finance an energy efficiency initiative to retrofit City maintained streetlights. The interest rate on the loan is 3.00%, which was below-market at the time of the loan. This interest rate was made possible through stimulus funds made available to the California Energy Commission via the Recovery Act. Principal and interest are payable in semi-annual installments in December and June, commencing December 2012 and ending in December 2020. During fiscal year 2015-16, the City made principal and interest payments totaling $46,674 and $7,921, respectively. For The Year Ending June 30 Principal 2017 $ 48,105 2018 49,559 2019 51,057 2020 52,596 2021 26,893 $ 228,210 $ $ 72 Interest 6,489 5,035 3,537 1,999 405 17,465 $ $ Total 54,594 54,594 54,594 54,595 27,298 245,675 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6 -LONG-TERM DEBT (Continued) A. Long-Term Debt from Governmental Activities (Continued) Lease Revenue Bonds, Series 2012 -Original Issue $10,030,000 In December 2012, the Authority issued the Lease Revenue Bonds, Series 2012 to finance certain improvements to Downtown Burlingame Avenue in accordance with the City's Downtown Burlingame Avenue Streetscape Project and to pay the costs of issuance of the bonds. The bonds are limited obligations of the Authority payable solely from revenues, consisting primarily of base rental payments to be made by the City, pursuant to a facilities sublease dated October 2, 2012. The bonds were issued at a premium of $237,936, which will be amortized over the life of the bonds. Principal and interest are due annually on June 1, commencing on June 1, 2013. During fiscal year 2015-16, the City made principal and interest payments totaling $210,000 and $341,888, respectively. The bonds mature on June 1, 2042, and the underlying serial and term bonds carry an interest rate that varies from 2.0% to 5.0%. For The Year Ending June 30 Principal Interest Total 2017 $ 215,000 $ 333,488 $ 548,488 2018 225,000 324,888 549,888 2019 235,000 315,888 550,888 2020 245,000 306,488 551,488 2021 250,000 296,688 546,688 2022-2026 1,440,000 1,306,290 2,746,290 2027-2031 1,725,000 1,019,655 2,744,655 2032-2036 2,020,000 727,800 2,747,800 2037-2041 2,400,000 350,700 2,750,700 2042 530,000 18,550 548,550 9,285,000 5,000,435 14,285,435 Plus: Unamortized premium 213,739 213,739 $ 9,498,739 $ 5,000,435 $ 14,499,174 73 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) A. Long-Term Debt from Governmental Activities {Continued) Storm Drainage Revenue Bonds, Series 2012 -Original Issue $10,615,000 In December 2012, the Authority issued Storm Drainage Revenue Bonds, Series 2012 to provide funds to the City to finance certain improvements to the City's Storm Drainage System and fund a reserve account for the bonds. The bonds are limited obligations of the Authority payable solely from revenues generally consisting of installment payments to be made by the City and from amounts on deposit in certain funds and accounts held under the trust agreement. The installment payments are special obligations of the City under the 2012 Installment Sale Agreement and are separately secured by a pledge of the system revenues of the Storm Drainage System. System revenues are required to be at least equal to 110% of the maximum annual debt service for all outstanding installment payments and all outstanding parity obligations during each fiscal year. The system revenues consist primarily of Storm Drainage Fees approved by a majority of the parcel owners in the City voting at a special election May 5, 2009. Principal is due annually on July 1, commencing July 1, 2013. Interest on bonds is payable semiannually on January 1 and July 1, commencing on July 1, 2013. During fiscal year 2015-16, the City made principal and interest payments totaling $280,000 and $346,344, respectively, which represent prepaid amounts due on July 1, 2016. The bonds mature on July 1, 2038, and the underlying serial and term bonds carry interest rates which vary from 2.0% to 5.0%. For The Year Ending June 30 Principal 2017 $ 2018 290,000 2019 300,000 2020 310,000 2021 325,000 2022-2026 1,875,000 2027-2031 2,230,000 2032-2036 2,580,000 2037-2039 1,755,000 9,665,000 Plus: Unamortized premium 239,790 $ 9,904,790 74 Interest $ 167,572 329,344 317,544 305,344 292,644 1,210,220 860,547 497,531 86,855 4,067,601 $ 4,067,601 $ $ Total 167,572 619,344 617,544 615,344 617,644 3,085,220 3,090,547 3,077,531 1,841,855 13,732,601 239,790 13,972,391 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) A. Long-Term Debt from Governmental Activities (Continued) Storm Drainage Revenue Bonds, Series 2016-Original Issue $9,855,000 In February, the Authority issued Storm Drainage Revenue Bonds, Series 2016 to provide funds to the City to finance certain improvements to the City's Storm Drainage System and fund a reserve account for the bonds. The bonds are limited obligations of the Authority payable solely from revenues generally consisting of installment payments to be made by the City and from amounts on deposit in certain funds and accounts held under the trust agreement. The Installment Payments are special obligations of the City under the 2016 Installment Sale Agreement and are secured by a pledge of the System Revenues of the Storm Drainage System on a parity with the installment payments under the 2010 Installment Sale Agreement and the 2012 Installment Sale Agreement. System revenues are required to be at least equal to 110% of the maximum annual debt service for all outstanding installment payments and all outstanding parity obligations during each fiscal year. The system revenues consist primarily of Storm Drainage Fees approved by a majority of the parcel owners in the City voting at a special election May 5, 2009. Principal is due annually on July 1, commencing July 1, 2016. Interest on bonds is payable semiannually on January 1 and July 1, commencing on July 1, 2016. During fiscal year 2015-16, the City made principal and interest payments totaling $515,000 and $129,884, respectively, which represent prepaid amounts due on July 1, 2016. The bonds mature on July 1, 2038, and the underlying serial and term bonds carry interest rates which vary from 2.0% to 5.0%. For The Year Ending June 30 Principal 2017 $ 2018 265,000 2019 275,000 2020 280,000 2021 295,000 2022-2026 1,660,000 2027-2031 2,130,000 2032-2036 2,625,000 2037-2039 1,810,000 9,340,000 Plus: Unamortized premium 1,025,034 $ 10,365,034 75 Interest $ 191,313 379,975 373,200 363,475 351,975 1,544,350 1,083,700 608,550 132,813 5,029,351 $ 5,029,351 $ $ Total 191,313 644,975 648,200 643,475 646,975 3,204,350 3,213,700 3,233,550 1,942,813 14,369,351 1,025,034 15,394,385 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) B. Long-Term Debt from Business-Type Activities State Water Resources Control Board loan, 2003-Principal $10,743,788 In 2003, the City entered into an agreement with the State of California Water Resources Control Board (CWRCB) to receive financial assistance for the improvement of the wastewater treatment plant which consists of upgrading the performance of several unit processes and increasing their reliability to help the plant meet discharge requirements. The loan is due in annual installment payments at an interest of 1.5%. Installment payments will start August 2007 and shall be fully amortized August 2026. The City is required to maintain compliance with all provisions of the loan. During fiscal year 2015-16, the City made principal and interest payments of $530,955 and $183,121, respectively. For The Year Ending June 30 Principal 2017 $ 544,229 2018 557,835 2019 571,781 2020 586,075 2021 600,727 2022-2026 3,236,561 2027 696,659 $ 6,793,867 76 Interest $ 169,847 156,241 142,295 128,001 113,349 333,819 17,417 $ 1,060,969 Total $ 714,076 714,076 714,076 714,076 714,076 3,570,380 714,076 $ 7,854,836 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) B. Long-Term Debt from Business-Type Activities (Continued) Water and Wastewater Revenue Bonds, Series 2007 -Original Issue $25,180,000 The Authority issued Water and Wastewater Revenue Bonds, Series 2007 to provide funds to the City to finance certain improvements to the City's water system and wastewater system, to fund a reserve fund surety for the bonds, and to pay the costs of issuance of the bonds. The bonds are limited obligations of the Authority payable solely from revenues generally consisting of separate installment payments to be made by the City which are secured by a pledge of the net revenue generated from the water system and the wastewater system and from amounts on deposits in certain funds and held under the trust agreement. Net system revenues will be equal to at least 120% of the installment payments and debt service on any parity obligations during each fiscal year and such that system net revenues (excluding connection fees and money transferred from any rate stabilization fund) will be equal to at least 100% of the installment payments and debt service on other parity obligations during each fiscal year. Principal is payable annually on April 1, commencing April 1, 2008. Interest on the bonds is payable semiannually on April 1 and October 1, commencing October 1, 2007. The bonds mature on April 1, 2031, with serial and term bonds carrying an interest rate that varies from 4.0% to 5.0%. For the current year, principal and interest paid on the Water and Wastewater Bonds, Series 2007 were $920,000 and $889,383, respectively. Of this amount, principal and interest payments made by the Water Enterprise Fund were $480,000 and $464,400. Principal and interest payments made by the Sewer Enterprise Fund were $440,000 and $424,983. For The Year Ending June 30 Principal Interest Total 2017 $ 950,000 $ 852,583 $ 1,802,583 2018 1,000,000 812,208 1,812,208 2019 1,050,000 762,208 1,812,208 2020 1,085,000 717,583 1,802,583 2021 1,130,000 674,183 1,804,183 2022-2026 6,400,000 2,616,165 9,016,165 2027-2031 7,910,000 1,107,225 9,017,225 19,525,000 7,542,155 27,067,155 Plus: Unamortized premium 19,113 19,113 Less unamortized discount (3,577) (3,577) $ 19,540,535 $ 7,542,155 $ 27,082,690 77 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued) JUNE 30, 2016 NOTE 6 -LONG-TERM DEBT (Continued) B. Long-Term Debt from Business-Type Activities (Continued) State Water Resources Control Board loan, 2010 -Principal $5,605,800 In 2010, the City entered into an agreement with CWRCB to receive financial assistance for the Influent Storm Water Retention Basin project at the City's wastewater treatment facility, which involves the construction of an influent storm water retention basin and associated pumping system, commencing in July 2011. The loan is due in annual installments payments at an interest of 2.9%, and the net revenues of the Sewer Fund are pledged for the prompt payment of debt service on the loan. Installment payments commenced July 2012 and shall be fully amortized in July 2031. The City is required to maintain compliance with all provisions of the loan. During fiscal year 2015- 16, the City made principal and interest payments of $227,416 and $145,614, respectively. For The Year Ending June 30 Principal 2017 $ 234,011 2018 240,797 2019 247,780 2020 254,966 2021 262,360 2022-2026 1,430,436 2027-2031 1,650,234 2032 473,158 $ 4,793,742 78 Interest $ 139,018 132,232 125,249 118,064 110,670 434,712 214,914 13,718 $ 1,288,577 Total $ 373,029 373,029 373,029 373,030 373,030 1,865,148 1,865,148 486,876 $ 6,082,319 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) B. Long-Term Debt from Business-Type Activities (Continued) Water and Wastewater Refunding Revenue Bonds, Series 2011 -Original Issue $5,935,000 In 2011, the Authority issued $5,935,000 of Water and Wastewater Refunding Revenue Bonds, Series 2011 to refund and defease all of the Authority's outstanding Water and Wastewater Revenue Bonds, Series 2003, which financed certain improvements to the City's water and wastewater system, and to pay the costs of issuance of the bonds. The bonds are a limited obligation of the Authority payable solely from revenues generally consisting of separate installment payments to be made by the City which are secured by a pledge of the net revenue generated from the water system, wastewater system, and from amounts on deposits in certain funds and held under the trust agreement. Net system revenues will be equal to at least 120% of the installment payments and debt service on any parity obligations during each fiscal year, and net system revenues (excluding connection fees and money transferred from any rate stabilization fund) will be equal to at least 100% of the installment payments and debt service on other parity obligations during each fiscal year. Principal is payable annually on April 1, commencing April 1, 2012. Interest on the bonds is payable semiannually on April 1 and October 1, commencing April 1, 2012. The bonds mature on April 1, 2028, with an interest rate that varies from 4.00 to 4.75%. A premium of $575,800 was paid and will be amortized over the life of the bond. The refunding transaction resulted in an economic gain of $450,734 and a reduction of $1,429,732 in future debt service payments. For the current year, principal and interest paid on the Water and Wastewater Bonds, Series 2011 were $290,000 and $214,151, respectively. Of this amount, principal and interest payments made by the Water Enterprise Fund were $185,000 and $136,363. Principal and interest payments made by the Sewer Enterprise Fund were $105,000 and $77,788. For The Year Ending June 30 Principal Interest Total 2017 $ 290,000 $ 208,351 $ 498,351 2018 300,000 196,751 496,751 2019 310,000 187,751 497,751 2020 330,000 172,251 502,251 2021 345,000 155,751 500,751 2022-2026 1,990,000 506,905 2,496,905 2027-2028 935,000 63,552 998,552 4,500,000 1,491,312 5,991,312 Plus: Unamortized premium 416,658 416,658 $ 4,916,658 $ 1,491,312 $ 6,407,970 79 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) B. Long-Term Debt from Business-Type Activities (Continued) Water and Wastewater Revenue Refunding Bonds, Series 2013 -Original Issue $14,260,000 In 2013, the Authority issued $14,260,000 of Water and Wastewater Revenue Refunding Bonds, Series 2013 to advance refund the Authority's outstanding Water and Wastewater Revenue Bonds, Series 2004, which financed certain improvements to the City's water and wastewater system, and to pay the costs of issuance of the bonds. The bonds are a limited obligation of the Authority payable solely from revenues generally consisting of separate installment payments to be made by the City which are secured by a pledge of the net revenue generated from the water system, wastewater system, and from amounts on deposit in certain funds and held under the trust agreement. Net system revenues will be equal to at least 120% of the installment payments and debt service on any parity obligations during each fiscal year, and net system revenues (excluding connection fees and money transferred from any rate stabilization fund) will be equal to at least 100% of the installment payments and debt service on other parity obligations during each fiscal year. Principal is payable annually on April 1, commencing April 1, 2013. Interest on the bonds is payable semi-annually on April 1 and October 1, commencing October 1, 2013. During fiscal year 2015-16, the City made principal and interest payments of $710,000 and $493,251, respectively. Of this amount, principal and interest payments made by the Water Enterprise Fund were $470,000 and $327,838. Principal and interest payments made by the Sewer Enterprise Fund were $240,000 and $165,413. The bonds mature on April 1, 2029, with underlying serial and term bonds carrying an interest rate that varies from 2.00% to 5.00%. The bond was issued a premium of $1,533,676 which will be amortized over the life of the bond. The refunding transaction resulted in an economic gain of $584,903 ($389,501 for the Water Enterprise Fund and $195,402 for the Sewer Enterprise Fund). For The Year Ending June 30 Principal Interest Total 2017 $ 735,000 $ 471,951 $ 1,206,951 2018 755,000 449,901 1,204,901 2019 785,000 419,701 1,204,701 2020 815,000 388,301 1,203,301 2021 845,000 359,776 1,204,776 2022-2026 4,780,000 1,235,930 6,015,930 2027-2029 3,365,000 246,678 3,611,678 12,080,000 3,572,238 15,652,238 Plus unamortized premium 1,172,811 1,172,811 $ 13,252,811 $ 3,572,238 $ 16,825,049 80 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued) JUNE 30, 2016 NOTE 6 -LONG-TERM DEBT (Continued) c. Future Debt Requirements The future outstanding debt of the City, net of amortized costs as of June 30, 2016, for governmental activities is as follows: For The Year Ending June 30 Principal Interest Total 2017 $ 4,385,910 $ 2,091,265 $ 6,477,175 2018 5,499,620 2,226,872 7,726,492 2019 2,621,057 1,975,537 4,596,594 2020 2,742,596 1,872,776 4,615,372 2021 2,851,893 1,755,173 4,607,066 2022-2026 9,605,000 7,235,217 16,840,217 2027-2031 9,770,000 5,088,784 14,858,784 2032-2036 12,145,000 2,889,040 15,034,040 2037-2041 7,635,000 648,923 8,283,923 2042 530,000 18,550 548,550 57,786,076 25,802,137 83,588,213 Plus: Unamortized premium 1,915,628 1,915,628 $ 59,701,704 $ 25,802,137 $ 85,503,841 The future outstanding debt of the City, net of amortized costs as of June 30, 2016, for business- type activities is as follows: For The Year Ending June 30 Principal Interest Total 2017 $ 2,753,240 $ 1,841,750 $ 4,594,990 2018 2,853,632 1,747,333 4,600,965 2019 2,964,561 1,637,204 4,601,765 2020 3,071,041 1,524,200 4,595,241 2021 3,183,087 1,413,729 4,596,816 2022-2026 17,836,997 5,127,531 22,964,528 2027-2031 14,556,893 1,649,786 16,206,679 2032 473,158 13,718 486,876 47,692,609 14,955,251 62,647,860 Plus unamortized premium 1,608,582 1,608,582 Less unamortized discount (3,577) (3,577) $ 49,297,613 $ 14,955,251 $ 64,252,864 81 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) D. Legal Debt Limit and Debt Margin As of June 30, 2016, the City's debt limit was $338,188,325. California Government Code, Section 43605 sets the debt limit at 15% of assessed value. The legal requirement was enacted when assessed valuations were based on 25% of full market value. This has since changed to 100% of full market value. Thus, the limit shown is 3.75% (one-fourth the limit of 15%). The total amount of debt applicable to the debt limit, or outstanding general obligation debt, was $15,050,000. The resulting legal debt margin was $323,138,325. E. Arbitrage Rebate Liability Under U.S. Treasury Department regulations, all government tax -exempt debt issued after August 31, 1986, is subject to arbitrage rebate requirements. The requirements stipulate, in general, that the excess of earnings from the investment of tax-exempt bond proceeds over related interest expenditure on the bonds must be remitted to the federal government on every fifth anniversary of each bond issue. The city has valuated each outstanding debt obligation that is subjected to arbitrage rebate requirement and has determined that there is no arbitrage rebate liability as of June 30, 2016. F. Credit Rating As of June 30, 2016, the City carried underlying ratings of AA+ for the Water and Sewer Funds, A+ for the Storm Drainage Fund, and AA+ as the City's institutional credit rating for general obligation debt. These ratings were affirmed by Standard & Poor's. G. Revenue Pledge The City has pledged future revenues to debt service on previously issued revenue bonds to finance the capital programs related to the Water and Sewer Funds or defease previously issued revenue bonds: (1) Water and Wastewater Revenue Bonds, Series 2007; (2) Water and Wastewater Refunding Revenue Bonds, Series 2011; (3) Water and Wastewater Refunding Revenue Bonds, Series 2013. Debt service on certain bonds are payable solely through the net revenue of the activities of the Water and Sewer Funds. 82 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) G. Revenue Pledge (Continued) Under the provisions of GASB Statement No. 48, the City's net revenue for the year ended June 30, 2016, and net amounts available to pay debt service on the revenue bonds are as follows: Pledged revenue required for future principal and interest Principal and interest paid during the year Net revenue, excluding depreciation and amortization Percentage of revenue pledged Term of commitment H. Debt Service Coverage $ Water Fund 28,350,535 2,063,601 5,232,963 39.43% 2031 Sewer Fund $ 34,297,279 2,540,290 8,660,795 29.33% 2031 Under the terms of the City's Indenture, the Water and Sewer Funds are required to collect sufficient net revenues each fiscal year, which may include any other unappropriated enterprise funds available for expenditure on debt service. The Indenture requires that net revenues are, at minimum, equal to 1.20 times annual debt service for the applicable fiscal year. For the year ended June 30, 2016, the Water and Sewer Funds had sufficient net revenues to satisfy the requirements of the Indenture. Under the terms of the City's Indenture, the Storm Drainage Fund is required to collect sufficient net revenues each fiscal year, which may include any other unappropriated funds available for expenditure on debt service. The Indenture requires that net revenues are, at minimum, equal to 1.10 times annual debt service for the applicable fiscal year. For the year ended June 30, 2016, the Storm Drainage Fund had sufficient net revenues to satisfy the requirements of the Indenture. 83 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) H. Debt Service Coverage (Continued) Other obligations relating to governmental activities are paid solely from available revenue of the City, such as the Lease Revenue Bonds Series 2010 and the Pension Obligation Bonds Series 2006, which are subordinate to previously issued parity debt relating to the Water and Sewer Funds. The following table summarizes debt service coverage levels for the Water Fund for the fiscal year ending June 30, 2016: Water Fund Gross operating revenue Less: Operating expenses, except depreciation and amortization Net revenue Debt Service Water Revenue Bonds, Series 2007 Water Refunding Bonds, Series 2011 Water Refunding Bonds, Series 2013 Parity Debt Service Lease Revenue Bonds, Series 2010 Pension Obligation Bond, Series 2006 Total Debt Service Parity Debt Service Coverage Total Debt Service Coverage 84 $ 15,178,439 (9,945,476) 5,232,963 $ 944,400 321,363 797,838 2,063,601 385,168 452,132 $ 2,900,901 2.54 1.80 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued} JUNE 30, 2016 NOTE 6-LONG-TERM DEBT (Continued) H. Debt Service Coverage (Continued} The following table summarizes debt service coverage levels for the Sewer Fund for the fiscal year ending June 30, 2016: Sewer Fund Gross operating revenue Less: Operating expenses, except depreciation and amortization Net revenue Debt Service State Water Resource Board Loan, 2003 Wastewater Revenue Bond, Series 2007 State Water Resource Board Loan, 2010 Wastewater Refunding Bonds, Series 2011 Wastewater Refunding Bonds, Series 2013 Parity Debt Service Lease Revenue Bonds, Series 2010 Pension Obligation Bond, Series 2006 Total Debt Service Parity Debt Service Coverage Total Debt Service Coverage $ 15,634,340 (6,973,545) 8,660,795 $ 714,076 864,983 373,030 182,788 405,413 2,540,290 385,168 452,132 $ 3,377,590 3.41 2.56 The following table summarizes debt service coverage levels for the Storm Drainage Fund for the fiscal year ending June 30, 2016: Storm Drainage Fund Net Revenue, Excluding Depreciation and Amortization Debt Service Storm Drain Revenue Bond, Series 2010 Storm Drain Revenue Bond, Series 2012 Storm Drain Revenue Bond, Series 2016 Parity Debt Service Parity Debt Service Coverage 85 $ 2,884,689 $ 686,699 626,344 644,884 $ 1,957,927 1.47 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 7-OTHER LONG-TERM LIABILITIES A. Compensated Absences B. The City's compensated absences consist of accumulated vacation, compensatory time, and administrative leave for management employees. The estimated unpaid compensated absences at June 30, 2016 are recorded in the government-wide and proprietary fund financial statements. Additional information about significant accounting policies over compensated absences can be found in Note l(J). Beginning Balance Ending Balance Amounts Due Description Julyl, 2015 Additions Reductions June 30, 2016 One Year Government Activities: Compensated Absences $ 1,364,486. $ 2,017,222 $ 887,207 $ 2,494,501 $ 247,899 $ 1,364,486 $ 2,017,222 $ 887,207 $ 2,494,501 $ 247,899 Business-Type Activities: Compensated Absences $ 283,788 $ 415,892 $ 450,100 $ 249,580 $ 66,292 Total Business-Type Activities $ 283,788 $ 415,892 $ 450,100 $ 249,580 $ 66,292 Pollution Remediation Obligation Land{jll Closure and Post-Closure Costs The City closed the Burlingame Landfill located on Airport Boulevard in accordance with the California Code of Regulations under the jurisdiction of the California Integrated Waste Management Board in 1987. The landfill had been filled to capacity and has been reconstructed as a multi-use recreational facility. State and federal laws and regulations require that the City perform certain maintenance and monitoring functions at the landfill site. These same regulations require the City to make annual contributions and/or provide an alternative funding mechanism to finance closure and post-closure costs. The City has collected a surcharge on solid waste collection fees in order to cover these costs. The City was also required by the Bay Area Air Quality Management Board to install a gas collection system. In 1997, the City developed a post-closure plan that met all regulatory requirements. The post- closure estimate was $3,660,000. In 2008, the City recognized an additional liability, as required by the State, for corrective action. The corrective action cost estimate was $733,100. Consequently, the City recorded 100% of its closure and post-closure costs based upon these estimates. At June 30, 2016, the City's outstanding future post-closure and corrective action costs were estimated at $3,017,299. This estimate is based upon the original estimates for post-closure and corrective action costs as reported to the California Department of Resources Recycling and Recovery (CalRecycle) as adjusted, based on changes in the implicit price deflator for the gross national product in accordance with Title 27 of the California Code of Regulations, reduced by any permitted 15 year amortization of post-closure costs, and adjusted for incurred costs and expected costs of remediation. 86 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 7 -OTHER LONG-TERM LIABILITIES (Continued) Landfill Closure and Post-Closure Costs (Continued) The City will fund ongoing post-closure costs with a combination of revenues from the surcharge and interest earnings. However, if these revenues are inadequate or additional post-closure care requirements are determined, these costs may need to be covered by additional garbage surcharges or from future tax revenue. NOTE 8 -RISK MANAGEMENT A. Self-Insurance and Contingent Liabilities Effective July 1, 1976, and December 2, 1976, respectively, the City implemented a self-insurance program for workers' compensation and general liability. The City is a member of the Associated Bay Area Governments Pooled liability Assurance Network Corporation (ABAG PLAN), a public-entity risk pool. ABAG PLAN provides liability insurance coverage, claims management, risk management services, and legal defense to its participating members. ABAG PLAN is governed by a board of directors, which comprises officials appointed by each participating member. Premiums paid to ABAG PLAN are subject to possible refund based on the results of actuarial studies and approval by ABAG PLAN's board of directors. Premiums are assessed to the participants based on their individual loss experience. General liability insurance coverage has been purchased by ABAG PLAN for losses exceeding $250,000 up to a maximum of $10,000,000. The workers' compensation program is administered by a third-party administrator (TPA), LWP Claims Solutions. The TPA sets reserve levels for reported claims. Excess workers' compensation insurance has been purchased by the City for losses exceeding $500,000 up to the maximum statutory limit. The ABAG PLAN claim administrators set the reserve levels for known liability claims. The City's liabilities are reported when it is both probable that a loss has occurred and the amount of the loss can be reasonably estimated. The claims and litigation liabilities are reported in the governmental activities of the government-wide financial statements and in the internal service fund and include an amount for claims that have been incurred but not reported. The liabilities are re-evaluated annually using the results of actuarial studies. The estimated liability for claims and litigation is calculated considering recent claim settlement trends, amounts for claims incurred but not reported, current settlements, frequency of claims, past experience, and economic factors. 87 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 8 -RISK MANAGEMENT (Continued) A. Self-Insurance and Contingent Liabilities (Continued) Changes in the balances of the City's claims liabilities were as follows: Current Year Payments for Claims and Current and Balance Changes in Prior Fiscal July 1 Estimates Years 2010-2011 $ 6,640,000 $ 2,524,265 $ (2,524,265) 2011-2012 6,640,000 1,516,265 (1,085,265) 2012-2013 7,071,000 1,595,000 (1,892,000) 2013-2014 6,774,000 2,813,959 (1,692,959) 2014-2015 7,895,000 911,838 (1,791,838) 2015-2016 7,015,000 910,959 (1,507,959) Balance June 30 $ 6,640,000 7,071,000 6,774,000 7,895,000 7,015,000 6,418,000 There have been no significant reductions in any insurance coverage, nor have there been any insurance related settlements that exceeded insurance coverage during the past six fiscal years. In September 2016, an actuarial review was conducted by the firm of Bickmore Risk Services to identify the estimated liability for the City's Self-Insured General Liability Program as well as determine the various funding confidence levels to cover that liability. The study estimated the expected liability for outstanding claims to be $687,000 as of June 30, 2016. The study recommends that the City set aside an amount in addition to the discounted expected loss costs to be set aside as a margin for contingencies. As of June 30, 2016, the City has funded the general liability program at the 90% confidence level noted in the actuarial report or $687,000. In September 2016, an actuarial review was conducted and completed by the firm of Bickmore Risk Services to identify the estimated liability for the City's Self-Insured Workers' Compensation Program as well as determine the various funding confidence levels to cover that liability as of June 30, 2016. The study estimated that the outstanding claims at June 30, 2016, were $5,731,000. The study also recommends that an amount be set aside as a margin for contingencies. As of June 30, 2016, the City has funded the workers' compensation program at the 70% confidence level noted in the actuarial report or $5,731,000. 88 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued) JUNE 30, 2016 NOTE 9 -PENSION PLANS -COST-SHARING A. General information about the Safety Pension Plan The City's Safety Plan is part of the public agency cost-sharing multiple-employer defined benefit pension plan (PERF C), which is administered by CalPERS. PERF C consists of a miscellaneous pool and a safety pool (also referred to as "risk pools"), which are comprised of individual employer miscellaneous and safety rate plans, respectively. Individual employers may sponsor more than one miscellaneous and safety rate plan. The employer participates in one cost-sharing multiple- employer defined benefit pension plan regardless of the number of rate plans the employer sponsors. The City sponsors two rate plans (Police Classic tier and Police PEPRA tier) within the safety risk pool. Plan Descriptions-All qualified permanent and probationary employees are eligible to participate in the City's separate Safety Employee Pension plan, cost-sharing multiple-employer defined benefit pension plans administered by the California Public Employees' Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and the City's resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the Cal PERS website. Benefits Provided-CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law. The Pension Reform Act of 2013 (PEPRA), Assembly Bill 340, is applicable to employees new to Cal PERS and hired after December 31, 2012. The Plan's provisions and benefits in effect at June 30, 2016, are summarized as follows: Hire date Benefit formula Benefit vesting schedule Benefit payments Retirement age Monthly benefits, as a % of annual salary Required employee contribution rates Required employer contribution rates 89 Safety Classic PEP RA Prior to On or after January 1, 2013 January 1, 2013 3.0%@50 2.7%@57 5 years service 5 years service monthly for life monthly for life 50-55 50-57 3% 2.0 %-2.7% 9% 12.25% 20.230% 11.923% CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 9 -PENSION PLANS-COST-SHARING (Continued) A. General information about the Safety Pension Plan (Continued) Beginning in fiscal year 2016, CalPERS collects employer contributions for the cost-sharing plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability and side fund. The dollar amounts are billed on a monthly basis. The City's required contribution for the unfunded liability and side fund was $775,593 in fiscal year 2016. Contributions -Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2016, the contributions recognized as part of pension expense for each Plan were as follows: Safety -Police Safety -PEPRA Contributions -employer $ 860,979 $ 49,488 B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2016, the City reported net pension liabilities for its proportionate shares of the net pension liability of the Plan as follows: Safety Proportionate Share of Net Pension Liability $ 18,401,988 The City's net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2015, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2014, rolled forward to June 30, 2015, using standard update procedures. The City's proportion of the net pension liability was based on a projection of City's long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. 90 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 9 -PENSION PLANS-COST-SHARING (Continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) The City's proportionate share of the net pension liability for the Plan as of June 30, 2014 and 2015, was as follows: Proportion -June 30, 2015 Proportion -June 30, 2016 Change -Increase (Decrease) Safety 0.24850% 0.44660% 0.19810% For the year ended June 30, 2016, the City recognized a pension expense of $1,312,251 for the Safety Plan. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions for the Safety Plan from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date $ 910,467 Differences between actual and expected experience $ (169,469) Changes in assumptions (779,449) Net differences between projected and actual earnings on plan investments (395,030} Change in proportion (89,829) Change in proportion and differences between actual contributions and proportionate share of contributions (683,789} Total $ 910,467 $ (2,117,566} $910,467 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Year Ended Annual June 30 Amortization 2017 $ (875,014) 2018 (893,772) 2019 (833,704) 2020 484,924 91 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 9 -PENSION PLANS-COST-SHARING (Continued} C. Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City's proportionate share of the net pension liability for the Plan as of the measurement date, calculated using the discount rate for the Plan, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.65%) or one percentage point higher (8.65%) than the current rate: 1% Decrease Net Pension Liability Current Discount Rate Net Pension Liability 1% Increase Net Pension Liability $ $ $ Safety 6.65% 29,856,630 7.65% 18,401,988 8.65% 9,009,392 Actuarial assumptions and information regarding the discount rate are discussed in Note 9D below. D. Information Common to the Miscellaneous (Footnote 10) and Safety Plans Actuarial Assumptions -For the measurement period ended June 30, 2015, the total pension liabilities were determined by rolling forward the June 30, 2014 total pension liability. The June 30, 2015 total pension liabilities were based on the following actuarial assumptions: Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions: Discount Rate Inflation Projected Salary Increase Investment Rate of Return Mortality Rate Table Post Retirement Benefit Increase Miscellaneous June 30, 2014 June 30, 2015 Entry-Age Normal Cost Method 7.65% 2.75% Varies by Entry Age and Service 7.65% (1) Derived using CalPERS Membership Data for all Funds (2) Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter (1) Net of pension plan investment expenses, including inflation (2) The mortality table used was developed based on Cal PERS' specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB 92 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 9 -PENSION PLANS -COST-SHARING (Continued) D. Information Common to the Miscellaneous (Footnote 10} and Safety Plans (Continued) All other actuarial assumptions used in the June 30, 2014 valuation were based on the results of a January 2015 actuarial experience study for the period 1997 to 2011, including updates to salary increase, mortality and retirement rates. Further details of the Experience Study can be found in the CalPERS website under Forms and Publications. Change of Assumptions -GASB 68, paragraph 68 states that the long long-term expected rate of return should be determined net of pension plan investment expense, but without reduction for pension plan administrative expense. The discount rate of 7.50 percent used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65 percent used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense. All other assumptions for the June 30, 2014 measurement date were the same as those used for the June 30, 2015 measurement date. Discount Rate -The discount rate used to measure the total pension liability was 7.65% for each Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.65% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.65% will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. 93 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 9 -PENSION PLANS -COST-SHARING (Continued) D. Information Common to the Miscellaneous (Footnote 10) and Safety Plans (Continued) The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses. New Strategic Asset Class Allocation Global Equity 51% Private Equity 19% Global Fixed Income 6% Liquidity 10% Real Assets 10% Inflation Sensitive Assets 2% Absolute Return Strategy (ARS) 2% Total 100% (a) An expected inflation of 2.5% used for this period (b) An expected inflation of 3.0% used for this period Real Return Years Real Return Years 1-10 (a) 11+ (b) 5.25% 5.71% 0.99% 2.43% 0.45% 3.36% 6.83% 6.95% 4.50% 5.13% 4.50% 5.09% -0.55% -1.05% Pension Plan Fiduciary Net Position-Detailed information about each pension plan's fiduciary net position is available in the separately issued Cal PERS financial reports. E. Payable to the Safety Pension Plan At June 30, 2016, the City reported a payable of $52,736 for the outstanding amount of employer and member contributions to the Safety pension plan required for the year ended June 30, 2016. NOTE 10-PENSION PLANS-MULTIPLE EMPLOYER A. General information about the Miscellaneous Pension Plan Plan Descriptions -All qualified permanent and probationary employees are eligible to participate in the City's separate Miscellaneous Plan, agent multiple employer defined benefit pension plan administered by CalPERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plan are established by State statute and the City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions, and membership information that can be found on the Cal PERS website. 94 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 10 -PENSION PLANS -MULTIPLE EMPLOYER (Continued) A. General information about the Miscellaneous Pension Plan (Continued) Benefits Provided-CalPERS provides service retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the California Public Employees' Retirement Law. The Pension Reform Act of 2013 (PEPRA), Assembly Bill 340, is applicable to employees new to Cal PERS and hired after December 31, 2012. The Plan's provisions and benefits in effect at June 30, 2016, are summarized as follows: Miscellaneous Hire date Benefit formula Benefit vesting schedule Benefit payments Retirement age Monthly benefits, as a % of eligible compensation Required employee contribution rates Required employer contribution rates Prior to January 1, 2013 2.5%@55 5 years service monthly for life 50-55 2.0%to 2.5% 8.0% 21.17% On or after January 1, 2013 2.0%@62 5 years service monthly for life 52-67 1.0%to 2.5% 6.75% 21.17% Employees Covered -As of the June 30, 2014 actuarial valuation date, the following employees were covered by the benefit terms for the Plan: Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees Total Miscellaneous 249 131 169 549 Contributions -Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. 95 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 10 -PENSION PLANS -MULTIPLE EMPLOYER (Continued) B. Net Pension Liability The City's net pension liability for the Miscellaneous Plan is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of the Plans is measured as of June 30, 2015, using an annual actuarial valuation as of June 30, 2014, rolled forward to June 30, 2015, using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown in Note 9D above. C. Changes in the Net Pension Liability The changes in the Net Pension Liability for the Miscellaneous Plan follow: Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liabilit::i Net Position LiabilitY.f{Asset) Balance at June 30, 2014 $ 126,588, 733 $ 100,292,022 $ 26,296,711 Changes in the year: Service cost 2,374,018 2,374,018 Interest on the total pension liability 9,244,742 9,244,742 Changes of benefit terms Changes in assumptions (2,208,472) (2,208,472) Differences between actual and expected experience (1,273,339) (1,273,339) Plan to plan resource movement 40,946 (40,946) Contribution -employer 2,605,414 (2,605,414) Contribution -employee 1,064,874 (1,064,874) Net investment income 2,248,984 (2,248,984) Benefit payments, including refunds of employee contributions (6,895,260) (6,895,260) Administrative expenses (111,650) 111,650 Net changes 1,241,689 (1,046,692) 2,288,381 Balance at June 30, 2015 $ 127,830,422 $ 99,245,330 $ 28,585,092 96 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued) JUNE 30, 2016 NOTE 10-PENSION PLANS-MULTIPLE EMPLOYER (Continued) C. Changes in the Net Pension Liability Sensitivity of the Net Pension Liability to Changes in the Discount Rate -The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City's net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate: Miscellaneous 1% Decrease 6.65% Net Pension Liability $ 45,205,864 Current Discount Rate 7.65% Net Pension Liability $ 28,585,092 1% Increase 8.65% Net Pension Liability $ 14,835,384 D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2016, the City recognized a pension expense of $2,012,901. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date $ 2,929,226 Differences between actual and expected experience $ (834,257} Changes in assumptions (1,446,930} Net differences between projected and actual earnings on plan investments (1,059,460) Total $ 2,929,226 $ (3,340,647) 97 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 10-PENSION PLANS-MULTIPLE EMPLOYER (Continued} D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (continued) $2,929,226 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Year Ended June 30 2017 2018 2019 2020 E. Payable to the Miscellaneous Pension Plan Annual Amortization $ (1,875,325) (1,755,264) (674,702) 964,644 At June 30, 2016, the City reported a payable of $161,041 for the outstanding amount of employer and member contributions to the Safety pension plan required for the year ended June 30, 2016. NOTE 11-OTHER -POST-EMPLOYMENT HEALTHCARE PLAN A. Plan Description The City of Burlingame Retiree Healthcare Plan (Plan) is a single-employer defined benefit healthcare plan administered by the City. The Plan provides healthcare benefits to eligible retirees and their dependents. Benefit provisions are established and may be amended through agreements and memorandums of understanding between the City, its management employees, and unions representing City employees. The Plan does not issue a financial report. The City provides certain retirees that are eligible with retiree medical benefits through the California Public Employees' Retirement System Healthcare Program (PEMHCA). The City pays retiree healthcare benefits up to a cap for eligible retirees, dependent on bargaining unit and hire date. No dental, vision, or life insurance benefits are provided. The plan is closed to new employees. Employees hired after November 1, 2011, are enrolled in a retiree health savings plan (RHS Plan) after five years of service. Upon enrollment, the City contributes 2.0% of annual base bay into the RHS Plan. After nineteen years of service, the City contributes 2.5% of annual base pay into the RHS Plan. 98 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 11-OTHER -POST-EMPLOYMENT HEALTHCARE PLAN (Continued) B. Funding Policy The contribution requirements of the Plan participants and the City are established and may be amended by the City. In September 2013, the City established an irrevocable trust to prefund its unfunded actuarially accrued liability for retiree health care benefits. The California Benefit Trust Fund (CERBT), a multi- employer trust, is administered by CalPERS which also invests trust fund deposits made by the City on behalf of retirees. The City pre-funds the Plan by contributing the City's ARC every year to the CERBT. During fiscal year 2015-16, the City made deposits of $1,782,098 to the trust. As of June 30, 2016, the cash balance was $11,284,358. C. Annual Other Post-Employment Benefits (OPEB) Cost and Net OPEB Obligation The ARC is an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC is equal to the normal cost, or projected cost to cover the related obligation during the year, plus a 20-year amortization of the unfunded actuarial liability at June 30, 2016. CERBT is a tax qualified irrevocable trust, organized under Internal Revenue Code (IRC) Section 115, established to pre-fund OPEB as described in GASB Statement No. 45. The CERBT issues a publicly available financial report that includes financial statements and required supplementary information in aggregate with all CERBT participants. That report may be obtained by contacting Cal PERS. The following table, based on the City's actuarial valuation as of January 30, 2015, shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the City's net OPEB obligation, shown below at a 7.25% discount rate: Annual Required Contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) Trust Pre-funding Contributions (Pay-go) Increase in net OPEB Obligation Net OPEB -beginning year Net OPEB obligation -end of year 99 $ 2016 5,130,000 1,157,000 (1,179,000) 5,108,000 (1,782,098) (3,306,126) 19,776 15,954,310 $ 15,974,086 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS {Continued) JUNE 30, 2016 NOTE 11-OTHER -POST-EMPLOYMENT HEALTHCARE PLAN (Continued} D. Funded Status and Funding Progress A schedule of funding progress for the last three years is presented below: Percentage of Fiscal Year Annual Annual OPEB Ended OPEB Cost Cost Contributed 6/30/2014 $ 5,390,703 166% 6/30/2015 5,083,214 106% 6/30/2016 5,108,000 100% Net OPEB Obligation $ 16,265,025 15,954,310 15,974,086 Actuarial valuations of an ongoing plan involve estimates of the value of expected benefit payments and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the Plan and the ARC of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as Required Supplementary Information following the Notes to the Basic Financial Statements, presents multi-year trend information about whether the actuarial value of Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. As of June 30, 2015, the latest actuarial valuation date, the funded status was as follows: Unfunded Actuarial Actuarial Actuarial Actuarial Accrued Annual UAAL Valuation Accrued Actuarial Liabilities Funded Covered Asa% Date Liabilities Assets (UAAL) Ratio Payroll of Payroll 6/30/2015 $ 58,440,000 $ 9,557,000 $ 48,883,000 16.4% $ 18,255,000 267.8% E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and Plan members to that point. The actuarial methods and assumptions include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. 100 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 11-0THER -POST-EMPLOYMENT HEALTHCARE PLAN (Continued) E. Actuarial Methods and Assumptions In the June 30, 2015 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions included a 7.25% investment rate of return, based on the City pre-funding through the CERBT. An annual pre-Medicare and post-Medicare medical cost trend of 7.0% and 7.2% is assumed for HMOs and PPOs applied to actual 2016 premiums, with annual cost escalations decreasing to 5.0% over 4 years. The initial UAAL is being amortized as a level percentage of payroll over 19.5 years on a closed basis. NOTE 12 -NET POSITION AND FUND BALANCES A. Net Position Net position is the excess of all the City's assets and deferred outflows over all its liabilities and deferred inflow, regardless of fund. Net position is divided into three captions on the Statement of Net Position. These captions apply only to net position, which is determined at the Government-wide level and proprietary funds and are described as follows: Net investment in capital assets, describes the portion of net position which is represented by the current net book value of the City's capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of net position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws or other restrictions which the City cannot unilaterally alter. These principally include developer fees received for use on capital projects, debt service requirements and funds restricted to low and moderate income purposes. Unrestricted describes the portion of net position which is not restricted as to use. B. Fund Balances Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables, less its liabilities. The City's fund balances are classified in accordance with GASB Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the City to classify its fund balances based on the long-term amounts of loans and on spending constraints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint as follows: 101 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 12 -NET POSITION AND FUND BALANCES (Continued) B. Fund Balances(Continued) Nonspendab/es represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as inventories and prepaids, the long-term amounts of loans and notes receivable and land held for resale are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by resolution of the City Council, which may only be altered by resolution of the City Council. Nonspendable amounts subject to council commitments are included along with spendable resources. Assigned fund balances are amounts constrained by the City's intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council or its designees and may be changed at the discretion of the City Council or its designees. The City Council has not delegated the authority to make assignments of fund balance. This category includes nonspendables, when it is the City's intent to use proceeds or collections for a specific purpose and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds. Committed and Assigned Fund Balance In January 2015, the City Council adopted a General Fund Reserve Policy by resolution. The policy, based on an analysis of risks specific to the City, establishes targeted levels for an Economic Stability Reserve and a Catastrophic Reserve (24% and 2%-9% of budgeted revenues, respectively), as well as a Contingency Reserve amount of $500,000. The actual reserve levels are adopted by resolution with each annual budget, or as recommended by the Finance Director based upon an update of the City's fiscal needs or forecasts during the year. 102 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 12 -NET POSITION AND FUND BALANCES (Continued) B. Fund Balances (Continued) As the City Council and management can only use reserves for purposes consistent with the purposes described in the policy, these reserve amounts are reported as assignments of the General Fund's balance. The aggregate balance of the General Fund's assigned fund balance was $18,637,867 as of June 30, 2016. The breakdown is shown below: • The Economic Stability Reserve is available to protect and preserve City services from dramatic drops in General Fund revenues that are highly sensitive to economic conditions, mainly sales taxes and transient occupancy taxes. The balance at June 30, 2016, was $15,700,000. • The Catastrophic Reserve is available to make repairs and reconstruct City buildings and facilities that may be damaged by natural disasters or acts of war and terrorism. The balance at June 30, 2016, was $2,000,000. • The Contingency Reserve is available to cover unexpected expenses that may arise during the course of the fiscal year that were not considered during budget planning. The balance at June 30, 2016, was $500,000. • Encumbrances represent amounts set aside for purchase requisitions and related vendors. The balance at June 30, 2016, was $437,867. 103 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 12 -NET POSITION AND FUND BALANCES (Continued) B. Fund Balances (Continued) Detailed classifications of the City's fund balances, as of June 30, 2016, are below: Storm Capital Other General Drainage Debt Service Projects Governmental Fund Balance Classifications Fund Fund Fund Fund Funds Total Nonspendables: Items not in spendable form: Prepaids $ 235,317 $ 574,590 $ 809,907 Advances 101,497 101,497 Total Nonspendable Fund Balances 336,814 574,590 911,404 Restricted for: Special Revenue Programs $ 6,195,291 6,195,291 Capital Projects $ 2,634,731 $ 224,122 2,858,853 Debt service 11,980,065 11,980,065 Total Restricted Fund Balances 2,634,731 11,980,065 224,122 6,195,291 21,034,209 Committed to: Capital Projects 20,874,431 20,874,431 Total Committed Fund Balances 20,874,431 20,874,431 Assigned to: Encumbrances 437,867 437,867 Contingency reserve 500,000 500,000 Economic stability reserve 15,700,000 15,700,000 Catastrophic event reserve 2,000,000 2,000,000 Capital Projects 13,500,000 13,500,000 Total Assigned Fund Balances 18,637,867 13,500,000 32,137,867 Unassigned: 11,003,467 159,652 (62,379) 11,100,740 Total Fund Balances ~ 29,978,148 ~ 2,634,731 ~ 12,714,307 ~ 34,598,553 ~ 6,132,912 ~ 86,058,651 104 CITY OF BURLINGAME, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) JUNE 30, 2016 NOTE 13 -COMMITMENTS AND CONTINGENT LIABILITIES A. Grant Programs The City may, from time to time, participate in Federal and State grant programs. No cost allowances were proposed as a result of the City's financial audit. As of June 30, 2016, the City has not made an allowance for expenditures which may be disallowed by the granting agencies. Any disallowance for expenditures is expected to be immaterial. B. Litigation The City is subject to litigation arising in the normal course of business. In the opinion of the City Attorney, there is one case pending in which there is at least a possibility that the plaintiff could be entitled to monetary damages. However, the City believes that its financial position would not be adversely affected due to the availability of reserves in the remote event that the plaintiff prevails. NOTE 14 -SUBSEQUENT EVENTS On July 12, 2016, the City, via the Burlingame Financing Authority, issued the $17,585,000 Water and Wastewater Revenue Refunding Bonds, Series 2016. The Bonds are being issued to refund the Water and Wastewater Revenue Bonds, Series 2007 and to pay the costs of issuance of the Bonds. Interest, ranging from 2% to 5%, on the Bonds is payable semiannually on April 1 and October 1, commencing October 1, 2016. Principal on the Bonds is due on April 1, commencing April 1, 2016. 105 Comprehensive Annual Financial Report June 30, 2016 REQUIRED SUPPLEMENTARY INFORMATION CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL VEAR ENDED JUNE 30, 2016 NOTE 1-COST-SHARING MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Prepared for City of Burlingame, a Cost-Sharing Multiple-Employer Defined Pension Plan As of fiscal year ending June 30, 2016 Last 10 Years* SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Safety Plan Safety Plan 6/30/2015 6/30/2016 Plan's Proportion of the Net Pension Liability/Asset 0.24850% 0.44660% Plan's Proportionate Share of the Net Pension Liability /(Asset) $ 15,465,681 $ 18,401,988 Plan's Covered-Employee Payroll $ 4,343,279 $ 3,991,262 Plan's Proportionate Share of the Net Pension Liability/(Asset) as a Percentage of it's Covered- Employee Payroll 356.08% 461.06% Plan's Proportionate Share of the Net Pension Liability/(Asset) as a Percentage of the Plan's Total Pension Liability 18.58% 22.03% * Fiscal year 2015 was the 1st year of implementation, therefore only two years are shown. 108 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2016 NOTE 1-COST-SHARING MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN (Continued) Actuarially determined contribution Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered-employee payroll Contributions as a percentage of covered- employee payroll Notes to Schedule Valuation date: As of fiscal year ending June 30, 2016 Last 10 Years* SCHEDULE OF CONTRIBUTIONS Safety Plan 6/30/2015 $ 1,217,044 $ (1,217,044) $ $ $ 4,343,279 $ 28.02% 6/30/2012 Safety Plan 6/30/2016 910,465 (910,465) 3,991,262 22.81% 6/30/2013 Methods and assumptions used to determine contribution rates: Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return Retirement age Mortality Entry age Level percentage of payroll, closed 30 years 5-year smoothed market 2.75% Varies by Age, Service and Type of Employment inflation The probabilities of retirement are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007 The probabilities of mortality are derived from Cal PERS' Membership Data for all Funds based on Cal PERS' specific data from a 2010 Cal PERS Experience Study. The table includes 20 years of mortality improvements using the Society of Actuaries Scale AA. * Fiscal year 2015 was the 1st year of implementation, therefore only two years are shown. 109 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2016 NOTE 2 -AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN Prepared for City of Burlingame, an Agent Multiple-Employer Defined Pension Plan As of fiscal year ending June 30, 2016 Last 10 Years* SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS Measurement Date Total Pension Liability Service Cost Fiscal year Ended June 30, 2015 Fiscal year Ended June 30, 2016 Interest Changes of benefit terms Differences between expected and actual experience Changes in assumptions Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability-beginning Total pension liability -ending (a) Plan fiduciary net position Contributions -employer Contributions -employee Net investment income Benefit payments, including refunds of employee contributions Plan to plan resource movement Administration expense Net change in plan fiduciary net position Plan fiduciary net position -beginning Plan fiduciary net position -ending (b) Net pension liability -ending (a)-(b) Plan fiduciary net position as a percentage of the total pension liability Covered -employee payroll Net pension liability as percentage of covered- employee payroll Notes to Schedule: $ $ $ $ $ $ 2,451,356 8,964,159 (6,246,453) 5,169,062 121,419,671 126,588, 733 2,214,366 1,203,540 15,116,451 (6,246,453) 12,287,904 88,004,118 100,292,022 26,296,711 79.23% 13,078,081 201.07% $ $ $ $ $ $ 2,374,018 9,244,742 (1,273,339) (2,208,472) (6,895,260) 1,241,689 126,588,733 127,830,422 2,605,414 1,064,874 2,248,984 (6,895,260) 40,946 (111,650) (1,046,692) 100,292,022 99,245,330 28,585,092 77.64% 13,191,923 216.69% Benefit changes. In 2016, the figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2014. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes). Changes in assumptions. In 2016, the discount rate was changed from 7.5% (net of administrative expenses) to 7.65%. * -Fiscal year 2015 was the 1st year of implementation, therefore only two years are shown. 110 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2016 NOTE 2 -AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN (Continued) Prepared for City of Burlingame, an Agent Multiple-Employer Defined Pension Plan As of Fiscal Year ending June 30, 2016 Fiscal Year Ended June 30 Actuarially determined contribution Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered-employee payroll Contributions as a percentage of covered- employee payroll Notes to Schedule Valuation date: Last 10 Years* SCHEDULE OF CONTRIBUTIONS 2015 $ 1,031,238 (1,031,238) $ $ 13,078,081 7.89% 6/30/2012 2016 $ 2,929,226 (2,929,226) $ $ 13,191,923 22.20% 6/30/2013 Methods and assumptions used to determine contribution rates: Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return Retirement age Mortality Entry age Level percentage of payroll, closed 30 years 5-year smoothed market 2.75% 3.30% to 14.20% depending on Age, Service and type of employment 7.5%, net of pension plan investment and administrative expenses, including inflation The probabilities of Retirement are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007. The probabilities of mortality are derived from CalPERS' Membership Data for all Funds based on CalPERS' specific data from a 2010 CalPERS Experience Study. The table includes 20 years of mortality improvements using the Society of Actuaries Scale AA. *Fiscal year 2015 was the 1st year of implementation, therefore only two years are shown. 111 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED,JUNE 30, 2016 NOTE 3-OTHER POST-EMPLOYMENT BENEFITS (OPEB) A schedule of funding progress for the last three valuations is presented below in thousands: Unfunded Actuarial Fiscal Actuarial Actuarial Actuarial Accrued Annual Year End Valuation Accrued Actuarial Liabilities Funded Covered Date Date Liabilities Assets (UAAL) Ratio Payroll 6/30/2014 1/1/2013 $ 53,049 $ 7,335 $ 45,714 14.0% $ 15,269 6/30/2015 1/1/2013 53,049 9,358 43,691 17.6% 18,462 6/30/2016 6/30/2015 58,440 9,557 48,883 16.4% 18,255 112 UAAL Asa% of Payroll 299.4% 236.7% 267.8% CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2016 NOTE 4 -MODIFIED APPROACH FOR THE CITY'S INFRASTRUCTURE In accordance with GASB Statement No. 34, the City accounts for and reports infrastructure capital assets. The City defines infrastructure as the basic physical assets including the street system; park and recreation lands and improvement system; storm water collection system; and site amenities associated with buildings, such as parking and landscaped areas, used by the City in the conduct of its business. Each major infrastructure system is divided into subsystems. For example, the street system is divided into concrete and asphalt pavements, concrete curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals, and pavement markings), landscaping, and land. Subsystem detail is not presented in these basic financial statements; however, the City maintains detailed information on these subsystems. The City has elected to use the modified approach, as defined by GASB Statement No. 34, for the Roads and Streets networks. Under GASB Statement No. 34, eligible infrastructure capital assets are not required to be depreciated. In February 2016, the City's consultant completed a study to update the physical condition assessment of the streets. The streets, primarily asphalt pavements, were defined as all physical features associated with the operation of motorized vehicles that exist within the limits of right of way. City-owned streets are classified based on land use, access and traffic utilization into the following four classifications: (1) arterial/major, (2) collector, (3) residential, and (4) other (such as alleys and parking lots). This condition assessment will be performed approximately every two years. For this inspection update, all the paved streets in the City's system were re-inspected. A visual survey of approximately 82.28 centerline miles was evaluated in accordance with Metropolitan Transportation Commission (MTC) standards. Upon completion of this survey, a Pavement Condition Index (PCI) was calculated for each segment to reflect the overall pavement condition. Ranging between 0 -100, a PCI of 0 would correspond to a badly deteriorated pavement with virtually no remaining life. A PCI of 100 would correspond to a new pavement with proper engineering design and construction at the beginning of its life cycle. 113 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2016 NOTE 4 -MODIFIED APPROACH FOR THE CITY'S INFRASTRUCTURE (Continued) The following conditions were defined: Condition Excellent Very Good Good Poor Very Poor Rating 90-100 70-89 50-69 25-49 0-24 Description Little or no distress. Little or no distress, with the exception of utility patches in good condition, or minor to moderate hairline cracks; typically lightly weathered. Light to moderate· weathering, light load-related base failure, moderate linear cracking. Moderate to severe weathering, moderate levels of base failure, moderate to heavy linear cracking. Extensive weathering, moderate to heavy base failure, failed patches, extensive network of moderate to heavy linear cracking. The City's policy is to achieve an average rating of 65 for all streets. This rating allows minor cracking and raveling of the pavement along with minor roughness that could be noticeable to drivers traveling at the posted speeds. As of June 30, 2016, the City's street system was rated at a PCI index of 77 on a 100-point scale. The overall condition of the street pavement is in the lower range of MTC's designation 'Very Good'. The following table details the network statistics and pavement condition by functional class. Table 1-Street Network Statistics and Average PCI by Functional Class Functional Class Centerline Miles Lane Miles # of Sections %ofNetwork Average PCI Arterial 23.47 53.50 84 28.5% 75 Residential 37.55 67.33 249 45.6% 80 Collector 20.35 39.69 116 24.8% 77 Other 0.80 1.61 24 1% 60 Totals 82.17 162.13 473 100% 77 Table 2 details the percentage of the street network area by each PCI range or condition category. 114 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION {Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2016 NOTE 4-MODIFIED APPROACH FOR THE CITY'S INFRASTRUCTURE {Continued) Table 2 -Percent Network Area by Functional Class and Condition Class Condition Class PCIRange Arterial Collector Residential Other Excellent/Very Good (I) 70-100 22.40% 22.00% 32.70% 2.00% Good/Fair (II/Ill) 50-69 5.60% 3.30% 8.50% 0% Poor (IV) 25-49 0.40% 0.60% 0.70% 1.00% Very Poor (V) 0-24 0.00% 0.20% 0.10% 0.40% Totals 28.40% 26.10% 42.00% 3.40% NCE Total 0.00% 78.90% 0.00% 18.21% 0.00% 2.31% 0.10% 0.58% 0.10% 100.00% The City's street network replacement value is estimated at $160 million. Replacement value is calculated as the current cost to reconstruct each street in the network. The optimal network PCI is somewhere between low and mid 80's, which is in the middle of the 'excellent/very good' condition category. This is recommended because streets with a PCI in the 80's as opposed to 70's will likely remain in the 'excellent/very good' condition category for a longer period of time if relatively inexpensive preventive maintenance treatments are used. Once PCI falls below 70, more expensive rehabilitation treatments will be needed. The cost to repair and maintain a pavement depends on its current PCI. In the 'excellent/very good' category, it costs very little to apply preventative maintenance treatments. More than half (76.9%) of the City's street network would benefit from these lower cost preventative maintenance treatments. Approximately 96% of the City's street network is considered in 'good' condition. Pavements in this range require more than a life-extending treatment. At this point, a well designed pavement will have served at least 75 percent of its life with the quality of the pavement dropping approximately 40%. The remaining 4% of the City's street network falls into the 'poor' or 'very poor' PCI ranges. These pavements are near the end of their service lives and often exhibit major forms of distress. At this stage a street usually requires either a thick overlay or reconstruction. One of the key elements of a pavement repair strategy is to keep streets that are in the 'good' or 'fair' category from deteriorating. This is particularly true for streets in the 'fair' range, because they are at the point where pavement deterioration accelerates if left untreated. The projected pavement budget for fiscal year 2011-12 through fiscal year 2016-17 is approximately $1,200,000 per year or $6.0 million. This investment maintains the current PCI of 77. Furthermore, under this investment level, the projected deferred maintenance backlog decreased from $2.9 million in 2014 to $680,000 in 2018. 115 CITY OF BURLINGAME, CALIFORNIA REQUIRED SUPPLEMENTARY INFORMATION (Continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2016 NOTE 4 -MODIFIED APPROACH FOR THE CITY'S INFRASTRUCTURE (Continued) 2016 2017 2018 2019 Budget $ 1,400,000 $ 1,300,000 $ 1,300,000 $1,300,000 Rehabilitation 4,441,000 1,167,000 2,114,000 986,000 Preventative Maintenance 614,000 4,000 12,000 104,000 Deferred Maintenance 3,655,000 129,000 826,000 (210,000) PCI 76 74 73 71 2020 Total $1,300,000 $ 6,600,000 420,000 9,128,000 6,000 740,000 {874,000) 3,526,000 69 The study determined that there was approximately a $2.9 million deferred maintenance backlog in 2014. To maintain an appropriate overall PCI level and address critical areas of deferred maintenance, a cost-effective funding and maintenance and rehabilitation strategy was implemented. A schedule of estimated annual amounts calculated to maintain and preserve its streets at the current level compared to actual expenditures for street maintenance for the last three years is presented below. Fiscal Maintenance Actual PCI Year Estimate Expenditures Rating 2013-2014 $ 1,200,000 980,218 76 2014-2015 $ 1,200,000 1,479,349 76 2015-2016 $ 1,200,000 1,151,003 76 The City has an ongoing street rehabilitation program funded in the Capital Improvement Program that is intended to maintain the condition rating of City streets. For example, a major street re-surfacing project was completed in fiscal year 2015-16 which resulted in over 290,312 square feet of street repair. 116 CITY OF BURLINGAME, CALIFORNIA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2016 Budgeted Amounts Variance Positive Original Final Actual (Negative) Revenues Property taxes $ 16,900,000 $ 17,716,400 $ 17,645,289 $ (71,111) Sales and use taxes 11,585,000 13,244,000 12,827,673 (416,327) Transient occupancy taxes 23,100,000 25,200,000 26,092,240 892,240 Other taxes 3,009,000 3,113,000 3,153,550 40,550 Licenses and permits 85,000 87,000 86,154 (846) Fines, forfeitures and penalties 965,000 836,000 864,393 28,393 Charges for services 4,403,500 4,574,200 4,470,276 (103,924) Other revenue 236,000 237,000 236,185 (815) Grants and subventions 175,000 157,000 22,230 (134,770) Investment income 400,000 323,000 757,153 434,153 Total revenues 60,858,500 65,487,600 66,155,143 667,543 Expenditures Current: General Government City Attorney 714,722 726,687 495,646 231,041 City Clerk 313,665 313,665 296,685 16,980 City Council 331,393 331,393 291,779 39,614 City Manager 770,312 782,812 657,684 125,128 Elections 50,000 50,000 23,381 26,619 Human Resources 861,970 861,970 792,452 69,518 Finance 2,117,690 2,058,481 1,919,776 138,705 Total General Government 5,159,752 5,125,008 4,477,403 647,605 Public safety: Fire 10,734,319 10,734,319 10,547,008 187,311 Fire -Disaster Preparedness 411,026 411,026 419,689 (8,663) Police Communications Dispatch 1,399,579 1,408,907 1,330,446 78,461 Police -Parking Enforcement 614,702 614,702 457,774 156,928 Police 11,411,382 11,835,070 11,870,151 (35,081) Total Public Safety 24,571,008 25,004,024 24,625,068 378,956 Public Works 4,865,055 4,890,816 4,662,203 228,613 Community Development 1,563,474 1,806,184 1,405,793 400,391 Parks, recreation, and library Library 4,840,685 4,843,126 4,376,007 467,119 Parks 4,099,382 4,112,244 3,730,477 381,767 Recreation 4,207,134 4,380,589 4,128,430 252,159 Total Leisure & Cultural Services 13,147,201 13,335,959 12,234,914 1,101,045 Capital outlay 128,232 120,231 53,994 66,237 Total Expenditures 49,434,722 50,282,222 47,459,375 2,822,847 Excess (deficiency) of revenues over expenditures 11,423,778 15,205,378 18,695,768 (2,155,304) Other financing sources (uses) Transfers in 3,194,770 3,194,770 3,106,045 (88,725) Transfers out (13,637,743) (21,387,743) (21,285,231) 102,512 Total other financing sources (uses) (10,442,973) (18,192,973) (18,179,186) 13,787 Net change in fund balance $ 980,805 $ (2,987,595) 516,582 $ 3,504,177 FUND BALANCE Beginning of year 29,461,566 End of year $ 29,978,148 See accompanying notes to financial statements 117 Revenues Charges for services Investment income Total revenues Other financing sources (uses) Transfers out CITY OF BURLINGAME, CALIFORNIA STORM DRAINAGE SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2016 Budgeted Amounts Original Final $ 2,740,000 $ 2,740,000 100,000 78,000 2,840,000 2,818,000 (2,829,679) (2,829,679) Total other financing sources (uses) (2,829,679) (2,829,679) Net change in fund balance $ 10,321 $ (11,679) FUND BALANCE Beginning of year End of year See accompanying notes to financial statements 118 Variance Positive Actual (Negative) $ 2,712,328 $ (27,672) 172,362 94,362 2,884,690 66,690 (2,829,679) (2,829,679) 55,011 $ 66,690 2,579,720 $ 2,634,731 COMBINING FINANCIAL STATEMENTS AND OTHER SUPPLEMENTARY INFORMATION Comprehensive Annual Financial Report June 30, 2016 NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Measure A Fund -This fund accounts for the City's share of the special half-cent sales tax for transportation approved on the November 1988 ballot, effective January 1, 1989. Expenditures from this fund can only be incurred on transportation-related programs. Gas Tax Fund -This fund is to account for revenue received from the State of California derived from gasoline taxes. These funds may only be used for street purposes .. as specified in the State Streets and Highway Code. Special Assessment District Fund -This fund accounts for revenue from special assessments received from a special benefit district formed during fiscal year 2011-12 on Burlingame Avenue. The special benefit district revenues fund the lighting, landscape, and utility-related upgrades completed in 2014, and a portion of the related maintenance costs. Traffic Safety Fund -This fund is to account for revenues received from traffic fines and used for traffic safety programs. Train Shuttle Fund -This fund is to account for grant revenues received from the San Mateo County Transportation Authority and the Bay Area Air Quality Management District for a commuter shuttle bus program. State/Federal Grants Funds-These funds are to account for grants from the State of California and the federal government, used or expended for a specific purpose, activity, or facility. local Grants Fund -This fund is to account for grants or donations from local sources other than the State or Federal government used or expended for a specific purpose, activity, or facility. Development Fees Fund -This fund is to account for developers' fees that may be used for improvements on the bay front area and streetscape improvements in the North Burlingame area of the City, as well as Bayfront facilities impact fees and parking in lieu fees. Public TV Access Fund -This fund is to account for the PEG Access funding through Cable TV Franchise agreement beginning January 1, 1999. The City uses these funds to finance capital improvements associated with the broadcast of municipal events. 121 ASSETS Cash and investments Cash and investments, restricted CITY OF BURLINGAME, CALIFORNIA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2016 Special Revenue Funds Measure A Gas Tax Fund Fund $ 1,947,032 $ 1,709,204 Receivables (net of uncollectible amount of $0): Accounts and other receivables 122,743 4,929 Due from other governments Total assets $ 2,069,775 $ 1,714,133 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES DEFERRED INFLOWS Unavailable Revenues Total deferred inflows Liabilities: Accounts payable Unearned revenue Due to other funds Total liabilities Fund Balances: Restricted $ 2,069,775 $ 1,714,133 Committed Assigned Unassigned Total fund balances 2,069,775 1,714,133 Total liabilities, deferred inflows and fund balances $ 2,069,775 $ 1,714,133 122 Special Traffic Assessment Safety District Fund $ 417,252 1,151 $ 418,403 $ 418,403 418,403 $ 418,403 Special Revenue Funds Total Train State /Federal Local Development Public TV Non major Shuttle Grants Grants Fees Access Governmental Fund Fund Fund Fund Fund Funds $ 67,177 $ 499,738 $ 1,043,151 $ 407,667 $ 6,091,221 63,200 $74,717 1,551 2,322 29,259 299,872 $ 130,377 $ 74,717 $ 501,289 $ 1,045,473 $ 436,926 $ 6,391,093 $ 63,200 $ 63,405 $ 126,605 63,200 63,405 126,605 39,973 29,632 $ 14,212 $ 3,700 87,517 44,059 44,059 39,973 73,691 14,212 3,700 131,576 27,204 487,077 $ 1,045,473 433,226 6,195,291 (62,379) (62,379) 27,204 (62,379) 487,077 1,045,473 433,226 6,132,912 $ 130,377 $ 74,717 $ 501,289 $ 1,045,473 $ 436,926 $ 6,391,093 123 CITY OF BURLINGAME, CALIFORNIA Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the year ended June 30, 2016 Special Revenue Funds Special Measure A Gas Tax Assessment Fund Fund District REVENUES: Fines, forfeitures and penalties Investment income $ 32,347 $ 29,327 $ 6,844 Intergovernmental taxes 767,021 667,918 Charges for services 310,094 Grants and subventions Total revenues 799,368 697,245 316,938 EXPENDITURES: Current: General government Public safety Public works Community development Parks, recreation, and library Shuttle operations Capital outlay Total expenditures REVENUES OVER (UNDER) EXPENDITURES 799,368 697,245 316,938 OTHER FINANCING SOURCES (USES): Transfers in Transfer out (600,000) {654,000) (279,044) Total other financing sources (uses) (600,000) (654,000) (279,044) Net change in fund balance 199,368 43,245 37,894 FUND BALANCE: Beginning of year 1,870,407 1,670,888 380,509 End of year $ 2,069,775 $ 1,714,133 $ 418,403 124 Traffic Safety Fund $ {43,201) {43,201) (43,201) 43,201 Train Shuttle Fund $ 137,321 137,321 (137,321) 85,500 85,500 (51,821) State /Federal Grants Fund $ 301,716 301,716 357,228 11,898 369,126 (67,410) (67,410) Special Revenue Funds $ Local Grants Fund 272,405 272,405 2,479 191,181 193,660 78,745 $ Development Fees Fund 13,772 312,595 326,367 326,367 $ Public TV Access Fund 5,920 113,535 119,455 39,088 39,088 80,367 $ Total Non major Governmental Funds 88,210 1,434,939 736,224 574,121 2,833,494 39,088 359,707 203,079 137,321 739,195 2,094,299 10,000 95,500 (55,250) ---~(~l,_77_4~) -----___ _,_(1--,6_3_3,'-2_69_,_) (45,250) (1, 774) (1,537, 769) 33,495 324,593 80,367 556,530 ___ 79~,0_2_5 _____ 5~,0_3_1_ 453,582 ____ 7_20~,_88_0_ 352,859 5,576,382 $ 27,204 $ (62,379) $ 487,077 $ 1,045,473 $ 433,226 $ 6,132,912 =========== 125 CITY OF BURLINGAME, CALIFORNIA Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual -Nonmajor Governmental Funds For the year ended June 30, 2016 Special .Revenue Funds Measure A Fund Gas Tax Fund Variance Positive Budget Actual (Ne~ative) Budget Actual REVENUES: Fines, forfeitures and penalties Investment income $ 13,000 $ 32,347 $ 19,347 $ 20,000 $ 29,327 Intergovernmental 824,000 767,021 (56,979) 673,000 667,918 Charges for services Grants revenue Total revenues 837,000 799,368 {37,632) 693,000 697,245 EXPENDITURES: Current: General government Public safety Public works Parks, recreation, and library Shuttle operations Total expenditures REVENUES OVER (UNDER) EXPENDITURES 837,000 799,368 {37,632) 693,000 697,245 OTHER FINANCING SOURCES (USES): Transfers in Transfers out (600,000) (600,000) (654,000) (654,000) Total other financing sources (uses) (600,000) (600,000) (654,000) (654,000) Net change in fund balance $ 237,000 199,368 $ (37,632) $ 39,000 43,245 FUND BALANCE: Beginning of year 1,870,407 1,670,888 End of year $ 2,069,775 $ 1,714,133 126 Variance Positive (Negative) $ 9,327 (5,082) 4,245 4,245 $ 4,245 $ Special Assessment District Budget 4,000 310,157 314,157 25,000 25,000 289,157 (279,044) (279,044) $ Actual 6,844 310,094 316,938 316,938 (279,044) {279,044) Variance Positive (Negative) $ 2,844 (63) 2,781 25,000 25,000 (22,219) $ Special Revenue Funds Traffic Safety Fund Budget Actual 96,000 96,000 96,000 (133,700) $ {43,201) (133,700) (43,201) $ Variance Positive (Negative) (96,000) (96,000) (96,000) 90,499 90,499 $ Train Shuttle Fund Variance Positive Budget Actual (Negative) 62,000 $ (62,000) 62,000 (62,000) 147,500 $ 137,321 10,179 147,500 137,321 10,179 (85,500) (137,321) (51,821) 85,500 85,500 85,SOO 85,500 $ 10,113 37,894 $ (22,219) $ (37,700) (43,201) $ (5,501) ============= (51,821) $ (51,821) 380,509 $ 418,403 43,201 79,025 $ 27,204 (Continued) 127 ===== CITY OF BURLINGAME, CALIFORNIA Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual -Nonmajor Governmental Funds For the year ended June 30, 2016 Special Revenue Funds State/Federal Grants Fund Local Grant Funds Variance Positive Budget Actual (Negative) Budget Actual REVENUES: Fines, forfeitures and penalties Investment income Intergovernmental Charges for services Grants revenue $ 370,598 $ 301,716 $ (68,882) $ 272,405 $ Total revenues 370,598 301,716 (68,882) 272,405 EXPENDITURES: Current: General government Public safety 462,750 357,228 105,522 2,479 Public works Parks, recreation, and library 11,898 11,898 $ 21,808 191,181 Shuttle operations Total expenditures 474,648 369,126 105,522 21,808 193,660 REVENUES OVER (UNDER) EXPENDITURES {104,050) {67,410) 36,640 (21,808) 78,745 OTHER FINANCING SOURCES (USES): Transfers in 10,000 10,000 Transfers out (55,250) Total other financing sources (uses) 10,000 (45,250) Net change in fund balance $ (104,050) {67,410) $ 36,640 $ (11,808) 33,495 $ FUND BALANCE: Beginning of year 5,031 453,582 End of year $ (62,379) $ 487,077 128 Variance Positive (Negative) 272,405 272,405 (2,479) (169,373) (171,852) 100,553 (55,250) (55,250) 45,303 Budget Special Revenue Funds Development Fees Fund $ Actual Variance Positive (Negative) Budget 13,772 $ 13,772 312,595 312,595 $ 110,000 326,367 326,367 110,000 78,000 78,000 326,367 326,367 32,000 (1,774) (1,774) (1,774) (1,774) 324,593 $ 324,593 $ 32,000 720,880 $ 1,045,473 Public TV Access Fund Actual $ 5,920 $ 113,535 119,455 39,088 39,088 80,367 Variance Positive (Negative) 5,920 3,535 9,455 38,912 38,912 (48,367) 80,367 =$====(4=8,=36=7=) 352,859 $ 433,226 129 Comprehensive Annual Financial Report June 30, 2016 INTERNAL SERVICE FUNDS General liability Fund -This fund accounts for the servicing of the general liability self-insurance program of the City. Included are costs associated with self-insurance and the purchase of excess insurance to adequately protect the City. User departments are charged for this program at rates based on loss experience (frequency and severity of claims). Workers' Compensation Fund -This fund accounts for the funding of the City's Workers' Compensation costs. User departments are charged for workers' compensation at rates based on loss experience and on departmental personnel budgets. OPEB (Other Post-Employment Benefits) Fund -This fund accounts for the costs of the City's retiree medical program and related liabilities. A percentage "surcharge" on actual payroll provides the fund's revenues; benefits are paid out of the fund and the remaining funds are swept to the irrevocable trust fund established to reduce the OPEB liability incurred in prior years. Facilities Services Fund -This fund accounts for the costs of operation of the City's maintenance and repair of building and custodial services on a cost reimbursement basis. Equipment Services Fund -This fund accounts for the costs of operation, maintenance, and replacement of automotive equipment used by the various departments. Such costs are billed to the consuming departments at a rate that includes operation and maintenance, and an amount necessary to provide replacement of the equipment at a future date. Information Technology Services Fund -This fund accounts for the costs of operation of the City's telephone and computer maintenance and acquisitions. Such costs are billed to the consuming departments at a rate that includes operation and maintenance, and an amount necessary to provide for replacement of computers. 131 ASSETS Current assets: Cash and investments $ Receivable (net of uncollectible amounts of $0): Due from consumers Due from other governments Other receivables Inventory Total current assets Non-Current assets: Cash and investments, restricted Advances to other funds Capital assets: Facilities, infrastructure, and equipment, net of depreciation Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES Total deferred outflows of resources LIABILITIES Current liabilities: Accounts payable Compensated absences due in one year Claims and litigation due in one year Total current liabilities Noncurrent liabilities: Compensated absences Claims and litigation Net pension liability Total noncurrent liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Total deferred Inflows of resources NET POSITION Net Investment in capital assets Restricted Unrestricted (deficit) Total net position $ CITY OF BURLINGAME, CALIFORNIA Combining Statement of Net Position Internal Service Funds June 30, 2016 General Worker's Liability Compensation OPEB Fund Fund Fund 3,581,921 $ 6,276,320 $ 341,386 $ 56,514 7,771 16,380 336 3,646,206 6,292,700 341,722 87,405 87,405 3,646,206 6,380,105 341,722 9,868 237 347,906 165,000 432,000 174,868 432,237 347,906 522,000 5,299,000 522,000 5,299,000 696,868 5,731,237 347,906 87,405 2,949,338 561,463 (6,184) 2,949,338 $ 648,868 $ (6,184) $ 132 Information Facilities Equipment Technology Services Services Services Fund Fund Fund Total 364,893 $ 6,054,255 $ 693,633 $ 17,312,408 9,539 9,955 76,008 988 16,130 1,892 43,497 57,189 57,189 365,881 6,137,113 705,480 17,489,102 87,405 101,497 101,497 80,102 1,460,524 61,671 1,602,297 80,102 1,562,021 61,671 1,791,199 445,983 7,699,134 767,151 19,280,301 81,328 52,756 3,730 137,814 33,316 32,985 102,779 527,091 3,327 3,327 597,000 33,316 36,312 102,779 1,127,418 40,530 25,675 66,205 5,821,000 793,649 514,820 36,406 1,344,875 834,179 540,495 36,406 7,232,080 867,495 576,807 139,185 8,359,498 90,252 58,545 4,140 152,937 80,102 1,460,524 61,671 1,602,297 101,497 188,902 (510,538) 5,554,517 565,885 9,114,481 (430,436) $ 7,116,538 $ 627,556 $ 10,905,680 CITY OF BURLINGAME, CALIFORNIA Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the year ended June 30, 2016 General Worker's Facilities Equipment Liability Compensation OPEB Services Services Fund Fund Fund Fund Fund OPERATING REVENUES: Charges for services $ 1,175,000 $ 884,489 $ 4,611,579 $ 1,362,481 $ 1,195,440 Other revenue 165,000 432,100 92 16,650 Total operating revenue 1,340,000 1,316,589 4,611,579 1,362,573 1,212,090 OPERATING EXPENSES: Salaries and benefits 656,214 4,591,224 687,380 379,837 Supplies and services 150,880 92,274 24,503 637,418 223,477 Depreciation 14,838 545,796 Insurance claims and expenses 448,401 160,190 1,635 41,235 Total operating expenses 599,281 908,678 4,615,727 1,341,271 1,190,345 Operating income (loss) 740,719 407,911 (4,148) 21,302 21,745 NONOPERATING REVENUES (EXPENSES): Investment income (expense) 46,086 97,252 1,984 5,867 95,742 Net nonoperating revenues (expenses) 46,086 97,252 1,984 5,867 95,742 Net change in net position 786,805 505,163 (2,164) 27,169 117,487 NET POSITION: Total net position, beginning 2,162,533 143,705 {4,020} {457,605} 6,999,051 Total net position, ending $ 2,949,338 $ 648,868 $ {6,184) $ (430,436) $ 7,116,538 133 Information Technology Services Fund Total $ 958,498 $10,187,487 613,842 958,498 10,801,329 63,118 6,377,773 920,502 2,049,054 28,197 588,831 651,461 1,011,817 9,667,119 (53,319) 1,134,210 11,234 258,165 11,234 258,165 (42,085) 1,392,375 669,641 9,513,305 $ 627,556 $10,905,680 CITY OF BURLINGAME, CALIFORNIA Combining Statement of Cash Flows Internal Service Funds For the year ended June 30, 2016 Information General Workers' Facilities Equipment Technology Liability Compensation OPEB Services Services Services Fund Fund Fund Fund Fund Fund Total CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers for service charges $ 1,284,886 $ 1,317,936 $ 4,611,243 $ 1,362,672 $ 1,206,898 $ 967,798 $ 10, 751,433 Payments to suppliers (640,225) (252,675) 7,135 (641,234) (289,284) {869,078) (2,685,361) Payments to employees (165,000l {1,088,214} {4,591,224} {734,617} {413,982} {65,287} {7,058,324) Net cash provided by (used In) operating activities 479,661 {22,953} 27154 {13,179} 503,632 33,433 1,007,748 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: lnterfund loans received (paid) 100,493 100,493 100,493 100,493 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets !7,025) {462,792) {65,084) (534,901) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on investments 46,086 97,252 1984 5 867 95 742 11,234 258,165 46,086 97,252 1984 5 867 95 742 11,234 258,165 Net increase (decrease) in cash and cash equivalents 525,747 74,299 29,138 (14,337) 237,075 (20,417) 831,505 CASH AND CASH EQUIVALENTS: Beginning of year 3,056,174 6,289,426 312,248 379,230 518171180 714,050 16,568,308 End of year $ 3,581,921 $ 6,363,725 $ 341,386 $ 364,893 $ 6,054,255 $ 693,633 $ 17,399,813 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET $ 525,747 $ 74,299 $ 29,138 $ (14,337) $ 237,075 $ (20,417) $ 831,505 CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Operating (loss) income 740,719 407,911 (4,148) 21,302 21,745 {53,319) 1,134,210 Adjustments for noncash activities: Depreciation and amortization 14,838 545,796 28,197 588,831 Claims and litigation Changes In assets and liabilities: Receivables (55,114) 1,347 (336) 99 (5,192) 9,300 (49,896) Inventories 12,108 12,108 Deferred outflows (8,990) (5,832) (412) (15,234) Accounts payable (40,944) (211) 31,638 (2,181) (36,680) 51,424 3,046 Compensated absences 22 (3,489) (3,467) Claims and litigations liabilities (165,000) (432,000) (597,000) Deferred Inflows (101,805) (66,038) (4,670) (172,513) Net pension liabilities 63,536 41,214 2,913 107,663 Total adjustments {261,058) {430,864) 31,302 {34,481) 481,887 86,752 {126,462) Net cash provided by (used In) operating activities $ 479,661 $ {22,953) $ 27,154 $ {13,179) $ 503,632 $ 33,433 $ 1,007,748 RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET POSITION Cash and investments -current $ 3,581,921 $ 6,276,320 $ 341,386 $ 364,893 $ 6,054,255 $ 693,633 $ 17,312,408 Cash and investments, restricted 87,405 87,405 Total cash and investments per Statement of Net Position $ 3,581,921 $ 6,363,725 $ 341,386 $ 364,893 $ 6,054,255 $ 693,633 $ 17,399,813 134 FIDUCIARY FUNDS Agency Funds Hotel Business Improvement District {BID) Fees -This fund accounts for fee collections received as an Agent for the San Mateo County Visitors and Convention Bureau. Elementary School Development Fees -This fund accounts for fee collections received as an Agent for the Burlingame Elementary School District. High School Development Fees-This fund accounts for fee collections received as an Agent for the San Mateo Union High School District. Business Improvement District {BID) Fund -Broadway-This fund accounts for collections received as an Agent for the Broadway Business Improvement District. Library Foundation Account Fund -This fund accounts for collections and disbursements by the Library Foundation. Downtown Business Improvement District Fund -This fund accounts for collections received for the Downtown Business Improvement District. 135 CITY OF BURLINGAME AGENCY FUNDS COMBINING STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2016 Balance Balance June 30, 2015 Additions Deductions June 30, 2016 Seismic Education Fees Assets: Cash and investments $ 34,790 $ (33,017) $ 1,773 Total assets $ 34,790 $ (33,017) $ 1,773 Liabilities: Accounts payable $ 1,666 $ 107 $ 1,773 Due to other governmental units 33,124 $ (33,124) Total liabilities $ 34,790 $ 107 $ (33,124) $ 1,773 Hotel BID Fees Assets: Cash and investments $ 77,236 $ 6,446 $ 83,682 Accounts receivable 778,905 88,348 867,253 Total assets $ 856,141 $ 94,794 $ 950,935 Liabilities: Accounts payable $ 103,426 $ (11,780) $ 91,646 Due to other governmental units 752,715 $ 106,574 859,289 Total liabilities $ 856,141 $ 106,574 $ (11,780) $ 950,935 Elementary School Development Fees Assets: Cash and investments $ 43,132 $ (13,162) $ 29,970 Total assets $ 43,132 $ (13,162) $ 29,970 Liabilities: Accounts payable $ 43,132 $ (13,162) $ 29,970 Total liabilities $ 43,132 $ (13,162) $ 29,970 High School Development Fees Assets: Cash and investments $ 32,244 $ (9,682) $ 22,562 Total assets $ 32,244 $ (9,682) $ 22,562 Liabilities; Accounts payable $ 32,244 $ (9,682) $ 22,562 Total liabilities $ 32,244 $ (9,682) $ 22,562 (continued) 136 CITY OF BURLINGAME AGENCY FUNDS COMBINING STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2016 Balance Balance June 30, 2015 Additions Deductions June 30, 2016 Unclaimed Property· PD Assets: Cash and investments $ 22,241 $ (22,241) Accounts receivable $ 946 $ 946 Total assets $ 22,241 $ 946 $ (22,241) $ 946 Liabilities; Due to other governmental units $ 22,241 $ 946 $ (22,241) $ 946 Total liabilities $ 22,241 $ 946 $ (22,241) $ 946 EMS Training Fund Assets: Cash and investments $ (3,871) $ 3,871 Total assets $ (3,871) $ 3,871 Liabilities: Due to other governmental units $ (3,871) $ 3,871 Total liabilities $ (3,871) $ 3,871 BID -Broadway Assets: Cash and investments $ 1,613 $ 582 $ 2,195 Total assets $ 1,613 $ 582 $ 2,195 Liabilities; Accounts payable $ 1,613 $ 582 $ 2,195 Total liabilities $ 1,613 $ 582 $ 2,195 Library Foundation Account Fund Assets: Cash and investments $ 3,316 $ (1,532) $ 1,784 Total assets $ 3,316 $ (1,532) $ 1,784 Liabilities; Accounts payable $ 1,482 $ 302 $ 1,784 Due to other governmental units 1,834 $ (1,834) Total liabilities $ 3,316 $ 302 $ (1,834) $ 1,784 (continued) 137 CITY OF BURLINGAME AGENCY FUNDS COMBINING STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2016 Balance Balance June 30, 2015 Additions Deductions June 30, 2016 Building Standards Administration Assets: Cash and investments $ 4,865 $ (3,251) $ 1,614 Total assets $ 4,865 $ (3,251) $ 1,614 Liabilities; Accounts payable $ 556 $ 1,423 $ 1,979 Due to other governmental units 4,309 $ (4,309) Total liabilities $ 4,865 $ 1,423 $ (4,309) $ 1,979 QWL Committee Assets: Cash and investments $ (165) $ 165 Total assets $ (165) $ 165 Liabilities; Due to other governmental units $ {165) $ 165 Total liabilities $ (165) $ 165 Unclaimed -General Accounts Assets: Cash and investments $ 2,567 $ 500 $ (2,567) $ 500 Total assets $ 2,567 $ 500 $ (2,567) $ 500 Liabilities: Accounts payable $ 500 $ 500 Deposit $ 2,567 $ {2,567) Total liabilities $ 2,567 $ 500 $ (2,567) $ 500 Downtown Business Improvement District Assets: Cash and investments $ 5,709 $ 1,872 $ {7,581) Accounts receivable 12,731 7,059 $ 19,790 Total assets $ 18,440 $ 8,931 $ (7,581) $ 19,790 Liabilities: Accounts payable $ 4,254 $ {2,954) $ 1,300 Due to other governmental units 14,186 $ 3,939 18,125 Total liabilities $ 18,440 $ 3,939 $ (2,954) $ 19,425 138 (continued) CITY OF BURLINGAME AGENCY FUNDS COMBINING STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2016 Balance Balance June 30, 2015 Additions Deductions June 30, 2016 Totals -All Agency Funds Assets: Cash and investments $ 223,677 $ 13,436 $ {93,033) $ 144,080 Accounts receivable 791,636 96,353 887,989 Total assets $ 1,015,313 $ 109,789 $ (93,033) $ 1,032,069 Liabilities: Accounts payable $ 188,373 $ 2,914 $ (37,578) $ 153,709 Due to other governmental units 824,373 115,495 (61,508) 878,360 Deposit 2,567 (2,567) Total liabilities $ 1,015,313 $ 118,409 $ (101,653) $ 1,032,069 139 Comprehensive Annual Financial Report June 30, 2016 STATISTICAL SECTION Comprehensive Annual Financial Report June 30, 2016 STATISTICAL SECTION Contents Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property and other taxes. Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make 160-167 168-175 176-180 comparisons over time and with other governments. 181-183 Operating Information These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs. 143 185-188 CITY OF BURLINGAME, CALIFORNIA NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 2007 2008 Governmental activities: Net investment in capital assets $ 93,700 $ 92,795 Restricted 1,800 3,299 Unrestricted -restated per GASB 68 12,709 16,265 Total governmental activities net position $ 108,209 $ 112,359 Business-type activities: Net investment in capital assets $ 27,631 $ 30,824 Restricted Unrestricted -restated per GASB 68 13,540 14,385 Total business-type activities net position $ 41,171 $ 45,209 Primary government: Net investment in capital assets $ 121,331 $ 123,619 Restricted 1,800 3,299 Unrestricted 26,249 30,650 Total primary government net position $ 149,380 $ 157,568 2009 $ 60,967 3,575 41,005 $ 105,547 $ 32,014 18,119 $ 50,133 $ 92,981 3,575 59,124 $ 155,680 (1) Reclassifications in the categories were made to stay consistent and comparable with the presentation in the current year. $ $ $ $ $ $ (2) 2012 reflects net position as originally stated and does not include the effect of implementation of GASB Statement No. 65 in 2013 which restated beginning net position. 144 (1) 2010 59,936 3,515 42,298 105,749 30,759 19,260 50,019 90,695 3,515 61,558 155,768 Fiscal Year (1) 2011 $ 51,521 8,674 49,259 $ 109,454 $ 38,406 17,736 $ 56,142 $ 89,927 8,674 66,995 $ 165,596 (1) 2012 $ 78,903 12,102 27,234 $ 118,239 $ 40,381 5,014 14,788 $ 60,183 $ 119,284 17,116 42,022 $ 178,422 (2) 2013 $ 64,020 26,400 34,841 $ 125,261 $ 43,469 5,050 16,093 $ 64,612 $ 107,489 31,450 50,934 $ 189,873 2014 $ 72,956 45,863 14,732 $ 133,551 $ 46,341 451 27,092 $ 73,884 $ 119,297 46,314 41,824 $ 207,436 145 2015 $ 74,346 36,446 (26,763) $ 84,029 $ 50,485 451 22,038 $ 72,974 $ 124,831 36,897 (4,725) $ 157,003 2016 $ 79,019 38,414 (25,511} $ 91,922 $ 54,587 12,367 26,002 $ 92,956 $ 133,606 50,781 491 $ 184,878 CITY OF BURLINGAME, CALIFORNIA CHANGE IN NET POSITION Last Ten Fiscal Years (accrual basis accounting) (amounts expressed in thousands) 2007 2008 2009 2010 Expenses Governmental activities: General government $ 4,957 $ 5,199 $ 5,493 $ 5,354 Public safety 17,804 18,981 21,154 21,050 Public works 7,685 4,307 8,071 8,453 Community development 835 4,168 3,263 2,318 Parks, recreation and library 11,304 9,465 10,868 9,191 Shuttle operations 306 304 318 130 Financing and other activities 2,644 1,401 2,093 1,876 Total governmental activities expenses 45,535 43,825 51,261 48,372 Business-type activities: Water 7,629 8,662 9,315 9,370 Sewer 9,323 10,011 10,442 10,170 Waste management 372 307 1,217 687 Landfill Parking 1,154 1,315 1,353 1,298 Building 1,185 1,075 Total business-type activities expenses 18,478 20,295 23,512 22,600 Total primary government expenses $ 64,013 ~ 64,120 ~ 74,773 ~ 70,972 Program Revenue Governmental activities: Charges for services: General government $ 574 $ 269 $ 240 $ 350 Public safety 2,355 1,737 2,104 1,179 Public works 3,032 1,438 556 314 Community development 344 263 300 336 Parks, recreation and library 2,810 2,719 2,S65 2,643 Shuttle operations Operating grants and contributions 166 2,730 2,590 2,040 Capital grants and contributions 105 918 3,407 Total government activities program revenues 9,281 9,261 9,273 10,269 Business-types activities: Charges for services: Water 10,484 11,119 11,800 11,516 Sewer 10,825 11,592 12,467 12,534 Waste management 7 294 Landfill Parking 1,638 1,691 1,640 1,645 Building 2,356 1,479 Capital grants and contributions 1,105 535 23 Total business-type activities program revenues 22 947 25,507 28,805 27,491 Total primary governmental program revenues $ 32,228 ~ 34,768 ~ 38,078 ~ 37,760 Net (expenses)/revenue Government activities $ (36,254) $ (34,564) $ (41,988) $ (38,103) Business-type activities 4 469 5,212 5,293 4,891 Total primary government net expenses $ (31,785) ~ (29,352) ~ (36,695) ~ (33,212) General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes $ 11,469 $ 12,198 $ 12,798 $ 13,355 Sales tax 9,231 9,458 8,251 6,276 Transient occupancy tax 10,356 11,265 10,155 10,342 Other taxes 2,090 2,103 2,095 2,267 Other general revenue Special Item -OPEB pre-funding Investment earnings (expense) 1,408 1,610 897 618 Transfers 464 2,080 980 5,447 Total governmental activities 35,018 38,714 35,176 38,305 Business-type activities: Other taxes 905 906 610 442 Other general revenue Investment earnings (expense) Transfers {464) {2,080) {980) {5,447) Total primary government 441 {1,174) (370) {5,005) Change in Net Position Government activities (1,236) 4,149 (6,811) 202 Business-type activities 4,910 4,038 4,923 {114) Total primary government $ 3,674 $ 8,187 $ (1,887) $ 88 146 2011 2012 2013 2014 2015 2016 $ 6,803 $ 6,358 $ 6,188 $ 7,295 $ 4,231 $ 4,275 21,141 20,265 21,163 19,141 23,005 26,296 8,514 8,248 9,268 12,961 8,267 8,312 1,752 1,245 941 1,007 1,145 1,162 10,475 9,828 11,065 11,162 15,832 13,786 324 249 179 188 135 137 2,656 2,215 3,552 2,812 2,422 2,639 51,665 48,408 52,356 54,567 55,037 56,607 9,569 11,082 12,127 10,745 11,471 12,822 9,509 9,686 9,553 9,332 10,144 10,960 936 681 634 467 481 487 177 67 56 1,454 1,435 1,350 1,183 1,296 445 1,141 1,222 1,317 1,254 1,368 1,420 22,608 24,107 24,980 23,158 24,827 26,190 $ 74,273 $ 72,516 $ 77,336 $ 77,725 $ 79,864 $ 82,797 $ 616 $ 2 $ 117 $ 302 $ 116 $ 123 2,202 1,053 212 1,097 1,066 1,009 1,713 560 3,230 4,075 3,870 3,477 744 319 384 738 657 890 2,744 2,760 2,880 2,919 3,372 3,405 72 2,210 1,165 987 738 1,127 591 3,189 3,520 357 1,249 740 439 13,490 9,379 8,167 11,118 10,948 9,934 12,734 13,708 14,875 16,023 15,425 15,158 14,566 16,157 16,791 16,931 15,679 15,634 653 465 564 1,694 943 778 350 445 437 1,802 1,950 2,428 2,477 2,573 2,649 1,404 1,580 1,707 2,057 1,980 2,257 31,159 33,860 36,365 39,532 37,045 36,913 ~ 44,649 ~ 43,239 ~ 44,532 ~ 50,651 ~ 47,993 ~ 46,847 $ (38,175) $ (39,029) $ (44,189) $ (43,449} $ (44,089) $ (46,673) 8,551 9,753 11,385 16,374 12,218 10,723 ~ (29,624) ~ (29,277) ~ (32,804) ~ (27,075) ~ (31,871) ~ (35,950) $ 13,310 $ 13,672 $ 14,394 $ 15,497 $ 16,677 $ 17,645 8,041 8,495 9,199 10,196 11,101 12,828 13,404 16,183 18,244 21,357 23,698 26,092 5,037 4,478 5,311 4,595 4,697 4,589 344 1,254 233 (6,600} 805 472 148 576 481 1,292 1,282 4,513 3,916 5,774 3,127 (8,114) 41,879 47,813 51,212 45,139 61,037 54,565 228 314 382 (1,145) (1,427) (3,353) (1,329} (1,451) 762 (1,282) (4,513) (3,916) (5,774) (3,127) 8,114 (2,427) (5,712) (6,955) (7,103) (4,578) 9,258 3,704 8,784 7,023 1,690 16,947.11 7,893 6,124 4,041 4,430 9,271 7,640 19,982 $ 9,828 $ 12,825 $ 11,453 $ 10,962 $ 24,587 s 27,875 147 Comprehensive Annual Financial Report June 30, 2016 General Fund: Reserved Unreserved Total general fund All other governmental funds: Reserved Unreserved, reported in: Debt service funds Special revenue funds Capital projects funds Total all other governmental funds General Fund: Nonspendable Restricted Committed Assigned Unassigned Subtotal General Fund All other governmental funds: Nonspendable Restricted Committed Assigned Unassigned CITY OF BURLINGAME, CALIFORNIA FUND BALANCE OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) (amounts express in thousands) 2007 2008 2009 2010 $ 88 $ 669 $ 670 $ 580 9,802 8,881 6,676 6,276 $ 9,890 $ 9,550 $ 7,346 $ 6,856 $ 4,509 $ 7,724 $ 6,111 $ 9,024 517 605 757 739 $ 5,026 $ 8,329 $ 6,868 $ 9,763 2011 {l) 2012 2013 2014 $ 3 $ 1 $ 217 $ 221 10,200 11,927 12,300 9,413 1,665 3,591 7,430 13,251 $ 11,868 $ 15,519 $ 19,947 $ 22,885 $ 475 $ 204 $ 396 $ 383 5,756 11,898 26,004 17,417 19,412 28,063 16,140 13,246 1,166 651 Subtotal all other governmental funds $ 22,370 $ 25,348 $ 46,978 $ 46,514 Total governmental fund balance $ 34,238 $ 40,867 $ 66,925 $ 69,399 2015 $ 224 $ 18,773 10,465 $ 29,462 $ $ 375 $ 10,851 25,220 8,762 $ 45,208 $ $ 74,670 $ (1) Beginning in fiscal year 2011, the City implemented GASB Statement No. 54 which provided updated guidance on fund balance designation and reporting. 149 2016 337 18,638 11,003 29,978 575 21,034 20,874 13,500 97 56,080 86,058 CITY OF BURLINGAME, CALIFORNIA CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2007 2008 REVENUES: Property taxes $ 11,469 $ 12,198 $ Sales and use taxes 9,231 9,459 Transient occupancy taxes 10,355 11,265 Other taxes 1,900 1,981 Licenses and permits 967 1,221 Fines, forfeitures, and penalties 1,184 1,178 Investment income 1,491 1,677 Motor vehicle in lieu tax 190 122 Charges for services 4,145 3,797 Intergovernmental Grant and governmental revenues 2,091 2,148 Other revenue 777 823 Total revenues 43,801 45,869 EXPENDITURES: Current General government 4,686 4,987 Public safety 16,550 18,846 Public works 6,204 4,723 Community development 780 1,697 Parks, recreation and library 8,784 9,505 Shuttle operations 306 304 Other Capital Outlay 1,456 6,680 Debt service: Principal 2,405 2,547 Interest 2,297 1,543 Total expenditures 43,468 50,832 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 333 (4,963) OTHER FINANCING SOURCES (USES): Transfer in 16,935 15,532 Transfer out (16,471) (7,605) Pension obligation bonds issued 32,975 Payment to PERS retirement (32,393) Refund bond issued Premium on bonds issued Proceeds from issuance of debt Payments to refunded bond escrow agent Total other financing sources (uses) 1,046 7,927 Net change in fund balances $ 1,379 $ 2,964 $ Debt service as a percentage of noncapital expenditures 11% 9% 150 2009 2010 12,798 $ 12,209 8,251 6,276 10,155 10,342 2,012 2,159 298 92 1,298 467 959 695 83 108 3,986 6,392 2,722 2,652 877 552 43,440 41,945 5,111 4,842 19,097 18,830 6,839 7,231 890 780 10,319 8,500 318 130 11,001 5,028 2,138 2,212 2,104 1,922 57,817 49,475 (14,377) (7,530) 17,398 16,797 (6,686) (6,861) 10,712 9,936 (3,665) $ 2,405 9% 9% $ $ 2011 13,310 8,041 13,404 2,416 97 1,025 803 148 6,121 2,162 845 48,372 5,458 17,378 5,713 731 8,620 139 17 4,023 7,526 2,425 52,031 (3,659) 26,312 (25,029) 20,300 (305) 21,278 17,619 21% $ $ 2012 13,672 8,495 16,183 2,582 100 889 472 6,270 3,112 904 52,679 6,669 18,392 9,790 1,172 9,463 145 3,034 2,304 50,969 1,710 29,276 (24,763) 405 4,918 6,629 10% $ $ Fiscal Year 2013 15,539 9,199 18,244 2,970 102 933 148 6,721 2,383 370 56,608 5,699 18,895 7,834 854 9,328 179 6,447 3,527 2,337 55,101 1,507 33,209 (29,293) 20,637 24,553 26,058 12% $ $ 2014 15,497 10,196 21,357 4,595 112 874 391 7,704 1,987 345 63,058 5,989 20,082 11,280 1,041 10,485 188 3,205 4,631 2,752 59,654 3,405 33,520 (34,448) (929) 2,474 13% 151 $ $ 2015 16,677 11,101 23,698 4,697 84 921 374 8,076 1,867 1,254 68,750 4,434 23,231 8,311 1,244 15,145 135 6,594 4,964 2,548 66,607 2,143 33,694 (30,567) 3,127 5,270 13% $ $ 2016 17,645 12,828 26,092 3,154 864 1,036 8,005 1,435 1,075 391 72,525 4,917 25,057 7,330 1,406 12,725 137 3,885 5,832 2,633 63,922 8,603 30,150 (38,264) 1,045 9,855 2,786 11,389 14% CITY OF BURLINGAME, CALIFORNIA ASSESSED VALUES OF TAXABLE PROPERTY Last Ten Fiscal Years Category 2006-07 Residential $ 4,097,648,898 Commercial 1,111,631,900 Industrial 367,137,642 Government 1,651,816 Institutional 31,826,071 Miscellaneous 2,294,312 Recreational 12,299,913 Vacant Land 10,666,591 SBE Nonunitary 1,290,599 Unsecured 324,100,493 Unknown TOTALS $ 5,960,548,235 Total Direct Rate 0.14531 Note: Exempt values are not included in the total. 2007-08 2008-09 2009-10 $ 4,425,787,714 $ 4, 752,698,976 $ 4,919,813,993 1,218,274,542 1,205,209,020 1,229,890,648 386,532,903 403,343,837 417,397,081 1,684,851 1,718,546 1,752,914 32,449,526 27,466,494 23,302,586 2,340,192 2,386,992 6,116,146 12,527,505 20,570,100 17,974,577 10,038,189 43,891,543 46,610,281 3,837,425 3,837,425 3,837,425 291,377,516 300,758,515 299,902,769 145,525 $ 6,384,850,363 $ 6,762,026,973 $ 6,966,598,420 0.14525 0.14522 0.14521 In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1%, based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum of 2%). With few exceptions, property is only reassessed as a result of new construction activity or at the time it is sold to a new owner. At that point, the property is reassessed based upon the added value of the construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: San Mateo County Assessor 2006/07 -2015/16 Combined Tax Rolls 152 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 $4,964,900,673 $5,067,435,558 $5,292,630,080 $5,657,587,039 $6,106,922,682 $6,543,165,637 1, 197,204,546 1,203,204,597 1,264,338,491 1,304,028,690 1,406,432,281 1,487,65 7,043 445,945,589 449,409,192 469,569,724 487,612,064 491,904,917 500,290,183 477,622 481,217 490,841 1,131,741 1,136,878 16,859,592 5,108,197 5,179,683 5,313,527 5,686,994 6,739,774 5,545,746 47,603,695 46,149,474 47,731,445 52,216,889 52,541,265 63,818,615 21,392,656 21,565,053 21,330,221 21,756,820 27,696,881 30,269,253 50,379,786 44,684,470 53,260,644 61,242,201 42,238,634 43,082,544 3,680,597 2,560,452 2,560,452 2,560,452 2,560,452 2,763,435 274,429,627 270,906,684 275,840,943 302,712,785 307,284,506 324,903,282 45,233,193 $ 7,011,122,988 $7,111,576,380 $ 7,433,066,368 $ 7,941, 768,868 $8,445,458,270 $9,018,355,330 0.14520 0.14519 0.14209 0.14205 0.14235 0.14250 153 CITY OF BURLINGAME, CALIFORNIA NET TAXABLE ASSESSED VALUE HISTORY Last Ten Fiscal Years TAXABLE PROPERTY VALUES LIEN YEAR SECURED UNSECURED SBE NONUNITARY 2006/07 $ 5,635,157,143 $ 324,100,493 $ 1,290,599 2007/08 6,089,635,422 291,377,516 3,837,425 2008/09 6,457,431,033 300,758,515 3,837,425 2009/10 6,662,858,226 299,902,769 3,837,425 2010/11 6,733,012,764 274,429,627 3,680,597 2011/12 6,838,109,244 270,906,684 . 2,560,452 2012/13 7,154,664,973 275,840,943 2,560,452 2013/14 7,636,495,631 302,712,785 2,560,452 2014/15 8,135,613,312 307,284,506 2,560,452 2015/16 8,690,688,613 324,903,282 2,763,435 Source: San Mateo County Assessor 154 NET TOTAL ASSESSED VALUE %CHANGE $ 5,960,548,235 8.56% 6,384,850,363 7.12% 6, 762,026,973 5.91% 6,966,598,420 3.03% 7,011,122,988 0.64% 7,111,576,380 1.43% 7,433,066,368 4.52% 7,941, 768,868 6.84% 8,445,458,270 6.34% 9,018,355,330 6.78% CITY OF BURLINGAME, CALIFORNIA PROPERTY TAX RATES--DIRECT AND OVERLAPPING GOVERNMENTS Last Ten Fiscal Years (per $100 of assessed value) General DEBT AND/OR SPECIAL ASSESSMENTS County, Community Elementary Fiscal City and Peninsula College School Year Schools 11H2J City County Hospital District District $ $ $ $ $ $ 2005 1.000000 0.000000 0.000000 0.000000 0.006500 0.086500 2006 1.000000 0.000000 0.000000 0.000000 0.006500 0.085100 2007 1.000000 0.000000 0.000000 0.000000 0.018400 0.081500 2008 1.000000 0.000000 0.000000 0.000000 0.017100 0.083000 2009 1.000000 0.000000 0.000000 0.000000 0.016500 0.108300 2010 1.000000 0.000000 0.000000 0.000000 0.018200 0.127400 2011 1.000000 0.000000 0.000000 0.000000 0.019300 0.132300 2012 1.000000 0.000000 0.000000 0.000000 0.019900 0.138800 2013 1.000000 0.000000 0.000000 0.000000 0.019400 0.144800 2014 1.000000 0.000000 0.000000 0.000000 0.019400 0.177200 2015 1.000000 0.000000 0.000000 0.000000 0.019000 0.101500 2016 1.000000 0.000000 0.000000 0.000000 0.025000 0.090000 City's Share of 1% Levy Per Prop 13 13' Redevelopment Rate 14' Total Direct Rate Note: High School Total District Tax Rate $ $ 0.017400 1.110400 0.017400 1.109000 0.015600 1.115500 0.015000 1.115100 0.029800 1.154600 0.031900 1.177500 0.032200 1.183800 0.038300 1.197000 0.038100 1.202300 0.035500 1.232100 0.047500 1.168000 0.046600 1.161600 0.1707 0.0000 0.1425 (1) In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies in which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. (2) Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all city property owners. (3) City's share of 1% levy is based on the City's share of the General Fund tax rate area with the largest net taxable value within the city. Educational Revenue Augmentation Fund (ERAF) General Fund tax shifts may not be included in tax ratio figures. (4) Redevelopment Agency (RD) rate is based on the largest RDA tax rate area (TRA) and includes only rate(s) from indebtedness adopted prior to 1989 per California State Statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABXl 26 eliminated RDA from the State of California for the fiscal year 2012/13 and years thereafter. (5) Total Direct Rate is the weighted average of all Individual direct rates applied to by the government preparing the statistical section information and excludes revenues derived from aircraft. Beginning In 2013-14 the Total Direct Rate no longer Includes revenue generated from the former redevelopment tax rate areas. Challenges to recognized enforceable obligations are assumed to have been resolved during 2012-13. For the purposes of this report, residual revenue is assumed to be distributed to the City in the same proportions as general fund revenue. 155 CITY OF BURLINGAME, CALIFORNIA TOP TEN PROPERTY TAXPAYERS June 30, 2016 (amounts expressed in thousands) Taxable Assessed Taxpayer Value EQR-Northpark LP $ 118,730 HMC Burlingame Hotel LLC 117,946 Inland American Lodging Burlin 108,795 Burlingame Bay LLC 72,125 Felcor CCS Holdings LP 9520 56,642 MNCVAD-Harvest One Bay LLC 49,607 EQR Skyline Terrace LP 45,395 OCT Rollins Road LLC 36,735 100-198 California Drive LLC 30,616 Harbour View Hotels, Inc 29,090 $ 665,681 (1) 2015-16 Local Combined Assessed Valuation 2016 Percentage of Total Taxable Assessed Rank Value (1) 1 1.32% HMC Burlingame Hotel LLC 2 1.31% HMHSFO Inc. 3 1.21% Bay Park Plaza Associates 4 0.80% Felcor CCS Holdings LP 9520 5 0.63% One Bay Plaza Associates LLC 6 0.55% Glenborough Properties LP 7 0.50% Northpark Properties 8 0.41% Airport Blvd 'Hotel LLC 9 0.34% Are809 863 mitten Road LLC 10 0.32% Harbour View Hotels, Inc 7.38% $ 9,018,355 Source: San Mateo County Assessor 2015/16 Combined Tax Rolls and the SBE Non Unitary Tax Roll 156 2007 Percentage of Total Taxable Taxable Assessed Assessed Value Rank Value (1) $ 108,699 1 1.75% 73,134 2 1.17% 48,809 3 0.78% 41,673 4 0.67% 33,500 5 0.54% 29,100 6 0.47% 28,668 7 0.46% 28,464 8 0.46% 24,793 9 0.40% 24,568 10 0.41% $ 441,408 7.11% CITY OF BURLINGAME, CALIFORNIA PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Collected Within Year of Levy Current Fiscal Total Tax Year Tax Levy Collections % of Levy 2007 $ 9,939,398 $ 8,799,467 88.53% 2008 10,661,563 9,371,585 87.90% 2009 11,304,881 9,730,358 86.07% 2010 11,653,813 8,840,920 75.86% 2011 11,729,356 10,050,908 85.69% 2012 11,900,220 10,976,456 92.24% 2013 12,446,101 11,762,421 94.51% 2014 13,312,310 12,745,227 95.74% 2015 14,167,158 13,744,014 97.01% 2016 15,144,338 14,512,541 95.83% Notes: Total Collections Delinquent Total Tax Tax Collections Collections % of Levy $ $ 8,799,467 88.53% 9,371,585 87.90% 9,730,358 86.07% 8,840,920 75.86% 10,050,908 85.69% 10,976,456 92.24% 11,762,421 94.51% 12,745,227 95.74% 13,744,014 97.01% 14,512,541 95.83% (1) In fiscal year 2009-10 as part of the State of California's budget balancing actions, the State borrowed $1,145,268 of the City's property tax revenue, with the promise to repay the Prop lA loan in three years with 2% interest. These amounts were fully reimbursed by the State of California as of June 30, 2013. (2) Current tax collections are less than the levy due to roll corrections, county administrative charges, and other adjustments which may occur after the date of levy. (3) The City participates in the Teeter Plan under California State law. Under the Teeter Plan, the County remints the entire tax levy and manages delinquent tax collections with the associated interest and penalties. Source: San Mateo County Controller's Office; Audited City financial records 157 Comprehensive Annual Financial Report June 30, 2016 CITY OF BURLINGAME, CALIFORNIA GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE (accrual basis of accounting) (amounts expressed in thousands) Transient Fiscal Property Sales Occupancy year Tax Tax Tax 200S $ 9,360 $ 8,S08 $ 8,066 2006 10,390 8,806 9,273 2007 11,469 9,231 10,3S6 2008 12,198 9,4S9 11,26S 2009 12,798 8,2S1 10,lSS 2010 13,3SS 6,276 10,342 2011 13,310 8,041 13,404 2012 13,672 8,49S 16,183 2013 14,394 9,199 18,244 2014 lS,497 10,196 21,3S7 201S 16,677 11,101 23,698 2016 17,64S 12,828 26,092 Source: Audited City Financial records -Governmental Funds 1S9 Inter- governmental Other Taxes Revenues Total $ 1,861 $ 1,996 $ 29,791 2,204 1,041 31,714 1,S23 S67 33,146 1,981 sos 3S,408 1,782 313 33,299 1,8S7 403 32,233 2,070 2,966 39,791 2,S82 1,896 42,828 4,217 1,408 47,462 2,970 1,62S S1,64S 3,048 1,648 S6,172 3,1S4 1,43S 61,1S4 CllY OF BURLINGAME, CALIFORNIA RATIOS OF OUTSTANDING DEBT BY lYPE Last Ten Fiscal Years Governmental Activities Lease Pension Fiscal Revenue Obligation Year Bond Storm Drainage Bonds 2007 $ 5,645,000 $ 31,395,000 2008 5,095,000 30,280,000 2009 4,530,000 29,020,000 2010 3,950,000 27,605,000 2011 11,555,000 9,805,000 26,010,000 2012 10,935,000 9,560,000 24,235,000 2013 19,985,000 19,630,000 22,275,000 2014 18,889,859 19,596,924 20,095,000 2015 16,999,489 19,083,477 17,695,000 2016 15,040,564 28,920,064 15,050,000 Note: State Loans 11,056,020 10,696,649 10,249,390 9,791,549 11,776,097 13,466,890 364,204 320,209 274,884 228,210 Lease Purchase 1,500,000 1,305,907 1,104,952 897,598 683,639 462,866 Details regarding the City1s outstanding debt can be found in the Notes to the Basic Financial Statements. Business~Type Activities Total Percentage Sewer Water Primary of Personal Bonds Bonds Government Income (1) 16,435,000 17,540,000 $ 82,071,020 4.70% 26,025,000 30,475,000 102,571,649 6.03% 24,250,000 29,550,000 97,599,390 7.66% 22,400,000 28,600,000 92,346,549 6.61% 20,470,000 27,625,000 108, 741,097 7.78% 18,225,000 25,925,000 103,652, 797 6.91% 17,525,000 24,895,000 105,779,156 7.14% 30,260,807 24,550,763 114,611,160 7.74% 28,729,137 23,372,756 106,838,382 6.41% 27,143,163 22,154,450 108,999,317 6.03% Furthermore, please reference the schedule of Demographic and Economic Statistics for personal income and per capita data. Data for calendar year 2016 is not available. Therefore, in order to present a useful estimate, personal income data for calendar year 2015 has been used. 160 Per Capita (1) 2,853 3,531 3,326 3,173 3,736 3,522 3,563 3,861 3,597 3,667 CITY OF BURLINGAME, CALIFORNIA RATIOS OF GENERAL BONDED DEBT OUTSTANDING Last Ten Fiscal Years General Fiscal Obligation Net Total Year Bonds Assessed Value 2006 $ $ 5,490,568,399 2007 31,395,000 5,960,548,235 2008 30,280,000 6,384,850,363 2009 29,020,000 6, 762,026,973 2010 27,605,000 6,966,598,420 2011 26,010,000 7,011,122,988 2012 24,235,000 7,111,576,380 2013 22,275,000 7,433,066,368 2014 20,095,000 7,941, 768,868 2015 17,695,000 8,445,458,270 2016 15,050,000 9,018,355,330 Note: Percentage·ot Estimated Actual Taxable Value of Burlingame Per Property Population Capita 0.00% 28,180 $ 0.53% 28,277 1,110 0.47% 28,453 1,064 0.43% 28,762 1,009 0.40% 29,050 950 0.37% 29,342 886 0.34% 29,106 833 0.30% 29,426 757 0.25% 29,685 677 0.21% 29,700 596 0.17% 29,724 506 The City has had no general obligations bonds outstanding over the last ten years. However, because the 2006 Pension Obligation Bonds are to be repaid with general government resources, they are shown as general obligation bonds included in this table. 161 CITY OF BURLINGAME, CALIFORNIA COMPUTATION OF DIRECT AND OVERLAPPING DEBT* June 30, 2015 2015-16 Assessed Valuation**: $ 9,018,355,330 OVERLAPPING TAX AND ASSESSMENT DEBT: San Mateo Community College District San Mateo Union High School District Burlingame Elementary School District Hillsborough School District TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT: San Mateo County General Fund Obligations San Mateo County Board of Education Certificates of Participation City of Burlingame General Fund Obligations (Net) City of Burlingame Pension Obligation Bond City of Burlingame -Storm Drainage Revenue Bonds, Series 2010 (Net) City of Burlingame -Storm Drainage Revenue Bonds, Series 2012 (Net) City of Burlingame -Storm Drainage Revenue Bonds, Series 2016 (Net) City of Burlingame -Master Equipment Lease Purchase Agreement, 2011 City of Burlingame -California Energy Commission, 2012 TOTAL GROSS DIRECT AND OVERLAPPING LEASE OBLIGATION DEBT $ $ $ $ Total Debt June 30, 2016 644,384,027 544,823,660 103,322,486 53,799,726 1,346,329,899 432,359,816 9,890,000 15,040,564 15,050,000 8,650,241 9,904,789 10,365,034 462,866 228,210 501,951,520 Less: City of Burlingame General Fund Obligations supported from enterprise revenues Less: City of Burlingame Pension Obligations supported by enterprise revenues TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT TOTAL GROSS DIRECT DEBT TOTAL NET DIRECT DEBT TOTAL OVERLAPPING DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT (2) Ratios to 2014-15 Assessed Valuation: City's share of Percent Debt Applicable (1) June 30, 2016 5.056% $ 32,580,056 14.420% 78,563,572 94.638% 97,782,334 0.119% 64,022 $ 208,989,984 5.056% $ 21,860,112 5.056% 500,038 100.000% 15,040,564 100.000% 15,050,000 100.000% 8,650,241 100.000% 9,904,789 100.000% 10,365,034 100.000% 462,866 100.000% 228,210 $ 82,061,855 2,635,000 3,762,500 $ 75,664,355 $ 59,701,704 $ 53,304,204 $ 231,350,135 $ 291,051,839 $ 284,654,339 Total Overlapping Tax and Assessment Debt................................................ 2.32% * Source: California Municipal Statistics, Inc. Total Gross Direct Debt ($54,736,489)........................................................... 0.66% **Total assessed valuation less other exemptions Total Net Direct Debt ($47,200,239)............................................................... 0.59% Gross Combined Total Debt ......................................................................... 3.23% Net Combined Total Debt ........................................................................... 3.16% Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Burlingame. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and, therefore responsible for repaying the debt of each overlapping government. (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non- bonded capital lease obligations. Source: California Municipal Statistics 162 CITY OF BURLINGAME, CALIFORNI LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years (amount expressed in thousands) Debt limit Pension Obligation Bond Total net debt applicable to the limit as a percentage of debt limit $ $ 2007 888,627 31,395 3.5% $ $ 2008 2009 2010 239,432 $ 253,576 $ 261,247 30,280 $ 29,020 $ 27,605 12.6% 11.4% 10.6% Legal Debt Margin Calculation for Fiscal Year 2015 Gross Assessed Valuation Multiplied by: (1) Less: Outstanding Debt Legal Debt Margin $ $ $ $ $ Fiscal Year 2011 2012 266,684 $ 295,550 26,010 $ 24,235 9.8% 8.2% 9,018,355,330 0.0375 338,188,325 15,050,000 323,138,325 2013 2014 2015 $ 295,550 $ 297,816 $ 323,138 $ 22,275 $ 20,095 $ 17,695 7.5% 6.7% 5.5% (1) California Government, Code Section 43605 sets the debt limit at 15%. The Code section was enacted when assessed valuations were based on 25% of full market value. This has since changed to 100% of full market value. Thus, the limit shown is 3.75% (one-fourth the limit of 15%). 163 2016 $ 323,138 $ 15,050 4.7% CITY OF BURLINGAME, CALIFORNIA PLEDGED REVENUE COVERAGE Last Ten Fiscal Years Less: Fiscal Water Operating Water Revenue Bonds Net Available Debt Service Year Charges Expenses Revenue Principal Interest Coverage 2007 $ 10,131,904 $ 6,132,961 $ 3,998,943 $ 540,000 $ 714,618 3.19 2008 11,119,428 6,426,513 4,692,915 940,000 1,264,786 2.13 2009 11,800,380 6,801,139 4,999,241 925,000 1,279,173 2.27 2010 11,515,884 6,874,120 4,641,764 950,000 1,249,998 2.11 2011 12,734,554 7,747,436 4,987,118 975,000 1,218,998 2.27 2012 13,708,448 9,112,553 4,595,895 1,225,000 1,232,332 1.87 2013 14,874,705 9,577,242 5,297,463 1,220,000 1,295,085 2.11 2014 16,023,092 8,955,437 7,067,655 1,125,000 942,966 3.42 2015 15,425,234 9,507,833 5,917,401 1,095,000 964,149 2.87 2016 15,178,439 9,945,476 5,232,963 1,135,000 928,601 2.54 Wastewater Revenue Bonds Less: Net Fiscal Wastewater Operating Available Debt Service Year Charges Expenses Revenue Principal Interest Coverage 2007 $ 10,663,634 $ 5,972,961 $ 4,690,673 $ 275,000 $ 366,340 2008 11,591,922 5,997,898 5,594,024 778,684 1,094,019 2009 12,466,935 6,763,470 5,703,465 797,258 1,112,615 2010 12,534,507 6,578,950 5,955,557 822,841 1,091,957 2011 14,566,587 6,927,346 7,639,241 844,287 1,069,436 2012 16,157,287 6,932,146 9,225,141 981,019 1,072,772 2013 16,791,449 6,297,799 10,493,650 1,483,648 1,221,156 2014 16,931,432 6,448,667 10,482,765 1,470,149 1,060,938 2015 15,679,343 7,071,969 8,607,374 1,489,012 1,043,726 2016 15,634,340 6,973,545 8,660,795 1,543,371 996,919 Notes: Details regarding the City's outstanding debt can be found in Note 5 in the Notes to the Basic Financial Statements. Operating expenses, for purposes of calculating debt service coverage, do not include depreciation and amortization. The above reference debt service only includes parity debt. 164 7.31 2.99 2.99 3.11 3.99 4.49 3.88 4.14 3.40 3.41 CITY OF BURLINGAME, CALIFORNIA DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years Personal Income (amounts Per Capita Calendar expressed Personal Year Population (1) in thousands)(2) Income (2) 2006 28,277 $ 1,610,910 $ 56,969 2007 28,453 1,708,173 60,035 2008 28,762 1,747,107 60,744 2009 29,050 1,700,088 58,523 2010 29,342 1,274,382 43,432 2011 29,106 1,396,972 47,996 2012 29,426 1,500,785 51,002 2013 29,685 1,480,747 49,882 2014 29,700 1,667,596 56,148 2015 29,724 1,808,528 60,844 Sources: (1) California State Department of Finance (2) Income Data: ESRI provided by HDL, Coren & Cone % of Population % of Population 25+with 25+with High School Bachelor's Degree (3) Degree (3) N/A N/A . N/A N/A N/A N/A 95.3% 53.6% 94.4% 51.8% 94.1% 53.4% 95.2% 54.1% 95.2% 54.6% 95.5% 58.3% 95.8% 58.0% (3) For 2006-2008, education level attained for population 25 years of age and over was not available. (4) State of California Employment Development Department for San Mateo County 165 Unemployment Rate (4) 2.6% 2.7% 3.5% 6.2% 6.5% 5.8% 3.7% 3.0% 3.3% 2.6% CITY OF BURLINGAME, CALIFORNIA PRINCIPAL EMPLOYERS Last Fiscal Year and Five Years Ago 2015-16 Number of Employer Name Rank Employees Mills Peninsula Health Services Lufthansa Service Holdings Group Sky Chefs Inc Hyatt Regency San Francisco Airport* Burlingame Long Term Care Flying Food Group Burlingame School District San Francisco Airport Marriott Putnam Auto Guittard Chocolate Co.* American Medical Response* Virgin America, Inc Wright Medical Technology Inc United Natural Foods Critchfield Mechanical, Inc California Teachers Association Getinge USA Wine Warehouse Berkeley Farms ECC Remediation Services Corp. Total City Labor Force (2) Source: MuniServices, LLC 1 2 3 4 s 6 7 8 9 10 Results based on direct correspondence with city's local businesses. (1) Prior year data provided by previous CAFR. (2) Total City Labor Force provided by EDD Labor Force Data. *Includes full and part time. 166 l,S94 468 410 3S4 340 326 300 2S3 2SO 232 4,527 17,800 Percent of Total Employment (%) 8.96% 2.63% 2.30% 1.99% 1.91% 1.83% 1.69% 1.42% 1.40% 1.30% 25.43% 2010-11 (1) Percent of Total Number of Employment Employees (%) 467 2.97% 2,056 13.10% 1,200 7.64% SSS 3.S4% S17 3.29% soo 3.18% soo 3.18% 483 3.08% 463 2.9S% 460 2.93% 7,201 45.87% 15,700 CITY OF BURLINGAME, CJ FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION Last Ten Fiscal Years 2007 2008 2009 2010 2011 Function General government 19.13 19.13 19.13 19.00 18.00 Public safety Police: Officers 42.00 42.00 42.00 39.00 37.00 Civilians 20.00 20.00 20.00 19.00 18.25 Fire: Firefighters and officers 44.00 44.00 44.00 43.00 Civilians 1.00 1.75 1.75 1.75 Public works 56.55 56.30 56.30 59.55 61.15 Community development 12.00 12.00 12.00 12.00 10.00 Leisure and culture 55.14 55.42 55.42 52.29 49.77 Note: 2012 2013 2014 2015 18.00 18.00 18.00 19.00 37.00 37.00 37.00 37.00 18.25 17.25 19.25 19.25 61.15 61.14 61.75 62.74 10.00 10.00 11.00 11.00 49.77 49.52 51.67 52.18 The Central County Fire Department (CCFD) is a Joint Powers Authority shared by the Town of Hillsborough and City of Burlingame. 2016 20.38 37.00 20.00 62.99 11.00 53.93 Please refer to the Notes to the Financial Statements which define the reporting entity. CCFD is a non-disclosed organization, independently governed, and therefore, no longer a reporting unit of the City. Source: City of Burlingame 167 CITY OF BURLINGAME, CALIFORNIA OPERATING INDICATORS BY FUNCTION Last Ten Fiscal Years Function Police Calls for Service Physical arrests Crimes Reported Traffic violations Fire Number of calls answered Inspections Public works Street repair (sq. ft.) Sidewalk & curb repair (sq. ft.) City planning Plans checked Planning applications reviewed Permit applications received Inspections conducted Leisure and culture Recreation Class Participants Library circulation Tree plantings Tree trimmings Water New connections Main and valve repairs Millions of gallons purchased (millions of gallons) Wastewater Average daily sewage treatment (millions of gallons) Preventive Maintenance, main cleaning (Feet) Source: Various city department records. 2007 26,275 537 2,155 2,893 4,233 2,259 17,204 5,618 560 144 N/A N/A 15,323 599,833 334 1,350 4 20 1,652 4.50 314,497 2008 2009 2010 30,337 28,481 29,124 541 343 438 2,053 2,296 1,797 4,128 6,354 5,255 4,374 4,205 4,267 2,089 1,299 1,414 15,000 15,529 10,000 6,000 8,278 4,000 548 500 364 140 187 131 N/A N/A N/A N/A N/A N/A 16,303 14,318 13,607 600,000 698,558 713,394 229 466 222 1,574 1,576 1,831 8 17 so 20 61 15 1,700 1,561 1,600 4.10 3.82 3.30 385,293 450,937 450,000 Aquatic Center registrations are not included in fiscal year 2013, due to the transition of programming responsibility from the City of Burlingame to the Burlingame Aquatics Club. Police statistical data has been presented on a calendar year basis. Central County Fire Department data is now reported with the Central County Fire Department CAFR. 168 2011 30,865 348 1,516 3,683 4,152 4,195 14,154 5,468 355 144 N/A N/A 13,821 696,096 229 1,785 37 19 1,474 2.60 404,488 2012 2013 2014 2015 2016 38724 31,706 33,969 36,427 38,773 410 508 560 634 586 1,681 1,879 1,799 1,787 1,878 3,836 5,692 8,057 9,455 6,506 N/A N/A N/A N/A N/A 5,700 5,662 N/A N/A N/A 10,678 15,560 12,600 13,650 12,545 2,539 1,985 2,100 3,789 2,557 366 499 554 500 494 134 125 94 120 86 1,075 1,229 1,185 1,230 1,251 5,161 5,662 5,280 5,600 6,000 13,657 11,982 13,428 13,424 13,331 721,132 761,795 753,694 647,128 720,000 164 271 230 198 235 1,712 1,621 1,943 2,866 1,398 20 10 21 16 20 19 15 17 26 16 1,190 1,519 1,497 1,340 1,164 2.60 2.60 2.60 2.80 2.92 299,212 330,586 270,000 366,779 220,192 169 CITY OF BURLINGAME, CALIFORNIA CAPITAL ASSET STATISTICS BY FUNCTION FOR FISCAL VEAR 2015-16 (COMPARED TO 5 YEARS AGO) Function Public works Streets (miles) Streetlights (City-owned) Traffic signals Water Water mains (miles) Fire hydrants Maximum daily capacity (thousands of gallons) Sewer Sanitary sewers (miles) Storm sewers (miles) Maximum daily treatment capacity (thousands of gallons) Storm drain pump station Note: Historical data is not available. Includes Hillside Fire Station which is currently closed. Source: City of Burlingame 170 2011 2016 152 152 1,700 1,700 16 17 94 100 822 826 2,850 2,850 84 100 38.6 50 4,100 4,100 5 5 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATIERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of City Council of the City of Burlingame Burlingame, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financia l audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund , and the aggregate remaining fund information of the City of Burlingame, California (City), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated December 8, 2016 . Internal Control Over Financial Reporting In planning and performing our aud it of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our op i nions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's interna l control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis . A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was fo r the limited purpose described in the first paragraph of this section and was no t designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we conside r to be material weaknesses . However, material weaknesses may ex ist that have not been identified . Accountancy Corporation 3478 Buskirk Avenue, Su ite 2 15 Pleasant Hi ll, CA 94523 171 T 925.930.0902 F 925.930.0 135 E maze@mazeassoc iat es .com w mazeassociates.com Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the City in a separate letter dated December 8, 2016. Purpose of this Report This report is intended solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this report is not suitable for any other purpose. Pleasant Hill, California December 8, 2016 172 1 STAFF REPORT AGENDA ITEM NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: William Meeker, Community Development Director – (650) 558-7255 Subject: Discussion of Commercial Linkage Fee and Residential Impact Fee Nexus Studies RECOMMENDATION Staff recommends that the City Council provide direction on whether the City should pursue establishing a commercial housing impact fee, and/or a residential housing impact fee. BACKGROUND Affordable housing impact fees are used to support and build new homes for lower income residents. The fees can be charged to developers of new commercial or residential projects, and used for land purchase, construction costs, or site rehabilitation related to providing workforce housing. Several Peninsula cities such as Menlo Park, Redwood City, San Carlos, San Mateo, Palo Alto and Mountain View have already implemented these fees. Jurisdictions may tailor the fees so they meet local needs. The fees can be adjusted for a wide variety of reasons, so long as they are not arbitrary or capricious, and so long as the fees for all projects remain below the legal maximum. As part of the San Mateo County “21 Elements” multi-jurisdictional effort, a Commercial Linkage Fee Nexus Study and Residential Impact Fee Nexus Study have been prepared for the City of Burlingame. These studies describe and quantify how the development of homes, offices, and commercial space creates a need for housing, particularly for very low-, low- and moderate- income residents. The maximum impact fees that can be legally charged were calculated by estimating the number of new worker households associated with new development. A final analysis was then completed that considered factors like local conditions and the fees of neighboring jurisdictions to determine a potential range of impact fees. These studies enable the City Council to consider the adoption of commercial linkage and/or residential impact fees that would be used to provide affordable housing. DISCUSSION Housing Need: The need for affordable housing in Burlingame, the Peninsula, and the Bay Area far exceeds the supply. Both ownership and rental housing have become increasingly less affordable over the past several decades. Typically, new market rate housing is only affordable to people making higher income wages. Commercial Linkage Fee and Residential Housing Impact Fee Nexus Studies January 3, 2017 2 However, a significant number of new jobs pay lower income wages, including jobs generated by new development. The region’s driving economic sectors are increasingly split between high- skill, high-wage jobs in industries such as professional and technical services and low-skill, low- wage jobs in hospitality, childcare, retail, and others. In San Mateo County as a whole, as of June 2015 (according to the U.S. Department of Labor, Bureau of Labor Statistics), there were 351,959 people employed in jobs located in San Mateo County; of those, 61%, or 214,479 people, were employed in jobs earning less than $70,000 per year. Additional information on the need for affordable housing is available on the website (http://bos.smcgov.org/task-force) created by the County-wide “Closing the Jobs/Housing Gap Task Force” co-chaired by Supervisors Horsley and Slocum, which met monthly from September 2015 to June 2016 to analyze ways to address the growing gap between the number of jobs and the number of available, affordable housing units. As noted by the task force, between 2010 and 2014, 54,600 new jobs were created in San Mateo County, while only 2,100 new housing units were built, a 26:1 ratio. The findings of the task force are presented in a “Home for All” website with on-line resources and an ”Action Plan” at http://homeforallsmc.org. Legal and Policy Context: Impact fees are charges imposed by jurisdictions that can be used to support and build new development. Since the 1970s, California cities have used impact fees to reduce costs paid by the public for items like roads, parks, schools, water, and sewer. The money generated by housing impact fees is placed into a fund to help pay for new affordable housing. Fees can be set per square foot, per unit, or by some other measure, and can only be applied to new development projects. Before being adopted, jurisdictions must show that there is a connection, or nexus, between the impacts of development and the fees charged. A nexus study assesses the connection between new development and the need for new affordable housing. This is accomplished by calculating the number, type, and salaries of jobs that will result from a new development. The study then establishes the maximum impact fee that can legally be charged to a developer for each type of development being studied. Residential developments include single-family homes, townhomes, condominiums, and apartments. Commercial developments include the categories of office (office, medical office, and R&D), retail (restaurant, retail, and services) and hotel (hotel, resort, and other lodging). The logic behind impact fee nexus studies is that residents of new housing spend money on goods and services like landscaping, childcare, and restaurants. New commercial developments also require new workers. Many of the workers providing these services and working at these new businesses earn lower wages, and cannot afford to buy or rent a home at market-rate. Nexus studies calculate the maximum fees that would be necessary to bridge the difference between what these new worker households can afford to pay, and the cost of developing housing units to accommodate them. While a nexus study will inform a jurisdiction about the maximum amount it can legally charge as an impact fee, the maximum fee level may not be appropriate given local housing market conditions, existing fee levels in the region, or the jurisdiction’s current fee structure. A feasibility study considers these conditions and recommends a more appropriate range of fees that do not unduly burden or lessen the profitability of new development. Commercial Linkage Fee and Residential Housing Impact Fee Nexus Studies January 3, 2017 3 Commercial Linkage Fees and Housing Impact Fees in Other Jurisdictions: A number of jurisdictions throughout the Bay Area and California have shifted toward the use of impact fees to increase affordable housing opportunities. The nexus studies include some information on impact fees in neighboring jurisdictions. Since the publication of the nexus studies in 2015, additional cities have adopted or are considering housing impact and/or commercial linkage fees. The tables below list the commercial linkage and housing impact fees for jurisdictions on the Peninsula. TABLE 1: SUMMARY OF COMMERCIAL LINKAGE FEES IN VARIOUS PENINSULA JURISDICTIONS Jurisdiction Hotel Per SF Retail- Restaurant- Services Per SF Office-R&D- Medical Office Per SF Date Fee Adopted Daly City None East Palo Alto $10.00 June 2016 Foster City $12.50 $6.25 $27.50 November 2016 Menlo Park $8.45 $15.57 2015 Mountain View $1.25 - $2.50 $1.25 - $2.50 $12.25 - $25.00 2014 Palo Alto $19.31 $19.31 $19.31 2014 Redwood City2 $5.00 $5.00 $20.00 2015 San Carlos2 $10.00 $5.00 $20.00 October 2016 San Mateo City2 $10.00 $7.50 $25.00 September 2016 San Mateo County2 $10.00 $5.00 $25.00 June 2016 Sunnyvale1 $7.50 $7.50 $15.00 2015 1 Fee is $9.74 for “pipeline projects” and $7.50 for the first 25,000 SF of industrial, office and R&D developments. 2 Provides reductions for using Area Standard Wages. TABLE 2: SUMMARY OF HOUSING IMPACT FEES IN VARIOUS PENINSULA JURISDICTIONS Jurisdiction Townhomes Per SF Condominiums Per SF Apartments Per SF Date Fee Adopted Daly City $18.00 $22.00 $25.00 2014 Foster City None3 East Palo Alto $23.00 - $44.00 $23.00 - $44.00 $33.71 - $44.72 2014 Menlo Park None3 Mountain View $17.00 2014 Palo Alto None3 Redwood City $25.00 $20.00 $20.00 2015 San Carlos1 $20.59 - $42.20 $21.00 - $42.00 2010 San Mateo City None3 San Mateo County $5.00 - $12.50 $5.00 - $12.50 $10.00 June 2016 Sunnyvale2 $17.00 2015 1 Also assesses fee on single family additions. 2 Rental only – for developments with 8 or more units. 3 No Housing Impact Fee adopted, but Inclusionary Housing requires Below Market Rate units in new developments. Commercial Linkage Fee and Residential Housing Impact Fee Nexus Studies January 3, 2017 4 Prevailing Wage Discounts: Some cities have adopted fees with provisions for fee reductions to developers who utilize prevailing wages or area standard wages. Redwood City, City of San Mateo, San Carlos, and San Mateo County have adopted a 25% reduction for developers using a standard area wage. Use of the Impact Fees: Local funding can be used in a variety of ways to support affordable housing. Funds from housing impact fees would be required to be spent on affordable workforce housing (not housing for generally non-working populations, such as seniors). Examples of the types of programs that these funds could be used for include:  Loans or grants to subsidize construction cost of new units  Homebuyer loan programs  Extension of expiring affordability covenants  Acquisition of affordability covenants for existing housing units  Rental subsidies  Housing rehabilitation programs ANALYSIS Summary of Commercial Linkage Fee Report: The Commercial Linkage Fee Nexus Study measures the increased demand for affordable housing resulting from new commercial development. This occurs in several steps:  For each type of non-residential development, analyze the number and income levels of employees that will work there.  Calculate the number of worker households created at various income levels.  Calculate the “affordability gap” between what worker households can afford compared to what market rate housing costs.  Calculate what the “affordability gap” represents on a per square foot basis – this represents the “maximum” fee that would offset 100% of the difference between the price of the affordable housing needed and market rate housing. The Study then analyzes the “maximum” fees and lower fee scenarios relative to:  Financial feasibility – what level of fee will still allow the developer the typical rate of return on investment for that type of development.  Comparison to existing City fees.  Comparison to neighboring jurisdictions – to not put the City at a disadvantage relative to neighboring cities. Commercial Linkage Fee and Residential Housing Impact Fee Nexus Studies January 3, 2017 5 TABLE 3: NON-RESIDENTIAL “MAXIMUM” AND “CONSULTANT RECOMMENDED” FEES Maximum Justified Fee Per SF Consultant Recommended Linkage Fee Range Per SF Hotel $163.00 $5.00 - $15.00 Retail/Restaurants/Services $283.00 $2.50 - $7.50 Office/Medical Office/R&D $245.00 $5.00 - $10.00 Summary of Residential Nexus Study: The Residential Impact Fee Nexus Study measures the increased demand for affordable housing resulting from new market rate housing. This occurs in several steps:  For each type of residential development, analyze the likely spending using the income levels needed to purchase or rent a new unit.  Estimate the number, type and wage level of jobs created by the spending.  Calculate the number of worker households created at various income levels.  Calculate the “affordability gap” between what worker households can afford compared to what market rate housing costs.  Calculate what the “affordability gap” represents on a per unit and per square foot basis – this represents the “maximum” fee that would offset 100% of the difference between the price of the affordable housing needed and market rate housing. The Study then analyzes the “maximum” fees and lower fee scenarios relative to:  Financial feasibility – what level of fee will still allow the developer the typical rate of return on investment for that type of housing.  Comparison to existing City fees.  Comparison to neighboring jurisdictions – to not put the City at a disadvantage relative to neighboring cities. The results are a “maximum fee” representing 100% of the amount needed to fill the affordability gap between what the new households can afford and market prices, and a “recommended fee” representing the consultant’s recommendation for a fee that would be financially feasible, i.e., provide sufficient return on investment to developers, and not put Burlingame at a significant disadvantage relative to other cities in the area. Commercial Linkage Fee and Residential Housing Impact Fee Nexus Studies January 3, 2017 6 TABLE 4: RESIDENTIAL “MAXIMUM” AND “CONSULTANT RECOMMENDED” FEES Maximum Justified Fee Consultant Recommended Fee Range Per Unit Per SF Per Unit Per SF Townhomes $98,451 $52.00 $76,000 - $95,000 $40.00 - $50.00 Condominiums $91,598 $56.00 $41,250 - $82,500 $25.00 - $50.00 Apartments $85,253 $85.00 $25,000 - $50,000 $25.00 - $50.00 FISCAL IMPACT None. Exhibits:  Commercial Linkage Fee Nexus Study – November 2015  Residential Impact Fee Nexus Study – November 2015 Draft Report Commercial Linkage Fee Nexus Study November 2015 prepared for: City of Burlingame Vernazza Wolfe Associates, Inc. VWA Table of Contents I. EXECUTIVE SUMMARY .................................................................................................. 4  Introduction ...................................................................................................................................... 4  Background ...................................................................................................................................... 4  Report Organization ......................................................................................................................... 4  Implementation Options ................................................................................................................... 4  Nexus Analysis Results .................................................................................................................... 5  Policy Considerations ....................................................................................................................... 8  II. INTRODUCTION AND METHODOLOGY ...................................................................... 12  The Nexus Concept ....................................................................................................................... 12  Methodology ................................................................................................................................... 12  III. COMMERCIAL LINKAGE FEE NEXUS ANALYSIS ...................................................... 15  Nexus Analysis Steps .................................................................................................................... 15  IV. HOUSING AFFORDABILITY GAP ................................................................................. 48  Methodology ................................................................................................................................... 48  Estimating Affordable Rents and Sales Prices .............................................................................. 49  Estimating Housing Development Costs ........................................................................................ 56  Calculating the Housing Affordability Gap ..................................................................................... 61  V. MAXIMUM LINKAGE FEES ........................................................................................... 64  Maximum Fee Calculation ............................................................................................................. 64  Summary of Conservative Assumptions ........................................................................................ 65  VI. FEASIBILITY AND POLICY CONSIDERATIONS .......................................................... 66  Prototypes and Fee Levels ............................................................................................................ 66  Methodology ................................................................................................................................... 67  Key Inputs ...................................................................................................................................... 67  Results ........................................................................................................................................... 72  Policy Considerations ..................................................................................................................... 76  VII. GLOSSARY OF TERMS AND ACRONYMS .................................................................. 82  Glossary of terms ........................................................................................................................... 82  Definition of Acronyms ................................................................................................................... 85  List of Figures Figure I-1. Recommended Linkage Fees by Commercial Prototype ............................................................ 5  Figure I-2. Commercial Prototypes ............................................................................................................... 6  Figure I-3. Calculation of Worker Household Income by Prototype ............................................................ 7  Figure I-4. Affordable Housing Gap ............................................................................................................. 7  Figure I-5. Maximum Linkage Fees by Prototype ........................................................................................ 8  Figure I-6. Comparison of Commercial Linkage Fees in Other Jurisdictions .............................................. 9  Figure I-7. Financial Feasibility Results for the Hotel and Office Prototypes with Increased Revenue ...... 9  Figure I-8. Commercial Linkage Fee Scenarios as Percent of Total Development Costs .......................... 11  Figure I-9. Total Fees and Permits per Square Foot ................................................................................... 11  Figure III-1. Description of Commercial Prototypes .................................................................................. 16  Figure III-2. Employment Density Data and Sources ................................................................................. 18  Figure III-3. Employment Density by Prototype ........................................................................................ 19  Figure III-4. Number of Worker Households by Prototype ........................................................................ 19  Figure III-5. Definition of Industries for Hotel Prototype .......................................................................... 19  Figure III-6. Definition of Industries for Retail/ Restaurants/ Services Prototype ..................................... 20  Figure III-7. Definition of Industries for Office/ R&D/ Medical Office Prototype .................................... 21  Figure III-8. Average Annual Wage by Prototype ...................................................................................... 22  Figure III-9. Occupational Mix and Average Wages for Hotel Industry .................................................... 23  Figure III-10. Occupational Mix and Average Wages for Retail/ Restaurants/ Services ........................... 32  Figure III-11. Occupational Mix and Average Wages for Office/ R&D/ Medical Office .......................... 38  Figure III-12. Household Income Categories ............................................................................................. 46  Figure III-13. Number of Worker Households by Income Category .......................................................... 47  Figure IV-1. Calculation of Affordable Rents in San Mateo County by Household Size, 2014 ................ 52  Figure IV-2. Calculation of Affordable Rents in San Mateo County by Unit Type, 2014 ......................... 53  Figure IV-3. Calculation of Affordable Sales Prices in San Mateo County by Household Size, 2014 ...... 54  Figure IV-4. Calculation of Affordable Sales Prices in San Mateo County by Unit Type, 2014 ............... 55  Figure IV-5. Affordable Housing Project Pro Forma Data ......................................................................... 57  Figure IV-6. Sales of Vacant Lands in San Mateo County, 2014 ............................................................... 58  Figure IV-7. Recent Condominium Sales in San Mateo County (2008-2012) ........................................... 59  Figure IV-8. Estimate of Development Costs of Hypothetical Condominium Project ............................... 59  Figure IV-9. Rental Housing Unit Sizes and Development Costs .............................................................. 60  Figure IV-10. For-Sale Housing Unit Sizes and Development Costs ......................................................... 60  Figure IV-11. Housing Affordability Gap Calculation for Rental Housing ............................................... 62  Figure IV-12. Housing Affordability Gap Calculation for For-Sale Condominium Housing .................... 63  Figure IV-13. Average Housing Affordability Gap by Income Group ....................................................... 63  Figure V-1. Maximum Commercial Linkage Fees ..................................................................................... 64  Figure VI-1. Description of Commercial Prototypes .................................................................................. 66  Figure VI-2. Linkage Fee Scenarios by Prototype ...................................................................................... 67  Figure VI-3. Pro Forma Revenue Inputs by Prototype ............................................................................... 69  Figure VI-4. Direct and Indirect Cost Inputs .............................................................................................. 70  Figure VI-5. Recent Commercial Vacant Land Transactions in San Mateo County .................................. 71  Figure VI-6. Feasibility Thresholds for Return on Cost ............................................................................. 72  Figure VI-7. Financial Feasibility Results for the Hotel Prototype with Increased Revenues .................. 73  Figure VI-8. Financial Feasibility Results for the Office/R&D/Medical Office Prototype with Increased Revenues ..................................................................................................................................................... 74  Figure VI-9. Pro Forma Analysis Results ................................................................................................... 75  Figure VI-10. Existing City Fees on Commercial Development by Prototype .......................................... 76  Figure VI-11. Comparison to Linkage Fees in Neighboring Cities ............................................................ 77  Figure VI-12. Existing Linkage Fees in Bay Area Cities ........................................................................... 78  Draft Burlingame Linkage Fee Nexus Study -4- INTRODUCTION This report is part of the 21 Elements multi-city nexus study, a collaborative effort to mitigate the impacts of new development on the demand for affordable housing in San Mateo County. In February 2014, 21 cities and the county partnered to hire Strategic Economics and Vernazza Wolfe Associates, Inc. to develop nexus studies for commercial linkage fees and residential impact fees.1 The project was initiated by 21 Elements, a countywide collaboration among all the cities in San Mateo County on housing issues. Some jurisdictions elected to conduct both fee studies, while others did not. The preparation of these fee studies may result in the adoption of new impact fees on either residential, commercial or both types of developments. This draft report describes the methodology, data sources, and analytical steps required for the nexus analysis. BACKGROUND Burlingame is considering adopting a new commercial linkage fee on commercial development. The purpose of the linkage fee would be to mitigate the impacts of an increase in affordable housing demand from new worker households associated with new commercial development. When a city or county adopts impact fees on new development, it must establish a reasonable relationship or connection between the development project and the fee that is charged. Studies undertaken to demonstrate this connection are called nexus studies. This linkage fee nexus study quantifies the connection between the development of commercial hotel, retail/restaurants/services, and office/R&D/medical office projects and the demand for affordable housing units. The funds raised by the linkage fees are deposited into a housing fund specifically reserved for use by a local jurisdiction to increase the supply of affordable housing for the workforce. Linkage fees are one of several funding sources that jurisdictions can use to help meet the affordable housing needs of new workers. REPORT ORGANIZATION This executive summary provides an overview of the commercial linkage fee nexus analysis methodology, results, and recommendations. The subsequent chapters of the report contain more detailed information regarding the methodology, data sources and analysis. The report is organized into six sections. Following this executive summary, Section II provides an introduction to the purpose of the study, and an overview of the methodology. Section III presents each of the steps of the commercial linkage fee analysis in detail. Section IV covers the housing affordability gap analysis. Section V presents the maximum fee calculation based on the nexus analysis and affordability gap results. The final section, Section VI, discusses financial feasibility and other policy considerations that jurisdictions typically weigh before implementing a nexus fee. IMPLEMENTATION OPTIONS The maximum justified linkage fees are $163 per square foot for hotel, $283 per square foot for retail/ restaurants/ services, and $245 per square foot for office/ R&D/ medical office. Based on the findings of the financial feasibility analysis, a comparison of fees in neighboring jurisdictions, and other policy considerations, it is recommended that Burlingame adopt new commercial linkage fees between $5 and 1 Participating jurisdictions include: Atherton, Belmont, Brisbane, Burlingame, Colma, Daly City, East Palo Alto, Foster City, Half Moon Bay, Hillsborough, Menlo Park, Millbrae, Pacifica, Portola Valley, Redwood City, San Bruno, San Carlos, San Mateo County, San Mateo City, San Mateo County, South San Francisco, and Woodside. I. EXECUTIVE SUMMARY Draft Burlingame Linkage Fee Nexus Study -5- $15 per square foot for hotel, between $5 and $10 per square foot for office/ R&D/ medical office, and between $2.50 and $7.50 per square foot for retail/restaurants/services. The maximum and recommended fee levels are shown in Figure I-1. Figure I-1. Recommended Linkage Fees by Commercial Prototype Prototype Maximum Justified Fee Recommended Linkage Fee Range Hotel $163 $5 - $15 Retail/ Restaurants / Services $283 $2.50 - $7.50 Office/ Medical Office/ R&D $245 $5 - $10 Source: Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. NEXUS ANALYSIS RESULTS The principal findings of the nexus analysis are presented below. More detail on each step can be found in other sections of this report. Prototypes The first step in this nexus analysis is to establish prototypes of typical commercial development in Burlingame. These typical developments are called prototypes. This study examined the jobs-housing linkage for three commercial development prototypes: 1. Hotel - includes full-service hotels, limited-service hotels, motels, and other lodging. 2. Retail/ Restaurants/ Services - includes a range of buildings, including retail stores, restaurants, and personal care spaces accommodating businesses like nail salons and drycleaners. 3. Office/ R&D/ Medical Office - includes a range of office and research and development (R&D) uses, including traditional office buildings, medical offices, and specialized spaces for highly advanced manufacturing and research. The definition of the commercial prototypes was informed by a review of recently completed and proposed development projects in San Mateo County, as well as discussions with City staff. The prototype information is summarized in Figure I-2. Draft Burlingame Linkage Fee Nexus Study -6- Figure I-2. Commercial Prototypes Hotel Retail/ Restaurants/ Services Office/R&D/ Medical Office Prototype Description Gross Building Area (GBA) 100,000 100,000 100,000 Podium Parking Area 11,970 30,000 63,000 Gross Building Area including Podium Parking (SF) 111,970 130,000 163,000 Efficiency Ratio (a) N/A 0.95 0.9 Net Leasable Sq. Ft. (NSF) N/A 95,000 90,000 Hotel Rooms 133 Parking Spaces 160 400 300 Podium Parking 40 100 210 Surface Parking 120 300 90 Floor Area Ratio (b) 1.1 0.5 2.0 Land Area (Acres) 2.3 6.0 1.9 Land Area (SF) 101,791 260,000 81,500 Notes: (a) Refers to ratio of gross building area to net leasable area. An efficiency ratio of 0.9 means that 90% of the gross building area is leasable. (b) The floor-area-ratio (FAR) is often used as a measure of density. In this analysis, it is calculated as the gross building area (including podium parking) divided by the total land area. Sources: Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. Employment Density The next step is to determine how many employees will work in each of the three prototypes. While these numbers will vary from building to building, there are sources of information that help researchers define employment “densities.” The employment density measures the number of employees who work in a given amount of space. For each building prototype, an average employment density was defined based on a review of national survey data for existing commercial buildings and a review of recently completed linkage fee nexus studies in the Bay Area. The densities selected were at the lower end of each range. By using slightly lower employment estimates, the conclusions from this study are more conservative. The study uses a slightly lower number of future employees in calculating affordable housing needs. Worker Household Incomes Using these prototypes, the nexus analysis estimates the wages of future workers based on industry and occupation data. After the average wage of workers is calculated, the next step is to compute the average household income of worker households. Assuming that there are multiple wage-earners per household, the household income of worker households is estimated. Each worker-household is then classified into area median income (AMI) categories to determine the number of households that would require affordable housing. Figure I-3 summarizes the estimated worker-household incomes for each prototype. Draft Burlingame Linkage Fee Nexus Study -7- Figure I-3. Calculation of Worker Household Income by Prototype Prototype Number of Employee Households Hotel Very Low Income (<=50% AMI) 24.4 Low Income (51-80% AMI) 38.5 Moderate Income (81-120% AMI) 1.4 Above Moderate (>=120%) 6.7 Total 70.9 Retail, Restaurants and Personal Services Very Low Income (<=50% AMI) 87.9 Low Income (51-80% AMI) 14.4 Moderate Income (81-120% AMI) 0.8 Above Moderate (>=120%) 3.3 Total 106.4 Office, R&D and Medical Office Land Use Very Low Income (<=50% AMI) 34.7 Low Income (51-80% AMI) 58.7 Moderate Income (81-120% AMI) 3.7 Above Moderate (>=120%) 115.6 Total 212.8 Sources: Vernazza Wolfe Associates, Inc; Strategic Economics, 2015. Affordability Gap Many of the new worker households will be unable to afford market-rate housing. In order to measure this shortfall, this study has calculated the housing affordability gap, shown in Figure I-4. The housing affordability gap measures the difference between what very low, low, and moderate income households can afford to pay for housing and the cost of building new, modest rental and for-sale housing units. Figure I-4. Affordable Housing Gap Income Level Rental Gap Ownership Gap Average Affordability Gap Very Low Income (50% AMI) $280,783 N/A $280,783 Low Income (70% - 80% AMI) (a) $240,477 N/A $240,477 Moderate Income (90% - 110% AMI) (b) $187,066 $164,049 $175,558 Notes: (a) Low income households are defined at 70 percent of AMI for renters and 80 percent of AMI for owners. (b) Moderate income households are defined at 90 percent of AMI for renters and 110 percent AMI for owners. Acronyms: AMI: Area median income. Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. Maximum Nexus-Based Fee To calculate the maximum commercial impact fee, the Consultant Team began by calculating the total affordability gap by prototype, which is obtained by multiplying the average affordability gap at each income level by the number of very low, low and moderate income households for each prototype. The total affordability gap by prototype is then divided by the size of the prototype to obtain the maximum nexus-based fee per square foot (Figure I-5). The maximum per-square-foot linkage fees are $163 for hotel, $283 for retail/restaurants/services, and $245 for office/R&D/medical office. The maximum fees are not the recommended fees for Draft Burlingame Linkage Fee Nexus Study -8- adoption. They are the nexus-justified fees that represent the maximum that Burlingame could charge to mitigate affordable housing demand related to commercial development. Figure I-5. Maximum Linkage Fees by Prototype Prototype Hotel Retail/ Restaurants/ Personal Services Office/ R&D/ Medical Office Square Footage 100,000 100,000 100,000 Total Affordability Gap $16,343,868 $28,278,432 $24,517,864 Maximum Fee per SF $163 $283 $245 Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. POLICY CONSIDERATIONS There are a number of policy considerations that should be taken into account when the City of Burlingame considers whether to adopt commercial linkage fees on new commercial development. These may include factors such as: the likely financial impact of the proposed linkage fees on development; the additional cost of the new fees on the existing City fee structure; a comparison of the fee scenarios to existing linkage fees in nearby cities; the role of the fee in the City’s overall strategy for affordable housing implementation; and the potential overlap with a residential linkage fee. This section provides a discussion of each of these policy questions for Burlingame. Comparison to Neighboring Jurisdictions – It is difficult to show an accurate comparison of fees at this time because most cities in San Mateo County are considering adopting new fees or updating existing fees. However, based on the most current information available, the maximum linkage fee levels for the prototypes in Burlingame would be considerably higher than the fees in place in other San Mateo County and Santa Clara County cities. However, adopting a fee within the range of the recommendations would be comparable to the adopted fees in nearby cities.  The recommended hotel fee range between $5 and $15 per square foot is similar to fees in Sunnyvale, Redwood City, Menlo Park, and Cupertino.  For the retail prototypes, adopting a fee between $2.50 and $7.50 would be similar to Mountain View, Redwood City, and Sunnyvale’s fees.  For the office prototype, the recommended fee of $5 to $10 per square foot would place Burlingame’s fee at a lower level than the neighboring jurisdictions, which range from $15 to $25 per square foot. It is important to note that Menlo Park, as well as various other cities in San Mateo County, are currently considering updates to their existing commercial linkage fees. Draft Burlingame Linkage Fee Nexus Study -9- Figure I-6. Comparison of Commercial Linkage Fees in Other Jurisdictions Jurisdiction Hotel Retail/ Restaurant/ Services Office/R&D/ Medical Office Date Fee Was Adopted Cupertino $10 $10 $20 2015 Menlo Park (a) $8 $8 $15 2014 Mountain View (b) $2.50 $2.50 $25 2015 Palo Alto $19.31 $19.31 $19.31 2002 Redwood City (c) Proposed at $5 Proposed at $5 Proposed at $20 N/A San Francisco (d) $18 $22 $16-$24 2015 Sunnyvale (e) $7.50 $7.50 $15 2015 Notes: (a) Buildings 10,000 SF and under are exempt from fees. A new nexus study is currently underway that may result in an updated fee. (b) New gross floor area under 25,000 SF pays 50 percent of full fee. (c) Approval of the proposed fees is pending. (d) The fee for R&D is $16.01 and the fee for office is $24.03. The fee for a small enterprise is $18.89. (e) The fee on the first 25,000 SF, for all three commercial uses, is discounted by 50 percent. Sources: City staff and websites; Nonprofit Housing Association of Northern California, 2015; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Financial Feasibility – Financial feasibility is just one of several factors to consider in making a decision regarding updating an existing fee. In order to provide Burlingame with guidance on how different fee levels could influence development, the Consultant Team conducted a pro forma feasibility analysis that tested the impact of the maximum fee and three reduced fee scenarios on developer profit for all the commercial prototypes. The analysis showed that establishing a fee at the maximum fee levels was not financially feasible at this time for any of the prototypes. In the case of the hotel and the office/R&D/medical office prototypes, although none of the fee scenarios tested was deemed financially feasible under 2014 market conditions, room rates and office rental rates have significantly increased in San Mateo County since 2014. Based on the upward trend in room rates and office rents, it is reasonable to assume a 5 or 10 percent increase in hotel and office revenues in San Mateo County, which yields different feasibility results. According to the Consultant Team’s analysis, if revenues increase by ten percent, the hotel prototype can feasibly support a linkage fee of up to $30 per square foot (Figure I-7). If hotel and office revenues increase by ten percent, the hotel prototype can feasibly support a linkage fee of $35 per square foot, and the office/R&D/medical office prototype can support a linkage fee of $10 per square foot. The analysis found that, under current market conditions, development of the retail/ restaurants/ services prototype development is not financially feasible. However, it is possible that new retail development could be feasible if land, construction, or soft costs were slightly lower. The ground-floor retail component of a mixed-use project may also have stronger financial feasibility results, because it would share land costs with the residential or office component. Figure I-7. Financial Feasibility Results for the Hotel and Office Prototypes with Increased Revenue Revenue Scenario Hotels Office/R&D/Medical Office 2014 Rents/Prices $0 $0 5% Increase in Rents/ Prices $20 $0 10% Increase in Rents/ Prices $35 $10 Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Total Development Costs – Currently, the total development costs (including land, building and onsite improvements, parking, indirect costs, financing costs, and developer profit) are $375 per net square foot Draft Burlingame Linkage Fee Nexus Study -10- for the hotel prototype, $483 per net square foot for the retail/restaurants/services prototype and $453 per net square foot for the office/ R&D/ medical office prototype. The maximum nexus-based linkage fee represents 44 percent of total development cost for the hotel prototype, almost 59 percent of total development costs for the retail/ restaurants/ services prototype, and 54 percent of total development costs for the office/ R&D/ medical office prototype (Figure I-8). For the hotel prototype, the recommended fee range represents between one and four percent of total development costs. For the retail and office/ R&D/ medical office prototypes, the recommended fee ranges would represent two percent or less of total development costs. Comparison to Existing City Fees – Burlingame does not have a commercial linkage fee in place. The City’s other existing development fees for the commercial prototypes range from $12.52 per square foot for the hotel and retail prototypes, to $18.43 per square foot for the office prototype. Adding the nexus- based linkage fees at any of the potential levels would increase the City’s total fees on commercial development significantly. If the maximum linkage fees were adopted, the total development fees and permits would be $176 per square foot for hotel, $295 per square foot for retail, and $264 for office, as shown in Figure I-9. A fee scenario of $5 for all prototypes would increase total fees to $18 per square foot for the hotel and retail/restaurants/services prototypes, and $23 per square foot for the office/R&D/medical office prototype. Role of Fee in Burlingame’s Overall Housing Strategy – Burlingame does not currently have a commercial linkage fee program or residential impact fee program. Typically, affordable housing projects in Burlingame are funded through a variety of financing sources, including the City’s housing funds, San Mateo County, as well as the federal government, e.g., the CDBG and HOME Programs. In addition, equity is also provided directly by developers and indirectly raised through the allocation and sale of Low Income Housing Tax Credits. Finally, a portion of permanent financing comes from conventional loans obtained from private lending institutions. Commercial linkage fee revenues (and housing impact fee revenues, if adopted) would augment existing affordable housing funds. The existence of a local revenue source such as nexus fees can also make certain projects more competitive for outside funding. It should be noted that revenues from a commercial linkage fee need to be spent on housing that benefits the workforce since the funds stem from affordable housing impacts related to new employment. Overlap with Residential Impact Fees - In addition to the commercial linkage fee described in this report, the City of Burlingame may also be considering implementing new residential impact fees on housing development. There may be a small share of jobs counted in the residential nexus analysis that are also included in this commercial linkage fee analysis. Thus, the two programs may have some overlap in mitigating the affordable housing demand from the same worker households. In order to reduce the potential for overlap between the two programs, it is advisable to set both the commercial linkage fees and housing impact fees at below 100 percent of the nexus-based maximum. In this way, when combined, the programs would mitigate less than 100 percent of the impact even if there were overlap in the jobs counted in the two nexus analyses. Draft Burlingame Linkage Fee Nexus Study -11-Figure I-8. Commercial Linkage Fee Scenarios as Percent of Total Development Costs Hotel Retail/Restaurants/Services Office/R&D/Medical Office Fee Scenario Fee Amount Fee as % of TDC Fee Amount Fee as % of TDC Fee Amount Fee as % of TDC Scenario 1: Max Fee $163 43.61% $283 58.54% $245 54.07% Scenario 2 $20 5.34% $20 4.14% $20 4.41% Scenario 3 $10 2.67% $10 2.07% $10 2.21% Scenario 4 $5 1.33% $5 1.04% $5 1.10% Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Figure I-9. Total Fees and Permits per Square Foot Hotel Retail/Restaurants/Services Office/R&D/Medical Office Fee Scenario Linkage Feeper SF Total Permits and Fees Linkage Feeper SF Total Permits and Fees Linkage Feeper SF Total Permits and Fees Existing Permits and Fees $0.00 $12.52 $0.00 $12.52 $0.00 $18.43 Scenario 1 (Maximum Fee) $163.44 $175.96 $282.78 $295.30 $245.18 $263.61 Scenario 2 $20.00 $32.52 $20.00 $32.52 $20.00 $38.43 Scenario 3 $10.00 $22.52 $10.00 $22.52 $10.00 $28.43 Scenario 4 $5.00 $17.52 $5.00 $17.52 $5.00 $23.43 Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -12- A commercial linkage fee is an impact fee that is charged on new, commercial development to address the affordable housing demand from new workers. Burlingame does not currently have a commercial linkage fee in place. The purpose of this study is to provide the necessary nexus analysis for commercial linkage fees in the event that Burlingame decides to adopt them in the future. The funds raised by the linkage fees are deposited into a housing fund specifically reserved for use by a local jurisdiction to increase the supply of affordable housing for the workforce. Linkage fees are one of several funding sources that jurisdictions can use to help meet the affordable housing needs of new workers. For more than thirty years, California cities and counties have imposed commercial linkage fees on new, non-residential developments. THE NEXUS CONCEPT In order to adopt a commercial linkage fee, a nexus study is required to determine the reasonable relationship between the fee's use and the impact of the development project on which the fee is imposed. This commercial linkage fee nexus study establishes and quantifies the linkages or “nexus” between new commercial development and the need for additional housing affordable to new workers. Some of the new workers will have household incomes that qualify them for income-restricted affordable housing. This study quantifies the demand for very low income, low income, and moderate income housing that is created by new development of commercial buildings. METHODOLOGY When a city or county adopts a development impact fee, it must establish a reasonable relationship between the development project and the fee being charged. Studies undertaken to demonstrate this connection are called nexus studies. Nexus studies for school impact fees, traffic mitigation fees, and parks are common. For commercial linkage fees, a methodology exists that establishes a connection between the development of commercial space and the need to expand the supply of affordable housing. This study is based on this established methodology. The purpose of a commercial linkage fee nexus analysis is to quantify the increase in demand for affordable housing that accompanies new non-residential development. There will be a net gain in employment when new commercial space is built. The ability of new workers to pay for housing costs is linked to their occupations (and hence salaries). Given anticipated incomes, there may be an affordability "gap" between what worker households can afford to pay (to rent or to buy) and the actual costs of new housing. A nexus analysis calculates the relationship between new commercial development and household incomes of employees and then determines the employees' need for affordable housing. These steps provide the rationale for calculating the maximum justified commercial linkage fee that could be levied on non-residential development. These steps are presented in more detail below, and the subsequent sections of this report present the results of each of these steps. Step 1. Define the commercial prototypes that represent new commercial development in San Mateo County. The prototypes are defined based on recently completed and proposed development projects in San Mateo County. The purpose of defining prototypes is to estimate future employment linked to the new commercial space. Three prototypes were selected and include Hotels (133 rooms or 100,000 SF), Retail/ Restaurants/ Services (100,000 SF), and Office/ R&D/ Medical Office (100,000 SF). The prototype II. INTRODUCTION AND METHODOLOGY Draft Burlingame Linkage Fee Nexus Study -13- definitions include information on gross and leasable area, number of rooms (for hotel only), parking, and floor-area-ratio. Step 2. Estimate the number of workers that will work in the new commercial space. Based on a national survey data on employment density for commercial land uses, as well as recently completed linkage fee nexus studies in the Bay Area, the estimated employment density in hotels is approximately 0.75 workers per room (average room size of 750 SF), one worker per 667 SF for retail/ restaurants/ services, and one worker per 333 SF for office/ R&D/ medical office. By dividing the prototype developments by employment density figures, the number of workers for each prototype is estimated. Step 3. Estimate the number of new households represented by these new workers. Since there are multiple wage earners in a household, the number of new workers will be higher than the number of new households moving into Burlingame. Therefore, it is necessary to go from projected growth in the number of workers to household growth. This adjustment is based on the average number of wage-earners per worker household for Burlingame (1.41) according to the U.S. Census Bureau American Community Survey 3-Year Estimates, 2010-2012. Step 4. Estimate wages of new workers. The first step in calculating employee wages is to establish a list of the industries that can be associated with each prototype. Using industry data from QCEW, industries (defined by NAICS Codes) were identified that are associated with each prototype, or land use. The next step is to identify all the occupations that are associated with each industry based on data provided by the U.S. Bureau of Labor Statistics (BLS). The national BLS occupational matrix is then calibrated to match the county’s employment mix by weighting the national employment distribution to reflect the distribution of employment by industry within San Mateo County. Finally, the average wage by worker is calculated using data on average annual wages by occupation in the San Francisco-Redwood City-San Mateo Metro Division from the California Employment Development Department. Step 5. Estimate household income of worker households. Worker wage estimates from the previous step are then converted to household incomes. This step assumes that the income of the second wage-earner is similar to the wage of the first wage-earner. According to the U.S. Census Bureau American Community Survey 3-Year Estimates, 2010-2012, there are 1.41 wage-earners per worker household in Burlingame. Individual worker wages are multiplied by 1.41 to represent household incomes. Step 6. Calculate the number of households that would be eligible for affordable housing divided into three categories: very low, low, and moderate income. The average household size in Burlingame is estimated to be 2.3, based on the US Census, American Community Survey 5-Year Estimates, 2008-2012. Thus, the income groups are defined for a household size of two persons based on the income categories established by California Department of Housing and Community Development (HCD) for San Mateo County. Households with above-moderate income are removed to determine the number that would require below market rate affordable housing. Step 7. Estimate the affordability gap of new households requiring affordable housing. The affordability gap represents the difference between what households can afford to pay for housing and the development cost of a modest housing unit. For very low and low income households, a rental housing gap is used. For moderate income households, the housing affordability gap is calculated separately for renter and owner households, and then the two gaps are combined to derive an average affordability gap for moderate income households. Draft Burlingame Linkage Fee Nexus Study -14- Step 8. Estimate the total housing affordability gap of new households requiring affordable housing. The total number of very low, low, and moderate income new worker households for the each land use prototype is multiplied by the corresponding affordable housing gap figure. Step 9. Calculate maximum commercial linkage fees for each prototype. The total affordability gap is then divided by 100,000 SF, the size of each commercial prototype to generate a maximum fee per square foot. Draft Burlingame Linkage Fee Nexus Study -15- This section discusses each step of the commercial linkage analysis calculations and the maximum nexus- based fees. The analysis presented in this section should be interpreted within the context of the previous sections establishing the overall methodology for this study. NEXUS ANALYSIS STEPS Using the methodology described in Section II, the following describes each of the steps to calculate the linkage fees in more detail. Commercial Prototypes This study examined the jobs-housing linkage for three commercial development prototypes, which are described below. 1. Hotel – This building prototype includes full-service hotels, limited-service hotels, motels, and other lodging. 2. Retail/ Restaurants/ Services – This building prototype includes a broad range of buildings, including retail stores, restaurants, and personal care spaces accommodating businesses like nail salons and drycleaners. 3. Office/ R&D/ Medical Office – This category includes a wide range of office and R&D users, including traditional office buildings, open floor-plan offices, medical offices, and specialized spaces for highly advanced manufacturing and research commonly found in San Mateo County. The prototypes defined above represent the types of new commercial buildings recently constructed or proposed in San Mateo County. Each prototype was assumed to be 100,000 square feet in size. The building size is not prescriptive; it is only averaged to illustrate the overall numbers of workers and households associated with new development projects. Many linkage fee nexus studies use the 100,000 square foot number because it can easily be converted into per-square-foot calculations. The per-square- foot linkage fee can be applied to a project of any size. For example, the small ground-floor retail component in a mixed-use building would be charged the same per-square-foot retail linkage fee as a large “big-box” project. Figure III-1 below describes the building characteristics of each prototype, including factors like floor- area-ratios (FARs) and parking ratios, which were established based on a review of recent commercial development projects in the county. III. COMMERCIAL LINKAGE FEE NEXUS ANALYSIS Draft Burlingame Linkage Fee Nexus Study -16- Figure III-1. Description of Commercial Prototypes Hotel Retail/ Restaurants/ Services Office/R&D/ Medical Office Prototype Description Gross Building Area (GBA) 100,000 100,000 100,000 Podium Parking Area 11,970 30,000 63,000 Gross Building Area including Podium Parking (SF) 111,970 130,000 163,000 Efficiency Ratio (a) N/A 0.95 0.9 Net Leasable Sq. Ft. (NSF) N/A 95,000 90,000 Hotel Rooms 133 Parking Spaces 160 400 300 Podium Parking 40 100 210 Surface Parking 120 300 90 Floor Area Ratio (b) 1.1 0.5 2.0 Land Area (Acres) 2.3 6.0 1.9 Land Area (SF) 101,791 260,000 81,500 Notes: (a) Refers to ratio of gross building area to net leasable area. An efficiency ratio of 0.9 means that 90% of the gross building area is leasable. (b) The floor-area-ratio (FAR) is often used as a measure of density. In this analysis, it is calculated as the gross building area (including podium parking) divided by the total land area. Sources: Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. Average Employment Density and Number of Workers For each building prototype, an average employment density was defined based on a review of national survey data for existing commercial buildings and a review of recently completed linkage fee nexus studies in the Bay Area. The densities selected were at the lower end of each range. While there is some anecdotal evidence that Silicon Valley technology firms occupy office space at higher densities than those selected in this study, these lower employment estimates are based on published data sources and surveys in order to ensure that the calculated nexus fees are more conservative. Furthermore, the office/R&D/medical office prototype includes a range of building types in addition to technology office space, including R&D buildings and medical offices, which typically have a large amount of building space dedicated to labs and clinics, thereby attaining low overall employment densities. Figure III-2 summarizes the building density data that formed the basis for establishing average employment density for each prototype. Figure III-3 describes the density for each prototype, measured by the average number of square feet per worker for each prototype. This factor is multiplied by the size of the building (100,000 square feet) to calculate the total number of workers in each commercial prototype. The density factors represent the average density for the prototypes; individual projects and buildings may actually be more or less dense. The hotel prototype is assumed to be the lowest density followed by retail/ restaurant/ services and office/ R&D/ medical office. The density assumption generates the total number of direct workers occupying the commercial space in each prototype.  Hotel – The hotel employment density assumption is 1,000 square feet per worker (or 0.75 workers per room). This density is at the mid-range of the densities shown in Figure III-2, and consistent with the Vallen and Vallen estimate for limited service mid-scale hotels, which are in between full-service “luxury” properties and economy properties. Given that many of the recently constructed and proposed hotel projects in San Mateo County are limited service mid- scale hotels, this density is aligned with market trends. For a 100,000-square-foot hotel (roughly equivalent to 133 rooms), this density assumption results in a total number of 100 workers. Draft Burlingame Linkage Fee Nexus Study -17-  Retail/ Restaurants/ Services – The average density for retail/ restaurants/ services is estimated at 667 square feet of space per worker. This figure represents a lower density than the figures used in many other commercial linkage fee studies in the Bay Area, but a higher density than national data sources. Using this density, the number of workers in a 100,000 square foot prototype is estimated at 150.  Office/ R&D/ Medical Office – The average density assumption for office/R&D/medical office is estimated at 333 square feet per worker. This density estimate is slightly lower than some recent linkage fee nexus studies, but higher than the national Energy Information Administration survey. The resulting number of total workers in this prototype is estimated at 300. Draft Burlingame Linkage Fee Nexus Study -18-Figure III-2. Employment Density Data and Sources Employee Density Figure Source Hotel 1.5 workers per full-service (luxury) hotel room Vallen and Vallen, "Chapter 1: The Traditional Hotel Industry," Check-In, Check-Out, 2012 0.5 to 1.0 workers per room for "in-between" hotels Vallen and Vallen, "Chapter 1: The Traditional Hotel Industry," Check-In, Check-Out, 2012 As few as 0.25 workers per room for "budget" hotels Vallen and Vallen, "Chapter 1: The Traditional Hotel Industry," Check-In, Check-Out, 2012 2,074 square feet per worker Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey, Revised June 2006 720 square feet per worker A.C. Nelson, "Reshaping Metropolitan America" (based on calculations from EIA survey) 450 square feet per worker Jobs Housing Impact Fee Draft Nexus Study: City of Napa, CA, Vernazza Wolfe Associates Inc., 2011 2,000 square feet per worker Housing Impact Fee Nexus Study: Mountain View, CA, KMA, 2012 Retail/ Restaurants/ Services 528 -1,246 square feet per worker in retail and services Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey, Revised June 2006 605 square feet per worker A.C. Nelson, "Reshaping Metropolitan America," 2013 300 square feet per worker San Mateo County Housing Needs Study, Economic & Planning Systems, 2006 350 square feet per worker Jobs Housing Impact Fee Draft Nexus Study: City of Napa, CA, Vernazza Wolfe Associates Inc., 2011 384.6 square feet per worker Housing Impact Fee Nexus Study: Mountain View, CA, KMA, 2012 Office/ R&D/ Medical Office 185-340 square feet per employee Norm Miller, "Estimating Office Space per Worker: Implications for Future Office Space Demand," 2012 306 square feet per worker Building Owners and Managers Association Survey, 2012 434 square feet per worker Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey, Revised June 2006 300 square feet per worker A.C. Nelson, "Reshaping Metropolitan America," 2013 250-350 square feet per worker San Mateo County Housing Needs Study, Economic & Planning Systems, 2006 300 square feet per worker Jobs Housing Impact Fee Draft Nexus Study: City of Napa, CA, Vernazza Wolfe Associates Inc., 2011 312.5 square feet per worker Housing Impact Fee Nexus Study: Mountain View, CA, KMA, 2012 Draft Burlingame Linkage Fee Nexus Study -19- Figure III-3. Employment Density by Prototype Commercial Prototype Prototype Size (SF) Average Density Number of Workers in Prototype Hotel 100,000 SF 133 rooms 1,000 SF per worker 0.75 workers per room 100 workers Retail/ Restaurant/ Personal Services 100,000 SF 667 square feet per worker 150 workers Office/ R&D/ Medical Office 100,000 SF 333 square feet per worker 300 workers Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. Number of Worker Households Based on the total number of workers directly employed in the prototypes, the total number of worker households is estimated. The number of worker households is calculated by dividing the number of workers by the average number of wage-earners per household in Burlingame. Based on data from the U.S. Census American Community Survey 3-Year Estimates, 2010-2012, there is an average of 1.41 workers per household in Burlingame. The calculation of total new worker households is demonstrated in Figure III-4 below. The number of worker households associated with the prototypes is 71 for hotels, 106 for retail/ restaurants/ services; and 192 for office/R&D/medical office. Figure III-4. Number of Worker Households by Prototype Commercial Prototype Number of New Workers Workers Per Household Number of New Worker Households Office/R&D/Medical Office 300 1.41 213 Retail/Restaurant/Personal Services 150 1.41 106 Hotel 100 1.41 71 Sources: US Census, American Community Survey 3-Year Estimates, 2010-2012; Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. Calculate Worker Wages and Household Income The first step in calculating employee wages is to establish a list of the industries that can be associated with each prototype. Using industry data from Quarterly Census of Employment and Wages (QCEW), industries (defined by NAICS Codes) were identified that are associated with each prototype, or land use. Figure III-5 below describes the industries that are associated with the hotel, retail/ restaurants/ services and office/ R&D/ medical office prototypes. The hotel category shown in Figure III-5 has only one industry attached to it, while the other land uses are associated with a larger number of industries. The industries associated with the retail/ restaurants/ services prototype are defined in Figure III-6. The office/R&D/ medical office industries are shown in Figure III-7. Figure III-5. Definition of Industries for Hotel Prototype NAICS Code Description Percent Total Workers in Prototype 721 Accommodation 100% Total 100% Note: Unlike other prototypes, the hotel prototype only includes one NAICS industry category. Source: United States Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW), 2013. Draft Burlingame Linkage Fee Nexus Study -20- Figure III-6. Definition of Industries for Retail/ Restaurants/ Services Prototype NAICS Code Description Percent Total Workers in Prototype 7225 Restaurants 34.1% 4451 Grocery stores 9.8% 4529 Other general merchandise stores 4.9% 8111 Automotive repair and maintenance 4.0% 4411 Automobile dealers 3.9% 4521 Department stores 3.6% 4441 Building material and supplies dealers 3.5% 8129 Other personal services 3.2% 4481 Clothing stores 3.1% 4461 Health and personal care stores 3.0% 8121 Personal care services 2.3% 5321 Automotive equipment rental and leasing 2.3% 8123 Dry-cleaning and laundry services 2.1% 4511 Sporting goods and musical instrument stores 1.8% 4431 Electronics and appliance stores 1.7% 4471 Gasoline stations 1.6% 4532 Office supplies, stationery, and gift stores 1.4% 4541 Electronic shopping and mail-order houses 1.2% 4421 Furniture stores 1.1% 4452 Specialty food stores 1.1% 4413 Auto parts, accessories, and tire stores 1.0% 4539 Other miscellaneous store retailers 1.0% 5322 Consumer goods rental 0.9% 4422 Home furnishings stores 0.7% 8122 Death care services 0.7% 5615 Travel arrangement and reservation services 0.5% 4237 Hardware and plumbing merchant wholesalers 0.5% 4512 Book, periodical, and music stores 0.4% 4482 Shoe stores 0.4% 4453 Beer, wine, and liquor stores 0.4% 7224 Drinking places, alcoholic beverages 0.4% 8113 Commercial machinery repair and maintenance 0.4% 4483 Jewelry, luggage, and leather goods stores 0.4% 4533 Used merchandise stores 0.4% 4231 Motor vehicle and parts merchant wholesalers 0.4% 4233 Lumber and const. supply merchant wholesalers 0.3% 5324 Machinery and equipment rental and leasing 0.3% 4442 Lawn and garden equipment and supplies stores 0.3% 8114 Household goods repair and maintenance 0.3% 4531 Florists 0.2% 5323 General rental centers 0.2% 4543 Direct selling establishments 0.2% 8112 Electronic equipment repair and maintenance 0.1% 4412 Other motor vehicle dealers 0.1% 4542 Vending machine operators 0.0% Total 100% Sources: United States Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW), 2013; Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -21- Figure III-7. Definition of Industries for Office/ R&D/ Medical Office Prototype NAICS Code Description Percent Total Workers in Prototype 5415 Computer systems design and related services 12.0% 5417 Scientific research and development services 10.1% 5112 Software publishers 8.7% 5613 Employment services 6.3% 5416 Management and technical consulting services 4.6% 5191 Other information services 4.6% 5617 Services to buildings and dwellings 4.4% 523 Securities, commodity contracts, investments 3.9% 5511 Management of companies and enterprises 2.9% 6211 Offices of physicians 2.8% 6214 Outpatient care centers 2.7% 7223 Special food services 2.5% 5616 Investigation and security services 2.4% 6212 Offices of dentists 2.1% 5411 Legal services 2.1% 3341 Computer and peripheral equipment mfg. 2.1% 5222 Non-depository credit intermediation 2.0% 5412 Accounting and bookkeeping services 1.8% 5221 Depository credit intermediation 1.8% 5242 Insurance agencies and brokerages 1.7% 5182 Data processing, hosting and related services 1.6% 5413 Architectural and engineering services 1.5% 3345 Electronic instrument manufacturing 1.4% 5611 Office administrative services 1.2% 5313 Activities related to real estate 1.2% 517 Telecommunications 1.2% 5311 Lessors of real estate 1.0% 5419 Other professional and technical services 0.9% 5121 Motion picture and video industries 0.9% 5111 Newspaper, book, and directory publishers 0.8% 3344 Semiconductor and electronic component mfg. 0.8% 6213 Offices of other health practitioners 0.8% 5418 Advertising, pr, and related services 0.7% 3391 Medical equipment and supplies manufacturing 0.7% 6215 Medical and diagnostic laboratories 0.7% 5312 Offices of real estate agents and brokers 0.5% 5241 Insurance carriers 0.5% 5619 Other support services 0.4% 515 Broadcasting, except internet 0.4% 5614 Business support services 0.4% 5223 Activities related to credit intermediation 0.3% 3353 Electrical equipment manufacturing 0.2% 5414 Specialized design services 0.2% 3342 Communications equipment manufacturing 0.1% 5331 Lessors of nonfinancial intangible assets 0.0% 5612 Facilities support services 0.0% 5122 Sound recording industries 0.0% 5259 Other investment pools and funds 0.0% Total 100% Sources: United States Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW), 2013; Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015 Draft Burlingame Linkage Fee Nexus Study -22- The next step is to identify all the occupations that are associated with each industry based on data provided by the U.S. Bureau of Labor Statistics (BLS). National level data on occupations are the best available; state level industry-occupation data exist but do not include all relevant industries. The national BLS occupational matrix is then calibrated to match the county’s employment mix by weighting the national employment distribution to reflect the distribution of employment by industry within San Mateo County. Finally, the average wage by worker is calculated using data on average annual wages by occupation in the San Francisco-Redwood City-San Mateo Metro Division (the smallest geographic level at which wage data are available) from the California Employment Development Department. Figure III-8 below summarizes the results of these calculations, computing the average weighted wages2 for each prototype. As shown, the Average wage is lowest for workers of retail/ restaurants/ services, since the occupations in these industries tend to have the lowest wages. Hotel workers have a slightly higher Average wage than retail/restaurant/service workers. Office/R&D/medical office employees have the highest Average wage of the three prototypes, due to a larger percentage of occupations in higher wage categories. Figure III-8. Average Annual Wage by Prototype Commercial Prototype Weighted Average Annual Wage (a) Hotel $39,935 Retail/ Restaurants/ Services $29,833 Office/ R&D /Medical Office $77,342 Notes: (a) Average wages are weighted to take into account the proportion of jobs in each occupational wage category. Sources: Bureau of Labor Statistics, Occupational Employment Statistics, 2013 and Quarterly Census of Employment and Wages (QCEW), 2013; California Economic Development Department, OES Employment and Wages by Occupation, 2013; Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. The complete occupational mix, and wage data tables for each prototype are presented in Figure III-9, Figure III-10 and Figure III-11. 2 The weighted average wage takes into account the proportion of jobs in each occupational category. Draft Burlingame Linkage Fee Nexus Study -23-Figure III-9. Occupational Mix and Average Wages for Hotel Industry Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Hotel Workers (c) 11-0000 Management Occupations 11-9081 Lodging Managers $74,498 1.586% 11-1021 General and Operations Managers $150,628 0.964% 11-9051 Food Service Managers $63,767 0.487% 11-2022 Sales Managers $161,570 0.376% 11-3031 Financial Managers $169,227 0.201% 11-3011 Administrative Services Managers $110,659 0.165% 11-9199 Managers, All Other $141,691 0.125% 11-3121 Human Resources Managers $136,986 0.092% 11-1011 Chief Executives $207,735 0.064% 11-9141 Property, Real Estate, and Community Association Managers $85,117 0.056% 11-2021 Marketing Managers $175,141 0.054% 11-2011 Advertising and Promotions Managers $119,666 0.039% 11-3061 Purchasing Managers $146,940 0.026% 11-3021 Computer and Information Systems Managers $165,650 0.025% 11-2031 Public Relations and Fundraising Managers $133,651 0.008% 11-3111 Compensation and Benefits Managers $143,112 0.007% 11-9151 Social and Community Service Managers $78,548 0.006% 11-3131 Training and Development Managers $152,542 0.003% 11-9041 Architectural and Engineering Managers $168,643 0.003% 11-3071 Transportation, Storage, and Distribution Managers $119,656 0.003% 11-9021 Construction Managers $138,900 0.002% Weighted Average Annual Wage $112,338 4.293% 13-0000 Business and Financial Operations Occupations 13-1121 Meeting, Convention, and Event Planners $63,284 0.475% 13-2011 Accountants and Auditors $86,991 0.457% 13-1071 Human Resources Specialists $80,583 0.197% 13-1199 Business Operations Specialists, All Other $94,719 0.094% 13-1023 Purchasing Agents, Except Wholesale, Retail, and Farm Products $79,939 0.081% 13-1161 Market Research Analysts and Marketing Specialists $87,374 0.068% Draft Burlingame Linkage Fee Nexus Study -24-Figure III-9. Occupational Mix and Average Wages for Hotel Industry, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Hotel Workers (c) 13-1151 Training and Development Specialists $82,770 0.027% 13-1141 Compensation, Benefits, and Job Analysis Specialists $81,621 0.018% 13-2051 Financial Analysts $124,663 0.017% 13-2099 Financial Specialists, All Other $118,407 0.012% 13-1041 Compliance Officers $87,616 0.012% 13-1131 Fundraisers $59,012 0.011% 13-1075 Labor Relations Specialists $83,656 0.009% 13-1111 Management Analysts $119,726 0.006% 13-1022 Wholesale and Retail Buyers, Except Farm Products $60,856 0.004% 13-2031 Budget Analysts $86,457 0.002% 13-2041 Credit Analysts $101,611 0.002% Weighted Average Annual Wage $79,133 1.493% 15-0000 Computer and Mathematical Occupations 15-1151 Computer User Support Specialists $70,345 0.036% 15-1199 Computer Occupations, All Other $97,276 0.025% 15-1142 Network and Computer Systems Administrators $95,860 0.023% 15-1152 Computer Network Support Specialists $82,738 0.015% 15-1121 Computer Systems Analysts $104,935 0.009% 15-1134 Web Developers $91,692 0.005% 15-1141 Database Administrators $105,451 0.005% 15-1131 Computer Programmers $100,716 0.003% 15-1132 Software Developers, Applications $115,740 0.002% Weighted Average Annual Wage $88,477 0.124% 17-0000 Architecture and Engineering Occupations 17-3023 Electrical and Electronics Engineering Technicians $68,604 0.004% 17-2051 Civil Engineers $108,648 0.003% 17-2141 Mechanical Engineers $100,372 0.003% Weighted Average Annual Wage $91,281 0.011% Draft Burlingame Linkage Fee Nexus Study -25-Figure III-9. Occupational Mix and Average Wages for Hotel Industry, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Hotel Workers (c) 19-0000 Life, Physical, and Social Science Occupations $96,012 0.006% Weighted Average Annual Wage $96,012 0.006% 21-0000 Community and Social Service Occupations 21-1099 Community and Social Service Specialists, All Other $53,338 0.003% Weighted Average Annual Wage $53,338 0.003% 23-0000 Legal Occupations 23-1011 Lawyers $171,324 0.002% 23-2011 Paralegals and Legal Assistants $71,528 0.002% Weighted Average Annual Wage $128,554 0.004% 25-0000 Education, Training, and Library Occupations 25-3021 Self-Enrichment Education Teachers $46,984 0.034% 25-3099 Teachers and Instructors, All Other, Except Substitute Teachers $69,029 0.004% 25-2011 Preschool Teachers, Except Special Education $37,039 0.003% 25-9031 Instructional Coordinators $71,751 0.002% Weighted Average Annual Wage $49,878 0.043% 27-0000 Arts, Design, Entertainment, Sports, and Media Occupations 27-4011 Audio and Video Equipment Technicians $58,639 0.149% 27-2022 Coaches and Scouts $45,133 0.074% 27-3031 Public Relations Specialists $83,345 0.053% 27-3099 Media and Communication Workers, All Other $60,146 0.021% 27-4099 Media and Communication Equipment Workers, All Other $97,539 0.013% 27-1024 Graphic Designers $72,419 0.009% 27-1023 Floral Designers $36,644 0.008% 27-4014 Sound Engineering Technicians $49,190 0.008% 27-2012 Producers and Directors $95,971 0.002% Draft Burlingame Linkage Fee Nexus Study -26-Figure III-9. Occupational Mix and Average Wages for Hotel Industry, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Hotel Workers (c) 27-1025 Interior Designers $76,587 0.002% Weighted Average Annual Wage $61,155 0.339% 29-0000 Healthcare Practitioners and Technical Occupations 29-1141 Registered Nurses $129,166 0.006% 29-2041 Emergency Medical Technicians and Paramedics $57,354 0.006% 29-9011 Occupational Health and Safety Specialists $98,501 0.004% Weighted Average Annual Wage $95,944 0.016% 31-0000 Healthcare Support Occupations 31-9011 Massage Therapists $45,586 0.425% Weighted Average Annual Wage $45,586 0.425% 33-0000 Protective Service Occupations 33-9032 Security Guards $32,013 1.558% 33-9092 Lifeguards, Ski Patrol, and Other Recreational Protective Service Workers $29,746 0.392% 33-1099 First-Line Supervisors of Protective Service Workers, All Other $54,040 0.137% 33-9099 Protective Service Workers, All Other $56,801 0.062% 33-9021 Private Detectives and Investigators $86,255 0.003% Weighted Average Annual Wage $33,786 2.152% 35-0000 Food Preparation and Serving Related Occupations 35-3031 Waiters and Waitresses $25,413 7.428% 35-2014 Cooks, Restaurant $29,161 3.335% 35-9011 Dining Room and Cafeteria Attendants and Bartender Helpers $24,284 2.633% 35-3011 Bartenders $30,119 2.106% 35-3041 Food Servers, Nonrestaurant $33,434 1.813% 35-9021 Dishwashers $23,035 1.735% 35-1012 First-Line Supervisors of Food Preparation and Serving Workers $40,256 1.268% 35-2021 Food Preparation Workers $23,942 1.015% 35-9031 Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop $26,673 0.900% Draft Burlingame Linkage Fee Nexus Study -27-Figure III-9. Occupational Mix and Average Wages for Hotel Industry, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Hotel Workers (c) 35-3021 Combined Food Preparation and Serving Workers, Including Fast Food $23,509 0.819% 35-1011 Chefs and Head Cooks $60,066 0.733% 35-3022 Counter Attendants, Cafeteria, Food Concession, and Coffee Shop $23,710 0.541% 35-2012 Cooks, Institution and Cafeteria $38,049 0.322% 35-2015 Cooks, Short Order $29,030 0.314% 35-9099 35-2019 Food Preparation and Serving Related Workers, All Other Cooks, All Other $32,386 $36,487 0.276% 0.094% 35-2011 Cooks, Fast Food $25,514 0.086% Weighted Average Annual Wage $28,537 25.418% 37-0000 Building and Grounds Cleaning and Maintenance Occupations 37-2012 Maids and Housekeeping Cleaners $35,419 24.068% 37-2011 Janitors and Cleaners, Except Maids and Housekeeping Cleaners $28,396 2.545% 37-1011 First-Line Supervisors of Housekeeping and Janitorial Workers $50,352 1.736% 37-3011 Landscaping and Groundskeeping Workers $42,100 1.036% 37-1012 First-Line Supervisors of Landscaping, Lawn Service, and Groundskeeping Workers $62,696 0.117% 37-3019 Grounds Maintenance Workers, All Other $28,819 0.047% Weighted Average Annual Wage $36,023 29.549% 39-0000 Personal Care and Service Occupations 39-3011 Gaming Dealers $20,999 2.029% 39-6011 Baggage Porters and Bellhops $31,257 1.334% 39-6012 Concierges $44,649 0.684% 39-3091 Amusement and Recreation Attendants $24,899 0.665% 39-1011 Gaming Supervisors $55,441 0.617% 39-9032 Recreation Workers $29,101 0.600% 39-1021 First-Line Supervisors of Personal Service Workers $49,758 0.232% 39-9099 Personal Care and Service Workers, All Other $37,948 0.210% 39-3093 Locker Room, Coatroom, and Dressing Room Attendants $29,867 0.133% 39-3031 Ushers, Lobby Attendants, and Ticket Takers $27,761 0.087% 39-5094 Skincare Specialists $47,632 0.082% Draft Burlingame Linkage Fee Nexus Study -28-Figure III-9. Occupational Mix and Average Wages for Hotel Industry, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Hotel Workers (c) 39-3012 Gaming and Sports Book Writers and Runners $30,159 0.061% 39-9041 Residential Advisors $29,887 0.060% 39-5012 Hairdressers, Hairstylists, and Cosmetologists $39,520 0.058% 39-5092 Manicurists and Pedicurists $23,005 0.057% 39-7011 Tour Guides and Escorts $31,761 0.047% 39-9011 Childcare Workers $31,540 0.039% 39-2011 Animal Trainers $45,123 0.003% Weighted Average Annual Wage $31,928 7.056% 41-0000 Sales and Related Occupations 41-3099 Sales Representatives, Services, All Other $85,023 0.890% 41-2011 Cashiers $26,859 0.790% 41-2031 Retail Salespersons $30,457 0.309% 41-1011 First-Line Supervisors of Retail Sales Workers $47,883 0.130% 41-2021 Counter and Rental Clerks $31,919 0.075% 41-1012 First-Line Supervisors of Non-Retail Sales Workers $96,139 0.070% 41-3041 Travel Agents $44,829 0.033% 41-9041 Telemarketers $29,198 0.029% 41-4012 Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific Products $65,591 0.020% 41-9022 Real Estate Sales Agents $68,040 0.007% 41-3011 Advertising Sales Agents $72,989 0.005% Weighted Average Annual Wage $53,482 2.358% 43-0000 Office and Administrative Support Occupations 43-4081 Hotel, Motel, and Resort Desk Clerks $35,774 12.525% 43-1011 First-Line Supervisors of Office and Administrative Support Workers $66,668 1.466% 43-3031 Bookkeeping, Accounting, and Auditing Clerks $50,052 1.084% 43-9061 Office Clerks, General $39,997 0.551% 43-6014 Secretaries and Administrative Assistants, Except Legal, Medical, and Executive $43,612 0.485% 43-4051 Customer Service Representatives $45,657 0.444% 43-4181 Reservation and Transportation Ticket Agents and Travel Clerks $35,784 0.442% Draft Burlingame Linkage Fee Nexus Study -29-Figure III-9. Occupational Mix and Average Wages for Hotel Industry, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Hotel Workers (c) 43-2011 Switchboard Operators, Including Answering Service $37,607 0.361% 43-4171 Receptionists and Information Clerks $37,546 0.244% 43-5081 Stock Clerks and Order Fillers $32,149 0.215% 43-6011 Executive Secretaries and Executive Administrative Assistants $69,716 0.190% 43-5071 Shipping, Receiving, and Traffic Clerks $36,220 0.123% 43-3051 Payroll and Timekeeping Clerks $53,413 0.092% 43-5032 Dispatchers, Except Police, Fire, and Ambulance $44,634 0.074% 43-3021 Billing and Posting Clerks $47,723 0.063% 43-3061 Procurement Clerks $49,322 0.031% 43-5061 Production, Planning, and Expediting Clerks $57,140 0.019% 43-4041 Credit Authorizers, Checkers, and Clerks $44,847 0.011% 43-4151 Order Clerks $41,890 0.011% 43-3011 Bill and Account Collectors $49,221 0.009% 43-9051 Mail Clerks and Mail Machine Operators, Except Postal Service $34,184 0.008% 43-4199 Information and Record Clerks, All Other $48,826 0.007% 43-4071 File Clerks $39,187 0.005% 43-5111 Weighers, Measurers, Checkers, and Samplers, Recordkeeping $31,056 0.005% 43-9011 Computer Operators $48,685 0.005% 43-9071 Office Machine Operators, Except Computer $32,747 0.004% 43-3099 Financial Clerks, All Other $43,338 0.003% Weighted Average Annual Wage $40,271 18.649% 45-0000 Farming, Fishing, and Forestry Occupations 45-2093 Farmworkers, Farm, Ranch, and Aquacultural Animals $26,179 0.032% 45-2092 Farmworkers and Laborers, Crop, Nursery, and Greenhouse $25,936 0.003% 45-1011 First-Line Supervisors of Farming, Fishing, and Forestry Workers $78,486 0.002% Weighted Average Annual Wage $29,280 0.037% 47-0000 Construction and Extraction Occupations 47-2141 Painters, Construction and Maintenance $47,652 0.077% 47-2031 Carpenters $63,165 0.057% Draft Burlingame Linkage Fee Nexus Study -30-Figure III-9. Occupational Mix and Average Wages for Hotel Industry, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Hotel Workers (c) 47-2111 Electricians $84,223 0.030% 47-1011 First-Line Supervisors of Construction Trades and Extraction Workers $85,954 0.011% 47-2152 Plumbers, Pipefitters, and Steamfitters $82,675 0.010% 47-2061 Construction Laborers $48,816 0.009% 47-2073 Operating Engineers and Other Construction Equipment Operators $77,565 0.008% 47-2041 Carpet Installers $53,208 0.003% 47-4051 Highway Maintenance Workers $56,618 0.002% Weighted Average Annual Wage $62,281 0.208% 49-0000 Installation, Maintenance, and Repair Occupations 49-9071 Maintenance and Repair Workers, General $50,605 4.446% 49-1011 First-Line Supervisors of Mechanics, Installers, and Repairers $90,340 0.391% 49-9091 Coin, Vending, and Amusement Machine Servicers and Repairers $38,422 0.092% 49-9099 Installation, Maintenance, and Repair Workers, All Other $51,032 0.043% 49-9021 Heating, Air Conditioning, and Refrigeration Mechanics and Installers $56,193 0.027% 49-9098 Helpers--Installation, Maintenance, and Repair Workers $48,488 0.023% 49-3053 Outdoor Power Equipment and Other Small Engine Mechanics $45,302 0.011% 49-9041 Industrial Machinery Mechanics $70,075 0.010% 49-3023 Automotive Service Technicians and Mechanics $55,124 0.008% 49-3042 Mobile Heavy Equipment Mechanics, Except Engines $58,707 0.007% 49-9043 Maintenance Workers, Machinery $42,351 0.007% 49-2022 Telecommunications Equipment Installers and Repairers, Except Line Installers $59,633 0.002% 49-2094 Electrical and Electronics Repairers, Commercial and Industrial Equipment $65,933 0.002% Weighted Average Annual Wage $53,515 5.070% 51-0000 Production Occupations 51-6011 Laundry and Dry-Cleaning Workers $28,552 1.573% 51-3011 Bakers $29,436 0.175% 51-8021 Stationary Engineers and Boiler Operators $75,624 0.053% 51-1011 First-Line Supervisors of Production and Operating Workers $67,828 0.049% 51-6052 Tailors, Dressmakers, and Custom Sewers $35,179 0.017% 51-9061 Inspectors, Testers, Sorters, Samplers, and Weighers $42,183 0.011% Draft Burlingame Linkage Fee Nexus Study -31-Figure III-9. Occupational Mix and Average Wages for Hotel Industry, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Hotel Workers (c) 51-3021 Butchers and Meat Cutters $34,265 0.008% 51-6031 Sewing Machine Operators $26,245 0.006% 51-6021 Pressers, Textile, Garment, and Related Materials $24,822 0.006% 51-6093 Upholsterers $40,577 0.004% 51-3092 Food Batchmakers $28,450 0.002% 51-6051 Sewers, Hand $26,031 0.002% 51-9198 Helpers--Production Workers $31,286 0.002% Weighted Average Annual Wage $31,128 1.907% 53-0000 Transportation and Material Moving Occupations 53-6021 Parking Lot Attendants $28,363 0.453% 53-7062 Laborers and Freight, Stock, and Material Movers, Hand $30,670 0.290% 53-1031 First-Line Supervisors of Transportation and Material-Moving Machine and Vehicle Operators $59,643 0.033% 53-1021 First-Line Supervisors of Helpers, Laborers, and Material Movers, Hand $51,208 0.018% 53-3033 Light Truck or Delivery Services Drivers $41,869 0.017% 53-7061 Cleaners of Vehicles and Equipment $26,168 0.008% 53-7199 Material Moving Workers, All Other $58,830 0.005% 53-6031 Automotive and Watercraft Service Attendants $26,859 0.004% 53-6061 Transportation Attendants, Except Flight Attendants $40,660 0.003% 53-5021 Captains, Mates, and Pilots of Water Vessels $83,149 0.003% 53-7051 Industrial Truck and Tractor Operators $43,099 0.003% 53-3031 Driver/Sales Workers $33,058 0.002% 53-3032 Heavy and Tractor-Trailer Truck Drivers $46,595 0.002% Weighted Average Annual Wage $31,621 0.840% Total, Land Use $39,935 100.000% Notes: (a) Occupational mix by industry was obtained from US Bureau of Labor Statistics, Occupational Employment Statistics, 2013. (b) Wage data for the San Francisco-Redwood City-San Mateo Metro Division obtained from California Economic Development Department, OES Employment and Wages by Occupation, 2013. (c) Distribution of workers is calculated based on the existing distribution of employment by industry in San Mateo County, provided by Quarterly Census of Employment and Wages (QCEW), 2013. Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -32-Figure III-10. Occupational Mix and Average Wages for Retail/ Restaurants/ Services Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Retail/ Restaurants/ Services Workers (c) 11-0000 Management Occupations 11-9051 Food Service Managers $63,767 1.301% 11-1021 General and Operations Managers $150,628 0.820% 11-2022 Sales Managers $161,570 0.081% Weighted Average Annual Wage $99,709 2.202% 13-0000 Business and Financial Operations Occupations 13-2011 Accountants and Auditors $86,991 0.045% 13-1199 Business Operations Specialists, All Other $94,719 0.038% 13-1022 Wholesale and Retail Buyers, Except Farm Products $60,856 0.037% 13-1071 Human Resources Specialists $80,583 0.023% 13-1151 Training and Development Specialists $82,770 0.022% 13-1121 Meeting, Convention, and Event Planners $63,284 0.020% 13-1051 Cost Estimators $87,676 0.020% 13-1161 Market Research Analysts and Marketing Specialists $87,374 0.016% 13-1023 Purchasing Agents, Except Wholesale, Retail, and Farm Products $79,939 0.012% 13-2072 Loan Officers $99,586 0.010% Weighted Average Annual Wage $81,548 0.243% 15-0000 Computer and Mathematical Occupations 15-1151 Computer User Support Specialists $70,345 0.009% 15-1142 Network and Computer Systems Administrators $95,860 0.003% 15-1132 Software Developers, Applications $115,740 0.003% 15-1134 Web Developers $91,692 0.002% 15-1131 Computer Programmers $100,716 0.002% 15-1152 Computer Network Support Specialists $82,738 0.002% 15-1121 Computer Systems Analysts $104,935 0.001% 15-1133 Software Developers, Systems Software $118,614 0.001% 15-1199 Computer Occupations, All Other $97,276 0.001% Weighted Average Annual Wage $89,553 0.026% Draft Burlingame Linkage Fee Nexus Study -33-Figure III-10. Occupational Mix and Average Wages for Retail/ Restaurants/ Services (Continued) Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Retail/ Restaurants/ Services Workers (c) 17-0000 Architecture and Engineering Occupations 17-3011 Architectural and Civil Drafters $67,421 0.001% 17-2072 Electronics Engineers, Except Computer $105,947 0.000% 17-2141 Mechanical Engineers $100,372 0.000% 17-3023 Electrical and Electronics Engineering Technicians $68,604 0.000% 17-2112 Industrial Engineers $107,849 0.000% 17-2071 Electrical Engineers $108,982 0.000% 17-2061 Computer Hardware Engineers $121,274 0.000% 17-3019 Drafters, All Other $62,261 0.000% 17-2199 Engineers, All Other $113,444 0.000% Weighted Average Annual Wage $87,823 0.002% 19-0000 Life, Physical, and Social Science Occupations 19-4099 Life, Physical, and Social Science Technicians, All Other $42,118 0.000% 19-1032 Foresters $85,449 0.000% Weighted Average Annual Wage $50,019 0.000% 21-0000 Community and Social Service Occupations 21-1019 Counselors, All Other $54,835 0.000% 21-1091 Health Educators $74,644 0.000% Weighted Average Annual Wage $63,741 0.000% 23-0000 Legal Occupations 23-2093 Title Examiners, Abstractors, and Searchers $76,809 0.000% 23-2099 Legal Support Workers, All Other $64,021 0.000% 23-1011 Lawyers $171,324 0.000% 23-2011 Paralegals and Legal Assistants $71,528 0.000% Weighted Average Annual Wage $87,762 0.001% 25-0000 Education, Training, and Library Occupations 25-3021 Self-Enrichment Education Teachers $46,984 0.004% 25-3099 Teachers and Instructors, All Other, Except Substitute Teachers $69,029 0.000% Draft Burlingame Linkage Fee Nexus Study -34-Figure III-10. Occupational Mix and Average Wages for Retail/Restaurants/Services (Continued) Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Retail/ Restaurants/ Services Workers (c) Weighted Average Annual Wage $47,770 0.004% 27-0000 Arts, Design, Entertainment, Sports, and Medial Occupations 27-1023 Floral Designers $36,644 0.025% 27-1026 Merchandise Displayers and Window Trimmers $38,931 0.025% 27-3031 Public Relations Specialists $83,345 0.008% 27-1024 Graphic Designers $72,419 0.006% 27-1025 Interior Designers $76,587 0.004% 27-3012 Public Address System and Other Announcers $31,566 0.003% Weighted Average Annual Wage $47,673 0.071% 29-0000 Healthcare Practitioners and Technical Occupations 29-2052 Pharmacy Technicians $46,326 0.291% 29-1051 Pharmacists $137,654 0.210% 29-2081 Opticians, Dispensing $38,051 0.033% Weighted Average Annual Wage $81,749 0.534% 31-0000 Healthcare Support Occupations 31-9095 Pharmacy Aides $28,446 0.046% 31-9011 Massage Therapists $45,586 0.024% 31-9099 Healthcare Support Workers, All Other $44,780 0.003% Weighted Average Annual Wage $34,717 0.073% 33-0000 Protective Service Occupations 33-9032 Security Guards $32,013 0.047% 33-9099 Protective Service Workers, All Other $56,801 0.011% 33-1099 First-Line Supervisors of Protective Service Workers, All Other $54,040 0.007% Weighted Average Annual Wage $38,701 0.065% 35-0000 Food Preparation and Serving Related Occupations 35-3021 Combined Food Preparation and Serving Workers, Including Fast Food $23,509 23.920% 35-3031 Waiters and Waitresses $25,413 19.241% 35-2014 Cooks, Restaurant $29,161 8.873% Draft Burlingame Linkage Fee Nexus Study -35-Figure III-10. Occupational Mix and Average Wages for Retail/Restaurants/Services (Continued) Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Retail/ Restaurants/ Services Workers (c) 35-1012 First-Line Supervisors of Food Preparation and Serving Workers $40,256 5.919% 35-2011 Cooks, Fast Food $25,514 4.716% 35-2021 Food Preparation Workers $23,942 4.395% 35-9021 Dishwashers $23,035 3.592% 35-9031 Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop $26,673 3.111% 35-9011 Dining Room and Cafeteria Attendants and Bartender Helpers $24,284 2.560% Weighted Average Annual Wage $26,226 76.327% 37-0000 Building and Grounds Cleaning and Maintenance Occupations 37-2011 Janitors and Cleaners, Except Maids and Housekeeping Cleaners $28,396 0.485% 37-2012 Maids and Housekeeping Cleaners $35,419 0.041% Weighted Average Annual Wage $28,945 0.527% 39-0000 Personal Care and Service Occupations 39-5012 Hairdressers, Hairstylists, and Cosmetologists $39,520 0.214% 39-2021 Nonfarm Animal Caretakers $35,348 0.064% 39-5092 Manicurists and Pedicurists $23,005 0.046% 39-3091 Amusement and Recreation Attendants $24,899 0.031% 39-1021 First-Line Supervisors of Personal Service Workers $49,758 0.019% 39-5094 Skincare Specialists $47,632 0.017% Weighted Average Annual Wage $36,583 0.390% 41-0000 Sales and Related Occupations 41-2011 Cashiers $26,859 6.363% 41-2031 Retail Salespersons $30,457 3.344% 41-1011 First-Line Supervisors of Retail Sales Workers $47,883 1.214% Weighted Average Annual Wage $30,298 10.921% 43-0000 Office and Administrative Support Occupations 43-5081 Stock Clerks and Order Fillers $32,149 2.065% 43-4051 Customer Service Representatives $45,657 0.446% 43-9061 Office Clerks, General $39,997 0.363% Draft Burlingame Linkage Fee Nexus Study -36-Figure III-10. Occupational Mix and Average Wages for Retail/Restaurants/Services (Continued) Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Retail/ Restaurants/ Services Workers (c) 43-3031 Bookkeeping, Accounting, and Auditing Clerks $50,052 0.356% 43-1011 First-Line Supervisors of Office and Administrative Support Workers $66,668 0.265% 43-5071 Shipping, Receiving, and Traffic Clerks $36,220 0.158% Weighted Average Annual Wage $39,003 3.653% 45-0000 Farming, Fishing, and Forestry Occupations 45-2041 Graders and Sorters, Agricultural Products $34,254 0.005% 45-2092 Farmworkers and Laborers, Crop, Nursery, and Greenhouse $25,936 0.004% Weighted Average Annual Wage $30,537 0.009% 47-0000 Construction and Extraction Occupations 47-2121 Glaziers $56,415 0.009% 47-2031 Carpenters $63,165 0.005% 47-1011 First-Line Supervisors of Construction Trades and Extraction Workers $85,954 0.002% 47-2041 Carpet Installers $53,208 0.001% Weighted Average Annual Wage $61,425 0.017% 49-0000 Installation, Maintenance, and Repair Occupations 49-3023 Automotive Service Technicians and Mechanics $55,124 0.521% 49-3021 Automotive Body and Related Repairers $52,600 0.141% 49-9071 Maintenance and Repair Workers, General $50,605 0.120% 49-1011 First-Line Supervisors of Mechanics, Installers, and Repairers $90,340 0.091% 49-3093 Tire Repairers and Changers $32,447 0.040% 49-3031 Bus and Truck Mechanics and Diesel Engine Specialists $55,399 0.039% 49-9098 Helpers--Installation, Maintenance, and Repair Workers $48,488 0.037% Weighted Average Annual Wage $56,300 0.988% 51-0000 Production Occupations 51-3011 Bakers $29,436 0.392% 51-3021 Butchers and Meat Cutters $34,265 0.313% 51-1011 First-Line Supervisors of Production and Operating Workers $67,828 0.071% Draft Burlingame Linkage Fee Nexus Study -37-Figure III-10. Occupational Mix and Average Wages for Retail/Restaurants/Services (Continued) Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Retail/ Restaurants/ Services Workers (c) 51-6011 Laundry and Dry-Cleaning Workers $28,552 0.064% 51-3022 Meat, Poultry, and Fish Cutters and Trimmers $24,425 0.062% 51-3092 Food Batchmakers $28,450 0.047% Weighted Average Annual Wage $33,458 0.949% 53-0000 Transportation and Material Moving Occupations 53-3031 Driver/Sales Workers $33,058 1.421% 53-7064 Packers and Packagers, Hand $26,940 0.434% 53-7062 Laborers and Freight, Stock, and Material Movers, Hand $30,670 0.370% 53-3033 Light Truck or Delivery Services Drivers $41,869 0.328% 53-7061 Cleaners of Vehicles and Equipment $26,168 0.239% 53-6031 Automotive and Watercraft Service Attendants $26,859 0.107% 53-6021 Parking Lot Attendants $28,363 0.100% Weighted Average Annual Wage $31,915 2.999% Total, Minor Occupation Grouping $29,832.77 100.000% Notes: (a) Occupational mix by industry was obtained from US Bureau of Labor Statistics, Occupational Employment Statistics, 2013. (b) Wage data for the San Francisco-Redwood City-San Mateo Metro Division obtained from California Economic Development Department, OES Employment and Wages by Occupation, 2013. (c) Distribution of workers is calculated based on the existing distribution of employment by industry in San Mateo County, provided by Quarterly Census of Employment and Wages (QCEW), 2013. Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -38-Figure III-11. Occupational Mix and Average Wages for Office/ R&D/ Medical Office Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Office/ R&D/ Medical Office Workers (c) 11-0000 Management Occupations 11-1021 General and Operations Managers $150,628 2.410% 11-3021 Computer and Information Systems Managers $165,650 1.436% 11-3031 Financial Managers $169,227 0.920% 11-9199 Managers, All Other $141,691 0.499% 11-2022 Sales Managers $161,570 0.494% 11-2021 Marketing Managers $175,141 0.469% 11-1011 Chief Executives $207,735 0.347% 11-3011 Administrative Services Managers $110,659 0.339% 11-9041 Architectural and Engineering Managers $168,643 0.336% Weighted Average Annual Wage $159,380 7.251% 13-0000 Business and Financial Operations Occupations 13-2011 Accountants and Auditors $86,991 2.067% 13-1111 Management Analysts $119,726 1.797% 13-1199 Business Operations Specialists, All Other $94,719 1.416% 13-1161 Market Research Analysts and Marketing Specialists $87,374 1.124% 13-1071 Human Resources Specialists $80,583 1.109% 13-2051 Financial Analysts $124,663 0.768% 13-2052 Personal Financial Advisors $125,077 0.660% 13-2072 Loan Officers $99,586 0.579% 13-1151 Training and Development Specialists $82,770 0.460% Weighted Average Annual Wage $99,264 9.980% 15-0000 Computer and Mathematical Occupations 15-1132 Software Developers, Applications $115,740 4.510% 15-1121 Computer Systems Analysts $104,935 2.827% 15-1151 Computer User Support Specialists $70,345 2.316% 15-1133 Software Developers, Systems Software $118,614 2.487% 15-1131 Computer Programmers $100,716 2.286% 15-1142 Network and Computer Systems Administrators $95,860 1.371% Draft Burlingame Linkage Fee Nexus Study -39-Figure III-11. Occupational Mix and Average Wages for Office/ R&D/ Medical Office, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Office/ R&D/ Medical Office Workers (c) 15-1152 Computer Network Support Specialists $82,738 0.685% 15-1143 Computer Network Architects $125,331 0.732% Weighted Average Annual Wage $103,790 17.214% 17-0000 Architecture and Engineering Occupations 17-2141 Mechanical Engineers $100,372 0.408% 17-2061 Computer Hardware Engineers $121,274 0.396% 17-2071 Electrical Engineers $108,982 0.315% 17-2051 Civil Engineers $108,648 0.315% 17-2072 Electronics Engineers, Except Computer $105,947 0.309% 17-2112 Industrial Engineers $107,849 0.300% 17-2199 Engineers, All Other $113,444 0.260% 17-3023 Electrical and Electronics Engineering Technicians $68,604 0.254% 17-2011 Aerospace Engineers $107,788 0.168% 17-1011 Architects, Except Landscape and Naval $102,163 0.139% 17-3029 Engineering Technicians, Except Drafters, All Other $73,531 0.137% 17-3011 Architectural and Civil Drafters $67,421 0.136% Weighted Average Annual Wage $102,350 3.138% 19-0000 Life, Physical, and Social Science Occupations 19-1042 Medical Scientists, Except Epidemiologists $116,975 0.489% 19-2031 Chemists $102,011 0.259% 19-4021 Biological Technicians $66,854 0.250% 19-1021 Biochemists and Biophysicists $115,416 0.189% 19-2041 Environmental Scientists and Specialists, Including Health $103,842 0.176% 19-4099 Life, Physical, and Social Science Technicians, All Other $42,118 0.167% 19-4031 Chemical Technicians $52,559 0.142% 19-4061 Social Science Research Assistants $41,288 0.124% Weighted Average Annual Wage $89,127 1.795% Draft Burlingame Linkage Fee Nexus Study -40-Figure III-11. Occupational Mix and Average Wages for Office/ R&D/ Medical Office, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Office/ R&D/ Medical Office Workers (c) 21-0000 Community and Social Service Occupations 21-1014 Mental Health Counselors $43,140 0.105% 21-1093 Social and Human Service Assistants $39,234 0.097% 21-1023 Mental Health and Substance Abuse Social Workers $54,987 0.097% 21-1011 Substance Abuse and Behavioral Disorder Counselors $44,900 0.072% 21-1022 Healthcare Social Workers $79,571 0.059% 21-1021 Child, Family, and School Social Workers $53,429 0.046% 21-1091 Health Educators $74,644 0.037% 21-1094 Community Health Workers $45,861 0.032% 21-1099 Community and Social Service Specialists, All Other $53,338 0.029% 21-1015 Rehabilitation Counselors $36,442 0.022% 21-1012 Educational, Guidance, School, and Vocational Counselors $63,516 0.022% Weighted Average Annual Wage $51,827 0.618% 23-0000 Legal Occupations 23-1011 Lawyers $171,324 1.165% 23-2011 Paralegals and Legal Assistants $71,528 0.572% 23-2093 Title Examiners, Abstractors, and Searchers $76,809 0.090% Weighted Average Annual Wage $135,415 1.827% 25-0000 Education, Training, and Library Occupations 25-3098 Substitute Teachers $36,300 0.247% 25-9041 Teacher Assistants $34,995 0.057% 25-4021 Librarians $77,396 0.054% 25-4031 Library Technicians $53,641 0.037% 25-2021 Elementary School Teachers, Except Special Education $67,562 0.035% 25-3099 Teachers and Instructors, All Other, Except Substitute Teachers $69,029 0.033% 25-9099 Education, Training, and Library Workers, All Other $37,302 0.026% 25-2022 Middle School Teachers, Except Special and Career/Technical Education $69,808 0.023% 25-2031 Secondary School Teachers, Except Special and Career/Technical Education $70,729 0.023% Weighted Average Annual Wage $48,507 0.536% Draft Burlingame Linkage Fee Nexus Study -41-Figure III-11. Occupational Mix and Average Wages for Office/ R&D/ Medical Office, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Office/ R&D/ Medical Office Workers (c) 27-0000 Arts, Design, Entertainment, Sports, and Media Occupations 27-3042 Technical Writers $85,935 0.228% 27-3031 Public Relations Specialists $83,345 0.218% 27-1014 Multimedia Artists and Animators $84,934 0.114% 27-2012 Producers and Directors $95,971 0.090% 27-3043 Writers and Authors $66,197 0.061% 27-3022 Reporters and Correspondents $53,510 0.053% 27-1011 Art Directors $127,071 0.048% 27-4011 Audio and Video Equipment Technicians $58,639 0.033% Weighted Average Annual Wage $83,997 0.845% 29-0000 Healthcare Practitioners and Technical Occupations 29-1141 Registered Nurses $129,166 1.422% 29-2061 Licensed Practical and Licensed Vocational Nurses $63,060 0.602% 29-1069 Physicians and Surgeons, All Other $192,701 0.506% 29-2021 Dental Hygienists $114,294 0.474% 29-1062 Family and General Practitioners $196,758 0.282% 29-1021 Dentists, General $167,318 0.231% 29-2071 Medical Records and Health Information Technicians $54,359 0.222% 29-1171 Nurse Practitioners $127,193 0.212% 29-1071 Physician Assistants $112,877 0.199% Weighted Average Annual Wage $127,464 4.150% 31-0000 Healthcare Support Occupations 31-9092 Medical Assistants $44,014 1.318% 31-9091 Dental Assistants $49,244 0.750% 31-1014 Nursing Assistants $42,130 0.363% 31-1011 Home Health Aides $28,587 0.166% Weighted Average Annual Wage $44,273 2.598% Draft Burlingame Linkage Fee Nexus Study -42-Figure III-11. Occupational Mix and Average Wages for Office/ R&D/ Medical Office, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Office/ R&D/ Medical Office Workers (c) 33-0000 Protective Service Occupations 33-9032 Security Guards $32,013 2.059% 33-1099 First-Line Supervisors of Protective Service Workers, All Other $54,040 0.088% Weighted Average Annual Wage $32,919 2.147% 35-0000 Food Preparation and Serving Related Occupations 35-3021 Combined Food Preparation and Serving Workers, Including Fast Food $23,509 0.389% 35-3031 Waiters and Waitresses $25,413 0.305% 35-2021 Food Preparation Workers $23,942 0.192% 35-2012 Cooks, Institution and Cafeteria $38,049 0.164% 35-3022 Counter Attendants, Cafeteria, Food Concession, and Coffee Shop $23,710 0.159% 35-1012 First-Line Supervisors of Food Preparation and Serving Workers $40,256 0.139% 35-3041 Food Servers, Nonrestaurant $33,434 0.131% 35-9021 Dishwashers $23,035 0.113% 35-9011 Dining Room and Cafeteria Attendants and Bartender Helpers $24,284 0.108% 35-2014 Cooks, Restaurant $29,161 0.068% 35-3011 Bartenders $30,119 0.061% Weighted Average Annual Wage $27,622 1.828% 37-0000 Building and Grounds Cleaning and Maintenance Occupations 37-2011 Janitors and Cleaners, Except Maids and Housekeeping Cleaners $28,396 4.662% 37-3011 Landscaping and Groundskeeping Workers $42,100 2.565% 37-2012 Maids and Housekeeping Cleaners $35,419 0.784% 37-2021 Pest Control Workers $53,698 0.316% 37-1011 First-Line Supervisors of Housekeeping and Janitorial Workers $50,352 0.307% 37-1012 First-Line Supervisors of Landscaping, Lawn Service, and Groundskeeping Workers $62,696 0.303% Weighted Average Annual Wage $35,758 8.938% Draft Burlingame Linkage Fee Nexus Study -43-Figure III-11. Occupational Mix and Average Wages for Office/ R&D/ Medical Office, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Office/ R&D/ Medical Office Workers (c) 39-0000 Personal Care and Service Occupations 39-9021 Personal Care Aides $24,476 0.269% 39-3031 Ushers, Lobby Attendants, and Ticket Takers $27,761 0.096% 39-9011 Childcare Workers $31,540 0.037% 39-2021 Nonfarm Animal Caretakers $35,348 0.032% 39-1021 First-Line Supervisors of Personal Service Workers $49,758 0.022% 39-9032 Recreation Workers $29,101 0.021% Weighted Average Annual Wage $27,782 0.476% 41-0000 Sales and Related Occupations 41-3099 Sales Representatives, Services, All Other $85,023 1.745% 41-3031 Securities, Commodities, and Financial Services Sales Agents $140,636 1.096% 41-4011 Sales Representatives, Wholesale and Manufacturing, Technical and Scientific Products $100,443 0.666% 41-3021 Insurance Sales Agents $86,434 0.564% 41-4012 Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific Products $65,591 0.388% 41-1012 First-Line Supervisors of Non-Retail Sales Workers $96,139 0.292% 41-2031 Retail Salespersons $30,457 0.284% 41-9041 Telemarketers $29,198 0.256% Weighted Average Annual Wage $92,201 5.290% 43-0000 Office and Administrative Support Occupations 43-9061 Office Clerks, General $39,997 3.754% 43-4051 Customer Service Representatives $45,657 3.408% 43-6014 Secretaries and Administrative Assistants, Except Legal, Medical, and Executive $43,612 2.641% 43-3031 Bookkeeping, Accounting, and Auditing Clerks $50,052 1.862% 43-1011 First-Line Supervisors of Office and Administrative Support Workers $66,668 1.612% 43-4171 Receptionists and Information Clerks $37,546 1.585% 43-6011 Executive Secretaries and Executive Administrative Assistants $69,716 1.228% 43-3071 Tellers $31,987 1.057% 43-6013 Medical Secretaries $44,675 0.919% Draft Burlingame Linkage Fee Nexus Study -44-Figure III-11. Occupational Mix and Average Wages for Office/ R&D/ Medical Office, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Office/ R&D/ Medical Office Workers (c) 43-3021 Billing and Posting Clerks $47,723 0.787% 43-0000 Office and Administrative Support Occupations Weighted Average Annual Wage $46,632 18.852% 45-0000 Farming, Fishing, and Forestry Occupations 45-2092 Farmworkers and Laborers, Crop, Nursery, and Greenhouse $25,936 0.020% 45-2093 Farmworkers, Farm, Ranch, and Aquacultural Animals $26,179 0.008% 45-1011 First-Line Supervisors of Farming, Fishing, and Forestry Workers $78,486 0.004% 45-2011 Agricultural Inspectors $66,342 0.002% 45-4011 Forest and Conservation Workers $56,628 0.001% Weighted Average Annual Wage $34,801 0.034% 47-0000 Construction and Extraction Occupations 47-2031 Carpenters $63,165 0.122% 47-2111 Electricians $84,223 0.116% 47-4011 Construction and Building Inspectors $74,833 0.066% 47-2152 Plumbers, Pipefitters, and Steamfitters $82,675 0.044% 47-1011 First-Line Supervisors of Construction Trades and Extraction Workers $85,954 0.043% 47-2141 Painters, Construction and Maintenance $47,652 0.043% 47-2073 Operating Engineers and Other Construction Equipment Operators $77,565 0.040% Weighted Average Annual Wage $73,634 0.474% 49-0000 Installation, Maintenance, and Repair Occupations 49-9071 Maintenance and Repair Workers, General $50,605 0.826% 49-2022 Telecommunications Equipment Installers and Repairers, Except Line Installers $59,633 0.254% 49-2011 Computer, Automated Teller, and Office Machine Repairers $51,460 0.185% 49-9099 Installation, Maintenance, and Repair Workers, All Other $51,032 0.152% 49-1011 First-Line Supervisors of Mechanics, Installers, and Repairers $90,340 0.143% 49-9052 Telecommunications Line Installers and Repairers $68,467 0.129% 49-2098 Security and Fire Alarm Systems Installers $44,478 0.103% Weighted Average Annual Wage $56,122 1.792% Draft Burlingame Linkage Fee Nexus Study -45-Figure III-11. Occupational Mix and Average Wages for Office/ R&D/ Medical Office, Continued Occupation Code Occupation Name (a) Average Annual Wage (b) % of Total Office/ R&D/ Medical Office Workers (c) 51-0000 Production Occupations 51-2092 Team Assemblers $32,811 1.384% 51-9198 Helpers--Production Workers $31,286 0.925% 51-2099 Assemblers and Fabricators, All Other $28,796 0.631% 51-9199 Production Workers, All Other $35,474 0.511% 51-9111 Packaging and Filling Machine Operators and Tenders $34,458 0.477% 51-9061 Inspectors, Testers, Sorters, Samplers, and Weighers $42,183 0.428% 51-2022 Electrical and Electronic Equipment Assemblers $38,168 0.323% 51-4041 Machinists $60,011 0.238% Weighted Average Annual Wage $34,930 4.916% 53-0000 Transportation and Material Moving Occupations 53-7062 Laborers and Freight, Stock, and Material Movers, Hand $30,670 3.512% 53-7064 Packers and Packagers, Hand $26,940 0.932% 53-7051 Industrial Truck and Tractor Operators $43,099 0.401% 53-3032 Heavy and Tractor-Trailer Truck Drivers $46,595 0.270% 53-3033 Light Truck or Delivery Services Drivers $41,869 0.189% Weighted Average Annual Wage $32,163 5.304% Total, Office/R&D/Medical Office $77,342 100.000% Notes: (a) Occupational mix by industry was obtained from US Bureau of Labor Statistics, Occupational Employment Statistics, 2013. (b) Wage data for the San Francisco-Redwood City-San Mateo Metro Division obtained from California Economic Development Department, OES Employment and Wages by Occupation, 2013. (c) Distribution of workers is calculated based on the existing distribution of employment by industry in San Mateo County, provided by Quarterly Census of Employment and Wages (QCEW), 2013. Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -46- Household Incomes Based on the employee wage calculations discussed above, household incomes are estimated for each prototype. This step assumes that the income of the second wage-earner is similar to the wage of the first wage-earner. In order to calculate the annual household income, the average worker wage is multiplied by the number of wage-earners per household. According to the U.S. Census Bureau American Community Survey 3-Year Estimates, 2010-2012, there is an average of 1.41 wage-earners per household in Burlingame. The average annual wage per employee within each occupation was multiplied by 1.41 in order to determine annual average household income. Employee households are then categorized as very low, low, moderate, and above moderate income based on the income definitions and cut-offs established by the California Housing and Community Development Department (HCD). According to the U.S. Census Bureau American Community Survey 5- Year Estimates, 2008-2012, the average household size in the City of Burlingame is 2.3. This has been rounded to 2, the nearest whole number. The income categories for very low, low, moderate, and above moderate income households are therefore based on the household size of two persons, using the California Department of Housing and Community Development’s definitions of income thresholds for area median income, as shown in Figure III-12. Figure III-12. Household Income Categories Income Category 2-Person Household Very Low Income (<=50% AMI) $45,250 Low Income (51-80% AMI) $72,400 Moderate Income (81-120% AMI) $98,900 Above Moderate Income (>=120%) >$98,900 Source: California Department of Housing and Community Development, "State Income Limits for 2014", February 28, 2014. Using the income categories described above, the new worker households were sorted into income groups. As shown in Figure III-13 below, most hotel worker households are in very low and low income categories, the vast majority of retail/ restaurants/ services worker households are in the very low income categories, and less than half of office/ R&D/ medical office workers are in very low, low, and moderate income categories. Above moderate income households were removed from the subsequent steps of the nexus analysis, as it is determined that these income groups would be able to afford market-rate housing. Draft Burlingame Linkage Fee Nexus Study -47- Figure III-13. Number of Worker Households by Income Category Prototype Number of Employee Households Hotel Very Low Income (<=50% AMI) 24.4 Low Income (51-80% AMI) 38.5 Moderate Income (81-120% AMI) 1.4 Above Moderate (>=120%) 6.7 Total 70.9 Retail, Restaurants and Personal Services Very Low Income (<=50% AMI) 87.9 Low Income (51-80% AMI) 14.4 Moderate Income (81-120% AMI) 0.8 Above Moderate (>=120%) 3.3 Total 106.4 Office, R&D and Medical Office Land Use Very Low Income (<=50% AMI) 34.7 Low Income (51-80% AMI) 58.7 Moderate Income (81-120% AMI) 3.7 Above Moderate (>=120%) 115.6 Total 212.8 Sources: Vernazza Wolfe Associates, Inc; Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -48- Estimating the housing affordability gap is necessary to calculate the maximum potential housing impact fee. This affordability gap analysis was conducted at the county-wide level so that it can be applied to all the jurisdictions in San Mateo County participating in the multi-city nexus study.3 This section summarizes the approach to calculating the housing affordability gap and the results of the analysis. METHODOLOGY The housing affordability gap is defined as the difference between what very low, low, and moderate income households can afford to pay for housing and the development cost of new, modest housing units. Calculating the housing affordability gap involves the following three steps: 1. Estimating affordable rents and housing prices for households in target income groups. 2. Estimating development costs of building new, modest housing units, based on current cost and market data. 3. Calculating the different between what renters and owners can afford to pay for housing and the cost of development of rental and ownership units. The housing affordability gap is estimated at a countywide level, and assumed to be the same for all the jurisdictions participating in the multi-city nexus studies, for the following reasons:  Both the California Department of Housing and Community Development Department (HCD) and U.S. Housing and Urban Development Department (HUD) define the ability to pay for housing at the county (rather than the city) level. Existing affordable housing studies and policies in most jurisdictions rely on these countywide area median income (AMI) estimates published by HCD or by HUD. This analysis uses 2014 income limits published by California Department of Housing and Community Development (HCD).  Construction costs for housing and commercial development do not vary dramatically between different jurisdictions in San Mateo County, because the cost of labor and materials is regional in nature. Although land costs vary widely in San Mateo County, the study estimated a single land value for the county based on data provided by developers of recently built projects. These costs are at the low end of recent land sales, as described below. Additionally, because the land costs used in the analysis are from 2012 and 2013, and land values have escalated rapidly since then, the resulting affordability gap will be slightly lower than if the analysis incorporated 2014 land costs, providing a conservative estimate of the affordability gap. 3 Although there is a single housing affordability gap estimate for all jurisdictions participating in the multi-city nexus studies, the subsequent steps in the fee calculations considers market and household characteristics for Burlingame, generating a unique maximum fee for each jurisdiction in the county, as described in Section V of this report. IV. HOUSING AFFORDABILITY GAP Draft Burlingame Linkage Fee Nexus Study -49- ESTIMATING AFFORDABLE RENTS AND SALES PRICES The first step in calculating the housing affordability gap is to determine the maximum amount that households at the targeted income levels can afford to pay for housing. For eligibility purposes, most affordable housing programs define very low income households as those earning approximately 50 percent or less of area median income (AMI), low income households as those earning between 51 and 80 percent of AMI, and moderate income households as those earning between 81 and 120 percent of AMI. In order to ensure that the affordability of housing does not use the top incomes in each category, the analysis uses a point within the income ranges for the low and moderate income groups.4 Figure IV-1 and Figure IV-2 show the calculations for rental housing. The maximum affordable monthly rent is calculated as 30 percent of gross monthly household income, minus a deduction for utilities. For example, a very low income, three-person household could afford to spend $1,273 on total monthly housing costs. After deducting for utilities, $1,220 a month is available to pay for rent. Figure IV-3 and Figure IV-4 demonstrate housing affordability for homeowners. Homeowners are assumed to pay a maximum of 35 percent of gross monthly income on total housing costs, depending on income level. The maximum affordable price for for-sale housing is then calculated based on the total monthly mortgage payment that a homeowner could afford, using standard loan terms used by CalHFA programs and many private lenders for first-time homebuyers, including a five percent down payment (Figure IV-3). For example, a moderate income, three-person household could afford to spend $2,974 a month on total housing costs, allowing for the purchase of a $348,526 home. Key assumptions used to calculate the maximum affordable rents and housing prices are discussed below.  Unit types: For rental housing, the analysis included studios, one-, two-, and three-bedroom units. For for-sale housing, one-, two-, and three-bedroom units were included. These unit types represent the affordable and modest market-rate apartment and condominium units available in San Mateo County. Condominiums were used to represent modest for-sale housing because single-family homes in San Mateo County tend to be significantly more expensive than condominiums.  Occupancy and household size assumptions. Because income levels for affordable housing programs vary by household size, calculating affordable unit prices requires defining household sizes for each unit type. Consistent with California Health and Safety Code Section 50052.5(h), unit occupancy was generally estimated as the number of bedrooms plus one. For example, a studio unit is assumed to be occupied by one person, a one bedroom unit is assumed to be occupied by two people, and so on. Several adjustments to this general assumption were made in order to capture the full range of household sizes. In particular, it is assumed that one-bedroom condominiums could be occupied by one- or two-person households, and three-bedroom apartments and condominiums could be occupied by four- or five-person households.5 4 For rental housing, 70 percent of AMI is used to represent low income households and 90 percent of AMI is used to represent moderate income households. For ownership housing, it is assumed that moderate income homebuyers may earn slightly less than the maximum for that income category (110 percent of AMI). Higher income limits are used for ownership than for rental housing because ownership housing is more expensive to purchase and maintain. 5 For these unit types, the maximum affordable home price (or rent) is calculated as the average price (or rent) that the relevant household sizes can afford to pay. For example, the maximum affordable home price for a one-bedroom condominium is calculated as the average of the maximum affordable home price for one- and two-person households. Draft Burlingame Linkage Fee Nexus Study -50-  Targeted income levels for rental housing: For rental housing, affordable rents were calculated for very low income, low income, and moderate income households (see Figure IV-1 and Figure IV-2). For eligibility purposes, most affordable housing programs define very low income households as those earning 50 percent or less of area median income (AMI), low income households as those earning between 51 and 80 percent of AMI, and moderate income households as those earning between 81 and 120 percent of AMI. However, defining affordable housing expenses based at the top of each income range would result in prices that are not affordable to most of the households in each category. Thus, this analysis does not use the maximum income level for all of the income categories. Instead, for rental housing, 70 percent of AMI is used to represent moderate income households and 90 percent of AMI is used to represent moderate income households.  Targeted income levels for ownership housing For ownership housing, affordable home prices were calculated only for moderate income households. Higher income limits are used for ownership than for rental housing because ownership housing is more expensive to purchase and maintain. It is assumed that moderate income homebuyers may earn slightly less than the maximum for that income category (110 percent of AMI).  Maximum monthly housing costs.6 For all renters, maximum monthly housing costs are assumed to be 30 percent of gross household income. For homebuyers, 35 percent of gross income is assumed to be available for monthly housing costs, reflecting the higher incomes of this group.7 These standards are based on California’s Health & Safety Code Sections 50052.5 and 50053.  Utilities. The monthly utility cost assumptions are based on utility allowances calculated by the U.S. Department of Housing and Urban Development for San Mateo County.8 Both renters and owners are assumed to pay for heating, cooking, other electric, and water heating. In addition, owners are assumed to pay for water and trash collection.9  Mortgage terms & costs included for ownership housing. For ownership housing, the mortgage calculations are based on the terms typically offered to first-time homebuyers (such as the terms offered by the California Housing Finance Authority), which is a 30-year mortgage with a five percent down payment. A five percent down payment standard is also used by many private lenders for first-time homebuyers. Based on recent interest rates to first-time buyers, the analysis assumes a 5.375 percent annual interest rate.10 In addition to mortgage payments and 6 The calculation of homeowner affordability is conservative in that the model accounts for additional costs for buyers (such as utility costs) that might not be considered by all lenders. 7 The assumption that homebuyers spend 35 percent of gross household income on housing results in a reduced affordability gap than if 30 percent of gross household income were used instead. 8 U.S. Department of Housing and Urban Development, "Allowances for Tenant-Furnished Utilities and Other Services: Housing Authority of San Mateo County," November 2013. 9 Units are assumed to have natural gas heating, cooking, and water heating systems, as natural gas is the most common fuel for units located in San Mateo County. Sources: U.S. Census Bureau, 2012 American Community Survey, “Table B25117: Tenure by House Heating Fuel,” San Mateo County; U.S. Census Bureau, 2011 American Housing Survey, “Table C-03-AH-M, San Francisco-San Mateo-Redwood City: Heating, Air Conditioning, and Appliances – All Housing Units.” 10 Sources: CalHFA Mortgage Calculator, accessed March 2014; Zillow.com, “Current Mortgage Rates and Home Loans,” accessed March 2014; interviews with California Housing Finance Agency (CalHFA) Preferred Loan Officers, March 2014. Draft Burlingame Linkage Fee Nexus Study -51- utilities, monthly ownership housing costs include homeowner association (HOA) dues,11 property taxes,12 private mortgage insurance,13 and hazard and casualty insurance.14 11 HOA fees are estimated at $300 per unit per month, based on common HOA fees in San Mateo County as reported in: Polaris Pacific, “Silicon Valley Condominium Market,” February 2014. 12 The annual property tax rate is estimated at 1.18 percent of the sales price, based on the average total tax rate for San Mateo County (calculated from County of San Mateo, 2008-09 Property Tax Highlights http://www.co.sanmateo.ca.us/Attachments/controller/Files/PTH/PTH_2009.pdf) and discussions with Preferred Loan Officers. 13 The annual private mortgage insurance premium rate is estimated at 0.89 percent of the total mortgage amount, consistent with standard requirements for conventional loans with a five percent down payment. Sources: Genworth, February 2014; MGIC, December 2013; Radian, April 2014. 14 The annual hazard and casualty insurance rate is assumed to be 0.35 percent of the sales price, consistent with standard industry practice. Draft Burlingame Linkage Fee Nexus Study -52-Figure IV-1. Calculation of Affordable Rents in San Mateo County by Household Size, 2014 Persons per Household (HH) 1 2 3 4 5 Very Low Income (50% AMI) Maximum Household Income at 50% AMI $39,600 $45,250 $50,900 $56,550 $61,050 Maximum Monthly Housing Cost (a) $990 $1,131 $1,273 $1,414 $1,526 Utility Deduction $29 $40 $53 $68 $68 Maximum Available for Rent (HH Size) (b) $961 $1,091 $1,220 $1,346 $1,458 Low Income (70% AMI) Maximum Household Income at 70% AMI $50,470 $57,680 $64,890 $72,100 $77,875 Maximum Monthly Housing Cost (a) $1,262 $1,442 $1,622 $1,803 $1,947 Utility Deduction $29 $40 $53 $68 $68 Maximum Available for Rent (HH Size) (b) $1,233 $1,402 $1,569 $1,735 $1,879 Moderate Income (90% AMI) Maximum Household Income at 90% AMI $64,890 $74,160 $83,430 $92,700 $100,125 Maximum Monthly Housing Cost (a) $1,622 $1,854 $2,086 $2,318 $2,503 Utility Deduction $29 $40 $53 $68 $68 Maximum Available for Rent (HH Size) (b) $1,593 $1,814 $2,033 $2,250 $2,435 Notes: (a) 30 percent of maximum monthly household income. (b) Maximum monthly housing cost minus utility deduction. Acronyms: AMI: Area median income HH: Household Sources: California Department of Housing and Community Development, 2014; U.S. Department of Housing and Urban Development, 2013; Vernazza Wolfe Associates, Inc.; Strategic Economics, 2014. Draft Burlingame Linkage Fee Nexus Study -53-Figure IV-2. Calculation of Affordable Rents in San Mateo County by Unit Type, 2014 Affordable Rents by Unit Type (a) Studio(1 person) 1 Bedroom(2 persons) 2 Bedroom (3 persons) 3 Bedroom(4 and 5 persons) Very Low Income (50% AMI) $961 $1,091 $1,220 $1,402 Low Income (70% AMI) $1,233 $1,402 $1,569 $1,807 Moderate Income (90% AMI) $1,593 $1,814 $2,033 $2,342 Notes: (a) Affordable rents are calculated as follows: Studios are calculated as one-person households; One-bedroom units are calculated as two-person households; Two-bedroom units are calculated as three-person households; Three-bedroom units are calculated as an average of four and five person households. Sources: California Department of Housing and Community Development, 2014; U.S. Department of Housing and Urban Development, 2013; Vernazza Wolfe Associates, Inc.; Strategic Economics, 2014. Draft Burlingame Linkage Fee Nexus Study -54-Figure IV-3. Calculation of Affordable Sales Prices in San Mateo County by Household Size, 2014 Persons per Household (HH) 1 2 3 4 5 Moderate Income (110% AMI) Maximum Household Income at 110% AMI (a) $79,310 $90,640 $101,970 $113,300 $122,375 Maximum Monthly Housing Cost (b) $2,313 $2,644 $2,974 $3,305 $3,569 Monthly Deductions Utilities $106 $106 $130 $156 $156 HOA Dues $300 $300 $300 $300 $300 Property Taxes and Insurance (c) $517 $607 $690 $773 $844 Monthly Income Available for Mortgage Payment (d) $1,390 $1,631 $1,854 $2,076 $2,269 Maximum Mortgage Amount (e) $248,195 $291,274 $331,100 $370,795 $405,155 Maximum Affordable Sales Price - HH Size (f) $261,258 $306,604 $348,526 $390,311 $426,479 Notes: (a) Calculated as 110 percent of the median household income reported by HCD for each household size. (b) Maximum housing cost is estimated at 35 percent of household income for homebuyers. (c) Assumes annual property tax rate of 1.18 percent of sales price; annual private mortgage insurance premium rate of 0.89 percent of mortgage amount; annual hazard and casualty insurance rate of 0.35 percent of sales price. (d) Maximum monthly housing cost minus deductions (e) Assumes 5.375 percent interest rate and 30 year loan term (f) Assumes 5 percent down payment (75 percent loan-to-value ratio) Acronyms: AMI: Area median income HH: Household HOA: Home owners association Sources: California Department of Housing and Community Development, 2014; U.S. Department of Housing and Urban Development, 2013; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Draft Burlingame Linkage Fee Nexus Study -55-Figure IV-4. Calculation of Affordable Sales Prices in San Mateo County by Unit Type, 2014 Affordable Sales Price by Unit Type (a) 1 Bedroom(1 and 2 persons) 2 Bedroom(3 persons) 3 Bedroom(4 and 5 persons) Moderate Income (110% AMI) $283,931 $348,526 $408,395 Notes: (a) Affordable sales prices are calculated as follows: One-bedroom units are calculated as an average of one- and two-person households; Two-bedroom units are calculated as three-person households; Three-bedroom units are calculated as an average of four and five person households. Sources: California Department of Housing and Community Development, 2014; U.S. Department of Housing and Urban Development, 2013; Vernazza Wolfe Associates, Inc.; Strategic Economics, 2014. Draft Burlingame Linkage Fee Nexus Study -56- ESTIMATING HOUSING DEVELOPMENT COSTS The second step in calculating the housing affordability gap is to estimate the cost of developing new, modest housing units. Modest housing is defined slightly differently for rental and ownership housing. For rental housing, the costs and characteristics of modest housing are similar to recent projects developed in San Mateo County by the affordable rental housing sector. Modest for-sale housing is assumed to be non-luxury multifamily (condominium) development because single-family homes in San Mateo County tend to be significantly more expensive than condominiums; many of the new single- family homes in the county are custom-built luxury units that are too costly to meet the standard for modest housing. The calculation of housing development costs used in the housing affordability gap requires several steps. Because the gap covers both rental housing and for-sale housing, it is necessary to estimate costs for each. The following describes the data sources used to calculate rental and for-sale housing development costs. Rental Housing Rental housing development costs were based on pro forma data obtained from three recent affordable housing projects in San Mateo County. Figure IV-5 shows the location and description of these projects and summarizes the information that was used to generate a per-square-foot cost of $410 used in the cost analysis. These costs include site acquisition costs, hard costs (on- and off-site improvements), soft costs (such as design, city permits and fees, construction interest, and contingencies), and developer fees. The costs from the rental housing pro formas were also cross-referenced against proprietary pro formas available to the consultant team from other private development projects in order to ensure accuracy. Since these projects assumed state and federal funding, the labor costs included in the original pro formas reflect the prevailing wage requirement imposed by state and local governments. The costs shown in Figure IV-5 have been adjusted to subtract out the prevailing wage requirement because the development cost model used in the housing affordability gap analysis does not assume receipt of government subsidies. A rule of thumb used by local economists who assist affordable housing developers in obtaining public financing, is to estimate that, under the prevailing wage requirement, labor costs are 25 percent higher than would otherwise be the case. Therefore, on-site and off-site improvement costs obtained from the original pro formas are reduced by 25 percent to reflect actual labor costs that would apply to construction projects that do not have these requirements.15 Finally, on average, land acquisition costs accounted for 20 percent or less of these total adjusted costs. 15 These prevailing wage requirements refer only to labor cost requirements on construction projects that receive funding from the state or federal government. These are not the same as minimum wage requirements that individual cities may adopt. Draft Burlingame Linkage Fee Nexus Study -57- Figure IV-5. Affordable Housing Project Pro Forma Data Project Description Project 1 Project 2 Project 3 Location San Mateo San Mateo San Bruno Year Built 2013 2010 2011 Land Area (acres) 1.05 1.0 0.63 Gross Building Area (SF) 106,498 127,718 42,688 Net Building Area (SF) 56,075 67,850 33,297 Number of Units 60 68 42 Parking Type Podium Underground Structure Parking Spaces/ Unit 1.82 1.55 1.0 Land Acquisition Costs $3,157,000 ($69 per SF of land) $5,543,600 ($127 per SF of land) $2,096,500 ($76 per SF of land) Project Costs per SF of Net Building Area Land Cost (a) $56 $82 $63 Hard Costs (b) $228 $216 $187 Soft Costs (c) $93 $99 $114 Developer Fees $25 $21 $39 Total Project Costs (d) $402 $417 $403 Notes: (a) Calculated per square foot of net building area. (b) Excludes prevailing wage requirements for on-site and off-site hard costs. (c) Includes design, engineering, city permits and fees, construction interest, contingencies, legal, etc. (d) Total costs include developer fees. Acronyms: SF: Square feet Source: Confidential Pro Forma Data; Vernazza Wolfe Associates, Inc; Strategic Economics, 2014. To ensure that the land value assumptions used in the rental development cost estimates (ranging from $69 to $127 per square foot of land) were reasonable, the consultant team analyzed recent sales of vacant properties in San Mateo County using DataQuick, a commercial vendor that tracks real estate transactions. Cities with fewer than three vacant land transactions were excluded from the analysis. As shown below in Figure IV-6, land values in San Mateo County are highly variable from city to city, ranging from $45 to $300 per square foot; the average sales price for the selected sites in the County was $189 per square foot. The analysis demonstrates the land cost assumptions used to calculate rental housing costs (in Figure IV-5) represent the lower range of current land values. Draft Burlingame Linkage Fee Nexus Study -58- Figure IV-6. Sales of Vacant Lands in San Mateo County, 2014 Jurisdiction Number Transactions Average Sales Price Average Site Size (SF) Average Sales Price/ SF Land Belmont 4 $920,000 6,383 $165 Menlo Park 6 $1,239,500 5,802 $220 Pacifica 4 $487,000 7,221 $111 San Bruno 13 $933,769 3,259 $295 San Mateo 8 $1,314,188 5,424 $300 Unincorporated San Mateo County 4 $224,250 5,194 $45 Average of Records $853,118 5,547 $189 Notes: Includes data from cities with 3 or more transactions of vacant land in San Mateo County from January through May 2014. Records with missing sales or land area information were eliminated. Acronyms: SF: Square feet Sources: DataQuick, January-May 2014; Vernazza Wolfe Associates, Inc; Strategic Economics, 2014. For-Sale Housing Since affordable housing developers do not typically build for-sale housing in San Mateo County, the cost of developing new, modest for-sale housing was estimated using two data methods: the first method used price data for recently built condominium units as a proxy for development costs; the second approach estimated development costs based on published market and cost data for similar projects in San Mateo County. Each of these cost estimate approaches is described in more detail below. Review of condominium sales data – In this approach, average sales prices from condominium units built in San Mateo County between 2008 and 2012 are used as a proxy for development costs. 16 This approach assumes that construction costs, land costs, soft costs, and developer profit are all included in the unit sales price. Using data provided by DataQuick, the consultant team analyzed sales prices of condominium units of various sizes in the seven cities that experienced condominium development that exceeded 10 units in the aggregate between 2008 and 2012. These seven cities included Brisbane, East Palo Alto, Millbrae, Redwood City, San Carlos, San Mateo City, and South San Francisco. The other jurisdictions in San Mateo County experienced little or no condominium development during this time period. Figure IV-7 summarizes the information that was used to generate a per-square-foot cost for condominium development of $420. Cost estimate of hypothetical condominium project - The second approach relied on published industry data sources and recent financial feasibility studies to estimate the development costs of a hypothetical condominium project, as described in Figure IV-8.17 Land costs were estimated based on recent DataQuick land transactions shown in Figure IV-6. RS Means cost data, adjusted for the Bay Area’s construction costs, was used to calculate hard costs. Based on a review of recent financial 16 Ideally, cost estimates would be based only on projects built in the last year or two. However, the decline in new construction after 2007 necessitated that the analysis use several years’ worth of data in order to estimate for-sale housing costs. Since costs are not adjusted for inflation, they may be slightly lower than actual costs required for a new project to be built in 2014 or 2015. This approach is more conservative – and likely more accurate – than applying across-the-board inflation factors to historic costs. Furthermore, the increasing cost of residentially zoned, high density parcels is the main source of development cost increase. Adjusting land costs for inflation is not easily done. 17 The hypothetical condominium building type is a Type V building with underground parking and floor-area ratio of 1.7. The building characteristics are described in Figure IV-8. Draft Burlingame Linkage Fee Nexus Study -59- feasibility analyses in the Bay Area, soft costs were estimated at 30 percent of hard costs, and developer fees and profits were estimated at 12 percent of hard and soft costs. Using this second method, the development costs are estimated at $495 per net square foot of building area. In order to ensure that the results of the affordability gap analysis are conservative, the lower development cost estimate of $420 per net square foot was selected for ownership units. Figure IV-7. Recent Condominium Sales in San Mateo County (2008-2012) Jurisdiction Average Number of Bathrooms Average Number of Bedrooms Average Square Feet Average Price per Square Foot Average Unit Price Brisbane 1.2 1.5 892 $413 $368,625 East Palo Alto 1.8 1.3 1,029 $340 $349,991 Millbrae 1.9 2 1,290 $429 $553,893 Redwood City 2.7 2.9 1,933 $402 $776,655 San Carlos 1.8 1.8 1,066 $508 $541,932 San Mateo City 2.3 2.2 1,545 $439 $677,430 South San Francisco 1.7 1.8 981 $427 $418,740 Average 1.9 1.9 1,248 $423 $527,401 Sources: DataQuick, Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Figure IV-8. Estimate of Development Costs of Hypothetical Condominium Project Building Characteristics Land Area (SF) 110,727 Gross Building Area (SF) 188,235 Net Building Area (SF) 160,000 Number of Units 100 Parking Type Underground Floor-area ratio (FAR) 1.7 Density (units per acre) 39 Average Unit Size 1,600 Land Acquisition Costs per Square Foot (a) $189 Development Cost Cost per Net SF Land Cost (b) $131 Hard Costs $250 Soft Costs (c) $75 Developer Fees (d) $39 Total Development Costs $495 Notes: (a) Land value is calculated based on DataQuick records of vacant land transactions in the county. See Figure IV-6. (b) Calculated based on RS Means cost estimates per square foot of net building area. (c) Estimated at 30 percent of hard costs. Includes design, engineering, city permits and fees, construction interest, contingencies, legal, etc. (d) Estimated at 12 percent of hard costs and soft costs. Acronyms: SF: square feet Sources: RS Means, 2014; DataQuick 2014; Recent financial feasibility studies; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Draft Burlingame Linkage Fee Nexus Study -60- Cost Estimates by Unit Size The data sources described above also provided information on estimated unit sizes. Unit size information is needed to translate costs/sales prices per square foot to unit costs. Unit sizes are estimated separately for rental and for-sale units. For the rental units, the recent inventory of projects developed by MidPen Housing was analyzed. For ownership units, the average sizes of recently built condominium units (Figure IV-7) were analyzed. Figure IV-9 provides the unit sizes and development cost estimates for rental units. Per-unit development costs were calculated by multiplying average unit sizes by the per-square foot development costs of $410. Rental unit costs range from $205,000 for studio units to $479,700 for three-bedroom units. Figure IV-10 summarizes the costs of condominium units. The per-unit costs were derived by multiplying the average unit size by the development cost per square foot of $420. Condominium development costs range from $357,000 for one-bedroom units to $672,000 for three-bedroom units. Figure IV-9. Rental Housing Unit Sizes and Development Costs Unit Type Estimated Cost per Net SF Unit Size (net SF) Development Costs Studio $410 500 $205,000 One bedroom $410 700 $287,000 Two bedroom $410 970 $397,700 Three bedroom $410 1,170 $479,700 Acronyms: SF: Square feet Sources: Confidential Pro Forma Data; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Figure IV-10. For-Sale Housing Unit Sizes and Development Costs Unit Type Estimated Cost per Net SF Unit Size (net SF) Development Costs One bedroom $420 850 $357,000 Two bedroom $420 1,200 $504,000 Three bedroom $420 1,600 $672,000 Acronyms: SF: Square feet Sources: DataQuick, 2014; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Draft Burlingame Linkage Fee Nexus Study -61- CALCULATING THE HOUSING AFFORDABILITY GAP The final step in the analysis is to calculate the housing affordability gap, or the difference between what renters and owners can afford to pay and the total cost of developing new units. The purpose of the housing affordability gap calculation is to help determine the fee amount that would be necessary to cover the cost of developing housing for very low, low, and moderate income households. The calculation does not assume the availability of any other source of housing subsidy because not all "modest" housing is built with public subsidies, and tax credits and tax-exempt bond financing are highly competitive programs that will not always be available to developers of modest housing units.   Figure IV-11 shows the housing affordability gap calculation for rental units. For each rental housing unit type and income level, the gap is defined as the difference between the per-unit cost of development and the supportable debt per unit. The supportable debt is calculated based on the net operating income generated by an affordable monthly rent, incorporating assumptions about operating expenses (including property taxes, insurance, etc.), reserves, vacancy and collection loss, and mortgage terms based on discussions with local affordable housing developers. Because household sizes are not uniform and the types of units each household may occupy is variable, the average housing affordability gap is calculated by averaging the housing affordability gaps for the various unit sizes. Figure IV-12 shows the housing affordability gap calculation for ownership units. For each unit type, the gap is calculated as the difference between the per-unit cost of development and the affordable sales price for each income level. As with rental housing, the average housing affordability gap for each income level is calculated by averaging the housing affordability gaps across unit sizes in order to reflect that households in each income group vary in size, and may occupy any of these unit types. Finally, the tenure-neutral estimates of the housing affordability gap were estimated for very low, low, and moderate income households (Figure IV-13). Because very low and low income households that are looking for housing in today’s market are much more likely to be renters, an ownership gap was not calculated for these income groups. The rental gap represents the overall affordability gap for these two income groups. On the other hand, moderate income households could be either renters or owners. Therefore, the rental and ownership gaps are averaged for this income group to calculate the overall affordability gap for moderate income households. The calculated average affordability gap per unit is $280,783 for very low income households; $240,477 for low income households, and $175,558 for moderate income households. The housing affordability gap is highest for very low income households because those households with higher incomes can afford to pay more for housing. Draft Burlingame Linkage Fee Nexus Study -62-Figure IV-11. Housing Affordability Gap Calculation for Rental Housing Income Level and Unit Type Unit Size (SF) Maximum Monthly Rent (a) Annual Income Net Operating Income (b) Available for Debt Service (c) Supportable Debt (d) Development Costs (e) Affordability Gap Very Low Income (50% AMI) Studio 500 $961 $11,532 $3,455 $2,764 $36,552 $205,000 $168,448 1 Bedroom 700 $1,091 $13,095 $4,940 $3,952 $52,259 $287,000 $234,741 2 Bedroom 970 $1,220 $14,634 $6,402 $5,122 $67,725 $397,700 $329,975 3 Bedroom 1,170 $1,402 $16,824 $8,483 $6,786 $89,733 $479,700 $389,967 Average Affordability Gap $280,783 Low Income (70% AMI) Studio 500 $1,233 $14,793 $6,553 $5,243 $69,323 $205,000 $135,677 1 Bedroom 700 $1,402 $16,824 $8,483 $6,786 $89,733 $287,000 $197,267 2 Bedroom 970 $1,569 $18,831 $10,389 $8,312 $109,902 $397,700 $287,798 3 Bedroom 1,170 $1,807 $21,680 $13,096 $10,477 $138,535 $479,700 $341,165 Average Affordability Gap $240,477 Moderate Income (90% AMI) Studio 500 $1,593 $19,119 $10,663 $8,530 $112,796 $205,000 $92,204 1 Bedroom 700 $1,814 $21,768 $13,180 $10,544 $139,417 $287,000 $147,583 2 Bedroom 970 $2,033 $24,393 $15,673 $12,539 $165,796 $397,700 $231,904 3 Bedroom 1,170 $2,342 $28,108 $19,202 $15,362 $203,127 $479,700 $276,573 Average Affordability Gap $187,066 Notes: (a) Affordable rents are based on State of California Housing and Community Development FY 2014 Income Limits for San Mateo County. See Figure IV-2. (b) Amount available for debt. Assumes 5% vacancy and collection loss and $7,500 per unit per year for operating expenses and reserves based on recently built (2012-2014) and proposed affordable housing projects in the San Francisco Bay Area. (c) Assumes 1.25 Debt Coverage Ratio. (d) Assumes 6.38%, 30 year loan. Calculations based on annual payments. (e) Assumes $410/SF for development costs based on comparable project pro formas. (f) Calculated as the difference between development costs and supportable debt. Acronyms: SF: Square feet AMI: Area median income Sources: Housing and Community Development, 2014; Selected San Mateo Rental Housing Pro Formas; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -63- Figure IV-12. Housing Affordability Gap Calculation for For-Sale Condominium Housing Income Level and Unit Type Unit Size (SF) Affordable Sales Price (a) Development Costs (b) Affordability Gap (c) Moderate Income (110% of AMI) 1 Bedroom 850 $283,931 $357,000 $73,069 2 Bedroom 1,200 $348,526 $504,000 $155,474 3 Bedroom 1,600 $408,395 $672,000 $263,605 Average Affordability Gap $164,049 Notes: (a) See calculation in Figure IV-3. (b) Assumes $420/SF for development costs, based on recent condominium sales data. (c) Calculated as the difference between development cost and affordable sales price. Acronyms: SF: Square feet AMI: Area median income Sources: DataQuick Sales Data, 2008-2012; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Figure IV-13. Average Housing Affordability Gap by Income Group Income Level Rental Gap Ownership Gap Average Affordability Gap Very Low Income (50% AMI) $280,783 N/A $280,783 Low Income (70% - 80% AMI) (a) $240,477 N/A $240,477 Moderate Income (90% - 110% AMI) (b) $187,066 $164,049 $175,558 Notes: (a) Low income households are defined at 70 percent of AMI for renters and 80 percent of AMI for owners. (b) Moderate income households are defined at 90 percent of AMI for renters and 110 percent AMI for owners. Acronyms: AMI: Area median income. Source: Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -64- This section builds on the findings of the previous analytical steps to calculate the maximum justified linkage fees for each commercial prototype. MAXIMUM FEE CALCULATION To derive the maximum nexus-based fee, the housing affordability gap (see Section IV) is applied to the number of lower-income worker households linked to the prototypes. This is the basis for developing an estimate of the total affordability gap for each prototype. The total gap for each prototype is then divided by the size of each development prototype to calculate a single maximum fee per square foot. Figure V-1 presents the results of the linkage fee calculations for each prototype. The calculations shown below assume that 100 percent of the very low, low, and moderate income households linked to the new commercial space would be accommodated in Burlingame. The maximum fee results are $163 per square foot for hotel, $283 per square foot for retail/ restaurants/ services, and $245 per square foot for office/ R&D/ medical office. The calculated linkage fees are high for two reasons: 1) the cost of housing development in San Mateo County is high, creating a large affordability gap for very low, low, and moderate income households; 2) many of the workers associated with new commercial development, especially those in the retail and hotel industries, earn low wages and fall into very low and low income household categories. For these reasons, the highest fees are associated with retail/ restaurant/ personal services, generally referred to as service industries. Occupations in these industries offer workers the lowest average wage; hence the total affordability gap is highest for these employee households. Although average wages for hotel workers are similarly low, the density of workers in hotels is lower than in retail and in office/ R&D/ medical office space; therefore maximum linkage fees for hotels are the lowest among the three prototypes. Finally, while office workers earn the highest Average wage of all three prototypes, the employment density of this prototype is the highest. Therefore, the calculated fees for the category covering office/ R&D/ medical office are higher than those calculated for hotel developments, and lower than the retail/ restaurants/ services. The maximum fees shown in Figure V-1 are not the recommended fees for adoption. They are the nexus- justified fees that represent the maximum that Burlingame could charge to mitigate affordable housing demand related to commercial development. Figure V-1. Maximum Commercial Linkage Fees Worker Households Requiring Affordable Housing Affordability Gap for All New Worker Households Size of Prototype (SF) Maximum Fee per SF Hotel 64 $16,343,868 100,000 $163 Retail, Restaurants and Personal Services 103 $28,278,432 100,000 $283 Office, R&D and Medical Office 97 $24,517,864 100,000 $245 Sources: Vernazza Wolfe Associates, Inc; Strategic Economics, 2015. V. MAXIMUM LINKAGE FEES Draft Burlingame Linkage Fee Nexus Study -65- SUMMARY OF CONSERVATIVE ASSUMPTIONS  Employment density assumptions. For each commercial building prototype, an average employment density was applied based on a combination of national survey data for existing commercial buildings and a review of recently completed linkage fee nexus studies in the Bay Area. In order to create conservative assumptions about the number of jobs associated with new commercial development, the lower range of the density figures were selected for the analysis. Though some office developments in the Bay Area have much higher employment densities, particularly for high-technology tenants, the analysis used a lower estimate of density for the office/R&D/medical office prototype, resulting in a lower maximum fee estimate.  Cost estimates for affordability gap analysis. The affordability gap analysis measures the difference between what households can afford to pay for housing and the cost of new housing units. To ensure that the gap is conservative, the development cost estimates are based on the lower range of land and construction costs in San Mateo County. In many sub-areas of the county, including priority-development areas and downtown locations, land costs for housing sites may be higher, particularly under today’s market conditions.  Extremely low income households and very low income households are combined in the affordability gap analysis. The affordability gap analysis combines these two income groups, thereby reducing the total fee calculation.  Affordability gap for owner households. The calculation of the affordability gap for ownership households only considers moderate-income households. Low and very low income households are not considered in the calculation. This also results in a lower estimate of the maximum fee.  Feasibility analysis. The analysis takes into account the financial feasibility of adding the maximum impact fee and reduced fee levels to the total cost of new development. The financial feasibility component of the analysis incorporates market-supportable assumptions about revenues, costs, land costs, and developer return expectations based on research on recent development trends. The results of financial analysis informed the final recommendations on the linkage fee.  Comparison to other cities. The Consultant Team researched existing linkage fee in other Bay Area cities to determine the competitiveness of the maximum fee and reduced fee levels. The fee recommendations in this report incorporate the findings from the comparative analysis.  Overlap analysis. The City is undertaking two impact fee nexus studies at the same time: the commercial linkage fee nexus study and the housing impact fee nexus study. To minimize the potential that some jobs could be double-counted by including the same worker households in both studies, the Consultant Team ensured that the recommended fees for the two programs (commercial linkage and housing fees) would – when combined –mitigate less than 100 percent of the total impact. Draft Burlingame Linkage Fee Nexus Study -66- There are a number of policy considerations that can be taken into account when jurisdictions consider whether to adopt a commercial linkage fee on new non-residential development, and if so, what fee levels to adopt. These policy factors include the likely impact of the proposed fee levels on future development, the potential increase to the city’s existing fees on commercial development, a comparison of proposed linkage fees with those fees already charged in adjacent jurisdictions, and how potential revenues from new linkage fees can benefit the city’s overall affordable housing goals. This section provides a discussion of some of the key financial and policy questions for Burlingame. PROTOTYPES AND FEE LEVELS Commercial Prototypes As described in Section III, the analysis estimates linkage fees for three commercial prototypes: hotel, retail/ restaurants/ services, and office/ R&D/ medical office. The building characteristics, including size, density (floor-area-ratio), and parking assumptions are based on a review of recently built and proposed projects in San Mateo County (Figure VI-1). The financial feasibility of potential fee levels is tested for each of these prototypes. Figure VI-1. Description of Commercial Prototypes Hotel Retail/ Restaurants/ Services Office/R&D/ Medical Office Prototype Description Gross Building Area (GBA) 100,000 100,000 100,000 Podium Parking Area 11,970 30,000 63,000 Gross Building Area including Podium Parking (SF) 111,970 130,000 163,000 Efficiency Ratio (a) N/A 0.95 0.9 Net Leasable Sq. Ft. (NSF) N/A 95,000 90,000 Hotel Rooms 133 Parking Spaces 160 400 300 Podium Parking 40 100 210 Surface Parking 120 300 90 Floor Area Ratio (b) 1.1 0.5 2.0 Land Area (Acres) 2.3 6.0 1.9 Land Area (SF) 101,791 260,000 81,500 Notes: (a) Refers to ratio of gross building area to net leasable area. An efficiency ratio of 0.9 means that 90% of the gross building area is leasable. (b) The floor-area-ratio (FAR) is often used as a measure of density. In this analysis, it is calculated as the gross building area (including podium parking) divided by the total land area. Sources: Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. VI. FEASIBILITY AND POLICY CONSIDERATIONS Draft Burlingame Linkage Fee Nexus Study -67- Fee Levels In order to provide Burlingame with some guidance on how proposed fees could impact development decisions, the Consultant Team conducted a financial feasibility analysis that tested the impact of proposed linkage fee options on developer profit. The fees were tested for four scenarios, which represent different assumptions regarding the number of very low, low, and moderate income new worker households that would be accommodated in Burlingame: Figure VI-2 illustrates the different fees per square foot for each scenario, by prototype. Figure VI-2. Linkage Fee Scenarios by Prototype Fee Scenarios Hotel Retail/ Restaurants / Services Office/ R&D/ Medical Office Scenario 1 - Maximum Fee $163.44 $282.78 $245.18 Scenario 2 $20 $20 $20 Scenario 3 $10 $10 $10 Scenario 4 $5 $5 $5 Sources: Vernazza Wolfe Associates, Inc; Strategic Economics, 2015. METHODOLOGY Financial feasibility was tested using a pro forma model that measures the return on cost of the commercial prototypes. Return on cost is a commonly used metric indicating the profitability of a commercial project. The pro forma model tallies all development costs, including land, direct construction costs, indirect costs (including financing), and developer fees. Revenues from lease rates or hotel room rates are the basis for calculating annual income from the new commercial development. The total operating costs are subtracted from the total revenues to calculate the annual net operating income. The return on cost is then estimated by dividing the annual net operating income by the total development costs. The fee levels were then added as an additional development cost to measure the resulting change in the developer’s return on cost. KEY INPUTS The key revenue and cost inputs to the financial pro forma analysis are based on market research and published resources. The data inputs are explained in more detail below. Revenues To estimate income from commercial development, the analysis used rental data from Costar for the Northern San Mateo County sub-market for existing retail and office buildings. A 20 percent increase was applied to account for the value premium of new commercial space. Hotel room revenue is estimated based on current revenue per available room (RevPAR) from HVS Consulting and Smith Travel Research for the San Mateo County market area. The revenue inputs are shown in Figure VI-3. Direct and Indirect Costs Cost estimates for the commercial prototypes include direct construction costs (site work, building costs, and parking), indirect costs, financing costs, and developer overhead and profit. Direct building construction cost estimates for office/ R&D/ medical office and retail/ restaurants/ services are based on RS Means. Hotel costs were estimated based on recent data from HVS Consulting and Smith Travel Research, and include costs for Furniture, Fixtures, and Equipment (FF&E). Direct and indirect cost inputs for the pro forma analysis are shown in Figure VI-4. Draft Burlingame Linkage Fee Nexus Study -68- Land Costs One of the critical cost factors for a commercial development project is land cost. To determine the land value of sites zoned for commercial uses, the Consultant Team analyzed recent sales transactions in the county and reviewed third-party property appraisals, with a focus on the Northern San Mateo County submarket (where Burlingame is located). According to the data, the land value for commercially zoned land sold in recent years is on average $98. However, when the small 5,700-square-foot site in Millbrae is excluded, the average value is lower. Based on this analysis of land transactions, the estimated land value for commercial properties in Burlingame is $90 per square foot (see Figure VI-5). This approximate land cost is an estimate for the purposes of the financial feasibility analysis; the value of any particular site is likely to vary based on its location, amenities, and property owner expectations, among other factors. Return on Cost Thresholds In order to understand how the different fee levels impact financial feasibility, the return on cost results can be compared to an investor’s expectations for each type of development. The thresholds for this analysis were pegged to investor expectations regarding overall capitalization rates (cap rate) for each product type in the Bay Area. The cap rate, which is measured by dividing net income generated by a property by the total project value, is a commonly used metric to estimate potential returns. Lower cap rates signify high performing markets. In this analysis, the total project value is equivalent to the total development cost. PWC Real Estate Investor Survey (Fourth Quarter 2014) was the primary data source for determining cap rates for office/ R&D/ medical office and retail/restaurant/services uses. For hotel, cap rate data was obtained from HVS, a hotel consulting firm that tracks hotel markets. To ensure that the financial analysis is conservative and does not reflect peak market conditions, the thresholds selected for determining project feasibility are slightly higher than the published cap rates. It was determined that the threshold for the return on cost is between 6.75 percent and 7.0 percent for office/ R&D/ medical office and retail/ restaurants/ services prototypes, and between 7.0 percent and 7.25 percent for hotel (see Figure VI-6). Draft Burlingame Linkage Fee Nexus Study -69- Figure VI-3. Pro Forma Revenue Inputs by Prototype Prototypes Metric Input Hotel Gross Annual Room Income (a) RevPAR $54,750 Gross Annual Other Revenue Per Room $10,950 Less: Vacancy (b) $0 Less: Operating Expenses (c) 70% ($45,990) Annual Net Operating Income $19,710 Retail/Services Revenues and Expenses (d) Monthly Rent - Triple Net per NSF $28 Operating Expenses % of Gross 10% Vacancy Rate % of Gross 3% Estimates Net Square Footage 95,000 Annual Gross Revenues $2,660,000 Operating Expenses ($266,000) Vacancy Rate ($79,800) Annual Net Operating Income $2,314,200 Office/R&D Revenues and Expenses (d) Monthly Rent - Gross per NSF $47 Operating Expenses % of Gross 28% Vacancy Rate % of Gross 5% Estimates Net Square Footage 90,000 Annual Gross Revenues $4,230,000 Operating Expenses ($1,184,400) Vacancy Rate ($211,500) Net Operating Income $2,834,100 Notes: (a) RevPAR is a measure of revenue per room, calculated as occupancy percentage times average daily rate. (b) Expense ratio for limited service and full-service hotels, based on data from HVS and STR Consulting. (c)Vacancy is already reflected in RevPAR estimate. (d) Costar Group average rents in the Northern San Mateo County submarket. A premium of 20% is applied to account for newer product. Sources: Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -70-Figure VI-4. Direct and Indirect Cost Inputs Development Assumptions Metric Hotel Retail/ Restaurants/ Services Office/R&D/ Medical Office Direct Costs (a) Building & On-Site Improvements (b) per sq. ft. of GBA $200 $130 $200 Parking Costs - Podium per space $25,000 $25,000 $25,000 Parking Costs - Surface per space $2,500 $2,500 $2,500 Indirect Costs (c) A&E & Consulting % of Direct Costs 8% 8% 8% Tenant Improvements per NSF N/A $30 $40 Permits & Fees (d) total vary by city vary by city vary by city Taxes, Insurance, Legal & Accounting % of Direct Costs 3% 3% 3% Financing Costs % of Direct Costs 6% 6% 6% Developer Overhead &Fee % of Direct Costs 9% 9% 9% Contingency % of Indirect Costs 5% 5% 5% Notes: (a) Review of pro formas for similar projects in San Mateo County; RS Means, 2014.  (b) Hotel costs include Furniture, Fixtures & Equipment (FF&E). (c) Indirect costs (except permits and fees) based on review of pro formas for similar projects in Bay Area.  (d) Permits & Fee provided by City staff. Sources: Project pro formas; RS Means, 2014; HVS Consulting and Smith Travel Research, 2014; City staff; Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -71-Figure VI-5. Recent Commercial Vacant Land Transactions in San Mateo County Property City Site Area Sale Price/ Appraised Value Sale Price/ SF Sale Date Central San Mateo County 480 East 4th Ave San Mateo 50,573 $5,100,000 $101 2013 1804 Leslie Street San Mateo 13,939 $1,000,000 $72 2011 900 El Camino Real Belmont 8,400 $655,000 $78 2010 Average 24,304 $2,251,667 $84 Northern San Mateo County 480 El Camino Real Millbrae 5,663 $1,100,000 $194 On Market 1001-1015 E. Market Street Daly City 37,897 $2,250,000 $59 On Market 6800 Mission Street Daly City 17,424 $1,350,000 $77 2012 7255 Mission Street Daly City 20,038 $1,225,000 $61 2012 Average 20,256 1,481,250 $98 Southern San Mateo County 3264 Haven Ave Redwood City 27,000 $3,179,000 $118 On Market 1706 El Camino Real Menlo Park 27,007 $2,200,000 $81 2011 1300 El Camino Real Menlo Park 145,490 $24,500,000 $168 2012 Average 27,004 $2,689,500 $122 Sources: Property appraisals; Loopnet, 2015; Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -72- Figure VI-6. Feasibility Thresholds for Return on Cost Prototype Capitalization Rates Selected Threshold for Return on Cost Hotel (a) 6.75% - 7.25% 7.0% - 7.25% Retail/ Restaurants/ Services (b) 6.21% - 7.05% 6.75% - 7.0% Office/ R&D/ Medical Office(c) 5.88% - 6.71% 6.75% - 7.0% Notes: (a) HVS Consulting, January 2015. Cap rate data was only available at the national level. However, the Bay Area market generally outperforms the rest of the country, so this estimate is likely lower than cap rates for San Mateo County. (b) PWC Real Estate Investor Survey, National Retail Market, 4th Quarter 2014. Cap rates are lower for regional malls and power centers (under 7%) than for strip shopping centers. The feasibility threshold is set at the higher end of the range to represent smaller retail centers rather than large regional malls. (c) PWC Real Estate Investor Survey, San Francisco Office Market, 4th Quarter 2014. Because capitalization rates for office may be peaking in the Bay Area market, and R&D and medical office uses have higher cap rates, the financial analysis set the threshold at a higher rate. Sources: HVS Consulting, January 2015; PWC Real Estate Investor Survey, 4Q2014; Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. RESULTS The financial feasibility analysis, in addition to considering the effect of the nexus fee scenarios on the developer’s return, also measures the fee as a share of total development costs, as an indicator of the financial burden of the fee on new development. Hotel The financial analysis shows that the annual net operating income is approximately $2.6 million ($19,710 per room), and that total development costs, including land, direct and indirect costs total about $37.47 million (Figure VI-9). The net operating income divided by total development costs yields a return on costs of 7 percent without the linkage fee, which meets the required threshold for feasibility. The financial feasibility analysis also measures the fee as a share of total development costs as an indicator of the financial burden of the fee on new development, under current market conditions. For each fee scenario, the results are as follows:  The maximum fee level ($163.44 per square foot) increases total development costs to $53.82 million. The maximum fee accounts for almost 44 percent of total development costs. This fee scenario generates a calculated return on cost of 4.87 percent, well below the required threshold for financial feasibility.  Fee scenario 2, a lower nexus fee of $20 per square foot, is equivalent to 5.34 percent of development costs and generates a potential return on costs of 6.64 percent. This return is insufficient to meet the threshold for financial feasibility.  Scenario 3, a fee of $10 per square foot, would account for 2.67 percent of development costs. At this fee level, the return on cost is estimated at 6.81 percent, which is not financially feasible. Draft Burlingame Linkage Fee Nexus Study -73-  Scenario 4 is a fee of $5 per square foot. This modest fee is 1.33 percent of the project’s total development costs. The return on costs is estimated at 6.90 percent. Under current market conditions, none of the fee levels that were tested were found to be feasible. However, because the financial feasibility results for the hotel prototype may change over time depending on market conditions, the analysis compared the financial feasibility of the linkage fee scenarios with 2014 room rates (which the nexus analysis is based on), and with increased room rates. According to the analysis, a five percent increase in hotel revenues would allow a linkage fee of $20 per square foot to be financially feasible. A ten percent increase in revenues would allow a hotel linkage fee of $35 per square foot to be financially feasible (Figure VI-7 below). Figure VI-7. Financial Feasibility Results for the Hotel Prototype with Increased Revenues Revenue Scenario Hotels 2014 Rents/Prices $0 5% Increase in Rents/ Prices $20 10% Increase in Rents/ Prices $35 Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Retail/ Restaurant/Services The feasibility analysis indicates that at current market rents, without the addition of new linkage fees, new retail projects would obtain an annual net operating income of approximately $2.31 million, with a total development cost of $48.31 million. The net operating income divided by total cost results in a return on cost estimate of 4.79 percent (see Figure VI-9). This figure is well below the feasibility threshold for new retail development (6.75 percent), indicating that a new retail project without any linkage fees would likely be unfeasible. It is possible that the prototype could be marginally feasible if land, construction, or soft costs were slightly lower. The ground-floor retail component of a mixed-use project may also have stronger financial feasibility results, because it would share land costs with the residential or office component. To understand the financial burden of the fee scenarios on overall development costs, the pro forma analysis measures the fees as a percent of total development costs. The financial feasibility results for the retail/ restaurants/services prototype are as follows:  Scenario 1, the maximum linkage fee ($282.78 per square foot) reduces the return on cost to 3.02 percent, significantly below the 6.75 percent threshold for financial feasibility. The maximum fee accounts for 58.54 percent of total development costs.  The fee scenario 2 ($20 per square foot) would correspond to 4.14 percent of development costs. At this fee level, the retail/restaurant/services prototype generates a return on costs of 4.60 percent. This level of financial return is unlikely to attract retail development.  Scenario 3, a nexus fee of $10 per square foot, would be equivalent to 2.07 percent of total development costs. The calculated return on cost is estimated at 4.69 percent. While this estimate of return is stronger, it is still under the feasibility threshold of 6.75 percent.  Scenario 4, a fee of $5, would correspond to 1.04 percent of total development costs. The return on cost with this linkage fee is estimated at 4.74 percent. While this is still under the feasibility threshold with today’s rental rates, given that the current retail vacancy rate is under five percent Draft Burlingame Linkage Fee Nexus Study -74- in Northern San Mateo County, it is possible that the retail market will see growth in rental rates over the short term, making new development feasible. Office/R&D/Medical Office Under a base scenario with no commercial linkage fees on office/R&D/medical office development, a prototypical project generates an estimated net operating income of $2.83 million, with total development costs estimated at $45.35 million. The net operating income divided by the total development costs results in an estimated return on cost of 6.25 percent, under the minimum threshold for financial feasibility for office/R&D/medical office development, which is currently 6.75 to 7.0 percent (see Figure VI-9). However, it is possible that a different type of office, R&D or medical office development could be financially feasible under certain conditions; for example, if development costs were reduced through lower land costs, increased densities, parking reductions, or other zoning incentives. In addition to estimating the return on cost for projects, the financial feasibility analysis also considers the impact of the linkage fee levels on total development costs. The following describes the results for each fee scenario.  Scenario 1, a fee set at the maximum level of $245.18, would account for 54.07 percent of total development costs for the office/R&D/medical office prototype. The return on cost with this fee is estimated at 4.06 percent, which would not be financially feasible.  Scenario 2, a fee level of $20 per square foot, would be 4.41 percent of total development costs. The calculated return on cost is 5.99 percent, which would not meet the requirement to be feasible.  Scenario 3, a fee level of $10 per square foot, is equivalent to 2.21 percent of total project development costs. Under this scenario, the office/R&D/medical office project generates a return on cost of 6.12 percent, which is not feasible.  Scenario 4 at $5 per square foot would be about 1.10 percent of total project costs. At this fee level, the prototype generates an estimated return on costs of 6.18 percent, which is not financially feasible. Because the results of the feasibility analysis for the office/R&D/medical office prototype may vary over time depending on market conditions, the analysis compared the financial feasibility of the linkage fee scenarios with 2014 revenues (which the nexus analysis is based on), and with increased revenues. According to the analysis, with a ten percent increase in revenues, a linkage fee of $10 per square foot would be financially feasible (Figure VII-8). Figure VI-8. Financial Feasibility Results for the Office/R&D/Medical Office Prototype with Increased Revenues Revenue Scenario Office/R&D/Medical Office 2014 Rents/Prices $0 5% Increase in Rents/ Prices $0 10% Increase in Rents/ Prices $10 Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -75- Figure VI-9. Pro Forma Analysis Results Hotel Retail/Restaurants/ Services Office/R&D/Medical Office Development Costs (a) per Room Total per SF of GBA Total per SF of GBA Total Land $68,881 $9,161,182 $234 $23,400,000 $73 $7,335,000 Direct Costs Building & On-Site Improvements $150,376 $20,000,000 $130 $13,000,000 $200 $20,000,000 Parking $9,750 $1,296,750 $33 $3,250,000 $55 $5,475,000 Total Direct Costs $160,126 $21,296,750 $163 $16,250,000 $255 $25,475,000 Indirect Costs A&E & Consulting $12,810 $1,703,740 $13 $1,300,000 $20 $2,038,000 Tenant Improvements $0 $0 $29 $2,850,000 $36 $3,600,000 FF&E (b) $0 $0 $0 $0 $0 $0 Permits & Fees (Excl. Housing Linkage) (c) $9,412 $1,251,749 $13 $1,251,749 $18 $1,842,849 Taxes, Insurance, Legal & Accounting $4,804 $638,903 $5 $487,500 $8 $764,250 Financing Costs $9,608 $1,277,805 $10 $975,000 $15 $1,528,500 Developer Overhead & fee $13,611 $1,810,224 $14 $1,381,250 $22 $2,165,375 Contingency $2,512 $334,121 $4 $412,275 $6 $596,949 Total Indirect Costs $52,756 $7,016,541 $87 $8,657,774 $125 $12,535,923 Total Development Costs (TDC) without Nexus Fees $37,474,473 $48,307,774 $45,345,923 TDC with Nexus Fees by Fee Scenario Linkage Fee per Sq. Ft. TDC incl. Linkage Impact Fee Linkage Fee per Sq. Ft. TDC incl. Linkage Impact Fee Linkage Fee per Sq. Ft. TDC incl. Linkage Impact Fee No Fee $0.00 $37,474,473 $0.00 $48,307,774 $0.00 $45,345,923 Scenario 1: Maximum Fee $163.44 $53,818,341 $282.78 $76,586,206 $245.18 $69,863,787 Scenario 2 $20.00 $39,474,473 $20.00 $50,307,774 $20.00 $47,345,923 Scenario 3 $10.00 $38,474,473 $10.00 $49,307,774 $10.00 $46,345,923 Scenario 4 $5.00 $37,974,473 $5.00 $48,807,774 $5.00 $45,845,923 Revenues per Sq. Ft. of GBA Total per Sq. Ft. of GBA Total per Sq. Ft. of GBA Total Annual Net Operating Income (d) $19,710 $2,621,430 $23 $2,314,200 $28 $2,834,100 Return on Cost by Fee Scenario: Nexus Fee per SF Return on Costs Nexus Fee per SF Return on Costs Nexus Fee per SF Return on Costs No Fee $0.00 7.00% $0.00 4.79% $0.00 6.25% Scenario 1: Maximum Fee $163.44 4.87% $282.78 3.02% $245.18 4.06% Scenario 2 $20.00 6.64% $20.00 4.60% $20.00 5.99% Scenario 3 $10.00 6.81% $10.00 4.69% $10.00 6.12% Scenario 4 $5.00 6.90% $5.00 4.74% $5.00 6.18% Fees as % of TDC Nexus Fee per SF Nexus Fee as % of TDC Nexus Fee per SF Nexus Fee as % of TDC Nexus Fee per SF Nexus Fee as % of TDC No Fee $0.00 0.00% $0.00 0.00% $0.00 0.00% Scenario 1: Maximum Fee $163.44 43.61% $282.78 58.54% $245.18 54.07% Scenario 2 $20.00 5.34% $20.00 4.14% $20.00 4.41% Scenario 3 $10.00 2.67% $10.00 2.07% $10.00 2.21% Scenario 4 $5.00 1.33% $5.00 1.04% $5.00 1.10% Return on Cost - Threshold for Feasibility 7.0-7.25% 6.75-7.0% 6.75-7.0% Notes: (a) See Figure VI-4. (b) Furniture Fixtures & Equipment for hotel is included in the direct costs. (c) Permit & fee calculations provided by City Staff. These are estimates for the prototypes created in this analysis; specific development projects may have different results. (d) See Figure VI-3. Sources: Vernazza Wolfe Associates, Inc; Strategic Economics, 2015. Draft Burlingame Linkage Fee Nexus Study -76- POLICY CONSIDERATIONS While the nexus study provides the necessary economic analysis for the linkage fees, it is up to policymakers to decide what percentage of the maximum fee to charge to new development. Financial feasibility is one important factor to examine. In addition, there are a number of other policy issues to consider, such as:  How much development fees would increase with a new commercial linkage fee;  How a commercial linkage fee in Burlingame would compare with those in neighboring jurisdictions;  What options exist for establishing alternatives to the payment of fees; and  How a commercial linkage fee fits into Burlingame’s overall housing strategy. Existing City Fees on Commercial Development The new linkage fee can be considered in context of existing city fees on new commercial development. Figure VI-10 presents the existing commercial fees that apply to the three commercial prototypes and the potential linkage fees under four scenarios. As shown, the existing fees range from $12.52 per square foot for the hotel and retail prototypes, to $18.43 per square foot for the office prototype. Each of the linkage fee scenarios would considerably increase the City’s fees on new development for all prototypes. Figure VI-10. Existing City Fees on Commercial Development by Prototype Commercial Prototype Hotel/ Resort/ Other Lodging Retail/ Restaurants/ Services Office/ Medical Office/ R&D Total Existing Permits & Impact Fees per Prototype $1,251,749 $1,251,749 $1,842,849 Existing Fees per Square Foot $12.52 $12.52 $18.43 Linkage Fee Scenarios Fee Scenario 1 (Maximum Fee) $163.44 $282.78 $245.18 Fee Scenario 2 $20.00 $20.00 $20.00 Fee Scenario 3 $10.00 $10.00 $10.00 Fee Scenario 4 $5.00 $5.00 $5.00 Sources: Burlingame, Department of Planning and Building, 2014; Vernazza Wolfe Associates, Inc; Strategic Economics, 2015. Comparison with Fees Charged in Other Jurisdictions Figure VI-11 provides comparative information for Millbrae and other jurisdictions in San Mateo County and Santa Clara County that charge commercial linkage fees. At present, the linkage fees in other jurisdictions range from $2.50 to $25 per square foot, depending on the land use. In most cases, cities have adopted higher fee levels for office/ R&D/ medical office uses than for retail and hotel uses. For example, in Cupertino, the commercial linkage fee for hotel and retail/ restaurants/ services is $10 per square foot, compared to $20 per square foot for office/ R&D/ medical office uses.18 The maximum fees for Burlingame are significantly higher than adopted linkage fees in the region. The lower fee scenarios (Scenarios 2, 3, and 4) are similar to those in place in nearby communities. 18 It is important to note that Menlo Park and Palo Alto are currently conducting new nexus studies that may result in revised commercial linkage fees. Draft Burlingame Linkage Fee Nexus Study -77- Figure VI-11. Comparison to Linkage Fees in Neighboring Cities Hotel Retail/ Restaurant/ Services Office/R&D/ Medical Office Date Fee Was Adopted Linkage Fee Scenarios (per SF) Scenario 1 - Maximum Fee $163.44 $282.78 $245.18 N/A Scenario 2 $20 $20 $20 N/A Scenario 3 $10 $10 $10 N/A Scenario 4 $5 $5 $5 N/A Neighboring Jurisdictions Cupertino $10 $10 $20 2015 Menlo Park (a) $8 $8 $15 2014 Mountain View (b) $2.50 $2.50 $25 2015 Redwood City (c) Proposed at $5 Proposed at $5 Proposed at $20 N/A Palo Alto (c) $19 $19 $19 2014 Sunnyvale (d) $7.50 $7.50 $15 2015 Notes: (a) Buildings 10,000 SF and under are exempt from fees. A new nexus study is currently underway that may result in an updated fee. (b) New gross floor area under 25,000 SF pays 50 percent of full fee. (c) Approval of the proposed fees is pending. (d) Palo Alto has a single fee of $19.31 per SF for any new gross square footage in commercial and industrial projects. A new nexus study is currently underway that may result in an updated fee. (e) The fee on the first 25,000 SF, for all three commercial uses, is discounted by 50 percent. Sources: City staff and websites; Nonprofit Housing Association of Northern California, 2015; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Other cities in the Bay Area outside of San Mateo and Santa Clara counties also have commercial linkage fees that can be compared to the potential fee scenarios for Millbrae. A summary of some of these existing fees is shown in Figure VI-12, based on the most current information available. The fee amounts vary significantly by jurisdiction. San Francisco has the highest impact fees on commercial development, ranging from $16 for R&D space to $24 for office space. Draft Burlingame Linkage Fee Nexus Study -78- Figure VI-12. Existing Linkage Fees in Bay Area Cities City Commercial Development Subject to Fees Fee Amount Walnut Creek All development commercially classified i.e. R&D, for-profit medical offices/hospitals, etc. $5.00 per SF Oakland Office and Warehouse/Distribution $5.24 per SF used for office of warehouse /distribution needs beyond 25,000 SF San Francisco Entertainment, Hotel, Office, R&D, Retail, Integrated PDR, Small Enterprise Workspace Based on type of space and additional gross SF past 25,000 Entertainment/retail: $22.42 per SF Office: $24.03 per SF Integrated PDR/small enterprise: $18.89 per SF Hotel: $17.99 per SF R&D: $16.01 per SF Dublin Industrial, Office, R&D, Retail, Services & Accommodations Industrial: $.048 per SF Office: $1.24 per SF R&D: $0.81 per SF Retail: $1.00 per SF Services & Acc.: $0.42 per SF * Buildings less than 20,000 SF are exempt. Pleasanton All commercial office or industrial development projects $2.87 per SF Adjusted annually based on CPI Alameda Retail, Office, Warehousing, Manufacturing, Hotel//Motel Retail: $2.24 per SF Office: $4.42 per SF Warehouse & Manufacturing: $0.77 per SF Hotel/Motel: $1,108 per room/suite May be adjusted annually based on CPI Napa Office, Hotel, Retail, Industrial (Industrial, Warehouse, Wine Production) Office: $1.00 per SF Hotel: $3.00 per SF Retail: $0.80 per SF Industrial: $0.50 per SF Emeryville Any development of non residential uses for which a discretionary permit or building permit is required $4.00 per SF Berkeley Developments in non-residential and R-4 Zones, except in South Berkeley IX Target Area, over 7,500 SF Office/Retail/Restaurant/Hotel/Lodging/R&D: $4.50 per SF Industrial/Manufacturing/Warehouse/Storage: $2.25 per sq. ft Sources: The Non-Profit Housing Association of Northern California, Strategic Economics, and Vernazza Wolfe Associates, Inc, 2015. Draft Burlingame Linkage Fee Nexus Study -79- Options for Establishing Alternatives to Payment of Fees When Burlingame designs its ordinance governing commercial linkage fees, it can provide options that developers may choose instead of the payment of fees. For example, one option would be for the developer to provide affordable housing units on- or off-site or to provide a building site for affordable housing. This flexibility is provided to allow development of creative solutions that may provide more affordable housing than would be created by payment of fees. Regardless of whether a commercial developer elects to provide affordable housing or provide a building site, it is necessary to calculate how these alternatives would compare with any fees established by the City. The first step in establishing options for a specific development project would be for the City to calculate the total fees that are owed by the new development. Then, establishing an alternative compliance method will depend on what is offered by the developer. For example, if the developer offers to provide land for an affordable housing site, a recent site appraisal generally suffices to place a value on a contribution of land. This land value can then be compared with the fees that the developer would normally pay. If, instead of paying a fee, the developer elects to provide affordable housing units, it is also possible to estimate the value of these units by multiplying the number of affordable units to be provided by a current affordability gap estimate per unit. The value of alternative compliance measures needs to be calculated at the time a developer requests one. Benefit to Burlingame’s Overall Affordable Housing Strategy Burlingame currently does not have a residential impact fee program or commercial linkage fee program. The revenues to be collected from a commercial linkage fee would provide an important source of local funding; however, fee revenues do not generally cover the entire funding gap encountered by sponsors of new affordable housing. Additional funding is almost always required. In January 2015, Burlingame has adopted a Density Bonus Ordinance, which replaced its inclusionary zoning ordinance. The Density Bonus ordinance provides a density bonus of 20 percent for residential projects of over five units under the following circumstances: 10 percent of units are affordable to lower income households; five percent of units built are affordable to very low income households; the project is a senior citizen housing development; the project is a qualifying mobile home park. For projects that provide ten percent of units affordable to moderate income households, a density bonus of five percent is granted. In addition to the density bonus policy, the City also supports affordable housing development by providing funding to project sponsors. Typically, affordable housing projects in Burlingame are funded through a variety of other financing sources, including San Mateo County, as well as the federal government, e.g., the CDBG and HOME Programs. In addition, equity is also provided directly by developers and indirectly raised through the allocation and sale of Low Income Housing Tax Credits. Finally, a portion of permanent financing comes from conventional loans obtained from private lending institutions. Commercial linkage fee revenues (and housing impact fee revenues, if adopted) would augment existing affordable housing funds. The existence of a local revenue source such as nexus fees can also make certain projects more competitive for outside funding. It should be noted that revenues from a commercial linkage fee need to be spent on housing that benefits the workforce since the funds stem from affordable housing impacts related to new employment. Potential for Overlap Between Residential and Commercial Fees The City is also undertaking a housing impact nexus study simultaneously, and may soon adopt a housing impact fee in a parallel process to the commercial linkage fee considered in this report. One issue that may arise if a city considers the adoption of both fees is whether there is any overlap between the two impact fees, resulting in potential “double-counting” of impacts. Draft Burlingame Linkage Fee Nexus Study -80-  The commercial linkage fee study examined jobs located in new commercial buildings including office/ R&D/ medical office buildings, retail/ restaurants/ services, and hotels. The nexus analysis then calculated the average wages of the workers associated with each commercial building to derive the annual income of the new worker households. The analysis determines the area median income (AMI) level of the new worker households to identify the number of worker households that would require affordable housing.  The housing impact fee nexus analysis examined households buying or renting new market rate units in the jurisdiction. The household expenditures by these new residents have an economic impact in the county, which can be linked to new jobs. The nexus analysis quantified the jobs linked to new household spending, and then calculated the wages of new workers and the household income of new worker households. Each worker household was then categorized by AMI level to determine the number of households that require affordable housing. There may be a share of jobs counted in the commercial linkage fee analysis that are also included in the residential nexus analysis, particularly those in the service sector. Other types of jobs counted in the residential nexus analysis are unique to that analysis, and are not included in the commercial linkage fee analysis (for example, public sector employees). The commercial linkage fee analysis is limited to private sector office/ R&D/ medical office buildings, hotels, and retail/ restaurants/ services space. There is potential that some jobs could be counted in both analyses, and that the two programs may overlap in mitigating the affordable housing demand from the same worker households. Each of the proposed fees is required to mitigate no more than 100 percent of the demand for affordable units by new worker households. However, the recommendations presented in this study (and in the housing impact fee study) do not exceed the nexus, even if every job counted in the residential nexus study was duplicated in the commercial linkage fee study. The nexus fee levels recommended in both studies represent less than the justified nexus amount.  First, the recommended linkage fees are significantly less than the maximum justified nexus amount for all prototypes. Therefore, the commercial linkage fee would mitigate less than 100 percent of the demand for affordable units generated by the new non-residential space.  Secondly, the recommended housing impact fee levels are also less than 100 percent of the maximum fee level supported by the residential nexus analysis. Therefore, the combined programs (commercial and residential fees) would mitigate less than 100 percent of the impact even if there were overlap in the jobs counted in the two nexus analyses. Administrative Issues Similar to any impact fee, the fee should be adjusted annually for inflation and increases in construction costs. Adjustments are also needed due to possible changes in the housing affordability gap. However, the connection between new residential construction and growth in employment derived from employment densities is unlikely to change in the short run. It is advisable that the City adjusts its commercial linkage fee annually by using an annual adjustment mechanism. An adjustment mechanism updates the fees to compensate for inflation in development costs. To simplify annual adjustments, it is recommended that the City select a cost index that is routinely published. While there is no index that tracks changes in Burlingame’s development costs, including land, there are a few other options to consider. Draft Burlingame Linkage Fee Nexus Study -81-  The first option is the Consumer Price Index (Shelter Only). The shelter component of the index covers costs for rent of primary residence, lodging away from home, owner’s equivalent rent of primary residence, and household insurance. Of the total shelter index, costs associated with the owner’s equivalent rent of primary residence constitute 70 percent of total costs entered into the index.  A second option to adjust the fee for annual inflation is the construction cost index published in the Engineering News Record (ENR). This index is routinely used to update other types of impact fees. Cost index information for the San Francisco area, the closest geographical area to Burlingame, is available on an annual basis. While this index measures inflation in construction costs, it does not incorporate changes in land costs and public fees charged on new development. While both indices measure changes in housing costs, both understate the magnitude of inflation for the reasons presented above. However, since these indices are readily available and relatively simple to use, it is recommended, that City uses these indices for annual adjustments. It is further recommended that the City base its annual adjustment mechanism on the higher of the two indices (CPI or ENR), using a five- year moving average as the inflation factor. In addition to revising the fee annually for inflation, the City is encouraged to update the commercial linkage fee study every five years, or at the very least, update the housing affordability gap used in the basic model. The purpose of these updates is to insure that the fee is still based on a cost/revenue structure that remains applicable in Burlingame housing market. In this way, the fee will more accurately reflect any structural changes between affordable prices/rents and market rate sales prices/development costs. Draft Burlingame Linkage Fee Nexus Study -82- GLOSSARY OF TERMS Affordable Housing: Under state and federal statutes, housing is defined as affordable if housing costs do not exceed 30 to 35 percent of gross household income. Annual Adjustment Mechanism: Due to inflation in housing construction costs, it is frequently necessary to adjust impact fees. An index, such as the Consumer Price Index (CPI) or a published construction cost index (for example, from the Engineering News Record) is used to revise housing fees to reflect inflation in housing construction costs. Assisted Housing: Housing that has received public subsidies (such as low interest loans, density bonuses, direct financial assistance, etc.) from federal, state, or local housing programs in exchange for restrictions requiring a certain number of housing units to be affordable to very low, low, and moderate income households. Boomerang Funds: Monies returned to the City by the State of California, after dissolution of redevelopment agencies in the State. Consumer price index (CPI): Index that measures changes in the price level of a market basket of consumer goods and services purchased by households. Employment Densities: The amount of square feet per employee is calculated for each property use that is subject to a commercial development housing linkage fee. Employment densities are used to estimate the number of employees that will work in a new commercial development. Household: The US Census Bureau defines a household as all persons living in a housing unit whether or not they are related. A single person living in an apartment as well as a family living in a house is considered a household. Households do not include individuals living in dormitories, prisons, convalescent homes, or other group quarters. Household Income: The total income of all the persons living in a household. Household income is commonly grouped into income categories based upon household size and income, relative to the regional median family income. Housing Affordability Gap: The affordability gap is defined as the difference between what a household can afford to spend on housing and the market rate cost of housing. Affordable rents and sales prices are defined as a percentage of gross household income, generally between 30 percent and 35 percent of income. VII. GLOSSARY OF TERMS AND ACRONYMS Draft Burlingame Linkage Fee Nexus Study -83- For renters, rental costs are assumed to include the contract rent as well as the cost of utilities, excluding cable and telephone service. The difference between these gross rents and affordable rents is the housing affordability gap for renters. This calculation assumes that 30% of income is paid for gross rent. For owners, costs include mortgage payments, mortgage insurance, property taxes, property insurance, and homeowner association dues.19 The difference between these housing expenses and affordable ownership costs is the housing affordability gap for owners. This calculation assumes that 35% of income is paid for housing costs. Housing Subsidy: Housing subsidies refer to government assistance aimed at reducing housing sales prices or rents to more affordable levels. Housing Unit: A housing unit can be a room or group of rooms used by one or more individuals living separately from others in the structure, with direct access to the outside or to a public hall and containing separate toilet and kitchen facilities. Inclusionary Zoning: Inclusionary zoning, also known as inclusionary housing, refers to a planning ordinance that requires that a given percentage of new construction be affordable to households with very low, low, moderate, or workforce incomes. In-Lieu Fee: A literal definition for an in-lieu fee for inclusionary units would be a fee adopted “in place of” providing affordable units. For the purposes of operating an inclusionary housing program, a public jurisdiction may adopt a fee option for developers that prefer paying fees over providing housing units on- or off-site. A fee study is frequently undertaken to establish the maximum fee that can be charged as an in-lieu fee. This fee study must show that there is a reasonable relationship between the fee and the cost of providing affordable housing. Market-Rate Housing: Housing which is available on the open market without any public subsidy. The price for housing is determined by the market forces of supply and demand and varies by location. Nexus Study: In order to adopt a residential housing impact fee or a commercial linkage fee, a nexus study is required. A nexus requires local agencies proposing a fee on a development project to identify the purpose of the fee, the use of the fee, and to determine that there is “a reasonable relationship between the fee’s use and the type of development project on which the fee is imposed.” A Nexus Study establishes and quantifies a causal link or “nexus” between new residential and commercial development and the need for additional housing affordable to new employees. 19 Mortgage terms for first-time homebuyers typically allow down payment of five percent; these terms require private mortgage insurance. Draft Burlingame Linkage Fee Nexus Study -84- Non-Residential Development Housing Impact Fee (or Linkage Fee): A fee or charge imposed on commercial developers to pay for a development’s impact on the need for affordable housing. The fee is based on projected household incomes of new employees that will work in newly created space. The fee varies according to the type of property use. Palmer Case: This civil suit affects rental housing only. It affirmed that the Costa Hawkins Rental Act, passed in 1995 by the California State Legislature, applies to inclusionary rental units. The implication of this finding is that cities or counties cannot require rental property owners to rent inclusionary units that become vacant at below market rents, unless the developer accepted financial assistance (including fee waivers) or received other incentives that lowered development costs. Property Prototypes: Property prototypes are used for residential and commercial developments in order to define housing impact fees. The prototypes generally represent new development projects built in a community and are used to estimate affordable housing impacts associated with new market rate commercial and residential developments. While the prototypes should be “typical” of what is built, for ease of mathematical computation, they are often expressed as larger developments in order to avoid awkward fractions. Residential Housing Impact Fee: A fee imposed on residential development to pay for a development’s impact on the need for affordable housing. The fee is based on projected incomes of new employees associated with the expansion of market rate developments. Two steps are needed to define the fees. The first step is the completion of a nexus study, and the second step entails selection of the actual fee amount, which can be below the amount justified by the fee study, but not above that amount. RS Means: Data source of information for construction cost data. Draft Burlingame Linkage Fee Nexus Study -85- DEFINITION OF ACRONYMS AMI: Area Median Income CBIA: California Building Industry Association EDD: State of California Employment Development Department FAR: Floor-area-ratio FF&E: Furniture, Fixtures, and Equipment GBA: Gross Building Area HCD: Department of Housing and Community Development (State of California) NAICS: North American Industry Classification System NSF: Net Square Feet QCEW: Quarterly Census of Employment and Wages R&D: Research and development SF: Square Feet DRAFT REPORT Residential Impact Fee Nexus Study November 2015 prepared for: City of Burlingame Vernazza Wolfe Associates, Inc. VWA -2- Table of Contents I. EXECUTIVE SUMMARY .................................................................................................. 5  Introduction ...................................................................................................................................... 5  Background ...................................................................................................................................... 5  Report Organization ......................................................................................................................... 5  Impact Fee Implementation options ................................................................................................. 6  Nexus Analysis Results .................................................................................................................... 6  Policy Considerations ..................................................................................................................... 10  II. INTRODUCTION AND METHODOLOGY ...................................................................... 15  Background .................................................................................................................................... 15  The Nexus Concept ....................................................................................................................... 16  Methodology ................................................................................................................................... 16  III. RESIDENTIAL PROTOTYPES ....................................................................................... 18  Recent Housing Development Trends ........................................................................................... 18  Residential Prototypes ................................................................................................................... 18  Household Incomes of Buyers and Renters .................................................................................. 22  IV. ECONOMIC IMPACT ANALYSIS (IMPLAN3) ............................................................... 26  The IMPLAN3 Model ...................................................................................................................... 26  Household Income Impacts ........................................................................................................... 27  Employment and Wage Impacts .................................................................................................... 27  Estimating Worker-Households ..................................................................................................... 28  Estimating Demand for Affordable Housing ................................................................................... 28  V. AFFORDABILITY GAP ANALYSIS ............................................................................... 33  Methodology ................................................................................................................................... 33  Estimating Affordable Rents and Sales Prices .............................................................................. 34  Estimating Housing Development Costs ........................................................................................ 41  Calculating the Housing Affordability Gap ..................................................................................... 46  VI. NEXUS FEES AND REQUIREMENTS ........................................................................... 49  Maximum Fee Calculation ............................................................................................................. 49  Summary of Conservative Assumptions ........................................................................................ 52  VII. FEASIBILITY AND POLICY CONSIDERATIONS .......................................................... 54  Financial Feasibility Analysis ......................................................................................................... 54  Additional Policy Considerations .................................................................................................... 66  VIII. GLOSSARY OF TERMS AND ACRONYMS .................................................................. 73  Glossary of terms ........................................................................................................................... 73  Definition of Acronyms ................................................................................................................... 76  Draft Burlingame Residential Impact Fee Nexus Study -3- List of Figures Figure I-1. Recommended Housing Impact Fees by Residential Prototype ................................................. 6 Figure I-2. Sales Prices and Rental Rates of Residential Prototypes .......................................................... 7 Figure I-4. Estimated Annual Household Incomes of Buyers of Condominium Units................................... 8 Figure I-5. Estimated Annual Household Incomes of Renters of Apartment Units ....................................... 8 Figure I-6. New Worker Households by Income Group for Prototypes ........................................................ 9 Figure I-8. Total Affordability Gap for Condominiums ................................................................................... 9 Figure I-9.Total Affordability Gap for Apartments ....................................................................................... 10 Figure I-10. Maximum Housing Impact Fee by Prototype .......................................................................... 10 Figure I-11. Housing Impact Fees in Neighboring Cities ............................................................................ 11 Figure I-12: Housing Impact Fee Scenarios as Percent of Total Development Costs ............................... 13 Figure I-13: Total City Fees and Permits per Square Foot ......................................................................... 13 Figure III-2. Sales of Recently Built Condominium Units in Burlingame* ................................................... 20 Figure III-3. Asking Rents of Recently Built Apartment Units in San Mateo City ........................................ 21 Figure III-4. Burlingame Prototypes ............................................................................................................ 22 Figure III-6. Estimated Annual Household Incomes of Buyers of Condominiums ...................................... 24 Figure III-7. Estimated Annual Household Incomes of Renters of Apartment Units ................................... 25 Figure IV-1. Estimated Incomes by Income Categories for Buyers of Single-Family Attached Units ........ 29 Figure IV-2. Estimated Incomes by Income Categories for Buyers of Condominiums Units and Renters of Apartment Units .......................................................................................................................................... 29 Figure IV-3. Estimated Job and Wage Impacts of Prototypes by Industry ................................................. 30 Figure IV-4. Estimated Job and Wage Impacts of Prototypes by Occupation ............................................ 31 Figure IV-5. Induced Employment Impacts, Burlingame ............................................................................ 32 Figure IV-6. New Worker Households by Income Group for Single-Family Attached, Condominium and Apartment Prototypes ................................................................................................................................. 32 Figure V-1. Calculation of Affordable Rents in San Mateo County by Household Size, 2014 ................... 37 Figure V-2. Calculation of Affordable Rents in San Mateo County by Unit Type, 2014 ............................. 38 Figure V-3. Calculation of Affordable Sales Prices in San Mateo County by Household Size, 2014 ......... 39 Figure V-4. Calculation of Affordable Sales Prices in San Mateo County by Unit Type, 2014 ................... 40 Figure V-5. Affordable Housing Project Pro Forma Data ............................................................................ 42 Figure V-6. Sales of Vacant Lands in San Mateo County, 2014 ................................................................ 43 Figure V-7. Condominium Sales: Average Unit Characteristics and Prices for Selected Cities in San Mateo County (2008-2012) ......................................................................................................................... 44 Figure V-8. Estimate of Development Costs of Hypothetical Condominium Project .................................. 44 Figure V-9. Rental Housing Unit Sizes and Development Costs ................................................................ 45 Figure V-10. For-Sale Housing Unit Sizes and Development Costs .......................................................... 45 Figure V-11. Housing Affordability Gap Calculation for Rental Housing .................................................... 47 Figure V-12. Housing Affordability Gap Calculation for For-Sale Condominium Housing .......................... 48 Figure V-13. Average Housing Affordability Gap by Income Group ........................................................... 48 Figure VI-2. Maximum Per-Unit Fee for Condominium Prototype .............................................................. 50 Figure VI-3. Maximum Per-Unit Fee for Apartment Prototype .................................................................... 50 Figure VI-5. Maximum Fee per SF for Condominium Prototype ................................................................. 51 Figure VI-6. Maximum Fee per SF for Apartment Prototype ...................................................................... 51 Figure VII-1. Residential Prototypes ........................................................................................................... 54 Figure VII-2. Fee Levels per Unit for Prototypes......................................................................................... 55 Figure VII-3. Fee Levels per Square Foot for Prototypes ........................................................................... 55 Figure VII-4. Prototype Sales Prices and Rents ......................................................................................... 56 Figure VII-5. Apartment Revenue Calculations........................................................................................... 57 Figure VII-6. Development Cost Factors ..................................................................................................... 58 Figure VII-7. Single-Family Vacant Land Sales Transactions in Central San Mateo County ..................... 60 Figure VII-8. Multi-Family Vacant Land Sales Transactions in Central San Mateo County, 2009-2014 .... 61 Figure VII-9. Pro Forma Model Results for the Single-Family Attached Prototype .................................... 64 Figure VII-10. Pro Forma Model Results for Condominium and Apartment Prototypes ............................. 65 Draft Burlingame Residential Impact Fee Nexus Study -4- List of Figures (continued) Figure VII-11. Burlingame Total Residential Fees Under Selected Fee Scenarios .................................... 67 Figure VII-12. Comparison with Fees in Neighboring Jurisdictions ............................................................ 69 Figure VII-13. Existing Housing Impact Fees in Bay Area Cities ................................................................ 70  Draft Burlingame Residential Impact Fee Nexus Study -5- INTRODUCTION This report is part of the 21 Elements multi-city nexus study, a collaborative effort to mitigate the impacts of new development on the demand for affordable housing in San Mateo County. In February 2014, the local jurisdictions in San Mateo County partnered to hire Strategic Economics and Vernazza Wolfe Associates, Inc. to develop nexus studies for commercial linkage fees and residential impact fees.1 The project was initiated by 21 Elements, a countywide collaboration among all the cities in San Mateo County on housing issues. The preparation of these fee studies may result in the adoption of new impact fees on either residential, commercial or both types of developments. This draft report describes the methodology, data sources, and analytical steps required for the nexus analysis. BACKGROUND Burlingame is potentially interested in adopting an affordable housing impact fee on new residential development. The purpose of this fee would be to mitigate the impact of an increase in affordable housing demand from new worker households associated with new market-rate residential units. When a city or county adopts a development impact fee, it must establish a reasonable relationship or connection between the development project and the fee that is charged. Studies undertaken to demonstrate this connection are called nexus studies. This nexus study quantifies the connection between the development of market rate housing and the demand for affordable housing units. This residential nexus study measures the income and spending generated by the new market rate households renting or buying new units in Burlingame. This new consumption is then translated into new induced job growth. These induced jobs will be at various wage rates; many will be at lower wages, for example in the retail and personal services sectors. Since low-wage households cannot reasonably afford to pay for market rate rental and for-sale housing in Burlingame, a housing impact fee can be justified to bridge the difference between what these new households can afford to pay and the cost of developing modest housing units to accommodate them. REPORT ORGANIZATION This executive summary provides an overview of the housing nexus analysis methodology and results. The subsequent chapters of the report contain more detailed information regarding the methodology, data sources, and the steps of the analysis. The report is organized into seven sections and a glossary of terms. Following this executive summary, Section II provides an introduction to the purpose of the study, and an overview of the methodology. Section III presents the residential prototypes used in the analysis. Section IV describes the methodology and results of the IMPLAN economic impact analysis. Section V covers the housing affordability gap analysis. Section VI presents the maximum fee calculation based on the nexus analysis and affordability gap results. The final section, Section VII, discusses financial feasibility and other policy considerations that jurisdictions typically weigh before implementing a nexus fee. 1 Participating jurisdictions include: Atherton, Belmont, Brisbane, Burlingame, Colma, Daly City, East Palo Alto, Foster City, Half Moon Bay, Hillsborough, Menlo Park, Millbrae, Pacifica, Portola Valley, Redwood City, San Bruno, San Carlos, San Mateo City, San Mateo County, South San Francisco, and Woodside. I. EXECUTIVE SUMMARY Draft Burlingame Residential Impact Fee Nexus Study -6- IMPACT FEE IMPLEMENTATION OPTIONS The maximum single-family attached fee per unit is $98,541 ($52 per square foot), the maximum condominium impact fee per unit is $91,598 ($56 per square foot), and the maximum apartment fee per unit is $85,253 ($85 per square foot). If Burlingame elects to adopt a housing impact fee, the recommended fee ranges are as follows: between $40 and $50 per square foot for single-family attached homes, and between $25 and $50 per square foot for condominiums and apartments. These recommendations are based on the findings of the financial feasibility analysis, a comparison of fees in neighboring jurisdictions, and other factors as explained in the Policy Considerations section, below. The maximum and recommended fee levels are shown in Figure I-1. Figure I-1. Recommended Housing Impact Fees by Residential Prototype Prototype Maximum Justified Fee per Unit Maximum Justified Fee per SF Recommended Fee per Unit Recommended Fee per SF Single-Family Attached $98,541 $52 $76,000 - $95,000 $40 - $50 Condominium $91,598 $56 $41,250 - $82,500 $25 - $50 Apartments $85,253 $85 $25,000 - $50,000 $25 - $50 Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015 NEXUS ANALYSIS RESULTS This section describes the steps taken to calculate the nexus-based fee amount per housing unit. More detail on each step can be found in other sections of this report. Prototypes The first step in the nexus analysis is developing residential housing prototypes. The prototypes establish the types of market rate housing development that are occurring or are expected to occur in the city that could potentially be subject to the affordable housing impact fee. The fees calculated in this nexus study are only applicable to the housing prototypes defined in this analysis. Based on historical development trends, market data, broker interviews, and input from city staff, the Consultant Team constructed three housing prototypes that represent the type of development that is likely to occur in Burlingame: for-sale single-family attached units, for-sale condominiums and rental apartments. These development prototypes are not intended to represent specific development projects; rather, they are designed to illustrate the type of projects that are likely to be built in Burlingame in the near future. A single-family detached prototype was considered, but not included in this nexus study, as it less likely to be developed in Burlingame. Figure I-2 provides information on the unit type and size, as well as estimated sales prices and average monthly rents for each prototype. Draft Burlingame Residential Impact Fee Nexus Study -7- Figure I-2. Sales Prices and Rental Rates of Residential Prototypes Prototype Unit Type Number of Units Net Area (SF) Unit Sales Price/ Monthly Rent Price or Rent per SF Single-Family Attached (For-Sale) Type V wood frame 3 BD/3 BA 20 1,900 $1,132,000 $596 12 units per acre Tuck-under podium parking Net Residential Area 38,000 Condominiums (For-Sale) Type V wood frame 2 BD/2 BA 10 1,500 $942,000 $628 38 units per acre 3 BD/2 BA 10 1,800 $1,080,000 $600 Subterranean parking Net Residential Area (Net SF) 33,000 Average Net SF per Unit 1,650 Apartments (Rental) Type V wood frame 1 BD/1 BA 100 800 $3,600 $4.50 40 units per acre 2 BD/2 BA 100 1,200 $4,300 $3.58 Podium parking Net Residential Area (Net SF) 200,000 Average Net SF per Unit 1,000 Sources: Strategic Economics & Vernazza Wolfe Associates, Inc., 2014. Household Income The next step is to calculate the annual household incomes of the buyers and the renters occupying new units by using the sales prices and rents shown in Figure I-2. Threshold incomes needed to purchase or rent units are based on standards used in the housing industry.2 Figures I-3, I-4 and I-5 show the estimated household income of buyers of buyers of single-family attached units, buyers of condominium units, and renters of apartment units, respectively. Household incomes are a key input to the IMPLAN3 economic impact analysis described in Section IV of this report. 2 These standards are presented in Section III of this report. Draft Burlingame Residential Impact Fee Nexus Study -8- Figure I-3. Estimated Annual Household Incomes of Buyers of Single-Family Attached Units Single-Family Attached Unit Type 3 BR/3 BA Number of Households 20 Sales Price $1,132,000 Household Income $213,344 Source: Applied Development Economics, Inc., 2015; Strategic Economics & Vernazza Wolfe Associates, Inc. 2015. Figure I-4. Estimated Annual Household Incomes of Buyers of Condominium Units Condominium Unit Type 2 BD/2 BA 3 BD/2 BA Number of Households 10 10 Sales Price $942,000 $1,080,000 Household Income $185,831 $210,794 Source: Applied Development Economics, Inc., 2015; Strategic Economics & Vernazza Wolfe Associates, Inc. 2015. Figure I-5. Estimated Annual Household Incomes of Renters of Apartment Units Apartment Unit Type 1 BD/1 BA 2 BD/2 BA Number of Households 100 100 Monthly Rent $3,600 $4,300 Household Income $144,000 $172,000 Source: Applied Development Economics, Inc., 2015; Strategic Economics & Vernazza Wolfe Associates, Inc. 2015. Economic Impact Analysis (IMPLAN) The next step is to determine employment and wage impacts of each prototype based on the incomes of the occupants of new housing units. The buyers and renters of the new market-rate single-family attached, condominiums, and apartments create new spending in the local economy. These new expenditures can be linked to new jobs, many of which pay low wages. The job and wage impacts related to new market-rate housing units are measured using IMPLAN3, an economic impact analysis tool. An economics consulting firm, Applied Development Economics (ADE) undertook the IMPLAN3 analysis. The results of the IMPLAN analysis indicate that many of the induced jobs generated within San Mateo County are in low-wage sectors like retail and food services (restaurants). However, a significant proportion of induced jobs are also in higher-paying resident-serving categories such as health care and government. Demand for Affordable Housing Recognizing that many households have more than one wage-earner, the next step is to calculate the number of worker households by dividing the total number of new workers by the average number of wage-earners per household in Burlingame. However, not all of the worker households require affordable housing. To estimate the affordable housing demand, the average annual household income of worker households is sorted into income categories that are consistent with area median income (AMI) levels defined for San Mateo County and is specific to the average household size in the jurisdiction. Figure I-6 indicates that of the 10.7 new worker households associated with a single- Draft Burlingame Residential Impact Fee Nexus Study -9- family attached development, there are 8.6 households that need affordable housing. The comparable figures for condominium and apartment developments are 8 and 73.9 households. Figure I-6. New Worker Households by Income Group for Single-Family Attached, Condominium and Apartment Prototypes Worker Households by Income Category Single-Family Attached Condominium Apartment Households Requiring Affordable Housing Very Low Income (<=50% AMI) 2.7 2.5 24.1 Low Income (51-80% AMI) 2.7 2.6 23.6 Moderate Income (81-120% AMI) 3.1 2.9 26.2 Subtotal Very Low, Low, Moderate Income 8.6 8.0 73.9 Above Moderate Income Households 2.1 2.0 18.3 Total All Worker Households 10.7 10.0 92.2 Source: Applied Development Economics, Inc., 2015; Strategic Economics & Vernazza Wolfe Associates, Inc. 2015.  Affordability Gap The next step is to quantify the total gap between what very low, low, and moderate income households can afford to pay and the cost of building new, modest rental and for-sale housing units. This housing “affordability gap” number is then multiplied by the number of income-qualified households in each income category for single-family attached, condominium and apartment developments separately in order to estimate the total housing affordability gap for each prototype. Figures I-7 through I-9 present these totals for single-family attached, condominiums and apartments. Figure I-7. Total Affordability Gap for Single-Family Attached Income Level Households Requiring Affordable Housing Average Affordability Gap per Household Affordability Gap for All Households Very Low-Income (<50% AMI) 2.7 $280,783 $764,947 Low-Income (50-80% AMI) 2.7 $240,477 $660,706 Moderate-Income (80-120% AMI) 3.1 $175,558 $545,161 Total 8.6 $1,970,813 Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2014. Figure I-8. Total Affordability Gap for Condominiums Income Level Households Requiring Affordable Housing Average Affordability Gap per Household Affordability Gap for All Households Very Low-Income (<50% AMI) 2.5 $280,783 $711,053 Low-Income (50-80% AMI) 2.6 $240,477 $614,156 Moderate-Income (80-120% AMI) 2.9 $175,558 $506,751 Total 8.0 $1,831,960 Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2014. Draft Burlingame Residential Impact Fee Nexus Study -10- Figure I-9.Total Affordability Gap for Apartments Income Level Households Requiring Affordable Housing Average Affordability Gap per Household Affordability Gap for All Households Very Low-Income (<50% AMI) 24.11 $280,783 $6,769,850 Low-Income (50-80% AMI) 23.63 $240,477 $5,682,340 Moderate-Income (80-120% AMI) 26.19 $175,558 $4,598,346 Total 73.93 $17,050,536 Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2014. Maximum Nexus-Based Fee The final step in calculating the maximum housing impact fee by prototype is to divide the total gap at each income level by the number of units in each prototype (Figure I-10). This maximum fee amount represents the ceiling on the fee that could be charged to mitigate affordable housing impacts from new residential development. The maximum single-family attached fee per unit is $98,541, the maximum condominium fee per unit is $91,598, and the maximum apartment fee per unit is $85,253. The fees are also calculated on a per-square-foot basis by dividing the unit fee by the average size of the unit. On a per-square-foot basis, the maximum impact fee is $52 for single-family attached, $56 for condominiums and $85 for apartments. Figure I-10. Maximum Housing Impact Fee by Prototype Prototype Single-Family Attached Condominiums Apartments Total Number of Units 20 20 200 Average Unit Size 1,900 1,650 1,000 Total Affordability Gap $1,970,813 $1,831,960 $17,050,536 Maximum Fee per Unit $98,541 $91,598 $85,253 Maximum Fee per SF $52 $56 $85 Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. POLICY CONSIDERATIONS There are a number of policy considerations that can be taken into account when jurisdictions consider adopting an affordable housing impact fee on new market-rate development. These may include factors such as: the likely financial impact of the proposed housing impact fees on development; the additional cost of the new fees on the existing city fee structure; a comparison of the fee scenarios to existing housing impact fees in nearby cities; the role of the fee in the City’s overall strategy for affordable housing implementation; and the potential overlap with a commercial linkage fee. This section provides a discussion of each of these policy questions for Burlingame. Comparison to Neighboring Jurisdictions – A comparison of the nexus fee scenarios to current housing impact fees charged in nearby cities is an important element of the policy analysis. This comparison is challenging, because most cities in San Mateo County are participating in this multi- city nexus study, and may decide to adopt new fees or update existing fees. In San Mateo and Santa Clara Counties, the impact fee for attached single-family homes is generally between $17 and $23 per square foot (Figure I-11). The recommended fees for single-family attached homes in Burlingame (from $40 to $50 per square foot) would be higher than the housing impact fees in nearby cities, except for San Carlos. For condominiums, the recommended fee range of $25 to $50 per square foot Draft Burlingame Residential Impact Fee Nexus Study -11- would be similar to the fee levels in East Palo Alto and San Carlos. For apartments, the recommended fee levels are between $25 and $50; the lower end of the range is comparable to the existing housing impact fees in Cupertino, Daly City, East Palo Alto and San Carlos. Figure I-11. Housing Impact Fees in Neighboring Cities City Single-Family Attached Condominiums Apartments Cupertino $16.50 $20 $25 Daly City $18 $22 $25 East Palo Alto $23 $23-$44 $23 Mountain View N/A N/A $15 San Carlos $21-$42 $21-$42 $24-$44 San Jose N/A N/A $17 Sunnyvale N/A N/A $17 Sources: Baird + Driskell; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Financial Feasibility – Financial feasibility is just one of several factors to consider in making a decision regarding a potential nexus fee. In order to provide Burlingame with guidance on how proposed fees could impact development decisions, the Consultant Team conducted a pro forma analysis that tested the financial impact of the maximum and reduced fee scenarios for each prototype.  Single-Family Attached – The maximum fee and reduced fee levels for the single-family attached prototype are financially feasible to implement.  Condominium – The maximum fee and reduced fee levels for the condominium prototype are financially feasible.  Apartment - While the maximum nexus fee is not supportable for the apartment prototype, the reduced fee level of $50 per square foot, as well as lower fee scenarios, are financially feasible. Total Development Costs – Currently, the total development costs (including building and onsite improvements, parking, indirect costs, financing costs, and developer profit) are $221 per net square foot for the single-family attached prototype, $360 per net square foot for the condominium prototype and $354 per net square foot for the apartment prototype. When land costs are added to the project’s development costs, costs increase to between $246 and $271per net square foot for the single-family attached prototype (depending on the land price of the site), between $535 and $585 per net square foot for the condominium prototype, and between $529 and $579 per net square foot for the apartment prototype. The maximum housing impact fees represent 15.6 percent, 13.1 percent and 15.9 percent of total development cost of the single-family attached, condominium and apartment prototypes, respectively (Figure I-12). A fee of $50 per square foot represents 14.4 percent of total development costs for single-family attached units, 5.7 percent for condominiums, and 5.2 percent for apartments. Comparison to Existing City Fees –Burlingame has existing city permits and fees on new development that would increase with the adoption of a new housing impact fee. The City may wish to consider the amount that total city fees would increase with the addition of a new housing impact fee. Based on the current schedule of fees in Burlingame, existing fees (excluding the nexus fees) for the residential prototypes are estimated to be $17 per square foot for single-family attached units Draft Burlingame Residential Impact Fee Nexus Study -12- ($32,072 per unit), $20 per square foot for condominiums ($32,604 per unit) and $17 per square foot for rental apartments ($16,595 per unit).3 The maximum residential impact fee would increase total fees by four to six times for these prototypes, as shown in Figure I-13. A residential impact fee of $50 per square foot increases the total city permits and fees to $67 per square foot for single-family attached units, $70 per square foot for condominiums, and $67 per square foot for apartments. 3 The fee estimates presented above represent the best approximations available from Burlingame. Draft Burlingame Residential Impact Fee Nexus Study -13-Figure I-12: Housing Impact Fee Scenarios as Percent of Total Development Costs Single-Family Attached Condominiums Apartments Residential Impact Fee Scenario Fee Amount Fee as % of TDC Fee Amount Fee as % of TDC Fee Amount Fee as % of TDC No Fee $0 0.00% $0 0.00% $0 0.00% Scenario 1: Max Fee $52 15.58% $56 13.07% $85 15.89% Scenario 2 $50 14.40% $50 5.69% $50 5.19% Scenario 3 $40 12.83% $25 2.35% $25 2.67% Scenario 4 $25 11.20% $15 1.19% $15 1.35% Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Figure I-13: Total City Fees and Permits per Square Foot   Single-Family Attached Condominiums Apartments Fee Scenario Residential Impact Fee Total Permits and Fees Residential Impact Fee Total Permits and Fees Residential Impact Fee Total Permits and Fees Existing Permits and Fees $0 $17 $0 $20 $0 $17 Scenario 1 (Maximum Fee) $52 $69 $56 $75 $85 $102 Scenario 2 $50 $67 $50 $70 $50 $67 Scenario 3 $40 $57 $25 $45 $25 $42 Scenario 4 $25 $42 $15 $35 $15 $32 Sources: Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -14- Role of Fee in Burlingame’s Overall Housing Strategy – Burlingame does not currently have a residential impact fee program or commercial linkage fee program. In January 2015, Burlingame has adopted a Density Bonus Ordinance, which replaced its inclusionary zoning ordinance. The Density Bonus ordinance provides a density bonus of 20 percent for residential projects of over five units under the following circumstances: 10 percent of units are affordable to lower income households; five percent of units built are affordable to very low income households; the project is a senior citizen housing development; the project is a qualifying mobile home park. For projects that provide ten percent of units affordable to moderate income households, a density bonus of five percent is granted. In addition to the density bonus policy, the City also supports affordable housing development by providing funding to project sponsors. Typically, affordable housing projects in Burlingame are funded through a variety of other financing sources, including San Mateo County, as well as the federal government, e.g., the CDBG and HOME Programs. In addition, equity is also provided directly by developers and indirectly raised through the allocation and sale of Low Income Housing Tax Credits. Finally, a portion of permanent financing comes from conventional loans obtained from private lending institutions. Residential impact fee revenues (and commercial linkage fee revenues, if adopted) would augment the City’s existing affordable housing funds. It should be noted that revenues from a residential impact fee need to be spent on housing that benefits the workforce since the funds stem from affordable housing impacts related to new employment. Overlap with Commercial Linkage Fee - In addition to the residential impact fee described in this report, Burlingame is also considering implementing linkage fees on commercial development. There may be a small share of jobs counted in the residential nexus analysis that are also included in this residential impact fee analysis. Thus, the two programs may have some overlap in mitigating the affordable housing demand from the same worker households. In order to reduce the potential for overlap between the two programs, it is advisable to set both the commercial linkage fees and housing impact fees at below 100 percent of the nexus-based maximum. In this way, when combined, the programs would mitigate less than 100 percent of the impact even if there were overlap in the jobs counted in the two nexus analyses. Draft Burlingame Residential Impact Fee Nexus Study -15- Burlingame is considering a housing impact fee on new residential development. The purpose of this fee would be to mitigate the impact of an increase in demand for affordable housing due to employment growth associated with potential new residential development. When a city or county adopts a development impact fee, it must establish a reasonable relationship or connection between the development project and the impacts for which the fee is charged. Studies undertaken to demonstrate this connection are called nexus studies. Nexus studies for school impact fees, traffic mitigation fees, and park fees are common. For housing impact fees, a methodology exists that establishes a connection between the development of market rate housing and the need to expand the supply of affordable housing. This study is based on this methodology. The approach for this nexus study is to estimate the number of new workers that will be required to provide goods and services to the market rate households that are occupying new units in Burlingame. Although growth in employment will provide jobs at various wage rates, many of the new jobs will be at low-wage rates in retail trade and services, consistent with job patterns in the County. Since low-wage households cannot reasonably afford to pay for market rate rental and for-sale housing in Burlingame, a housing impact fee can bridge the difference between what these new households can afford to pay and the costs of developing new housing units for them. New market rate housing units in Burlingame create a need for low-wage employees to provide goods and services to residents of the new units. If new market rate housing were not built, there would not be an increase in employment nor the accompanying demand for affordable housing from these new workers. Because housing impact fees are directed related to employment growth, the revenues collected from these fees needs to be spent on workforce housing and not on housing for households that do not participate in the labor force, such as retired seniors, unemployed homeless, and full-time student populations. BACKGROUND Cities and counties in California have operated inclusionary zoning programs to increase the supply of affordable housing since the 1970s. An inclusionary program requires that builders of new residential projects provide a specified percentage of units, either on-site or off-site, at affordable prices. Some programs have also allowed developers the option of paying fees “in lieu” of providing inclusionary units. Inclusionary zoning policies have usually been established based on the police power of cities and counties to enact legislation benefitting public health, safety, and welfare. In its recent decision on California Building Industry Ass’n v. City of San Jose, the California Supreme Court upheld this power of cities, finding that the objective of increasing affordable housing supply in economically diverse developments was “unquestionably” permitted by the U.S. Constitution. However, in 2009, in Palmer/Sixth Street Properties, L.P. v. City of Los Angeles, the Court of Appeal held that inclusionary rental requirements violate the Costa Hawkins Rental Housing Act, which allows landlords to determine the rents of all new units. Affordable rental housing may still be required if a developer agrees by contract to do so, in exchange for financial assistance or regulatory incentives. However, in the absence of these incentives, restricted rents cannot be required of a developer. Consequently, communities have completed nexus studies and imposed rental housing impact fees to mitigate the impact of market-rate rental housing on the need for affordable housing. Although a nexus analysis is not required to adopt inclusionary ordinances and in-lieu fees on for-sale housing, conducting a nexus study provides additional support for these requirements. II. INTRODUCTION AND METHODOLOGY Draft Burlingame Residential Impact Fee Nexus Study -16- The nexus analyses presented in this study are designed to define an upper limit for a housing impact fee to be charged on new rental and for-sale housing to mitigate impacts on affordable housing needs. The maximum fee is not necessarily the recommended fee. Subsequent sections of this report address additional policy considerations to consider when adopting housing impact fees. THE NEXUS CONCEPT In a balanced housing market, the development of new market rate housing results in population growth. Residents purchasing and renting these new units now spend money in the city. For example, they go out to eat in local restaurants, shop for food and clothing in local stores, and patronize other local businesses, such as hair salons, dry cleaners, and dental offices. This local spending results in the need to hire new workers to respond to the increased demand for goods and services. A nexus study establishes the connection between the households that purchase new housing units (or rent newly constructed rental units) and the number of new workers that will be hired by local businesses to serve the needs of new residents. Growth in employment will provide jobs at various wage rates. While some jobs will pay salaries that will allow new workers to rent or purchase market rate housing, many new jobs will also be at lower wages. Since low-wage households cannot reasonably afford to pay for market rate rental and for-sale housing in Burlingame, a housing impact fee addresses the demand for affordable housing. METHODOLOGY The first step of the nexus analysis is to estimate the market prices or rents of new housing units. Based on these prices or rents, gross household incomes of buyers and renters are calculated. The gross household incomes of buyers and renters are then translated into direct economic impacts (new spending on retail goods and personal services), and induced impacts (new jobs and wage income) using the IMPLAN3 model. The IMPLAN3 analysis provides information on likely incomes of new workers. These incomes can then be used to estimate the demand for affordable housing from new worker households, and the costs of providing these affordable units. Each step of the nexus analysis is described in greater detail below. Step 1. Define the residential prototypes that represent new market rate housing development. Based on a review of recent development trends, pipeline projects, and market data for the city and county, the residential prototypes are defined. The prototypes represent typical new market-rate development projects likely to occur in the city. The prototype definitions include information on the building characteristics, net residential area, unit mix and sizes, and sales prices or rents. Step 2. Estimate household income of buyers and renters of new market rate units. The average gross household income required to purchase or rent new market rate units is estimated based on the market value or rents of new units. For ownership units, the calculation assumes typical mortgage terms and assumes that buyers spend 35 percent of their gross incomes on housing costs. For rental units, is assumed that renter households spend 30 percent of their gross incomes on housing. Step 3. Estimate economic impacts of new buyers and renters using IMPLAN3. The IMPLAN3 model uses Bureau of Labor Statistics Consumer Expenditure Survey data to model the spending patterns of different income groups. The model estimates the increase in expenditures from new households, the number of new (induced) workers related to new households, and the occupations and wages of these new workers. Draft Burlingame Residential Impact Fee Nexus Study -17- Step 4. Estimate the number of new worker households and annual household incomes. The number of new induced workers from the IMPLAN3 analysis is divided by the average number of workers per household in the city (defined by the U.S. Census Bureau) to calculate the total number of worker households associated with each housing prototype. The average worker’s wage calculated in the IMPLAN3 analysis is multiplied by the number of workers per household in the city to derive gross household income. This step assumes that the all wage-earners in a household have the same income. Step 5. Estimate the demand for affordable housing from new worker households. Based on the calculation of new worker household income, the worker households are categorized by target income group (very low income, low income, moderate income, and above moderate income). Worker households with above-moderate incomes are removed from the nexus analysis, because they would not require affordable housing. Step 6. Estimate the affordability gap of new households requiring affordable housing. The affordability gap represents the difference between what households can afford to pay for housing and the development cost of a modest housing unit. For very low and low income households, a rental housing gap is used. For moderate income households, the housing affordability gap is calculated separately for renter and owner households, and then the two gaps are combined to derive an average affordability gap for moderate income households. Step 7. Estimate nexus-based fees for each prototype. The number of new households requiring affordable housing is multiplied by the average affordability gap per household to estimate the total affordability gap for each prototype. The maximum per-unit and per-square foot fees are then calculated by dividing the aggregate affordability gap by the number of units or net residential area in each prototype. Draft Burlingame Residential Impact Fee Nexus Study -18- The first step in the nexus analysis is developing residential housing prototypes. The residential prototypes establish the types of residential development that are occurring or are expected to occur in the city and could potentially be subject to the affordable housing impact fee. The housing prototypes are not intended to represent specific development projects; rather, they are designed to illustrate the type of projects that are likely to be built in Burlingame in the near future. The fees calculated in this nexus study are only applicable to the housing prototypes defined in this analysis. Based on estimated sales prices and rents of new market-rate units, the household incomes of buyers and renters of new units are estimated. This section of the report describes the methodology for establishing the prototypes and calculating the household incomes of buyers and renters of new market-rate units in Burlingame. The estimated household incomes are then used as inputs to the IMPLAN3 analysis to estimate the employment impacts of the market-rate households, which is described in more detail in Section IV of this report. RECENT HOUSING DEVELOPMENT TRENDS In order to ensure that the prototypes accurately reflect current market conditions, the Consultant Team analyzed recently built market rate housing development projects in Burlingame and in comparable neighboring cities. Burlingame has recently attracted condominium development, and the City is anticipating future single-family attached and apartment development projects. A single- family detached prototype was considered but not included in this study, as recent single-family detached development has mainly consisted of replacement of existing units, rather than net new units. Figure III-1 presents a recently built single-family attached project in the neighboring city of San Mateo. These three-bedroom units have, on average, a size of 1,900 square feet, and a price of approximately $1,100,000. Recently built and sold condominiums in Burlingame are presented in Figure III-3: units had an average size of 1,200 square feet and an average price of $1,300,000. Market data on San Mateo City’s apartment market is presented in Figure III-4. As shown, average asking monthly rents are approximately $3,000 for studios, $3,600 for one bedroom units, and $4,300 for two-bedroom units. RESIDENTIAL PROTOTYPES Based on historical development trends, market data, broker interviews, and input from city staff, the Consultant Team constructed three housing prototypes that represent the type of development that is likely to occur in Burlingame. These development prototypes are not intended to represent specific development projects; rather, they are designed to illustrate the type of projects that are likely to be built in Burlingame in the near future, using market data from the City of Burlingame and, when necessary, from the City of San Mateo. The prototypes, as shown in Figure III-4, provide information on the building type, number of units, average size by unit type, and average monthly rents or sales prices by unit type. For-Sale Single-Family Attached Units The for-sale single-family attached prototype is a Type V wood-frame building with a tuck-under podium parking and a net residential area of 38,000 square feet. The estimated density is 12 units per acre. This type of building is representative of potential future single-family attached development in Burlingame. These are three bedroom units with an average size of 1,900 square feet and a price of $1,132,000. The prototype size and number of units are based on projects planned in Burlingame, III. RESIDENTIAL PROTOTYPES Draft Burlingame Residential Impact Fee Nexus Study -19- while the price per square foot is based on recently built single-family attached units in San Mateo City. For-Sale Condominiums The for-sale condominium prototype is a Type V wood-frame building with an underground parking garage and net residential area of 33,000 square feet. The estimated average density is 38 units per acre. This building type is representative of recently built condominium projects in Burlingame. Units have two or three bedrooms and an average size of 1,500 or 1,800 square feet. The average estimated price of newly built condominiums is $942,000 for two bedroom units and $1,080,000 for three bedroom units. The unit prices per square foot were based on sales of newly built condominium units in Burlingame. However, the average sizes of the prototypical units are slightly smaller than these recently built projects, which were upscale luxury products. The resulting average unit sales price for the prototype is slightly lower than the sales prices of recently built condominiums. Rental Apartments The rental apartment prototype is a Type V wood-frame building with podium parking and net residential area of 200,000 square feet. The estimated density is 40 units per acre. This is representative of potential future development in Burlingame. The apartment unit mix consists of one- and two-bedroom units. Estimated monthly rents are $3,600 for two-bedrooms and $4,300 for three-bedrooms, based on the rental rates achieved in a new development in the neighboring city of San Mateo. Draft Burlingame Residential Impact Fee Nexus Study -20-Figure III-1. Recently Built Single-Family Attached Project in San Mateo City Address City Complex Number of Units Bedrooms Bathrooms Average Size (Square Feet) Sale Amount Price per S.F. 428 E 28th Ave San Mateo City Landsdowne 57 3 3 - 3.5 1,852 $1,104,114 $596 Sources: Shea Website, 2014; Strategic Economics & Vernazza Wolfe Associates, Inc., 2014. Figure III-2. Sales of Recently Built Condominium Units in Burlingame* Address City Bedrooms Bathrooms Square Feet Year Built Year Sold Sale Amount Price per S.F. 1512 Floribunda Ave Apt 102 Burlingame 2 2.5 1,213 2008 2008 $1,025,000 $845.01 1512 Floribunda Ave Apt 201 Burlingame 3 2.5 2783 2008 2008 $2,350,000 $844.41 1512 Floribunda Ave Apt 102 Burlingame 2 2.5 1,213 2008 2009 $1,000,000 $824.40 1512 Floribunda Ave Apt 401 Burlingame 2 2.5 1,960 2008 2011 $1,500,000 $765.31 1512 Floribunda Ave Apt 301 Burlingame 3 2.5 2,783 2008 2011 $1,870,000 $671.94 1512 Floribunda Ave Apt 202 Burlingame 3 2.5 2,663 2008 2012 $1,732,500 $650.58 1512 Floribunda Ave Apt 301 Burlingame 3 2.5 2,783 2008 2012 $1,750,000 $628.82 1512 Floribunda Ave Apt 302 Burlingame 3 2.5 2,663 2008 2012 $1,750,000 $657.15 1512 Floribunda Ave Apt 402 Burlingame 2 2.5 1,941 2008 2013 $1,635,000 $842.35 508 Peninsula Ave # 3 Burlingame 2 2.5 1,350 2009 2009 $575,000 $425.93 508 Peninsula Ave # 2 Burlingame 2 2.5 1,370 2009 2010 $300,000 $218.98 508 Peninsula Ave # 1 Burlingame 2 2.5 1,350 2009 2013 $740,000 $548.15 1226 El Camino Real Apt 201 Burlingame 2 2 1,640 2010 2010 $825,000 $503.05 1226 El Camino Real Apt 403 Burlingame 2 2 1,580 2010 2011 $880,000 $556.96 Average by Unit Type 2-bedroom 2 2.4 1,513 $942,222 $622.75 3-bedroom 3 2.5 2,735 $1,890,500 $691.22 *Includes transactions that occurred through Mid-2013, of condominiums built in or after 2008.Sources: DataQuick, April 2014; Strategic Economics & Vernazza Wolfe Associates, Inc., 2014. Draft Burlingame Residential Impact Fee Nexus Study -21-Figure III-3. Asking Rents of Recently Built Apartment Units in San Mateo City Project City Unit Type Number of Bathrooms Average Size (SF) Average Rent 888 Apartments, 155 Units San Mateo City Studio 1 634 $2,970 One-Bedroom 1 812 $3,581 Two-Bedroom 2 1,127 $4,331 Sources: June 2014 Leasing Website; Strategic Economics & Vernazza Wolfe Associates, Inc., 2014. Draft Burlingame Residential Impact Fee Nexus Study -22- Figure III-4. Burlingame Prototypes Prototype Unit Type Number of Units Net Area (SF) Unit Sales Price/ Monthly Rent Price or Rent per SF Single-Family Attached (For-Sale) Type V wood frame 3 BD/3 BA 20 1,900 $1,132,000 $596 12 units per acre Tuck-under podium parking Net Residential Area 38,000 Condominiums (For-Sale) Type V wood frame 2 BD/2 BA 10 1,500 $942,000 $628 38 units per acre 3 BD/2 BA 10 1,800 $1,080,000 $600 Subterranean parking Net Residential Area (Net SF) 33,000 Average Net SF per Unit 1,650 Apartments (Rental) Type V wood frame 1 BD/1 BA 100 800 $3,600 $4.50 40 units per acre 2 BD/2 BA 100 1,200 $4,300 $3.58 Podium parking Net Residential Area (Net SF) 200,000 Average Net SF per Unit 1,000 Sources: Strategic Economics & Vernazza Wolfe Associates, Inc., 2014. HOUSEHOLD INCOMES OF BUYERS AND RENTERS Using the sales prices and rents shown in Figure III-4, the next step is to calculate the annual household incomes of the buyers of new for-sale single-family attached units and condominiums, and the renters occupying new apartment units. The household income is a key input to the IMPLAN3 economic impact analysis described in Section IV of this report. Income of Single-Family Attached Units Buyers To calculate the household income of buyers of new single-family attached units, the analysis used typical mortgage terms for San Mateo County: 20 percent down payment, 30 year fixed rate mortgage, and 4.35 percent interest rate. Burlingame’s property tax rate was estimated from recent budget documents. Homeowner association (HOA) fees were based on a review of HOA fees at similar new single-family attached developments in San Mateo County. Households are expected to spend 35 percent of available monthly income on total housing costs, including monthly payments for mortgage payments, property taxes, insurance and HOA fees. Figure III-5 shows the result of the Draft Burlingame Residential Impact Fee Nexus Study -23- income estimates for households buying new single-family attached units. As shown in the calculations, for single-family attached units, household incomes are estimated to be over $150,000. Incomes of Buyers of Condominiums with Underground Parking To calculate the household income of buyers of new condominium units, the analysis applied mortgage terms typical for San Mateo County: 20 percent down payment, 30 year fixed rate mortgage, and 4.35 percent interest rate. Property tax rates were estimated from recent budget documents, and homeowner association (HOA) fees were based on a review of HOA fees at similar new condominium developments in San Mateo County. Total housing costs, including monthly payments for mortgage payments, property taxes, insurance, and HOA fees, are assumed to be 35 percent of available monthly income. The result of the income estimates for households buying new condominium units is shown in Figure III-6. As shown in the calculations, for condominium units, household incomes are estimated to be over $150,000. Incomes of Apartment Renters For renter households, maximum annual housing costs are assumed to be 30 percent of gross household income, a standard established in California’s Health and Safety Code Sections 50052.5 and 50053. The estimated household income of renters varies by unit type, as indicated in Figure III- 7. One-bedroom renter households have an estimated annual income of $144,000, while two-bedroom renter households have an estimated annual income of $172,000. Draft Burlingame Residential Impact Fee Nexus Study -24- Figure III-5. Estimated Annual Household Incomes of Buyers of Single-Family Attached Units Single-Family Attached Units 3 BR/3 BA Number of Households 20 Sales Price $1,132,000 Down Payment (a) $226,400 Loan Amount $905,600 Monthly Debt Service (b) $4,508 Annual Debt Service $54,098 Annual Property Taxes (c) $13,610 Annual HOA Fees (d) $3,000 Fire and Hazard Insurance (e) $3,962 Annual Housing Costs (f) $74,670 Household Income $213,344 Notes: (a) Down payment is estimated at 20% of sales price, based on Freddie Mac data for San Mateo County. (b) Interest rate is estimated at 4.35% for a 30-year term, based on Freddie Mac data, http://www.freddiemac.com/pmms/pmms30.htm. (c) Property tax rate is 1.2023% based on Burlingame CAFR. (d) Homeownership association (HOA) fees are estimated at $250 per month, based on fees charged at a sample of recently built projects in San Mateo County. (e) Industry standard (f) Homeownership housing burden is estimated at 35%, based on California Health & Safety Code Sections 50052.5 and 50053. Sources: Strategic Economics & Vernazza Wolfe Associates, Inc., 2014. Figure III-6. Estimated Annual Household Incomes of Buyers of Condominiums Condominium Units 2 BD/2 BA 3 BD/2 BA Number of Households 10 10 Sales Price $942,000 $1,080,000 Down Payment (a) $188,400 $216,000 Loan Amount $753,600 $864,000 Monthly Debt Service (b) $3,752 $4,301 Annual Debt Service $45,018 $51,613 Annual Property Taxes (c) $11,326 $12,985 Annual HOA Fees (d) $5,400 $5,400 Fire and Hazard Insurance (e) $3,297 $3,780 Annual Housing Costs (f) $65,041 $73,778 Household Income $185,831 $210,794 Notes: (a) Down payment is estimated at 20% of sales price, based on Freddie Mac data for San Mateo County. (b) Interest rate is estimated at 4.35% for a 30-year term, based on Freddie Mac data, http://www.freddiemac.com/pmms/pmms30.htm. (c) Property tax rate is 1.2023%based on Burlingame CAFR. (d) Homeownership association (HOA) fees are estimated at $450 per month, based on review of new condominiums in San Mateo County. (e) Industry standard (f) Homeownership housing burden is estimated at 35%, based on California Health & Safety Code Sections 50052.5 and 50053. Sources: Strategic Economics & Vernazza Wolfe Associates, Inc., 2014. Draft Burlingame Residential Impact Fee Nexus Study -25- Figure III-7. Estimated Annual Household Incomes of Renters of Apartment Units Apartment Unit Type 1 BD/1 BA 2 BD/2 BA Number of Households 100 100 Monthly Rent $3,600 $4,300 Annual Housing Costs $43,200 $51,600 Housing Costs as % of Income (a) 30% 30% Household Income $144,000 $172,000 Notes: (a) Renter housing burden is estimated at 30%, based on California Health & Safety Code Sections 50052.5 and 50053. Sources: Strategic Economics & Vernazza Wolfe Associates, Inc., 2014. Draft Burlingame Residential Impact Fee Nexus Study -26- The buyers and renters of the new market-rate single-family attached units, condominiums and apartments create new spending in the local economy. These new expenditures can be linked to new jobs, many of which pay low wages. The job and wage impacts related to new market-rate housing units are measured using IMPLAN3, an economic impact analysis tool. An economics consulting firm, Applied Development Economics (ADE) undertook the IMPLAN3 analysis with the information on residential prototypes and associated buyers’ and renters incomes provided by Strategic Economics and Vernazza Wolfe Associates Inc. In this section of the report, the methodology and results of the IMPLAN3 analysis are described in detail. THE IMPLAN3 MODEL The IMPLAN model is an economic dataset that has been used for over 35 years to measure the economic impacts of new investments and spending using the industrial relationships defined through an Input-Output Model. The IMPLAN model can estimate economic impacts resulting from changes in industry output, employment, income, and other measures. The latest version of this model is referred to as IMPLAN3. For this analysis, the input-output model used data specific to San Mateo County in order to estimate the multiplier effects resulting from the households that could potentially rent or buy new housing units in Burlingame. In this case, all of the multiplier effects derive from new demand for goods and local services (including government) that new households would generate within San Mateo County. It does not account for economic impacts generated during the construction period, or any economic impacts that would occur outside of the county. The economic impacts estimated by the model generally fall into one of three categories - direct, indirect, or induced. For this analysis, the direct impacts represent the household income brought into the community by new residents. Indirect impacts would normally result from demand for commodities and services provided by suppliers for business operations. (Because the direct impacts come only from household spending, and not from business activity, the indirect effects were not calculated.) Induced impacts represent the potential effects resulting from household spending at local establishments by the new workers hired as a result of increased household expenditures. These impacts affect all sectors of the economy, but primarily affect retail businesses, health services, personal services providers, and government services. The employment estimates provided by the IMPLAN3 model cover all types of jobs, including full and part time jobs. The first analysis undertaken by the IMPLAN3 model estimated the household demand for retail goods and personal services. It is assumed that buyers and renters of new housing units in Burlingame increase demand for goods and services within San Mateo County. This demand is based on the projected incomes of renters and owners for each prototype. The IMPLAN3 model’s calculations are based on changes in household income, which adjusts the gross income to account for the payment of income taxes and savings.4 The second analysis estimated the induced impacts, or multiplier effects of new household spending in terms of jobs and wage income. The jobs and income calculations are focused on the induced jobs that would be created through local spending by the new households. The input-output model 4 According to IMPLAN Group LLC, when the economic impact is modeled based on household income change, IMPLAN3 will adjust the input for income taxes and savings. IV. ECONOMIC IMPACT ANALYSIS (IMPLAN3) Draft Burlingame Residential Impact Fee Nexus Study -27- estimates the job impacts by detailed industry sector. The analysis took the detailed industry impact estimates and distributed them by occupational category. The occupational employment data used in the analysis came from the California Employment Development Department (EDD) Labor Market Information Division, and aggregates together data for all of California. After converting the industry level data into occupational employment, the income distribution was calculated using the occupational wage data for the San Francisco-San Mateo-Redwood City Metropolitan Division (MD) that combines San Francisco, Marin, and San Mateo counties.5 The average wage by occupation was used to make this calculation. The 2014 (first quarter) occupational wage data used in the analysis comes from California’s EDD. It should be noted that the figures used in the IMPLAN3 analysis reflect the demand for retail goods and services by net, new San Mateo County households. The multiplier impacts assume that all of this spending will remain in San Mateo County.6 HOUSEHOLD INCOME IMPACTS Since the IMPLAN3 Model bases its household income impacts on Consumer Expenditure Survey data, income categories are used in the model instead of continuous income information. Because of this feature, the analysis sorted the renters and buyers of new market rate units into income groups, and then calculated the economic impacts based on the total income calculated for each income group. Figure IV-1 below summarizes the household income data for single-family attached households. All 20 single-family attached buyer households have an average household income situated in the income category of $150,000 or higher, and an aggregate household income of $4.27 million. Figure IV-2 demonstrates the same calculation for condominium buyer households and renter households. The 20 households of the condominium prototype have an average household income over $150,000, and a combined income of $3.97 million. The rental prototype has 100 households in the $100,000-$150,000 income category, and 100 households in the over $150,000 income category. The combined total household income for renter households is $31.6 million. These total income figures, adjusted to account for taxes and savings, were used as inputs for the IMPLAN3 analysis. EMPLOYMENT AND WAGE IMPACTS Based on the incomes of the new buyers and renters, the next step is to determine employment and wage impacts from each prototype. Estimated employment and wages are shown in Figure IV-3 for each IMPLAN3 industry sector, indicating the number of induced jobs, the industry’s share of total employment growth by prototype, and the average wage by industry. Figure IV-4 provides the same IMPLAN3 output data, organized by occupation rather than industry, for each prototype. As shown in both figures, many of the induced jobs generated within San Mateo County are in low-wage sectors and occupations related to retail and food services (restaurants). However, a significant proportion of induced jobs are in higher-paying resident-serving categories such as health care, engineering and high tech and management. 5 The San Francisco – San Mateo – Redwood City Metropolitan Division, which includes Marin, San Francisco and San Mateo Counties, was used because it is the smallest geography including San Mateo County for which certain occupational wage data was available. 6 Estimating the retail leakage would require a detailed analysis of retail sales totals for existing businesses in San Mateo County and is beyond the scope of this study. Draft Burlingame Residential Impact Fee Nexus Study -28- ESTIMATING WORKER-HOUSEHOLDS Recognizing that many households have more than one wage-earner, the next step is to calculate the number of worker–households by dividing the total number of new workers by the average number of wage-earners per household in Burlingame. According to the U. S. Census Bureau 2008-2012 American Community Survey 3-Year Estimate, Burlingame has an average of 1.41 workers per household. The number of induced jobs is divided by 1.41 to calculate the total number of worker households. Figure IV-5 illustrates this calculation. ESTIMATING DEMAND FOR AFFORDABLE HOUSING To estimate the demand for affordable housing, it is first necessary to determine the incomes of the new households. Once the average annual household income of worker households is calculated, the next step is to categorize households into area median income (AMI) levels based on the thresholds set by California Department of Housing and Community Development for San Mateo County. The average household size in Burlingame is 2.0, according to the US Census American Community Survey 5-Year Estimates 2008-2012. The income threshold for a two-person household in San Mateo County was therefore used to determine the AMI categories of each new worker household.7 Figure IV-6 indicates that of the 10.7 new worker households associated with a single-family attached development, there will be 8.6 households that need affordable housing. The comparable figures for condominium and apartment developments are 8 and 73.9 households. 7 The average Burlingame household size is 2.0, according to the US Census, American Community Survey 5 Year Estimates, 2008-2012. Draft Burlingame Residential Impact Fee Nexus Study -29- Figure IV-1. Estimated Incomes by Income Categories for Buyers of Single-Family Attached Units Single-Family Attached Prototype Income Category New Households Aggregate Household Incomes Average Household Income Less than $10,000 0 $0 n/a $10,000-$15,000 0 $0 n/a $15,000-$25,000 0 $0 n/a $25,000-$35,000 0 $0 n/a $35,000-$50,000 0 $0 n/a $50,000-$75,000 0 $0 n/a $75,000-$100,000 0 $0 n/a $100,000-$150,000 0 $0 n/a Over $150,000 20 $4,266,871 $213,344 Total 20 $4,266,871 $213,344 Sources: Applied Development Economics, Inc., 2015; Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. Figure IV-2. Estimated Incomes by Income Categories for Buyers of Condominiums Units and Renters of Apartment Units Condominium Prototype Apartment Prototype Income Category New HouseholdsAggregate Household Incomes Average Household Income New HouseholdsAggregate Household Incomes Average Household Income Less than $10,000 0 $0 n/a 0 0 n/a $10,000-$15,000 0 $0 n/a 0 0 n/a $15,000-$25,000 0 $0 n/a 0 $0 n/a $25,000-$35,000 0 $0 n/a 0 $0 n/a $35,000-$50,000 0 $0 n/a 0 $0 n/a $50,000-$75,000 0 $0 n/a 0 $0 n/a $75,000-$100,000 0 $0 n/a 0 $0 n/a $100,000-$150,000 0 $0 n/a 100 $14,400,000 $144,000 Over $150,000 20 $3,966,250 $198,312 100 $17,200,000 $172,000 Total 20 $3,966,250 $198,312 200 $31,600,000 $158,000 Sources: Applied Development Economics, Inc., 2015; Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -30-Figure IV-3. Estimated Job and Wage Impacts of Prototypes by Industry Single-Family Attached Prototype Condominium Prototype Apartment PrototypeIndustry (NAICS code) Average Wage Jobs % Of Jobs Jobs % Of Jobs Jobs % Of Jobs11 Forestry, fishing, hunting, and agriculture $38,309 0.01 0% 0.01 0% 0.08 0% 21 Mining $70,505 0.01 0% 0.01 0% 0.05 0% 22 Utilities $74,144 0.03 0% 0.02 0% 0.23 0% 23 Construction $68,376 0.33 2% 0.31 2% 2.66 2% 31 Manufacturing $66,946 0.04 0% 0.04 0% 0.35 0% 42 Wholesale trade $62,797 0.19 1% 0.17 1% 1.62 1% 44 Retail trade $54,808 2.33 15% 2.17 15% 20.31 16% 48 Transportation & warehousing $49,308 0.34 2% 0.32 2% 2.81 2% 51 Information $77,312 0.20 1% 0.18 1% 1.76 1% 52 Finance & insurance $71,830 0.75 5% 0.70 5% 6.50 5% 53 Real estate & rental & leasing $66,316 0.71 5% 0.66 5% 6.43 5% 54 Professional, scientific & technical services $91,389 0.46 3% 0.43 3% 3.85 3% 55 Management of companies & enterprises $88,955 0.02 0% 0.02 0% 0.17 0% 56 Admin, support, waste mgt, remediation services $54,197 0.63 4% 0.58 4% 5.43 4% 61 Educational services $62,584 0.68 4% 0.63 4% 5.10 4% 62 Health care and social assistance $68,778 2.69 18% 2.50 18% 24.56 19% 71 Arts, entertainment & recreation $49,614 0.52 3% 0.48 3% 4.40 3% 72 Accommodation & food services $31,520 2.14 14% 1.99 14% 19.22 15% 81 Other services (except public administration) $53,217 1.53 10% 1.42 10% 13.37 10% 91 Government $70,961 1.53 10% 1.42 10% 11.21 9% Total 15.12 100% 14.05 100% 130.11 100% Note: Average wage is calculated based on the mean occupational wages, and the average statewide distribution of occupations for each industry.Sources: Applied Development Economics, Inc, 2015; Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -31-Figure IV-4. Estimated Job and Wage Impacts of Prototypes by Occupation SOC Code Occupational Title Average Annual Wage Single-Family Attached Jobs Condominium Jobs Apartment Jobs 11-0000 Management Occupations $146,537 0.70 0.65 6.00 13-0000 Business and Financial Operations Occupations $95,505 0.73 0.68 6.11 15-0000 Computer and Mathematical Occupations $104,996 0.26 0.24 2.14 17-0000 Architecture and Engineering Occupations $100,605 0.14 0.13 1.07 19-0000 Life, Physical, and Social Science Occupations $96,012 0.13 0.12 1.03 21-0000 Community and Social Services Occupations $54,663 0.34 0.32 2.91 23-0000 Legal Occupations $140,841 0.10 0.09 0.77 25-0000 Education, Training, and Library Occupations $59,459 0.58 0.54 4.59 27-0000 Arts, Design, Entertainment, Sports, Media Occupations $70,952 0.23 0.21 1.96 29-0000 Healthcare Practitioners and Technical Occupations $111,876 0.97 0.90 8.68 31-0000 Healthcare Support Occupations $41,374 0.45 0.42 4.12 33-0000 Protective Service Occupations $61,618 0.39 0.37 3.06 35-0000 Food Preparation and Serving-Related Occupations $27,076 2.26 2.10 20.23 37-0000 Building and Grounds Cleaning and Maintenance $33,575 0.48 0.45 4.11 39-0000 Personal Care and Service Occupations $33,716 1.08 1.01 9.54 41-0000 Sales and Related Occupations $54,767 2.00 1.86 17.44 43-0000 Office and Administrative Support Occupations $46,720 2.33 2.17 19.93 45-0000 Farming, Fishing, and Forestry Occupations $34,770 0.02 0.01 0.13 47-0000 Construction and Extraction Occupations $63,327 0.29 0.27 2.32 49-0000 Installation, Maintenance, and Repair Occupations $58,564 0.54 0.51 4.67 51-0000 Production Occupations $41,105 0.29 0.27 2.48 53-0000 Transportation and Material Moving Occupations $42,255 0.80 0.74 6.81 Total all occupations 15.12 14.05 130.11 Sources: Applied Development Economics, 2015; IMPLAN3 input-output model, 2015; California Labor Market Information Division, 2015. Draft Burlingame Residential Impact Fee Nexus Study -32-Figure IV-5. Induced Employment Impacts, Burlingame Project Prototype Single-Family Attached Condominium Apartment Number of Units 20 20 200 Induced Employment (Workers) 15 14 130 Average Number of Workers per Household 1.41 1.41 1.41 New Worker Households 10.72 9.96 92.22 Source: Applied Development Economics, 2015; Strategic Economics & Vernazza Wolfe Associates, Inc. 2015. Figure IV-6. New Worker Households by Income Group for Single-Family Attached, Condominium and Apartment Prototypes Worker Households by Income Category Income Thresholds (2-Person Household) Single-Family Attached Condominium Apartment Households Requiring Affordable Housing Very Low Income (<=50% AMI) $45,250 2.7 2.5 24.1 Low Income (51-80% AMI) $72,400 2.7 2.6 23.6 Moderate Income (81-120% AMI) $98,900 3.1 2.9 26.2 Subtotal Very Low, Low, Moderate Income 8.6 8.0 73.9 Above Moderate Income Households (>120% AMI) >$98,900 2.1 2.0 18.3 Total All Worker Households 10.7 10.0 92.2 Source: Applied Development Economics, Inc., 2015; Strategic Economics & Vernazza Wolfe Associates, Inc. 2015. Draft Burlingame Residential Impact Fee Nexus Study -33- Estimating the housing affordability gap is necessary to calculate the maximum potential housing impact fee. This affordability gap analysis was conducted at the county-wide level so that it can be applied to all the jurisdictions in San Mateo County participating in the multi-city nexus study.8 This section summarizes the approach to calculating the housing affordability gap and the results of the analysis. METHODOLOGY The housing affordability gap is defined as the difference between what very low, low, and moderate income households can afford to pay for housing and the development cost of new, modest housing units. Calculating the housing affordability gap involves the following three steps: 1. Estimating affordable rents and housing prices for households in target income groups. 2. Estimating development costs of building new, modest housing units, based on current cost and market data. 3. Calculating the different between what renters and owners can afford to pay for housing and the cost of development of rental and ownership units. The housing affordability gap is estimated at a countywide level, and assumed to be the same for all the jurisdictions participating in the multi-city nexus studies, for the following reasons:  Both the California Department of Housing and Community Development Department (HCD) and U.S. Housing and Urban Development Department (HUD) define the ability to pay for housing at the county (rather than the city) level. Existing affordable housing studies and policies in most jurisdictions rely on these countywide area median income (AMI) estimates published by HCD or by HUD. This analysis uses 2014 income limits published by California Department of Housing and Community Development (HCD).  Construction costs for housing and commercial development do not vary dramatically between different jurisdictions in San Mateo County, because the cost of labor and materials is regional in nature. Although land costs vary widely in San Mateo County, the study estimated a single land value for the county based on data provided by developers of recently built projects. These costs are at the low end of recent land sales, as described below. Additionally, because the land costs used in the analysis are from 2012 and 2013, and land values have escalated rapidly since then, the resulting affordability gap will be slightly lower than if the analysis incorporated 2014 land costs, providing a conservative estimate of the affordability gap. 8 Although there is a single housing affordability gap estimate for all jurisdictions in the county, the subsequent steps in the fee calculation considers market and household characteristics for Burlingame, generating a unique maximum fee for each jurisdiction in the county, as described in Section V. V. AFFORDABILITY GAP ANALYSIS Draft Burlingame Residential Impact Fee Nexus Study -34- ESTIMATING AFFORDABLE RENTS AND SALES PRICES The first step in calculating the housing affordability gap is to determine the maximum amount that households at the targeted income levels can afford to pay for housing. For eligibility purposes, most affordable housing programs define very low income households as those earning approximately 50 percent or less of area median income (AMI), low income households as those earning between 51 and 80 percent of AMI, and moderate income households as those earning between 81 and 120 percent of AMI. In order to ensure that the affordability of housing does not use the top incomes in each category, the analysis uses a point within the income ranges for the low and moderate income groups.9 Figure V-1 and Figure V-2 show the calculations for rental housing. The maximum affordable monthly rent is calculated as 30 percent of gross monthly household income, minus a deduction for utilities. For example, a very low income, three-person household could afford to spend $1,273 on total monthly housing costs. After deducting for utilities, $1,220 a month is available to pay for rent. Figure V-3 and Figure V-4 demonstrate housing affordability for homeowners. Homeowners are assumed to pay a maximum of 35 percent of gross monthly income on total housing costs, depending on income level. The maximum affordable price for for-sale housing is then calculated based on the total monthly mortgage payment that a homeowner could afford, using standard loan terms used by CalHFA programs and many private lenders for first-time homebuyers, including a five percent down payment (Figure V-3). For example, a moderate income, three-person household could afford to spend $2,974 a month on total housing costs, allowing for the purchase of a $348,526 home. Key assumptions used to calculate the maximum affordable rents and housing prices are discussed below.  Unit types: For rental housing, the analysis included studios, one-, two-, and three-bedroom units. For for-sale housing, one-, two-, and three-bedroom units were included. These unit types represent the affordable and modest market-rate apartment and condominium units available in San Mateo County. Condominiums were used to represent modest for-sale housing because single-family homes in San Mateo County tend to be significantly more expensive than condominiums.  Occupancy and household size assumptions. Because income levels for affordable housing programs vary by household size, calculating affordable unit prices requires defining household sizes for each unit type. Consistent with California Health and Safety Code Section 50052.5(h), unit occupancy was generally estimated as the number of bedrooms plus one. For example, a studio unit is assumed to be occupied by one person, a one bedroom unit is assumed to be occupied by two people, and so on. Several adjustments to this general assumption were made in order to capture the full range of household sizes. In particular, it is assumed that one-bedroom condominiums could be occupied by one- or two-person households, and three-bedroom apartments and condominiums could be occupied by four- or five-person households.10 9 For rental housing, 70 percent of AMI is used to represent low income households and 90 percent of AMI is used to represent moderate income households. For ownership housing, it is assumed that moderate income homebuyers may earn slightly less than the maximum for that income category (110 percent of AMI). Higher income limits are used for ownership than for rental housing because ownership housing is more expensive to purchase and maintain. 10 For these unit types, the maximum affordable home price (or rent) is calculated as the average price (or rent) that the relevant household sizes can afford to pay. For example, the maximum affordable home price for a one- bedroom condominium is calculated as the average of the maximum affordable home price for one- and two- person households. Draft Burlingame Residential Impact Fee Nexus Study -35-  Targeted income levels for rental housing: For rental housing, affordable rents were calculated for very low income, low income, and moderate income households (see Figure V- 1 and Figure V-2). For eligibility purposes, most affordable housing programs define very low income households as those earning 50 percent or less of area median income (AMI), low income households as those earning between 51 and 80 percent of AMI, and moderate income households as those earning between 81 and 120 percent of AMI. However, defining affordable housing expenses based at the top of each income range would result in prices that are not affordable to most of the households in each category. Thus, this analysis does not use the maximum income level for all of the income categories. Instead, for rental housing, 70 percent of AMI is used to represent low income households and 90 percent of AMI is used to represent moderate income households.  Targeted income levels for ownership housing For ownership housing, affordable home prices were calculated only for moderate income households (see Figure V-3 and Figure V- 4). Higher income limits are used for ownership than for rental housing because ownership housing is more expensive to purchase and maintain. It is assumed that moderate income homebuyers may earn slightly less than the maximum for that income category (110 percent of AMI).  Maximum monthly housing costs.11 For all renters, maximum monthly housing costs are assumed to be 30 percent of gross household income. For homebuyers, 35 percent of gross income is assumed to be available for monthly housing costs, reflecting the higher incomes of this group.12 These standards are based on California’s Health & Safety Code Sections 50052.5 and 50053.  Utilities. The monthly utility cost assumptions are based on utility allowances calculated by the U.S. Department of Housing and Urban Development for San Mateo County.13 Both renters and owners are assumed to pay for heating, cooking, other electric, and water heating. In addition, owners are assumed to pay for water and trash collection.14  Mortgage terms and costs included for ownership housing. The mortgage calculations are based on the terms typically offered to first-time homebuyers (such as the terms offered by the California Housing Finance Authority), which is a 30-year mortgage with a five percent down payment. A five percent down payment standard is also used by many private lenders for first-time homebuyers. Based on recent interest rates to first-time buyers, the analysis assumes a 5.375 percent annual interest rate.15 In addition to mortgage payments and utilities, 11 The calculation of homeowner affordability is conservative in that the model accounts for additional costs for buyers (such as utility costs) that might not be considered by all lenders. 12 The assumption that homebuyers spend 35 percent of gross household income on housing results in a lower affordability gap than if 30 percent of gross household income were used instead. 13 U.S. Department of Housing and Urban Development, "Allowances for Tenant-Furnished Utilities and Other Services: Housing Authority of San Mateo County," November 2013. 14 Units are assumed to have natural gas heating, cooking, and water heating systems, as natural gas is the most common fuel for units located in San Mateo County. Sources: U.S. Census Bureau, 2012 American Community Survey, “Table B25117: Tenure by House Heating Fuel,” San Mateo County; U.S. Census Bureau, 2011 American Housing Survey, “Table C-03-AH-M, San Francisco-San Mateo-Redwood City: Heating, Air Conditioning, and Appliances – All Housing Units.” 15 Sources: CalHFA Mortgage Calculator, accessed March 2014; Zillow.com, “Current Mortgage Rates and Home Loans,” accessed March 2014; interviews with California Housing Finance Agency (CalHFA) Preferred Loan Officers, March 2014. Draft Burlingame Residential Impact Fee Nexus Study -36- monthly ownership housing costs include homeowner association (HOA) dues,16 property taxes,17 private mortgage insurance,18 and hazard and casualty insurance.19 16 HOA fees are estimated at $300 per unit per month, based on common HOA fees in San Mateo County as reported in: Polaris Pacific, “Silicon Valley Condominium Market,” February 2014. 17 The annual property tax rate is estimated at 1.18 percent of the sales price, based on the average total tax rate for San Mateo County (calculated from County of San Mateo, 2008-09 Property Tax Highlights http://www.co.sanmateo.ca.us/Attachments/controller/Files/PTH/PTH_2009.pdf) and discussions with Preferred Loan Officers. 18 The annual private mortgage insurance premium rate is estimated at 0.89 percent of the total mortgage amount, consistent with standard requirements for conventional loans with a five percent down payment. Sources: Genworth, February 2014; MGIC, December 2013; Radian, April 2014. 19 The annual hazard and casualty insurance rate is assumed to be 0.35 percent of the sales price, consistent with standard industry practice. Draft Burlingame Residential Impact Fee Nexus Study -37-Figure V-1. Calculation of Affordable Rents in San Mateo County by Household Size, 2014 Persons per Household (HH) 1 2 3 4 5 Very Low Income (50% AMI) Maximum Household Income at 50% AMI $39,600 $45,250 $50,900 $56,550 $61,050 Maximum Monthly Housing Cost (a) $990 $1,131 $1,273 $1,414 $1,526 Utility Deduction $29 $40 $53 $68 $68 Maximum Available for Rent (HH Size) (b) $961 $1,091 $1,220 $1,346 $1,458 Low Income (70% AMI) Maximum Household Income at 70% AMI $50,470 $57,680 $64,890 $72,100 $77,875 Maximum Monthly Housing Cost (a) $1,262 $1,442 $1,622 $1,803 $1,947 Utility Deduction $29 $40 $53 $68 $68 Maximum Available for Rent (HH Size) (b) $1,233 $1,402 $1,569 $1,735 $1,879 Moderate Income (90% AMI) Maximum Household Income at 90% AMI $64,890 $74,160 $83,430 $92,700 $100,125 Maximum Monthly Housing Cost (a) $1,622 $1,854 $2,086 $2,318 $2,503 Utility Deduction $29 $40 $53 $68 $68 Maximum Available for Rent (HH Size) (b) $1,593 $1,814 $2,033 $2,250 $2,435 Notes: (a) 30 percent of maximum monthly household income. (b) Maximum monthly housing cost minus utility deduction. Acronyms: AMI: Area median income HH: Household Sources: California Department of Housing and Community Development, 2014; U.S. Department of Housing and Urban Development, 2013; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Draft Burlingame Residential Impact Fee Nexus Study -38-Figure V-2. Calculation of Affordable Rents in San Mateo County by Unit Type, 2014 Affordable Rents by Unit Type (a) Studio(1 person) 1 Bedroom(2 persons) 2 Bedroom (3 persons) 3 Bedroom(4 and 5 persons) Very Low Income (50% AMI) $961 $1,091 $1,220 $1,402 Low Income (70% AMI) $1,233 $1,402 $1,569 $1,807 Moderate Income (90% AMI) $1,593 $1,814 $2,033 $2,342 Notes: (a) Affordable rents are calculated as follows: Studios are calculated as one-person households; One-bedroom units are calculated as two-person households; Two-bedroom units are calculated as three-person households; Three-bedroom units are calculated as an average of four and five person households. See Figure V-1. Sources: California Department of Housing and Community Development, 2014; U.S. Department of Housing and Urban Development, 2013; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Draft Burlingame Residential Impact Fee Nexus Study -39-Figure V-3. Calculation of Affordable Sales Prices in San Mateo County by Household Size, 2014 Persons per Household (HH) 1 2 3 4 5 Moderate Income (110% AMI) Maximum Household Income at 110% AMI (a) $79,310 $90,640 $101,970 $113,300 $122,375 Maximum Monthly Housing Cost (b) $2,313 $2,644 $2,974 $3,305 $3,569 Monthly Deductions Utilities $106 $106 $130 $156 $156 HOA Dues $300 $300 $300 $300 $300 Property Taxes and Insurance (c) $517 $607 $690 $773 $844 Monthly Income Available for Mortgage Payment (d) $1,390 $1,631 $1,854 $2,076 $2,269 Maximum Mortgage Amount (e) $248,195 $291,274 $331,100 $370,795 $405,155 Maximum Affordable Sales Price - HH Size (f) $261,258 $306,604 $348,526 $390,311 $426,479 Notes: (a) Calculated as 110 percent of the median household income reported by HCD for each household size. (b) Maximum housing cost is estimated at 35 percent of household income for homebuyers. (c) Assumes annual property tax rate of 1.18 percent of sales price; annual private mortgage insurance premium rate of 0.89 percent of mortgage amount; annual hazard and casualty insurance rate of 0.35 percent of sales price. (d) Maximum monthly housing cost minus deductions (e) Assumes 5.375 percent interest rate and 30 year loan term (f) Assumes 5 percent down payment (75 percent loan-to-value ratio) Acronyms: AMI: Area median income HH: Household HOA: Home owners association Sources: California Department of Housing and Community Development, 2014; U.S. Department of Housing and Urban Development, 2013; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Draft Burlingame Residential Impact Fee Nexus Study -40-Figure V-4. Calculation of Affordable Sales Prices in San Mateo County by Unit Type, 2014 Affordable Sales Price by Unit Type (a) 1 Bedroom(1 and 2 persons) 2 Bedroom(3 persons) 3 Bedroom(4 and 5 persons) Moderate Income (110% AMI) $283,931 $348,526 $408,395 Notes: (a) Affordable sales prices are calculated as follows: One-bedroom units are calculated as an average of one- and two-person households; Two-bedroom units are calculated as three-person households; Three-bedroom units are calculated as an average of four and five person households. See Figure V-3. Sources: California Department of Housing and Community Development, 2014; U.S. Department of Housing and Urban Development, 2013; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Draft Burlingame Residential Impact Fee Nexus Study -41- ESTIMATING HOUSING DEVELOPMENT COSTS The second step in calculating the housing affordability gap is to estimate the cost of developing new, modest housing units. Modest housing is defined slightly differently for rental and ownership housing. For rental housing, the costs and characteristics of modest housing are similar to recent projects developed in San Mateo County by the affordable rental housing sector. Modest for-sale housing is assumed to be non-luxury multifamily (condominium) development because single-family homes in San Mateo County tend to be significantly more expensive than condominiums; many of the new single-family homes in the county are custom-built luxury units that are too costly to meet the standard for modest housing. The calculation of housing development costs used in the housing affordability gap requires several steps. Because the gap covers both rental housing and for-sale housing, it is necessary to estimate costs for each. The following describes the data sources used to calculate rental and for-sale housing development costs. Rental Housing Rental housing development costs were based on pro forma data obtained from three recent affordable housing projects in San Mateo County. Figure V-5 shows the location and description of these projects and summarizes the information that was used to generate a per-square-foot cost of $410 used in the cost analysis. These costs include site acquisition costs, hard costs (on- and off-site improvements), soft costs (such as design, city permits and fees, construction interest, and contingencies), and developer fees. The costs from the rental housing pro formas were also cross- referenced against proprietary pro formas available to the consultant team from other private development projects in order to ensure accuracy. Since these projects assumed state and federal funding, the labor costs included in the original pro formas reflect the prevailing wage requirement imposed by state and local governments. The costs shown in Figure V-5 have been adjusted to subtract out the prevailing wage requirement because the development cost model used in the housing affordability gap analysis does not assume receipt of government subsidies. A rule of thumb used by local economists who assist affordable housing developers in obtaining public financing, is to estimate that, under the prevailing wage requirement, labor costs are 25 percent higher than would otherwise be the case. Therefore, on-site and off-site improvement costs obtained from the original pro formas are reduced by 25 percent to reflect actual labor costs that would apply to construction projects that do not have these requirements.20 Finally, on average, land acquisition costs accounted for 20 percent or less of these total adjusted costs. 20 These prevailing wage requirements refer only to labor cost requirements on construction projects that receive funding from the state or federal government. These are not the same as minimum wage requirements that individual cities may adopt. Draft Burlingame Residential Impact Fee Nexus Study -42- Figure V-5. Affordable Housing Project Pro Forma Data Project Description Project 1 Project 2 Project 3 Location San Mateo San Mateo San Bruno Year Built 2013 2010 2011 Land Area (acres) 1.05 1.0 0.63 Gross Building Area (SF) 106,498 127,718 42,688 Net Building Area (SF) 56,075 67,850 33,297 Number of Units 60 68 42 Parking Type Podium Underground Structure Parking Spaces/ Unit 1.82 1.55 1.0 Land Acquisition Costs $3,157,000 ($69 per SF of land) $5,543,600 ($127 per SF of land) $2,096,500 ($76 per SF of land) Project Costs per SF of Net Building Area Land Cost (a) $56 $82 $63 Hard Costs (b) $228 $216 $187 Soft Costs (c) $93 $99 $114 Developer Fees $25 $21 $39 Total Project Costs (d) $402 $417 $403 Notes: (a) Calculated per square foot of net building area. (b) Excludes prevailing wage requirements for on-site and off-site hard costs. (c) Includes design, engineering, city permits and fees, construction interest, contingencies, legal, etc. (d) Total costs include developer fees. Acronyms: SF: Square feet Source: Confidential Pro Forma Data; Vernazza Wolfe Associates, Inc; Strategic Economics, 2014. To ensure that the land value assumptions used in the rental development cost estimates (ranging from $69 to $127 per square foot of land) were reasonable, the consultant team analyzed recent sales of vacant properties in San Mateo County using DataQuick, a commercial vendor that tracks real estate transactions. Cities with fewer than three vacant land transactions were excluded from the analysis. As shown below in Figure V-6, land values in San Mateo County are highly variable from city to city, ranging from $45 to $300 per square foot; the average sales price for the selected sites in the County was $189 per square foot. The analysis demonstrates the land cost assumptions used to calculate rental housing costs (in Figure V-5) represent the lower range of current land values. Draft Burlingame Residential Impact Fee Nexus Study -43- Figure V-6. Sales of Vacant Lands in San Mateo County, 2014 Jurisdiction Number Transactions Average Sales Price Average Site Size (SF) Average Sales Price/ SF Land Belmont 4 $920,000 6,383 $165 Menlo Park 6 $1,239,500 5,802 $220 Pacifica 4 $487,000 7,221 $111 San Bruno 13 $933,769 3,259 $295 San Mateo 8 $1,314,188 5,424 $300 Unincorporated San Mateo County 4 $224,250 5,194 $45 Average of Records $853,118 5,547 $189 Notes: Includes data from cities with 3 or more transactions of vacant land in San Mateo County from January through May 2014. Records with missing sales or land area information were eliminated. Acronyms: SF: Square feet Sources: DataQuick, January-May 2014; Vernazza Wolfe Associates, Inc; Strategic Economics, 2014. For-Sale Housing Since affordable housing developers do not typically build for-sale housing in San Mateo County, the cost of developing new, modest for-sale housing was estimated using two data methods: the first method used price data for recently built condominium units as a proxy for development costs; the second approach estimated development costs based on published market and cost data for similar projects in San Mateo County. Each of these cost estimate approaches is described in more detail below. Review of condominium sales data – In this approach, average sales prices from condominium units built in San Mateo County between 2008 and 2012 are used as a proxy for development costs. 21 This approach assumes that construction costs, land costs, soft costs, and developer profit are all included in the unit sales price. Using data provided by DataQuick, the consultant team analyzed sales prices of condominium units of various sizes in the seven cities that experienced condominium development that exceeded 10 units in the aggregate between 2008 and 2012. These seven cities included Brisbane, East Palo Alto, Millbrae, Redwood City, San Carlos, San Mateo City, and South San Francisco. The other jurisdictions in San Mateo County experienced little or no condominium development during this time period. Figure V-7 summarizes the information that was used to generate a per-square-foot cost for condominium development of $420. Cost estimate of hypothetical condominium project - The second approach relied on published industry data sources and recent financial feasibility studies to estimate the development costs of a hypothetical condominium project, as described in Figure V-8.22 Land costs were estimated based on recent DataQuick land transactions shown in Figure V-6. RS Means cost data, adjusted for the Bay Area’s construction costs, was used to calculate hard costs. Based on a review of recent financial 21 Ideally, cost estimates would be based only on projects built in the last year or two. However, the decline in new construction after 2007 necessitated that the analysis use several years’ worth of data in order to estimate for-sale housing costs. Since costs are not adjusted for inflation, they may be slightly lower than actual costs required for a new project to be built in 2014 or 2015. This approach is more conservative – and likely more accurate – than applying across-the-board inflation factors to historic costs. Furthermore, the increasing cost of residentially zoned, high density parcels is the main source of development cost increase. Adjusting land costs for inflation is not easily done. 22 The hypothetical condominium building type is a Type V building with underground parking and floor-area ratio of 1.7. The building characteristics are described in Figure IV-8. Draft Burlingame Residential Impact Fee Nexus Study -44- feasibility analyses in the Bay Area, soft costs were estimated at 30 percent of hard costs, and developer fees and profits were estimated at 12 percent of hard and soft costs. Using this second method, the development costs are estimated at $495 per net square foot of building area. In order to ensure that the results of the affordability gap analysis are conservative, the lower development cost estimate of $420 per net square foot was selected for ownership units. Figure V-7. Condominium Sales: Average Unit Characteristics and Prices for Selected Cities in San Mateo County (2008-2012) Jurisdiction Average Number of Bathrooms Average Number of Bedrooms Average Square Feet Average Price per Square Foot Average Unit Price Brisbane 1.2 1.5 892 $413 $368,625 East Palo Alto 1.8 1.3 1,029 $340 $349,991 Millbrae 1.9 2 1,290 $429 $553,893 Redwood City 2.7 2.9 1,933 $402 $776,655 San Carlos 1.8 1.8 1,066 $508 $541,932 San Mateo City 2.3 2.2 1,545 $439 $677,430 South San Francisco 1.7 1.8 981 $427 $418,740 Average 1.9 1.9 1,248 $423 $527,401 Sources: DataQuick, Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Figure V-8. Estimate of Development Costs of Hypothetical Condominium Project Building Characteristics Land Area (SF) 110,727 Gross Building Area (SF) 188,235 Net Building Area (SF) 160,000 Number of Units 100 Parking Type Underground Floor-area ratio (FAR) 1.7 Density (units per acre) 39 Average Unit Size 1,600 Land Acquisition Costs per Square Foot (a) $189 Development Cost Cost per Net SF Land Cost (b) $131 Hard Costs $250 Soft Costs (c) $75 Developer Fees (d) $39 Total Development Costs $495 Notes: (a) Land value is calculated based on DataQuick records of vacant land transactions in the county. See Figure IV-6. (b) Calculated based on RS Means cost estimates per square foot of net building area. (c) Estimated at 30 percent of hard costs. Includes design, engineering, city permits and fees, construction interest, contingencies, legal, etc. (d) Estimated at 12 percent of hard costs and soft costs. Acronyms: SF: square feet Sources: RS Means, 2014; DataQuick 2014; Recent financial feasibility studies; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Draft Burlingame Residential Impact Fee Nexus Study -45- Cost Estimates by Unit Size The data sources described above also provided information on estimated unit sizes. Unit size information is needed to translate costs/sales prices per square foot to unit costs. Unit sizes are estimated separately for rental and for-sale units. For the rental units, the recent inventory of projects developed by MidPen Housing was analyzed. For ownership units, the average sizes of recently built condominium units (Figure V-7) were analyzed. Figure V-9 provides the unit sizes and development cost estimates for rental units. Per-unit development costs were calculated by multiplying average unit sizes by the per-square foot development costs of $410. Rental unit costs range from $205,000 for studio units to $479,700 for three-bedroom units. Figure V-10 summarizes the costs of condominium units. The per-unit costs were derived by multiplying the average unit size by the development cost per square foot of $420. Condominium development costs range from $357,000 for one-bedroom units to $672,000 for three-bedroom units. Figure V-9. Rental Housing Unit Sizes and Development Costs Unit Type Estimated Cost per Net SF Unit Size (net SF) Development Costs Studio $410 500 $205,000 One bedroom $410 700 $287,000 Two bedroom $410 970 $397,700 Three bedroom $410 1,170 $479,700 Acronyms: SF: Square feet Sources: Confidential Pro Forma Data; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Figure V-10. For-Sale Housing Unit Sizes and Development Costs Unit Type Estimated Cost per Net SF Unit Size (net SF) Development Costs One bedroom $420 850 $357,000 Two bedroom $420 1,200 $504,000 Three bedroom $420 1,600 $672,000 Acronyms: SF: Square feet Sources: DataQuick, 2014; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2014. Draft Burlingame Residential Impact Fee Nexus Study -46- CALCULATING THE HOUSING AFFORDABILITY GAP The final step in the analysis is to calculate the housing affordability gap, or the difference between what renters and owners can afford to pay and the total cost of developing new units. The purpose of the housing affordability gap calculation is to help determine the fee amount that would be necessary to cover the cost of developing housing for very low, low, and moderate income households. The calculation does not assume the availability of any other source of housing subsidy because not all "modest" housing is built with public subsidies, and tax credits and tax-exempt bond financing are highly competitive programs that will not always be available to developers of modest housing units.   Figure V-11 shows the housing affordability gap calculation for rental units. For each rental housing unit type and income level, the gap is defined as the difference between the per-unit cost of development and the supportable debt per unit. The supportable debt is calculated based on the net operating income generated by an affordable monthly rent, incorporating assumptions about operating expenses (including property taxes, insurance, etc.), reserves, vacancy and collection loss, and mortgage terms based on discussions with local affordable housing developers. Because household sizes are not uniform and the types of units each household may occupy is variable, the average housing affordability gap is calculated by averaging the housing affordability gaps for the various unit sizes. Figure V-12 shows the housing affordability gap calculation for ownership units. For each unit type, the gap is calculated as the difference between the per-unit cost of development and the affordable sales price for each income level. As with rental housing, the average housing affordability gap for each income level is calculated by averaging the housing affordability gaps across unit sizes in order to reflect that households in each income group vary in size, and may occupy any of these unit types. Finally, the tenure-neutral estimates of the housing affordability gap were estimated for very low, low, and moderate income households (Figure V-13). Because very low and low income households that are looking for housing in today’s market are much more likely to be renters, an ownership gap was not calculated for these income groups. The rental gap represents the overall affordability gap for these two income groups. On the other hand, moderate income households could be either renters or owners. Therefore, the rental and ownership gaps are averaged for this income group to calculate the overall affordability gap for moderate income households. The calculated average affordability gap per unit is $280,783 for very low income households; $240,477 for low income households, and $175,558 for moderate income households. The housing affordability gap is highest for very low income households because those households with higher incomes can afford to pay more for housing. Draft Burlingame Residential Impact Fee Nexus Study -47-Figure V-11. Housing Affordability Gap Calculation for Rental Housing Income Level and Unit Type Unit Size (SF) Maximum Monthly Rent (a) Annual Income Net Operating Income (b) Available for Debt Service (c) Supportable Debt (d) Development Costs (e) Affordability Gap Very Low Income (50% AMI) Studio 500 $961 $11,532 $3,455 $2,764 $36,552 $205,000 $168,448 1 Bedroom 700 $1,091 $13,095 $4,940 $3,952 $52,259 $287,000 $234,741 2 Bedroom 970 $1,220 $14,634 $6,402 $5,122 $67,725 $397,700 $329,975 3 Bedroom 1,170 $1,402 $16,824 $8,483 $6,786 $89,733 $479,700 $389,967 Average Affordability Gap $280,783 Low Income (70% AMI) Studio 500 $1,233 $14,793 $6,553 $5,243 $69,323 $205,000 $135,677 1 Bedroom 700 $1,402 $16,824 $8,483 $6,786 $89,733 $287,000 $197,267 2 Bedroom 970 $1,569 $18,831 $10,389 $8,312 $109,902 $397,700 $287,798 3 Bedroom 1,170 $1,807 $21,680 $13,096 $10,477 $138,535 $479,700 $341,165 Average Affordability Gap $240,477 Moderate Income (90% AMI) Studio 500 $1,593 $19,119 $10,663 $8,530 $112,796 $205,000 $92,204 1 Bedroom 700 $1,814 $21,768 $13,180 $10,544 $139,417 $287,000 $147,583 2 Bedroom 970 $2,033 $24,393 $15,673 $12,539 $165,796 $397,700 $231,904 3 Bedroom 1,170 $2,342 $28,108 $19,202 $15,362 $203,127 $479,700 $276,573 Average Affordability Gap $187,066 Notes: (a) Affordable rents are based on State of California Housing and Community Development FY 2014 Income Limits for San Mateo County. See Figure V-2. (b) Amount available for debt. Assumes 5% vacancy and collection loss and $7,500 per unit per year for operating expenses and reserves based on recently built (2012-2014) and proposed affordable housing projects in the San Francisco Bay Area. (c) Assumes 1.25 Debt Coverage Ratio. (d) Assumes 6.38%, 30 year loan. Calculations based on annual payments. (e) Assumes $410/SF for development costs based on comparable project pro formas. (f) Calculated as the difference between development costs and supportable debt. Acronyms: SF: Square feet AMI: Area median income Sources: Housing and Community Development, 2014; Selected San Mateo Rental Housing Pro Formas; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -48- Figure V-12. Housing Affordability Gap Calculation for For-Sale Condominium Housing Income Level and Unit Type Unit Size (SF) Affordable Sales Price (a) Development Costs (b) Affordability Gap (c) Moderate Income (110% of AMI) 1 Bedroom 850 $283,931 $357,000 $73,069 2 Bedroom 1,200 $348,526 $504,000 $155,474 3 Bedroom 1,600 $408,395 $672,000 $263,605 Average Affordability Gap $164,049 Notes: (a) See calculation in Figure V-3. (b) Assumes $420/SF for development costs, based on recent condominium sales data. (c) Calculated as the difference between development cost and affordable sales price. Acronyms: SF: Square feet AMI: Area median income Sources: DataQuick Sales Data, 2008-2012; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Figure V-13. Average Housing Affordability Gap by Income Group Income Level Rental Gap Ownership Gap Average Affordability Gap Very Low Income (50% AMI) $280,783 N/A $280,783 Low Income (70% - 80% AMI) (a) $240,477 N/A $240,477 Moderate Income (90% - 110% AMI) (b) $187,066 $164,049 $175,558 Notes: (a) Low income households are defined at 70 percent of AMI for renters and 80 percent of AMI for owners. (b) Moderate income households are defined at 90 percent of AMI for renters and 110 percent AMI for owners. Acronyms: AMI: Area median income. Source: Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -49- This section builds on the findings of the previous analytical steps to calculate maximum justified housing impact fees for each prototype. MAXIMUM FEE CALCULATION To derive the maximum nexus-based fee, the housing affordability gap is applied to the number of lower-income worker households linked to the prototypes. This is the basis for developing an estimate of the total affordability gap for each prototype. The total gap for each prototype is then divided by the number of units in the development prototype to calculate a single maximum fee per unit. Figure VI-1 presents the results of the nexus fee calculation for the single-family attached prototype. The per unit housing affordability gap number is multiplied by the number of income-qualified worker households linked to the prototype to estimate the total gap. The total affordability gap is then divided by the number of units in the prototype to derive the maximum fee per unit, estimated at $98,541 per unit. The same steps are taken for the condominium and apartment prototypes to estimate the maximum fee per unit, as shown in Figures VI-2 and VI-3. The calculated maximum fees are $91,598 per condominium unit and $85,253 per apartment unit. The fees can also be calculated on per-square-foot basis by dividing the total gap by the net residential area for each prototype. The maximum fee per square foot is $52 for the single-family attached prototype (Figure VI-4), $56 per square foot for the condominium prototype (Figure VI-5), and $85 for the apartment prototype (Figure VI-6). The per-unit and per-square-foot fees shown in the tables below express the total nexus-based fees for new market-rate single-family attached, condominium and rental apartment development in Burlingame. They represent the maximum justified fees based on the nexus analysis that could be imposed on new development. The city may adopt fees or require mitigations at a lower level than these justified fees, depending on financial feasibility and other policy considerations. VI. NEXUS FEES AND REQUIREMENTS Draft Burlingame Residential Impact Fee Nexus Study -50-Figure VI-1. Maximum Per-Unit Fee for Single-Family Attached Prototype Income Category Average Affordability Gap (per Household) Number Worker Households Maximum Fee Revenues for Prototype Number Units in Prototype Total Fee Per Unit Very Low Income (<=50% AMI) $280,783 2.7 $764,947 Low Income (51-80% AMI) $240,477 2.7 $660,706 Moderate Income (81-120% AMI) $175,558 3.1 $545,161 Total $1,970,813 20 $98,541 Sources: California Housing and Community Development; Individual lenders; Affordable and market-rate project pro formas; DataQuick, 2014; RS Means, 2014; IMPLAN 3 via Applied Development Economics, 2015; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Figure VI-2. Maximum Per-Unit Fee for Condominium Prototype Income Category Average Affordability Gap (per Household) Number Worker Households Maximum Fee Revenues for Prototype Number Units in Prototype Total Fee Per Unit Very Low Income (<=50% AMI) $280,783 2.5 $711,053 Low Income (51-80% AMI) $240,477 2.6 $614,156 Moderate Income (81-120% AMI) $175,558 2.9 $506,751 Total $1,831,960 20 $91,598 Sources: California Housing and Community Development; Individual lenders; Affordable and market-rate project pro formas; DataQuick, 2014; RS Means, 2014; IMPLAN 3 via Applied Development Economics, 2015; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Figure VI-3. Maximum Per-Unit Fee for Apartment Prototype Income Category Average Affordability Gap (per Household) Number Worker Households Maximum Fee Revenues for Prototype Number Units in Prototype Total Fee Per Unit Very Low Income (<=50% AMI) $280,783 24.1 $6,769,850 Low Income (51-80% AMI) $240,477 23.6 $5,682,340 Moderate Income (81-120% AMI) $175,558 26.2 $4,598,346 Total $17,050,536 200 $85,253 Sources: California Housing and Community Development; Individual lenders; Affordable and market-rate project pro formas; DataQuick, 2014; RS Means, 2014; IMPLAN 3 via Applied Development Economics, 2015; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Figure VI-4. Maximum Fee per SF for Single-Family Attached Prototype Draft Burlingame Residential Impact Fee Nexus Study -51-Income Category Average Affordability Gap (per Household) Number Worker Households Maximum Fee Revenues for Prototype Net Residential Area (SF) Total Fee Per SF Very Low Income (<=50% AMI) $280,783 2.7 $764,947 Low Income (51-80% AMI) $240,477 2.7 $660,706 Moderate Income (81-120% AMI) $175,558 3.1 $545,161 Total $1,970,813 38,000 $52 Sources: California Housing and Community Development; Individual lenders; Affordable and market-rate project pro formas; DataQuick, 2014; RS Means, 2014; IMPLAN 3 via Applied Development Economics, 2015; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Figure VI-5. Maximum Fee per SF for Condominium Prototype Income Category Average Affordability Gap (per Household) Number Worker Households Maximum Fee Revenues for Prototype Net Residential Area (SF) Total Fee Per SF Very Low Income (<=50% AMI) $280,783 2.5 $711,053 Low Income (51-80% AMI) $240,477 2.6 $614,156 Moderate Income (81-120% AMI) $175,558 2.9 $506,751 Total $1,831,960 33,000 $56 Sources: California Housing and Community Development; Individual lenders; Affordable and market-rate project pro formas; DataQuick, 2014; RS Means, 2014; IMPLAN 3 via Applied Development Economics, 2015; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Figure VI-6. Maximum Fee per SF for Apartment Prototype Income Category Average Affordability Gap (per Household) Number Worker Households Maximum Fee Revenues for Prototype Net Residential Area (SF) Total Fee Per SF Very Low Income (<=50% AMI) $280,783 24.1 $6,769,850 Low Income (51-80% AMI) $240,477 23.6 $5,682,340 Moderate Income (81-120% AMI) $175,558 26.2 $4,598,346 Total $17,050,536 200,000 $85 Sources: California Housing and Community Development; Individual lenders; Affordable and market-rate project pro formas; DataQuick, 2014; RS Means, 2014; IMPLAN 3 via Applied Development Economics, 2015; Vernazza Wolfe Associates, Inc. & Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -52- SUMMARY OF CONSERVATIVE ASSUMPTIONS The housing impact fee nexus analysis methodology utilizes conservative assumptions that result in a lower estimate of the nexus-supported maximum fee. Some of the conservative assumptions undertaken in the analysis include the following:  Prices and rental rates for new development. Because there has been little new housing development completed in the aggregate in San Mateo County the sale prices and rental rates for new market-rate housing are based on older market data. The rental rates and sale prices for projects that are coming on the market today are significantly higher. The use of lower prices and rents results reduces the total nexus fee calculation.  Economic impact analysis model. The IMPLAN3 model only measures the impacts of new market-rate housing development in San Mateo County. It does not measure any of the impacts that could be occurring in other Bay Area counties. The economic impact analysis is modeled on a household income change approach, which adjusts for income taxes and savings when calculating the employment impacts of new households.  Cost estimates for affordability gap analysis. The affordability gap analysis measures the difference between what households can afford to pay for housing and the cost of new housing units. To ensure that the gap is conservative, the development cost estimates are based on the lower range of land and construction costs in San Mateo County. In many sub- areas of the county, including priority-development areas and downtown locations, land costs for housing sites may be higher, particularly under today’s market conditions.  Extremely low income households and very low income households are combined in the affordability gap analysis. The affordability gap analysis combines these two income groups, thereby reducing the total fee calculation.  Affordability gap for owner households. The calculation of the affordability gap for ownership households only considers moderate-income households. Low and very low income households are not considered in the calculation. This also results in a lower estimate of the maximum fee.  Feasibility analysis. The analysis takes into account the financial feasibility of adding the maximum impact fee and reduced fee levels to the total cost of new development. The financial feasibility component of the analysis incorporates market-supportable assumptions about revenues, costs, land costs, and developer return expectations based on research on recent development trends. The results of financial analysis informed the final recommendations on the housing impact fee.  Comparison to other cities. The Consultant Team researched existing impact fees and BMR policies in other nearby cities to determine the competitiveness of the maximum fee and reduced fee levels. The fee recommendations in this report incorporate the findings from the comparative analysis.  Overlap analysis. The City is undertaking two impact fee nexus studies at the same time: the commercial linkage fee nexus study and the housing impact fee nexus study. To minimize the potential that some jobs could be double-counted by including the same worker households in both studies, the Consultant Team ensured that the recommended fees for the two programs Draft Burlingame Residential Impact Fee Nexus Study -53- (commercial linkage and housing fees) would – when combined –mitigate less than 100 percent of the total impact. Draft Burlingame Residential Impact Fee Nexus Study -54- There are a number of policy considerations that can be taken into account when jurisdictions consider adopting an affordable housing impact fee on new market-rate development. These may include factors such as the likely impact of the proposed fee levels on local housing development, the competitiveness of the city in attracting development relative to neighboring jurisdictions, the impact of the proposed fee on existing city fee level, and the role of the proposed fee in meeting the city’s overall affordable housing objectives. This section provides a discussion of some of the key financial and policy questions for Burlingame. FINANCIAL FEASIBILITY ANALYSIS Summary of Residential Prototypes As discussed in more detail in Section III of this report, this nexus analysis is based on three residential prototypes: single-family attached units, ownership condominiums and rental apartments. Figure VII-1 summarizes the characteristics of the three development prototypes that were tested for financial feasibility. These prototypes are representative of the types of market rate housing development projects that can reasonably be expected in Burlingame. The single-family attached units are Type V wood frame buildings with a tuck-under parking, a density of 12 units per acre, and an average net area per unit of 1,900 square feet. The condominiums are Type V wood frame buildings with underground parking and a density of 38 units per acre. The average net residential area is 1,650 square feet per unit. Half of the condominium units are two-bedroom units, and the other half are three-bedroom units. The apartment prototype building is Type V wood frame construction, with podium parking and a density of 40 units per acre. The average net area per unit is 1,000 square feet. Half of the apartment units are one-bedroom units, and the other half are two-bedroom units. Figure VII-1. Residential Prototypes Building Characteristics Single-Family Attached Condominiums Apartments Building Type Type V Type V Type V Total Residential Units (a) 20 20 200 Avg. Size Unit in Square Feet (SF) 1,900 1,650 1,000 Net Square Footage (NSF) 38,000 33,000 200,000 Parking Type Tuck-Under Underground Podium Efficiency Factor (b) 85% 85% 65% Gross Square Footage (GSF) 44,706 38,824 307,692 Floor Area Ratio (FAR) (c) 0.6 1.7 1.4 Land Area (SF) 74,510 22,837 219,780 Land Area (Acres) 1.71 0.52 5.05 Units per Acre 12 38 40 Notes: (a) Unit characteristics are described in more detail in Section III. (b) Ratio of leasable square footage to gross square footage. (c) Floor area ratio (FAR) measures density by dividing gross building area by total site area. Source: Vernazza Wolfe Associates, Inc. and Strategic Economics, 2015. VII. FEASIBILITY AND POLICY CONSIDERATIONS Draft Burlingame Residential Impact Fee Nexus Study -55- Fee Levels In order to provide Burlingame with guidance on how proposed fees could impact development decisions, the Consultant Team conducted a financial feasibility analysis that tested the impact of different fee scenarios on developer profit. In addition to the maximum nexus-based level, three additional fee scenarios were evaluated for each prototype. These calculations provide Burlingame with an understanding of the impact of different fee scenarios on the financial feasibility of residential development projects. Figure VII-2 demonstrates the calculated fees per unit for each prototype for all four scenarios. The fees can also be calculated on per square foot basis. The per-square-foot fees at different fee levels are shown in Figure VII-3. Figure VII-2. Fee Levels per Unit for Prototypes Prototype Net Residential SF per Unit Scenario 1 (Maximum Fee) Scenario 2 Scenario 3 Scenario 4 Single-Family Attached 1,900 $98,541 $95,000 $76,000 $47,500 Condominium 1,650 $91,598 $82,500 $41,250 $24,750 Apartments 1,000 $85,253 $50,000 $25,000 $15,000 Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. Figure VII-3. Fee Levels per Square Foot for Prototypes Prototype Net Residential SF per Unit Scenario 1 (Maximum Fee) Scenario 2 Scenario 3 Scenario 4 Single-Family Attached 1,900 $52 $50 $40 $25 Condominium 1,650 $56 $50 $25 $15 Apartments 1,000 $85 $50 $25 $15 Sources: Vernazza Wolfe Associates, Inc.; Strategic Economics, 2015. Methodology Financial feasibility of the fee options was tested using a pro forma model that measures the residual land value of a given development project. Many pro forma models are structured to solve for the financial return for the developer or investors (internal rate of return). In contrast, the residual land value method of analysis solves for the value of the land. This method recognizes that the value of land is inextricably linked to what can be built on it, and that development potential is heavily influenced by zoning, lot size/configuration, neighborhood context, and other factors. The pro forma model tallies all development costs (minus land) including direct construction costs, indirect costs (including financing), and developer fees. Revenues from unit sales or rental leases are then summed. The total project costs are then subtracted from the total project revenues. The balance is the residual value, representing the price a developer would pay for the land if pursuing that project. The fee levels were then added as an additional development cost to measure the effect on the residual land value. Revenues To estimate income from residential development, the analysis uses the sales prices and monthly rents presented in Section III of this report and summarized in Figure VII-4. These revenue assumptions were based on a review of local and regional market data, including information on the type of Draft Burlingame Residential Impact Fee Nexus Study -56- development that has been recently constructed or is planned or proposed in Burlingame; and current sales prices and rental rates of recently built (or sold) residential development in Burlingame and neighboring cities. For single-family attached and condominium projects, the revenues are calculated by multiplying the unit count by the sales price. Single-family attached units are estimated at $1,132,000 and condominium units at $942,000 or $1,080,000, depending on size. For rental projects, the revenues were estimated using an income capitalization approach. This valuation approach first estimates the annual net operating income (NOI) of the apartment prototype, which is the difference between total project income (annual rents) and project expenses, including operating costs23 and vacancies. The NOI is then divided by the capitalization rate (cap rate) to derive total project value. Figure VII-5 summarizes the calculations and data source used for estimating the value of the apartment prototype. Figure VII-4. Prototype Sales Prices and Rents Prototype Unit Type Number of Units Net Area (SF) Unit Sales Price/ Monthly Rent Price or Rent per SF Single-Family Attached (For-Sale) Type V wood frame 3 BD/3 BA 20 1,900 $1,132,000 $596 12 units per acre Tuck-under podium parking Net Residential Area 38,000 Condominiums (For-Sale) Type V wood frame 2 BD/2 BA 10 1,500 $942,000 $628 38 units per acre 3 BD/2 BA 10 1,800 $1,080,000 $600 Subterranean parking Net Residential Area (Net SF) 33,000 Average Net SF per Unit 1,650 Apartments (Rental) Type V wood frame 1 BD/1 BA 100 800 $3,600 $4.50 40 units per acre 2 BD/2 BA 100 1,200 $4,300 $3.58 Podium parking Net Residential Area (Net SF) 200,000 Average Net SF per Unit 1,000 Sources: Strategic Economics & Vernazza Wolfe Associates, Inc., 2014. 23 Operating costs were calculated based on the Institute of Real Estate Management Survey of Apartment Buildings in the San Francisco Metropolitan Statistical Area (MSA). Draft Burlingame Residential Impact Fee Nexus Study -57- Figure VII-5. Apartment Revenue Calculations Apartment Revenues Calculation Total Gross Annual Rental Income (a) Gross annual rents $9,480,000 Operating Expenses (b) 30 percent of income ($2,844,000) Vacancy (c) 5 percent of income ($474,000) Annual Net Operating Income (c) Income less expenses and vacancy $6,162,000 Capitalization Rate (d) 5 percent 5.00% Capitalized Value Project value $123,240,000 Notes: (a) Average monthly rents multiplied by 12 months multiplied by unit count for each unit type. (b) Institute of Real Estate Management, San Francisco MSA Apartment Properties, 2011. (c) Assumes a vacancy rate of 5 percent in a stabilized rental market. (d) According to DTZ's San Francisco Real Estate Forecast 2015, the cap rate for apartments is approximately 5 percent. Sources: IREM, DTZ, Strategic Economics, 2015. Development Costs Cost estimates for the residential prototypes include direct construction costs (site work, building costs, and parking), indirect costs, financing costs, and developer overhead and profit. Development cost estimates for the pro forma analysis are distinct from the cost estimates provided in the countywide affordability gap analysis. Direct building construction cost estimates are based on RS Means and project pro formas for recent projects in San Mateo County.24 Soft costs and developer overhead/profit were calculated based on a review of similar project pro formas in the Bay Area. City fee calculations were provided by City staff. Each of the cost factors used in the analysis is summarized in Figure VII-6. 24 The development cost estimates used in the pro forma analysis are slightly different from those used in the affordability gap analysis because they include more recent real estate data, and are more tailored for Burlingame and Central San Mateo County, rather than an overall estimate for the entire county. Furthermore, the market-rate units are generally larger and costlier to build than the “modest” units described in the affordability gap analysis. Draft Burlingame Residential Impact Fee Nexus Study -58- Figure VII-6. Development Cost Factors Development Costs Metric Direct Costs (a) Single-Family Attached $150 Per NSF Condominiums $225 Per NSF Apartments $210 Per NSF Indirect Costs (b) A&E & Consulting 6.00% of direct costs Permits & Fees (Excl. Housing) (c) estimated by City Taxes, Insurance, Legal & Accounting 3.00% of direct costs Other (d) 3.00% of direct costs Contingency 5.00% of indirect costs Total Indirect Costs Financing Costs (b) Loan to Cost Ratio (LTC) 80% of total costs Loan Interest Rate 6% annual rate Compounding Period 12 months Construction/Absorption Period (e) 12 to 24 months Utilization Rate 55% of loan Loan Fees 2% of loan Developer Overhead & Profit 12% of total costs (excl. land) Notes: (a) Direct costs include site work, building construction, and parking costs of $30,000 per space for underground parking and $25,000 per space for podium parking. Costs estimates are based on review of Bay Area pro formas for similar projects and data from RS Means. (b) Based on review of similar project pro formas in the Bay Area and interviews with developers. (c) Permits & fees are a generalized estimate of costs based on prototypes, calculated by City staff. Permits and fees for actual projects vary depending on many factors. (d) Other soft costs include marketing, personal property, environmental studies, etc. (e) Absorption periods are estimated at 24 months for apartments, condominiums and single- family attached units; and 18 months for single-family subdivisions. Sources: RS Means, 2014; Similar pro formas; Burlingame, 2015; Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -59- Land Value In order to understand what the different fee levels indicate regarding financial feasibility, the residual land values for each fee scenario can be compared with the market value of residential land in Burlingame. If the residual value is higher than the market value, the project is feasible. If the residual value is lower than the market price, then the project is infeasible. To determine the land value of sites zoned for lower density uses (single-family attached units) and higher density multi-family residential uses (condominiums and rental apartments), the Consultant Team analyzed recent sales transactions in Central San Mateo County, and reviewed third-party property appraisals. 25 Figure VII-7 illustrates the results of the land value analysis for lower density single-family attached residential uses, while Figure VII-8 shows the value of properties zoned for higher density multi-family residential uses. For lower density residential uses, values range considerably depending on location and size, from $28 per square foot for the lower quartile, to $44 per square foot for the upper quartile. For higher-density multi-family housing, the average value is $201 per square foot. For this analysis, the estimated land value is $25 to $50 for lower density sites, and between $175 and $225 per square foot for higher density multi-family development, including condominiums and apartments. For all prototypes, the market value of land is presented as a range because the land value of properties is likely to vary depending on location, size, and other conditions. 25 The land value assumptions utilized in the pro forma analysis are different from the affordability gap analysis in two ways: 1) they include more recent transactional data than the affordability gap analysis, which was completed in July 2014; and 2) they are tailored to Burlingame and Central San Mateo County, unlike the affordability gap estimate, which is a countywide estimate. Draft Burlingame Residential Impact Fee Nexus Study -60-Figure VII-7. Single-Family Vacant Land Sales Transactions in Central San Mateo County Address City Sale Price Lot Area Price/ SF Land Naughton Ave Belmont $150,000 5,000 $30.00 Cipriani Belmont $150,000 6,750 $22.22 2200 Ralston Ave Belmont $225,000 3,950 $56.96 Marsten Ave Belmont $200,000 8,712 $22.96 Naughton Belmont $256,000 8,250 $31.03 Naughton Belmont $256,000 10,350 $24.73 Belmont Ave 1 Belmont $920,000 4,280 $36.03 Belmont Ave 1 Belmont $920,000 7,827 $36.03 Belmont Ave 1 Belmont $920,000 4,000 $36.03 Belmont Ave 1 Belmont $920,000 9,425 $36.03 1724 Terrace Dr Belmont $315,000 11,812 $26.67 1717 Notre Dame Ave Belmont $299,000 7,250 $41.24 383 Sierra Dr Hillsborough $11,800,000 124,582 $94.72 1085 Parrott Dr Hillsborough $1,450,000 29,250 $49.57 Hillsborough $2,200,000 34,717 $63.37 Hillsborough $999,000 22,651 $44.10 Hillsborough $1,280,000 25,265 $50.66 30 Cinnamon Ct Hillsborough $1,780,000 42,400 $41.98 275 Robin Rd Hillsborough $1,750,000 71,874 $24.35 101 Tiptoe Ln Hillsborough $3,500,000 148,958 $23.50 77 New Place Rd Hillsborough $2,512,500 68,475 $36.69 138 New Place Rd Hillsborough $4,750,000 114,998 $41.31 Summary Statistics Lower Quartile (25%) $27.50 Median Value $36.03 Upper Quartile (75%) $43.57 Source: CoreLogic, 2015; Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -61-Figure VII-8. Multi-Family Vacant Land Sales Transactions in Central San Mateo County, 2009-2014 Site Address Location Price Lot Area Price/ SF Land 1950 Elkhorn Court San Mateo $16,745,000 88,862 $188 E. Side of Tilton Ave/N. El Camino Real San Mateo $4,505,000 33,572 $134 1840 Ogden Dr. Burlingame $7,180,000 38,768 $185 2790 S. El Camino Real San Mateo $6,100,000 14,331 $426 10 Barneson San Mateo $2,530,000 19,341 $131 Shea Homes of Northern CA San Mateo $13,480,000 79,279 $170 TRI Pointe Homes, LLC San Mateo $22,510,000 132,422 $170 Summary Statistics Average Value per SF $201 Weighted Average Value per SF $180 Source: Property appraisals; DataQuick, 2015; Loopnet, 2015; Strategic Economics, 2015 Draft Burlingame Residential Impact Fee Nexus Study -62- Financial Feasibility Results Figures VII-9 and VII-10 provide the pro forma for the single-family attached, condominium and apartment prototypes. Below is a discussion of the findings. Single-Family Attached According to the feasibility analysis, with no added nexus fees, the single-family attached prototype would have total development costs of $8.4 million and a sale value of $22.6 million. The residual land value, without nexus fees, is estimated at $191 per square foot. This residual land value is higher than the current value of land in Burlingame for single-family attached units, estimated at between $25 and $50 per square foot. The analysis shows that under current market conditions, the single-family attached prototype can also support a maximum impact fee of $52 per square foot. The maximum housing impact fee level brings development costs from $8.4 million to $10.4 million. This cost increase results in a residual land value of $165 per square foot, which is higher than the current market value of land in Burlingame. Lower fee levels result in higher residual land values, and are even more economically viable from the perspective of a developer. Condominiums The feasibility analysis estimates that under current sales prices, the condominium prototype would have revenues of $20.2 million, and a total development cost of $11.9 million. The difference between the revenues and costs is the residual land value, which is estimated at $365 per square foot. This residual land value is higher than the current market value of multi-family land in Burlingame, which is between $175 and $225 per square foot. The analysis shows that under current market conditions, the condominium prototype can also support a maximum impact fee of $56 per square foot. The maximum housing impact fee level brings development costs from $11.9 million to $13.7 million. This cost increase results in a residual land value of $284 per square foot, which is higher than the current market value of multi-family land in Burlingame. As in the case of the single-family attached prototype, lower fee levels result in higher residual land values, and are even more economically viable from the perspective of a developer. Apartments For apartments, the financial analysis shows that under current market conditions, without a nexus fee on affordable housing, a prototypical apartment development costs approximately $70.9 million, with a total project value of $123.2 million. The residual land value on this prototype, excluding a nexus fee, is estimated at $262 per square feet. The current market value of multi-family land in Burlingame is between $175 and $225 per square foot. Scenario 1, the maximum nexus fee of $85 per square foot, results in a residual land value of $160 per square foot, which is below the market value of higher density residential land in Burlingame, making the project infeasible to develop under current conditions. The lower fee scenarios of $50, $25 and $15 per square foot are all financially feasible under current rental rates, yielding a residual land value of over $175 per square foot. The following summarizes the results for the apartment prototype:  The maximum justified impact fee of $85 per square foot raises development costs to $87.9 million, and accounts for 15.9 percent of total project costs. The residual land value is $160 per square foot, below the threshold required for financial feasibility. Draft Burlingame Residential Impact Fee Nexus Study -63-  Scenario 2, a reduced impact fee set at $50 per square foot raises development costs to $80.9 million, making up 5.2 percent of total development costs. This fee scenario is financially feasible under today’s market conditions, with a residual land value of $193 per square foot.  Scenario 3, a fee level of $25 per square foot results in development costs of $75.9 million. This fee level would make up 2.7 percent of total development costs. The residual land value is $215 per square foot.  Scenario 4, a fee of $15 per square foot results in a total development cost of $73.9 million. The fee is 1.4 percent of total development costs, and the residual land value is $224 per square foot. Draft Burlingame Residential Impact Fee Nexus Study -64- Figure VII-9. Pro Forma Model Results for the Single-Family Attached Prototype Single-Family Attached Development Costs (Excl. Land & Nexus Fee) per Unit Total Direct Costs (a) Building & On-Site Improvements $285,000 $5,700,000 Building & Onsite per NSF $150 Parking Incl. above Incl. above Total Direct Costs $285,000 $5,700,000 Total Direct Costs per NSF $150 Indirect Costs (a) A&E & Consulting $17,100 $342,000 Permits & Fees (Excl. Nexus fee) (b) $32,072 $641,432 Taxes, Insurance, Legal & Accounting $8,550 $171,000 Other Indirect Costs $8,550 $171,000 Contingency $3,314 $66,272 Total Indirect Costs $69,585 $1,391,703 Financing Costs (a) $19,715 $394,299 Developer Overhead & Profit (a) $44,916 $898,320 Total Development Costs $419,216 $8,384,322 Total Development Costs (per NSF) $221 Income Gross Income/Sales Proceeds $1,132,000 $22,640,000 Less: Operating/Sales Expenses & Vacancy Net (Operating or Sales) Income $1,132,000 $22,640,000 Capitalized Value/Sales Value (c) $1,132,000 $22,640,000 Residual Land Value Analysis Total Development Costs (TDC) Except Land With Various Levels of Nexus Fee Nexus Fee per NSF TDC incl. Nexus Fee No Fee $0 $8,384,322 Scenario 1: Max Fee $52 $10,355,135 Scenario 2 $50 $10,284,322 Scenario 3 $40 $9,904,322 Scenario 4 $25 $9,334,322 Residual Land Value per Sq. Ft. at Various Nexus Fee Levels Nexus Fee per NSF Residual Land Value per SF No Fee $0 $191 Scenario 1: Max Fee $52 $165 Scenario 2 $50 $166 Scenario 3 $40 $171 Scenario 4 $25 $179 Nexus Fee as Percentage of Total Development Costs Nexus Fee per NSF Fee as % of TDC No Fee $0 0.00% Scenario 1: Max Fee $52 15.58% Scenario 2 $50 14.40% Scenario 3 $40 12.83% Scenario 4 $25 11.20% Current Land Values/ Threshold for Feasibility $25-$50 Notes: (a) See Figure VII-5. (b) This represents a generalized estimate of the fee and permit costs for each prototype, calculated by city staff. Actual fee and permit costs for development projects will vary depending on many factors. (c) See Figure VII-4. (d) Feasibility threshold varies by density of prototype. For single-family attached, the threshold is $35 - $120 per square foot. For multi-family rental apartments and condominiums, the threshold is $170 to $250 per square foot Acronyms: SF: square feet NSF: net square foot TDC: total development costs Source: Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -65- Figure VII-10. Pro Forma Model Results for Condominium and Apartment Prototypes Condominiums Apartments Development Costs (Excl. Land & Nexus Fee) per Unit Total per Unit Total Direct Costs (a) Building & On-Site Improvements $371,250 $7,425,000 $210,000 $42,000,000 Building & Onsite per NSF $225 $210 Parking $45,000 $900,000 $37,500 $7,500,000 Total Direct Costs $416,250 $8,325,000 $247,500 $49,500,000 Total Direct Costs per NSF $252 $248 Indirect Costs (a) A&E & Consulting $24,975 $499,500 $14,850 $2,970,000 Permits & Fees (Excl. Nexus fee) (b) $32,604 $652,085 $16,595 $3,318,989 Taxes, Insurance, Legal & Accounting $12,488 $249,750 $7,425 $1,485,000 Other Indirect Costs $12,488 $249,750 $7,425 $1,485,000 Contingency $4,128 $82,554 $2,315 $462,949 Total Indirect Costs $86,682 $1,733,639 $48,610 $9,721,939 Financing Costs (a) $27,963 $559,260 $20,372 $4,074,469 Developer Overhead & Profit (a) $63,707 $1,274,148 $37,978 $7,595,569 Total Development Costs $594,602 $11,892,047 $354,460 $70,891,977 Total Development Costs (per NSF) $360 $354 Income Gross Income/Sales Proceeds $1,011,000 $20,220,000 $47,400 $9,480,000 Less: Operating/Sales Expenses & Vacancy $16,590 $3,318,000 Net (Operating or Sales) Income $1,011,000 $20,220,000 $30,810 $6,162,000 Capitalized Value/Sales Value (c) $1,011,000 $20,220,000 $616,200 $123,240,000 Residual Land Value Analysis Total Development Costs (TDC) Except Land With Various Levels of Nexus Fee Nexus Fee per NSF TDC incl. Nexus Fee Nexus Fee per NSF TDC incl. Nexus Fee No Fee $0 $11,892,047 $0 $70,891,977 Scenario 1: Max Fee $56 $13,724,007 $85 $87,942,513 Scenario 2 $50 $13,542,047 $50 $80,891,977 Scenario 3 $25 $12,717,047 $25 $75,891,977 Scenario 4 $15 $12,387,047 $15 $73,891,977 Residual Land Value per Sq. Ft. at Various Nexus Fee Levels Nexus Fee per NSF Residual Land Value per SF Nexus Fee per NSF Residual Land Value per SF No Fee $0 $365 $0 $262 Scenario 1: Max Fee $56 $284 $85 $160 Scenario 2 $50 $292 $50 $193 Scenario 3 $25 $329 $25 $215 Scenario 4 $15 $343 $15 $224 Nexus Fee as Percentage of Total Development Costs Nexus Fee per NSF Fee as % of TDC Nexus Fee per NSF Fee as % of TDC No Fee $0 0.00% $0 0.00% Scenario 1: Max Fee $56 13.07% $85 15.89% Scenario 2 $50 5.69% $50 5.19% Scenario 3 $25 2.35% $25 2.67% Scenario 4 $15 1.19% $15 1.35% Current Land Values/ Threshold for Feasibility $175-$225 $175-$225 Notes: (a) See Figure VII-5. (b) This represents a generalized estimate of the fee and permit costs for each prototype, calculated by city staff. Actual fee and permit costs for development projects will vary depending on many factors. (c) See Figure VII-4. (d) Feasibility threshold varies by density of prototype. For single-family attached, the threshold is $35 - $120 per square foot. For multi-family rental apartments and condominiums, the threshold is $170 to $250 per square foot Acronyms: SF: square feet NSF: net square foot TDC: total development costs Source: Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -66- ADDITIONAL POLICY CONSIDERATIONS While the nexus study provides the necessary economic analysis for the residential impact fees, it is up to policymakers to decide what percentage of the maximum fee to be charged on new development. Financial feasibility is one important factor to examine. In addition, there are a number of other policy issues to consider, such as:  How much residential fees would increase with a new residential impact fee;  How a residential impact fee in Burlingame would compare with those in neighboring jurisdictions; and  How a residential impact fee fits into Burlingame’s overall housing strategy. A discussion of each of these topics is presented below. Comparison to Existing Fees on Residential Development Figure VII-11 presents information on current city fees charged on the three residential prototypes included in this nexus analysis. It also demonstrates the effect of the residential impact fee scenarios on overall city permits and fees. Currently, Burlingame’s fees for the residential prototypes are estimated to range from $17 to $20 per square foot for the three prototypes.26 Once the nexus-based residential impact fees at various levels are added to existing fees, the total fees increase as presented in Figure VII-11. The maximum fee (Scenario 1) increases total fees by over 400 percent for all prototypes. 26 The fee estimates presented above represent the best approximations available from Burlingame. Draft Burlingame Residential Impact Fee Nexus Study -67-Figure VII-11. Burlingame Total Residential Fees Under Selected Fee Scenarios Single-Family Attached Condominiums Apartments Existing Fees and Permits per Unit (Excl. Nexus Fees) $32,072 $32,604 $16,595 Existing Fees and Permits per SF (Excl. Nexus Fees) $17 $20 $17 Fee Scenario 1: Maximum Fees Nexus Fee per SF $52 $56 $85 Combined Fees per SF $69 $75 $102 Fee Scenario 2 Nexus Fee per SF $50 $50 $50 Combined Fees per SF $67 $70 $67 Fee Scenario 3 Nexus Fee per SF $40 $25 $25 Combined Fees per SF $57 $45 $42 Fee Scenario 4 Nexus Fee per SF $25 $15 $15 Combined Fees per SF $42 $35 $32 Sources: City staff, 2015; Strategic Economics, Inc; Vernazza Wolfe Associates, Inc., 2015. Draft Burlingame Residential Impact Fee Nexus Study -68- Comparison to Neighboring Jurisdictions It is challenging to compare the potential residential impact fee in Burlingame to the adopted fees in neighboring jurisdictions, because most cities in San Mateo County are participating in the multi-city nexus studies, and the fee levels may change. However, Figure VII-14 provides the most up-to-date information available to compare Burlingame’s potential fee scenarios to existing residential impact fees in jurisdictions in San Mateo and Santa Clara Counties. If the maximum impact fees calculated for Burlingame were adopted for the three prototypes, they would all exceed the fees charged in neighboring jurisdictions, as listed in Figure VII-12. The recommended fee level of between $40 and $50 per square foot for the single-family attached prototype is slightly higher than in most nearby cities, with the exception of San Carlos. The recommended fee levels for the single-family attached prototypes are equivalent to between seven and eight percent of the sales price, which is comparable with the inclusionary in lieu fee in Sunnyvale, set at seven percent of sales price. For condominiums, the lower end of the recommended fee range ($25 to $50 per square foot) is comparable to the housing impact fees in Cupertino, East Palo Alto, and Daly City. For apartments, the recommended fee range of $25 to $50 per square foot is higher than the housing impact fees in most neighboring cities, which tend to be between $15 and $25 per square foot. The exception is the City of San Carlos, which has a housing impact fee of between $24 and $44 per square foot for apartments. Draft Burlingame Residential Impact Fee Nexus Study -69-Figure VII-12. Comparison with Fees in Neighboring Jurisdictions Single Family Attached Condominiums Apartments Date Fee Was Adopted Burlingame Fee Scenarios Scenario 1 - Maximum Fee N/A Per SF $52 $56 $85 Per Unit $98,541 $91,598 $85,253 Scenario 2 N/A Per SF $50 $50 $50 Per Unit $95,000 $82,500 $50,000 Scenario 3 N/A Per SF $40 $25 $25 Per Unit $76,000 $41,250 $25,000 Scenario 4 N/A Per SF $25 $15 $15 Per Unit $47,500 $24,750 $15,000 Impact Fees Cupertino $15/SF $20/SF $25/SF 2015 Daly City $14/SF $22/SF $25/SF 2014 East Palo Alto $22/SF $22-$44/SF (a) $22/SF 2014 Mountain View N/A N/A $15/SF 2015 San Carlos (b) $23.54-$43.54/SF $20.59-$42.20/SF $23.54-$43.54/SF 2010 San Jose N/A N/A $17/SF (c) 2014 Sunnyvale N/A N/A $17/SF (d) 2015 Inclusionary Policies and In-Lieu Fees Mountain View 3% of Sales Price 3% of Sales Price N/A 2015 San Jose (e) Inclusionary @15% or $17/SF in-lieu fee Inclusionary @15% or $17/SF in-lieu fee N/A 2014 Sunnyvale 7% of Sales Price 7% of Sales Price N/A 2015 Notes: (a) Fee ranges from $22 per square foot for for-sale housing without structured parking to $44 per square foot for housing with structured parking. (b) Fees shown as ranges. Actual fees charged depend on project size. (c) Fee goes into effect in 2016. Developments approved by July 2016 are exempt with a longer exemption for downtown development. (d) Fees for projects that are between 4 and 7 units pay 50 percent of this fee. (e) Inclusionary policy and in-lieu fee apply to for-sale developments of more than 20 units. Sources: The Non-Profit Housing Association of Northern California; City of San Carlos Municipal Code; Vernazza Wolfe Associates, Inc; Strategic Economics, 2015. Draft Burlingame Residential Impact Fee Nexus Study -70- The potential fee scenarios can also be compared with existing residential impact fees in other Bay Area cities outside of San Mateo County and Santa Clara County for regional context. This list is not an exhaustive inventory of all Bay Area cities with residential impact fees, but it provides information about many cities that have fees on housing. As shown in Figure VII-13, housing impact fees in other Bay Area cities vary significantly from city to city. Figure VII-13. Existing Housing Impact Fees in Bay Area Cities City Project Type Amount Berkeley Rental Development $28,000 per unit ($8,000 discount for eligible projects) Emeryville Rental Residential Projects $20,000 per dwelling unit Fremont For-Sale and Rental Development $19.50 per habitable SF $22.50 per habitable SF for single family homes on lots 6,000 SF or greater. Livermore For-Sale and Rental Development Based on type of dwelling produced Napa For Sale and Rental Development Single Family: $ 2.20 per SF Condo: $2.20 per SF Rental: $3.75 per sq. Pleasanton For-Sale and Rental Development Single Family (over 1,500 SF): $10,880 per unit Single Family (1,500 SF or less) and Multi-family (Apt. or Condo): $2,696 per unit Adjusted annually based on CPI San Francisco Any housing project that consists of five or more units $199,698 per studio unit $270,411 per 1 bedroom unit $367,711 per 2 bedroom unit $419,621 per 3 bedroom unit $522,545 per 4 bedroom unit Santa Rosa For-Sale and Rental Development 2.5% of sale price of for-sale units. Based on SF for rentals Sources: The Non-Profit Housing Association of Northern California, Strategic Economics, and Vernazza Wolfe Associates, Inc, 2015. Role of Fees in Overall Housing Strategy Burlingame does not currently have a residential impact fee program or commercial linkage fee program. In January 2015, Burlingame has adopted a Density Bonus Ordinance replacing its inclusionary zoning ordinance. The Density Bonus ordinance states that for residential projects of five or more units, developers are granted a density bonus of 20 percent for building any of the following: 10 percent of units as affordable to lower income households, five percent of units as affordable to very low income households, a senior citizen housing development, or a qualifying mobile home park. A density bonus of five percent is granted for developers building at least ten percent of dwelling units affordable for moderate income households. The revenues to be collected from a residential impact fee provide an important source of local funding; however, fee revenues do not generally cover the entire funding gap encountered by sponsors of new affordable housing. Additional funding is almost always required. Currently, affordable housing in Burlingame is funded through the use of a variety of sources, including funding provided by Burlingame and San Mateo County, as well as the federal government, e.g., the CDBG and HOME Program. In addition, equity is also provided directly by developers and indirectly raised through the allocation and sale of Low Income Housing Tax Credits. Finally, a Draft Burlingame Residential Impact Fee Nexus Study -71- portion of permanent financing comes from conventional loans obtained from private lending institutions. Residential impact fee revenues (and commercial linkage fee revenues, if adopted) would augment existing affordable housing funds. The existence of a local revenue source such as nexus fees can also make certain projects more competitive for outside funding. It should be noted that revenues from a residential impact fee need to be spent on housing that benefits the workforce since the funds stem from affordable housing impacts related to new employment. Potential for Overlap between Residential and Commercial Fees The City is also undertaking a commercial linkage nexus study simultaneously, and may soon adopt a commercial linkage fee in a parallel process to the residential impact fee considered in this report. One issue that may arise if a city considers the adoption of both fees is whether there is any overlap between the two impact fees, resulting in potential “double-counting” of impacts.  The commercial linkage fee study examined jobs located in new commercial buildings including office/ R&D/ medical office buildings, retail/ restaurants/ services, and hotels. The nexus analysis then calculated the average wages of the workers associated with each commercial building to derive the annual income of the new worker households. The analysis determines the area median income (AMI) level of the new worker households to identify the number of worker households that would require affordable housing.  The residential impact fee nexus analysis examines households buying or renting new market rate units in the jurisdiction. The household expenditures by these new residents have an economic impact in the county, which can be linked to new jobs. The nexus analysis quantified the jobs linked to new household spending, and then calculated the wages of new workers and the household income of new worker households. Each worker household was then categorized by AMI to determine the number of households that require affordable housing. There may be a share of jobs counted in the commercial linkage fee analysis that are also included in the residential nexus analysis, particularly those in the service sector. Other types of jobs counted in the residential nexus analysis are unique to that analysis, and are not included in the commercial linkage fee analysis (for example, public sector employees). The commercial linkage fee analysis is limited to private sector office/ R&D/ medical office buildings, hotels, and retail/ restaurants/ services space. There is potential that some jobs could be counted in both analyses, and that the two programs may overlap in mitigating the affordable housing demand from the same worker households. Each of the proposed fees is required to mitigate no more than 100 percent of the demand for affordable units by new worker households. In order to reduce the potential for overlap between the two programs, it is advisable to set both the commercial linkage fees and housing impact fees at below 100 percent of the nexus-based maximum. In this way, when combined, the programs would mitigate less than 100 percent of the impact even if there were overlap in the jobs counted in the two nexus analyses. Administrative Issues When adopting a residential impact fee, there are several administrative issues to consider. First, does the City want to encourage smaller units? By charging lower fees for smaller units, it is possible that it could encourage development of smaller units. Draft Burlingame Residential Impact Fee Nexus Study -72- Secondly, similar to any impact fee, it will be necessary to adjust the residential impact fees on an annual basis. Adjustments are also needed due to possible changes in the affordability gap. However, the connection between new residential construction and growth in employment derived from the IMPLAN3 Model is unlikely to change in the short run. It is advisable that the City adjusts its residential impact fee annually by using an annual adjustment mechanism. An adjustment mechanism updates the fees to compensate for inflation in development costs. To simplify annual adjustments, it is recommended that the City select a cost index that is routinely published. While there is no index that tracks changes in Burlingame’s development costs, including land, specifically, there are a few options to consider.  The first option is the Consumer Price Index (CPI) Shelter component. The shelter component of the CPI covers costs for rent of primary residence, lodging away from home, owner’s equivalent rent of primary residence, and household insurance. Of the total shelter index, costs associated with the owner’s equivalent rent of primary residence constitute 70 percent of total costs entered into the index.  A second option to adjust the fee for annual inflation is the construction cost index published in the Engineering News Record (ENR). This index is routinely used to update other types of impact fees. Cost index information for the San Francisco region, the smallest geographical area available for this purpose, is available on an annual basis. The ENR cost index measures inflation in construction costs, but it does not incorporate changes in land costs or public fees charged on new development. Because these indices are readily available, reliable, and relatively simple to use, it is recommended that Burlingame use these indices for annual adjustments. However, because both understate the magnitude of inflation, it is recommended that the City base its annual adjustment mechanism on the higher of the two indices (CPI or ENR), using a five-year moving average as the inflation factor. In addition to revising the fee annually for inflation, the City is encouraged to update the residential impact study every five years, or at the very least, update the housing affordability gap used in the basic model. The purpose of these updates is to ensure that the fee is still based on a cost-revenue structure that remains applicable in the Burlingame housing market. In this way, the fee will more accurately reflect any potential structural changes in the relationships between affordable prices and rents, market-rate prices and rents, and development costs. Draft Burlingame Residential Impact Fee Nexus Study -73- GLOSSARY OF TERMS Affordable Housing: Under state and federal statutes, housing is defined as affordable if housing costs do not exceed 30 to 35 percent of gross household income. Annual Adjustment Mechanism: Due to inflation in housing construction costs, it is frequently necessary to adjust impact fees. An index, such as the Consumer Price Index (CPI) or a published construction cost index (for example, from the Engineering News Record) is used to revise housing fees to reflect inflation in housing construction costs. Assisted Housing: Housing that has received public subsidies (such as low interest loans, density bonuses, direct financial assistance, etc.) from federal, state, or local housing programs in exchange for restrictions requiring a certain number of housing units to be affordable to very low-, low-, and moderate-income households. Consumer price index (CPI): Index that measures changes in the price level of a market basket of consumer goods and services purchased by households. Employment Densities: The amount of square feet per employee is calculated for each property use that is subject to a commercial development housing linkage fee. Employment densities are used to estimate the number of employees that will work in a new commercial development. Household: The US Census Bureau defines a household as all persons living in a housing unit whether or not they are related. A single person living in an apartment as well as a family living in a house is considered a household. Households do not include individuals living in dormitories, prisons, convalescent homes, or other group quarters. Household Income: The total income of all the persons living in a household. Household income is commonly grouped into income categories based upon household size and income, relative to the regional median family income. Housing Affordability Gap: The affordability gap is defined as the difference between what a household can afford to spend on housing and the market rate cost of housing. Affordable rents and sales prices are defined as a percentage of gross household income, generally between 30 percent and 35 percent of income. For renters, rental costs are assumed to include the contract rent as well as the cost of utilities, excluding cable and telephone service. The difference between these gross rents and affordable rents is the housing affordability gap for renters. This calculation assumes that 30% of income is paid for gross rent. VIII. GLOSSARY OF TERMS AND ACRONYMS Draft Burlingame Residential Impact Fee Nexus Study -74- For owners, costs include mortgage payments, mortgage insurance, property taxes, property insurance, and homeowner association dues. 27 The difference between these housing expenses and affordable ownership costs is the housing affordability gap for owners. This calculation assumes that 35% of income is paid for housing costs. Housing Subsidy: Housing subsidies refer to government assistance aimed at reducing housing sales prices or rents to more affordable levels. Housing Unit: A housing unit can be a room or group of rooms used by one or more individuals living separately from others in the structure, with direct access to the outside or to a public hall and containing separate toilet and kitchen facilities. IMPLAN3: A software model that is used to provide a quantitative assessment of the interdependencies between different branches of a regional (or national) economy. The latest model, IMPLAN3, was used in the nexus studies. The major input is household income, and the major output is direct and induced employment reported by industries Inclusionary Zoning: Inclusionary zoning, also known as inclusionary housing, refers to a planning ordinance that requires that a given percentage of new construction be affordable to households with very low, low, moderate, or workforce incomes. In-Lieu Fee: A literal definition for an in-lieu fee for inclusionary units would be a fee adopted “in place of” providing affordable units. For the purposes of operating an inclusionary housing program, a public jurisdiction may adopt a fee option for developers that prefer paying fees over providing housing units on- or off-site. A fee study is frequently undertaken to establish the maximum fee that can be charged as an in-lieu fee. This fee study must show that there is a reasonable relationship between the fee and the cost of providing affordable housing. Market-Rate Housing: Housing which is available on the open market without any public subsidy. The price for housing is determined by the market forces of supply and demand and varies by location. Nexus Study: In order to adopt a residential housing impact fee or a commercial linkage fee, a nexus study is required. A nexus requires local agencies proposing a fee on a development project to identify the purpose of the fee, the use of the fee, and to determine that there is “a reasonable relationship between the fee’s use and the type of development project on which the fee is imposed.” A nexus study establishes and quantifies a causal link or “nexus” between new residential and commercial development and the need for additional housing affordable to new employees. 27 Mortgage terms for first-time homebuyers typically allow down payment of five percent; these terms require private mortgage insurance. Draft Burlingame Residential Impact Fee Nexus Study -75- Linkage Fee: A fee or charge imposed on commercial developers to pay for a development’s impact on the need for affordable housing. The fee is based on projected household incomes of new employees that will work in newly created space. The fee varies according to the type of property use. Prototypes: Prototypes are used for residential and commercial developments in order to define housing impact fees. The prototypes generally represent new development projects built in a community and are used to estimate affordable housing impacts associated with new market rate commercial and residential developments. While the prototypes should be “typical” of what is built, for ease of mathematical computation, they are often expressed as larger developments in order to avoid awkward fractions. Residential or Housing Impact Fee: A fee imposed on residential development to pay for a development’s impact on the need for affordable housing. The fee is based on projected incomes of new employees associated with the expansion of market rate developments. Two steps are needed to define the fees. The first step is the completion of a nexus study, and the second step entails selection of the actual fee amount, which can be below the amount justified by the fee study, but not above that amount. RS Means: Data source of information for construction cost data. Draft Burlingame Residential Impact Fee Nexus Study -76- DEFINITION OF ACRONYMS AMI: Area Median Income CBIA: California Building Industry Association EDD: State of California Employment Development Department FAR: Floor-area-ratio FF&E: Furniture, Fixtures, and Equipment GBA: Gross Building Area HCD: Department of Housing and Community Development (State of California) NAICS: North American Industry Classification System NSF: Net Square Feet QCEW: Quarterly Census of Employment and Wages R&D: Research and development SF: Square Feet TDC: Total Development Costs 1 STAFF REPORT AGENDA NO: MEETING DATE: January 3, 2017 To: Honorable Mayor and City Council Date: January 3, 2017 From: Syed Murtuza, Director of Public Works – (650) 558-7230 Subject: Implementation of a Pilot Program to Introduce a 15 MPH School Zone Speed Limit Along Quesada Way between Trousdale Drive and Davis Drive RECOMMENDATION Staff recommends that the City Council consider implementation of a pilot program to reduce speed limits around schools to 15 MPH (when children are present) on Quesada Way in the vicinity of Burlingame Intermediate School (BIS). BACKGROUND Section 22358.4 of the California Vehicle Code (CVC) authorizes cities to adopt a 15 mile per hour prima facie limit in a residence district, on a highway with a posted speed limit of 30 miles per hour or slower, when approaching, at a distance of less than 500 feet from, or passing, a school building or the grounds of a school building, contiguous to a highway and posted with a school warning sign that indicates a speed limit of 15 miles per hour. Since the passage of AB 321 in 2007, several California cities have initiated 15 MPH school zone speed limit programs. For example, the City of San Francisco implemented 15 MPH speed limits at several separate school sites in 2012; the City of Berkeley set reduced speed limits at its schools in 2014; and earlier this year, the City of Los Altos reduced the speed limits near schools. This 15 MPH speed limit may only be implemented on roadways with: (a) a maximum of two traffic lanes; (b) a maximum posted 30 miles per hour prima facie speed limit immediately prior to and after the school zone. Section 22358.4 does not expressly require a speed study prior to the implementation of a 15 MPH speed limit. It only states that the City must consider the requirements of Vehicle Code section 627 before implementing a 15 MPH speed limit. Generally speaking, this section of the CVC allows a local government by ordinance to declare, without having to complete an engineering and traffic study, a prima facie speed limit of 15 MPH in a school zone in a residence district within its jurisdiction. School Zone Speed Limit Reduction Pilot Program January 3, 2017 2 The reduction of vehicle speed from 25 MPH to 15 MPH improves vehicle, pedestrian, and bicycle safety by reducing stopping distances and reducing the force of a collision if one does occur. DISCUSSION The Traffic Safety and Parking Commission (TSPC) discussed t he school zone speed limit reduction topic at several meetings, and a sub-committee of commissioners was formed to review potential locations for the pilot program. Burlingame has several schools at which a 15 MPH zone could potentially be established. After reviewing all the school locations and the criteria that allow for a speed limit reduction, the sub- committee proposed that the ideal location for the pilot program would be Quesada Way between Trousdale Drive and Davis Drive. This street directly serves two schools, Burlingame Intermediate School (BIS) and Franklin Elementary School, and it also satisfies the site requirements of the statute. The key factors favoring a 15 MPH zone on Quesada Way include: 1) In middle school more students walk on their own or in groups without parents escorting them. The lack of parental supervision potentially increases the risk of conflicts between autos and pedestrians. 2) BIS has established bicycle parking on campus, promoting bicycling to and from school. Again, the lack of parental supervision potentially increases the risk of conflicts between autos and bicyclists. 3) The street has a Class III bicycle facility (bike route). A reduction in the vehicular speed limit in the school zone would help in minimizing the potential risk of conflicts between autos and bicycles. 4) The elevation changes on Quesada Way affect sight distances, which can impact roadway safety. 5) The schools and fields are home to several after-school and extracurricular programs. 6) The proximity to Trousdale Drive, which serves as a thoroughfare, and encourages higher speeds on Quesada Way. The Police Department has reviewed the proposed pilot program and indicated that they can enforce the 15 MPH speed limit similar to how they currently enforce the 25 MPH limit at school locations. School Zone Speed Limit Reduction Pilot Program January 3, 2017 3 Prior to making a recommendation on the matter to the City Council, the TSPC was able to obtain input from the Burlingame School District (BSD). BSD staff expressed strong support for the proposed pilot program, and agreed that the BIS location would be ideal. They especially supported starting with a single location, and wanted to withhold comments on other locations until after the pilot program has been in place. For the reasons stated above, the TSPC at their October 13, 2016 meeting unanimously recommended the implementation of a pilot program that would reduce the existing speed limit from 25 MPH to 15 MPH along Quesada Way from Trousdale Drive to 500 feet from the southern boundary of BIS. The pilot program will be in place for a 12-month period during which the Police and Public Works Departments will monitor the changes and make further recommendations to the City Council regarding expansion and adoption of the program. FISCAL IMPACT There will be minimal costs associated with the staff time involved in the installation of parking restriction and turn restriction signage. These costs will be covered by the Public Works Department’s operation budget. Exhibit:  Location Map