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Why Didn’t the City Collect the Traffic Fees?:

Some answers have emerged in the investigation of whether the City failed to collect from developers 12 years of traffic mitigation fees, claimed by some to amount to as much as $45 million. That number has been seriously questioned as based on inaccurate facts and speculation.

The City had in hand in December 1996 a draft of the “nexus study” needed to implement its November 1991 ordinance imposing traffic mitigation fees on new developments, but simply failed to take any further action to set the amount of those fees or collect them. That is the import of an Information Item memorandum and associated documents sent to the mayor and city council October 9 by City Manager Lamont Ewell and City Attorney Marsha Moutrie, but not placed on the Council’s October 14 agenda.

The associated documents included a 50-page draft of a Traffic Congestion Mitigation Fee Evaluation delivered to the City December 24, 1996 by City consultants (the nexus study), together with a covering memorandum saying the consultants “look forward to working with you to complete a second draft and finalizing the report based on your comments.” And there the trail apparently goes dead.

The memorandum, prepared by Moutrie and later obtained by the Mirror, said: “Thus, the documents show that MMA [consultants Meyer, Mohaddes Associates] and City staff worked on the nexus study for about two and a half years. The scarcity of City documents relating to this project after January of 1994 may reflect a shift in Planning Department priorities following the 1994 earthquake, increased focus upon transit system options, staffing changes, or something else; but this is speculation.”

At the September 23 Council meeting last month, several citizens challenged the Council during its consideration of Planning Department recommendations related to transportation aspects of the Land Use and Circulation Elements (LUCE) of the City’s General Plan, one of which recommendations was that the Council direct staff to develop a “nexus study” to implement a Traffic Mitigation Impact Fee on new developments. [Santa Monica Mirror, September 25 – October 1, 2008]

The citizens – generally backers of Proposition T on the November ballot – argued that such a fee had been approved by ordinance in 1991, but no fees had ever been actually charged or collected by the City. Ted Winterer estimated that “$45 million was left on the table,” although Councilmember Ken Genser seriously questioned that number. During the discussion, Councilmember Kevin McKeown located on his laptop computer Council minutes from April 1992 authorizing the City to engage consultants for the preparation of a nexus study, but it was not clear at that time whether the contract was ever executed or the consultants paid or the study conducted.

(A “nexus study” is required by state law before a city can implement such a fee against developers – the study must demonstrate a nexus between the traffic generated by the new development and the cost of mitigation measures to offset that new traffic.)

McKeown made a motion on September 23, seconded by Councilmember Bobby Shriver and unanimously adopted, that the City Manager and City Attorney research the events of 1991 and 1992 and return with the information at the next Council meeting or shortly thereafter. When no such report appeared on the agenda for the next (October 14) meeting, McKeown pulled the normally perfunctory approval of the September 23 minutes from the consent calendar at the beginning of the meeting, and a lively discussion ensued.

Ewell and Moutrie said that they had sent councilmembers the October 9 Information Item memorandum and documents as the report of their research and that they would make a brief report at the meeting. McKeown and Shriver objected that they had intended the report to be an agendized item and so open for public discussion, which could not be held that night, as there had been no public notice in the agenda. Councilmember Genser and Mayor Pro Tem Richard Bloom wanted a straight up-or-down vote on approving the minutes without attempting to interpret them. Mayor Herb Katz and Councilmember Bob Holbrook sat this one out; Councilmember Pam O’Connor was not present.

In the end, Ewell agreed to put the matter on the October 28 agenda, but withdrew his offer to make a brief report that night. Katz concluded, “All right; carry it over to the 28th.”

Meanwhile, Santa Monica Coalition for a Livable City (SMCLC), principal backer of Proposition T, made a Public Records Act request on September 24 for documents relating to work on the transportation impact fee, and those documents were provided by the City on October 9, the same day as the Information Item memorandum to the City Council. Between that memorandum, the documents supplied to the Council, and the substantially overlapping documents supplied to SMCLC, it appears that:

• Pursuant to the April 1992 Council minutes located by McKeown, the City did enter into a May 12, 1992 contract with consultants MMA to prepare a nexus study to support and set the amount of the transportation impact fee authorized by the November 1991 ordinance;

• The consultants were paid for the work they did, and their contract was extended, on that study;

• The study was in fact conducted to the point of the December 1996 50-page draft submitted to the City, which draft study identified traffic mitigation projects that could be charged against developers by way of transportation impact fees; but,

• There is no apparent record as to what, if anything, happened after that.

Responding to these developments, Diana Gordon, co-chair of the Yes on Prop. T campaign, told the Mirror, “City Hall does not create new taxes or fees and then simply forget to collect them. Someone in city government decided to let developers off the hook for many millions of dollars.”

Genser, who was on the City Council in both 1991 and 1996, said that he had no clear recollection as to why the transportation impact fees were dropped, but that anyone could have pushed to re-introduce the fees.

This is all a two-edged sword as it relates to the current debate over Proposition T. On the one hand, Prop. T supporters may argue that a fixed cap on commercial development is needed because flexible but monitored development with traffic mitigation fees has not worked in the past. On the other hand, it may be argued that just because another Council and another staff dropped the ball does not mean that this one (or a new one) will, and current complaints about how much money was lost just show how much money could be collected in the future with flexible but monitored development of traffic mitigation fees that are actually collected.

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