No formal action is expected at this work session, but staff is seeking direction from City Council on the methodology used to assess fees for encroachments.  A public hearing and the resolution assessing the fees is scheduled for the September 28, 2020 Council business meeting. 

An encroachment is when any physical object projects into the City's right-of-way, such as streets and sidewalks.  Examples of encroachments include awnings, fences, landscaping, restaurant patios, signs, and conduit.  The City needs to assure safety and accessibility on all right-of-way, and for that reason, it requires an encroachment permit any time a property owner requests to use part of that public right-of-way.  Encroachment permit applications are processed and approved by the Public Works Engineering Division.  A fee is collected with the permit application to cover the administrative costs of processing the application.  If the encroachment is approved, annual assessments of the encroachment fee for the rental of the right-of-way will begin.  The assessments will continue until the permit is revoked.

City Council passed Resolution 86-15316 on May 19th, 1986.  This resolution waived annual rental fees for awnings and canopies in the Central Business District so as not to discourage the use of these structures.  Council may choose to amend this resolution or revoke the resolution at a future Council business meeting or continue with the resolution in place.  

The current encroachment fee is set at $1.00 per square foot of the surface area of the encroachment per year.  This rate has been in effect since 1985 and staff is recommending the fee be increased.  However, because we are still in the middle of a pandemic and many of the property owners that are assessed for encroachments have been impacted financially by COVID-19, one option presented will be to continue the encroachment fee at the current rate for one more year.  The presentation will primarily focus on common methodologies that other municipalities use to assess the annual encroachment fees and the effects of the different methodologies on property owners for various types of encroachments. 

This is a work session, so no formal action may be taken a this time.  However, staff is asking for the City Council to provide direction on changes to the annual encroachment assessment.  Options presented will include:

• Tier structure - Each type of encroachment will be categorized into tiers, depending on the overall impact to the right-of way.  As the impact of the encroachment increases, so does the assessment amount. 
• Assessments are based on assessed value of the land.  The land value is then divided by the square footage of the lot to arrive at the encroachment fee per square foot.  
• Continue with the same methodology of assessing at a specified amount per square foot for all types of encroachments, but increase the amount.
  • The average amount per square foot by municipalities surveyed using this methodology is $1.44.
  • The 1985 amount per square foot of $1.00 has the same buying power as $2.40 according to the Consumer Price Index 
• Continue at the current rate of assessing annual encroachment fees at $1.00 per square foot for one additonal year.

The amount currently received for annual encroachment fees is approximately $27,000.