Staff recommends that the City Council conduct a public hearing and adopt the encroachment assessment resolution setting and assessing the fees for FY22.

The City charges an annual rental fee for approved encroachments in the right-of-way. Some examples of encroachments are awnings, fences, landscaping, restaurant patios, signs, and conduit. The City needs to assure safety and accessibility of the right-of-way, and for this reason, it requires an encroachment permit any time a property owner requests to use part of the right-of-way. Encroachment permit applications are processed and approved by the Public Works Department. 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. Awnings and canopies in the Central Business District are not charged an annual rental fee in accordance with Resolution 86-15316.

The annual encroachment rental fee had been set at $1.00 per square foot of the surface area of the encroachment since 1985 until FY21 when Council adopted new fees and methodology. The current methodology is a tier structure consisting of two tiers. Tier 1 encroachments have minimal impact to the right-of-way. Tier 1 encroachments include awnings, overhanging signs, conduit, and other encroachments that minimally impact accessibility of the right-of-way. Tier 2 encroachments have a major impact to the right-of-way and cause the part of the right-of-way that is encroached on to be unusable. Some types of Tier 2 encroachments are restaurant patios on the sidewalk, fences, stairways, and sheds.

The FY21 annual rental rate for Tier 1 encroachments is $2.00 per square or linear foot per year to cover engineering and administrative costs and staff is recommending no increase to the Tier 1 encroachment fee in FY22. Last year, staff proposed a 5-year plan to gradually increase Tier 2 encroachment rates to 50% of the average taxable value of the adjacent properties, currently $7.28 per square foot.  Council approved the first year's increase of $2.00 per square foot for FY21.  Staff recommends adopting the second year of the five year plan and increasing the Tier 2 encroachment fee to $2.80.  This additional revenue is recommended to be utilized in the beautification of the right-of-way.

Included in the resolution is the list of assessments and property owners at the proposed FY22 encroachment rental fee.

City Council may:

• Approve the resolution to revise and asses the encroachment rental fees; or,
• Approve an amended resolution to revise and assess the fees at another specified rate; or,
• Not approve the resolution.  If not approved, Council will need to approve a resolution at the September 27, 2021, Council meeting or no encroachment fees will be assessed for FY22.

The proposed FY22 encroachment rental fee will generate $65,032.59.  This is an increase of $12,480.11 over the FY21 revenues.