2022 AIA Communities by Design Reimagining Petaluma SDAT - Report - Page 51
Petaluma DAT
Public Benefits for Development Rights (e.g.:
Right of Way Contribution)
Developers may access additional development rights
such as a density bonus or an expedited permitting
process by contributing privately or publicly owned
land that is needed for the public infrastructure. The
contribution can include right-of-way areas, facilities to
support transit services, bike lanes, etc. The government
is required to negotiate with the developer on the terms
of the contribution. Petaluma may already be engaged
in utilizing this program. A new program like the MPDU
can also be considered a form of public benefit that can
be required for additional development rights.
District-Based Strategies
When the benefits of a public investment are reasonably
limited to a specific geographic area and the benefiting
entities can be easily identified, local governments
can establish special districts from which new funding
sources can be generated. The creation of these districts
and their boundaries are often dependent on the
development potential. Once a district is established,
its landowners pay assessments or taxes that finance
the costs of projects that generate shared benefits.
The assessments or taxes may be proportional to the
estimated share of benefits each entity receives.
The establishment of a special district and the funded
projects within it creates value that is reflected in
increased real estate prices. Capturing a portion
of the increased value is necessary to finance the
projects and even fund other projects. If these projects
would otherwise not have occurred or would have
required public funding, they can be considered public
investments.
Special Assessment Districts (e.g., Business
Improvement District, Community
Improvement District, Local Improvement
District)
Special Assessment Districts involve the creation of
districts that generate tax revenues from properties
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that benefit from a public infrastructure improvement.
In general, businesses or new developments in the
designated area would pay special assessments
in addition to existing taxes to fund new public
infrastructure. Petaluma already has a BID, and state
enabled Mello-Roos special assessment districts can
be used to pay for an array of public improvements in
such districts but we understand that these have been
difficult to use since the added assessments passes on
with property sales until the bonds are paid off. They
may however be more viable for denser multi-family
development projects that would benefit from various
public improvements (e.g., open spaces, bike paths,
street trees).
A few of these are listed below.
necessarily seek a direct return on their investments.
501(c)3 tax exempt Bonds
Additional Needs to help
achieve a 15-minute city
Tax Increment revised funding
C-PACE sustainable development financing
California now offers a range of incremental tax
investment options to replace the recently extinguished
Urban Renewal District TIF program, including
Community Revitalization and Investment Authority,
Infrastructure Financing District, and Enhanced
Infrastructure Financing.
Infrastructure and Refinancing District
We understand that Petaluma currently has a
Community Revitalization program but it relies only on
collecting the City’s portion of incremental growth so
it doesn’t have ample funds. It may be worth exploring
the other tax increment options in conjunction with the
county assuming that the latter can be convinced of
the larger benefits that it can bring to that jurisdiction.
Funds can be used for affordable housing, public
infrastructure (e.g., bike lanes, street improvements such
as road diets, parks). (See appendix 1 for more on these
options)
State enabled and other funding tools
There are a range of tax-exempt development funding
tools offered by the state. Petaluma developers are
likely already tapping into some of these such as the Low
Income House Tax Credits. Other programs are geared
toward enabling more sustainable housing development.
501(c)(3) Tax Exempt Bonds (issued by the California
Finance Authority) are revenue bonds issued at tax
exempt rates for a range of tax-exempt uses that can
include eligible medical facilities, senior housing, for and
non-profit lower and moderate income housing, etc. The
key benefit of this funding source is that these bonds
can pay for up to 100% of the development costs which
means that a project doesn’t have to have expensive
equity requirements which increase project costs.
Projects do need to have sufficient revenues to repay the
bonds.
C-PACE is a program that offers financing for
multifamily development projects that utilize sustainable
building materials (e.g., mass timber, solar roofs,
energy efficient windows) in an effort to reduce carbon
footprints. C-PACE financing covers 100% of the
developmental hard and soft costs for market rate or
mixed-income multifamily projects, thereby reducing the
developer’s need to secure expensive equity. Based on
recent discussions, it appears that this program is either
being used very little or not at all in Petaluma even
though it’s listed in the tool kit. Finding ways to promote
the program among lenders, developers, and relevant
city personnel could enable the development of more
sustainable housing.
Crowd Funding
Crowd funding is a collective effort by individuals to
raise funds for a variety of causes, projects or business
ventures they care about. Crowd funding, whose
participants are often solicited via the internet thereby
casting a wide but inexpensive network, has been
used for help to fund start-up businesses, political
campaigns, and development projects. Recently, a
small town in Wales raised over $1million to finance
a community center. It has also been used to raise
funds for sustainable office and housing developments.
Depending on the project, crowd funders may or may not
Working toward a more sustainable and equitable
15-minute city will benefit from enabling other changes.
A few are listed here.
• Parking code changes. To help achieve higher
density housing on urban sites, parking ratios need
to have lower maximums. The current 2 spaces per
unit requirement makes the development of 5 and 6
story housing projects with active ground floor uses
very difficult. Petaluma currently has achievable
rents to support higher density building but these
will be more possible to construct with a parking
maximum of 1 space per unit. We understand that
Petaluma is considering this and strongly suggest
that it be codified.
• Enhancing mass transit capacity and ridership.
It would be useful to find ways for the existing
mass transit agencies to create a seamless transit
system amongst them. This could take the form
of developing one unified “ticket” that can be used
for any of the current operating systems. Providing
subsidized tickets by public and private employers
would be helpful in both enhancing ridership and
reducing single use auto traffic. This would better
enable devoting more right-of-way to bikes.
• Explore innovative programs with ride sharing
entities. This can take the form of having private
and public employers enter into contracts with
ride sharing services for a reduced cost to the
employees.
• Assess the potential for Co-op housing. Co-ops
have been around for many decades. They can
provide a more affordable form of ownership in
multi-family buildings. Homeowners purchase
