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HomeMy WebLinkAboutAgenda Packet 09/10/2005 *PUBLIC REVIEW COPY Please do not remove from counter �,il ,,; ,„ CITY OFATASCADER 1913 ® ' CITY COUNCIL Mid. Year Strategic Planning g Workshop AGENDA Saturday, September 10, 2005 8:30 A.M. — 3:00 P.M. [The Council will be served lunch at 12:00 p.m. Members of the public planning to attend should provide their own lunch.] Community Room Pavillion at the Lake Atascadero, California ROLL CALL: Mayor Scalise Mayor Pro Tem O'Malley Council Member Clay Council Member Luna Council Member Pacas COMMUNITY FORUM: The public is encouraged and welcome to attend this Strategic Planning Workshop. This is an opportunity for the City Council to discuss, in a less formal way, the various issues facing the. City. The public's input on the issues before the Council is very important. There will be an opportunity at the beginning of the workshop to provide public input. Welcome and Check in: (Mayor) ❑ How are you doing/feeling? ❑ Any time constraints? Progress of Council Strategic Initiatives (Dept. Heads) Pint The City Manager and Department Heads will present a PowerPoint presentation and discussion on the progress made on the City Council Strategic Initiatives. The Strategic Initiatives are: 1 . Enhance Public Safety 2. Improve the City's Financial Condition 3. Construct the Youth/Community Center 4. Continue the Emphasis on Road Maintenance 5. Repair the Historic City Hall Building Affordable/Workforce Housing Program (Com. Dev. Dir.) This section will include a discussion of the City's Inclusionary Housing Program. Implementation of the program has revealed challenges which impact the viability of the units. The discussion may include topics such as the deed restrictions, financing and optional inclusionary housing methods. Condominium Conversions (Com. Dev. Dir.) This section will include a discussion of the impact of condo conversions on the rental and affordable housing market, General Plan policies and the City's position relative to potential conversions. Emergency and Fire Options for High Hazard Buildings and Buildings Over Three Stories (Fire Chief) This section will include a discussion of the options to deal with the emergency response to current and proposed multi story and special occupancy structures. The discussion may include concepts such as mutual aid with the City of Paso Robles, additional fire equipment, building restrictions, and other methods to enhance public safety. Colony Roads (City Attorney) This section will include an overview of the history of the Colony Roads; the deed restriction; public vs. private roads; the offer of dedication by Wells Fargo Bank, and Wells Fargo Bank's Petition to Terminate the Trust. The discussion may include Acceptance/Rejection of the Offer of Dedication, Acceptance/Rejection of Maintenance of Colony Roads, and Liability for Injuries/Accidents on Colony Roads Wrap up Adjournment 2 "r�■,�r- a ■i �� Atascadero City Council Study Session Community Development Department Inclusionary Housing Policy Options ISSUE: The City's inclusionary affordable housing requirement to provide affordable units for 30-years is becoming more controversial as more units and projects move toward construction. Due to the long term nature of this requirement and number of pending units, the Council should reaffirm its current policy or adopt a revised policy. BACKGROUND: in June 2005, staff presented the Council with options to modify the City's inclusionary housing program (refer to Attachment 1). The primary option presented to the Council was a program to allow moderate income, single-family units to be converted to market rate units if the seller paid the City back the original affordable subsidy. Those funds could be pooled and used to build higher density low and very low income units. During deliberations, the Council expressed concern about the loss of long term affordable housing units if the units were allowed to convert to market rate prior to the end of the 30-year term. The Council referred the item back to staff to investigate further options. OPTIONS: Staff has conducted additional research on this item and met with the staff of other housing agencies. Staff has identified four general approaches that could be reasonably implemented under the existing inclusionary program. Option 1: Keep existing 30 year program and deed restriction This option would continue the existing program with no changes. Option 2: Keep existing 30 year program with modified deed restriction • This option would continue to -require the units to remain affordable for 30 years, but • would utilize a new deed restriction. The new deed restriction would be based on a template that has been developed by the Housing Trust Fund. This new deed restriction would meet Fannie Mae lending guidelines and provide better notification and protections to the buyers. It would include a provision to convert the units to market rate in case of foreclosure. Option 3: Silent Second plus Equity Sharing Program with Sliding Scale This option includes a sliding scale equity sharing agreement on top of a silent second. This program would allow the affordable units to convert to market rate prior to the end of the 30 year period. However, the City would hold a silent second that would repay the City for the original affordable subsidy amount. In addition, there would be an equity sharing requirement with a sliding scale that would entitle the City to a share of any equity gained in the unit. The equity sharing agreement would include a sliding scale that would decrease the percentage of the City's share over time. The percentages could be established to encourage the buyer to stay in the unit for a longer period of time. For example, the City's equity share could start at 90% and then decrease 10% a year. Therefore, a buyer would have an incentive to keep the unit for 0 ten ears in order to realize 100/o of their equity. If the units sold earlier the Cit would YY end u with additional affordable housing revenues. The Council has full control on p g how to set the sliding scale. • Option 4: Silent Second Program P 9 This option was discussed during the June stud session and is outlined in the attached p g Y staff report. This option would allow units to convert to market rate once the original subsidy was paid back to the City. The primary difference between option 3 is the lack of incentives for the original buyer to keep the unit for a longer period of time. The following chart outlines the benefits and drawbacks of each option. • PROGRAM OPTIONS DRAWBACKS BENEFITS 1. Keep existing 30 year Current 30 year deed restriction • Provides for 30-year protection of housing program and deed lacks any escape clauses for units. restriction foreclosures. • Already in use for the past year. • Buyer notification and disclosure of program requirements is limited. • Program has limited appeal to moderate income buyers. • Owner's ability to gain equity is extremely limited. • No protection of seller if qualifying buyers cannot be found • Lending institutions may not fund loans. 2. Keep existing 30 year • Program has limited appeal to • Provides for 30-year protection of housing program with moderate income buyers. units. modified deed . Owner's ability to gain equity is • Revised 30 year deed restriction would restriction extremely limited. include escape clauses for foreclosures. • Provisions to protect seller if qualifying buyers cannot be found • Improved buyer notification and disclosure of program requirements. • Would meet Fannie Mae lending guidelines. 3. Silent Second with • Would allow affordable units to • Would provide incentives for the owner to Equity Sharing convert to market rate prior to the stay in the unit for as long as possible. Program with Sliding end of the 30 year agreement. • Would provide the maximum affordable Scale • Substantially more complex housing revenue potential to the City. administration and tracking • Would be more attractive to moderate requirements for staff. income buyers. • Provisions to protect seller if qualifying buyers cannot be found • Improved buyer notification and disclosure of program requirements. • Would meet Fannie Mae lending guidelines. 4. Silent Second • Would allow affordable units to • Would provide the affordable housing Program convert to market rate prior to the revenue potential to the City. end of the 30 year agreement. • Would be more attractive to moderate • Substantially more complex income buyers. administration and tracking • Provisions to protect seller if qualifying requirements for staff. buyers cannot be found • Improved buyer notification and disclosure of program requirements. • • Would meet Fannie Mae lending guidelines. Attachment 1 • June 2005 Council Staff Report Atascadero City Council Study Session — Community Development Department Inclusionary Housing Policy Discussion of Program Options BACKGROUND: Two years ago, on June 24, 2003, the City adopted an inclusionary housing policy that required all housing project with a zone change or general plan amendment to provide 20% of the units as long term affordable units. That policy was amended in November 2003 to increase the in-lieu fee and clarify some wording (see following page). One of the key provisions of the policy is section B.5. that requires "all inclusionary units shall be deed restricted for a period of 30 years". To date, the City has required approximately 160 affordable units under the inclusionary program all of which are subject to the 30 year affordability requirement. So far, less than ten affordable units have been constructed and sold. As an increasing number of inclusionary units move toward construction, the development community is raising concerns regarding the financing and resale of these units. Based on what appears to be legitimate concerns, a staff committee from the Community Development, Finance, Redevelopment and City Manager's office has been assembled to review the issues. The staff committee has met with a number of experts in the field of affordable housing financing, law, construction, public policy and administration. In summary, staff found the City's existing program is legal and basic. However the program does have complications with the financing and resale of affordable units that will become increasingly difficult to administer over the long term. The purpose of this report is to illustrate a possible modification to the existing inclusionary program that could address some of these issues. The options raised in this report are a simplified overview and no formal action can be taken to modify the program at this point. If the Council chooses to make modification to the program, staff will need to begin a formal process of amending the housing program. • City of Atascadero rInterim Inclusionary Housing Policy Adopted by City Council June 24, 2003 Amended by City Council November 25, 2003 INCLUSIONARY SECTION INTERIM POLICY A. Project Requirements 1. All residential projects that require legislative approval are subject to the inclusionary requirement as follows: o Projects of 1-10 units:pay in-lieu fee or build units. o Projects of 11 or more units must build units or receive a Council approval to pay in-lieu fees. B. Percent Affordable 1. The percentage of units within a project that must be affordable shall be 20%. 2. The distribution of affordable units in single family land use areas shall be as follows: o 100%Moderate 3. The distribution of affordable units in multi-family and mixed use commercial land use areas shall be as follows: 0 20%Very Low Income 0 37%Low Income 0 43%Moderate 4. In-lieu fees shall be collected for all fractional units up to 0.499 units, fractional units of 0.50 and greater shall be counted as 1.0 units. 5. All inclusionary units shall be deed restricted fora period of 30 years. C. Exceptions 1. Projects that do not require a legislative approval from the City shall.not be subject in the interim policy. 2. Projects that qualify for the State density bonus are exempt form additional inclusionary housing requirements. 3. Second units are exempt from the inclusionary requirement. D. Affordable Housing Standards 1. The exterior design and quality standards for affordable units shall be comparable to those of market rate units. Affordable units may be of a smaller size and utilize less expensive interior finishes. 2. Affordable units shall be distributed throughout a project site and not concentrated in one location. 3. Inclusions units shall be built concurrent) with market rate units. A Inclusionary Y construction timeline shall be approved by the City Council prior to construction. E. In-Lieu Fees 1. In-lieu fees for units and fractions of units shall be based on 5.00%of the construction valuation of the market rate unit. F. Alternatives 1. The developer may request and the City Council may approve any of the following alternatives to on-site construction or payment of in-lieu fees for inclusionary units: 0 Off construction o Land dedication o Combinations of construction,fees and land dedications. G. Incentives 1. As an incentive to provide affordable units,all inclusionary units shall be treated as density bonus units that are not counted as part of the maximum density entitlement of a site. • ANALYSIS: • The current housing program treats all inclusionary housing products the same, requiring the same 30-year deed restriction with no opt out provision. While this one size fits all approach simplifies the short term administration of the program there are some negative aspects which include: ➢ Conventional loaning institution may not lend without an foreclosure opt- out provision in the deed restriction. ➢ Buyers are unable to gain any equity in the value of the house until the end of the 30-year deed restriction. ➢ The County's affordability sales prices are tied to interest rates, which means an increase in interest rates will reduce the future sales price of the unit, leaving the buyer upside down on a housing loan in a market that is appreciating at a double digit rate. CURRENT HOUSING PLAN h. Private Sector Private Sector Single Family Residential Multi-Family Moderate Income Low Income (est. price $297,000) (est. price $191 ,000) units to date +/- 100 du's units to date +/- 15 du's long term 30 year deed restriction long term 30 year deed restriction Very Low Income (est. price $125,000) units to date +/- 40 du's long term 30 year deed restriction The staff committee has developed an outline for a modified housing program that is • illustrated below. The primary difference is that the 30-year deed restriction .on moderate income units would have an opt out provision tied to a silent second loan held by the City. If a buyer chose to sell their affordable house at market rate, the City would be paid on the silent second. The silent second would represent the difference between the original sales price and the original market value. The seller would be entitled to any equity gained over the original market value, which is essentially the same situation a market rate buyer would be in. The City would realize the original subsidy amount that could be used to build low income housing. ALTERNATIVE HOUSING PLAN Money generate from the market 1 ■ it rate sales of moderate income units could also be use to fund a $$$ ■ first time buyer program. �a+n NIN :yr �} m--- Private Sector Private & Public Sector Single Family Residential Multi-Family Moderate Income Low Income (est. price $297,000) (est. price $191 ,000) units to date +/- 100 du's units to date +/- 15 du's 30 year deed restriction long term 30 year deed restriction w/e uit sharin exit 12rovision Very Low Income $$ (est. price $125,000) units to date +/- 40 du's • long term 30 year deed restriction Money generate fAom the market rate sales of moderate income ♦ $ units would be useO to fund or ♦7 • subsidize low and vry low income public and private projects with 45 ®♦ to 55 year affordable ;tractions.- - �♦ • EQUITY SHARING PROGRAM OVERVIEW Private Sector Single Family Residential Restricted sales price: $300,000 Market Value price: $400,000 Affordability Subsidy: $1009000 ➢ Example, a project is conditioned to provide 1 Moderate Income housing unit ➢ Based on the latest County standards the selling maximum price would +/-$300,000 • ➢ The City would record a modified 30-year deed restriction against the property that would allow the market rate sale of the unit prior to the 30-years subject to the City retaining the original subsidy amount. ➢ The subsidy amount would be based on a market rate appraisal of the unit at time of initial sate. (For example if the restricted sale price was $300,000 but the market value of the unit was $400,000 there would be a $100,000 subsidy value that could be realized at the time of sale). ➢ The City would hold a "silent second mortgage" against the property for the $100,000 subsidy value. ➢ If the unit were sold at market rate prior to the 30 year affordability requirement the City would be paid the $100,000. ➢ This $100,000 would be put into an account to be used for constructing or subsidizing long term low and very low income units. ➢ Currently there are 106 moderate income units required on current projects. Assuming the average affordability subsidy of $100,000 per unit would provide the City with potentially$10,000,000 in additional affordable housing funds. • • The benefit of the modified program would be to simplify the financing and resale of moderate income units while also creating a significant new source of funding for low and moderate income housing projects. ALTERNATIVE HOUSING PLAN BENEFITS ➢ Would simplify the lending and financing of moderate income units. ➢ Would provide more flexibility for the re-sale of moderate income units. ➢ Would create a significant source of housing funds that could be combined with RDA set aside funds and in-lieu housing funds to develop high quality long term low income housing projects. While there are a number of solid benefits to the modified program there are also a number of significant administration issues as well. As the City gets more involved in an elaborate housing program, with potentially millions of dollars of funds, it will be necessary to devote significantly more staff resources to housing. ALTERNATIVE HOUSING PLAN ISSUES ➢ Existing 30-year deed restrictions that have been recorded would have to be amended. • ➢ Professional legal assistance would be required to assist staff in revising deed restrictions and setting up silent second mortgage programs. ➢ Moderate income units that are converted to market rate units would have to be reported to the State annually and would need to be replaced by new units. ➢ Additional staff time and resources would be required in the Community Development, Redevelopment and Finance Department to administering and manage the program. ➢ The City would be committed to a permanent and comprehensive housing program. ➢ Construction and management of public affordable housing is expensive and time intensive. • FISCAL IMPACT: • Modification of the housing program would result in the collection of additional fees that could be used to build affordable housing projects. Management and administration of additional housing fees will obligate the City to devote staff time and resources to future affordable housing projects. Staff time and resources to administer affordable housing programs over the coming decades has not been calculated but should not be assumed to be insignificant. ALTERNATIVES: 1. The Council may choose to continue with the existing housing program with no changes. 2. The Council may choose to direct staff to investigate different housing options. • i9i8 '^ p, 19 e Atascadero City Council Study Session Community Development Department Condominium Conversions Issues ISSUE: The City needs to take a clear position on the conversion of existing rental apartments units to ownership condominium units. BACKGROUND: The creation of condominiums is a mapping process allowed under the State Map Act that allows for the "air space" inside a building to be subdivided. Once subdivided, these "condos" can be bought and sold as property. The O condominium conversion process is when an existing apartment building with multiple rental units is subdivided into separate for sale units. Over the 1990's, a flat real estate market and construction liability laws drastically curtailed the market for condominiums. Within the last 18 months, this situation has reversed and the City is seeing an ever increasing number of condominium conversion requests. Initially these requests were for small four and five unit projects and did not appear to be a significant issue. However, over the summer staff has been contacted by two large apartment complexes that intend to proceed with condominium conversions. Staff has reviewed the City's General Plan and determined that the Housing Element goals and policies require the conservation of City's rental housing stock. Goal HOS 3: Ensure that an adequate amount of rental housing exists. Policy 3.1: Ensure that the proportion of low and moderate rental housing is not significantly reduced • Staff has advised all recent condominium conversion applicants of this General • Plan policy issue. The primary concern with converting rental housing to condos, is the loss of affordable housing stock. While the cost of ownership units has skyrocketed in the past few years, rents have remained relatively stable. This situation benefits renters but apartment owners often feel that they are missing out on maximizing their potential revenue from the property. Consequently, apartment owners are beginning to realize that condo conversions can be financially lucrative. Currently the City has about 2,100 multi-family rental units. Recent staff inquiries indicate that potentially 200 — 300 of the units (10 — 15% of the inventory) could be converted to condos this year. This stable supply of rental housing is essential to many service oriented sectors of the local economy. Staff is concerned that City's subdivision ordinance and zoning ordinance are neutral on the issue of condominium conversion and should be revised to be consistent with the General Plan goals. OPTIONS: 1. The City could leave the zoning and subdivision ordinances as is and depend solely on the General Plan policy to protect the units. 2. The City could revise the zoning and subdivision ordinances to provide • protections for, the existing rental unit inventory. This should include a process to allow for a controlled condo conversion of some units, provided the overall net number of rental units does not decease. Atascadero City Council Study Session - Fire Department Emergency and Fire Options for High Hazard Buildings and Buildings Over Three Stories ISSUE: Development in Atascadero has begun to move vertically. The Carlton Hotel is three stories, as is the Colony Square project, and there are two hotels proposed for three and four stories. Consistent with the City's General Plan and Smart Growth Principles, compact development integrating mixed uses is encouraged. Given land availability and price, multiple story development is likely to continue. The Planning Commission and Council have questioned emergency response to the multiple story projects. Currently, fire personnel cannot .access heights above 19' which is the reach of a • standard 24' ground ladder. Emergency evacuation in case of fire depends on fire sprinklers and good egress systems. The ability to quickly rescue trapped occupants, gain access, and deal with emergencies, is top departmental priorities. DISCUSSION: Atascadero has generally been a "low rise" development community with a few taller structures including City Hall. Most structures have been developed at two stories or less. The City's emergency response operations have been tailored to this type of development. More recently, especially in the downtown, the City, through its General Plan and Smart Growth Principles, has encouraged multiple story buildings. As these taller structures are planned and constructed, there becomes more and more concern with emergency response capabilities. Staff has developed several options for discussion purposes. Currently the City has an auto-aid contract with the City of Paso Robles, negotiated between the Fire Chief's, to provide automatic dispatch of the Paso Robles ladder truck to Atascadero commercial and multi-family building fires. In return, Atascadero sends a structure engine to all commercial and multi-family building fires and a wildland engine to all vegetation fires in - Paso Robles. Atascadero relies on good escape? systems for rescues in multiple story structures. The Paso Robles ladder truck is great assistance in problem locations • although response times are longer. ALTERNATIVES: • City staff developed alternatives to deal with the multiple story development. The alternatives include: 1. Develop a district(s) or zone(s) in which multiple story buildings can be developed. Pros: development could be limited to flat land with wide roads and generally superior access providing the best emergency access and fire fighting capabilities. The development community would clearly understand where three (or more) story buildings can be located. • Cons: this would reduce the impact of multiple story buildings on emergency services but not eliminate it. The public may feel the zone is unfair or overly restrictive and arbitrary. 2. Seek a formal agreement with the City of Paso Robles for use of the ladder truck. This could include status quo, a fee per use or a flat annual fee for use. • Pros: very inexpensive, Paso firefighters would augment City staff and visa versa. • Cons: Paso Robles may choose not to participate in an agreement, longer response times, lack of control, lack of ability to train on specialized equipment; Paso Robles can withdraw from the current contract with 30 days notice. 3. -Restrict multistory development. • Pros: this action would dramatically affect SOC resulting in much less impact to the fire department as the community grows, postpones the problem, reduces density • Cons: this action does not support smart growth principles in the current General Plan and could impact reinvestment potential downtown. 4. Obtain a ladder truck. • Pros: greater local control, improved response times, not reliant on a neighbor, much quicker to deploy, more versatile if placed or spotted early in an incident, all residents would benefit from this piece of equipment • Cons: trucks are expensive, require additional training and maintenance, replacement funds would need to be budgeted • KRONICK MT&GIRARDIEDEMANN OSKOVITZ • A PROFESSIONAL CORPORATION MEMORANDUM TO: Honorable Members of the City Council FILE NO.: 11335.001 City of Atascadero CC: Wade McKinney, City Manager FROM: Patrick L. Enright, City Attorney Kronick, Moskovitz & Tiedemann& Girard DATE: September 8, 2005 RE: Colony Roads In 1914,the community of Atascadero was subdivided and developed by Mr. E.G. Lewis. The development was done under the name of Atascadero Colony,which involved two corporations owned by Lewis, Colony Holding Company and Atascadero Estates (hereinafter"the Lewis • Corporations") The road issue has its roots in the original development of the area. Rather than dedicate roads for public use, Lewis retained ownership of the roads, giving land purchaser legal rights to use the rights of way. The deed recorded by Colony Holding Corporation to the original purchasers of the Colony Lots provides as follows: The fee of each and all streets,roads, alleys,parks and other places is reserved to the first party',but the second party2 shall have and is hereby granted a license to use the said reserved places as private streets or places belonging to the first parry, and in common with other lot and parcel owners of said"Atascadero,"under rules and regulations to be adopted by the first party. The sale or conveyance of said land by the above description, or the fact that a map has been recorded shall not be deemed or construed as a dedication of any street, alley,road,park, or other place above mentioned, and the first party reserves the sole and exclusive right to make public dedication thereof. Upon public dedication being made by the first party, such dedication shall operate as a conveyance to the second party of the fee at the center of the street or road upon which the above described land abuts and 1 The first party was the Colony Holding Corporation,which was created by E.G.Lewis for the Atascadero Colony. Z The second party would be the actual purchaser of the lot. The initial intention of E.G.Lewis was to grant a license to every purchaser of the Atascadero lots to use the roads,which remained the ownership of Colony Holding Company. Colony Holding Company as the owner of the roads,could give"licenses" • to additional parties, but the intent was to limit the use of the roads primarily to the residents of Atascadero. Therefore,they are referred to as"private streets." 805809.1 Memo Page 2 • shall constitute apart of the land hereby granted, subject, however, to said easements. Colony Holding Corporation went bankrupt in the 1920's and the deed to the streets, roads, alleys,parks and other places reserved to Colony Holding under the above provisions,was transferred to several owners. Eventually, Wells Fargo Bank become the owner of the properties, and in 1993 made an offer of dedication of a public right-of-way for road purposes and incidental uses upon all the following property: Any and all real property in which offeror may have any interest by virtue of this succession to the rights acquired by Anglo-California Trust Company under the Blanket Deed and consisting of any portion of any street, road, alley,park or other place that was excepted or reserved in any Road Reservation in any Prior Deed. The City of Atascadero prior to this offer of dedication had been negotiating with Wells Fargo Bank, but the negotiations failed to address the City's concerns. In particular,the City was demanding that with the transfer of the roads,that Wells Fargo would pay the city a sum of money.4 The negotiations in the early 90's failed, and Wells Fargo unilaterally made an offer of dedication. They made the same offer to San Luis Obispo County for those roads located outside the city limits. The County adopted a Resolution accepting the.offer of dedication on May 17, 1993. The County specifically provided.in the resolution that the public rights of way shall not become a County Road by virtue of this Resolution. The City never took any action, either accepting or rejecting the offer of dedication by Wells Fargo Bank. On June 21, 2005, Wells Fargo Bank filed a petition in San Luis Obispo County Superior Court to terminate the trust. The next hearing on the matter is scheduled for November 1, 2005. Numerous property owners who lived adjacent to these roads take the position that the roads are private based upon the language of the deed from Colony Holding. As a private road, if someone wanted to use the road they would need to receive the permission/consent5 of the property owner as the public in general may not use a private road. A separate issue is maintenance of the road and liabilities for injuries/accidents on the road. The City may accept the dedication without accepting maintenance of road or any liability, which is how this firm recommends that the City accept the dedication. In the future,the City Council 3 Wells Fargo Bank acquired the rights to the Colony Roads from the Anglo-California Trust Company. 4 At the request of a few property owners,Wells Fargo Bank did quitclaim portions of the roads to individual property owners. I have not seen any of these quitclaim deeds,but discussed this with Dennis Law,attorney for Wells Fargo and he is going to provide copies to me of the deeds. He does not believe that there is a significant number of these(probably less than 10). Wells Fargo Bank took the position that their interest in the roads constituted a mere technical cloud on title,with any ownership interest in them having been lost by either failure to pay property taxes or by implied dedication. s Perhaps a better term would be to acquire a license,but even in the original deed the license was to be granted by the owner of the road, Colony Holding Corporation,not the individual property owner. 805809.1 Memo Page -3 • can determine whether to accept the roads (or some of them) into the city's road system, at which point the City would be responsible for maintenance of the roads and potentially liable for any injury/accidents on the roads. ANALYSIS: Public Roads All roads that the public has a right to travel on,whether express or prescriptive, are"public roads." However, not all "public"roads are county or city roads until they are accepted as such by resolution. Although a road is a"public street" and subject to "public control"; it is not necessarily maintained by the local governing entity. (61 Ca1.Atty.Gen.Ops. 466, 468 (1978).) The general rule is that a city may not use city road funds for maintaining"public"roads other than"city"roads. Accordingly, a city has no statutory duty to maintain public roads that have not been accepted into the city highway system by resolution of the board of supervisors. There are several ways that a road may become"public" including a dedication, a grant deed, a prescriptive right or a common law dedication. Wells Fargo Bank in 1993 made an offer of dedication of all of the public rights-of-way for road purposes and incidental uses concerning all of the "roads" owned by the Bank. This is consistent with the terms of the original grant deed executed by the original property owners, which provided in part: • Upon public dedication being made by the first party, such dedication shall operate as a conveyance to the second party of the fee to the center of the street or road upon which the above described land abuts and shall constitute a part of the land hereby granted, subject, however to said easements. Upon the public dedication of the roads owned by Wells Fargo Bank(originally Colony Holding Company),the property lines are extended to the centerline, and the public has an easement for road purposes. Even in 1914,there was the provision that E.G. Lewis may transfer the roads to another entity for public purposes. With this offer of dedication by Wells Fargo Bank,the remainder of this memorandum will address how roads become"public"through dedication. Dedication of Roads A dedication is the application of private real property to a public use by the acts of its owner which clearly manifest the intent that it be used for a public purpose. The property interest dedicated may be either an easement or the fee title interest. The two methods of dedication are statutory dedication and common law dedication. A statutory dedication is accomplished through compliance with the specific requirements of a statute, such as by the recordation of a map in substantial compliance with the Subdivision Map Act. A common law dedication involves less formal requirements. 805809.1 Memo Page 4 In new subdivisions the offer of dedication is completed through the Subdivision Map Act. However, the Legislature has adopted several specialized statutes for the commitment of private land to public or quasi-public uses. Specifically, Government Code section 7050 provides in pertinent part: With the consent of the city, county, or city and county, as the case may be, an irrevocable offer of dedication of real property for any public purpose, including, but not limited to, streets,highways,paths, alleys, including access rights and abutter's rights, drainage, open space, public utility or other public easements, parks, or other public places, may be made pursuant to this section. Such offer of dedication shall be executed, acknowledged, and recorded in the same manner as a conveyance of real property. Such offer of dedication when recorded in the office of the county recorder, shall be irrevocable and may be accepted at the time the city council of the city within which such real property is located at the time of acceptance, or . . . . . Wells Fargo Bank made an offer of dedication,but the City has never accepted or rejected the dedication. Once the offer is recorded, it is irrevocable and can be accepted by the city council at any time. There is no provision for termination or revocation of the offer except by proceedings in the same manner as for summary vacation of streets. The owner may specify the purpose of the dedication in the recorded offer, and presumably the City would be restricted to this purpose. An unaccepted offer under the statute would not lapse under the operation of the marketable title • statutes, because it is not offered by recordation of a subdivision map. A statutory offer of dedication may be accepted either formally(by a formal resolution of the Council accepting the dedication) or informally(public use of the property or by some other official government action). For an informal acceptance by some official government action,the City must take some action, or assert some dominion or control over the property that recognizes that it has been devoted to public uses. Normally this is accomplished by expending public funds for the improvement or maintenance of the road. The courts have made a distinction between"implied in fact dedication"which requires evidence of affirmative acts or acquiescence of thero erty owner, andp "implied in-law dedication,"which is established by continuous P P adverse public use of the property for the prescriptive period without substantial interference by the owner. A dedication offer may be accepted by the public use of the property without any formal action by the City. When the offer to dedicate property is implied from the use of the property by the public,the use must be adverse, open,notorious, continuous, and with knowledge of the owner. When the use is sufficient to determine to show the owner's intent to offer the property for dedication,the same use also show the public's acceptance of the offer. When an offer to dedicate is found by a conveyance of the owner,by his or her recordation of a map, or by reference to a recorded or unrecorded map in a deed,there is an"implied-in-fact" dedication. When there is a dedication for public use without any affirmative acts by the owner, • there is an"implied-in-law dedication. The courts look at the various surrounding circumstances to find evidence of the owner's intent to dedicate property and element similar to those required 8058091 Memo Page 5 • for a prescriptive easement must be proved in order to establish that there has been such a dedication. In this case, Wells Fargo Bank has made a statutory offer of dedication. The City has never formally accepted the offer of dedication, and the question as to whether there was an acceptance of the roads by the public would be a factual issue based on the unique circumstances of each road. I recommend that the City formally accept the offer of dedication, subject to the roads not being part of the City's road system. In this way, there will be no issue concerning the status of the roads as"public" or"private." If the Council does not desire to accept the offer of dedication,then the issue of the roads needs to be resolved road by road, depending on the use of the road, any signs posted that they are private roads, etc. The language in the original deed restriction in the early 20th century clearly contemplated that the roads would become public upon dedication. Maintenance of Roads If the City accepts the dedication offer, the City does not necessarily assume the obligation of maintenance. The City is not required to maintain any road or street until they have also been formally included into the public road system. (Streets and Highway Code §§ 948, 1806; Government Code § 66477.1.) Once the roads and streets have been accepted for dedication and formally accepted as a part of the road system,the City assumes the affirmative duty of maintenance. All of the property owners abutting the street have a right of ingress and egress • across the dedicated streets, and they have a right to expect that their access will be cared for. If the City fails to maintain and repair the streets after due notice, and the abutting property owner loses access to property as a result, the private property owner is entitled to recover the damages that result from this loss of access. (Clay v. City of Los Angeles 21 Cal.App.3d 577, 581-582 (1971).) Once a street or road is accepted into the public street system, if the City fails to properly maintain the dedicated property, the City will be liable for any injuries incurred as a proximate result of a condition. The City may be initially be immune from liability for the design and construction of the road, but will acquire liability if a dangerous condition is brought to its attention and it fails to remedy the condition. (Government Code §§ 830.6, 831.) Liability for Injury on Unaccepted Road Streets and Highway Code § 1806 provides that the City is not liable for failing to maintain any road until it has been accepted into the street system. No public or private street or road shall become a City street or road until the City Council,by resolution, has caused the street or road to be accepted into the City street system. Although the City has no liability for injury resulting from the condition of roads not yet accepted into the public road system,the entity may be liable for injuries in some cases where it has maintained the road. The City is only immune from liability for roads it has actually maintained if the maintenance was not performed negligently and the condition of the road is no more dangerous or unsafe than it was before the work • commenced. (Government Code § 831.3; Matthews v. County of San Bernardino (1991) 233 Ca1.App.3d 1623, 1631-1634.) Government Code § 831.3 specifically provides: 805809.1 Memo Page 6 • Neither a public entity nor a public employee is liable for any injury occurring on account of the grading or the performance of maintenance or repair on or reconstruction or replacement of any road which has not been officially accepted as a part of the road system under the jurisdiction of the public entity if the grading, maintenance,repair, or reconstruction or replacement is performed with reasonable care and leaves the road in no more dangerous or unsafe condition than it was before the work commenced. No act of grading, maintenance,repair, or reconstruction or replacement within the meaning of this section shall be deemed to give rise to any duty of the public entity to continue any grading, maintenance, repair, or reconstruction or replacement on any road not a part of the road system under the public entity's jurisdiction. As used in this section "reconstruction or replacement"means reconstruction or replacement performed pursuant to Article 3 (commencing with Section 1160) of Chapter 4 of Division 2 of the Streets and Highway Code. Simply stated, Section 1806 states that a city is not liable for failure to maintain unaccepted roads,while Government Code section 831.3, states if public entities perform an act of maintaining, grading or repairing unaccepted roads,they may be liable if the work is not done with reasonable care and if the work leaves the road in a more dangerous or unsafe condition than it was in before the work began. Government Code section 831.3 is basically a negligence standard; i.e. the petitioner would have to establish that the City performed the work negligently. However, this is a factual issue to be resolved by a jury, and could subject the City to a lawsuit to • address whether the work was or was not performed negligently. Therefore, if the City desires not to accept the street or road into the City's road system,the City must ensure that it performs no work on the street or road in order to avoid any possibility of being sued. This would include any maintenance, repairs, grading or reconstruction. Once the City performs any work on the street or road, it may be subject to a lawsuit alleging that the work was done negligently. • 805809.1