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8A Page 2 rigorously justified with respect to the 1999 baseline traffic analysis, but still allow credits where vacant periods were of reasonably limited duration. 2. Specifying the vacancy time limit could help to more clearly define an "existing" use, and at what point the exIsting use of a vacant site or building should actually be considered unused and ineligible for a credit allowance. 3. The vacancy time limit for credits might be an incentive to property owners not to leave buildings vacant for longer periods and possibly deteriorate to create blighted or nuisance conditions. In the five years since the City initiated the Transportation Impact Fee Program, it has evolved in a way that suggests the reasons outlined above are much less applicable now and/or have not proven to have significant merit: 1. In reference to the 1999 baseline traffic analysis, the three-year vacancy limit for credits is now clearly too short, as seven years have passed since a site generating traffic in 1999 was accounted for in the baseline. But furthermore, allowing credit for the prior uses at the few sites in the City that have remained vacant since 1999 or earlier should not affect the overall integrity of the fee program, nor significantly impact anticipated fee revenues. 2. The three-year vacancy limit for credits has not proven to be a significant! incentive for property owners to re-occupy buildings more quickly, and in some cases might have the opposite effect when the time limit expires and the credit is no longer applicable. In addition to these revised perspectives on the reasons for a vacancy time limit on credits, some unintended consequences of the time limit have been identified. In some cases where the time limit disqualifies the credit allowance for prior use of a building, the traffic fee may become a significant financial hurdle for the small, entrepreneurial businesses that the City does not want to discourage. An example of this is the proposed re-occupancy of the Emerald Market on Oak Knoll Drive with the same use that previously occupied that building more than ten years ago. Under current Ordinance, credit for this prior use has expired, and even accounting for the special neighborhood-serving use and location of this development, a traffic fee of approximately $39,000 is due (normal fee for this size retail use is about $71,000). In this case, the amendment proposed in this staff report would allow credit for the prior (identical) use, which fully offsets that fee amount, and no fee payment would be due. Additionally, when the Downtown exemption from the traffic fee expires next year, Downtown buildings with long-term vacancies would not be eligible for a credit allowance for their prior use under the current Ordinance. In such cases, the vacancy time limit on credits may present a significant financial hurdle to the re-occupancy of existing buildings, and to the opening of small businesses in them, that may be considered a community benefit. From a larger perspective, encouraging re-occupancy of existing buildings, which may present more opportunities to businesses with a wider Page 2 of 4