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Home My WebLink About35 - NB-1 - Attachment 5 - 10/6/2015ATTACHMENT MEMORANDUM TO: Laura Stetson, AICP DATE: September 24, 2015 Single-family residential (DU's) Principal 14,791 100% 14,791 MIG 28,413 37,742 FROM: Roger Dale, Managing Principal FILE: #4034 12,146,000 The Natelson Dale Group, Inc. (TNDG) 11,052,860 Office square feet SUBJECT: Costa Mesa General Plan Update— 78% Overview of Methodology for Fiscal Impact Model Per your request, this memorandum provides an overview of the methodology for Fiscal Impact Model (FIM) being developed for the City of Costa Mesa General Plan Update. The information described in this memo is based on the preliminary analysis summarized at the City Council / Planning Commission study session on September 8. We should emphasize that the projections shown at that meeting were preliminary and based on inputs/assumptions that are being refined as we finalize the model. The final model will reflect the comments provided at the study session as well as additional refinements based on the forthcoming City Council meeting on October 6. The model evaluates General Fund revenues and costs associated with future development in the City. The model has two major components: 1) a forecast of Citywide fiscal impacts associated with General Plan buildout, and 2) a project -specific analysis tool that allows the user to evaluate the fiscal impacts for individual development projects (or planning sub -areas). The preliminary projections presented on September 8 were based on the following land use, demographic and traffic assumptions: Land Use Existing Development Theoretical Buildout Market Adjustment Factor Evaluated Buildout Single-family residential (DU's) 14,210 14,791 100% 14,791 Multi -family residential (DU's) 28,413 37,742 100% 37,742 Retail square feet 9,741,000 12,146,000 91% 11,052,860 Office square feet 7,224,000 11,882,000 78% 9,267,960 Industrial square feet 13,087,000 13,078,000 N/A 13,078,000 Land Use Existing Evaluated Buildout Resident Population 110,770 135,744 Jobs 88,348 102,026 Traffic (Citywide ADT) 1,081,790 1,266,250 24835 E. La Palma Avenue, Suite I, Yorba Linda, California 92887 Phone: (714) 692-9596 . Fax: (714) 692-9597 Memorandum to Laura Stetson, AICP September 24, 2015 Page 2 The "evaluated buildout" numbers reflect reductions in the projected amounts of retail and office development based on market constraints. For example, whereas the theoretical buildout numbers would accommodate 12.1 million square feet of retail space (an addition of 2.4 million square feet over the existing base of 9.5 million square feet), the adjusted buildout number for retail (based on TNDG's market analysis) would be 11.1 million square feet. This adjustment is critical to the reasonableness of the model results since the theoretical buildout numbers could potentially overstate retail development (and related sales tax revenue) by approximately 1 million square feet. PRELIMINARY Fiscal Projections Based on the above land use, demographic and traffic assumptions, the preliminary fiscal forecasts presented on September 8 were as follows: The attached printout includes selected tables from the General Plan component of the model; these tables summarize the major assumptions utilized to derive the revenue and cost projections. "Per capita" forecasting methodology As noted on the attached tables, certain revenue and cost line items are projected using a per capita forecasting methodology, based on existing per capita factors derived from the City's budget. Given that some revenues and costs are affected by both residential and non-residential development, the analysis considers employee and visitor "populations" in addition to the resident population. For purposes of estimating population "equivalents" the following factors are applied to the employee and visitor populations: • 1 employee is equivalent to 0.24 full-time residents s 1 visitor (hotel guest) is equivalent to 0.75 full-time residents These factors are consistent with generally accepted methodologies for this type of analysis and have been calibrated to Costa Mesa's budget for purposes of this FIM. 24835 E. La Palma Avenue, Suite I, Yorba Linda, California 92887 Phone: (714) 692-9596 . Fax: (714) 692-9597 Projected Percentage Existing Budget at Change FY 2015-2016 Buildout Through General Fund Budget (2015 $) Buildout Total Revenues $107.1 million $133.8 million 25% Total Expenditures $108.3 million $128.1 million 18% Net Fiscal Balance -$1.2 million $5.7 million The attached printout includes selected tables from the General Plan component of the model; these tables summarize the major assumptions utilized to derive the revenue and cost projections. "Per capita" forecasting methodology As noted on the attached tables, certain revenue and cost line items are projected using a per capita forecasting methodology, based on existing per capita factors derived from the City's budget. Given that some revenues and costs are affected by both residential and non-residential development, the analysis considers employee and visitor "populations" in addition to the resident population. For purposes of estimating population "equivalents" the following factors are applied to the employee and visitor populations: • 1 employee is equivalent to 0.24 full-time residents s 1 visitor (hotel guest) is equivalent to 0.75 full-time residents These factors are consistent with generally accepted methodologies for this type of analysis and have been calibrated to Costa Mesa's budget for purposes of this FIM. 24835 E. La Palma Avenue, Suite I, Yorba Linda, California 92887 Phone: (714) 692-9596 . Fax: (714) 692-9597 Memorandum to Laura Stetson, AICP September 24, 2015 Page 3 Factors/Assumptions Needing Further Refinement As indicated above, the land use assumptions (buildout amounts) will be refined in the next iteration of the FIM based on direction provided at the October 6 City Council meeting. In addition, the following factors/assumptions are being refined as the FIM is finalized: • Costs for maintenance of parks and landscaped medians are set up to be forecasted on a per - acre basis. At this time, TNDG is coordinating with MIG and City staff to development assumptions regarding the future changes in these acreages. • The model currently classifies low density housing as "single family," and medium and high density housing as "multi -family." Per direction provided by the Council on September 8, the final model will show all three density levels (low, medium and high) as separate categories. • The FIM addresses the issue of potential increased costs related to the City's pension obligations. The projections are based on data provided by Finance Department staff, and are currently being confirmed for use in the final model. • The model shows a "bump" in assessed values resulting from periodic turnovers of residential properties (at which time properties can be re -assessed pursuant to Proposition 13 restrictions). This part of the analysis is based on data provided by Finance Department staff (showing long- term historic growth in citywide assessed values), and is currently being confirmed for use in the final model. Please feel free to call me directly if you have questions or would like to discuss any aspect of the preliminary model. 24835 E. La Palma Avenue, Suite I, Yorba Linda, California 92887 Phone: (714) 692-9596 . Fax: (714) 692-9597 I () Table 1 FY 2015 Data Inputs City of Costa Mesa Fiscal Impact Model Population Factors Single Family Household Size 2:7g Multi Family Household Size 2.50 City of Costa Mesa Assessed Valuation Property Tax Revenue Factors Property Tax Rate (City's Share) New Single Family Unit Value New Multi Family Unit Value New Retail Space (AV/Sq. Ft.) 1000 New Office Space (AV/Sq. Ft.) New Industrial Space (AV/Sq. Ft.) New Hotel Space (AV1Room) New Taxable Sales Rates General Commercial' 400.00 Regional Commercial $600.00 Retail $441.58 Office $0 Industrial $15.00 Property Transfer Tax Revenue Factors Property Transfer Tax Rate t 0,055°I Property Turnover Rate 7.515% Table 2 Existing Land Uses by Category City of Costa Mesa Fiscal Impact Model Enter Current Year Population: Average SFU Persons per DU 2.79 Average MFU Persons per DU 2.50 Enter Current Year Employees -, �..88,346 Existing Existing Assessed Sales Units/SF/Rooms Value Factors Tax Factors Residential Single-family A 14210 „$53p 400 Multi -family — 8,413 W .$288 QOO Subtotal, Residential 42,623 Commercial General Commercial _ 5 $tl9b00i �$115i �__ $400:QOj Regional Commercial _ 4144;t700a $1151 $600.00" Retail (overall average) 9 741,000 $115 " $4850221 Office 7,224;040;_ Industrial 13,087,000, $15.84 Subtotal, Commercial 30,052,000 HotellMotel (Rooms)m ,.14g) $54 Oi34a Parks (Acres) Landscaped Medians (Acres) y3^f 42- Table 3 Derivation of Other Revenue Projection Factors City of Costa Mesa Fiscal Impact Model City of Costa Mesa Population 110,770 City of Costa Mesa, Daytime Employee Population 88,348 City of Costa Mesa, Overnight Lodging Visitor Population 2,904 $1,272,000 R+E+V Employee Weighting Factor 0.24 Visitor Weighting Factor 0.75 Effective Daytime Employee Population 21,204 Effective Overnight Ledging Visitor Population 2,178 Budget Category Citywide OF Budget FY 2014115 Allocation Basis' Relevant Population Per Capita Revenue Electric Franchise Fee $1,272,000 R+E+V 134,152 $9.48 Cable Television Franchise Fee $1,300,000 R 110,770 $11.74 Gas Franchise Fee $250,000 R+E+V 134,152 $1.86 Solid Waste Hauler Franchise Fee $1,945,000 R+E+V 134,152 $14,50 Business License $954,000 E 88,348 $10.80 Licensesand Permits $139,100 R 110,770 $1.26 Fines and Forfeitures $1,190,000 R+E+V 134,152 $8.87 Use of Money and Property $276,300 NO CHANGE PROJECTED Fees and Charges $2,027,600 R 110,770 $18.30 Other Government Agencies $1,045,300 R 110,770 $944 Other Revenues $787.300 NO CHANGE PROJECTED (1) R = residents; F = empbyeee; V = visitors Table 4 Derivation of Projection Factors for Police Protection Costs City of Costa Mesa Fiscal Impact Model City of Costa Mesa Papulation 110,770 City of Costa Mesa, Daytime Employee Population 88,348 City of Costa Mesa, Overnight Lodging Visitor Population 2,ggq Employee Weighting Factor 02 Visitor Weighting Factor 0.75 Effective Daytime Employee Population 21,204 Effective Overnight Lodging Visitor Population 2,178 Citywide GF Budget Allocation Relevant Per Capita Budget Category FY 2015 Basis Population Cost Police Protection $41,016,560 R+E+V 134,152 $305.75 Table 5 Derivation of Projection Factor for Parks & Community Services Costs City of Costa Mesa Fiscal Impact Model City of Cosa Mesa Population 110,7 0 Citywide GF Budget Allocation Relevant Per Capita Budget Category FY 2015 Basis Population Cost Total Parks & Community Services Budget $4,958,298 Less: recreation fees and faculty, rentals (4,021,300) Net City cast $936,998 R 110,770 $8.46 Table 6 Derivation of Projection Factors for Development Services Costs City of Costa Mesa Fiscal Impact Model of Costa Mesa, Daytime Employee Population 88,348 Employee Weighting Factor 0.24 Visitor Weighting Factor 075 Effective Daytime Employee Population 21,204 Effective Overnight Lodging Visitor Population 2,178 Citywide GF Budget Allocation Budget Category FY 2015 Basis TOTAL GENERAL FUND EXPENDITURES Development Services Administration Planning Planning Planning Commission Building Safety Code Enforcement Building Safety OFFSETTING REVENUES Fire Permits Building Permits Electrical Permits Plumbing/Mechanical Permits Street Permits ZoningAlanance/CUP Fees Subdivision/Map Fees Environmental Impact fees Plan Checking Fee HOME/CDBG Funds (1) NET DEVELOPMENT SERVICES COST 662.546 1,530.432 24,600 837,447 1,758,061 (100,000) (1,111,000) (173,000) (212,000) (222,000) (117,000) (20,000) (25,000) (310,000) 734,306 $ 2,586,484 R+E+V (1) HOME/CDBG funding in excess of current year Housing & Community Development budget. Relevant Per Capita Population Cost 134,152 319.28 Table 7 Derivation of Projection Factors for Fire Protection Costs City of Costa Mesa Fiscal Impact Model Fire Department 2015 Budget Total Incidents per Year Cost per Incident Number of Incidents Incidents per per Year Existing Number of Occupancy Type Units, SF, or Rooms Single Family Unit 17,766 Multi -Family Unit 25,304 Retail (in 000'x) 9,456 Office (In 000'x) 7,429 Industrial (in 000's) 12,352 Overnight Lodging 4,123 Total Fire Department 2015 Budget Total Incidents per Year Cost per Incident Number of Incidents Incidents per per Year Unit 2,328 0.1310 2,294 0.0907 774 0.0818 439 0.0591 201 0.0163 445 0.1078 6,481 $20,075,061 6,481 $3,098 Table 8 Estimate of Existing (2015) Traffic Trips by Land Use City of Costa Mesa Fiscal Impact Model ADT/Unit (20151 9.52 6.82 40.75 11,42 6.97 6.78 N/A 1.90 N/A 2015 ADT ® 19 135,290 193,793 396,954 82,489 91,217 28,128 N/A 1,122 N/A 928,993 Total for General Plan Land Uses 140,822 257,422 450,413 105,828 91,154 20,494 N/A 1,122 N/A 1,067,256 Development Land Use Category Units (2015) Single Family Unit 14,210 Multi Family Unit 28,413 Retail (000'5 square feet) 9,741 Office (000's square feet) 7,224 Industrial (000's square feet) 13,087 Overnight Lodging (hotel/motel rooms) 4,149 Institutional N/A Parks (acres) 592 Other N/A Total Tdps ADT/Unit (20151 9.52 6.82 40.75 11,42 6.97 6.78 N/A 1.90 N/A 2015 ADT ® 19 135,290 193,793 396,954 82,489 91,217 28,128 N/A 1,122 N/A 928,993 Total for General Plan Land Uses 140,822 257,422 450,413 105,828 91,154 20,494 N/A 1,122 N/A 1,067,256 Table 9 Development Services Expenditures City of Costa Mesa Fiscal Impact Model Citywide Percentage/ Budget Budget Category FY 2015 Administration $ 1,139,355 Engineering 2,184,274 Transportation 2,027,273 Maintenance Services 11,299,619 Administration 288,016 Parkway & Median Maintenance 868,040 Park Maintenance 3,120,565 Streets 1,294,758 Graffiti Abatement 190,289 Storm Drain Maintenance 97,816 Signs and Markings 524,329 Facility Maintenance 1,555,672 Fleet Services 3,360,135 Total Public Services Expenditures S 18,650,521 Percentage/ Projection Number of Per Unit Basis Units Costs %Factor N/A 8.55% Per Capita(R+E+V) 134,152 $16.28 Per Traffic Trip 928,993 $2.18 %Factor N/A 2.84% Per Acre 12 $72,337 Per Acre 592 $5,271 Per Traffic Trip 928,993 $1.39 Per Capita(R+E+V) 134,152 $1.42 Percentage Input N/A 1.0% Percentage Input N/A 1.0% Percentage Input N/A 1.0% Percentage Input N/A 1,0% Table 10 Administrative and Overhead Expenditures City of Costa Mesa Fiscal Impact Model Budget Category City Council CEO's Office Finance City Attorney's Office Information Technology Non -Departmental Total Administrative/Overhead Functions Other General Fund Expenditures Percentage of Administrative/Overhead Costs of Total General Fund Citywide Budget FY 2015 $378,408 7,872,268 2,843,051 1,000,000 3,328,366 11,231,747 $26,653,840 $81,569,859 32,68% ~ 11Q_