HomeMy WebLinkAboutCT 96-02; TERRACES AT SUNNY CREEK; FISCAL IMPACT ANALYSIS; 1998-08-10I
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THE·TERRACES AT SUNNY CREEK
Fiscal Impact Analysis
August 10, 1998.
Submitted by:
CanAm Propert.ies, LLC
5850 A venida Encinas, Suite A
Carlsbad, CA 92008
(760) 438-3141
Prepared by:
Onaka Planning & Economics
P.O. Box 12565
La Jolla, CA 92039-2565
(619) 535-1420
(OPIE 149}
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ONAKA PLANNING & ECONOMICS
PO. BOX 12565, LA JOLLA, CA 92039-2565
(619) 535-1420 FAX (619) 535-1498
August 10, 1998
Mr. Gary Wayne
City of Carlsbad Planning Department
2075 Las Palmas Drive
Carlsbad, CA 92009-4859
Re: The Terraces at Sunny Creek -Fiscal Impact Study
Dear Gary:
Submitted herewith is a fiscal impact study of The Terraces at Sunny Creek, in accordance with
the information requirements for a General Plan Amendment (GPA 96-01), Specific Plan
Amendment (SP 190[B]), Tentative Map (CT 96-02), and related planning permit applications.
Based on a methodology which has been previously reviewed and accepted by the City's Finance
Department, the project is expected to require, at buildout, expenditures for public services
which exceed by $85,900 per year the General Fund revenues that will be generated. However,
there are several factors to be considered in evaluating this impact:
(1)
(2)
The methodology used to estimate fiscal impact is based on average costs of providing
municipal services. This results in a conservative (i.e., high) estimate of expenditures,
since the project would not impose a strictly proportional need for all municipal
functions.
The project contains a large number of affordable housing, comprising 31.2 % of total
units. This contributes significantly to the City's stock of affordable housing. However,
it also causes a significant, negative fiscal impact to the General Fund, since affordable
units necessarily have low assessed values and generate low property taxes.
(3) The project is located in a tax rate area, where the City's share of the 1 % property tax
is 13.9%, substantially lower than the citywide average of around 19%. As a result,
property tax revenues to the City from this area are nearly 27% lower than from
comparable projects in other areas. When adjusted for this difference, the project's
market housing would have a much smaller effect on the General Fund.
It is hoped that the foregoing observations will be considered in evaluating the fiscal impact of
The Terraces project.
L8804GIJ.IJP6
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Mr. Gary Wayne
August 10, 1998
Page 2
If there are any questions, please do not hesitate to call me.
Sincerely,
Onaka Planning & Economics
Encl.
L8804GI./.I./P6
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THE TERRACES AT SUNNY CREEK
Fiscal Impact Analysis
August 10, 1998
Submitted by:
CanAm Properties, LLC
5850 A venida Encinas, Suite A
Carlsbad, CA 92008
(760) 438-3141
Prepared by:
Onaka Planning & Economics
P.O. Box 12565
La Jolla, CA 92039-2565
(619) 535-1420
(OPIE 149)
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TABLE OF CONTENTS
I. EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Project Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Fiscal Impact Study Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summary of Conclusions ... ,, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
II. FISCAL IMPACT ANALYSIS ................................ 6
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Project Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Comparison of Land Uses in the Proposed Project and the City . . . . . . . . . . . . 13
General Fund Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
General Fund Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
III. REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
OP/E 149 1 The Terraces at Sunny Creek FIS
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LIST OF FIGURES
1-1 Project Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
11-1 Proposed Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11-2 Previously Approved Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
LIST OF TABLES
1-1 Summary of Impacts to General Fund Annual Revenues and Expenditures . . . . . . . 5
11-1 Buildout Program of Proposed Project . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11-2 Buildout Program of Previously Approved Project . . . . . . . . . . . . . . . . . . . . 12
11-3 Population, Housing and Land Use in the City and the Project . . . . . . . . . . . . . 14
11-4 City of Carlsbad General Fund Revenues, FY 1998-99 . . . . . . . . . . . . . . . . . 15
11-5 Estimated Taxable Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11-6 Estimated Sales Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11-7 City of Carlsbad General Fund Expenditures, FY 1998-99 . . . . . . . . . . . . . . . 23
OPIE 149 11 The Terraces at Sunny Creek FIS
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I I. EXECUTIVE SUMMARY
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Fiscal Impact Study Methodology
Impact on the General Fund
The fiscal impact study examines the effect of the proposed project on annual revenues and
expenditures of the city's general fund. Effects on special revenue funds and enterprise funds
are likely to be neutral, since charges would be levied on the project to cover the full cost of
services provided under these funds. Effects on capital funds are discussed in the previously
submitted application to amend the Local Facilities . Management Plan for Zone 15.
Consequently, this study does not address potential impacts to the city's special revenue funds,
enterprise funds, or the capital improvement program.
Average vs. Marginal Cost Analysis
This study analyzes average costs, based on the projected revenues and expenditures of the city's
general fund for the new fiscal year (FY) 1998-99. When there is sufficient unused capacity
remaining in the city's public service infrastructure or when any required infrastructure
improvements are fully funded, average cost analysis is more conservative than marginal cost
analysis, because revenues generated by the project are assumed to cover not only the
incremental cost of additional services, but also a pro rata share of fixed costs such as general
government, maintenance of public buildings and grounds, and other citywide services.
Inflation
Revenues and expenditures are estimated at buildout of the project, but computed in terms of
1998 dollars, except when the most recent data available are for previous years and when the
use of such data does not lead to a significant bias in the analysis.
Summary of Conclusions
At buildout, general fund expenditures required to provide public services to the proposed
residential project, including both market and affordable housing, are expected to exceed
revenues generated, by the project by $85,900 per year. In comparison, if the previously
approved, non-residential project were feasible and developed, general fund revenues would
exceed expenditures by $39,400 per year (Table I-1).
OP/E 149 3 The Terraces at Sunny Creek FIS
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Property taxes represent the largest source of revenues to the general fund, followed by sales
tax revenues. The largest expenditure category is public safety (police and fire protection),
followed by community services (recreation, library, and seniors programs) for the proposed
residential project and public works for the previously approved non-residential project. As
discussed below, the resort inn contemplated under the previously approved project is a for-sale,
condominium facility, which is not expected to generate any transient occupancy tax.
The estimated shortfall in general fund revenues associated with the proposed project is due
largely to two factors. First, the project contains a high proportion of affordable housing. Out
of a total of 250 residential units, 78 units, or 31.2 % , are affordable. This substantially exceeds
the city's requirement that a minimum of 15% of a project's total housing units be affordable.
Provision of affordable housing in excess of the minimum required is a condition for transferring
residential units to the project site from the "excess dwelling unit bank" in accordance with City
Council Policy No. 43. However, since affordable units would necessarily have low assessed
values and generate low property taxes, their presence increases the shortfall of general fund
revenues relative to expenditures for public services.
Second, in the tax rate area where the project is located (TRA 9125), the city's share of the 1 %
property tax is approximately 13.9 % . This is substantially less than the citywide average of
around 19% (based on data from the City of Carlsbad and County of San Diego Auditor and
Controller). Since property tax is the largest component of general fund revenues generated by
a residential project, differences in the allocation of the 1 % property tax have a substantial effect
on the project's estimated fiscal impact.
As an illustration of this effect, expenditures associated with only the 172 single family, market
housing would exceed estimated revenues by $39,600 (Table I-1). If, however, property tax
revenues were to be calculated using the city's average share, or 19 % , the estimated general
fund shortfall would decline to $14,300. Similarly, the estimated shortfall for the project as a
whole would decline to $58,200, and net surplus associated with the previously approved project
would increase to $72,200.
OP/E 149 4 The Terraces at Sunny Creek FIS
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Table 1-1
SUMMARY OF IMPACTS TO GENERAL FUND
ANNUAL REVENUES AND EXPENDITURES
Proposed Project
Market Market and
Housing Only Affordable
Revenues
Property Tax [1] $69,398 $76,014
Sales Tax 36,082 52,540
Franchise Tax 6,684 9,715
Real Property Transfer Tax 3,026 3,315
Business License Tax 0 0
Vehicle License (In-Lieu) 16,507 24,036
Other State Subventions 1 197 1 743
Total $132,893 $167,363
Expenditures
General Government $7,659 $11,133
Public Safety 78,404 113,960
Community Development 9,455 13,743
Community Services 33,297 48,484
Public Works 24,641 [2] 38,124
Non-Departmental 6,627 9,633
Contingency 12,418 18,236
Total $172,501 $253,311
Net Surplus or (Deficit) [1] ($39,608) ($85,949)
Source: Tables 11-1 through 11-7; Onaka Planning & Economics.
Note: Figures may not sum to totals as shown due to rounding.
[2]
Previously
Approved
Project
$90,163
41,176
5,922
3,932
24,071
0
0
$165,265
$6,786
69,470
8,377
0
26,344
5,872
9,064
$125,914
$39,351
1. Based on the city's 13.9227% share of the 1 % property tax in tax rate area (TRA) 9125. At
19%, or the city's average share of the 1 % property tax, revenues to the city would be 36.5%
higher, and the net surplus or deficit to the General Fund would be as follows:
Market Market and Previously
Housing Only Affordable A1212roved Project
Property Tax Revenues Calculated
at City's Average Share of 19% $94,706 $103,734 $123,044
General Fund Net Surplus or (Deficit) ($14,300) ($58,228) $72,231
2. Estimated expenditure for public works has been reduced by a credit of $5,091, to reflect
private (Homeowner Association) maintenance of local residential streets.
OP/E 149 5 The Terraces at Sunny Creek FIS
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I II. FISCAL IMPACT ANALYSIS
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II. FISCAL ThfPACT ANALYSIS
This section describes the methodology, assumptions, and estimated average revenues and
expenditures used in the analysis.
Methodology
The operating budget of the City of Carlsbad is divided into the general, special revenue,
enterprise, and other funds (City of Carlsbad, 1998a). Funds other than the general fund are
self-supporting; that is, revenues are collected to balance expenditures, hence would not be
negatively affected by the proposed project. (Impacts to the city's capital improvement program
are examined in the proposed amendment to the local facilities management plan for Zone 15,
hence are not addressed in this study.) Within the general fund, certain city functions and
services are partially or sometimes entirely self-supporting through the collection of fees or
charges from the users of those services. Such fees and charges are called functional revenues
and distinguished from general or unrestricted revenues, such as property and sales taxes.
This study takes account of these facts by (1) excluding all funds other than the general fund
from the analysis and (2) subtracting functional revenues from both the revenues and
expenditures of the general fund.
Equivalent Dwelling Units
Some municipal services benefit primarily the residents of the City of Carlsbad. Examples are
libraries, cultural arts, and parks and recreation services. Average costs of these services are
defined in terms of cost per capita. Other services, such as general government and public
safety, benefit both the residents of the city and other developed land uses, including
commercial, industrial, and institutional uses. In computing average costs for the latter group
of services, this study relies on the concept of equivalent dwelling units (EDU). Under this
approach, it is assumed that one EDU of developed residential use and one EDU of developed
non-residential use will require the same expenditure of funds for public services which are
provided to these uses.
The estimated number of equivalent dwelling units per acre of non-residential land use is 5.4
EDUs, which was derived as follows. San Diego Association of Governments has conducted
OP/E 149 6 The Terraces at Sunny Creek FIS
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a comprehensive study of land uses in local jurisdictions in San Diego County (SANDAG,
1993). According to this study, the City of Carlsbad in 1990 contained 5,780 acres1 of
residential uses, 699 acres of commercial uses, 748 acres of industrial uses, 664 acres of
transportation, communication and utilities uses, and 183 acres of educational and institutional
uses. Thus, residential and non-residential uses requiring municipal services in 1990 occupied
8,074 acres, of which 2,294 acres were non-residential.
According to the U.S. Census, the total housing stock in the City of Carlsbad in 1990 was
27,235 units. Thus, the average housing density was 4.7 units per acre(= 27,235 units/ 5,780
acres). Assuming that an acre of non-residential land use requires public services at the same
rate as an acre of residential use, the average housing density provides one estimate of the factor
required to convert non-residential land uses to equivalent dwelling units.
Another approach to estimating equivalent dwelling units is the density of employment in non-
residential land uses. It is assumed under this approach that an employee in a non-residential
workplace would require the same amount of certain categories of public services as a resident
in a home. In 1990, excluding agriculture and construction, the total employment in the city
was 32,161 (SANDAG, 1994). Dividing this number by the average number of persons per
household then in effect (2.3178) and by the number of non-residential acres which generate
employment (2,294 acres) provides an estimate of 6.0 EDUs per acre.
Taking the average of these two estimates, an acre of non-residential use with employment is
assumed equivalent to 5.4 residential units[= (4.7 + 6.0)/2].
Project Description
Proposed Project
The proposed project is a planned residential development on a 39.9-acre site, consisting of
Assessor's parcel numbers (APNs) 209-090-01 through 209-090-10, 209-090-12, and a portion
of 209-060-59. The site is located in Local Facilities Management Zone 15 in the Northeast
Quadrant of the City of Carlsbad. It is bordered on the north by Agua Hedionda Creek, on the
south by El Camino Real, on the west by College Boulevard, and on the east by vacant land
zoned for office use.
1 All acres are gross and include local streets.
OP/E 149 7 The Terraces at Sunny Creek FIS
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The proposed project would subdivide the site into 172 single family lots, one multifamily lot,
and one open space lot, for development of 250 residential units -172 single family units,
second dwelling units incorporated in 28 of the single family units, and 50 multifamily
(apartment) units (Figure II-1 and Table II-1). Single family units range in size from 1,605 to
2,519 square feet. The 28 largest units incorporate 610-square foot second dwelling units.
Multifamily units range in size from studios (437 square feet) to three-bedroom apartments
(1,106 square feet). The units would be constructed as three 3-story buildings. In all, 78 units
(28 second dwelling units and 50 multifamily units) would be made affordable to households
with incomes not more than 80 % of the median household income in San Diego County.
Single family lots would be configured as "Z" lots, with staggered side areas for entrances and
back yards. The residential areas would form a gated community with privately maintained
streets.
Previously Approved Project
The proposed project would delete or modify an existing specific plan (Sycamore Creek Specific
Plan) and subdivision map (APNs 209-060-59, 209-090-01 through 209-090-11) approved by the
city in 1984. In comparison with the previously approved plan, the proposed project would:
1. Exclude a commercial site (APN 209-090-11) west of College Boulevard, although
a recreational vehicle storage area would be located on this site;
2. Add a 3.43-acre parcel (APN 209-090-12) which was not formerly a part of the
specific plan; and
3. Replace a non-residential development -professional/offices, restaurants, a
"condominium" resort inn, and tennis facilities -with the planned residential
development as described above.
The office/restaurant component of the previously approved project consisted of seven buildings,
totalling 423,000 square feet -405,000 square feet of office/bank use and 18,000 square feet
of restaurants in three of the buildings (Figure II-2 and Table II-2). The resort inn/tennis
component of the project included a 122-room inn, 7 ,000-square foot restaurant, 1,500-square
foot conference area, and 1,500-square foot tennis club. The resort inn was planned and
approved as a "condominium" facility, with ownership interests sold to area companies for the
temporary housing of visiting staff, guests, and clients. Consequently, it is assumed in this
study that the inn, as originally planned, would not generate transient occupancy taxes for the
city.
OP/E 149 8 The Terraces at Sunny Creek FIS
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Table 11-1
BUILDOUT PROGRAM OF PROPOSED PROJECT
Equivalent
Building Size No. of Housing Resident Dwelling
Product Type (Sq. Ft.) Units Population [1] Units [2]
Single Family Detached
SFD-1 1,605 19 44
SFD-2 1,889 62 144
SFD-3 2,138 63 146
SFD-4 2,519 28 65
Total/Average 2,051 172 399 172.0
Second Units 610 28 65 28.0
Multifamily
Studio 437 12 28
1 BR 636 12 28
2BRA 786 12 28
2BR B 811 8 19
3BR 1,106 6 14
Total/Average 709 50 117 50.0
Total Project
Market Housing Only 172 399 172.0
Total of Market and
Affordable Housing 250 581 250.0
Source: Terraces at Sunny Creek Tract No. 96-02 and P.U.D. 96-02 (1998); City of Carlsbad
Planning Department report to the Planning Commission (June 1998); CanAm
Properties, LLC.
1. Based on Growth Management standard of 2.3178 persons per household.
2. 1 residential unit equals 1 equivalent dwelling unit (EDU).
OP/E 149 10 The Terraces at Sunny Creek FIS
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Table 11-2
BUILDOUT PROGRAM OF PREVIOUSLY APPROVED PROJECT
Equivalent
Site Area Building Size No. of Hotel Dwelling
Product Type (Acres) (Sq. Ft.) Rooms Units [1]
Professional Office
A Office, bank 31,000
B Restaurant 10,000
C Office, bank 115,000
D Office 78,000
E Restaurant 3,000
Office 75,000
F Office 55,500
G Office 50,500
Restaurant 5,000
Total 19.36 AC 423,000 104.5
Resort Inn, Tennis Club
Inn 122
Restaurant 7,000
Tennis Club [2] 1,500
Conference 1,500
Total 8.87 AC 10,000 122 47.9
Total by Land Use
Office, bank 405,000
Restaurant 25,000
Inn 122
Tennis Club [2] 1,500
Conference 1,500
Total 28.23 AC 433,000 122 152.4
Source: Sycamore Creek Specific Plan and Tentative Map, Del Mar Financial (1984)
1. Based on 5.4 equivalent dwelling units (ED Us) per acre; see text.
2. Assumed to include 200 sq. ft. of tennis shop.
OP/E 149 12 The Terraces at Sunny Creek FIS
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This study evaluates fiscal impacts of the proposed residential project and compares them to
impacts of the corresponding portion of the previously approved project. Since the commercial
site west of College Boulevard remains unchanged and is excluded from the proposed project,
fiscal impact of development on this site is not considered in this study.
Comparison of Land Uses in the Proposed and
Previously Approved Projects and the City
Based on an average household size of2.3178 persons per unit, as specified in the city's Growth
Management Program, the proposed project would house 581 persons, or less than 1 % of the
population of the city in 1997 (Table II-3). Commercial land use in the previously approved
project (28.2 acres) would represent approximately 1.3% of such land use in the city. Using
the definition of equivalent dwelling units discussed above, the proposed project would have
250.0 EDUs, and the previously approved project, 152.4 EDUs.
When completed, actual number of residents in the proposed project is likely to be less than the
estimate (581 persons), since the 28 second dwelling units incorporated in single family units
probably would not have the same number of residents per unit as the remainder of the project.
General Fund Revenues
Estimated total general fund revenues to the city in FY 1998-99 is $55,370,000 (Table II-4).
Functional revenues of $11,450,000 would be generated by fees and charges for services,
including planning and construction permits and interdepartmental charges. Following the
methodology described above, these are assumed to be cost recovery revenues and are used to
offset expenditures. Subtracting fees and charges for services, net revenues available for general
public services total $43,920,000.
The estimates of citywide, average revenues are also shown in Table II-4. The following
revenues which would result from the proposed and previously approved projects are discussed
below.
• Property, property transfer, and sales taxes
• Franchise tax
•
•
•
OP/E 149
Business license tax
Vehicle license tax
Other State subventions
13 The Terraces at Sunny Creek FIS
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Table 11-3
POPULATION, HOUSING AND LAND USE IN THE CITY AND THE PROJECT
Pro~osed Project [1]
Market Market and
City of Carlsbad Housing Only Affordable
Resident Population 70,099 [4] 399 [7] 581 [7]
Total Housing Units 29,940 DU [4) 172 DU 250 DU
Commercial/ Industrial Land 2,111.0 AC [5]
Institutional Land 183.0
Total Non-Residential Land 2,294.0 AC
Equivalent Dwelling Units [3) 42,327.6 EDU 172.0 EDU 250.0 EDU
Estimated Tax Value (x $1,000) $6,306,269 [6] $49,845 [8] $54,597 [8]
Source: California Department of Finance; San Diego Association of Governments (SANDAG).
1. SeeTablell-1.
2. See Table 11-2.
3. Number of housing units plus 5.4 times the number of acres in non-residential land use.
4.
5.
6 .
7 .
8.
SANDAG, January 1, 1997.
SANDAG (1994), Land Use Patterns in the San Diego Region; includes office, retail, industrial, transportation,
communication and utilities.
San Diego County Assessor's Office, total secured assessed valuation for the City of Carlsbad, FY 1997-98.
Project population based on assumed average household size of 2.3178 persons per unit and no vacancy.
See Table 11-5.
Previously
Approved
Project [2]
28.2 AC
28.2 AC
152.4 EDU
$64,760 [8]
-------------------
0 .., ...... m
Taxes
Property Tax
Sales Tax [2]
By Place of Business
By Residents' Purchases
Transient Occupancy Tax
Franchise Tax
Real Property Transfer Tax
Licenses and Permits
Construction Permits
Business Licenses
ti; Other Licenses & Permits
.... ~
(1) ....
(1) -, -, a,
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(1)
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State Subventions
Vehicle In-Lieu
Other
Charges for Services
Planning Fees
Building Department Fees
Engineering Fees
Ambulance Fees
Recreation Fees
Property Rentals
Other Charges or Fees
[Continue next page.)
Table 11-4
CITY OF CARLSBAD GENERAL FUND REVENUES, FISCAL YEAR 1998-99
Projected Potential Applied
FY 1998-99 Impact by to Offset
Revenue Project[1] Expenditures Unit Revenue / Note
$13,300,000 Yes 13.9227% times 1 % of est. taxable value
15,240,000
Yes 1.0000% of 58.4% of total taxable sales
Yes $90.43 per capita
5,775,000 Yes 10.00% of room revenues
1,645,000 Yes $38.86 per EDU
580,000 Yes 4.3609% of est. property tax revenue
1,800,000 Off-Set 1,800,000 Offset Public Works expend.
1,800,000 Yes $852.68 per acre of commercial and
industrial land
1,010,000 Off-Set 1,010,000 Offset General Government expend.
2,900,000 Yes $41.37 per capita
210,000 Yes $3.00 per capita
1,200,000 Off-Set 1,200,000 Offset Comm. Development expend.
1,250,000 Off-Set 1,250,000 Offset Comm. Development expend.
2,000,000 Off-Set 2,000,000 Offset Public Works expend.
735,000 Off-Set 735,000 Offset Public Safety expend.
1,040,000 Off-Set 1,040,000 Offset Comm. Services expend.
180,000 Off-Set 180,000 Offset General Government expend.
585,000 Off-Set 585,000 Offset General Government expend.
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Table 11-4
CITY OF CARLSBAD GENERAL FUND REVENUES, FISCAL YEAR 1998-99
Projected Potential Applied
FY 1998-99 Impact by to Offset
Revenue Project [1] Expenditures Unit Revenue / Note
(Continued)
Fines and Forfeitures 440,000 No
Interest 1,500,000 No
Interdepartmental Charges 1,650,000 Off-Set 1,650,000 Offset General Government expend.
Other Revenue Sources 530p00 No
Total -General Fund $55,370,000 $11,450,000
Off-Set From Fees (11,450,000}
Total Net of Off-Set ~43,920,000
Source: City of Carlsbad, 1998-99 Operating Budget (Preliminary); Onaka Planning & Economics.
1. One-time revenues which cover the cost of services provided, such as permits, licenses, and fees, are offset against
the costs of services provided; see Table II-7 on General Fund expenditures.
2. Estimated sales tax revenue per capita is based on income per capita; when multiplied by current population and subtracted from
projected sales tax revenues, the remaining 58.4% is assumed generated from taxable sales to non-residents. See text .
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Properly Tax
The City of Carlsbad receives on average 19% of the 1 % property tax revenues collected in the
city. 2 This rate can vary substantially in different tax rate areas (TRA) of the city. The project
site is located in TRA 9125. For FY 1997-98, the city's share of the 1 % property tax revenues
collected in this area was 13. 922672 % (County of San Diego, 1997a).
Proposed Project. Projected sales prices of market housing (i.e., single family units) were
obtained from a market study conducted by the project applicant (Table II-5). It is assumed that
the prices also include second dwelling units, where applicable.
Multifamily units are planned to be rented to low income households, defined as those earning
80% or less of the median income of households in San Diego County. For purposes of this
study, market values of multifamily units were estimated assuming that they would be valued
similar to for-sale housing, but priced to be affordable to low income households. In 1996,
median income of households in San Diego County was $38,477 (SANDAG, 1997). A low
income household would have 80% of the median income, or $30,782. Assuming that
•
•
25 % of household income would be used to pay principal and interest, and
30-year fixed mortgage is available at 7.0% interest, 2.0% origination fee, and 20%
down payment,
such a household could qualify to purchase a $118,000 unit, with a $94,400 loan and $23,600
downpayment. For purposes of this study, the largest multifamily units (i.e., 1,106 square-foot
units) were valued at this price. Smaller units were valued lower, but at a progressively higher
average value per square foot. Total estimated taxable value of the proposed project at buildout
is $54,597,000.
21n FY 1997-98, the city's projected revenues from property taxes totaled $12,300,000, on
locally assessed, secured tax base of $6,306,268,871.
OPIE 149 17 The Terraces at Sunny Creek FIS
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Table 11-5
ESTIMATED TAXABLE VALUES
Development
Project and Product Ty~e Program Value Per Unit Tax Value
Proposed Project
SFD-1 19 DU $260,000 /DU $4,940,000
SFD-2 62 280,000 17,360,000
SFD-3 63 295,000 18,585,000
SFD-4 28 320,000 8,960,000
Subtotal Market Housing 172 $49,845,000
Second Units 28 [1]
MF-Studio 12 77,000 [2] 924,000
MF-1BR 12 91,000 1,092,000
MF-2 BR A 12 101,000 1,212,000
MF-2 BR B 8 102,000 816,000
MF-3 BR 6 118,000 708,000
Total Market and
Affordable Housing 250 DU $54,597,000
Previously Approved Project
A Office, bank 31,000 SF $112 /SF [3] $3,472,000
B Restaurant 10,000 201 [4] 2,010,000
C Office, bank 115,000 112 12,880,000
D Office 78,000 112 8,736,000
E Restaurant 3,000 201 603,000
Office 75,000 112 8,400,000
F Office 55,500 112 6,216,000
G Office 50,500 112 5,656,000
Restaurant 5,000 201 1,005,000
Resort Inn 122 Rm 111,000 /Rm [5] 13,542,000
Restaurant 7,000 SF 200 /SF 1,400,000
Tennis Club 1,500 160 [6] 600,000
Conference 1,500 160 240,000
$64,760,000
Source: CanAm Properties, LLC; Onaka Planning & Economics
1. Included in the value of SFD-4.
2. Multifamily units are priced to be affordable to households earning 80% of median income,
adjusted for unit size.
3. Based on construction cost of $67.21 per sq.ft., with 40% of total value in land and site
improvements. Construction costs are from Means Square Foot Costs, 19th Annual Ed.
4. Based on construction cost of $120.71 per sq.ft., with 40% of total value in land and site
improvements.
5. Based on revenues per available room (REVPAR) of $122 and 2.5 gross revenue multiplier.
6. Based on construction cost of $95.74 per sq.ft., with 40% of total value in land and site
improvements.
7. Includes estimated $360,000 tor court improvements.
[7]
OP/E 149 18 The Terraces at Sunny Creek FIS
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Previously Approved Project. Taxable values for buildings in the previously approved project
were estimated as follows:
Office, bank -Construction cost of $67.21 per square foot, plus 66.7% (i.e., 40% of
total value) for land, site improvements, and incidental costs, for a total of $112 per
square foot.
Restaurant -Construction cost of $120. 71 per square foot, plus 66. 7% for land, site
improvements, and incidental costs, for a total of $201 per square foot.
Tennis Club -Construction cost of $95.74 per square foot, plus 66.7% for land, site
improvements, and incidental costs, for a total of $160 per square foot, plus
$360,000 for construction of tennis courts.
Conference Area -Same as tennis club ($160 per square foot).
As previously noted, the resort inn was planned and approved as a condominium development,
and ownership interests in rooms and support facilities would be sold to area companies. Sales
value of the inn was estimated as follows. According to San Diego County Visitors and
Convention Bureau, average daily room rate for a luxury hotel in the county in May 1998 was
$172.10, and average (annual) occupancy rate for all hotels in 1997 was 71 % (SDCVB, 1998).
Thus, revenue per available room (REVPAR) for a typical luxury hotel is $122 per room per
night, or $44,530 per year. Recent sales transactions of hotel properties in the county indicate
that sales prices are approximately 2.5 times annual REVPAR. Estimated value for the resort
inn is therefore $111,000 per room, or a total of $13,542,000.
Sales Tax
The city's share of sales tax revenues equals 1 % of all taxable transactions in the city. Taxable
transactions occur in one of two ways: (1) purchases by the residents of Carlsbad and (2)
purchases by non-residents. On a per capita basis, Carlsbad's taxable transactions exceed that
of the county. In 1996, average taxable retail sales per capita in the city totaled $12,066, while
the average for the county was $6,371 (Sta~e Board of Equalization, 1996). This difference is
partially explained by the fact that median per capita income in Carlsbad ($19,443) is
approximately 39.5% higher than median per capita income in the county ($13,941) (SANDAG,
1996 and 1997a). When this difference is taken into account, estimated average taxable retail
purchases by residents in Carlsbad is $8,888 (= $6,371 x 139.5%) per year, which is still much
less than actual transactions in the city in 1996. Adjusted for inflation, average taxable retail
purchases by Carlsbad residents in 1997 is $9,043 per year, and average sales tax revenue per
resident, $90.43 per year.
OP/E 149 19 The Terraces at Sunny Creek FIS
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For this study, it is assumed that residents in Carlsbad generate sales tax revenues at the average
rate for the county, with adjustment for the higher median income in the city, or $90.43 per
capita. Using this figure, sales tax revenues generated by all residents in Carlsbad in FY
1998-99 is estimated to be $6,339,000, or about 41.6% of projected total sales tax revenues.
The remaining 58.4% of sales tax revenues is generated by non-residents at retail establishments
in the city.
Within the previously approved project area, taxable transactions by non-residents are expected
to occur in 25,000 square feet of restaurants and in 200 square feet of tennis shop assumed to
be part of the tennis club. Projected annual sales per square foot for restaurant and tennis shop
were obtained from the Urban Land Institute's 1995 survey of shopping centers in the U.S. It
was assumed that the restaurants would fall in one of two groups. First group would generate
sales paralleling those of restaurants located in regional shopping centers ($366 per square foot),
while second group would generate sales similar to those in community shopping centers ($223
per square foot). Tennis shop sales were assumed similar to those of a sporting goods store in
a regional shopping center. (All sales data are from ULI, 1995.) Sales tax revenues associated
with purchases by non-residents are estimated to be $41,176 (Table 11-6).
Franchise Tax
Utility franchise taxes are paid by both households and businesses. It is assumed here that the
tax payments are proportional to equivalent dwelling units. The average revenue in FY 1998-99
is $38.86 per EDU.
Real Properly Tran sf er Tax
In Carlsbad, real property transfer tax is levied on property value appreciation realized at sale,
compared to the value at previous transfer. The level of tax collection can vary depending on
the rate of appreciation in the price of existing homes and on the number of homes sold.
Revenue for FY 1998-99 is projected to average 4.36% of total property tax revenues.
Business License Tax
On average, it is anticipated that the city would collect $852.68 of business license per acre of
commercial development. This applies to commercial development in the previously approved
project only.
OP/E 149 20 The Terraces at Sunny Cre~k FIS
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Table 11-6
ESTIMATED SALES TAXES
Resident Est. Sales Tax Annual Sales
Po~ulation Revenue/Person Tax Revenues
Proposed Project
Sales tax revenues from purchases
by residents of the project
Market Housing Only 399 $90.43 [1] $36,082
Market and Affordable Housing 581 $90.43 [1] $52,540
Gross Leasable Annual Taxable Annual
Area (GLA} Sales Per SF Taxable Sale
Previously Approved Project
Restaurant 10,000 SF $366 [2] $3,660,000
Restaurant 15,000 SF $223 [3] 3,345,000
Tennis Shop 200 $228 [4] 45,600
Total 25,200 SF $7,050,600
Estimated taxable sales to
non-residents $4,117,600 [5]
Sales tax revenues from purchases
by non-residents (1 %) $41,176
Source: Urban Land Institute, Dollars & Cents of Shopping Centers in the Top 20 Metropolitan
Areas, 1995; Onaka Planning & Economics.
1. Estimate based on income per capita; see text.
2. Median sales per GLA at restaurant with liquor; U.S. Regional Shopping Centers.
3. Median sales per GLA at restaurant with liquor; U.S. Community Shopping Centers.
4. Median sales per GLA at sporting goods store; U.S. Regional Shopping Centers.
5. 58.4% of taxable sales. See text for source.
OP/E 149 21 The Terraces at Sunny Creek FIS
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State Subventions
The city's share of vehicle license (in-lieu) taxes is assumed to vary in proportion with
population. Estimated revenues in FY 1998-99 are $41.37 per capita. Other subventions are
anticipated to average $3.00 per capita.
General Fund Expenditures
All departments and expenditure categories were included for analysis, except for a portion of
the non-departmental budget. Total general fund expenditures projected for FY 1998-99 is
$55,369,798 (Table II-7). After subtracting functional revenues ($11,450,000; see above), one-
half of non-departmental budget ($1,630,750), and the portion of the contingency budget
corresponding to the excluded items ($1,014,700), net expenditures are projected to total
$41,274,348.
Expenditure categories were divided into two groups, based on who would benefit from the
services represented by those expenditures. General public services, such as general government
and public safety, are assumed to benefit all land uses. Demand for these services is estimated
based on equivalent dwelling units (EDU)~ Public services which are directed primarily to
residents of the city, such as library and recreation services, ·are estimated based on population.
In order to estimate the unit costs of public services, expenditures are first adjusted for any fees
or charges received for services. For example, the Community Development Department is
projected to spend $4,776,829 in FY 1998-99. However, the department is projected to generate
$2,450,000 in fees, leaving $2,326,829 to be funded from general revenues. This represents
the planning and building-related activities which are performed for the general benefit of the
city.
Unit costs of public service provision are also summarized in Table 11-7. These costs total
$766. 73 per equivalent dwelling unit and $83 .45 per capita, plus contingency of 7. 7573 % .
Public service cost for a residential unit with 2.3178 persons is estimated to be $1,034.63 per
unit(= [$766.73 + 2.3178 x $83.45] x 1.077573).
OP/E 149 22 The Terraces at Sunny Creek FIS
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0 Table 11-7 .., .....
CITY OF CARLSBAD GENERAL FUND EXPENDITURES, FISCAL YEAR 1998-99 m -"" ,0
Estimated Potential Adjusted
FY 1998-99 Impact by Off-Set or General
Expenditure Project Adjustment [1] Expenditure Estimated Unit Cost
General Government
City Council $210,450 Yes
City Manager 941,145 Yes
City Clerk 410,750 Yes
City Attorney 612,010 Yes
City Treasurer 137,540 Yes
Finance 1,185,647 Yes
Purchasing 471,199 Yes
Human Resources 1,341,247 Yes
Subtotal 5,309,988 ($3,425,000) $1,884,988 $44.53 per EDU
Public Safety
N Police 11,843,145 Yes
u.) Fire 8,186,323 Yes
Subtotal 20,029,468 (735,000) 19,294,468 $455.84 per EDU
Community Development
Community Development Adm in. 519,000 Yes
Geographic Information 215,612 Yes
Economic Development 137,861 Yes
Planning 2,419,780 Yes
.... Building 1,484,576 Yes :,-
<1) .... Subtotal 4,776,829 (2,450,000) • 2,326,829 $54.97 per EDU
<1) -, -, Community Services "' n
<1) Library 3,388,588 Yes "' "' Cultural Arts Program 357,655 Yes ...
VI Sister City Program 7,320 Yes C: ::, ::, Park Planning/Recreation Mgt. 485,517 Yes -<
n Recreation 2,300,461 Yes -,
<1) Senior Programs 349,930 Yes <1)
?<" .., Subtotal 6,889,471 (1,040,000) 5,849,471 $83.45 per capita -VI
[Continue next page.)
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Table 11-7
CITY OF CARLSBAD GENERAL FUND EXPENDITURES, FISCAL YEAR 1998-99
Estimated
FY 1998-99
Expenditure
[Continued)
Public Works
Public Works Admin. 684,400
Engineering 3,788,576
Park Maintenance 2,398,253
Street Maintenance 2,129,849
Facilities Maintenance 1,528,343
Major Facility Maint (Transfer) 200,000
Traffic Signal Maintenance 387,121
Subtotal 11,116,542
Subtotal [2] 48,122,298
Non-Departmental 3,261,500
Contingencies 3,986,000
Total -General Fund $55,369i798
Unit Costs (excl. contingency)
Unit Cost Per EDU
Unit Cost Per Capita
Potential
Impact by
Project
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes (50%)
Yes (74.5%)
Off-Set or
Adjustment [1]
(3,800,000}
(11,450,000)
(1,630,750)
{1,014,700}
{$14,095,450}
Adjusted
General
Expenditure
7,316,542
36,672,298
1,630,750 (3)
2,971,300 (4)
$41,274,348
Source: City of Carlsbad, 1998-99 Operating Budget (Preliminary); Onaka Planning & Economics.
EDU Equivalent Dwelling Unit
Estimated Unit Cost
$172.86 per EDU
$38.53 per EDU
7 .7573% of other expend.
$766.73 per EDU
$83.45 per capita
1. Costs for providing services funded through one-time revenues are adjusted for such revenues; see also Table 11-4.
2. Subtotal of expenditures subject to potential off-set from one-time revenues.
3. One-half of non-departmental expenditures are assumed to be influenced by new development; one-half is assumed to
represent fixed annual costs.
4. It is assumed that a project would contribute to the contingency budget in the same proportion as the proportion of general
fund budget that is potentially impacted by the project, i.e., (36,672,298+ 1,630,750)/(48, 122,298+3,261,500).
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Credit for Privately Funded Street Maintenance. The average cost of providing public works
services assumes that a project would construct and dedicate local streets to be maintained by
the city. However, the proposed project is a gated community with privately maintained streets.
Accordingly, expenditure for public works services has been adjusted by an amount that would
have been incurred by the city for street maintenance. This was estimated as follows.
According to the city, there are 230 miles of public streets. The city's preliminary operating
budget for FY 1998-98 identifies two accounts for street maintenance: Account No.
15053/1525001 (Major Street Maintenance) and Account No. 15055 (Street Maintenance).
Beginning with FY 1998-99, Major Str,eet Maintenance is funded from the general fund (it was
previously funded from the gas tax fund); all its activities are related to street maintenance.
Street Maintenance Division's activities are also funded from the general fund; however, these
activities include drainage system maintenance and others not directly related to local streets.
Assuming that 40% of the Division's activities are related to local streets, it is estimated that the
average cost to maintain local streets is $5,164 per mile(= [$559,520 + 40% x $1,570,329]
• I 230 miles). The proposed project contains 5,205 lineal feet of privately maintained street;
hence estimated savings for street maintenance is $5,091 (= $5,164 x 5,205 lin. ft./ 5,280).
Non-Departmental
Non-departmental activities include general service functions, such as animal regulation and
property tax administration. However, this category also includes special functions which would
not be related specifically to new development. For this analysis, one-half of the non-
departmental budget was assumed to be impacted by a project.
Contingency
The city's preliminary general fund budget contains a contingency of $3,986,000, or 7.7573%
of all other projected expenditures. Assuming that this represents a potential additional cost of
public services, similar contingency is added to estimated expenditures for the proposed and
previously approved projects. If the contingency is not used, either a project's net surplus would
increase, or net deficit would decrease.
OP/E 149 25 The Terraces at Sunny Creek FIS
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III. REFERENCES
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ID. REFERENCES
California, State of. Office of Planning and Research. 1978. Economic Practices Manual
(Revised 1982). Sacramento.
----. Board of Equalization. 1996. Taxable Sales in California (Sales & Use Tax).
36th Annual Report (1996). Sacramento.
----. Department of Finance. 1997. Population Estimates of California Cities and
Counties. Report 92 E-1. Sacramento.
Carlsbad, City of. 1998a. Operating Budget and Capital Improvement Program, 1998-1999.
Finance Department, Carlsbad, CA.
1998b. EIR 98-01/GPA 96-01/ZC 96-01/SP 160(B)/LFMP 87-lS(B)/CT
96-02/SDP 97-02/PUC 96-02/HDP 96-02/SUP 96-01/SUP 96-02/SUP 96-03 -
TERRACES AT SUNNY CREEK. Report to the Planning Commission. Agenda of June
3, 1998. Planning Department, Carlsbad, CA.
(R.S.) Means Company, Inc. Means Square Foot Costs. 19th Annual Ed. Kingston, MA,
1997.
San Diego, County of. 1997a. "1997-98 Proportionate 1 % Revenue ATI Ratios by Fund."
Auditor/Controller, San Diego.
____ . 1997b. Property Valuations, Tax Rates, Useful Information for Taxpayers for
the Fiscal Year Ending June 30, 1998. Auditor/Controller, San Diego.
San Diego Association of Governments (SAND AG). 1993. Land Use in the San Diego Region.
San Diego.
1994. Regional Employment Inventory. San Diego.
1996. January 1, 1996. Population and Housing Estimates. San Diego.
1997a. Population and Income Characteristics of the San Diego Region; San
Diego.
1997b. January 1, 1997, Population and Housing Estimates. San Diego.
San Diego County Visitors and Convention Bureau. 1998. Lodging Outlook Survey, May
1998. Research Department, San Diego.
The Urban Land Institute. 1995. Dollars & Cents of Shopping Centers in the Top 20
Metropolitan Areas: 1995. Washington, D.C.
OP/E 149 26 The Terraces at Sunny Creek FIS