To order okay agenda item A study session roll call council member DuPont.

Present TAW present Harris Present Smith Present Jean.

Mayor Pro Temboyle here and Mayor Serrado.

Okay, agenda item B study session, B1 study session to discuss formation of a new community facilities district for services.

Sorry.

Okay.

Good evening.

No mayor, but council.

Tonight we will be presenting.

Well, mostly Cindy Yan here is of good uh here with Goodwin Consulting, and she has she and I have been working on a uh citywide fiscal impact analysis to come up with a potentially new CFD tax rate.

Um and so I'm gonna let Cindy take it from here.

Good evening, members of council.

Um my name is Cindy Yann.

I'm with Goodwin Consulting Group.

Um we've served as the special tax consultant for the city for as long as I've been with the company, which is going on 23 years now.

Um we helped the city form its first infrastructure CFD as well as the services CFD.

So the current services CFD was formed in 2003, and um the special tax rates were set um at the time, and the an initial CF citywide CFD analysis was completed in 2006, and subsequent update was done in 2014.

However, um the rates were determined to be too high, so we've kept the rates from the initial 2003 analysis um for current annexations into the services CFD.

Um the current update was initiated in 2023, and the goal was to create a new citywide services CFD to streamline future annexations because the process as it stands currently, each annexation there's um a prolonged process since the CFD was originally formed.

Um changes have been made to the CFD laws that allows unanimous consent.

So the it would be an internal annexation process.

We wouldn't need to come back to council because the analysis and the methodology would be the same.

Um then so just as some background of fiscal impact analyses, the purpose is to compare the annual project revenues for any development against the cost to provide services to that project, and um the goal would be to so that no project has a negative fiscal impact on the city general fund.

Um as part of this update process, um, we had several meetings with all of the department heads or their representatives to discuss level of service needs, whether the current budget provides sufficient levels of service, or if a preferred level of service is um warranted, and those um preferred level of service costs are reflected in the analysis.

And so as part of the fiscal impact analysis process, we'll look at um the different land uses, demographic assumptions, and then look at um the city's budget and separate the both revenues and costs into um average costs, whether those that's a good approximation, or if um the project doesn't look like what it currently exists in the city, or um revenues or costs are different than they currently as they currently exist in the city, we'll do so.

On the top it's the um multiplier method, and then on the bottom it looks at the case study method, or if marginal costs are and then we compare um revenues against expenses to come up with enough fiscal impact if it's a surplus, typically for commercial industrial developments, there's a tendency to generate a surplus.

Um we stop there, and then if there's a deficit similar to a lot of residential development projects, we'll estimate what the special tax needs to be to for that project to mitigate its um deficits.

And then so these are instances where we would use the case study method in the prior table, that's the red, and then the multiplier, the average cost method, it was the blue.

And then so I'll I know we're short for time, but so I'll briefly go over the analysis tables.

I think I've presented this to some of the members of council, but not all.

So the table one lays out, as I indicated, um, the analysis was initiated in 2003.

We use the 2024-25 budget, and for all of the revenues and costs that are calculated using average costs or revenues in the city.

The demographic assumptions are presented here.

It shows the city at the time had about 90,000 residents, and then about almost 32,000 jobs, which translates to about 105,000 persons served, and that represents 100% of the residents plus 50% of the employees.

Those are standard fiscal practice assumptions.

And then for as part of the analysis, we're calculating the fiscal impacts on five different resident um land use types per single family unit, multifamily unit, and then per thousand building square feet of retail office and industrial.

This table lays out all of the tax rate areas that uh is within the city's general plan boundaries, and it shows that um future development within any of these tax rate areas are generating about 37 percent of the 1% Prop 13 um property tax revenues to the city.

However, the city has an agreement with the county where it um pays half of that um to the county as a services fee at as opposed to a general property tax sharing agreement.

Um this table summarizes all of the case study methods and um it shows uh assumptions used to calculate property taxes, sales taxes, and um property tax in lieu of vehicle license fees, those are generally the three biggest um components of revenues for any fiscal impact analysis.

Um then tables five and six summarize the sales tax credit given to even though taxable sales is generated on site for commercial, it's the demand there, it's like the chicken and an egg without the residential demand, there would be no supply for the commercial, so we're giving a portion of that sales tax credit, half of that to the residential development, and then this table summarizes uh all of the other revenue items that are calculated using the multiplier method, and then um on this table then summarizes uh all of the costs uh that are calculated using the multiplier method, and um I had mentioned earlier that we met with um department staff to figure out whether the current budget or the 24-25 budget was sufficient to provide a level of service that's needed, and um it was determined that it wasn't, so we've augmented the 2425 budget.

It's the very last section, it's the additional personnel and equipment needs that um would adjustments to the budget that would provide service to um development in the city at the preferred level, and then the next table actually details what those what's included in those costs.

So for personnel, it's an extra 3.5 million dollars, and that um is made up of various um admin and support services, public safety, public works, and then recreation and park staff, as well as um about 14.6 million dollars to um main primary a majority of that is for um road maintenance.

The city prepares a pavement conditions index report that showed that to keep maintain its current PCI, it would need to fund spend about 14 million dollars a year on road maintenance.

And so this is the Cadillac of the results.

And then so the next five tables summarize the fiscal impacts on single family unit, um, multifamily unit, and then per thousand square feet of office commercial and industrial, and then combined looking at um development projections through 2040 that was done as part of the city's public facilities financing plan.

Um we're looking at a net shortfall about 8.1 million dollars annually at build out, and that translates to the special taxes that we had calculated earlier, um, essentially about $1,500 per unit for single family and $1,300 per unit for multifamily.

Um we've been asked in the past to create some kind of distinction between single family and multifamily in it in that the multifamily rate represents 70% of the single family rate, and so that bumps the single family rate from 1548 to 1658, and then drops the multifamily rate from 1331 to 1161.

And so this um chart shows what the the on the left hand side um it shows what the calculated um mitigation amounts are based on straight um the persons per household and the specific assumptions for single family and multifamily, and then the right hand side um adjusts those so that the multifamily rate represents 30 percent of the single family rate um questions does anyone have questions?

I don't have the request to speak on my soul.

Does anyone have questions?

Okay, go for a shane.

Thank you, Mayor Hurtz and Boyle.

Thank you, Ms.

Ann for the presentation.

I want to make sure I'm grounded here.

Um we didn't get the presentation in advance, and that's fine.

But the the subject of this informational item is to discuss the formation of a new community facilities district.

It seems like a lot of what you told me is how much sort of space there is left in our tax base to even impose a citywide facilities district fee.

Do I am I getting that right?

Yeah, so there's currently um a services district as it stands right now.