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Home My WebLink AboutLAFCO: North of I-10 File 4January 25, 2012 The Honorable Robert A. Spiegel, Mayor City of Palm Desert 73510 Fred Waring Drive Palm Desert, CA 92260 Re: H.N. and Frances C. Berger Foundation REQUEST TO CONTINUE AGENDA ITEM XVI Dear Mayor Spiegel: This firm has the privilege of representing the H.N. and Frances C. Berger Foundation, which requests the City continue Agenda Item XVI to a future meeting. As you may be aware, late last year the City expanded the scope of its fiscal assessment of the potential annexation for areas north of the 1-10 with the understanding that the Berger Foundation pay that added cost. The Berger Foundation is pleased to participate with the City in this process. Unfortunately, we only just received the 170 page fiscal study. We will not have sufficient time to review the report to provide meaningful feedback to the City by its January 26"' council meeting. This review is important to make sure the report and its assumptions are accurate, particularly since the Berger Foundation was not consulted with or interviewed about its development plans during the preparation of the fiscal report. Thank you for your consideration of this matter. Cordially, Robert A. Bernheimer cc: William Kroonen, Mayor Pro Tern Cindy Finerty, Council Member Jean Benson, Council Member Jan Harnik, Council Member John Wolmuth, City Manager Lauri Aylaian, Director of Community Development Ron Auen, H.N. and Frances C. Berger Foundation Aylaian, Lauri From: Rob Bernheimer [Rob@ RobBernheimer.com] Sent: Wednesday, January 25, 2012 11:18 PM To: Aylaian, Lauri Cc: Wohlmuth, John; <m rover@ roverarm strong. corn > Subject: Re: Request to Continue Thanks for getting back to me. Before I sent the letter I checked and confirmed with everyone at the Berger Foundation personally and nobody from Terra Nova communicated with the Berger Foundation or it's land planner. In the preparation of this report. If they referenced Berger, it's likely coming from historical documents. An accurate fiscal analysis is impossible without interviewing the owner of a large piece of vacant land to fully understand future plans. In any event, if this matter is continued, we are available to work with the City to provide accurate information. Rob Bernheimer (760) 360-7666 Law Office (760) 831-5455 Mobile Bob_@ Rob Bern heimer,corn CEO CV Strategies www.cvstrat.com Precision in Perception On Jan 25, 2012, at 5:48 PM, <Ia Dian { cit of alnidesert.or > wrote: ED I'm sorry that you haven't had more time to review the fiscal impact analysis. I forwarded it to Mike Rover the same day that I received it, and indicated that the Mayor will likely ask to have the matter continued to allow interested parties (Berger Foundation, Sun City, Cathedral City, etc.) more time to review it. When I didn't hear anything back from Mike, I called and left him a voice mail message that sought to confirm that he had received the analysis, but I still haven't heard back from him. Your explanation of Mike being out of the office Friday makes sense. Additionally, the Berger Foundation was consulted with during the preparation of the fiscal report. You'll notice that the report credits the Berger Foundation as being the source of information in several places. In the future, I will make a point of copying you on correspondence on this issue unless Mike or another representative of the Foundation asks me to do otherwise. See you at the meeting tomorrow - Director ofCommunity Nowmupwn`ent ~wwr -Mw~ City ofPalm Desert 73-5IOFred Waring Drive Palm Desert, [A9226D 760,346.0611phone 760776.641.7 fax From: RobBernhehner Sent: Wednesday, January 25 2012 1:18 PM To: VVoh|muth,John Cc: Av|aian,Lauri; 'Mike Rover' Subject: RE: Request to Continue John: Please replace the letter I sent 10 minutes ago with the attached. It seems the Study was sent to Mike Rover by email late Friday, but he was out of the office and did not see ituntil Tuesday afternoon, when itwas forwarded tome. Therefore, the earlier letter isinaccurate on the timing. This letter corrects that. In the future, can you/the City send/copy me on these things? Thank you. Rob From: Rob Barnhehner Sent: Wednesday, ]anuary2S, 2012 1:02PM To: Cc:. Subject: Request toContinue Per our discussion, this letter will behand delivered to the City this afternoon. | will attend tomonow's meeting. Thank you. Rob Bernheimer wmageoozJpg> WARNING: This e-mail is intended onlyfovthe use uythe individual m,entity u/whom it isaddressed, and may contain information that is privileged, confidential and exemptfrom disclosure under applicable law. If you are not the intended recipient, any dissemination, distribution mcopying of this communication is strictly prohibited. Please notify mimmediately by reply e-mail or by telephone at (760) 360-7666 and permanently delete the original e-mailing from your system. Thankyou. Rob@PRobBemmheimer.com 4S-O2SK4an|touDrive, Suite ] Indian Wells, [A922I0 (760)360-7666(OfOce) (760)776'1760(Fax) (760)831-5455(Mobi|e) ,C CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT STAFF REPORT REQUEST: That the City Council receive and file a fiscal impact analysis and direct staff how to proceed regarding potential annexation of areas north of the Interstate 10 SUBMITTED BY: Lauri Aylaian, Director of Community Development DATE: 26 January 2012 CONTENTS: Fiscal Impact Analysis for Potential Annexation to the City of Palm Desert Recommendation That the City Council direct staff regarding further actions to take, if any, concerning annexation of areas north of Interstate 10. Executive Summary In September 2011, the City Council directed staff to obtain a feasibility study on territory north of Interstate 10 (1-10) for Sun City Palm Desert and the adjacent commercial -retail areas. They asked that the narrow strip of land between the current northern city limits and the centerline of 1-10 be included in the study, and later directed that the areas near the Classic Club and Xavier Preparatory High School, west of Palm Desert's current sphere of influence, be included in an alternative scenario. The City Council specifically excluded Bermuda Dunes from the areas to be studied, while acknowledging that LAFCO staff likely will not recommend to the LAFCO Commission annexation of Sun City without inclusion of Bermuda Dunes. This report provides the City Council with the results of the completed studies, and seeks direction on whether to further pursue potential annexation of any of the areas at this time. Discussion In response to direction from the City Council, staff retained Terra Nova Planning & Research to perform fiscal analyses of the potential annexation of territory to the city of Palm Desert. Such studies are generally undertaken by cities that are considering expansion to determine if -- and to what magnitude -- the area(s) under consideration will have a positive impact on the city's budget, or if they would require support'by the General Fund. In particular, these studies seek to establish the conditions once the area is built out, when one-time developer fees no longer provide short-term revenue enhancements. For the sake of this study, two different scenarios were considered. The first scenario analyzed revenues and expenditures for all of the Palm Desert sphere of influence land north of the current city limits. The boundaries of this option, called Scenario A, are as outlined in red on the following map. Potential AnnexationTis�cal Impact Analysis 26 January 2012 Page 2 of 5 The Scenario B analysis adds territory that is currently in the Cathedral City sphere of influence. It includes the Classic Club, Xavier Preparatory High School, and vacant lands on both sides of Cook Street, but excludes Jack Ivey Ranch. Scenario B boundaries are as shown below. g:\planning\lauri aylaian\staff reports\sun city annexation fiscal impact analysis 1-26-12.docx Potential Annexation Fiscampact Analysis 26 January 2012 Page 3 of 5 The results of this analysis show that for both scenarios, the revenues fall far short of the City's cost of providing services. This holds true for the present, when large portions of the areas are undeveloped, and for the future when all areas are built out. One of the fundamental reasons for this shortfall is the high percentage of residential lands in the area, and the comparatively small percentage of commercial sales tax -generating development. For comparison sake, ten percent of the land within Palm Desert's existing boundaries is devoted to commercial development, which accounts for 34% of the revenue to the General Fund. However, in Scenarios A and B, the percentage of sales tax -generating commercial land is less than half of that. The conclusions of a fiscal impact analysis can change significantly by changing the assumptions regarding land use, general administrative costs, sales tax generation, and the costs of providing public safety. Consequently, staff worked closely with Terra Nova to identify and quantify the most likely impacts of annexing territory north of 1-10. Specifically, the following precepts were judged to be key for a valid calculation of fiscal impact: • Undeveloped lands are assumed to be developed with land uses consistent with those designated in approved specific plans or, where no specific plans have been approved, with the City of Palm Desert General Plan. Because some of the land is already developed, the City will see immediate revenues and costs with either Scenario A or Scenario B annexation. Police services will be required at the same officer -to -resident ratio as is provided in the rest of the city. Although Sun City itself may require lesser policing because it is a gated community with its own security, the converse is likely to be true in the remaining annexation areas, which are largely planned as medium -to -high density residential developments; this is true in other parts of the City that have a mix of country clubs and apartments or open subdivisions. The City will receive only 7% of the total 1 % property tax assessed projects in the annexation areas. Property tax revenues will be further reduced due to the City's mandated contributions to the Education Revenue Augmentation Fund (ERAF). Approximately half of the 7% property tax revenue collected by Riverside County is assumed to continue to be contributed to ERAF or an equivalent "revenue sharing" program. Some line items associated with the cost of general government will increase perceptibly as a result of annexation, while others will not. For instance, staffing levels, benefits, and overhead costs should not change for the City Manager's office, the City Council, and departments such as Finance, Special Events, and Risk Management. However, annexation would result in proportionally greater need for services such as: maintenance of roads, parks, storm drain and landscaping; police and fire services; code enforcement and animal control; and permitting, plan check, and inspections. For years, the Redevelopment Agency and the General Fund have subsidized the Capital Reserve Fund by paying for major public works maintenance projects, such as drainage, paving, reroofing, and landscaping. The true cost of maintaining the City's infrastructure must be calculated using all funds spent on maintenance, not gAplanning\lauri aylaian\staff reports\sun city annexation fiscal impact analysis 1-26-12.docx Potential Annexation Fiscal Impact Analysis 26 January 2012 Page 4 of 5 just those monies that were spent from the General Fund. These subsidies are not reflected in this study. It is therefore likely that the true cost of providing services to the annexation area will be greater than shown. Fiscal Analysis The findings of the fiscal impact analysis are briefly summarized here. Scenario A Annexation of Scenario A will add an estimated 15,144 residents to the City of Palm Desert. Build out of this area is projected to occur in ten years, at which time potentially $6.9 million annually in revenues would be generated. The largest single revenue generator is expected to be local Sales Tax ($2.3 million annually at 10-year build out), which is related to the second highest revenue source, Structural Fire Tax ($1.5 million annually at 10-year build out). These revenues are dependent upon commercial sales tax volume in the annexation area. The costs associated with serving this new area and its population are projected to be approximately $12.6 million annually at the end of the 10-year build out period. The most significant costs are those from Police Protection ($5.2 million annually at build out), closely followed by those from General Government operations ($4.2 million annually at build out). As such, development of the area is expected to result in an annual revenue shortfall of approximately $4.7 million at the end of the first five-year period. The shortfall is projected to grow to $5.6 million by build out at the end of the second five-year period. This is, in part, associated with the high percentage of residential development in the area and the costs of providing services to residents, and a comparatively small percentage of commercial sales tax - generating development. Residential lands comprise nearly 47% of the entire annexation area, and commercial lands account for 41/o. Developer impact fee (DIF) revenues are projected to be $5.09 million at phase build out of each of the two phases. This assumes that development occurs evenly over the 10-year build out period. The highest sources of DIF revenue will be from the New Construction Tax and the Park & Recreation Facilities Fund, which will benefit from the future construction of new single-family and mufti -family dwelling units in the annexation area, particularly those in the Mirasera Specific Plan. Scenario B Annexation of Scenario B will result in a population increase of approximately 15,779 to the City of Palm Desert. Build out of the undeveloped lands in Scenario B is expected to take 20 years. Revenues at the end of the 20-year build out period are projected to be approximately $9.86 million annually. As with Scenario A, the largest revenue source will be local Sales Tax ($3.9 million annually), followed by Structural Fire Tax ($1.8 million annually) and Transient Occupancy Tax ($1.5 million annually). At the end of the 20-year build out period, annual costs are projected to be $13.4 million. As with Scenario A, the highest costs are associated with providing police protection ($5.5 million) and general government services ($4.49 million) to existing and future residents. g:\planning\lauri aylaian\staff reports\sun city annexation fiscal impact analysis 1-26-12.docx Potential Annexation Fis al*%pact Analysis 26 January 2012 Page 5of5 Build out of Scenario B is expected to generate an annual revenue shortfall of approximately $3.9 million at the end of the first five-year build out period. However, the shortfall is projected to fall slightly to $3.5 million at the end of the fourth five-year period. Like Scenario A, residential development accounts for a much greater percentage of land in the annexation area (37%) than commercial development (5%), and sales tax -generating opportunities are limited. One-time revenues resulting from Developer Impact Fees in Scenario B are expected to be $4.3 million at build out of each phase, assuming development occurs evenly over the 20-year build out period. These revenues will constitute a significant revenue source to the City over the 20- year build out period, but they are one-time revenues that will be realized only as new development occurs. Submitted by: _J Lauri Aylaian Director of Community Development M. Wohimuth, City Manager Revi by: P Gibson Director of Finance g:\planning\lauri aylaian\staff reports\sun city annexation fiscal impact analysis 1-26-12.docx vw vo To: SCPD Board of Directors From: Paul Brady, Chairman, BRIC 2 Subject: Sub -committee's Review of Terra Nova Report Following receipt of the Terra Nova Report from the City of Palm Desert, a four person BRIC 2 sub -committee was selected to individually review the Terra Nova Report and provide any suggestions on anything that was overlooked or missing from the document. Following are the comments of Bob Graham, Frank Riley, Kent McDonald and Mike O'Conner; as well as Bill Murphy and Paul Brady. Bob Graham states that "I do not think we should argue the numbers unless we find something substantially wrong. With that said, I have no problem with the numbers. In my opinion, the strongest case we can make is in the area of providing additional revenue to maintain the services they now have until the economy turns around. I would guess they now have surplus employee's time in general fund departments. We may not have any major building projects but we will have construction that will need building permits and various approvals. This will not be a lot of additional revenue but there will be no additional cost for the present, as you know additional revenue streams are always important. I do think our number one negative is Palm Desert uses us (SCPD) and Bermuda Dunes as a buffer between them and Indio." Frank Riley provided the following: I could not find anything in the report that would have a significant impact on the recommendations. I did note the absence of two things that I thought should have been included. Aliante, the development west of Miraserra was not mentioned and perhaps there is no specific plan to reference and its included in the assumption of further growth. The other was the McMahon RV sales on Varner Road. Sales tax revenues from R V sales has undoubtedly fallen off in the last five years. But as the economy turns around and countless baby boomers retire, I have to think R V sales will rebound and significantly drive up sales tax revenue. I had trouble reconciling the Total Potential Cost/Revenue Summary Tables on pages 47 and 48 and 75 and 76. Because Scenario B includes all of Scenario A, I can't understand why some of Scenario B revenues are less than Scenario A. For example, property tax revenues in Scenario A Phase I and II are $836,415 and $947,279 respectively. In Scenario B, property tax revenues in Phase I and II and 828,082 and $915,621. Similar differences appear throughout the tables, Shouldn't revenues in Scenario B exceed Scenario A? I'm afraid I have not offered much Paul. On the whole the report makes a compelling argument against annexation. Kent McDonald: The fiscal analysis bottom line is that the additional revenues to Palm Desert from annexation do not cover the expenses. When the fiscal analysis for incorporation of SCPD was done four years ago, I believe that the revenue exceeded the expenses. The assumptions most likely differ in the two cases, but it would be useful to revisit the earlier analysis to see why the answer is now different. Assistance from the consultants used in 2008 would expedite this inquiry. The largest source of revenue, sales tax, is based on square footage of commercial buildings in the annexed area, plus actual taxable sales within SCPD. We have no way to confirm that all of the existing commercial buildings are actually included in the estimate; Terra Nova obtained their data from county records and show only summaries of the square footage by category. The property tax revenue is similarly based on county valuations that are shown only at the summary level. (Comparing the basis used in this analysis to that used earlier would serve as a reasonableness test.) The largest expenses, General Government and Police, are based on a per -capita rate. Essentially, the costs are scaled proportional to population. This is not reasonable for Palm Desert's General Government as a whole, so these costs are overstated. Lauri Alaian point out in her Staff Report of 26 January 2012 that some departments do not face increased costs after the annexation. In the case of Police costs, Palm Desert would provide the same ratio of officers per thousand residents (same per -capita cost) in the annexed area that they provide now in the city. This staffing level far exceeds what we in the county receive now, so it is no surprise that the cost of Police protection (3AX cost of Fire protection) is so large in the annexed are. If the cost of Police were more in line with the cost of Fire, the bottom line would not be a deficit. Property transfer tax revenues, although small, are probably overstated. They assume a 10% turnover of residential ownership each year. At SCPD that rate in 2011 was only 5%. Similarly, Motor Vehicle In -Lieu Fees, which are a minor contribution to revenue, are overstated. The study assumes that all residents have their vehicles registered in California, but that is not the case for most seasonal residents. Proposition A Fire Tax, typically $60 annually per dwelling, is used to pay for the ambulance service. Interestingly, the cost of providing that service in Scenario A is initially 3 X the revenue, then it falls to 2 X the revenue at build out. This means that the $60 annual fee doesn't cut it; the ambulance service by itself constituted nearly one-half million dollars per year to the annexation deficit. It is a shame not to count the Developer Impact Fees at all, when that revenue averages a million dollars a year. However, the timing of the payments is difficult to forecast. I Mike O'Conner: Comments it is possible to construct alternate fiscal scenarios based on other financial assumptions, such as development fees increases, carrying costs and land development rates. This could result in other financial outcomes. This is true on any large scale long-term effort. I have no particular reservations on the assumptions used. In addition to the sub -committee members comments, Mr. Bill Murphy, former Board President, provided these comments: Bill has concerns about two areas and the way they were estimated. Bill believes that we can never be annexed if the approach to these areas is not changed since annexation will always be a money loser for Palm Desert. The two areas are police protection and the expansion of city government costs. These were both essentially increased based on the increase in population of Palm Desert resulting from the proposed annexation scenario. The police cost increase is not directly the result of adding SCPD to the city but rather the desire of the city to maintain a police to population ratio as it exists today. We are a very low crime area and are currently served by a small Sheriff's Office staff and our own security patrol. Palm Desert's actual cost should be commensurate with the current Sheriffs costs. The same approach was used to estimate the increase in overall city services. This approach seems to be overly conservative as well since the basic infrastructure exists and, at most, hiring of a few individuals would expand staffmg to service the SCPD residents. Again, we have a community patrol, compliance committee and a lifestyle enhancement committee which will remain in place. The burden on the city should be minimal. My comments on the Terra Nova report are: I can not argue the overall findings and numbers contained in the report. Unless the mix of land uses change, with less residential and a higher percentage of retail commercial and industrial development, it does not make economic sense to annex the lands north of I-10. We all know that residential development does not carry it's weight financially. Optimally, a one-third residential, one-third retail commercial, and a one-third light industrial, is the preferred mix of land uses. The more retail commercial, the more sales tax generation. While public safety costs are generally the most costly, even though SCPD may not require the same or more services as the rest of Palm Desert, the city will insist on maintaining a similar ratio of police officers per 1,000 population. It's understandable that Palm Desert doesn't desire to have differing ratios for different communities, even though some areas may require less for call services. MM FMM Further, I can't foresee a situation where Palm Desert would "cherry pick" just SCPD as a stand alone annexation. Again, there's not sufficient sales tax generation to off set the increased costs, although minimal, by the city. The property taxes alone, (City receives 7% of the 1 % property tax) does not satisfy the increased costs. Palm Desert in mandated to contribute to the Education Revenue Augmentation Funds (ERAF), with approximately half of the 7% property tax revenue collected by Riverside County going into ERAF as revenue sharing. The fact that curtailment of city Redevelopment Agencies in California has also contributed to financial hardship for cities. Palm Desert's RDA subsidies are seriously impacted and could very well cause the estimated revenue short -fall to become even greater than the $3.9 to $4.7 million projections. While there might be some wiggle room in negotiations with Palm Desert, in my opinion these will not be enough to off -set the negative impact's on city finances to warrant SCPD being annexed into Palm Desert at this time. While our comments may not change anything, we hope they have been helpful to the Board. Submitted by: Paul Brady Chairman, BRIC 2 45-025 Manitou Drive, Suite 3 - Indian Wells, CA 92210 Phone 760.360.7666 Fax 760,776.1760 Rob@RobBernheimer.com February 15, 2012 Hon. Robert A. Spiegel, Mayor City of Palm Desert 73510 Fred Waring Drive Palm Desert, CA 92260 Re: H.N. and Frances C. Berger Foundation ANNEXATION Dear Mayor Spiegel: ChY of P'arm Desert Community DeYOIOPMent FEB 15 2012 This firm has the privilege of representing the H.N. and Frances C. Berger Foundation. Last month, the City granted the Berger Foundation's request to continue its consideration of the fiscal study concerning the potential annexation for areas north of the I-10 so it could review the study. Our review showed that the fiscal study presented in January did not reflect the current approved Specific Plan for the Berger Foundation parcels. The revised fiscal plan (titled "Technical Addendum" by Terra Nova) now reflects the approved land uses for the Berger Foundation parcels. The revised report shows significantly more revenue from the Berger Foundation parcels compared to the January version. Unfortunately, it also shows additional expenses due to added residential units in the Specific Plan. The fiscal study clearly demonstrates that the Berger Foundation parcels standing alone create significant financial benefit to the City upon annexation. However, the net financial conclusions of the revised fiscal report considering all areas north of the I-10 are similar to the ones presented in January. The Berger Foundation believes that the assumptions used for the expenses in the fiscal study significantly overstate future costs. Most notably, the fiscal study presumes the City would nearly double police coverage for the area immediately after annexation compared to existing police coverage. The area is now patrolled by the Riverside County Sherriffls Department and would continue to be after annexation, although through the City's contract. This vast overstatement of cost is attributable to a different staffing ratio the City uses as its guide compared to the County. While that may be logical on paper, we do not believe staffing levels would nearly double just because a boundary line changes. This one cost item would change the results of the fiscal study. We understand the City may be hesitant to pursue annexation of all areas north of the I- 10 if the fiscal impact creates a financial burden. We would encourage the City to carefully review the likely true costs the City would incur before making any fiscal findings with regards to the contemplated annexation. ROBERT A. BERNHEIMER A Professional Law Corporation Hon. Robert A. Spiegel, Mayor February 15, 2012 Page 2 While the Berger Foundation believes the ultimate financial impact annexing all areas north of the I-10 could be neutral or positive for the City, a new law creates a more difficult fiscal challenge. If Sun City were annexed into Palm Desert, Bermuda Dunes would become a County "island," surrounded completely by Palm Desert, La Quinta and Indio. While LAFCO policy already discourages creating such islands, SB 244, signed into law late last year, prohibits annexation when an adjacent "disadvantaged unincorporated community" remains within its sphere. It may be too early to know exactly how this will be defined and applied. However, early indications are that Bermuda Dunes may fall into this category. Palm Desert would then be required by law to include Bermuda Dunes with any annexation of Sun City. There are numerous benefits to the City in annexing the Berger Foundation parcels, Sun City and Bermuda Dunes. However, in order to create revenue neutrality for this larger annexation, the City would need to fiscalize all land uses within the entire annexation areas and not simply apply existing Palm Desert formulas and standards. These opportunities would need to be carefully studied. The Berger Foundation's desire to be annexed into the City of Palm Desert remains strong, whether it is accomplished as a stand-alone annexation or in combination with Sun City or Bermuda Dunes. Should the City decide to continue this process, we will assist and cooperate to any way we can. Thank you for your consideration of this matter. cc: William Kroonen, Mayor Pro Tem Cindy Finerty, Council Member Jean Benson, Council Member Jan Harnik, Council Member John Wolmuth, City Manager Lauri Aylaian, Director of Community Development Ron Auen, H.N. and Frances C. Berger Foundation Blue Ribbon Investigation Committee II Final Report January 3, 2012 Table of Contents Executive Summary ............................................ 1 Background .................................................. 3 Investigation Methodology ...................................... 5 Feasibility of Annexation ........................................ 7 Impact of Annexation .......................................... 9 Remaining an Unincorporated Area ............................... 13 Summary and Conclusions ...................................... 19 Appendices A - BRIC II Members' Backgrounds .......................... 23 B - LAFCO Annexation Flowchart ............................ 25 C- Maps ............................................... 27 D - SCPDCA Facts and Figures .............................. 29 E - Burrtec Cost Comparison ............................... 31 F - Property Tax Bills ...................................... 33 G - Indio Agreement ...................................... 35 11 0 s0 • • E Executive Summary Sun City Palm Desert is located in an unincorporated area of Riverside County. It has been in and out of Palm Desert's sphere of influence (SOI), most recently returning in 2010. Last September the City of Palm Desert commissioned a study to determine the feasibility of annexing SCPD. In conducting its feasibility study, the City of Palm Desert will be looking at the issue in terms of whether such an action makes economic sense for the city. In order for annexation to proceed, the operation must provide benefit to all parties, though the benefits need not be equal on both sides. In response, the SCPDCA Board of Directors appointed a committee to study the pros and cons of annexation, to assist Palm Desert's consultant in their study and to report the results. The committee investigated annexation procedures and processes, the impact of annexation upon individual residents, and what options might be available to SCPD if annexation appeared impractical or unattractive. It seems likely that the feasibility study being conducted for the City of Palm Desert will report that annexation of SCPD will provide a positive cash flow to the city; however, it may not be sufficiently positive to cover the additional staffing required by the city to keep their police and fire staffing at its current ratios within the expanded city. A review of changes that might result for residents from annexation are generally posi- tive in nature: waste collection fees would be reduced and more waste collection services would be available. Pet licensing fees would be lower than the current county rates. Emergency ambulance transportation would be provided through an annual a, �a fee of $60. Residents would be able to enjoy the Desert Willow golf courses at a very c reasonable cost and could participate in the city's solar program. N Alternatives to annexation by the City of Palm Desert were also investigated. From a purely economic standpoint, remaining unincorporated would result in the least re- -' turn on property tax dollars and leave SCPD vulnerable to the diminishing resources of a cash -strapped Riverside County. Currently SCPD pumps money annually in eight c figures to the county with little in return. The county has been hit hard by the recent ° recession, and existing county services are likely to be cut severely or spent on the more M a needy areas of the county. The Committee also studied other annexation options. The most logical and most f likely would be Indio since we are nearly surrounded by that city. Because Indio still o suffers somewhat from infrastructure shortages, it is unlikely annexation would provide E as many advantages as becoming part of Palm Desert would offer. It is one of the cities that must support the costs of its own emergency and administrative departments with the attendant pension problems. Another option, albeit less likely and much more distant in time, could be annexation by Cathedral City. Annexation by Cathedral City would not be an attractive proposi- tion for SCPD. The city's management and reserves do not begin to compare favor- ably with those of the City of Palm Desert. Cathedral City has numerous infrastructure problems, along with the costs of supporting its own emergency services and adminis- trative departments. Those services are based a long way from SCPD. In conclusion, from the standpoint of our residents, it seems clear that annexation to Palm Desert is a more attractive option than annexation to any other existing or po- tential neighboring city. It is also apparent that remaining an unincorporated island is becoming less attractive over time. The committee recommends that the Board of Directors: O Educate residents about the benefits of annexation and its alternatives. O Encourage the Palm Desert City Council to proceed toward annexation. O Take no action to pursue other options until the economy improves in the event Palm Desert does not proceed with annexation. Background This community has undergone more than one change in identity since its inception. When first launched by the Del Webb Corporation in the early 1990s, for marketing reasons they called it Sun City Palm Springs. However, because the community is in an unincorporated portion of Riverside County near Indio, it was served by the Indio post office and the mailing address was Indio. Before long, Del Webb accomplished two changes: first, the mailing address became Bermuda Dunes; second, Del Webb under- took and paid for the LAFCO-required studies to allow the community to be claimed by the City of Palm Desert into its SOL Upon expansion of the SOI, the mailing address became Palm Desert and Del Webb renamed our community Sun City Palm Desert. LAFCO (the Local Agency Formation Commission, a state -mandated regulatory agency) has and will continue to impact our future. LAFCOs were established by state law in 1963 to assist in balancing orderly development with competing state interests and to discourage urban sprawl, preserve agricultural and open -space land and extend gov- ernment services efficiently. Nine years after approving the extension of Palm Desert's SOI to include SCPD, LAFCO requested that all cities review their spheres and relinquish any areas they did not intend to annex in the foreseeable future. As a result, Palm Desert indicated that it wished to release SCPD; in October 2007 the Riverside County LAFCO accepted this revision. Several reasons have been put forward for Palm Desert's having relinquished the community, and it is unlikely that the whole picture will ever be known. Removal v from Palm Desert's sphere meant SCPD was no longer available for annexation by that city in the foreseeable future. -- N At the same time, Indio was aggressively expanding. With the Indio city limits abutting the community's east side along Adams St. and around the southeast corner to include the 1-10 Auto Mall, an extension of Indio's SOI at the northern boundary along Adams and Frances Way (now Coyote Song Way), then north along Washington Street to the foothills, was approved by LAFCO in September of 2007. This northern area was subse- o quently annexed by Indio. SCPD is now bordered on the north and east and partially x on the south by Indio. The same September 2007 expansion of Indio's SOI included several thousand acres of Q v land extending eastward along the foothills to the far side of Dillon Road. In late 2007 0 and again in March 2008, Indio indicated it was interested in annexing the commercial E area opposite the Newcastle gate. This westward expansionism is contrary to its 1996 0- :, agreement with the Del Webb Corporation (Appendix G). This move would extend its area along SCPD's entire southern boundary, with the exception of the Marketplace and the vacant land near the corner of Adams and 40th Street. . As a result of being removed from Palm Desert's SOI, a Blue Ribbon Investigation Com- mittee (BRIC) was appointed by the Sun City Palm Desert Community Association (SCPDCA) Board of Directors to investigate the options available to the community and to identify the issues of incorporation in February 2008. The committee's final report in May 2008 recommended expansion of the Government Relations Committee to pro- mote greater awareness of and involvement in the planning activities of neighboring agencies, establishment of a community council by Riverside County's District 4 Su- pervisor and reminding Indio of its agreement not to expand into our area. The Board implemented the report's recommendations and also approached the City of Palm Desert to request that they restore us to their SOI in order to provide protection from aggression by Indio. This request was approved by the Palm Desert City Council and ultimately approved by LAFCO on May 27, 2010. On September 4, 2011, The Desert Sun published an article which mentioned that the City of Palm Desert would be considering funding a study to determine the feasibility of annexing SCPD at its meeting on September 8. The study, approved by a three -to -two vote, was originally planned to cover the area recently added to their SOI by LAFCO but was modified to add approximately 650 acres in the vicinity of the Classic Club and Xavier Prep School. In response to the Palm Desert action, the SCPDCA Board of Direc- tors appointed a new Blue Ribbon Investigation Committee (BRIC II) at its meeting of October 4 to do the following: O To study the pros and cons of annexation of SCPD and its surrounding commercial area to the City of Palm Desert. O To assist the City of Palm Desert in its current annexation study by providing data and information concerning SCPD, its residents and its operations. O To report results to the Board and residents on a regular basis at Board meetings, on the web site and at town hall meetings if required. VOW Investigation Methodology The committee began by identifying the types of questions residents would want an- swered. The questions fell into three categories: O How would annexation proceed if feasible? O How would annexation change residents' daily lives? O How would the refusal of annexation impact SCPD? The committee organized into three teams with three distinct assignments. One team investigated annexation procedures and processes. Another team investigated the im- pact of annexation upon individual residents, emphasizing the kinds of questions resi- dents were likely to ask. The remaining team investigated what options might be avail- able to SCPD if annexation appeared impractical or unattractive. The committee chair retained responsibility for scheduling appointments with individuals with information of interest to all teams and for interfacing with Terra Nova, the local company hired by the City of Palm Desert to conduct its feasibility study. Appended to this report, in addition to a list of committee members and their back- grounds and qualifications, are several supplemental reports, maps, and references. When the committee had fully researched all the questions residents might have, it as- sessed the information and drew its conclusions. The work on the annexation process is explained and discussed at length in the next section. The following section addresses V) v the impact of possible annexation upon individual residents, and the findings on other 0— options appear in the subsequent section. Final conclusions and recommendations fol- low. M V) C O Z ra X 4J Ln C C a Ln Q) 0 E W,- T C V) C O X O C C Q N Ln Cl) r) E Feasibility of Annexation Introduction The City of Palm Desert is expected to determine the feasibility of annexing adjacent ar- eas using information from the study done at its request by Terra Nova. The areas being studied include one area currently in their SOI which includes SCPD, the commercial area south of the Newcastle gate and the business park triangle south of 38th Street, west of Washington, and northeast of Varner. A second area north of 1-10 between Cook and 38th Streets and south of the Nature Preserve is included in the feasibility study; this area includes the Classic Club and is currently within the SOI of Cathedral City. The key criterion for any action by the City of Palm Desert is that the financial im- pact post -annexation must be favorable to the city. In other words, the net cost of an- nexing must be more than offset by the additional revenue resulting from annexation. Time Line The Terra Nova study is scheduled to be complete in January 2012. SCPD will not have access to the report until the City of Palm Desert's staff or council releases it. If the city finds the facts emerging from the Terra Nova study to favor annexation of SCPD, the council would vote whether to proceed with an application to LAFCO for annexation proceedings. Palm Desert staff would then prepare a package of documents to ac- company the application. If LAFCO accepts the proposal, it will set a date for the com- mission's public hearing. At least 21 days before the hearing, all affected residents and N. property owners will be notified via a 1/8-page newspaper advertisement. If fewer than 25% of affected landowners and residents protest, the commission may approve or re- ject the proposal at the public hearing. If 25% or more protest, LAFCO must call for an N election by resident -owner voters registered to vote in this locale. The entire annexation n process could take up to a year to complete. Sphere of Influence A prerequisite for annexation of an unincorporated area adjacent to an existing city is `r the designation of that area as being in that city's SOL It is important to note that the R SOI area containing SCPD also includes the nearby businesses to the south of the New- castle gate and the business park triangle located west of Washington, south of 38th Q Street and northeast of Varner Road. It does not, however, include the area north of 1-10 between Cook and 38th Street that is currently included in Palm Desert's feasibility Ln o study; that area is in Cathedral City's SOL See the precise extent of these SOI areas on E maps in Appendix C. Koi v N M V) c 0 M x a c c Q aU V, E Revenue Concerns In conducting its feasibility study, the City of Palm Desert will be looking at the issue in terms of whether annexation makes economic sense for the city. The next section of this report will address whether such an action makes sense for SCPD collectively and SCPD residents individually. In order for annexation to proceed, the operation must provide benefit to all parties, although the benefits need not be equal on both sides. This section of the report views the issue from the City of Palm Desert's perspective. Property tax, sales tax, transient occupancy tax, and vehicle license fees collected by the state or county from SCPD residents and nearby businesses are potential sources of new revenue to the city. The City of Palm Desert is also concerned that the streets, sewers and landscaping of any area that is annexed meet the city's standards without the need for new capital investments. Also, the City of Palm Desert has mandated that the same standards of police and fire services be furnished to residents in an area it annexes as it currently provides to its city's residents. The per capita demands for para- medic and ambulance services at SCPD are greater than the current levels within Palm Desert due to the age demographics. This demographic is not a problem as long as the new revenue covers these costs. The study undertaken by Terra Nova will summarize both the new cost burdens and the new revenue sources for the City of Palm Desert to determine feasibility. LAFCO Geographic Concerns Another criterion in determining feasibility of annexation is the geographic area itself. There are two potential areas in play: SCPD plus the business areas described previ- ously, and the area north of 1-10 between Cook and 38th Streets, excluding the Nature Preserve. Presumably, Palm Desert could choose to annex either or both areas, al- though the Coo k-to-38th-Street area would require additional steps to transfer the SOI from Cathedral City to Palm Desert. Palm Desert's SOI also includes Bermuda Dunes, which is not included in the current study. Several years ago, the City of Palm Desert analyzed the financial considerations of annexing Bermuda Dunes; the idea was dropped when the city found that multi- million -dollar expenditures would be required to make infrastructure improvements. LAFCO could ask that Bermuda Dunes be included in any annexation proposed by Palm Desert before approving the proposal. Based on its previous study of Bermuda Dunes, Palm Desert would not agree to include Bermuda Dunes in its proposal. .W Impact of Annexation In an attempt to identify concerns and questions that SCPD residents might have re- garding the impact of potential annexation on their lives, the committee brainstormed the issues to be researched. Following are the questions they identified. O How will property taxes be impacted? With one exception, SCPD property taxes would remain unchanged if SCPD were annexed by Palm Desert. The exception is a $60 annual ambulance service fee imposed by the City of Palm Desert. The fee is essentially an insurance policy because the city in return provides free medi- cally necessary ambulance service to all its residents. It is not unusual for a short ambulance ride to cost more than $1000, depending upon the types of emergency services provided during the trip. O Will Palm Desert assess city taxes? Any governing body, including the county board of supervisors, can assess special taxes. Most general taxes within the con- trol of a local governing entity are imposed following a vote of residents. O Will we get hit with bond issues for schools or sewers? There would be no change in what we pay for schools. We already pay a school -district assessment, and any increase is not tied to what city we are located in, although we do pay a slightly lower rate because our community is age -restricted. Sewer bond issues are nor- mally assessed only upon the physical area where the sewers will be installed. Since our sewers meet Palm Desert standards there would be no change in services or assessments. a, O What will happen to our property values? Annexation to Palm Desert is unlikely to have any impact on SCPD property values. O Will we get to vote in the city's elections? Yes, upon annexation all locally regis- M tered residents will be eligible to vote in city elections. O Will we get to serve on the city's committees or run for a seat on the City Coun- cil? Upon annexation Sun City residents will be eligible to serve on all Palm Desert c 2 boards and commissions and will be eligible to seek a City Council seat subject to a the municipal election process. Q O What will happen to police services? Will they be better or reduced or cost more? 4-1 cu If annexation were to occur, the Palm Desert contract with the Riverside County p Sheriff's Department would be expanded to include our community. Since the E C a� N M V) c 0 ra x a) c LM L a) a, 0 E ,o 0 `mw Palm Desert Police Department staffing levels of 80 sworn deputies (of which 36 are assigned to patrol) far exceeds staffing levels currently provided by the county (two deputies patrolling all unincorporated areas from North Shore to SCPD, it is anticipated emergency response times and overall services would be significantly improved. In addition, Palm Desert's police department maintains a target team staffing of six officers to deploy to sudden crime increases. This team would pro- vide services to SCPD as well. The current Sheriff's POP (Problem Oriented Polic- ing) team servicing our area (and which was very helpful with our recent burglary problem near our Adams Street border) has been defunded at the County level. In addition to the target team, Palm Desert also maintains staff to provide crime prevention education and training services which would be available at no cost to SCPD residents. In conclusion, it appears the community would benefit from improved emergency and non -emergency services if annexation were to occur. What will happen to fire/ambulance services? Will they be better or reduced or cost more? With respect to fire services, annexation of SCPD would result in ex- pansion of the contract between the county and Palm Desert to include Fire Sta- tion 81 housed on Washington at 38th Street. It is anticipated the staffing levels would remain unchanged. American Medical Response (AMR), staffed by civilian paramedics, provides the current ambulance response and transportation service and those costs are billed to the transported patient. If annexation were to occur, uniformed Palm Desert firefighter/paramedics would provide ambulance response and transportation and no fee would be incurred by SCPD residents. Ambulance response times and current emergency service levels should be equal or better. However, a $60 annual tax per household would be charged. The $60 annual fee could not be increased without a 2/3-majority vote of all Palm Desert city residents. Fire code enforcement issues would be handled somewhat differently if SCPD were annexed. Currently SCPD retains a fee -based annual inspection and code enforce- ment service from a private fire protection provider. If annexation were to occur, our clubhouses and maintenance and repair buildings would receive annual in- spections at no cost to Sun City. In addition, requested fire education and preven- tion services would also be provided at no cost. Will Palm Desert police be patrolling within our gates? If so, will we have need for our present security patrol company? Palm Desert police would respond to calls as the Sheriff's personnel do now; we would continue our internal community service patrol unchanged. O Will any association monies have to go to the City of Palm Desert? No, the money to fund the additional services that Palm Desert provides its residents would come from the tax monies that we already pay in the form of property, vehicle and sales taxes. These funds are now being sent to the county, and a significant portion of them get spent in the western part of the county. O Will Palm Desert take over any maintenance costs now borne by SCPD residents such as for street resurfacing and street sweeping? No, our streets are privately owned and maintained by the association in accordance with the tract map and CC&Rs. O What about maintenance of the Washington Street median which the association now pays for? SCPD agreed in the CC&Rs of the association to maintain the me- dian on Washington and all landscaping adjacent to the perimeter of the complex. O Will we be subject to Palm Desert code enforcement and, if so, how will it differ from our own LEC and Compliance Committees activities? Typically cities leave code enforcement inside a gated community to the respective homeowners asso- ciation. Construction modifications which currently require county permits would require city permits if annexation were to occur. O Will our Burrtec waste collection service be the same, and will its fees for services or waste collection change? The service will still be provided by Burrtec, but the charges to residents will be reduced and some additional services will be available. Burrtec has a franchise from the City of Palm Desert to provide all wet garbage, recyclables and green waste pickup from residences and commercial establish- ments. At current rates, most residents would save about $100 annually; detailed information is available in Appendix E. The Palm Desert Burrtec contract also makes available to Palm Desert residents a number of special programs —such as hazardous waste, motor oil, electronics and sharps disposal —that are not available in unincorporated areas. Costs could be higher for the association, as Palm Desert requires Burrtec to pick up all golf course green waste. The association currently has a contract with a private hauler at a lower rate. O Will our contracts with Time Warner for bulk cable and Dewey for pest control still be in effect? Existing contracts are still in effect and are not affected by city an- nexation. 0 Will the Palm Desert Architectural Review Committee want to inspect our plans for remodels, re -landscaping, etc.? Items requiring a building permit will be required to submit plans for architectural review as needed. 0 Will the one -month minimum rental periods now allowed by the CC&Rs change? No, Palm Desert is in the process of modifying its regulations for short-term rent- als, but the modifications will not impact monthly rentals in gated communities. 0 Will we be eligible for Palm Desert resident rates at their recreational amenities such as Desert Willow Golf Course and the new pool? What other amenities might be available to us as Palm Desert residents? Yes, upon annexation SCPD residents would be eligible for all services and amenities available to other Palm Desert resi- dents, including its solar program. A comprehensive list of city services is available on the city's website. 0 Will Palm Desert go to bat for us to lobby the Nature Preserve authorities to add blow -sand fencing when necessary? This is an unknown, but the city is likely to be more responsive than county government in this as well as other areas. 0 Will our mailing zip code or post office at Hovley change? No. 0 Will we lose Imperial Irrigation District as our electric provider? No, IID is a district with established boundaries that are unrelated to municipal limits. O Will we have to pay more to license our pets? Pet owners will experience some N savings. The county currently charges $14 per animal for licenses, whereas Palm Desert residents pay $10 annually. It appears that annexation to Palm Desert has much to recommend it. Most residents would benefit from annexation financially; the savings in waste collection fees would rn more than offset the ambulance service fee. The significant increase in per capita law - enforcement personnel should improve residents' personal safety and response times -a when needed. c A major advantage of annexation is that future planning and permitting around our 0 M community becomes local, the responsibility of Palm Desert, with stricter requirements x than Riverside County. An example of how this could benefit our community is that Q the county has no height limits to protect our views, while Palm Desert does. And fol- Q) lowing development, it will be the responsibility of the Palm Desert Police Department p to address the inevitable traffic and public safety issues that will arise, not Riverside County. Remaining an Unincorporated Area County Services Since the committee cannot forecast whether or not Palm Desert will benefit from annexing us, it is necessary to look at the consequences and benefits of remaining an unincorporated area of the county. The major benefit of staying in the county is the lack of change. SCPD has been receiv- ing police and fire protection from the county for the community's entire existence; it is a known commodity. Many residents say, "If it ain't broke, don't fix it." However, that is a somewhat shortsighted view. The services the county has been providing this area, while stable to date, seem unlikely to remain stable in view of recent political and economic changes in the county. The county, like many governmental entities, has been hit hard by the recession of the last few years. In fact, Riverside County is one of the most heavily impacted areas in the entire nation from the standpoint of both unemployment and foreclosures. (Bad as things seem in the Coachella Valley, when compared to the rest of the county, it is in relatively good shape.) Although the current county budget managed to avoid cut- backs in public safety staffing, the sheriff's department is expecting to have to lay off as many as 800 deputies. The county has struggled in recent years to balance ongoing expenses with declining revenues. Discretionary revenue, which funds basic services such as police and fire protection, has dropped by $200 million from its peak in fiscal M 2006-2007. At the same time, the county's reserves have plummeted from $350 million to $125 million. The county has maintained a branch office of the Transportation and c Land Management Agency in the business park across from the main gate to handle N the valley's building, permitting and code enforcement activities for several years. Cost , reduction plans currently under consideration would close this office, thereby requiring Coachella Valley residents to travel to Riverside to apply for building permits. Given the glacial speed of economic recovery, significant cuts seem likely next year. V% Should cuts be unavoidable, they are most likely to occur in patrols of unincorporated c 0 areas. The sheriff's department has three major areas of responsibility: (1) crime con- Cz a trol in unincorporated areas, (2) contractually funded crime control in incorporated Q areas, and (3) staffing of jails. Because local municipalities fund the services provided L by the sheriff's department on the basis of a specific number of man-hours per dollar, a) o the department cannot reduce its services to cities without suffering additional losses of funds. Since California prisons and jails are already under threat of legal actions c for inadequate services, this is not an area where further cuts can be made. The only remaining option is to reduce services in unincorporated areas. The likelihood that the reduction of services will occur disproportionately in the Coachella Valley is tied to recent political changes. Until this year's reapportionment actions, the Coachella Valley was under the aegis of two of the county's five supervisors. Most of the valley, including SCPD, was the responsibility of John Benoit in District 4; however, Desert Hot Springs was in Marion Ashley's District 5. On September 13, 2011, the board approved a redistricting map which adjusted the boundaries of District 4 to include Desert Hot Springs. In the future only a single voice will be concerned with representing the issues of the entire Coachella Valley. The valley has always been a minor part of the county's concerns; its influence will now be reduced even further. It should also be noted that the substation where officers covering this area are based has recently been relocated from Indio to Thermal. This relocation may negatively impact the response time on any call for service. In the long term, potential future an- nexations (such as annexation of Thousand Palms by Cathedral City) is likely to further reduce staffing for unincorporated areas because Cathedral City would assume polic- ing responsibility for the additional area and the sheriff's department would make fur- ther staff reductions with less area to cover and even less revenue. Such actions would make it even less likely that county staff could respond in a timely manner. SCPD is also subject to potentially suffering a reduction of county services in the area of fire suppression and emergency medical services. Budget negotiations for the cur- rent year did not threaten the local station (nor does a cut seem likely in future years based on the amount of business SCPD provides). However, cuts in surrounding areas now and in the future can impact us. If the jurisdiction of the local station is increased to help cover for closings nearby, it is likely to impact the time required to respond to calls. Fiscal From a purely economic standpoint, remaining unincorporated would result in the least return on property tax dollars. Currently SCPD pumps money annually in eight figures to the county with little in return. Most of it will be spent on the more needy areas of the county. Becoming a county island like Bermuda Dunes is not considered to be a good option. It makes providing needed services difficult and remotely managed. It also minimizes involvement and control of surrounding developments. Finally, re- maining unincorporated leaves SCPD vulnerable to the diminishing resources of a cash- strapped Riverside County with the fourth or fifth highest foreclosure rate in the nation. On balance, remaining an unincorporated area in Riverside County at this time carries a significant risk. Police and fire services are likely to be undergoing reductions and options for other solutions will only be reduced over time. In addition, the community will remain dependent on Riverside County to deal with problems likely to arise from traffic increases from large future developments to our north and west. The bottom line is that staying in the county keeps SCPD at a distance from the seat of power and continues to keep many of its tax dollars from being used locally. Other Alternatives Annexation by Indio There are annexation options beyond those potentially offered by Palm Desert. The most logical and most likely would be annexation by Indio. With the annexation of the 730-acre Indio Trails development north of Sun City in 2009, the community is now surrounded on three sides by Indio. Indio Trails has already been approved for 1,150 homes along with a commercial development to support the community, while several parcels at the northeast corner of Washington Street and Coyote Song Way have been rezoned for business. Indio is not blind to the fact that Sun City is a major exporter of tax dollars to River- side County, while requiring relatively little in the way of services in return. Although Indio's aggressive growth under the former city manager appears tempered by the T_ current economy, a compelling argument could be made for Indio to expand west to v Washington Street or beyond, capturing those tax dollars for city coffers should Palm Desert take no action to annex Sun City. The oft -mentioned agreement between Del Webb and the City of Indio (Appendix G), whereby Indio agreed not to expand west of Adams Street, is potentially unenforceable. -- The name Sun City Palm Desert is ours to keep and need not change if the community were to be annexed by Indio. However, if we were to officially be annexed by Indio the Ln o Postal Service might be desirous of route modifications to make their life easier, and R the confusion of having Palm Desert in our name with an Indio mailing address might x cu cause an identity crisis. c Historically, Indio has not been viewed kindly. They are the largest city in the Coachella v Valley and have been improving their management and financial pictures. Indio would 0 E view annexing us as a net money inflow, without the attendant cost of infrastructure c V) c 0 ra x v c c Q v E maintenance that we do ourselves. Because Indio still suffers somewhat from infrastruc- ture shortages, it is unlikely annexation would provide as many advantages as becom- ing part of Palm Desert would offer. Indio's reputation has undergone an upgrade in recent years with its higher -end development north of 1-10, but still much of Indio's infrastructure is in dire need of upgrading. A comparison of area property values per square foot in September 2011 showed SCPD values at $152, Sun City Shadow Hills at $134 and residential Indio north of 1-10 (excluding Sun City) at $82. While the resi- dential Indio figure includes a variety of properties that might make their value much lower, the homes in the two Sun Cities are virtually identical and should be comparable in value. Actually Shadow Hills should have a higher value than the Palm Desert loca- tion because its homes are newer and included more amenities such as granite kitchen countertops. On a more positive note, being part of Indio would provide us access to more plentiful local city services than the county offers and easier access to those in charge. Another reason to be cautious of any affiliation with Indio is that they are re- sponsible for the costs of supporting their own police and administrative departments and contract with the county for fewer services than most local cities. This situation means that the city cannot benefit from the economies of scale that can be derived from contracting with a larger organization and could also raise concerns over pension and health insurance for retirees. While annexation to Indio might be considered by some to be preferable to remaining unincorporated, it is probably not in our best interest. Annexation by Cathedral City Another option, albeit less likely and much more distant in time, could be annexation by Cathedral City. Cathedral City is the only city in the valley whose actions to date in- dicate an interest in expansion. The city has become a huge player in SOI and annexa- tion discussions north of the 1-10 in recent years. In March 2011, LAFCO approved an application by Cathedral City to expand their SOI to include a large area west of Rio del Sol Road and along the 1-10 freeway. Following LAFCO's approval, a discussion ensued between Cathedral City, several resident groups and the Thousand Palms Community Council. From those discussions came a consensus to request an amendment to the re- cently approved SOI to include all of Thousand Palms. On September 29, 2011, Cathe- dral City submitted an application to expand the city's SOI eastward to include 5,200 acres east of Rio del Sol Road along the 1-10 freeway, encompassing all of the develop- able portions of Thousand Palms. The area includes all the remaining areas south and west of the Coachella Valley Preserve, including the Classic Club, and extends east past ti ,"W NW 4§001 Cook Street to the intersection of Avenue 38 and Varner Road, the western boundary of the recently restored Palm Desert 501. Should this be approved, it materially dimin- ishes the future tax base that would support Palm Desert annexing SCPD. Cathedral City's request to amend the SOI initially set the southern boundary of the SOI along the right-of-way of the railroad including the full width of the 1-10 freeway, which Palm Desert and Rancho Mirage opposed, citing concerns about fire protection and design issues along the freeway. Three members of the Palm Desert City Council cited this SOI expansion by Cathedral City as a reason to support funding of the Sun City SOI study. LAFCO is recommending approval of Cathedral City's request after agreement that the southern boundary of the SOI will be the freeway centerline. Annexation by Cathedral City would not be an attractive proposition for Sun City Palm Desert. The city's management and reserves do not begin to compare favorably with those of Palm Desert. it has numerous infrastructure problems. Along with the cost of supporting its own emergency services and administrative departments, it is one of only a few cities in the valley that do not contract with the county for most services. Its services are based a long way from SCPD, although outlying branches would no doubt be developed if Cathedral City expanded through Thousand Palms to Sun City. But without healthy commercial developments such as those planned in the vicinity of the Classic Club to support such expansions, the likelihood of Cathedral City's expansion as far east as Adams seems implausible. On balance, annexation by Cathedral City does not seem to be attractive at the present time, but the annexation of Thousand Palms and the addition of high -end develop- ments in currently undeveloped areas in conjunction with an improved economy could make such annexation more attractive in future years. Other Options There are other governance options beyond annexation by Palm Desert or Indio or Cathedral City. One such option is the incorporation of Thousand Palms separate from Cathedral City. This incorporation would only be viable in a strong economic climate with a vigorous development in the vicinity of the Classic Club, an occurrence which seems highly unlikely in the near future. Another is an affiliation of SCPD and Bermuda Dunes. However, any such relationship for the purposes of incorporation is highly un- likely. Bermuda Dunes is an unlikely potential governance partner. At the Palm Desert City Council meeting in September when the council voted to approve funding for the annexation study, Bermuda Dunes was central to the discussion leading up to the vote. v N rn In arguing against the motion, Council Members Finnerty and Benson pointed out that LAFCO, which is on record in opposition to "cherry picking", could require Palm Desert to include Bermuda Dunes in any application to annex the Sun City SOL The lack of infrastructure in Bermuda Dunes represents a huge expense that Palm Desert would be forced to take on and Council Member Finnerty rightly pointed out that given the eco- nomic outlook for the next few years, it was unlikely that Riverside County would agree to any cost sharing for infrastructure improvements should Palm Desert be required to include Bermuda Dunes in an annexation. The three council members supporting the study acknowledged that including Bermuda Dunes in an annexation was a possibility. 00 v N M 7 N C O X O C C Q L H Q) 0 C M Summary of Conclusions and Recommendations It seems likely that the Terra Nova feasibility study being conducted for the City of Palm Desert will report that annexation of SCPD will provide a positive cash flow to the city; however, it may not be sufficiently positive to cover the additional staffing required by the city to keep their police and fire staffing at its current ratios within the expanded city. A review of changes that might result for residents from annexation are generally posi- tive in nature: waste collection fees would be reduced and more waste collection services would be available. Pet licensing fees would be lower than the current county rates. Emergency ambulance transportation would be provided through an annual fee of $60. Residents would be able to enjoy the Desert Willow golf courses at a very rea- sonable cost and could participate in the city's solar program. From the standpoint of our residents, it seems clear that annexation to Palm Desert is a more attractive option than annexation to any other existing or potential neighboring city. It is also apparent that remaining an unincorporated island is gradually becoming less attractive. There are options for SCPD if Palm Desert decides against annexation, but the options offer considerably fewer benefits and higher risk. The committee recommends that the Board of Directors: O Educate residents about the benefits of annexation and its alternatives. rn O Encourage the Palm Desert City Council to proceed toward annexation. 0) M O Take no action to pursue other options until the economy improves in the event Palm Desert does not proceed with annexation. M Appendix A Blue Ribbon Investigation Committee Member Backgrounds and Qualifications O Paul Brady, Chair - Paul has forty-five years of city and county government experi- ence, including positions as city manager, assistant city manager, director of public safety and chief of police, director of community services and director of adminis- trative services. He also served as SCPD's general manager for several years. O Shirley Allan - Shirley is a retired Legislative Advocate for the California State Personnel Board. She was named Legislative Advocate for SCPD in May 2007 and serves on the Government Relations Committee. She chaired the Library Committee for six years and served on the original BRIC and Community Clubs and Organization Committees. O Steve Bailey — Steve spent twenty years working in the field of business trade publications with experience on homeowners association boards. In more than four years of SCPD residence, he has served as a district delegate and vice chair of the delegate counsel; he is currently a member of the board of directors and the Party Wall Arbitration Committee. O Regina Cain - Regina is a former educator in Orange County and ten-year resident of SCPD whose tenure has included a term on the board of directors, chairing the Strategic Business Plan Committee and service on the Election Committee and three ad hoc committees. N O Mike Coyne — Mike is a retired sales executive from AT&T with experience on ho- meowners association boards. An owner for eight years, Mike is active in several clubs and sports. O Ron Delgado - Ron has forty years' experience in fire and emergency management and also served as an assistant city manager. In the course of his eleven -year SCPD residence he served as a district delegate, a member of the board of directors and the Emergency Preparedness Committee; he also chaired the Public Safety Committee. O Carolyn Einung — Carolyn retired from municipal government as a systems analyst and project coordinator. She currently serves as secretary to the board of direc- tors and previously served on numerous committees, including the Strategic Busi- ness Plan Committee, the News Sr Views Committee, the Website Committee and a number of ad hoc committees. O Jacqueline Fogh - Jackie had a thirty-year career in banking, real estate develop- ment and planning in the public sector. O Bob Graham — Bob has more than thirty years of local government administration experience in town, city and county government, eight years as Assistant County Administrator of Riverside County. He is a thirteen year resident of SCPD and a member of the Insurance and Government Relation Committees. O Terry Kay —Terry is a retired aerospace systems engineer, and experienced in proj- ect management, working with diverse interests. He is a fifteen -year active resident of SCPD, founder of several clubs, and a five-year district delegate. O Elaine Leib - Elaine Leib obtained her broker's license, earned the designation of Certified Real Estate Specialist and is still engaged in real estate. A resident since 1997, she is involved in golf, mah jongg, bridge, walking, fitness and square danc- ing. O Kent McDonald — Kent is a retired aerospace systems engineer responsible for system design and project management of multi -computer systems. He has been active for eleven years at SCPD, serving on the boards of three chartered clubs and on six committees. O Mike O'Connor— Mike has extensive experience in local government manage- ment. He is an active member of the SCPD community. O Frank Riley — Frank has more than thirty years of local and federal government ad- ministration experience along with a long history of community involvement. Since moving to SCPD he has served as a district delegate and chaired the Government Relations Committee. Frank is currently president of the Desert Village Initiative, a 501(c)(3) nonprofit that organizes and delivers supportive services to residents of SCPD. O Colt Stewart - Colt has an enormous variety of experience in both state and mu- nicipal government, including focuses on economic development, transportation and energy issues. He also has extensive experience in legislative tracking and the publishing industry. He is a seven-year resident of SCPD and currently chairs the Government Relations Committee. Appendix B LAFCO Annexation Flow Chart CORTESE-KNOX-HERTZBERG LOCAL GOVERNMENT REORGANIZATION ACT OF 2000 ANNEXATIONIDETACHMENTIREORGANIZATION PROCEDURE DIAGRAM COMMISSION PROCEEDINGS AGENCY PRE -NOTICE NOTICE OF INTENT May be initiated by resolution of Mailed notice by proponent to TO CIRCULATE PETITION application by affected agency, or petition subject and interested agencies Must be filed with Executive At least 20 days before with required signature of landowners or Officer prior to circulation of resolution adoption unless 100% registered voters. the petition. consent (optional). RESOLUTION PETITION Resolution of application by Petition with required signatures of landowners affected local agency. ' or registered voters wA-AFCO for specific j signature requirement. _ _ Application is submitted to LAFCO in form required by Environmental Review ,Commission to include resolution/petition, map, pre- s perfom,ed if tAFCO zoning (for city annexations) and legal description, s the lead agency. I;applicable fees, CEQA compliance documents and _j comprehensive plan for services. Tax exchange resos APPLICATION REVIEW are adopted by Request for information from other agencies or affected agencies, if counties; Executive Officer prepares report and applicable. recommendation on proposal; report mailed at least 5 days ,prior to hearing. NOTICE OF HEARING Notice of Commission hearing is given by Executive Officer; inotice given by posting, publication and'mailing to property owners and registered voters within boundaries (within 300- f 50(1 feet) at least 21 days before date of hearing. '(If >2,000 jno-ices, 1/8 page display ad in lieu of mailed notice.) At the hearing the Commission will consider staff report and factors related to proposal, testimony of affected agencies and parties, service plan, CEOA documentation, and make COMMISSION DENIES PROPOSAL COMMISSION APPROVES PROPOSAL It denied, no similar proposal may be May be approved with revisions;aonditions. Commission directs made ; Executive Officer to oonduct protest proceedings. Approval expires within one year If not completed (aft next page). = within one year. ....... -.......... ........ ...,.._..-....... ..............»............ - : t WAIVER OF PROTEST NEARING 1 Commiss'an may waive hearing if 100% landowner consent and concurrence fromJ affected agencies. (see next page) Page 1 *These are generalized procedures. Processing of specific proposals can vary slightly. RMUr „201, CORTESE-KNOX-HERTZBERG LOCAL GOVERNMENT REORGANIZATION ACT OF 2000 ANNEXATIONIDETACHMENT/REORGANIZATION PROCEDURE DIAGRAM e-_._...._..._._....... _.................. _. PROTEST PROCEEDINGS f1, / WAIVER OF i A public hearing must be held to determine j PROTEST whether there is enough protest to warrant HEARING an election or terminate proceedings. 4 If protest is � waived, proposal may be NOTICE OF HEARING completed. Notice is given by Executive Officer by posting, publication and 'mailing to property owners and registered voters (if inhabited) within boundaries ' at least 21 days before date of hearing.-. —..-....._ ._ _ ._.._._..: '(If >2,000 notices, 1/8 page display ad in lieu of mailed notice.) PROTEST HEARING Protest hearing is held by the Executive Officer on date and time of notice; written protests must be filed on LAFCO protest form with Executive Officer prior to the conclusion of the hearing and each must have proper date, signature, and address. Value of written protest determined by Executive Office within 30 days of hearing. 12 registered 50% landowner (value) protest. 50% landowner (value) protest. (z 12 registered voters) < 25% voter protest and < 25% landowner protest. )etween 25-50% voter protest. pr a 25% landowner protest. 50% voter protest. Subject agency must call election by voters, VOTERS APPROVE VOTERS DENY A certificate of termination is COMPLETION OF PROPOSAL Once all term and conditions have been met, a Certificate of Completion is recorded. The change is effective upon recordation unless another date has set by the Commission. ,. anmm2m 'These are generalized procedures. Processing of specific proposals can vary slightly. Page 2 • Sphere of Influente MapAppendix C s C►T`Y pF p AND SPHERE OFLM ESE' e cATH" a � '�� NCE ARE r 07' uv tRA DR 1m 4 r \ Roe Ii '! �x DESFP,r" P AN DIC i 'INDIAN J WELLS i PALM 2, SPRINGS i LA QUINTA , tiT PALM DESERT r _ LAKE SOI cA ;n a r. i Sep[e^+ber9, 2009aa 2 2 Miles Po e..m oe �a tl. K c N e q �poxs MIY emit (tke een lM1 tRirersge makes no wemaM� rynp or �9ee 9 pa�OBd.eme55umvd„no kB'e Jiress. ort�b tee ae la the mnlent 4:5.etwe p,man wi a wnslsfy td ,M np epees mb,ymine 'ae,ewmyeierm�neeea, mreecedloam„an am I°`"'aloe mnramea on tns cop YRIGHTm 70p9 Coanl o Riveiyd AG,eN's map!ehsim sM1all pe the S _ / N v 0) ru N M r— O O m x v c c Q L v v 0 _E m c 4 0 7 0 PALM DESERT CITY O Np SPHERE OF INFLUENCE AREA September 9, 2009 Miles ` `". WOMMOMMONOW0 2 4 pd'�ddale areto xaariY ��yrate to aurveYma te¢ssiema content m le and are rot necea a ro 1B�or oom Pleleneca o Y of the e app x rtY al Goufti�e acaracY ireas donll anearda.�rna tm (lhe purce s oeen IFttd ParlY) I ponvWbtY t°f the In1Mma� shall be the ant assures no lega P ed to nacW2c7 and WeNs tlata Pro'^dad ItNs Droduct with rasp eyell lFic map maD- MY� e o D. . . or r ._e _-bilNY of tfte user ._, TLMA GIB 72 •c c v� Cc: C v 1 C N M Q N........-.-_..�..__ i - v 4� Y 1 Q ,- N v _ _ _ N _ + � Q O u LL u ..._:_. = u"O 7 i a +r C � �CL J a cu u t 1 - O i In v O ' ............. L' y j1 'z C ❑ III, LI ti ( ..h1�1 \ �.. ( s�Y",'_- *t-_ Li r , ulu Y:w ' I—, TI LL gton St. Z 0 Q cc m -0 a3 1� LL (n 00 N Q1 pl ca C— N M T N C O X v c c Q v N v 0 E Appendix D SCPDCA Information Provided to Terra Nova Sun City Palm Desert Community Association Facts And Figures 2011 SCPD Budget $19,059,444 Operations fund revenues 16,129,687 Operations fund expenses $ 2,929,757 Revenues over expenses ($ 2,050,437) Other income and expenses $ 870,320 Revenues over expenses $447,143 Neighborhood cost center, club revenues $ 1,326,463 Excess revenues SCPD was incorporated on June 15, 1992, with 1,600 acres of residential properties SCPD board of directors consists of seven elected homeowners Monthly HOA assessments are $228 per lot; total revenue from monthly assessments is $13,336,860 SCPD has $9,995,238 in replacement reserve fund investments rn The most recent reserve study was prepared by an independent consultant in April 2011 (N a) Total number of residential units is 4,985, with 4,869 detached and 116 attached units. Average lot C-1 size is 6,400 sq. ft. Smallest lot is 4,000 sq. ft.; largest is 8,250 sq. ft. -- N Number of full time residents M r- 10 - 12 Months 72% 7 - 9 Months 9% 4 - 6 Months 13% 1 - 3 Months 6% c 0 1,405 homeowners have residence ouside the 92211 zip code area x a Total number of full time employees = 161 Total number of part time employees flucuates depending on the time of the year Q L SCPD has an adopted 5 year business plan with a mission statement, vision statement and strategic a goals SCPD is guided by the provisions of the Davis -Sterling Act; has adopted CC&Rs and bylaws c O M a� N r-- M N c 0 x (1) c c Q 4. a) E The value of each of the three clubhouses is: Mountain View - $16,651,284 Sunset View - $ 9,295,780 Lake View - $ 6,032,000 Figures provided by SCPD's insurance company The square footage of each clubhouse is: Mountain View - 78,478 Sunset View - 25,000 Lake View - 16,000 The value of the two golf courses is: Santa Rosa - $4,433,876 San Gorgonio - $5,035,157 Figures from SCPD's fixed asset schedule Taxable sales from operations in 2010 are: Boulevards Daily Grind/Martini's Catering Automatic Gratuity Charter Club Sales Pro Shop Fitness Centers Post Office Total Gross Sales Subject to use tax Total Sales tax rate for 2010 $987,142.21 84,708.00 522,355.99 100,760.30 43,781.81 157,561.05 2,030.67 21,678.64 $1,920,018.67 122,426.75 $ 2,042,445.42 8.75% $ 178,713.97 Additional taxes collected - 43.03 Total sales/use taxes - $ 178,757.00 Papa Dan's - Outside vendor; SCPD does not have access to financials All parcels are developed within SCPD.; no information available on vacant lands outside SCPD or in the specific plan area Do not have information on assessed valuation of homes within SCPD. Information can be obtained from local realty board or by contacting a local realtor such as Coldwell Banker, the Horne Team (760-779-4495) or any other realtor doing business within SCPD Appendix E Burrtec Rates City of Palm Desert Unincorporated County First Cart (64-gal) Second Cart (64-gal) Total First Cart (64-gal) Second Cart (64-gal) Total Monthly $8.46 $4.23 $12.69 $15.33 $6.78 $22.11 Quarterly $25.38 $12.69 $38.06 $45.99 $20.341 $66.33 Annually $101.52 $50.76 $152.28 $183.96 $81.36 $265.32 M CJl C N r-- rn �� N m v N M Appendix F Property Tax Bills City of Palm Desert Residence Tax bI :xryuexed r Lana damMeatl(ut Mr rp a Bi11t TAX t..TKIT P=R PPCI, 13 9763.39 '' 'UNIFIED SCHO<?.`.., DEBT 3V CCVX----7=Y COLLEGE D32T 3V 194. 77 :OA(.^HELLA •iAL HATER VEH7 SERV a07 398-266: "ld1. O i` .j:IT: OF PALM DESERT t.l7ERG3'NCY cu (666) 807-6364b c0.00 .aP3.M DESSERT CAC 91-1 (E66; 807-6864:^ 1607.92. CCv1CNELLA VALLEY *!OSQUI"TO d P.I?A iE66! 801-5364.8 3.06'. DESERT REC 013 AD 97.-I. ;A561; 8U7-68644 9.90 CssWD SEP:LE. 33RV i.CE .7E".. N -DE: ,767; 391 .. S4,,004 331 .far',. Items 1-4 are tied to the property value. Item 5 is PD ambulance fee. Item 6 is a service district fee, N/A in SCPD. Items 7-9 are service district per -parcel fees. SCPD Residence UNPAID PRIOR -YEAR TAXES (See licit 06 ca: utrerse j NONE LAND : 243,318 STRUCCURES 740,021. TRADE FoCrURES iREE5 & Vli; &5 BUSINESS PMSONAL PROPERTY PULL VALUE 983,339 exPntvra*t BOX 7, 000 NETVALUE a76, :3g TAX RATE PER ST00 VALVF• 1 , 21462 TAXES 1.1, 880 8 .2.65 SPeciat Assetww= 1 6 6 2C_ $, s 7—dCh.r.. $13, 871.48 TOrALANIOUN'T l" nv�r I�SO.00f .Tee $6,935.74j $6,935.74 Add 1)4 I Add 10% Penalty after pe:talty plus Cost 12� i0.21)11 : after 0010f2012 $6,935.74 t $6,935.74 Please note that the major differences between these property tax bills relate to the fact that the City of Palm Desert residence is valued at approximately 3.75 times that of the SCPD residence. Tax bill tequesiod by Wan Identifimion Multiple Bills 8035-0000000 197521294 1% TAX LIMIT PER PROP 13 I 2601.23 UNIFIED SCHOOL DEBT SV 298.51 COMMUNITY COLLEGE DEBT SV 51.93 COACHELLA VAL WATER DEBT SERV (760) 396-2661 208.25 CSA 4121 STREET LIGHTS- (808) 683-52349 7.90 COACHELLA VALLEY MOSQUITO & RIFA (866) 807-6864E 3.06 DESERT REC DIST AD 93-1 (866) 807-68640 9.90 CVWD SEWER SERVICE CHARGE 1D81 (760) 391-96000 331.80 Items 1-4 are tied to the property value. Item 5 is a service district fee, N/A in PD. Items 6-8 are service district per -parcel fees. UNPAID PRIOR -YEAR TAXES (See Item 16 on reverse) NONE TRADEFIXTURES TRW & VINAS SUSINESS.PBHSONAL PROPERTY:, FULLVALUE 267, 323 EXEMPTIONS - HOX 71000 NET VALUE 260,323 TAX RATE PER $ 100 VALUE 1.21462 TAXES 311161: 2 Spacial Aueanmenta y 3 52 . 6 6 R Fixed Cluuger TOTALAMOUNT $3,514.58 $1,757.29 1 $1,757.29 Add 109E .„ Add 10% penalty after penalty plus coat 12/102011 after 041102012 i $1,757.29 $1,757.29 '-Mw .0w Indio Agreement Appendix G AGREEMENT BETWEEN THE CITY OF INDIO AND DEL WEBB CALIFORNIA CORP. REGARDING ANNEXATION 70 THIS AGREEMENT ("Agreement") is made effective as of the 25th day of November, 1996, by and between the City of Indio, a municipal corporation ("City") and Del Webb California Corp., an Arizona corporation ("Del Webb"), with reference to the following: A. The City has filed an annexation application with the Riverside County Local Agency Formation Commission ("LAFCO"). The application requests LAFCO approval of Annexation 70, which currently proposes to annex to the City the property indicated on Exhibit "A" attached. A portion of said property ("Westerly Area"), as indicated on Exhibit "B" attached, is located west of Adams Street. B. The City desires to have a commercial facility consisting solely of automobile dealerships ("Auto Mall") constructed on those properties within the Westerly Area designated as Doerschler and Blue Palms Trust on Exhibit "B" attached (collectively "Triangular Parcel"). The Triangular Parcel is intended to be separated by 40th Avenue (which is intended for future construction) from the properties designated as Kaptur and Del Webb on Exhibit `B". C. Del Webb is the owner and developer of a master planned community known as Sun City Palm Desert, which includes commercial property in the Westerly Area. Del Webb believes that the logical boundary for Indio would be Adams Street, and that the City's annexation efforts should not extend into the Westerly Area. However, Del Webb recognizes that the creation of a new Auto Mall is extremely important to the future of the City and, accordingly, Del Webb supports construction of an Auto Mall on the Triangular Parcel and the annexation of the Triangular Parcel into the City. D. In view of the foregoing, and in an effort to promote the expeditious development of the Auto Mall and accommodate their respective interests, the parties have elected to enter into this Agreement. NOW, THE, IT IS AGREED AS FOLLOWS: 1. City Agreements Regarding Modification of Annexation 70 and Sphere of Influence. As expeditiously as possible subsequent to the execution of this Agreement, the City shall commence and complete all steps and actions reasonably necessary or expedient to (a) modify Annexation 70 so that it excludes all of the Westerly Portion except for the Triangular Parcel, and (b) modify its sphere of influence so that it excludes all property located west of Adams Street, except for the Triangular Parcel. 2. City Agreements Regarding Future Annexation Efforts. Subsequent to the date of this Agreement (a) the City agrees to and shall limit its annexation efforts west of Adams Street to those portions of the property designated as Kaptur on Exhibit "C" which are reasonably necessary for expansion of the Auto Mall northerly across 40th Avenue frorn the Triangular Parcel, and (b) should the City determine it WCE61590:1 IR5/96 necessary to annex substantially all of the property designated as Kaptur for such purpose, the City shall require that the developer of the Auto Mall to leave at least a 250 foot landscape buffer between the southerly boundary of Sun City Palm Desert and the Auto Mall. 3. Del Webb Agreements Regarding Annexations and Lot Line Adjustment. From and after the execution of this Agreement, Del Webb shall (a) support Annexation 70, modified as indicated in Section l above, and (b) not oppose future efforts by the City to annex portions of the property designated as Kaptur, in the manner provided in Section 2 above, and (c) execute, acknowledge and deliver to Granite Construction Company any grant deeds to be provided by Del Webb in connection with the completion of Lot Line Adjustment No. 3671, which was approved by the Riverside County Planning Department on March 2, 1994. 4. Cooperation. Each party agrees to and shall do and perfomi such other and further acts and execute, acknowledge, deliver and/or record such other and further documents as may be reasonably necessary or expedient to implement the intents and purposes of this Agreement. 5. Attorneys Fees. In the event of any litigation arising out of and/or relating to this Agreement, or the performance or breach of it, the party prevailing in such litigation shall be entitled, in addition to any other appropriate relief, to an award of reasonable attorneys fees. 6. Remedies. The parties agree that any material breach of this Agreement, or any term or provision hereof, will cause irreparable injury to the aggrieved party which cannot be adequately compensated in monetary damages and, accordingly, the aggrieved party shall, in addition to any other appropriate relief, be entitled to court ordered injunctive relief restraining and/or preventing such breach. IN WITNESS WHEREOF, the parties have executed this Agreement and made it effective as of the date first above written. Del Webb California Corp., an Ari774,rKVw By: ice resident and General ATTEST: Deputy City le %YCE61590:1 In"6 2 EXHIBIT "'A" MO City cfIndio City ofPalm Dcscrt City of Indlo Prop. Annex. 68 Clty of lndlo Prop. Annex. 69 Cloy of Indio Prop. Annex. 70 Warner engineering i 0 U 0 tr Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation FISCAL IMPACT ANALYSIS for POTENTIAL ANNEXATION to the CITY OF PALM DESERT Table of Contents I. Introduction, Project Description and Demographics A. Introduction 3 B. Project Description 4 1. Scenario A Annexation Area 5 2. Scenario B Annexation Area 12 C. City of Palm Desert Demographics 16 H. Potential Revenue From Annexation A. General Fund 17 B. Special Revenue Funds 22 1. Annual Revenues 22 2. One -Time Revenues 23 C. Investment Income 26 III. Potential Costs From Annexation A. General Fund 27 B. Fire Fund 30 IV. Build out Assumptions A. Build out Phasing 32 B. Land Use Designations 33 C. Build out Calculations 33 V. Cost/Revenue Analysis A. Cost/Revenue Summaries 37 B. Conclusions 42 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation LIST OF EXHIBITS Exhibit 1: Scenario A Annexation Boundary Map 6 Exhibit 2: Sphere -of -Influence Map 7 Exhibit 3: Specific Plans Map 8 Exhibit 4: Land Use Map 11 Exhibit 5: Scenario B Annexation Boundary Map 13 LIST OF TABLES Table 1: Scenario A Developed Acreage 9 Table 2: Scenario A Vacant Acreage 10 Table 3: Scenario B Developed Acreage 14 Table 4: Scenario B Vacant Acreage 15 Table 5: Average Value of New Construction in Palm Desert 19 Table 6: Components of the 8.75% Sales & Use Tax 20 Table 7: Low -Income Housing Mitigation Fees 24 Table 8: Child Care Facilities Impact Mitigation Fees 24 Table 9: Annual Road Maintenance Costs, 2002-2011 29 Table 10: Total Potential Costs/Revenues Summary Table — Scenario A 38 Table 11: Developer Impact Fees Revenues — Scenario A 39 Table 12: Total Potential Costs/Revenues Summary Table — Scenario B 40 Table 13: Developer Impact Fees Revenues — Scenario B 41 LIST OF APPENDICES Appendix A: Scenario A Detailed Cost and Revenue Tables Appendix B: Scenario B Detailed Cost and Revenue Tables 2 - 0 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS I. INTRODUCTION, PROJECT DESCRIPTION AND DEMOGRAPHICS A. Introduction This Fiscal Impact Analysis is being prepared at the request of the Palm Desert City Council, which has received requests from property owners north of Interstate-10 (I-10) to consider annexation into the City limits. At the City's request, this report includes analysis of two scenarios (a detailed description is provided in section I.B., below): 1) Scenario A: the annexation of Sun City and land to the west that is within the City's sphere - of -influence, extending southerly across the Interstate 10 and railroads rights -of -way to the existing City limits, and 2) Scenario B: the annexation of Scenario A, and a larger expanse of land to the west extending beyond Cook Street to Jack Ivey Ranch, and southerly across the Interstate 10 and railroads rights -of -way to the existing City limits. The Riverside County Local Agency Formation Commission (LAFCO) is responsible for approving annexations proposed by cities in Riverside County. A comprehensive fiscal analysis is an integral part of this consideration, and Riverside County's "Guidelines to Preparing Fiscal Impact Reports" has been used as a basis for the analysis provided herein. This analysis addresses the costs and revenues that can be expected to be generated through build out of the potential annexation areas. The values, current revenues and costs associated with existing development have been calculated, and are assumed to occur immediately upon annexation. In addition, build out assumptions have been made for lands currently vacant in both scenarios. Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Both scenarios are analyzed in five year increments. Given that a significant portion of the parcels in scenario A are already developed, a ten-year build out period is assumed. Many of the parcels in scenario B are vacant, and therefore, a twenty-year build out period is assumed for that scenario. Land use and acreage data were obtained from Riverside County Assessor's parcel rolls (October 2011), aerial photography (June 2011), and the Palm Desert GIS Department. Revenue and cost factors were obtained from a variety of sources, including the City of Palm Desert 2011-12 budget, Palm Desert Comprehensive Annual Financial Report, Palm Desert staff, Riverside County Transportation Commission, and the State of California. Factors from the Riverside County "Guide to Preparing Fiscal Impact Reports," adjusted for inflation, have also been used. The analysis applies the appropriate revenue and cost factors to existing development and undeveloped land in the annexation areas using land use designations assigned by Palm Desert and Riverside County. The revenue and cost categories used to develop this fiscal analysis are described in Sections II and III of this document, respectively. Assumptions associated with each annexation scenario are described in Section IV. The cost/revenue analysis for each scenario is provided in Section V. Both costs and revenues throughout this analysis are calculated in current dollars. No inflation adjustment has been made. Although costs and revenues will rise over the build out period of the annexation areas, the ratio of costs to revenues is not expected to change significantly. As a result, the analysis in constant dollars is representative of the framework of costs and revenues likely to be experienced by the City throughout the build out of both scenarios, and beyond. B. Project Description The purpose of this fiscal analysis is to consider the potential financial impacts to the City of Palm Desert resulting from two potential annexation scenarios: 1) annexation of 2,181± acres encompassing Sun City, a resort residential community north of the City of Palm Desert, and adjacent parcels located north of the existing City limits to Avenue 38; and 2) annexation of 2,988± acres, including those described in Scenario A, and additional land to the west extending just beyond Cook Street. Under both scenarios, it is assumed that all lands from the existing City limits northerly, including the Interstate 10 and railroad rights -of -way, would be included in the annexation. All land considered in both scenarios is currently under the jurisdiction of Riverside County. Some land is currently in the City's sphere -of -influence. 4 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation 1. Scenario A Annexation Area Scenario A involves annexation of Del Webb's Sun City, an age -restricted resort -residential community north of Palm Desert, which encompasses ±1,600 acres and includes a population of approximately 9,000 residents. Sun City is generally bounded by the City of Indio on the east, I- 10 and Varner Road on the south, Washington Street on the west, and Frances Way on the north. The annexation boundary also includes land immediately south of Sun City, consisting of the Union Pacific Railroad and I-10 corridors, and ±39 acres adjacent to the southeast corner of Sun City. The boundary encompasses an additional 580± acres to the west, generally bounded by Avenue 38 on the north and the I-10 and railroad corridors on the south. Exhibit 1 illustrates the boundaries of Scenario A. Land in this area is currently under the jurisdiction of Riverside County and contained within the Palm Desert sphere -of -influence (SOI). Please also see Exhibit 2 for SOI boundaries. Two Specific Plans (SP) are located within` the boundaries of Scenario A. Each is described below and shown in Exhibit 3. • SP-281, Del Webb Sun City, is located in the eastern half of the annexation area. It contains approximately 1,600 acres and 4,985 residential units, golf course and other recreational amenities, community facilities, and retail commercial uses near the I- IO/Washington Street interchange. SP-281 is nearly 100%,developed. • The Mirasera Specific Plan is generally bounded by Avenue 38 on the north, Varner Road on the south, and existing business park development on the east. It encompasses approximately 190 acres. Of these, 178.5 acres are located in the potential annexation area. Land use designations include high and very high density residential, business park, mixed use, hotel and commercial retail. Open space designations include a village green, parks and trails. The remaining 11.3 acres are located outside of the annexation area, immediately north of Avenue 38; these are undevelopable acres designated for drainage channel right-of-way. The parcels are currently vacant, with the exception of one manufactured unit owned by Mirasera. 5 MU� 40- L -.4 i7 � O fb � N ® N b K O � A oY M Yam+ O O � w e�Y a � ee 2 b W.W_ v C Isla N.. r. V✓ Y � r IV y• s . r w . t Y v a s �. r1,.. op Ott, 1 iF ♦#il t� � ��'A' .� r '� T JIM �w 41 l ! J j '+/•�w,.T t � � +r � ,,, � �' +i+!•S V1 SY. `_ � n Y � Rrw °n`.� - 3 .. - 1' S ! �Y y ' 1. �' _ �a � .: �_, : .,fir: #�/' u - �►�r..� 01.16.12 0 2 IV A ir 10 I it ow at pore` t"• +. si ► t w� �L rt�•L' . . . `Nsota, OWN at Fs+ae;aAr•�, xr �* ��, ,ir.+.r•.w..wi.tr�. � .a<tN•« w + + �� • NtAwil•wt + f- f a • E NOW N"Moo, Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation A land use map for both Scenarios A and B is provided in Exhibit 4 and serves as a basis for the following developed vs. vacant acreage calculations. The Scenario A annexation area encompasses a total of 2,181± acres. Of these, 1,485± are developed, and 696± are vacant/undeveloped. Table 1, below, describes developed acreage by land use category. Existing development includes 4,985 single-family homes, two golf courses, and three community clubhouses in Sun City. Commercial development is located along and in the immediate vicinity of Washington Street, and business park/light industrial structures are located west of Washington Street. Other development includes a fire station, two hotels, and an RV park. Table 1 Scenario A - Developed Acreage Existing Existing Existing Dwelling Square Hotel Existing Land Use Designation Acreage Units Footage Rooms Population SP-281 Single -Family Residential 792.0 4,985 SF -- -- 9,000, SP-281 Golf Course 435.3 -- -- -- -- SP-281 Commercial 29.0 -- 277,912 -- -- SP-281 Commercial (Hotel) 2.2 -- 50,0004 72 -- Riv. Co. Commercial Retail 21.1 -- 202,205 -- -- Riv. Co. Commercial (Hotel) 1.4 -- 40'0004 82 -- Riv. Co. Comm./Tourist (RV Park) 26.3 -- -- -- -- Riv. Co. Industrial - Light 56.6 -- 542,409 -- -- SP-281 Fire Station 3.5 -- -- -- -- I-10 Corridor 79.2 -- -- -- -- Railroad Corridor 38.8 -- -- -- -- Total: 1.485.4 4.985 SF 1.112.526 154 9.000 ' Includes 4,869 detached units and 116 attached units. Source: Paul Brady, Sun City Palm Desert Community Association, October 2011. SF= single-family dwelling unit 2 Assumes that commercial & industrial building square footage covers 22% of the lot, with the remainder of the lot available for access roads, parking, landscaping, and other ancillary uses. 3 Paul Brady, Sun City Palm Desert Community Association, Oct. 2011. 4 Estimate for 72-room and 82-room hotels. The Scenario A annexation area also includes 696± acres of vacant/undeveloped land. Table 2, below, describes how vacant acreage could develop in the future based on assigned land use designations. All land use designations within Sun City/SP-281 and Mirasera Specific Plan were assigned by Riverside County. Parcels within the Palm Desert sphere -of -influence are assumed to develop consistent with the land use designations assigned in the Palm Desert General Plan. cm M Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 2 Scenario A - Vacant Acreage Potential Potential Potential Dwelling Square Hotel Potential Land Use Designation Acreage Units' Footage Rooms3 Population Non -Developable SP-281 Community Association 271.0 -- -- -- -- Public Utility (IID, CVWD) 18.1 -- -- -- -- Public Agency (County, State) 5.3 -- -- -- -- Riv. Co. Open Space/Water 10.4 -- -- -- -- Mirasera Open Space/Parks/Roads 39.5 -- -- -- -- Non-Developable Subtotal: 344.3 Developable PD Medium Density Residential (4-10 du/ac) 113.3 963 SF -- -- 2,003 Riv. Co. Medium -High Density Resid.(5-8 du/ac) 30.8 209 SF -- -- 434 Mirasera High Density Residential (12 du/ac) 22.6 230 SF -- -- 478 Mirasera Mixed Use Residential (16 du/ac) 10.5 142 MF -- -- 295 Mirasera Very High Density Resid. (20-25 du/ac) 66.4 1,411MF -- -- 2,934 SP-281 Commercial 3.0 -- 28,750 -- -- PD Community Commercial 10.7 -- 102,540 -- -- PD Industrial — Business Park 28.0 -- 268,330 -- -- PD Industrial — Light 26.6 -- 254,913 -- -- Mirasera Commercial Retail 17.6 -- 168,664 -- -- Mirasera Mixed Use Hotel 3.1 -- 100,000 150 -- Mirasera Office/Business Park 18.8 -- 180,164 -- -- Developable Subtotal: 351.4 Total: 695.7 2,955 1,103,361 150 6,144 Assumes future residential development occurs at 85% of the maximum density permitted. SF = single-family dwelling unit. MF = multi -family dwelling unit. 2 Assumes future commercial & industrial building square footage will cover 22% of the lot, with the remainder of the lot available for access roads, parking, landscaping, and other ancillary uses. Hotel square footage estimate based on available acreage. 3 Hotel room estimate based on single hotel and available acreage. 4 Based on Palm Desert average of 2.08 person s/househoId (2010 U.S. Census). As described in the tables above, the Scenario A annexation area currently contains 4,985 dwelling units and a population of approximately 9,000. If buildout occurs according to the land use designations currently assigned, the annexation area could contain a total of 7,940 dwelling units and 15,144 residents at buildout. Commercial, business park, and industrial square footage could nearly double, from 1,112,526 square feet to 2,215,887 square feet. Similarly, the number of hotel rooms could increase by 50%, from 154 to 304 rooms. 10 co 9 S F, ro� tv o o i y su z w+ C6 c r c Y cr y co r r ¢ � M J '#AM •e�P 8 f !1e � (8du/ac) -� - Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation 2. Scenario B Annexation Area Under Scenario B, the annexation area is expanded to include all of Scenario A (described above) and additional lands to the west, for a total of 2,988± acres. This annexation area is generally bounded by Palm Desert's existing City limits on the south, the Coachella Valley Preserve on the north, the City of Indio on the east, and the western boundary of the Center Pointe Specific Plan on the west. The boundaries of Scenario B are shown in Exhibit 5. Existing development in Scenario B includes 4,985 single-family residences, two golf courses, and three community clubhouses within Sun City. Other development includes a fire station, two hotels, an RV park, commercial structures along and in the vicinity of Washington Street, and business park/light industrial structures west of Washington Street. Further west are 9± acres of agriculture, a gravel/construction facility, a private school (Xavier High School), two general commercial lots, and the Classic Club golf course, clubhouse and maintenance building. Residential development is limited to one single-family home along Cook Street (Shadow Valley Road). A manufactured unit also occurs on land owned by Mirasera, which is designated for future residential development. Land in Scenario B is currently under the jurisdiction of Riverside County. That portion described in Scenario A, south and east of Frank Sinatra Drive (extended), is located within the Palm Desert SOI. That portion further west, north and west of Frank Sinatra Drive (extended) is located within the Cathedral City SOI. Please refer to Exhibit 2 for SOI boundaries as they pertain to the annexation area. In addition to SP-281 and the Mirasera Specific Plan described in Scenario A, two other Specific Plans approved by Riverside County are located in Scenario B. Exhibit 3 illustrates the boundaries of each Specific Plan, and each is described below. • SP-225, Center Pointe, is located at the western edge of the annexation area. It encompasses 215 acres and was approved for golf course, residential, business park, and commercial development. Nearly half (96 acres) is now developed with a private high school. This analysis assumes the remainder of the Specific Plan will develop as originally approved. • SP-151, Narth Star Commerce Center and Golf Club, is located along the I-10 corridor in the western portrai of the annexation area. It consists of 460 acres and was approved for golf course, business ar and highway commercial development, including hotels and motels. The golf course and c ouse (The Classic Club) have been built, another parcel contains a gravel/construction site, an -t4e remaining acreage is undeveloped. 7 tt 12 ; 0 o P nN-I A'{; 16 %Mw Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation The Scenario B annexation area encompasses a total of 2,988± acres. Of these, 1,987± are developed, and ±1,001 are vacant/undeveloped. Please refer to Exhibit 4 for a land use map, which serves as a basis for the following developed vs. vacant acreage calculations. Table 3 Scenario B - Developed Acreage Existing Existing Existing Dwelling Square Hotel Existing Land Use Designation Acreage Units' Footage Rooms Population Inside Scenario A: SP-281 Single -Family Residential 792.0 4,985 SF -- -- 9,000 SP-281 Golf Course 435.3 -- -- -- -- SP-281 Commercial 29.0 -- 277,912 -- -- SP-281 Commercial (Hotel) 2.2 -- 50,0004 72 -- Riv. Co. Commercial Retail 21.1 -- 202,205 -- -- Riv. Co. Commercial (Hotel) 1.4 -- 40,0004 82 -- Riv. Co. Comm./Tourist (RV Park) 26.3 -- -- -- -- Riv. Co. Industrial - Light 56.6 -- 542,409 -- -- SP-281 Fire Station 3.5 -- -- -- -- I-10 Corridor 79.2 -- -- -- -- Railroad Corridor 38.8 -- -- -- -- Outside Scenario A: Single -Family Residential 1.3 1 SF -- -- 2 SP-151 Golf Course/Facilities 271.2 -- -- -- -- SP-151 Gravel/Construction Facility 32.2 -- -- -- -- SP-225 Private School 96.0 -- -- -- -- SP-225 RV Storage 5.2 -- -- -- -- Agriculture 9.3 -- -- -- -- 1-10 Corridor 52.8 -- -- -- -- Railroad Corridor 34.1 -- -- -- -- Total: 1,987.5 4,986 1,112,526 154 9,002 Includes 4,869 detached and 116 attached units in Sun City, and one detached unit outside Sun City. SF = single-family dwelling unit. 2 Assumes commercial and industrial buildings cover 22% of the lot, with the remaining area available for access roads, arking, landscaping, and other ancillary uses. Includes an estimated 9,000 residents in Sun City (provided by Paul Brady, Sun City Community Assoc., Oct. 2011), and one additional dwelling unit at 2.08 persons/household (2010 U.S. Census). 4 Estimate for 72-room and 82-room hotels. Scenario B also includes approximately 1,001 acres that are vacant/undeveloped. Table 4 describes how vacant acreage could develop in the future based on assigned land use designations. Where Specific Plans have been approved by Riverside County, those land use designations are applied, as it is assumed that upon annexation, the City would honor the provisions of the approved Specific Plans. Parcels outside the Specific Plans have been assigned land use designations in the City's General Plan. 14 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 4 Scenario B - Vacant Ac Land Use Designation Acreage Potential Potential Potential Dwelling Square Hotel Potential Units' Footage Rooms Population Non -Developable Inside Scenario A: SP-281 Community Association 271.0 -- -- -- -- Public Utility (IID, CVWD) 18.1 -- -- -- -- Public Agency (County, State) 5.3 -- -- -- -- Riv. Co. Open Space/Water 10.4 -- -- -- -- Mirasera Open Space/Parks/Roads 39.5 -- -- -- -- Outside Scenario A: SP-225 Regional Circulation 6.4 -- -- -- -- Non-Developable Subtotal: 350.7 Developable Inside Scenario A: PD Medium Density Residential (4-10 du/ac) Riv. Co. Medium -High Density Resid.(5-8 du/ac) Mirasera High Density Residential (12 du/ac) Mirasera Mixed Use Residential (16 du/ac) Mirasera Very High Density Resid. (20-25 du/ac) SP-281 Commercial PD Community Commercial PD Industrial - Business Park PD Industrial - Light Mirasera Commercial Retail Mirasera Mixed Use Hotel Mirasera Office/Business Park Outside Scenario A: 113.3 963 SF -- -- 2,003 30.8 209 SF -- -- 434 22.6 230 SF -- -- 478 10.5 142 MF -- -- 295 66.4 1,411MF -- -- 2,934 3.0 -- 28,750 -- -- 10.7 -- 102,540 -- -- 28.0 -- 268,330 -- -- 26.6 -- 254,913 -- -- 17.6 -- 168,664 -- -- 3.1 -- 100,000 150 -- 18.8 -- 180,164 -- -- PD Low Density Residential (0-4 du/ac) 72.0 244 SF -- -- 507 SP-151 Service Commercial 30.8 -- 295,162 -- -- SP-151 Service Commercial (Hotel) 3.0 -- 200,000 250 -- SP-151 Business Park 103.0 -- 987,070 -- -- SP-225 Medium -Density Residential (8 du/ac) 9.0 61 SF -- -- 126 SP-225 Golf Course 13.6 -- -- -- -- SP-225 Commercial 26.1 -- 250,121 -- -- SP-225 Business Park 41.0 -- 392,911 -- -- Developable Subtotal: 649.9 Total: 1000.6 3,260 3,228,625 400 6,777 Assumes future residential development will occur at 85% of the maximum density permitted. SF = single-family dwelling unit. MF = multi -family dwelling unit. 2 Assumes future building square footage will cover 22% of the lot, with the remainder of the lot available for access roads, parking, landscaping, and other ancillary uses. Hotel square footage based on 2 hotels and available acreage. Estimates based on available acreage for highway -serving hotel land uses. 4 Based on Palm Desert average of 2.08 persons/household (2010 U.S. Census). 15 Term Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation As shown in the tables above, the Scenario B annexation area currently includes 4,986 dwelling units and a population of approximately 9,002. If future buildout occurs according to currently assigned land use designations, the annexation area could contain an estimated 8,246 dwelling units and 15,779 residents. Commercial, business park, and industrial square footage could increase by 190% from 1,112,526 square feet to 3,228,625 square feet. The number of hotel rooms could increase by 260%, from 154 to 554 rooms. C. City of Palm Desert Demographic Profile The population of the City of Palm Desert increased from 23,252 in 1990 to 41,155 by 2000, according to U.S. Census data. This represents an increase of approximately 76.9%. Census data for 2010 report a population of 48,445, representing an increase of 17.7% over the last decade. Palm Desert's 2011 population, as estimated by the California Department of Finance, is 49,111 residents. The City is also home to a significant seasonal population that is not factored into permanent population data. The City's General Plan indicates that the City's 1999 seasonal population was estimated at between 21,000 and 28,225 residents, and the City currently estimates its seasonal population to be 32,000.1 The median age in Palm Desert in 1990 was 42.3 years, which increased to 48.0 years in 2000. By 2010, the median age had increased to 53.0 years. The number of housing units in the City was 18,248 in 1990 and 28,021 in 2000. This figure reached 37,073 by 2010. The 2010 Census reports that 28.1 % of housing units in the City are for seasonal, recreational, or occasional use, further illustrating the importance of the seasonal population to the local economy. In 1990 there were an average of 2.18 persons per household in Palm Desert; by 2000, the average was 2.13. The 2010 Census indicates there is now an average of 2.08 persons per household in Palm Desert. The median household income in Palm Desert in 1990 was $37,315. This had risen by approximately 29.4% in 2000, to $48,316. The 2010 Census has not, as of this writing, released household income data; however, the City estimates its current median household income to be $59,728.2 The 1990, the U.S. Census reported that the median housing unit value in Palm Desert was $172,600. By 2000, this figure increased by 9.5%, to $189,100. In the second quarter of 2011, the median new home price in Palm Desert was $249,123, and the median value of an existing home was $278,996.3 City's website, Demographic Information, accessed October 25, 2011. 3 ,Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, PhD., October 2011. 16 'V Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS II. POTENTIAL REVENUES FROM ANNEXATION Annexation of either Scenario A or Scenario B has the potential to generate revenues to the City of Palm Desert. These revenues include taxes and fees based on real estate values, consumer spending, and per capita allocations from other agencies, among others. This analysis focuses on recurring revenues that the City would expect to receive on an annual basis. One-time fees from Developer Impact Fees are also included. Revenues will include monies that will be available through the General Fund, and can be spent for any activities or services allowed under the General Fund, and revenues that are restricted for spending on specific, predetermined services. All revenue sources are identified as being either restricted fund or General Fund revenues. A. General Fund The General Fund is the general operating fund of the City that accounts for all financial resources typically associated with government, except those which must be accounted for in restricted funds. General Fund revenues include property tax, property transfer tax, sales tax, transient occupancy tax and motor vehicle in -lieu fees. These revenue sources, as they relate to development in the proposed annexation area, have been estimated in this fiscal impact analysis. Property Tax The County of Riverside collects property tax annually at a rate of 1 % of assessed valuation. Property tax revenues are allocated between the County, the jurisdiction in which the land is located (if other than the County), and a variety of other public agencies. The City of Palm Desert is a No -Low Property Tax City and receives 0% of the County's 1% collection for land within its original boundaries. However, under current State law, the City receives 7% of the 17 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation County's 1 % collection on lands annexed after 1978. Property tax revenues go to the City's General Fund. Should annexation of Scenario A or B occur, the City would receive 7% of the 1 % property taxes collected for the area. It is important to note that property tax revenues will be reduced due to the City's mandated contributions to Education Revenue Augmentation Funds (ERAF). In fiscal year 1992, the State of California required cities and towns to shift a percentage of their property tax revenues to a countywide ERAF account to fund public schools. Based on prior annexations into the City of Palm Desert, the City receives approximately half (3.5%) of the 7% of property tax revenue collected by the County, and the remaining 3.5% is contributed to ERAF.4 In this analysis, properties flagged as "exempt" in Riverside County Assessor's parcel records are not included in property tax revenue calculations. In the annexation areas, these properties are largely owned by CVWD, California Department of Transportation (CalTrans), the County of Riverside, and Sun City Palm Desert Community Association. Additional properties owned by non-profit organizations receive tax exemptions and/or reductions. These include 90.4 acres owned by Xavier High School and 245.3 acres (Classic Club golf course, maintenance building, and clubhouse) owned by the Berger Foundation.5 Property tax revenue calculations have been adjusted to account for these cases. The fiscal analysis assumes that all taxable properties within the annexation areas are taxed at a rate of 1 % of valuation, and the collection rate is 100%. Future development in the potential annexation area will include residential, commercial and quasi -industrial development. In order to determine property value, and associated property tax generation for this development, a number of sources were utilized. The following table describes the average values of new residential, commercial and industrial development in Palm Desert. 4 Paul Gibson, Director of Finance/City Treasurer, City of Palm Desert, personal communication, October 27, 2011. 5 Based on property tax information provided by Mike Rover, Rover Armstrong, Berger Foundation representative, personal communication, November 29, 2011. 18 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 5 Average Value of New Construction in Palm Desert Type of Development Average Value Single-family Residential $249,123/unit Multi -family Residential $104,425/unit Commercial Lodging $110/sq. ft.2 or $68,512/room3 Commercial General/Retail $73/sq. ft. Office/Professional $169/sq. ft. Industrial $54/sq. ft. Golf Course $40,431/acre4 Source: 2" quarter 2011 median new home value, "Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, Ph.D., October 2011. Includes value of land and structure. 2 Based on building permit data provided by the Palm Desert Building & Safety Department, Nov. 2011. Includes value of structure only. 3 Based on comparable existing highway -serving hotel in the annexation area, per Riv. Co. Assessor's records, Oct. 2011. 4 Based on average of multiple developed golf course parcels in annexation area, per Riv. Co. Assessor's records, Oct. 2011. All other values are based on building permit data provided by the Palm Desert Building and Safety Department, November 2011. Includes value of structure only. Property Transfer Tax Property Transfer Tax revenues are generated when a change of property ownership occurs. For analysis purposes, estimated Property Transfer Tax revenues are calculated according to the instructions provided in the Riverside County "Guide to Preparing Fiscal Impact Reports." Factors set forth in the Guide include a tax rate of $1.10 per $1,000 (or 0.11%) of the unencumbered property value. The County retains 50% of the tax, and 50% is transmitted to the City in which the sale occurred.6 Upon the sale of a new unit, 100% of the unit's market value is subject to the property transfer tax. Upon change of ownership of an existing unit, the unencumbered value (assume average is 80%) of the property is subject to the property transfer tax. Change in ownership is assumed to begin in the fourth year of the project, and 10% of existing residential properties are assumed to change ownership per year. Property values are stated in year 2011 dollars. The average value of existing residential units in Sun City is $364,653.7 For existing units outside Sun City, and future residential units, an average value of $249,123 is used (see table above for source). A resale rate of 1% is assumed for single-family development. As discussed in Section III, this analysis assumes no re -sales during the build out timeframe for commercial and industrial development, as such sales are infrequent and sporadic. 6 Assessor's Office, County of Riverside, personal communication, November 9, 2011. 7 Riverside County Assessor's parcel data, October 2011. 19 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Sales Tax Sales tax in Riverside County is collected at a rate of 8.75% by the State of California. The table below describes how sales tax revenues are allocated among public agencies. Table 6 Components of the 8.75% Sales and Use Tax Rate Jurisdiction 7.25% State of California 1.00% Local (City/County) 0.50% Riverside County Transportation Commission Source: "Detailed Description of the Sales and Use Tax Rate," California State Board of Equalization; and Palm Desert Budget 2010/11, p. 2-2. Of the sales tax collected by the State, one percent (1.0%) is allocated to the jurisdiction in which the sale occurred. The fiscal analysis estimates total taxable sales that could be generated from commercial development at build out of each proposed annexation scenario, then calculates 1 % of taxable sales to determine how much sales tax revenue would be generated to the City. The fiscal model addresses taxable sales generated by existing and potential future development for each annexation scenario. Where taxable sales for existing development are known, actual figures are used. This includes annual taxable sales of $2.46 million generated by restaurants and golf pro shops within the boundaries of Sun City.s Where taxable sales are unknown, the analysis uses assumptions to estimate taxable sales. The analysis assumes that future retail commercial development will result in 22% lot coverage, and 90% of the net floor space will be dedicated to the sale of taxable goods. Average annual sales estimators from the Urban Land Institute's (ULI) 2008 "Dollars and Cents of Shopping Centers" are applied to the number of square feet dedicated to taxable sales. All existing and future commercial development in the annexation areas is considered Neighborhood Commercial in this analysis. The fiscal analysis calculates sales tax generation for Neighborhood Commercial development, based on the following ULI definition: • "Neighborhood Commercial" development includes neighborhood scale shopping centers conveniently located near residential areas, and a variety of smaller commercial centers, specialty retail shops and personal service businesses. These centers sell merchandise for daily living, such as food, drugs, and hardware. This type of development generates an annual average of $326.13 per square foot in taxable sales. In both scenarios, some lands are designated for "business park" development. It is expected that these lands will develop with a mix of light industrial and office uses. Although small amounts of sales tax revenue are likely to be generated by this development, the amount is expected to be negligible. As a result, business park and industrial development is assumed to generate no taxable sales in this analysis. 8 Paul Brady, Sun City Palm Desert Community Association, personal communication, October/November 2011. 20 M En Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Transient Occupancy Tax Transient Occupancy Tax (TOT) is collected from individuals when they occupy a hotel or motel room. In Palm Desert, TOT is collected at a rate of 9%. Potential TOT revenues are based on the number of hotel/motel rooms that are or could be constructed on annexation lands, the average nightly room rate charged, and the average occupancy rate. There are currently two hotels with a combined total of 154 hotel rooms in the annexation areas. The room rates at these properties are lower than the current average room rate in the City. Therefore, room rates have been calculated at $95.00 per night. In addition, annualized occupancy has been assumed to be 65%. Approximately 3 acres are designated for future hotel/motel development in SP-151, and this analysis assumes that two 125-room hotels will be constructed on these parcels in the future, for a total of 250 hotel rooms. An additional 3.1 acres are designated for hotel/motel development in the Mirasera Specific Plan, and this analysis assumes a single hotel/motel will contain 150 rooms. Therefore, future buildout of the annexation areas could result in the development of 400 new hotel rooms. Room rates for future development, particularly future development located near the Classic Club golf course, are expected to be consistent with current City average room rates of $145.00/night. This was determined using total hotel room sales for 2009/10 ($76 million), total number of hotel/motel rooms in Palm Desert (2,216), and an estimated occupancy rate of 65%. This rate is an average that reflects both the world -class hotels that characterize Palm Desert's resort and tourism industry, and more modest hotels/motels located throughout the city. The annexation areas contain 26.3 acres of developed RV Park parcels. In the City of Palm Desert, RV parks generate TOT revenue only during the high -tourism season from January through April, and only from visitors leasing for fewer than 30 days.9 Given the specific and limited nature of these parameters, this fiscal model does not estimate TOT revenue from RV parks. Motor Vehicle In -Lieu Fees Motor Vehicle In -Lieu Fees, or Motor Vehicle License Fees, are taxes on ownership of a registered vehicle. They are collected by the State of California and allocated to local jurisdictions on a monthly basis. These fees are levied on motorists in -lieu of a local property tax. During FY10/11, the City of Palm Desert received $167,177 in motor vehicle in -lieu fees.10 The State uses a City population figure of 52,067, which translates to $3.21 per capita annually. 9 Paul Gibson, Director of Finance/City Treasurer, City of Palm Desert, personal communication, December 2011. 10 Compilation of Motor Vehicle In -Lieu data from State Controller's Office, July 2010-June 2011. 21 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Other Revenue Sources Not Addressed The General Fund includes other revenue sources that will not be affected directly by annexation or will be one-time fees, and therefore, are not addressed in this analysis. These include timeshare mitigation fees, business license taxes, building and grading permit fees, plan check fees, and franchise fees. Timeshare development is not anticipated in the annexation area, so revenues from timeshare mitigation fees are not applicable to this project. Business license taxes will increase with annexation; however, these revenues are highly variable and development - specific, and estimates are not considered useful to this analysis. Building/grading permit fees and plan check fees are also based on specific development plans, which are determined at the time a project is proposed. B. Special Revenue Funds Special Revenue Funds are used to account for revenues/expenditures that are legally restricted for specific purposes. Each Special Revenue Fund that will be impacted by annexation is described below. 1. Annual Revenues The following Special Revenue Funds receive recurring revenues on an annual basis. Highway User Gas Tax Fund The State of California imposes a per gallon tax on all gasoline purchases. A portion of these revenues are allocated to counties and cities throughout the state. During FY10/11, the City of Palm Desert received $1,216,771 in Gas Tax revenue, or $23.37 per capita annually.11 Measure A Funds 12 Of the 8.75% sales tax collected in Riverside County, 0.50% is contributed to the Measure A Fund for regional and local transportation projects. Measure A funds are distributed by region; approximately 24% is distributed to the Coachella Valley region. Coachella Valley funds are further allocated for specific purposes: 50% for State highways and regional road improvements, 35% for local streets and roads, and 15% for transit (Sunline Transit Agency). Of the 35% for local streets and roads, about 20% goes to the City of Palm Desert. This percentage is based on a formula that accounts for Palm Desert's total number of dwelling units and total taxable sales. The trickle -down effect is illustrated below. 1 t Compilation of Highway Users Tax data from State Controller's Office, July 2010-June 2011. 12 Andrea Zureick, Riverside County Transportation Commission, personal communication, November 1, 2011. 22 W `terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation 8.75% sales tax 1 0.50% of sales tax goes to county -wide Measure A Fund 1 24% of county -wide Measure A Fund goes to Coachella Valley region 1 35% of Coachella Valley portion goes to local streets and roads 1 20% of Coachella Valley streets and roads fund goes to the City of Palm Desert Fire Fnnd The City's Fire Fund receives revenue from two sources: 1) Proposition A Fire Tax, and 2) Structural Fire Tax. Each is described below. In 1982, the residents of Palm Desert approved the Proposition A Fire Tax for upgrading the City's fire protection and prevention capabilities. Revenues are restricted for the purposes of obtaining, furnishing, operating and maintaining fire protection/prevention services, equipment and apparatus. Annual residential tax rates range from $30 per vacant residential lot, to $45 for rental apartments with 4+ units, to $60 per single-family dwelling unit. Non-residential rates are $60 for buildings equal to or less than 2,600 sq. ft. For larger non-commercial buildings, rates are building -specific and based on a formula that calculates fire flow requirements by square footage and takes into account the use of fire -resistive construction materials.13 This analysis estimates future Proposition A Fire Tax revenues for residential units, vacant parcels, and smaller non-commercial buildings. However, it does not attempt to project tax revenues for larger non-commercial buildings, given that the parameters required to project these revenues are building -specific and unknown at this time. The second revenue component of the Fire Fund is the Structural Fire Tax. For land not in a redevelopment area (this includes the proposed annexation areas), tax revenues are 5.87% of the 1 % property tax collected by Riverside County.14 They are remitted to the City's Fire Fund and restricted for the purpose of providing fire protection and prevention services. 2. One -Time Revenues The following Special Revenue Funds receive one-time revenues as a direct result of new development. These are typically paid to the City at the time building permits are issued. New development in the potential annexation areas would be required to contribute to these funds. Existing development would not pay these fees. Because they are one-time rather than recurring 13 Rates provided by Mark Dana, Willdan Financial, November 3, 2011. 14 "Comprehensive Annual Financial Report," City of Palm Desert Finance Department, June 30, 2010, page 186. 23 `%We `4✓ Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation annual fees, they are not included in Cost/Revenue Summary Tables for the annexation scenarios. Instead, they are summarized separately in Table 10 for Scenario A, and Table 12 for Scenario B. New Construction Tax Fund Revenues to this fund are from taxes collected upon application for a building permit for the construction of any new building, addition or trailer space in the city. Funds are restricted for the acquisition and development of public facilities, such as parks, playgrounds and public structures. Fees are $0.40 per square foot. Art in Public Places Fund This fund is reserved for maintaining public artwork throughout the City. For residential development, the fee is 0.25 of 1 % valuation of the structure; individual single-family dwellings not in a development are exempt for the first $100,000. For non-residential development, the fee is 0.50 of 1% valuation of the structure. Low Income Housing Mitigation Fee Fund Revenues from this fund pay for projects and programs that benefit low and moderate income households. All commercial development must pay this fee at the issuance of building permits, according to the fee schedule below. Table 7 Low Income Housing Mitigation Fees Development Type Fee General Mixed Commercial $1.00/sq. ft. Professional Office $0.50/sq. ft. Industrial $0.33/sq. ft. Resort Hotel $1,000/room Non -Resort Hotel $620/room Source: Palm Desert Building & Safety Department. Child Care Program Fund This fund is used for the purpose of providing child care programs. Fees are collected for all new non-residential square footage according to the fee schedule below. Table 8 Child Care Facilities Impact Mitigation Fees Development Type Fee Light Industrial $0.47/sq. ft. Hotel/Visitor Uses $0.77/sq. ft. Retail/Service Commercial $0.90/sq. ft. Office Uses $1.15/sq.ft. Source: Palm Desert Building Department. 24 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Traffic Signals Fund Revenues to this fund are collected for residential, commercial and industrial developments either at the time grading permits are paid or prior to the approval of the final map. Fees for residential development are $50 per unit. Fees for commercial development are $500 per 1,000 sq. ft. of building area, and fees for industrial development are $500 per acre.15 Planned Drainage Fund Drainage impact fees are collected to fund off -site drainage improvements.16 Fees are dependent upon the location of development, as described below: • South of Whitewater River = $4,000/acre • Between Whitewater and Sand Ridge = $1,500/acre • Between Sand Ridge and I-10 = $1,000/acre No fee has been established for land in the potential annexation areas (north of I-10). Since the annexation areas are most closely located to I-10, this analysis uses the $1,000/acre fee shown above. Park and Recreation Facilities Fund This fund is restricted for expenditures related to park development, maintenance and equipment. Fees are collected for residential subdivisions only, according to the following formula.17 Fee = (# of D.U.'s)(2.149)(5) X Current Land Value Per Acre 1,000 Other Funds Other Special Revenue Funds identified in the City Budget are impacted by new development, but do not apply to the annexation area. Landscape/Lighting District Funds only apply to specific neighborhoods or regions of the City for the purpose of providing landscape and lighting maintenance. These districts are established upon voter approval, and residents in the potential annexation area will contribute to such a fund only upon voter approval.18 Such funds are revenue -neutral and will not generate "extra" revenue for the City. New development in the potential annexation area will also generate revenues that are collected by the City, but transferred to other agencies. These include, but are not limited to, TUMF mitigation fees transmitted to CVAG, school impact mitigation fees remitted to the appropriate school district, and Strong Motion Instrumentation Program (SMIP) fees transmitted to the State. 15 Palm Desert Department of Public Works. 16 Ibid. 17 Ibid. 18 Lauri Aylaian, Community Development Director, City of Palm Desert, personal communication, October 26, 2011. 25 In Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation C. Investment Income The fiscal analysis assumes that the City will receive investment earnings on all annual revenues. To project potential investment earnings, the fiscal model applies the historical average interest rate of the 90-Day Treasury Bill. During the 25-year period from 1985 through 2010, the average interest earned on the 90-Day Treasury Bill was 4.39%.19 The fiscal model calculates investment income for all annual revenues calculated in this report. 19 Average historical interest rate determined using data from Table B.3, "Riverside County Guide to Preparing Fiscal Impacts Reports," January 1995; and "3-Month Treasury Constant Maturity Rates," from the Federal Reserve Board of Governors, as provided by The Financial Forecast Center. 26 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS III. POTENTIAL COSTS FROM ANNEXATION A. Potential Costs to the General Fund Annexation of developed and undeveloped acreage north of I-10 will not only generate additional revenues, but will also generate additional municipal costs. There will be expenditures for general government services, as well as the expansion and/or extension of infrastructure, utilities, roads and other public services, particularly public safety. The fiscal model projects the City's costs of providing general government services, public safety, and transportation/roadway maintenance to lands in the annexation area. Costs of General Government Costs of General Government are funded through the City's General Fund. Costs associated with general government include city-wide services, such as employee salaries and benefits, postage, printing, travel, equipment maintenance and repairs, contract services, computers, vehicles and other items necessary for the day-to-day functioning of government. They also include public and community services, such as code compliance and animal control, as well as municipal and support services. The City's 2011/12 Budget allocates $13,853,664 for the above -referenced general government services. This does not include expenditures for police protection and roadway maintenance, which are discussed and calculated separately below, and does not include other general government services that are provided by the City but will not be directly impacted by annexation. For residential development, this fiscal analysis translates the costs of general government to a per capita figure. Given the City's 2011 population of 49,111, the annual cost of providing 27 On CM Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation general government services to City residents is approximately $282 per capita. This factor is applied to the projected build out population of the annexation areas. The result is the estimated cost of providing general government services to residents living in the annexation areas. In order to capture costs for provision of General Government to commercial and industrial development, it was necessary to derive factors based on a per acre or per square foot basis. No such factors were available through the City. Therefore, this analysis uses factors provided in the Riverside County Guide, adjusted for inflation, to arrive at costs based on year 2011 dollars. Costs of Police Protection The same method used to calculate general government costs has been used to project costs of providing law enforcement services to existing and future residents in the annexation areas. The City contracts with the Riverside County Sheriff's Department for a wide range of police services, including patrol, traffic management, investigations, school resource programs, crime prevention, bike patrol and communications. The 2011/12 City Budget allocates $16,647,638 for police protection services. With a 2011 population of 49,111 residents, this equates to approximately $339 per resident annually. The fiscal model applies this per capita factor to the projected build out population of the annexation areas. Like General Government costs, to estimate the costs of providing police protection to commercial and industrial development, this analysis uses factors provided in the Riverside County Guide, adjusted for inflation. Costs of Roadway Maintenance Costs associated with repairing and maintaining future paved public roads in the annexation area are calculated using a per road mile cost factor. Costs associated with roadway maintenance include repairs and Americans with Disabilities Act retrofitting of sidewalks, resurfacing and restriping of roadways, and similar activities. These costs also include road improvement projects and the widening of roadways, which have averaged $6.1 million annually over the last ten years, as shown in the Table below 20. These costs are paid through the General Fund, and include funds from a reserve fund maintained by the Public Works Department for such projects. 20 City of Palm Desert Budget calculations f7r roadway construction and maintenance calculations, January, 2012. 28 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 9 Annual Road Maintenance Costs, 2002-2011 Year Costs 2002 $1,610,521 2003 $9,026,890 2004 $3,587,830 2005 $10,216,200 2006 $4,220,000 2007 $6,236,627 2008 $10,437,052 2009 $7,558,700 2010 $5,257,500 2001 $2,764,936 10 Year Average $6,091,626 With 159 paved public road miles in Palm Desert, this translates to $38,312 per road mile. Scenario A: Should annexation of Scenario A occur, maintenance of private roads within the gates of Sun City will continue to be the responsibility of the homeowners association. Outside of Sun City, there are three areas that currently include, or can be developed to include, paved roads: 1) existing paved roads, 2) future paved roads in the Mirasera Specific Plan, and 3) future paved roads elsewhere in the annexation area. Existing road miles are estimated at 10.5 miles and include Washington Street, Varner Road, 38th Avenue, 40th Avenue, and local roads that provide access to commercial and light industrial development near the I-10/Washington Street interchange. Buildout of the Mirasera Specific Plan will result in the construction of approximately 3.0 paved road miles. In addition, there are another 141.28 vacant acres available for development in Scenario A. To estimate the number of future road miles that could be constructed on these acres, the fiscal model uses a known road mile per square mile factor. There are currently 159 paved public road miles in the City of Palm Desert, and the existing City limits cover 25.5 square miles.21 This equates to an average of 6.2 road miles per square mile of land area. Therefore, at buildout, these 141.28 vacant acres (0.22 square miles) are projected to include approximately 1.5 paved road miles. At buildout, all of Scenario A could include an estimated total of 15.0 paved road miles. These estimates do not include commercial driveways, interior parking lots or other paved facilities that would be located on private property and be privately maintained. To project future roadway maintenance costs in Scenario A, the fiscal model applies the City's costs of $38,312/road mile to these 15.0 road miles. 21 ,Comprehensive Annual Financial Report," City of Palm Desert Finance Department, June 30, 2010, page 201. 29 E5 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Scenario B: The same methodology described above is used to project road maintenance costs for Scenario B. At buildout, Scenario B is projected to include: 1) 15.0 miles of paved roadways located within Scenario A boundaries (described above); 2) t3.5 miles of paved roadways currently existing outside Scenario A (largely limited to western Varner Road and Cook Street), and; 3) future roads constructed outside Scenario A during buildout, which are estimated below. There are approximately 301 vacant acres (0.47 square miles) outside Scenario A that could be built out to include paved roadways. Applying the ratio of 6.2 road miles per square mile of land area, this equates to 2.9 paved road miles. When added together with the miles described above, Scenario B is projected to include approximately 21.4 paved road miles at buildout. The fiscal model applies the City's costs of $38,312/road mile to these 21.4 road miles to estimate future maintenance costs. B. Potential Costs to the Fire Fund Annexation will also generate additional expenditures for fire and ambulance services. The City contracts with the Riverside County Fire Department for these services, which are accounted for in the Fire Fund (rather than the General Fund). The 2011/12 City Budget allocates $9,207,045 for Fire Fund expenditures. Costs of Fire Protection Services — Scenario A Parcels in Scenario A are currently served by Fire Station 81 on Washington Street, just north of Avenue 38. Upon annexation, the City would assume operation of this facility and its fire engine. The annual operating costs for this fire station are approximately $1.5 million.22 The station is adequately equipped, and no new or upgraded equipment, facilities or personnel would be required upon annexation. These operating costs will be assumed by the City under both Scenarios A and B. Costs of Fire Protection Services — Scenario B The eastern portion of Scenario B is served by Fire Station 81, as described above. Upon annexation, the City would assume annual costs of approximately $1.5 million for the operation of this fire station. The western portion of the annexation area in the vicinity of the Classic Club is currently served by a combination of three fire stations: 1) Station 71 in north Palm Desert, 2) Station 35 in Thousand Palms, and 3) Station 81 at Sun City (described above). A new fire station is planned in the north Palm Desert/College Park area, which is expected to directly serve this portion of the annexation area and other areas in northern Palm Desert .23 However, no construction date has been set; construction is expected to occur several years in the future. 22 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, November 14, 2011. 23 Ibid. 30 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Because the actual costs of providing fire protection services to the western portion of the annexation area are unknown at this time, the fiscal model estimates future costs on a per capita basis. The City's 2011-12 Budget allocates $9,946,973 for Fire Fund expenditures. With a current City population of 49,111 residents, this equates to $203 per resident annually. The model applies this per capita figure to the potential buildout population of all land outside the Scenario A boundaries. Costs of Ambulance Services Because the annexation area includes a stretch of I-10 extending from Cook Street to Washington Street, costs associated with providing ambulance services to emergency incidents on I-10 must be considered. Between 2006 and 2010, the Fire Department responded to 372 traffic collisions along I-10 between Monterey Avenue and Washington Street.24 This equates to an average of 74 incidents per year. Fire Department data gathered for the I-10 corridor in neighboring Indio show that, over a 3-year period, an average of 54% of traffic accidents resulted in patient transport via ambulance.25 The Fire Department considers this a reasonable assumption for that portion of I-10 that would be annexed into Palm Desert. This means that, each year, ambulance personnel could expect to respond to an average of 40 emergency incidents on I-10 in the annexation area. Ambulances would also provide emergency services to residents and development elsewhere in the annexation area. At the City's direction, a medic unit could be added to Fire Station 81 near Sun City. According to the Fire Department, first -year start-up costs for a medic unit total approximately $190,000.26 This includes the costs of an ambulance ($140,000), medic equipment ($40,000), and incidentals, such as radios and shoreline ($10,000). Annual operating costs for one ambulance staffed by 6 firefighter II medics are $940,944. These costs would be assumed by the City under both Scenarios A and B. 24 Data provided by Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 12, 2011. 25 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 25, 2011. 26 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 13, 2011. 31 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS IV. BUILDOUT ASSUMPTIONS AND COST/REVENUE ANALYSIS The build out assumptions used to calculate costs and revenues associated with potential annexation are presented in this section. A. Build Out Phasing This analysis assumes a 10-year build out projection for Scenario A. Nearly 68% of this annexation area is already built out. Where future development could occur, this analysis assumes an even distribution of development over the 10-year period. The analysis has been conducted in constant 2011 dollars; therefore, the relative costs and revenues will be as calculated at build out of the annexation area, regardless of exactly when build out occurs. A larger portion of the Scenario B annexation area is vacant and can accommodate future development. Therefore, this analysis assumes a 20-year build out for Scenario B. Depending on market conditions, growth and development in the City and the annexation area will rise and fall. An even distribution of development in 5-year increments has been assumed for the 20-year build out period. The analysis has been conducted in constant 2011 dollars; therefore, the relative costs and revenues will be as calculated at build out of the annexation area, regardless of when this occurs. That is to say that although inflationary and recessionary factors will affect the City's revenues and costs over time, the relative cost of providing services, the relative amount of revenues generated within the annexation area, and the surplus or shortfall to the City, are represented in this analysis. 32 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation B. Land Use Designations The annexation areas are currently under the jurisdiction of Riverside County, and much of the land contained within them is part of County -approved Specific Plans (see Exhibit 3). Where a Specific Plan has been approved, it is assumed that future build out will occur in accordance with the land use designations provided in the Specific Plan. Where development has taken place that is contrary to the original Specific Plan, as in the case of Xavier School in SP-225, existing development overrides the original Specific Plan. However, it is assumed that vacant land will still develop in accordance with the original Specific Plan. Where no Specific Plan exists, build out is assumed to occur in accordance with the Palm Desert General Plan land use map. C. Build out Calculations Residential For all residential land use categories, it is assumed that 15% of the currently vacant lands so designated would be needed for ancillary facilities, including streets, parking areas, parks and community open space. Based on this assumption, the development potential for these lands is equivalent to 85% of the maximum allowable density. Land designated for up to 12 dwelling units per acre is assumed to result in the development of single-family dwelling units, whether detached or attached. Land designated for 16 units per acre and higher is assumed to accommodate multi -family units. Scenario A: PD Medium Density Residential (4-10 du/ac) • total of 963 single-family units at build out (481.5 units in each five-year period) • Average value = $249,123 per unit Riv. Co. Medium -High Density Residential (5-8 du/ac) • total of 209 single-family units at build out (104.5 units in each five-year period) • Average value = $249,123 per unit Mirasera High Density Residential (12 du/ac) • total of 230 single-family units at build out (115 units in each five-year period) • Average value = $249,123 per unit Mirasera Mixed Use Residential (16 du/ac) • total of 142 multi -family units at build out (71 units in each five-year period) • Average value=$104,525 per unit Mirasera Very High Density Residential (20-25 du/ac) • total of 1,411 multi -family units at build out (705.5 units in each five-year period) • Average value = $104,425 per unit 33 En In Scenario B: Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation PD Low Density Residential (0-4 du/ac) • total of 244 single-family units at build out 61 units in each five-year period) • Average value = $249,123 per unit PD Medium Density Residential (4-10 du/ac) • total of 963 single-family units at build out (240.7 units in each five-year period) • Average value = $249,123 per unit Riv. Co. Medium -High Density Residential (5-8 du/ac) • total of 270 single-family units at build out (67.5 units in each five-year period) • Average value = $249,123 per unit Mirasera High Density Residential (12 du/ac) • total of 230 single-family units at build out (57.5 units in each five-year period) • Average value = $249,123 per unit Mirasera Mixed Use Residential (16 du/ac) • total of 142 multi -family units at build out (35.5 units in each five-year period) • Average value=$104,525 per unit Mirasera Very High Density Residential (20-25 du/ac) • total of 1,411 multi -family units at build out (352.7 units in each five-year period) • Average value = $104,425 per unit The average housing value for single-family units is based on the "Inland Empire Quarterly Economic Report" (October 2011). The average value for multi -family units is based on recent new multi -family residential construction in the City of Palm Desert. For residential property transfers, an annual resale rate of 1% change of ownership has been applied to single-family detached and attached units. These represent statistical averages that may be assumed to occur over the life of the annexation area, well beyond the build out year. This analysis also assumes that property transfer tax will begin in the 41h year of development (no resales in the first three years). The population of Sun City is estimated at 9,000 by the Sun City Palm Desert Community Association.27 The population of other dwelling units, existing and future, is based on 2010 U.S. Census data which indicates there are 2.08 persons/household in the City of Palm Desert. Commercial, Hotel, Business Park, and Industrial Commercial, business park, and industrial designations assume that building square footage will cover 22% of the lot. The remaining acreage accounts for driveways, surface parking lots, stormwater retention/detention facilities, and similar ancillary facilities. The following sub -sections summarize assumptions used to calculate various revenues that could be generated by build out of the annexation area. 27 Paul Brady, Sun City Palm Desert Community Association, November 2011. 34 M Commercial Scenario A: Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation • 149,977 square feet developed in each five-year period, for a total of 299,954 square feet at build out. • Per square foot value of $73, based on recent new commercial (general retail) construction valuation in the City of Palm Desert. Scenario B: • 211,309 square feet developed in each five-year period, for a total of 845,237 square feet at build out. • Per square foot value of $73, based on recent new commercial (general retail) construction valuation in the City of Palm Desert. The analysis assumes no revenues from transfer of commercial properties in the annexation area. Hotel Scenario A: • 25,000 square feet developed in each five-year period, for a total of 100,000 square feet at build out. • Per square foot value of $110, based on recent new hotel construction valuation in Palm Desert; or room value of $68,512, based on comparable existing highway -serving hotel development in the annexation boundary. Scenario B: • 75,000 square feet developed in each five-year period, for a total of 300,000 square feet at build out. • Per square foot value of $110, based on recent new hotel construction valuation in Palm Desert; or room value of $68,512, based on existing, comparable, highway -serving hotel development in the annexation boundary. The analysis assumes no revenues from transfer of hotel properties in the annexation area. Business Park Scenario A: • 224,247 square feet developed in each five-year period, for a total of 448,494 square feet at build out 35 M E5 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation • Average value of $169 per square foot, based on recent new office/business park construction valuation in Palm Desert. Scenario B: • 457,118 square feet developed in each five-year period, for a total of 1,828,475 square feet at build out. • Average value of $169 per square foot, based on recent new office/business park construction valuation in Palm Desert. The analysis assumes no revenues from transfer of business park properties in the annexation area. Light Industrial Scenario A: • 127,456.5 square feet developed in each five-year period, for a total of 254,913 square feet at build out. • Average value of $54 per square foot, based on new industrial construction valuation in Palm Desert.28 Scenario B: • 63,728 square feet developed in each five-year period, for a total of 254,913 square feet at build out. • Average value of $54 per square foot, based on new industrial construction valuation in the City of Palm Desert.29 The analysis assumes no revenues from transfer of light industrial properties in the annexation area. 28 Average based on 5 months of new industrial development that occurred in 2006. According to the Palm Desert Building & Safety Department, this is the most recent industrial building permit valuation data available. 29 Ibid. 36 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS V. Cost/Revenue Analysis A. Cost/Revenue Summaries The following conclusions are based on the assumptions described above. It should be noted that all amounts are in Year 2011 dollars and are subject to rounding. For Scenario A, the total projected annual costs and revenues to the City over each five-year phase of the 10-year build out period are shown in Table 10. This table also shows the total costs and revenues that are projected annually at build out of the annexation area. For Scenario B, these costs and revenues for the 20-year build out period are shown in Table 12. It should be noted that the cost/revenue summaries do not include revenues from developer impact fees, which are one-time fees that occur at the time permits are pulled. These projections are shown in Table 11 for Scenario A and Table 13 for Scenario B. All of the tables in this section are summary tables. More detailed calculations for each revenue and cost category can be found in Appendices A and B. 37 In r5 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 10 Total Potential Costs/Revenues Summary Table Annexation Scenario A Build out Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) ANNUAL REVENUES General Fund. Property Tax $836,415 $947,279 Property Transfer Tax $112,171 $125,579 Sales Tax $1,874,090 $2,314,298 Transient Occupancy Tax $544,596 $776,804 Motor Vehicle In -Lieu Fees $38,761 $48,632 Total Annual General Fund Revenue at Phase Build out: $3,406,032 $4,212,592 Restricted Funds: Highway Users Gas Tax $282,195 $354,059 Measure A Funds $15,742 $19,440 Prop. A Fire Tax $386,607 $467,813 Structural Fire Tax $1,402,787 $1,588,723 Total Annual Restricted Fund Revenue at Phase Build out: $2,087,331 $2,430 035 Interest Earnings: Total Annual Revenues at Phase Build out: $5,493,362 $6,642,628 Historic Average Interest Rate, 90-day Treasury Bill: 4.39% 4.39% Anticipated Interest on Revenues: $241,159 $291,611 Total Annual Revenues with Interest at Phase Build out: $5,734 521 $6,934 239 ANNUAL COSTS General Fund: General Government $3,413,867 $4,295,120 Police Protection $4,137,575 $5,251,483 Roadway Maintenance $488,478 $574,680 Total Annual General Fund Costs at Phase Build out: $8,039,920 $10,121 283 Restricted Funds: Fire Protection $1,500,000 $1,500,000 Ambulance Services $940,94431 $940,94426 Total Annual Restricted Fund Costs at Phase Build out: $2,440,94426 $2,440,944" Totals: Total Annual Costs at Phase Build out: $10,480,864 $12,562,227 Projected Annual Cashflow at Phase Build out: -$4,746,343 -$5,627,988 30 Does not include one-time (year 1) start-up ambulance costs of $190,000. 38 M M Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 11 Developer Impact Fee Revenues (One Time Only)' Annexation Scenario A Build out Phase Phase I Yrs 1-5) Phase II (Yrs 6-10 New Construction Tax $1,107,172 $1,107,172 Art in Public Places Fund $963,967 $963,967 Low Income Housing Mitigation Fee $350,661 $350,661 Child Care Program Fund $491,268 $491,268 Traffic Signals Fund $180,514 $180,514 Planned Drainage Fund $175,700 $175,700 Parks & Recreation Facilities Fund $1,823,916 $1,823,916 Total Developer Impact Fee Revenues at Phase Build out: $5,093,198 $5,093,198 Developer impact fees occur only once, at the time the unit is permitted. 39 E9 1 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 12 Total Potential Costs/Revenues Summary Table Annexation Scenario B Build out Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Phase III (Yrs 11-15) Phase IV (Yrs 16-20) ANNUAL REVENUES General Fund: Property Tax $828,082 $915,621 $1,003,160 $1,090,698 Property Transfer Tax $96,687 $97,980 $99,274 $100,568 Sales Tax $2,078,761 $2,698,991 $3,319,220 $3,939,446 Transient Occupancy Tax $621,998 $931,610 $1,241,221 50,832 Motor Vehicle In -Lieu Revenue $34,343 $39,789 $45,23550,682 L$6,73=2,226 Total Annual General Fund Revenue at Phase Build out: $3,659,871 $4,683,990 $5,708,110 Restricted Funds: Highway Users Gas Tax $250,028 $289,679 $329,330 $368,981 Measure A Funds $17,642 $22,672 $27,881 $33,091 Prop. A Fire Tax $351,356 $395,453 $439,549 $483,645 Structural Fire Tax $1,390,562 $1,537,377 $1,684,193 $1,831,008 Total Annual Restricted Fund Revenue at Phase Build out: $2,009,408 $2,245,180 $2,480,952 $2,716,725 Interest Earnings: Total Annual Revenues at Phase Build out: $5,669 279 $6,929,171 $8,189,062 $9,448,950 Historic Average Interest Rate, 90-day Treasury Bill: 4.39% 4.39% 4.39% 4.39% Anticipated Interest on Revenues: $248,881 $304,191 $359,500 $414,809 Total Annual Revenues with Interest at Phase Build out: $5 918,160 $7,233,361 $8,548 562 $9,863,759 ANNUAL COSTS General Fund. General Government $3,031,673 $3,517,392 $4,003,112 $4,488,831 Police Protection $3,701,198 $4,313,217 $4,925,236 $5,537,254 Roadway Maintenance $607,245 $678,122 $749 002 $819,879 Total Annual General Fund Costs at Phase Build out: $7,340,116 $8,508 731 $9 677 349 $10,845,965 Restricted Funds: Fire Protection $1,528,907 $1,557,408 $1,585,910 $1,614,411 Ambulance Services $940,94431 $940,94427 $940,94427 $940,94417 Total Annual Restricted Fund Costs at Phase Build out: $2,469,85127 $2,498,35227 $2,526,85427 $2,555,35527 Totals: Total Annual Costs at Phase Build out: $9,809 967 $11,007,084 $12,204,203 $1394011320 Projected Annual Cashflow at Phase Build out: -$3,891,807 -$3,773,723 -$39655,641 -$3,537,560 31 Does not include one-time (year 1) start-up ambulance costs of $190,000. 40 M Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 13 Developer Impact Fee Revenues (One time only)' Annexation Scenario B Build out Phase Phase I Yrs 1-5) Phase II (Yrs 6-10) Phase III Yrs 11-15) Phase IV (Yrs 16-20) New Construction Tax $811,863 $811,863 $811,863 $811,863 Art in Public Places Fund $787,633 $787,633 $787,633 $787,633 Low Income Housing Mitigation Fee $522,899 $522,899 $522,899 $522,899 Child Care Program Fund $803,567 $803,567 $803,567 $803,567 Traffic Signals Fund $187,230 $187,230 $187,230 $187,230 Planned Drainage Fund $162,475 $162,475 $162,475 $162,475 Parks & Recreation Facilities Fund $1,080,338 $1,080,338 $1,080,338 $1,080,338 Total Developer Impact Fee Revenues at Phase Build out: $4,356,004 $4,356,004 $4,356,004 $4,356.004 Developer impact fees occur only once, at the time the unit is permitted. 41 Iwo, Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation B. Conclusions 1. Scenario A Annexation of Scenario A will add an estimated 15,144 residents to the City of Palm Desert. The area is partially developed, and some costs and revenues will be realized almost immediately. Build out of land in Scenario A could potentially generate $6.9 million annually in revenues by the end of the 10-year build out timeframe. The largest single revenue generator is expected to be local Sales Tax ($2.3 million annually at 10-year build out), which is related to the second highest revenue source, Structural Fire Tax ($1.5 million annually at 10-year build out). These revenues are dependent upon commercial sales tax volume in the annexation area. The costs associated with serving this new area and its population are projected to be approximately $12.6 million annually at the end of the 10-year build out period. The most significant costs are those from Police Protection ($5.2 million annually at 10-year build out), closely followed by those from General Government operations ($4.2 million annually at 10-year build out). As such, build out of the area is expected to result in an annual revenue shortfall of approximately $4.7 million at the end of the first five-year period. The shortfall is projected to grow to $5.6 million by the end of the second five-year period. This is, in part associated with the high percentage of residential development in the area and the costs of providing services to residents, and a comparatively small percentage of commercial sales tax -generating development. Residential lands comprise nearly 47% of the entire annexation area, and commercial lands account for 4%. Developer impact fee (DIF) revenues are projected to be $5.09 million at phase build out of each phase. This assumes that development occurs evenly over the 10-year build out period. The highest sources of DIF revenue will be from the New Construction Tax and the Park & Recreation Facilities Fund, which will benefit from the future construction of new single-family and multi -family dwelling units in the annexation area, particularly those in the Mirasera Specific Plan. 2. Scenario B Annexation of Scenario B will result in a population increase of approximately 15,779 to the City of Palm Desert. The area is partially built out; some costs and revenues will be generated immediately, and others will be realized over the build out period. Projected revenues at the end of the 20-year build out period are projected to be approximately $9.86 million annually. The largest revenue source will be local Sales Tax ($3.9 million annually), followed by Structural Fire Tax ($1.8 million annually) and Transient Occupancy Tax ($1.5 million annually). 42 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation At the end of the 20-year build out period, annual costs are projected to be $13.4 million. As with Scenario A, the highest costs are associated with providing Police Protection ($5.5 million) and General Government services ($4.49 million) to existing and future residents. Build out of Scenario B is expected to generate an annual revenue shortfall of approximately $3.9 million at the end of the first five-year build out period. However, the shortfall is projected to fall slightly to $3.5 million at the end of the fourth five-year period. Like Scenario A, residential development accounts for a much greater percentage of land in the annexation area (37%) than commercial development (5%), and sales tax -generating opportunities are limited. One-time revenues resulting from Developer Impact Fees in Scenario B are expected to be $4.3 million at build out of each phase, assuming development occurs evenly over the 20-year build out period. These revenues will constitute a significant revenue source to the City over the 20- year build out period, but they are one-time revenues that will be realized only as new development occurs. 43 In M Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Appendix A Scenario A Detailed Cost and Revenue Tables 44 TN PD Potential Annexation Fiscal Analysis City of Palm Deset Ifte Scenario A: Prop. Tax, Struc. Fire Tax Property Tax Revenue - Scenario A From Existine Conditions Existing Conditions (developed parcels are taxed on value of land & structure; vacant parcels are taxed on value of land) Buildout Phase Phase I (Yrs. 1-5) Phase 1I (Yrs. 6-10) Calculation of Property Tax Revenue Total Value of allparcels' $2,087,295,429 $2,087,295,429 (subtract) Value of tax exempt parceIS2 $7,112,668 $7,112,668 Total value of taxable parcels $2,080,182,761 $2,080,182,761 Property Tax Rate I % I % Total Property Tax Collected by County at phase buildout $20,801,828 $20,801,828 Percent of Property Tax Allocated to Cit 's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $1,456, l 28 $1,456,128 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $728,064 $728,064 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $20,801,828 $20,801,828 Total Structural Fire Tax Revenue at phase buildout $1,221,067 $1,221,067 ' From Riverside County Assessors records, Oct. 2011. Includes value of land for vacant parcels, and value of land and structures for developed parcels. ' Tax exempt parcels, as flagged in Riverside County Assessors records, Oct. 2011. Includes 135.51 acres of land, primarily owned by CVWD, CA DOT, County of Riverside, and Sun City Palm Desert Community Association. From Future Residential Development Land Use Designation: Riv. Co. Medium High Density Residential (5- 8 dutac) Total No. Acres: 30.8 No. of Potential Buildout Units: 209' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) 8.0 8.0 Maximum potential units constructed during this phase 105 105 Number of total potential units constructed at buildout 105 209 Average value per unit' $249,123 $249,123 Total Value $26,088,161 $52,176,321 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $260,882 $521,763 Percent of Property Tax Allocated to Cit 's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $18,262 $36,523 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $9,131 $18,262 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by Count $260,882 $521,763 Total Structural Fire Tax Revenue at phase buildout $15,314 $30,627 'Assumes land will be developed at 85% of the maximum density permitted. ' "Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. Page 1 of 48 TN PI) Potential Annexation Fiscal Analysis �I4q --� City of Palm Desert vAIW Scenario A: Prop. Tax, Struc. Fire Tax From Future Residential Development Land Use Designation: PD Medium Density Residential (4-10 du/ac) Total No. Acres: 1133 No. of Potential Buildout Units: 963' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Number of acres developed during phase 56.7 56.7 Maximum density permitted (units/acre) 10.0 10.0 Maximum potential units constructed during this phase 482 482 Number of total potential units constructed at buildout 482 963 Average value per unit $249,123 $249,123 Total Value $119,958,953 $239,917,905 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $1,199,590 $2,399,179 Percent of Property Tax Allocated to Cit 's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $83971 $167,943 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $41,986 $83,971 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $1,199,590 $2,399,179 Total Structural Fire Tax Revenue at phase buildout $70,416 $140,832 'Assumes land will be developed at 85% of the maximum density permitted. ' "Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. From Future Residential Development Land Use Designation: Mirasera High Density Residential (12 duiac) Total No. Acres: 22.6 No. of Potential Buildout Units: 230' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Number of acres developed during phase 11.3 11.3 Maximum density permitted (units/acre) 12.0 12.0 Maximum potential units constructed during this phase 115 115 Number of total potential units constructed at buildout 115 231 Average value per unit' $249,123 $249,123 Total Value $28,713,917 $57,427,834 Property Tax Rate I % 1 % Total Property Tax Collected by County at Phase Buildout $287,139 $574,278 Percent of Pro ert Tax Allocated to City's General Fund 7.0% 7.0% to ERAF) $20,1001 $40,199 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $10,050 $20,100 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $287,139 $574,278 Total Structural Fire Tax Revenue at phase buildout $16,855 $33,710 'Assumes land will be developed at 85% of the maximum density permitted. 2 'Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. Page 2 of 48 L J i i ef,- ! I.,- X :Vl/>/. 1 tl TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tax, Struc. Fire Tax From Future Residential Development Land Use Designation: Mirasera Mixed Use Residential (16 duiac) Total No. Acres: 10.5 No. of Potential Buildout Units: 142' Buildout Phase Phase I (Yrs. 1-5) Phase II (Yrs. 6-10) Number of acres developed during phase 5.3 5.3 Maximum density permitted (units/acre) 16.0 16.0 Maximum potential units constructed during this phase 71 71 Number of total potential units constructed at buildout 71 143 Average value per unit' $104,425 $104,425 Total Value $7,455,945 $14,911,890 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $74,559 $149,119 Percent of Property Tax Allocated to Cit 's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $5,219 $10,438 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $2,610 $5,219 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $74,559 $149,119 Total Structural Fire Tax Revenue at phase buildout $4,377 $8,753 'Assumes land will be developed at 85% of the maximum density permitted. ' Based on building permit data provided by the Palm Desert Building and Safety Dept., Nov. 2011. Includes value of structure only. From Future Residential Development Land Use Designation: Mirasera Very High Density Residential (20- 25 duiac) Total No. Acres: 66.4 No. of Potential Buildout Units: 1,411' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Number of acres developed during phase 33.2 33.2 Maximum density permitted (units/acre) 25.0 25.0 Maximum potential units constructed during this phase 706 706 Number of total potential units constructed at buildout 706 1,411 Average value per unit' $104,425 $104,425 Total Value $73,671,838 $147,343,675 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $736,718 $1,473,437 Percent of Promtz Tax Allocated to City',General Fund 7.0% 7.0% to ERAF) $51,570 $103,141 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $25,785 $51,570 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.8717 Property Tax Revenue collected by County $736,718 $1,473,437 Total Structural Fire Tax Revenue at phase buildout $43,2451 $86,491 'Assumes land will be developed at 85% of the maximum density permitted. ' Based on building permit data provided by the Palm Desert Building and Safety Dept., Nov. 2011. Includes value of structure only. Page 3 of 48 y� TN PD Potential Annexation Fiscal Analysis IZX City of Palm Desert Scenario A: Prop. Tax, Struc. Fire Tax From Future Commercial Development Land Use Designation: Commercial Total No. Acres: 313 No. of Potential Buildout Sq. Ft.: 299,954' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Number of acres developed during phase 15.7 15.7 Percentage of lot covered by structure' 22% 22% Square footage constructed during this phase 149,977 149,977 Square footage constructed at phase buildout 149,977 299,954 Average value per square foot' $73 $73 Total Value $10,948,327 $21,896,654 Property Tax Rate 1 % I % Total Property Tax Collected by County at Phase Buildout $109,483 $218,967 Percent of Property Tax Allocated to Cit 's General Fund 7% 7% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $7,6641 $15,328 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at p hase buildout $3,832 $7,664 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% IProperty Tax Revenue collected by County $109,483 $218,967 Total Structural Fire Tax Revenue at phase buildout $6,427 $12,853 'Assumes structure will account for 22% lot coverage. Remainder of lot will include access roads, parking facilities, landscaping, and other ancillary uses. Based on compilation of building permit data provided by Palm Desert Building & Safety Department, October 2011. From Future Hotel Development Land Use Designation: Commercial (Hotel) Total No. Acres: 3.1 No. of Potential Buildout Sq. Ft.: 100,000' No. of Potential Room: 150 Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) No. of rooms constructed at phase buildout 75 150 Average value per room' $68,512 $68,512 Total Value $5,138,400 $10,276,800 Property Tax Rate I % I % Total Property Tax Collected by County at Phase Buildout $51,384 $102,768 Percent of Property Tax Allocated to Cit 's General Fund 7% 7% to ERAF) $3,597 $7,194 Percentage deducted for ERAF Contributions 3.5%1 3.5% Total Amount Allocated to City General Fund at phase buildout $1,7981 $3,597 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87%1 5.87% Property Tax Revenue collected by County 1 $51,3841 $102,768 Total Structural Fire Tax Revenue at phase buildout 1 $3,0161 $6,032 'Terra Nova estimate based on single hotel and available acreage. 2 Based on comparable existing highway -serving hotel in the annexation area, per Riv. Co. Assessor's records, Oct. 2011. Page 4 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm e Scenario A: Prop. Tax, Struc. Fire Tax From Future Business Park Development Land Use Designation: Business Park Total No. Acres: 46.8 No. of Potential Buildout S . Ft.: 448,494` Buildout Phase Phase I (Yrs. 1-5) Phase II (Yrs. 6-10) Number of acres developed during phase 23.4 23.4 Percentage of lot covered by structure' 22% 22% Square footage constructed during this phase 224,247 224,247 Square footage constructed at phase buildout 224,247 448,494 Average value per square foot'- $169 $169 Total Value $37,897,723 $75,795,445 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $378,977 $757,954 Percent of Property Tax Allocated to Cit 's General Fund 7% 7% to ERAF) $26,528 $53,057 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $13,264 $26,528 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% JProperty Tax Revenue collected by County $378,977 $757,954 Total Structural Fire Tax Revenue at phase buildout $22,246 $44,492 'Assumes structure will account for 22% lot coverage. Remainder of lot will include access roads, parking facilities, landscaping, and other Based on compilation of building permit data provided by Palm Desert Building & Safety Department, October 2011. From Future Industrial Development Land Use Designation: Industrial Total No. Acres: 26.6 No. of Potential Buildout Sq. Ft.: 254,913' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Number of acres developed during phase 13.3 13.3 Percentage of lot covered by structure' 22% 22% Square footage constructed during this phase 127,457 127,457 Square footage constructed at phase buildout 127,457 254,913 Average value per square foot' $54 $54 Total Value $6,882,654 $13,765,308 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $68,827 $137,653 Percent of Property Tax Allocated to Cit 's General Fund 7% 7% to ERAF) $4,818 $9,636 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $2,409 $4,818 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Pro erty Tax Revenue collected by County $68,827 $137,653 Total Structural Fire Tax Revenue at phase buildout $4,040 $8,080 'Assumes structure will account for 22% lot coverage. Remainder of lot will include access roads, parking facilities, landscaping, and other ' Based on compilation of building permit data provided by Palm Desert Building & Safety Department, October 2011. Page 5 of 48 M TN PD Potential Annexation Fiscal Analysis City of Palm Desert ` 40 Scenario A: Prop. Tax, Struc. Fire Tax Property Tax Revenue Summary Table Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Total property tax revenue to City General Fund at phase buildout from existing development $728,064 $728,064 ...from future Riv. Co. Medium High Density residential development $9,131 $18,262 ...from future PD Medium Density residential development $41,986 $83,971 ...from future Mirasera High Density residential development $10,050 $20,100 ...from future Mirasera Mixed Use residential development $2,610 $5,219 ...from future Mirasera Very High Density residential development $25,785 $51,570 ...from future commercial development $3,832 $7,664 ...from future hotel development $1,798 $3,597 ...from future business park development $13,264 $26,528 ...from future industrial -light development $2,409 $4,818 Subtotal $838,929 $949,793 Adjustment for loss of property tax revenue on vacant Single -Family parcels after development occurs Value of land on currently vacant (but developable) Single -Family Residentialparcels' $14,365,301 $14,365,301 City's Property Tax revenue on value of land for currently vacant (but develo able) Single -Family residentialparcels' $5,028 $5,028 (subtract) Property Tax Revenue Loss from line above, phased over entire buildout timeframe $2,514 $2514 Total Property Tax Revenue at Phase Buildout $836,415 $947,279 ' Refers to parcels that are currently vacant, but developable in the future for single-family residential development. Existing Conditions table includes property tax revenue currently generated by these parcels on their land value. Future Development tables projects future property tax revenue generated by these parcels on their land value and structure value. To avoid double -counting property tax revenue from land value, the current land value of these parcels is subtracted here. Page 6 of 48 CM 140 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax Property Transfer Tax Revenue - Scenario A From Existing Residential Development Existing Single -Family Residential Units Buildout Phase No. of Acres: 792 Phase I Phase II No. of Dwelling Units: 4985 (Yrs.l-5) (Yrs.6-10) lExisting Units(80% of market value is subject to tax) Number of units existing in 1 st year of this phase 4985 4985 Number of existing units changing ownership in 1 st year of this phase 499 499 Number of units existing in 2nd year of this phase 4985 4985 Number of existing units changing ownership in 2nd year of this phase 499 499 Number of units existing in 3rd year of this phase 4985 4985 Number of existing units changing ownership in 3rd year of this phase 499 499 Number of units existing in 4th year of this phase 4985 4985 Number of existing units changing ownership in 4th year of this phase 499 499 Number of units existing in 5th year of this phase 4985 4985 Number of existing units changing ownership in 5th year of this phase 499 499 Total number of units existing during this phase 4985 4985 Total number of existing units changing ownership during this phase 2493 2493 Property Valueper dwelling unit` $364,653 $364,653 Unencumbered Value per unit (80% of value) $291,722 $291,722 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $727,118,082 $727,118,082 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $799,830 $799,830 Percent of Property Transfer Tax allocated to Palm Desert 50% 50% Total Property Transfer Tax Allocated to Palm Desert General Fund at phase buildout (for 5-year period) $399,915 $399,915 Number of years this phase ( to get annual average) 5 5 Total Annual Property Transfer Tax Allocated to Palm Desert at Phase Buildout $79,983 $79,983 ' Average value of residential units in Sun City, based on Riverside County Assessors data, includes value of land and structure. Page 7 of 48 „4WO� TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax From Future Residential Development Land Use Designation: PD Medium Density Residential (4-10 dulac) No. of acres: 1133 No. of potential buildout units: 963' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) New Units (100% of market value is subject to tax) Number of acres developed during phase 56.7 56.7 Maximum Density permitted (units/acre) 10 10 Number of new units during thisphase' 482 482 Market Value per unit $249,123 $249,123 Amount Subject to Property Transfer Tax for all new units sold $119,958,953 $119,958,953 Existing Units(80% of market value is subject to tax) Number of units constructed in 1 st year of this phase 96 578 Number of existing units changing ownership in 1 st year of this phase 0 58 Number of units constructed by end of 2nd year of this phase 192 674 Number of existing units changing ownership in 2nd year of this phase 0 67 Number of units constructed by end of 3rd year of this phase 288 770 Number of existing units changing ownership in 3rd year of this phase 0 77 Number of units constructed by end of 4th year of this phase 384 866 Number of existing units changing ownership in 4th year of this phase 38 87 Number of units constructed by end of 5th year of this phase 482 849 Number of existing units changing ownership in 5th year of this phase 48 85 Total number of existing units changing ownership during this phase 87 374 Market Value per unit $249,123 $249,123 Unencumbered Value per unit (80% of market value) $199,298 $199,298 $17,249,775 $74,439,945 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $137,208,727 $194,398,898 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $150,930 $213,839 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $75,465 $106,919 Number of years this phase (to get annual average) 5 5 Total annual Property Transfer Tax allocated to Palm Desert at phase buildout $15,093 $21,384 Page 8 of 48 r �. N PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax From Future Residential Development Land Use Designation: Medium -High Density Residential (5-8 duiac) No. of acres: 30.8 No. of potential buildout units: 209` Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs.6-10) New Units (100% of market value is subject to tax) Number of acres developed during phase 15.4 15.4 Maximum Density permitted (units/acre) 8 8 Number of new units during thisphase' 105 105 Market Value per unit $249,123 $249,123 Amount Subject to Property Transfer Tax for all new units sold $26,088,161 $26,088,161 Existing Units(80% of market value is subject to tax) Number of units constructed in 1st year of this phase 20 125 Number of existing units changing ownership in 1 st year of this phase 0 12 Number of units constructed by end of 2nd year of this phase 40 145 Number of existing units changing ownership in 2nd year of this phase �ji 14 Number of units constructed by end of 3rd year of this phase 60 165 Number of existing units changing ownership in 3rd year of this phase 0 16 Number of units constructed by end of 4th year of this phase 80 185 Number of existing units changing ownership in 4th year of this phase 8 18 Number of units constructed by end of 5th year of this phase 105 184 Number of existing units changing ownership in 5th year of this phase 10 18 Total number of existing units changing ownership during this phase 18 80 Market Value per unit $249,123 $249,123 Unencumbered Value per unit (80% of market value) $199,298 $199,298 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $3,681,440 $16,001,270 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $29,769,601 $42,089,430 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $32,747 $46,298 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $16,373 $23,149 Number of years this phase (to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $3,275 $4,630 Page 9 of 48 �f 0r ec I TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax From Future Residential Development Land Use Designation: Mirasera High Density Residential (12 du/ac) No. of acres: 22.6 No. of potential buildout units: 230' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs.6-10) New Units (100% of market value is subject to tax) Number of acres developed during phase 11.3 11.3 Maximum Density permitted (units/acre) 12 12 Number of new units during thisphase' 115 115 Market Value per unit $249,123 $249,123 Amount Subject to Property Transfer Tax for all new units sold $28,713,9171 $28,713,917 Existing Units(80% of market value is subject to tax) Number of units constructed in 1 st year of this phase 23 138 Number of existing units changing ownership in 1 st year of this phase 0 14 Number of units constructed by end of 2nd year of this phase 46 161 Number of existing units changing ownership in 2nd year of this phase �ji 16 Number of units constructed by end of 3rd year of this phase 69 184 Number of existing units changing ownership in 3rd year of this phase {ji 18 Number of units constructed by end of 4th year of this phase 92 207 Number of existing units changing ownership in 4th year of this phase 9 21 Number of units constructed by end of 5th year of this phase 115 203 Number of existing units changing ownership in 5th year of this phase 12 20 Total number of existing units changing ownership during this phase 21 89 Market Value per unit $249,123 $249,123 Unencumbered Value per unit (80% of market value) $199,2981 $199,298 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $4,130,659 $17,818,074 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $32,844,576 $46,531,991 Property Transfer Tax Rate 0.11 % 0. l 1 % Total Property Transfer Tax Collected at Phase Buildout $36,129 $51,185 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $18,065 $25,593 Number of years this phase ( to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $3,613 $5,119 Page 10 of 48 n Future Residential Developn d Use Designation: Mirasera M of acres: 10.5 of potential buildout units: 142' TN PD Potential Annexation. Fiscal Analysis fi City of Palm Desert Scenario A: Prop. Transfer Tax Buildout Phase Phase I Phase II Yrs.1-5) (Yrs.6-la New Units (100% of market value is subject to tax) Number of acres developed during phase 5.3 5.3 Maximum Density permitted (units/acre) 16 16 Number of new units during this phase' 71 71 Market Value per unit $104,425 $104,425 Amount Subject to Property Transfer Tax for all new units sold $7,455,9451 $7,455,945 Existine Units(80% of market value is suhiect to tax) Number of units constructed in 1 st year of this phase 14 85 Number of existing units changing ownership in 1 st year of this phase 0 9 Number of units constructed by end of 2nd year of this phase 28 99 Number of existing units changing ownership in 2nd year of this phase 0 10 Number of units constructed by end of 3rd year of this phase 42 113 Number of existing units changing ownership in 3rd year of this phase 0 11 Number of units constructed by end of 4th year of this phase 56 127 Number of existing units changing ownership in 4th year of this phase 6 13 Number of units constructed by end of 5th year of this phase 71 126 Number of existing units changing ownership in 5th year of this phase 7 13 Total number of existing units changing ownership during this phase 13 55 Market Value per unit $104,425 $104,425 Unencumbered Value per unit (80% of market value) $83,540 $83,540 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $1,064,300 $4,608,066 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $8,520,245 $12,064,011 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $9,372 $13,270 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $4,686 $6,635 Number of years this phase (to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $937 $1,327 Page 11 of 48 y#of TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax From Future Residential Development Land Use Designation: Mirasera Very High Density Residential (20-25 du/ac) No. of acres: 66.4 No. of potential buildout units: 1 /4H' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs.6-10) New Units (100% of market value is subject to tax) Number of acres developed during phase 33.2 33.2 Maximum Density permitted (units/acre) 25 25 Number of new units during thisphase' 706 706 Market Value per unit $104,425 $104,425 Amount Subject to Property Transfer Tax for all new units sold $73,671,8381 $73,671,838 Existing Units(80% of market value is subject to tax) Number of units constructed in 1st year of this phase 141 847 Number of existing units changing ownership in 1 st year of this phase 0 85 Number of units constructed by end of 2nd year of this phase 282 988 Number of existing units changing ownership in 2nd year of this phase �}i 99 Number of units constructed by end of 3rd year of this phase 423 1129 Number of existing units changing ownership in 3rd year of this phase (}i 113 Number of units constructed by end of 4th year of this phase 564 1270 Number of existing units changing ownership in 4th year of this phase 56 127 Number of units constructed by end of 5th year of this phase 706 1245 Number of existing units changing ownership in 5th year of this phase 71 125 Total number of existing units changing ownership during this phase 127 548 Market Value per unit $104,425 $104,425 Unencumbered Value per unit (80% of market value) $83,5401 $83,540 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $10,605,403 $45,754,858 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $84,277,241 $119,426,696 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $92,705 $131,369 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $46,352 $65,685 Number of years this phase (to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $9,270 $13,137 Page 12 of 48 *40 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax Property Transfer Tax Revenue Summary Table Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Total tax revenue from existing resid. development '$79,983 $79,983 ...from future PD Medium Density residential development $15,093 $21,384 ...from future Riv. Co. Medium -High Density residential development $3,275 $4,630 ...from future Mirasera High Density residential development $3,613 $5,119 ...from future Mirasera Mixed Use residential development $937 $1,327 ...from future Mirasera Very High Density residential development $9,270 $13,137 Total property transfer tax revenue at phase buildout $112,171 $125,579 Page 13 of 48 En Sales Tax Revenue Measure A Revenue - Scenario A From Existing Commercial Development wryi TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Sales Tax, Measure A Lana useVesignauon: commerclai (does not Inc u e fioley No. of Acres: 50.1 Square Feet of Bldg. Space: 480,1181 Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Data Number of acres developed 50.11 50.1 Number of square feet constructed' 480,1181 480,118 Calculation of Total Leasable Square Feet Percent leasable space 90% 90% No. of leasable square feet 1 432,1061 432,106 "Neighborhood Commercial" Development' Percent of leasable s . ft. considered Neighborhood Commercial 100% 100% No. of leasable s . ft. considered Neighborhood Commercial 432,106 432,106 Ave. annual sales volume per s . ft.' $326.13 $326.13 Total annual sales from Neighborhood Commercial develo ment $140,922,795 $140,922,795 Calculation of Total Sales Tax Revenues Total annual sales at phase buildout $140,922,795 $140,922,795 Total annual sales generated by commercial venues within Sun City' $2,465,338 $2,465,338 Total annual sales generated by all existing commercial development $143,388,133 $143,388,133 County sales tax rate 1 % 1 % Annual sales tax revenue collected by City at phase buildout $1,433,881 $1,433,881 Calculation of Measure A Revenues° County -wide Measure A tax rate 0.50% 0.50% Amount collected for County -wide Measure A fund $716,941 $716,941 Percent allocated to the Coachella Valley region 24% 24% Amount allocated to the Coachella Valley region $172,066 $172,066 Percent allocated to local streets and roads 35% 35% Amount allocated to local streets and roads 1 $60,2231 $60,223 Percent allocated to City of Palm Desert 20% 20% Amount allocated to City of Palm Desert $12,0451 $12,045 Assumes building covers 22% of lot. The remaining area is used for landscaping, parking, roadway access, and other ancillary uses. ' Based on definitions and average sales volumes for U.S. Neighborhood Shopping Centers (Table 6-t), provided in "Dollars and Cents of Shopping Centers," Urban Land Institute, 2008. Data provided by Sun City Palm Desert Community Association. ° Measure A distribution data provided by Riverside County Transportation Commission. 14 of 48 CM *40 TN PD Potential Annexation Fiscal Analysis From Future Commercial Development City of Palm Desert Scenario A: Sales Tax, Measure A Land Use Designation: Commercial No. of Acres: 31.3 Square Feet of Bldg. Space: 299,954' Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Data Number of acres developed during this phase 15.7 15.7 Number of square feet constructed during thisphase' 149,977 149,977 Number of acres developed at phase buildout 15.7 31.3 Number of square feet constructed at phase buildout 149,977 299,954 Calculation of Total Leasable Square Feet Percent leasable space 90% 90% No. of leasable square feet 134,9791 269,959 "Neighborhood Commercial" Development, Percent of leasable s . ft. considered Neighborhood Commercial 100% 100% No. of leasable s . ft. considered Neighborhood Commercial 134,979 269,959 Ave. annual sales volume per s . ft.z $326.13 $326.13 Total annual sales from Neighborhood Commercial development $44,020,823 $88,041,645 Calculation of Total Sales Tax Revenues Total annual sales at phase buildout $44,020,823 $88,041,645 County sales tax rate 1% 1% Annual sales tax revenue collected by City at phase buildout $440,208 $880,416 Calculation of Measure A Revenues' County -wide Measure A tax rate 0.50% 0.50% Amount collected for County -wide Measure A fund $220,104 $440,208 Percent allocated to the Coachella Valley region 24% 24% Amount allocated to the Coachella Valley region $52,825 $105,650 Percent allocated to local streets and roads 35% 35% Amount allocated to local streets and roads $18,489 $36,977 Percent allocated to City of Palm Desert 20% 20% Amount allocated to City of Palm Desert $3,698 $7,395 'Assumes building covers 22% of lot. The remaining area is used for landscaping, parking, roadway access, and other ancillary uses. ' Based on definitions and average sales volumes for U.S. Neighborhood Shopping Centers (Table 6-1), provided in "Dollars and Cents of Shopping Centers," Urban Land Institute, 2008. ' Based on Measure A distribution data provided by Riverside County Transportation Commission. Sales Tax Revenue Summary Table Buildout Phase Phase 1 (Yrs 1-5) Phase 1I Yrs 6-10) Total sales tax revenue from existing commercial development $1,433,881 $1,433,881 Total sales tax revenue from future commercial development $440,208 $880,416 Total sales tax revenue from all development $1,874,090 $2,314,298 Measure A Revenue Summary Table Buildout Phase Phase I (Yrs 1-5) Phase It (Yrs 6-10) Total Measure A revenue from existing commercial development $12,045 $12,045 Total Measure A revenue from future commercial development $3,698 $7,395 Total Measure A revenue from all development $15,742 $19,440 15 of 48 cm TN f*o0otential Annexation Fiscal Analysis City of Palm Desert Scenario A: TOT Transient Occupancy Tax Revenue - Scenario A From Existing Hotel Development Land Use Designation: Commercial (Hotel) Total No. Acres: 3.6 Existing Rooms: 154 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed 3.601 3.60 Number of rooms developed 1541 154 Calculation of TOT Revenue Average room rate ($ per night) $95.00 $95.00 Average occupancy rate 65% 65% Annual revenue from all rooms at phase buildout $3,470,968 $3,470,968 City's Transient Occupancy Tax Rate 9% 9% City's annual TOT revenue at phase buildout $312,3871 $312,387 From Future Hotel Development Land Use Designation: Mirasera Mixed Use Hotel Total No. Acres: 3.1 Potential Rooms: 150 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed 1.551 1.55 Number of rooms developed 751 150 Calculation of TOT Revenue Average room rate ($ per night) $145.00 $145.00 Average occupancy rate 65% 65% Annual revenue from all rooms at phase buildout $2,580,094 $5,160,188 City's Transient Occupancy Tax Rate 9% 9% City's annual TOT revenue at phase buildout $232,2081 $464,417 Page 16 of 48 qLn TN potential Annexation Fiscal Analysis City of Palm Desert Scenario A: TOT Transient Occupancy Tax Revenue Summary Table Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Annual TOT Revenue from existing hotels at phase buildout $312,387 $312,387 Annual TOT Revenue from future hotels at phase buildout $232,208 $464,417 Total Annual TOT Revenue from all development $544,5961 $776,804 Page 17 of 48 ✓ TN *wWotential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Motor Vehicle In -Lieu Revenue - Scenario A From Existing Development Land Use Designation: SP-281 Residential Total No. Acres: 792.0 No. of Existing Units: 4,985 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 792 792 Number of total units developed at phase buildout 4,985 4,985 Calculation of Annual Motor Vehicle In -Lieu Revenue Existing Population' 9,000 9,000 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $28,890 $28,890 ' Estimated population provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. From Future Development Land Use Designation: PD Medium Density Residential (4-10 du/ac) Total No. Acres: 113.3 No. of Potential Buildout Units: 963 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density permitted (units/acre) 10 10 Maximum potential units constructed during this phase 482 482 Number of total potential units constructed at phase buildout 482 963 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 1,002 2,003 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $3,215 $6,430 ' 2010 U.S. Census. Page 18 of 48 potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu From Future Development Land Use Designation: Riv. Co. Medium -High Density Residential (5-8 du/ac) Total No. Acres: 30.8 No. of Potential Buildout Units: 209 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) 8 8 Maximum potential units constructed during this phase 105 105 Number of total potential units constructed at phase buildout 105 209 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 218 436 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $699 $1,398 ' 2010 U.S. Census. From Future Development Land Use Designation: Mirasera High Density Residential (12 du/ac) Total No. Acres: 22.6 No. of Potential Buildout Units: 230 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 11.3 11.3 Maximum density permitted (units/acre) 12 12 Maximum potential units constructed during this phase 115 115 Number of total potential units constructed at phase buildout 115 231 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 240 479 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $770 $1,539 ' 2010 U.S. Census. Page 19 of 48 +` lbTN N&OPotential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu From Future Development Land Use Designation: Mirasera Mixed Use Residential (16 du/ac) Total No. Acres: 10.5 No. of Potential Buildout Units: 142 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted (units/acre) 16 16 Maximum potential units constructed during this phase 71 71 Number of total potential units constructed at phase buildout 71 143 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 149 297 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $477 $953 ' 2010 U.S. Census. From Future Development Land Use Designation: Mirasera Very High Density Residential (20-25 du/ac) Total No. Acres: 66.4 No. of Potential Buildout Units: 1,411 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density permitted (units/acre) 25 25 Maximum potential units constructed during this phase 706 706 Number of total potential units constructed at phase buildout 706 1,411 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 1,467 2,935 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $4,710 $9,421 ' 2010 U.S. Census. Page 20 of 48 TN potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Motor Vehicle In -Lieu Revenue Summary Table Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Total Annual Motor Vehicle In -Lieu Revenue from existing residential development at phase buildout $28,890 $28,890 ...from future PD Medium Density residential development $3,215 $6,430 ...from future Riv. Co. Medium -High Density residential development $699 $1,398 ...from future Mirasera High Density residential development $770 $1,539 ...from future Mirasera Mixed Use residential development $477 $953 ...from future Mirasera Very High Density residential development $4,710 $9,421 Total Annual Motor Vehicle In -Lieu Revenue from all development $38,761 $48,632 Page 21 of 48 M TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Gas Tax Revenue - Scenario A From Existing Development Land Use Designation: SP-281 Residential Total No. Acres: 792.0 No. of Existing Units: 4,985 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 7921 792 Number of total units developed at phase buildout 4,9851 4,985 Calculation of Annual Gas Tax Revenue Existing Population' 9,000 9,000 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $210,330 $210,330 ' Estimated population provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. From Future Development Land Use Designation: PD Medium Density Residential (4-10 du/ac) Total No. Acres: 113.3 No. of Potential Buildout Units: 963 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density permitted (units/acre) 10 10 Maximum potential units constructed during this phase 482 482 Number of total potential units constructed at phase buildout 4821 963 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 1,002 2,003 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $23,407 $46,813 ' 2010 U.S. Census. Page 22 of 48 n TN PT) Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu From Future Development Land Use Designation: Riv. Co. Medium -High Density Residential (5-8 du/ac) Total No. Acres: 30.8 No. of Potential Buildout Units: 209 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) 8 8 Maximum potential units constructed during this phase 105 105 Number of total potential units constructed at phase buildout 105 209 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 218 436 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $5,090 $10,181 ' 2010 U.S. Census. From Future Development Land Use Designation: Mirasera High Density Residential (12 du/ac) Total No. Acres: 22.6 No. of Potential Buildout Units: 230 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 11.3 11.3 Maximum density permitted (units/acre) 12 12 Maximum potential units constructed during this phase 115 115 Number of total potential units constructed at phase buildout 115 231 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 240 479 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $5,603 $11,205 ' 2010 U.S. Census. Page 23 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu �"7•, ,rJ � ��✓V'11 J2 From Future Development Land Use Designation: Mirasera Mired Use Residential (16 du/ac) Total No. Acres: 10.5 No. of Potential Buildout Units: 142 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted (units/acre) 16 16 Maximum potential units constructed during this phase 71 71 Number of total potential units constructed at phase buildout 71 143 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 149 297 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $3,471 $6,941 ' 2010 U.S. Census. From Future Development Land Use Designation: Mirasera Very High Density Residential (20-25 du/ac) Total No. Acres: 66.4 No. of Potential Buildout Units: 1,411 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density permitted (units/acre) 25 25 Maximum potential units constructed during this phase 706 706 Number of total potential units constructed at phase buildout 706 1,411 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 1,467 2,935 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $34,294 $68,588 ' 2010 U.S. Census. Page 24 of 48 TN PD Potential Annexation Fiscal Analysis, . City of Palm Desert Scenario A: Motor Veh. In -Lieu Gas Tax Revenue Summary Table Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Total Annual Gas Tax Revenue from existing residential development at phase buildout $210,330 $210,330 ...from future PD Medium Density residential development $23,407 $46,813 ...from future Riv. Co. Medium -High Density residential development $5,090 $10,181 ...from future Mirasera High Density residential development $5,603 $11,205 ...from future Mirasera Mixed Use residential development $3,471 $6,941 ...from future Mirasera Very High Density residential development $34,294 $68,588 Total Annual Gas Tax Revenue from all development at Phase Buildout $282,195 $354,059 Page 25 of 48 M TN PD Potential Annexation Fiscal Analysis City of Palm Desert 1400, Scenario A: Prop. A Fire Tax Prop. A Fire Tax Revenue - Scenario A From Existing Conditions Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Tax from Existing Residential Units Number of residential units existing at end of phase 4,985 4,985 Prop. A Fire Tax (per unit)' $60 $60 Total Prop. A Fire Tax revenue from existing residential development $299,100 $299,100 Tax from Existing Non -Residential Development Less Than 2,600 sq. ft. No. of buildings less than 2,600 sq. ft.Z 80 80 Prop. A Fire Tax (per unit)' $60 $60 Total Prop. A Fire Tax revenue from existing non-residential development less than 2,600 sq. ft. $4,800 $4,800 Tax from Existing Non -Residential Development Greater Than 2,600 sq. ft. See footnote below3 Tax From Vacant Parcels No. of vacant parcels 50 50 Prop. A Fire Tax rate (perparcel)' $30 $30 Total Prop. A Fire Tax revenue for vacant parcels $1,500 $1,500 Total Prop. A Fire Tax Revenue - Existing Conditions $305,400 $305,400 'Tax rates provided by Willdan Financial Services. 2 Terra Nova estimate based on aerial photos and commercial characteristics in annexation area. 'Prop. A Fire Taxes for non-residential development greater than 2,600 sq. ft. in area are building -specific and determined using a formula that accounts for actual square footage and the use of fire restrictive building materials. These parameters are unknown for larger existing non-residential buildings in the annexation area, including 3 golf clubhouses, a supermarket, and a hotel. This analysis, therefore, is conservative as actual Prop. A Fire Tax revenues will be greater than those shown here. From Future Residential Development Land Use: PD Medium Density Residential (4-10 du/ac) No. of acres: 113.3 No. ofpotential buildout dwelling units: 963 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) No. of Dwelling Units built during this phase 481.5 481.5 Total Dwelling Units at phase buildout 481.5 963 Prop. A Fire Tax (per SF dwelling unit) $60 $60 Total Prop. A Fire Tax revenue from future residential development $28,890 $57,780 'Tax rates provided by Willdan Financial Services. 26 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax From Future Residential Development Land Use: Medium -High Density Residential (5-8 dulac) (Riv. Co. designation) No. of acres: 30.8 No. ofpotential buildout dwelling units: 209 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) No. of Dwelling Units built during this phase 104.5 104.5 Total Dwelling Units at phase buildout 104.5 209 Prop. A Fire Tax (per SF dwelling unit)' $60 $60 Total Prop. A Fire Tax revenue from future residential development 1 $6,270 $12,540 fax rates provided by Willdan Financial Services. From Future Residential Development Land Use: Mirasera High Density Residential (12 du/ac) No. of acres: 22.6 No. of potential buildout dwelling units: 230 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) No. of Dwelling Units built during this phase 115 115 Total Dwelling Units at phase buildout 115 230 .Prop. A Fire Tax(per SF dwelling unit)' $60 $60 Total Prop. A Fire Tax revenue from future residential development $6,9001 $13,800 Tax rates provided by Willdan Financial Services. From Future Residential Development Land Use: Mirasera Mixed Use Residential (16 du/ac) No. of acres: 10.5 No. of potential buildout dwelling units: 142 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) No. of Dwelling Units built during this phase 71 71 Total Dwelling Units at phase buildout 71 142 Pro . A Fire Tax (per SF dwelling unit)' $45 $45 Total Prop. A Fire Tax revenue from future residential development $3,195 $6,390 Tax rates provided by Willdan Financial Services. From Future Residential Development Land Use: Mirasera Very High Density Residential (20-25 du/ac) No. of acres: 66.4 No. of potential buildout dwelling units: 1,411 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) No. of Dwelling Units built during this phase 705.5 705.5 Total Dwelling Units at phase buildout 705.5 1411 Prop. A Fire Tax (per SF dwelling unit)' $45 $45 Total Prop. A Fire Tax revenue from future residential development $31,748 $63,495 lax rates provided by Willdan Financial Services. 27 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert rr� Scenario A: Prop. A Fire Tax From Future Commercial Development Land Use: Commercial (includes hotel) No. of acres: 34.4 No. ofpotential square feet: 399,954 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Number of acres to be developed during this phase 17.2 17.2 Conversion of acres to number of lots/buildings Average acreage of developed commercial lot in annexation area' 1.3 1.3 Projected number of commercial buildings built during this phase 22 22 Projected number of commercial buildings built at phase buildout 22 45 Calculation of Fire Tax Revenue Prop. A Fire Tax (per commercial building)Z $60 $60 Total Prop. A Fire Tax revenue from future commercial development $1,342 $2,683 ' Average acreage of multiple developed commercial lots in annexation area. z Tax rates provided by Willdan Financial Services. This analysis assumes that all future commercial development will be less than 2,600 sq. ft. and assessed a $60/building fee. Future development that is larger in size will be assessed a higher fee that is based on a formula which considers actual square footage and the use of fire restrictive building materials. These parameters are building -specific and are unknown at this time. From Future Business Park Development Land Use: Business Park No. of acres: 46.8 No. of potential square feet: 448,494 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Number of acres to be developed during this phase 23.4 23.4 Conversion of acres to number of lots/buildings Average acreage of developed commercial lot in annexation area' 1.3 1.3 Projected number of commercial buildings built during this phase 30 30 Projected number of commercial buildings built at phase buildout 30 61 Calculation of Fire Tax Revenue Prop. A Fire Tax (per commercial building)Z $60 $60 Total Prop. A Fire Tax revenue from future commercial development $1,825 $3,650 'Average acreage of multiple developed commercial lots in annexation area. 'Tax rates provided by Willdan Financial Services. This analysis assumes that all future business park development will be less than 2,600 sq. ft. and assessed a $60/building fee. Future development that is larger in size will be assessed a higher fee that is based on a formula which considers actual square footage and the use of fire restrictive building materials. These parameters are building -specific and are unknown at this time. 28 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax From Future Industrial Development Land Use: Industrial No. of acres: 26.6 No. ofpotential square feet: 254,913 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Number of acres to be developed during this phase 13.3 13.3 Conversion of acres to number of lots/buildings Average acreage of developed commercial lot in annexation area' 1.3 1.3 Projected number of commercial buildings built during this phase 17 17 Projected number of commercial buildings built at phase buildout 17 35 Calculation of Fire Tax Revenue Prop. A Fire Tax (per commercial building)Z $60 $60 Total Prop. A Fire Tax revenue from future commercial development $1,037 $2,075 'Average acreage of multiple developed commercial lots in annexation area. 2 Tax rates provided by Willdan Financial Services. This analysis assumes that all future industrial development will be less than 2,600 sq. ft. and assessed a $60/building fee. Future development that is larger in size will be assessed a higher fee that is based on a formula which considers actual square footage and the use of fire restrictive building materials. These parameters are building -specific and are unknown at this time. 29 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert �wrNWO, Scenario A: Prop. A Fire Tax Prop. A Fire Tax Revenue - Summary Table Buildout Phase Phase I (Yrs 1-5) Phase Il (Yrs 6-10) Potential Annual Prop. A Fire Tax Revenue from existing development $305,400 $305,400 ...from future PD Medium Density residential development $28,890 $57,780 ....from future Riv. Co. Medium High Density residential dev. $6,270 $12,540 from future Mirasera High Density residential development $6,900 $13,800 from future Mirasera Mixed Use residential development $3,195 $6,390 ...from future Mirasera Very High Density residential dev. $31,748 $63,495 ...from future commercial development $1,342 $2,683 ...from future business park development $1,825 $3,650 ...from future industrial development $1,037 $2,075 Total Annual Prop. A Fire Tax Revenue from all development (at ,phase buildout) $386,607 $467,813 30 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: City DIF Fees New Construction Tax Revenue - Scenario A Buildout Phase Phase 1 (Yrs 1-5) Phase II (Yrs 6-10) New Residential Development Number of dwelling units constructed during this phase 1478 1478 Average square footage ofnew dwelling unit[ 1,500 1,500 New Construction Tax rate (per square foot)' $0.40 $0.40 Total New Construction Tax collected on new residential development $886,500 $886,500 New Commercial Development Number of square feet constructed during this phase 149,977 149,977 New Construction Tax rate(per square foot)'' $0.40 $0.40 Total New Construction Tax collected on new commercial development $59,991 $59,991 New Commercial (Hotel) Development Number of square feet constructed during this phase 50,000 50,000 New Construction Tax rate (per square foot)z $0.40 $0.40 Total New Construction Tax collected on new hotel development $20,000 $20,000 New Business Park Development Number of square feet constructed during this phase 224,247 224,247 New Construction Tax rate(per square foot) $0.40 $0.40 Total New Construction Tax collected on new business park development $89,699 $89,699 New Industrial Development Number of square feet constructed during this phase 127,457 127,457 New Construction Tax rate (per square foot)' $0.40 $0.40 Total New Construction Tax collected on new industrial development $50,983 $50,983 Total New Construction Tax Revenue at phase buildout $1,107,172 $1,107,172 ' Terra Nova estimate based on permitted density and local residential characteristics. Palm Desert Building & Safety Dept, Page 31 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert �✓ lrtf Scenario A: City DIF Fees Art in Public Places Fund Revenue - Scenario A Buildout Phase Phase I Phase II New Single -Family Residential Development Number of dwelling units constructed during this phase 701 701 Average value (per unit)' $249,123 $249,123 Total value of dwelling units at phase buildout $174,635,223 $174,635,223 1% ofvaluation ofall new dwellingunitsz $1,746,352 $1,746,352 0.25 of 1% valuation $436,588 $436,588 Total Art in Public Places fees collected on new SF residential development $436,588 $436,588 New Multi -Family Residential Development Number of dwelling units constructed during this phase 777 777 Average value (per unit)' $104,425 $104,425 Total value of dwelling units at phase buildout $81,086,013 $81,086,013 1% of valuation of all new dwelling units' $810,860 $810,860 0.25 of 1% valuation $202,715 $202,715 Total Art in Public Places fees collected on new MF residential development $202,715 $202,715 New Commercial Development Number of square feet constructed during this phase 149,977 149,977 Average value (per square foot)' $73 $73 Total value of commercial dev. at phase buildout $10,948,321 $10,948,321 1% of valuation of all new commercial development $109,483 $109,483 0,50 of 1% valuation $54,742 $54,742 Total Art in Public Places fees collected on new commercial development 1 $54,7421 $54,742 New Hotel Development Number of rooms constructed during thisphase 75 75 Average value (per room)° $68,512 $68,512 Total value of hotel dev. at phase buildout $5,138,400 $5,138,405 1%ofvaluationofall new hotel development $51,384 $51,384 0.50 of 1% valuation $25,692 $25,692 Total Art in Public Places fees collected on new hotel development 1 $25,692 $25,692 New Business Park Development Number of square feet constructed during this phase 224,247 224,247 Average value(per square foot) $169 $169 Total value of commercial dev. at phase buildout $37,897,743 $37,897,743 1% of valuation of all new commercial development $378,977 $378,977 0.50 of 1% valuation $189,489 $189,489 Total Art in Public Places fees collected on new commercial development $189,4891 $189,489 New Industrial Development Number of square feet constructed during this phase 149,977 149,977 Average value (per square foot)' $73 $73 Total value of commercial dev. at phase buildout $10,948,321 $10,948,321 1% of valuation of all new commercial development $109,483 $109,483 0.50 of 1% valuation $54,742 $54,742 Total Art in Public Places fees collected on new commercial development $54,742 $54,742 Total Art in Public Places Revenue from all new development at phase buildout $963,967 $963,967 'Assumes all dwelling units are in a development and, therefore, are not exempt for the first $100,000 of valuation. 'Based on compilation of building permit data provided by Palm Desert Building & Safety Dept., October 2011. ' Based on comparable existing highway -serving hotel in the annexation area, per Riv. Co. Assessor's records, Oct. 2011. Page 32 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: City DIF Fees Low Income Housing Mitigation Fee Revenue - Scenario A Buildout Phase Phase I Yrs 1-5) Phase II Yrs 6-10) New Commercial Development Number of s uare feet constructed during this phase 149,9771 149,977 Low Income Housing Mitigation Fee rate(per square foot)' $1 $1 Total Fees from Commercial Development a phase buildout 1 $149,9771 $149,977 New Hotel Development Number of rooms constructed during this phase 751 75 Low Income Housing Mitigation Fee rate er room)' $620 $620 Total Fees from Hotel Development at phase buildout $46,5001 $46,500 New Business Park Development Number of square feet constructed during this phase 224,247 224,247 Low Income Housing Mitigation Fee rate er square foot)' 1 $0.50 $0.50 Total Fees from Business Park Development a phase buildout 1 $112,124 $112,124 New Industrial Development Number of square feet constructed during this phase 127,457 127,457 Low Income Housing Mitigation Fee rate(per square foot)' $0.33 $0.33 Total Fees from Industrial Development at phase buildout $42,061 $42,061 Total Low Income Housing Mitigation Fees collected at phase buildout 1 $350,6611 $350,661 Palm Desert Building & Satety Dept. Child Care Facilities Impact Mitigation Fee Revenue - Scenario A Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) New Commercial Development Number of s uare feet constructed durin this hase 149,977 149,977 foot)' $0.90 $0.90 Total Fees collected from commercial development $134,979 $134,979 New Hotel Development Number of s uare feet constructed durin this hase 50,000 50,000 squal- foot)' $0.77 $0.77 Total Fees collected from hotel development $38,500 $38,500 New Business Park Development Number of s uare feet constructed durin this hase 224,247 224,247 foot)' $1.15 $1.15 Total Fees collected from business park development $257,884 $257,884 New Industrial Development Number of s uare feet constructed durin this hase 127,457 127,457 foot ' $0.47 $0.47 Total Fees collected from industrial development $59,905 $59,903 Total Child Care Facilities Impact Mitigation Fee Revenue collected from all new development at phase buildout 1 $491,2681 $491,268 Palm Desert Building & Satety Dept. Page 33 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert *MW 1404 Scenario A: City DIF Fees Traffic Signals Fund Revenue - Scenario A Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) New Residential Development Number of dwelling units constructed during this phase 1478 1478 Traffic Signals Fund fee (per dwelling unit)' $50 $50 Total Traffic Signal fees collected on new residential development at phase buildout $73,875 $73,875 New Commercial Development Number of square feet constructed during this phase 149,977 149,977 Traffic Signal Fund fee (per 1,000 square feet)' $500 $500 Total Traffic Signal Funds collected on new commercial development at phase buildout $74,989 $74,989 New Hotel Development Number of square feet constructed during this phase 50,000 50,000 Traffic Signal Fund fee(per 1,000 square feet)' $500 $500 Total Traffic Signal Funds collected on new commercial development at phase buildout $25,000 $25,000 New Industrial Development Number of acres constructed during this phase 13.3 13.3 Traffic Signal Fund fee (per 1,000 square feet)' $500 $500 Total Traffic Signal Funds collected on new commercial development at phase buildout $6,650 $6,650 Total Traffic Signal Fund Revenues at phase buildout $180,514 $180,514 Palm Desert Public Works Dept. Planned Drainage Fund Revenue - Scenario A Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) All New Development Number of acres developed during this phase 175.71 175.7 Planned Drainage Fund fee (per acre)' 1 $1,0001 $1,000 Total Planned Drainage Fund Revenue at phase buildout 1 $175,7001 $175,700 Palm Desert Public Works Dept. Park & Recreation Facilities Fund Revenue - Scenario A Buildout Phase Phase 1 (Yrs 1-5) Phase II (Yrs 6-10) New Residential Development (subdivisions only) Number ofdwelling units constructed during this phase 1478 1478 Park & Recreation Facilities Fee (step 1)' 15.88 15.88 Current Value of Residential Land (per acre)' $114,887 $114,887 Park & Recreation Facilities Fee(step 2)' $1,823,916 $1,823,916 Total Park & Recreation Facilities Fund Revenue at phase buildout $1,823,916 $1,823,916 'This fee applies only to residential subdivisions. For analysis purposes, it is assumed that all acres designated for residential development will be subdivided. ' Palm Desert Public Works Dept. ' Average land value of multiple vacant parcels designated for residential development, from Riverside County Assessor's data, October 2011. Page 34 of 48 In TN PD Potential Annexation Fiscal Analysis City of Palm Desertvt . Scenario A: Government Costs Costs of General Government - Scenario A From Existing Residential Development Land Use: SP-281 Residential No. of Acres: 792 No. of Existing Dwelling Units: 4,985 Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Number of acres developed at phase buildout 792 792 Number of dwelling units existing at phase buildout 4,985 4,985 Existin Population' 9,000 9,000 Cost of General Government(per capita)' $282 $282 Total annual cost of General Government at hase buildout $2,538,0001 $2,538,000 ' Estimate provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. ' Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. From Future Residential Development Lana Use esigna ion: FV Meatton Vensity ResidenuatBuildout dulac) No. of Acres: 113.3 No. of Buildout Units: 963' Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density permitted units/acre 10 10 Maximum potential units constructed during this phase' 482 482 Number of total potential units constructed at phase buildout 482 963 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 1,0021 2,003 Calculating Annual Costs of General Government Cost of General Government (per capita)' $282 $282 Total annual cost of General Government at phase buildout 1 $282,4431 $564,887 'Assumes future residential development occurs at 85% of the maximum density permitted. ' 2010 U.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. From Future Residential Development Land Use Designation: Riv. Co. Medium -High Density Residential (5-8 dulae) No. of Acres: 30.8 No. of Buildout Units: 20V Buildout Phase Phase 1 (Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 15.4 15.4 Maximum density permitted units/acre 8 8 Maximum potential units constructed during thisphase' 105 105 Number of total potential units constructed at phase buildout 105 209 Average number of persons per household' 2.08 2.08 Total no. ofpotential residents at phase buildout 218 436 Calculating Annual Costs of General Government Cost of General Government (per capita)' $282 $282 Total annual cost of General Government at phase buildout $61,4251 $122,849 Assumes future residential development occurs at 85% of the maximum density permitted. ' 2010 U.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. Page 35 of 48 TN PD Potential Annexation Fiscal Analysis +hrr` City of Palm Desert ¢� Scenario A: Government Costs r6j IFrom Future Residential Development Land Use Designation: Mirasera High Density Residential (12 dulac) No. of Acres: 22.6 No. of Buildout Units: 230' Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 11.3 11.3 Maximum density permitted units/acre 12 12 Maximum potential units constructed during thisphase' 115 115 Number of total potential units constructed at phase buildout 115 231 Average number ofpersons per household' 2.08 2.08 Total no. ofpotential residents at phase buildout 240 479 Calculatin Annual Costs of General Government Cost of General Government (per capita)' $282 $282 Total annual cost of General Government at ph se buildout4 $67,607 $135,214 'Assumes future residential development occurs at 85% of the maximum density permitted. 2010 U.S. Census. ' Term Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. IFrom Future Residential Development Land Use Designation: Mirasera Mixed Use Residential (16 du/de) No. of Acres: 10.5 No. of Buildout Units: 142' Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted units/acre) 16 16 Maximum potential units constructed during thisphase' 71 71 Number of total potential units constructed at phase buildout 71 143 Average number of persons per household'' 2.08 2.08 Total no. ofpotential residents at phase buildout 149 297 Calculatin Annual Costs of General Government Cost of General Government (per capita)' $282 $282 Total annual cost of General Government at phase buildout $41,8801 $83,761 'Assumes future residential development occurs at 85% of the maximum density permitted. ' 2010 U.S. Census. ' Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. IFrom Future Residential Development Land Use Designation: Mirasera Very High Density Residential (10-25 du/ac) No. of Acres: 66.4 No. of Buildout Units: 1,411' Buildout Phase Phase I (Yrs 1-5) Phase If (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density permitted (units/acre) 25 25 Maximum potential units constructed during thisphase' 706 706 Number of total potential units constructed at phase buildout 706 1,411 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 1,467 2,935 lCalculating Annual Costs of General Government Cost of General Government(per capita)' $282 $282 Total annual cost of General Government at phase buildout $413,818 $827,636 ' Assumes future residential development occurs at 75% of the maximum density permitted. Page 36 of 48 From Existing Commercial Development TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use: ommercral (includes hotel & Commercial - Tourist) No. of Acres: 8 0. 0 No. o Existing Square Footage. 570,117 Buildout Phase Phase I (Yrs 1-5) Phase 11 Yrs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 80.01 80.0 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government' 1 $29.80 $29.80 Total cost of General Government at phase buildout 1 $2,384.171 $2,384.17 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Municipal Services)' $0.241 $0.24 Total cost of General Government (Municipal Services) at phase buildout 1 $19.39 $19.39 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services) $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $5,050.95 $5,050.95 Total Annual Costs of Government Services at Phase Buildout $7,454.52 $7,454.52 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Existing Development Land Use: Industrial - Light No. of Acres: 56.6 No. of Existing Square Footage: 542,409 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 56.6 56.6 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government' $29.80 $29.80 Total cost of General Government at phase buildout $1,686.80 $1,686.80 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government Munici al Services)' $0.24 $0.24 Total cost of General Government (Municipal Services) at phase buildout $13.72 $13.72 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services) $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $3,573.55 $3,573.55 Total Annual Costs of Government Services at Phase Buildout $5,274.07 $5,274.07 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Page 37 of 48 TN PD Potential Annexation Fiscal Analysis r City of Palm Desert C<�t� �� /� D 1��✓) tJ Scenario A: Government Costs From Future Commercial Development Land Use: ommercta No. ofAcres: 31.3 No. of Potential Square Footage: 299,954 Buildout Phase Phase 1 (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during this phase 15.71 15.7 Number of acres developed at phase buildout 15.71 31.3 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government' $29.80 $29.80 Total cost of General Government at phase buildout $466.401 $932.81 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Municipal Services)' $0.241 $0.24 Total cost of General Government (Municipal Services) at phase buildout 1 $3.79 $7.59 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services) $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $988.09 $1,976.19 Total Annual Costs of Government Services at Phase Buildout $1,458.291 $2,916.58 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Future Hotel Development Land Use: Commercial (Hotel) No. ofAcres: 3.1 No. of Potential Square Footage: 90,000 Buildout Phase Phase I (Yrs 1-5) Phase 11 1 (Yrs 6-10) Land Use Buildout Data Number of acres developed during this phase 1.61 1.6 Number of acres developed at phase buildout 1.61 3.1 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government $29.801 $29.80 Total cost of General Government at phase buildout 1 $46.191 $92.39 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Municipal Services)' 1 $0.24 $0.24 Total cost of General Government (Municipal Services) at phase buildout 1 $0.38 $0.75 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services) $63.141 $63.14 Total cost of General Government (Support Services Services) at phase buildout - $97.86 $195.72 Total Annual Costs of Government Services at Phase Buildout $144.431 $288.86 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Future Business Park Develonment Land Use: Business Par No. ofAcres: 46.8 No. of Potential Square Footage: 448,494 Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed during this phase 23.4 23.4 Number of acres developed at phase buildout 23.41 46.8 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government' $29.80 $29.80 Total cost of General Government at phase buildout $697.371 $1,394.74 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Municipal Services)' $0.241 $0.24 Total cost of General Government (Municipal Services) at phase buildout $5.67 $11.35 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services) $63.141 $63.14 Total cost of General Government (Support Services Services) at phase buildout $1,477.40 $2,954.81 Total Annual Costs of Government Services at Phase Buildout $2,180.451 $4,360.89 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Page 38 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert �f� �� Cdt ✓I �� Scenario A: Government Costs From Future Industrial Develooment Lan Use: /n ustrra No. of Acres: 26.6 No. of Potential Square Footage: 254,913 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-101) Land Use Buildout Data Number of acres developed during this phase 13.3 13.3 Number of acres developed at phase buildout 13.31 26.6 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government' $29.801 $29.80 Total cost of General Government at phase buildout 1 $396.371 $792.74 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Municipal Services)' 1 $0.241 $0.24 Total cost of General Government (Municipal Services) at phase buildout 1 $3.22 $6.45 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services) $63.141 $63.14 Total cost of General Government (Support Services Services) at phase buildout $839.72 $1,679.44 Total Annual Costs of Government Services at Phase Buildout $1,239.311 $2,478.63 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for CommerciaL/Industrial uses, Table A.2. Costs of General Government Summary Table Buildout Phase Phase I Phase lI Residential development Total Annual Govt. Costs from existing residential development at phase buildout $2,538,000 $2,538,000 ...from future PD Medium Density residential development $282,443 $564,887 ...from future Riv. Co. Medium -High Density resid. dev. $61,425 $122,849 ...from future Mirasera High Density resididential dev. $67,607 $135,214 ...from future Mirasera Mixed Use residential development $41,880 $83,761 ...from future Mirasera VeryHigh Densityresidential dev. $413'818 $827,636 Non -Residential development Total Annual Cost from existing Commercial Development at phase buildout $7,455 $7,455 ...from existing Industrial -Light development $5,274 $5,274 ...from future commercial development $1,458 $2,917 ...from future commercial -hotel development $144 $289 ...from future business park develo ment $2,180 $4,361 ...from future industrial development $1,2391 $2,479 Total Annual Govt. Costs at Phase Buildout $3,413,8671 $4,295,120 Page 39 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert live '40* Scenario A: Government Costs Costs of Police Protection - Scenario A From Existing Residential Development Land Use: SP-281 Residential No. of Acres: 792 No. of Existing Dwelling Units: 4,985 Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Number of acres developed at phase buildout 792 792 Number of dwelling units xisting at phase buildout 4,985 4,985 Existing Population' 9,000 9,000 Cost of Police Protection er capita)' $339 $339 Total annual cost of Police Protection at phase buildout $3,051,0001 $3,051,000 ' Estimate provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. (From Future Residential Development Lana Use Designation: FV Meiftum Density Resulenital- du/de) No. of Acres: 113.3 No. of Buildout Units: 963' Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density permitted (units/acre) 10 10 Maximum potential units constructed during thisphase' 482 482 Number of total potential units constructed at phase buildout 482 963 Average number of ersonsper household' 2.08 2.08 Total no. ofpotential residents at phase buildout 1,0021 2,003 Calculating Annual Costs of Police Protection Cost of Police Protection (per capita)' $339 $339 Total annual cost of Police Protection at phase buildout $339,533 $679,066 'Assumes future residential development occurs at 85 % of the maximum density permitted. 2010 U.S. Census. ' Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. From Future Residential Development Land Use Designation: Riv. Co. Medium -High Density Residential (5-8 du/de) No. of Acres: 30.8 No. of Buildout Units: 20V Buildout Phase Phase 1 (Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) 8 8 Maximum potential units constructed during this phase' 105 105 Number of total potential units constructed at phase buildout 105 209 Average number of persons per household 2.08 2.08 Total no. of potential residents at phase buildout 218 436 ICalculating Annual Costs of Police Protection Cost of Police Protection(per capita)' $339 $339 Total annual cost of Police Protection at phase buildout 1 $73,8401 $147,680 'Assumes future residential development occurs at 85% of the maximum density permitted. 2010 U.S. Census. ' Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures- 2011- 2012. Page 40 of 48 TN PI) Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs From Future Residential Development Land Use Designation: Mirasera High Density Residential (12 dulac) No. ofAcres: 22.6 No. of Buildout Units: 23W Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 11.3 11.3 Maximum density permitted (units/acre) 12 12 Maximum potential units constructed during thisphase' 115 115 Number of total potential units constructed at phase buildout 115 231 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 2401 479 Calculating Annual Costs of Police Protection Cost of Police Protection (per capita)' $339 $339 Total annual cost of Police Protection at phase buildout 1 $81,2721 $162,544 'Assumes future residential development occurs at 85% of the maximum density permitted. 2 2010 U.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. From Future Residential Development Land Use Designation: Mirasera Mixed Use Residential (16 dulac) No. ofAcres: 10.5 No. of Buildout Units: 1421 Buildout Phase Phase I Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted (units/acre) 16 16 Maximum potential units constructed during thisphase' 71 71 Number of total potential units constructed at phase buildout 71 143 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 149 297 Calculating Annual Costs of Police Protection Cost of Police Protection (per capita)' $3391 $339 Total annual cost of Police Protection at phase buildout $50,346 $100,691 'Assumes future residential development occurs at 85% of the maximum density permitted. ' 2010 U.S. Census. ' Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. From Future Residential Development Land Use Designation: Mirasera Very High Density Residential (20-25 dulac) No. ofAcres: 66.4 No. of Buildout Units: 1,411' Buildout Phase Phase I (Yrs 1-5) Phase If (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density permitted (units/acre) 25 25 Maximum potential units constructed during thisphase' 706 706 Number of total potential units constructed at phase buildout 706 1,411 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 1,467 2,935 Calculating Annual Costs of Police Protection Cost of Police Protection(per capita)' $339 $339 Total annual cost of Police Protection at phase buildout 1 $497,4621 $994,924 'Assumes future residential development occurs at 85% of the maximum density permitted. 2010 U.S. Census. ' Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. Page 41 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs From Future Commercial Development Land Use: Commercial No. ofAcres: 31.3 No. of Potential Square Footage: 299,954 Buildout Phase Phase I (Yrs 1-5) Phase If (Yrs 6-10) Land Use Buildout Data Number of acres developed during this phase 15.71 15.7 Number of acres developed at phase buildout 15.71 31.3 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection' $417.211 $417.21 Total cost of Police Protection at phase buildout $6,529.341 $13,058.67 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.691 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $871.55 $1,743.10 Total Annual Costs of Police Protection at Phase Buildout $7,400.891 $14,801.77 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Future Hotel Development Land Use: Commercial (Hotel) No. ofAcres: 3.1 No. of Potential Square Footage: 90,000 Buildout Phase Phase 1 (Yrs 1-5) Phase Il 1 (Yrs 6-10) Land Use Buildout Data Number of acres developed during this phase 1.61 1.6 Number of acres developed at phase buildout 1.6 3.1 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection $417.21 $417.21 Total cost of Police Protection at phase buildout $646.681 $1,293.35 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $86.32 $172.64 Total Annual Costs of Police Protection at Phase Buildout $733.00 $1,465.99 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for CommerciaVlndustrial uses, Table A.2. From Future Business Park Develonment Land Use: Business Park No. ofAcres: 46.8 No. of Potential Square Footage: 448,494 Buildout Phase Phase I (Yrs 1-5) Phase Il 1 (Yrs 6-10) Land Use Buildout Data Number of acres developed during this phase 23.41 23.4 Number of acres developed at phase buildout 23.41 46.8 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection' 1 $417.211 $417.21 Total cost of Police Protection at phase buildou 1 $9,762.711 $19,525.43 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.691 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $1,303.15 $2,606.29 Total Annual Costs of Police Protection at Phase Buildout $11,065.861 $22,131.72 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Page 43 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs From Existing Commercial Development Land Use: Commercia (includes hotel & Commercial- Tourist) No. of Acres: 80.0 No. ofExisting Square Footage: 570,117 Buildout Phase Phase I Yrs 1-5) Phase 11 Yrs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 80.01 80.0 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection' $41 Z21 $417.21 Total cost of Police Protection at phase buildout $33,376.801 $33,376.80 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $4,455.20 $4,455.20 Total Annual Costs of Police Protection at Phase Buildout $37,832.00 $37,832.00 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Existing Development Land Use: Industrial - Light No. of Acres: 56.6 No. of Existing Square Footage: 542,409 Buildout Phase Phase 1 (Yrs 1-5) Phase If Yrs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 56.6 56.6 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection' $417.21 $417.21 Total cost of Police Protection at phase buildout $23,614.09 $23,614.09 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $3,152.05 $3,152.05 Total Annual Costs of Police Protection at Phase Buildout $26,766.14 $26,766.14 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Page 42 of 48 el "rj ''i rG) I G� iZ jf,7Non TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs From Future Industrial Develooment Land Use: In ustrial No. ofAcres: 26.6 No. of Potential Square Footage: 254,913 Buildout Phase Phase 1 (Yrs 1-5) Phase 1[ (Yrs 6-101) Land Use Buildout Data Number of acres developed during this phase 13.31 13.3 Number of acres developed at phase buildout 13.31 26.6 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection 1 $417.211 $417.21 Total cost of Police Protection at phase buildout 1 $5,548.891 $11,097.79 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.691 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $740.68 $1,481.35 Total Annual Costs of Police Protection at Phase Buildout $6,289.571 $12,579.14 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Costs of Police Protection Summary Table Buildout Phase Phase 1 Phase 11 Residential development Total Annual Police Protection Costs from existing residential development at phase buildout $3,051,000 $3,051,000 ...from future PD Medium Density residential development $339,533 $679,066 ...from future Riv. Co. Medium -High Density resid. dev. $73,840 $147,680 ...from future Mirasera High Density resididential dev. $81,272 $162,544 ...from future Mirasera Mixed Use residential development 1 $50,3461 $100,691 ...from future Mirasera Very High Density residential dev. 1 $497,4621 $994,924 Non -Residential development Total Annual Cost from existing Commercial Development at phase buildout $37,832 $37,832 ...from existing Industrial -Light development $26,766 $26,766 ....from future commercial development $7,401 $14,802 ...from future commercial -hotel development $733 $1,466 ...from future business park development $11,066 $22,132 ...from future industrial development $6,2901 $12,579 Total Annual Police Protection Costs at Phase Buildout 1 $4,137,5751 $5,251,483 Page 44 of 48 n TN PP Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Roadway Maint. Costs Costs of Roadway Maintenance - Scenario A Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Roadway Data No. of existing public paved road miles in annexation area' 10.5 10.5 No. of future public paved road miles at phase buildout4 2.3 4.5 Total no. of paved road miles at phase buildout 12.8 15.0 Calculation of Roadway Costs Annual Costs ot city-wide street maintenance, resurtacing Improvement Pro'ects3 $6,091,625 $6,091,625 Number of paved road miles in current Palm Desert limits3 159 159 Annual Cost of Roadway Maintenance Per Road Mile $38,312 $38,312 Annual Cost of Roadway Maintenance at Phase Buildout $488,478 $574,680 ' Terra Nova estimate based on aerial photography. Does not include private roads inside Sun City which will be privately maintained. z Expenditures for street maintenance & resurfacing, City of Palm Desert Budget, 2011-2012. 3 "Comprehensive Annual Financial Report," City of Palm Desert Finance Dept., June 30,2010, p. 201. a Estimate based on 3.0 road miles in Mirasera and 1.5 miles elsewhere in annexation area. Page 45 of 48 CM TN PT) Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Fire, Ambulance Costs Costs of Fire Protection - Scenario A Buildout Phase Phase I Phase II (Yrs 1-5) (Yrs 6-10) Annual Costs of Operating Fire Station 81 at phase buildout' $1,500,0001 $1,500,000 ' Chief Dorian Cooley, Palm Desert Fire Dept., October 2011. Costs of Ambulance Service - Scenario A Buildout Phase Phase II Phase I Phase I (Yrs 6- (Year 1) (Yrs 2-5) 10) Start-up costs for new ambulance service based out o Fire Station 81 (one-time fee) $190,000 $0 $0 Annual Costs of Ambulance Operation $940,944 $940,944 $940,944 Total Annual Costs of Ambulance Service at Phase Buildout $1,130,944 $940,944 $940,944 46 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert *ario A: Costs/Revenues Summary Table Total Potential Costs/Revenues Summary Table Scenario A Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10 ANNUAL REVENUES General Fund. Property Tax $836,415 $947,279 Property Transfer Tax $112,171 $125,579 Local Sales Tax $1,874,090 $2,314,298 Transient Occupancy Tax $544,596 $7761804 Motor Vehicle In -Lieu Fees 1 $38,7611 $48,632 Subtotal Annual General Fund Revenue at Phase Buildout $3,406,032 $4,212,592 Restricted Funds: Highway Users Gas Tax $282,195 $354,059 Measure A $15,742 $19,440 Fire Fund - Prop. A Fire Tax $386,607 $467,813 Fire Fund - Structural Fire Tax $1,402,787 $1,588,723 Subtotal Annual Restr. Fund Revenue at Phase Buildout $2,087,331 $2,430,035 Total All Potential Revenues at Phase Buildout $5,493,362 $6,642,628 Interest Earnings: Historic Average Interest Rate on 90-Day Treasury Bills 4.39% 4.39% Anticipated Interest Earned on Revenues - $241,159 $291,611 Total Potential Annual Revenue at Phase Buildoutj $5,734,5211 $6,934,239 ANNUAL COSTS General Fund: Costs of General Government $3,413,867 $4,295,120 Costs of Police Protection $4,137,575 $5,251,483 Costs of Roadway Maintenance $488,478 $574,680 Subtotal Annual General Fund Costs at Phase Buildoutl $8,039,9201 $10,121,283 Restricted Funds: Costs of Fire Protection $1,500,000 $1,500,000 Service'Costs of Ambulance $940,944 $940,944 Subtotal Annual Restricted Fund Costs at Phase Buildout $2,440,944 $2,440,944 Total Potential Annual Costs at Phase Buildout $10,480,864 $12,562,227 Potential Cashflow at Phase Buildout -$4,746,343 -$5,627,988 'Does not include one-time (year 1) start-up ambulance costs of $190,000. Page 47 of 48 0 TN PD Potential Annexation Fiscal Analysis City of Palm Desert **nario A: Costs/Revenues Summary Table CITYDEVELOPER IMPACT FEES REVENUES (Onetime only) New Construction Tax $1,107,172 $1,107,172 Art in Public Places Fees $963,967 $963,967 Low Income Housing Mitigation Fees $350,661 $350,661 Child Care Program Fees $491,268 $491,268 Traffic Signals Fees $180,514 $180,514 Planned Drainage Fees $175,700 $175,700 Park & Recreation Facilities Fees $1,823,916 $1,823,916 Total Potential Developer Impact Fee Revenues at Phase Buildoutl $5,093,1981 $5,093,198 Page 48 of 48 M M Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Appendix B Scenario B Detailed Cost and Revenue Tables 45 cm 0 m W ^' 00 z r- b7 S M, V1 S N M M oq d' M r--r- r- M N �O M M N z N N �t N ,y 00cc rz 69 N N 64 N 69 b9 b9 00 '~00 W) VN1 t+°,1 S S 00 S M M M N N M o0 M 7 M �t ,~y 00 UU v'1 N N b9 N 64 cd H b4 -� b4 6. � a �: ro a ^J o0 '-': 00 O �0 N S r 00 Q� N O M N00 Z l 00 M V1 N V? o0 M N M M Cl) P 01 N l- N [- 00 I M N M z 00 M M N M �O 7 �p 70 69 N M N N H9 N 64 --� b4 b4 b9 A L p 6q o0 r- �0 00 N O N r- n oq N r N M r N N W N M 00 M <i' M ►N � O� l- V1 N M � V r N N W 69 b1 N N b9 N FA 'aq ',y b9 EA O ti C y a x b, q U CL � >< O O ❑ �O 7 O G G ❑ iG ro, Y ❑ > CL Zi .� ^ u y �� o o w V iC _o Q W O 1y r a y U u uu O > > N 7 f.1i y x y V ° O O O A H w 0 , O O u c� P s0 p iC itl U c� '� u V iO .k`'i „ .,��`, CO ❑ O O tCi 7 O O y O O d O N O CO O G W y v z z z H H H a H m m F 0 7 ul M O e, M S O S V) e, M 00 N cq ^' I I- C� W) Itr- � M 00 M 00 00 V7 e?N O;, b�9 bN4 6M4 IZ 69 Si L O �D oho N cnrn S O 7 ~ N r-�, 6MR 69 d' 6N9 69 11 69 69 Y a a N 'n N S 7 � N •� M a1 �.y O 7 N D\ O M N os 69 O M 69 py N 69 O 69 69 a �I oq C11 Ci091 6900 u e � � 'o o v o � � Oi cd a Li A C7 � ,L C 41 a � �7.1 a v r u Q W o LLB O L CL Y t� y y C w? 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O0 o U cd .� o M PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario B: Costs/Revenues Summary Table Total Potential Costs/Revenues Summary Table Scenario B Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) 1 Phase III (Yrs 11-15) Phase IV (Yrs 16-20) ANNUAL REVENUES General Fund: Property Tax $828,082 $915,621 $1,003,160 $1,090,698 Property Transfer Tax $96,687 $97,980 $99,274 $100,568 Local Sales Tax $2,078,761 $2,698,991 $3,319,220 $3,939,446 Transient Occupancy Tax $621,998 $931,610 $1,241,221 $1,550,832 Motor Vehicle In -Lieu Fees $34,3431 $39,789 $45,235 $50,682 Subtotal Annual General Fund Revenue at Phase Buildout $3,659,871 $4,683,990 $5,7089110 $6,732,226 Restricted Funds: Highway Users Gas Tax $250,028 $289,679 $329,330 $368,981 Measure $17,462 $22,672 $27,881 $33,091 Fire Fund - Prop. A Fire Tax $351,356 $395,453 $439,549 $483,645 Fire Fund - Structural Fire Tax $1,390,562 $1,537,377 $1,684,193 $1,831,008 Subtotal Annual Restr. Fund Revenue at Phase Buildout $2,009,408 $2,245,180 $2,480,952 $2,716,725 Total All Potential Revenues at Phase Buildoutl $5,669,2791 $6,929,171 $8,189,0621 $9,448,950 Interest Earnings: Historic Average Interest Rate on 90-Day Treasury Bills 4.39% 4.39% 4.39% 4.39% Anticipated Interest Earned on Revenues $248,881 $304,191 $359,500 $414,809 Total Potential Annual Revenues at Phase Buildoutl $5,918,160 $7,233,361 $8,548,5621 $9,8639759 ANNUAL COSTS General Fund: Costs of General Government $3,031,673 $3,517,392 $4,003,112 $4,488,831 Costs of Police Protection $3,701,198 $4,313,217 $4,925,236 $5,537,254 Costs of Roadway Maintenance $607,245 $678,122 $749,002 $819,879 Subtotal Annual General Fund Costs at Phase Buildoutl $7,340,1161 $8,508,731 $9,677,3491 $10,845,965 Restricted Funds: Costs of Fire Protection $1,528,907 $1,557,408 $1,5851910 $1,614,411 Costs of Ambulance Service' $940,944 $940,944 $940,944 $940,944 Subtotal Annual Restricted Fund Costs at Phase Buildout $2,469,851 $2,498,352 $2,526,854 $2,555,355 Total Potential Annual Costs at Phase Buildout $9,809,967 $11,007,084 $12,204,203 $13,401,320 Potential Cashflow at Phase Buildout -$3,891,807 -$3,773,723 -$3,655,641 -$3,537,560 Does not include one-time (year 1) start-up ambulance costs of $190,000. Page 75 of 76 M CITYDEVELOPER IMPACT FEE REVENUES (Onetime only) PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario B: Costs/Revenues Summary Table New Construction Tax $811,863 $811,863 $811,863 $811,863 Art in Public Places Fees $787,633 $787,633 $787,633 $787,633 Low Income Housing Mitigation Fees $522,899 $522,899 $522,899 $522,899 Child Care Program Fees $803,567 $803,567 $803,567 $803,567 Traffic Signals Fees $187,230 $187,230 $187,230 $187,230 Planned Drainage Fees $162,475 $162,475 $162,475 $162,475 Park & Recreation Facilities Fees $1,080,338 $1,080,338 $1,080,338 $1,080,338 Total Potential Developer Impact Fee Revenues at Phase Buildoutj $4,356,0041 $4,356,0041 $4,356,0041 $4,356,004 Page 76 of 76 Ro oF-RT A. FBERI,WEINER �,. " Hon. Robert A. Spiegel, Mayor February 15, 2012 Page 2 While the Berger Foundation believes the ultimate financial impact annexing all areas north of the W 0 could be neutral or positive for the City, a new law creates a more difficult fiscal challenge. If Sun City were annexed into Palm Desert, Bermuda Dunes would become a County "island," surrounded completely by Palm Desert, La Quinta and Indio. While LAFCO policy already discourages creating such islands, SB 244, signed into law late last year, prohibits annexation when an adjacent "disadvantaged unincorporated .community" remains within its sphere. It may be too early to know exactly how this will be defined and applied. However, early indications are that Bermuda Dunes may fall into this category. Palm Desert would then be required by law to include Bermuda Dunes with any annexation of Sun City. There are numerous benefits to the City in annexing the Berger Foundation parcels, Sun City and Bermuda Dunes. However, in order to create revenue neutrality for this larger annexation, the City would need to fiscalize all land uses within the entire annexation areas and not simply apply existing Palm Desert formulas and standards. These opportunities would need to be carefully studied. The Berger Foundation's desire to be annexed into the City of Palm Desert remains strong, whether it is accomplished as a stand-alone annexation or in combination with Sun City or Bermuda Dunes. Should the City decide to continue this process, we will assist and cooperate in any way we can. Thank you for your consideration of this matter. ••. cc: William Kroonen, Mayor Pro Tern Cindy Finerty, Council Member Jean Benson, Council Member Jan Harnik, Council Member John Wolmuth, City Manager Lauri Aylaian, Director of Community Development Ron Auen, H.N. and Frances C. Berger Foundation CITY OF PALM DESERT DEPARTMENT OF COMMUNITY QWQ LOPMENT STAFF REPORT REQUEST: That the City Council receive and file a fiscal impact analysis and direct staff how to proceed regarding potential annexation of areas north of the Interstate 10 SUBMITTED BY: Lauri Aylaian, Director of Community Development DATE: 26 January 2012 CONTENTS: Fiscal Impact Analysis for Potential Annexation to the City of Palm Desert Recommendation That the City Council direct staff regarding further actions to take, if any, concerning annexation of areas north of Interstate 10. Executive Summar In September 2011, the City Council directed staff to obtain a feasibility study on territory north of Interstate 10 (1-10) for Sun City Palm Desert and the adjacent commercial -retail areas. They asked that the narrow strip of land between the current northern city limits and the centerline of 1-10 be included in the study, and later directed that the areas near the Classic Club and Xavier Preparatory High School, west of Palm Desert's current sphere of influence, be included in an alternative scenario. The City Council specifically excluded Bermuda Dunes from the areas to be studied, while acknowledging that LAFCO staff likely will not recommend to the LAFCO Commission annexation of Sun City without inclusion of Bermuda Dunes. This report provides the City Council with the results of the completed studies, and seeks direction on whether to further pursue potential annexation of any of the areas at this time. Discussion In response to direction from the City Council, staff retained Terra Nova Planning & Research to perform fiscal analyses of the potential annexation of territory to the city of Palm Desert. Such studies are generally undertaken by cities that are considering expansion to determine if -- and to what magnitude -- the area(s) under consideration will have a positive impact on the city's budget, or if they would require support'by the General Fund. In particular, these studies seek to establish the conditions once the area is built out, when one-time developer fees no longer provide short-term revenue enhancements. For the sake of this study, two different scenarios were considered. The first scenario analyzed revenues and expenditures for all of the Palm Desert sphere of influence land north of the current city limits. The boundaries of this option, called Scenario A, are as outlined in red on the following map. Potential Annexation Fish Impact Analysis "W 26 January 2012 Page 2 of 5 The Scenario B analysis adds territory that is currently in the Cathedral City sphere of influence. It includes the Classic Club, Xavier Preparatory High School, and vacant lands on both sides of Cook Street, but excludes Jack Ivey Ranch. Scenario B boundaries are as shown below. g:lplanningVauri aylaianlstaff reportslsun city annexation fiscal impact analysis 1-26-12.docx Potential Annexation Fi`al Impact Analysis 26 January 2012 Page 3of5 The results of this analysis show that for both scenarios, the revenues fall far short of the City's cost of providing services. This holds true for the present, when large portions of the areas are undeveloped, and for the future when all areas are built out. One of the fundamental reasons for this shortfall is the high percentage of residential lands in the area, and the comparatively small percentage of commercial sales tax -generating development. For comparison sake, ten percent of the land within Palm Desert's existing boundaries is devoted to commercial development, which accounts for 34% of the revenue to the General Fund. However, in Scenarios A and B, the percentage of sales tax -generating commercial land is less than half of that. The conclusions of a fiscal impact analysis can change significantly by changing the assumptions regarding land use, general administrative costs, sales tax generation, and the costs of providing public safety. Consequently, staff worked closely with Terra Nova to identify and quantify the most likely impacts of annexing territory north of 1-10. Specifically, the following precepts were judged to be key for a valid calculation of fiscal impact: • Undeveloped lands are assumed to be developed with land uses consistent with those designated in approved specific plans or, where no specific plans have been approved, with the City of Palm Desert General Plan. Because some of the land is already developed, the City will see immediate revenues and costs with either Scenario A or Scenario B annexation. Police services will be required at the same officer -to -resident ratio as is provided in the rest of the city. Although Sun City itself may require lesser policing because it is a gated community with its own security, the converse is likely to be true in the remaining annexation areas, which are largely planned as medium -to -high density residential developments; this is true in other parts of the City that have a mix of country clubs and apartments or open subdivisions. The City will receive only 7% of the total 1 % property tax assessed projects in the annexation areas. Property tax revenues will be further reduced due to the City's mandated contributions to the Education Revenue Augmentation Fund (ERAF). Approximately half of the 7% property tax revenue collected by Riverside County is assumed to continue to be contributed to ERAF or an equivalent "revenue sharing" program. Some line items associated with the cost of general government will increase perceptibly as a result of annexation, while others will not. For instance, staffing levels, benefits, and overhead costs should not change for the City Manager's office, the City Council, and departments such as Finance, Special Events, and Risk Management. However, annexation would result in proportionally greater need for services such as: maintenance of roads, parks, storm drain and landscaping; police and fire services; code enforcement and animal control; and permitting, plan check, and inspections. For years, the Redevelopment Agency and the General Fund have subsidized the Capital Reserve Fund by paying for major public works maintenance projects, such as drainage, paving, reroofing, and landscaping. The true cost of maintaining the City's infrastructure must be calculated using all funds spent on maintenance, not gAplanningVauri aylaianlstaff reports\sun city annexation fiscal impact analysis 1-26-12.docx Potential Annexation FidW Impact Analysis 140 26 January 2012 Page 4of5 just those monies that were spent from the General Fund. These subsidies are not reflected in this study. It is therefore likely that the true cost of providing services to the annexation area will be greater than shown. Fiscal Analysis The findings of the fiscal impact analysis are briefly summarized here. Scenario A Annexation of Scenario A will add an estimated 15,144 residents to the City of Palm Desert. Build out of this area is projected to occur in ten years, at which time potentially $6.9 million annually in revenues would be generated. The largest single revenue generator is expected to be local Sales Tax ($2.3 million annually at 10-year build out), which is related to the second highest revenue source, Structural Fire Tax ($1.5 million annually at 10-year build out). These revenues are dependent upon commercial sales tax volume in the annexation area. The costs associated with serving this new area and its population are projected to be approximately $12.6 million annually at the end of the 10-year build out period. The most significant costs are those from Police Protection ($5.2 million annually at build out), closely followed by those from General Government operations ($4.2 million annually at build out). As such, development of the area is expected to result in an annual revenue shortfall of approximately $4.7 million at the end of the first five-year period. The shortfall is projected to grow to $5.6 million by build out at the end of the second five-year period. This is, in part, associated with the high percentage of residential development in the area and the costs of providing services to residents, and a comparatively small percentage of commercial sales tax - generating development. Residential lands comprise nearly 47% of the entire annexation area, and commercial lands account for 4%. Developer impact fee (DIF) revenues are projected to be $5.09 million at phase build out of each of the two phases. This assumes that development occurs evenly over the 10-year build out period. The highest sources of DIF revenue will be from the New Construction Tax and the Park & Recreation Facilities Fund, which will benefit from the future construction of new single-family and multi -family dwelling units in the annexation area, particularly those in the Mirasera Specific Plan. Scenario B Annexation of Scenario B will result in a population increase of approximately 15,779 to the City of Palm Desert. Build out of the undeveloped lands in Scenario B is expected to take 20 years. Revenues at the end of the 20-year build out period are projected to be approximately $9.86 million annually. As with Scenario A, the largest revenue source will be local Sales Tax ($3.9 million annually), followed by Structural Fire Tax ($1.8 million annually) and Transient Occupancy Tax ($1.5 million annually). At the end of the 20-year build out period, annual costs are projected to be $13.4 million. As with Scenario A, the highest costs are associated with providing police protection ($5.5 million) and general government services ($4.49 million) to existing and future residents. g:\planning\laud aylaian\staff reports\sun city annexation fiscal impact analysis 1-26-12.docx Potential Annexation Fish Impact Analysis 26 January 2012 Page 5 of 5 Build out of Scenario B is expected to generate an annual revenue shortfall of approximately $3.9 million at the end of the first five-year build out period. However, the shortfall is projected to fall slightly to $3.5 million at the end of the fourth five-year period. Like Scenario A, residential development accounts for a much greater percentage of land in the annexation area (37%) than commercial development (5%), and sales tax -generating opportunities are limited. One-time revenues resulting from Developer Impact Fees in Scenario B are expected to be $4.3 million at build out of each phase, assuming development occurs evenly over the 20-year build out period. These revenues will constitute a significant revenue source to the City over the 20- year build out period, but they are one-time revenues that will be realized only as new development occurs. Submitted by: Lauri Aylaian Director of Community Development M. Wohlmuth, City Manager Revi by: P Gibson Director of Finance gAplanningllaud aylaianlstaff reportslsun city annexation fiscal impact analysis 1-26-12.docx -025 Manitoia Drive, Suite 3 - Indiaia Weill, CA 922to (-'hone 760.360.]666 Fax 76076.1 "'60 R_r�h�t%RrabBernl-�itmer.��car,� rn Ut February 15, 2012 Hon. Robert A. Spiegel, Mayor City of Palm Desert 73510 Fred Waring Drive Palm Desert, CA 92260 Re: H.N. and Frances C. Berger Foundation ANNEXATION Dear Mayor Spiegel: This fine has the privilege of representing the H.N. and Frances C. Berger Foundation. Last month, the City granted the Berger Foundation's request to continue its consideration of the fiscal study concerning the potential annexation for areas north of the I-10 so it could review the study. Our review showed that the fiscal study presented in January did not reflect the current approved Specific Plan for the Berger Foundation parcels. The revised fiscal plan (titled "Technical Addendum" by Terra Nova) now reflects the approved land uses for the Berger Foundation parcels. The revised report shows significantly more revenue from the Berger Foundation parcels compared to the January version. Unfortunately, it also shows additional expenses due to added residential units in the Specific Plan. The fiscal study clearly demonstrates that the Berger Foundation parcels standing alone create significant financial benefit to the City upon annexation. However, the net financial conclusions of the revised fiscal report considering all areas north of the I-10 are similar to the ones presented in January. The Berger Foundation believes that the assumptions used for the expenses in the fiscal study significantly overstate future costs. Most notably, the fiscal study presumes the City would nearly double police coverage for the area immediately after annexation compared to existing police coverage. The area is now patrolled by the Riverside County Sherriff s Department and would continue to be after annexation, although through the City's contract. This vast overstatement of cost is attributable to a different staffing ratio the City uses as its guide compared to the County. While that may be logical on paper, we do not believe staffing levels would nearly double just because a boundary line changes. This one cost item would change the results of the fiscal study. We understand the City may be hesitant to pursue annexation of all areas north of the I- 10 if the fiscal impact creates a financial burden. We would encourage the City to carefully review the likely true costs the City would incur before making any fiscal findings with regards to the contemplated annexation. E9 CM REGULAR MEETING OF THE PALM DESERT REDEVELOPMENT AGENCY FEBRUARY 23, 2012 Staff has requested continuance of this matter to the next meeting, March 8, 2012. XV. CONTINUED BUSINESS A. FISCAL IMPACT ANALYSIS REPORT REGARDING POTENTIAL ANNEXATION BY THE CITY OF PALM DESERT FOR AREAS NORTH OF INTERSTATE 10 (Continued from the meeting of January 26, 2012). Rec: By Minute Motion, continue to the meeting of March 8, 2012. Action: =0ie�� Lmn CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT STAFF REPORT REQUEST: THAT THE CITY COUNCIL RECEIVE AND FILE DOCUMENTS PERTAINING TO THE POTENTIAL FISCAL IMPACT OF ANNEXATION OF AREAS NORTH OF THE INTERSTATE 10, AND PROVIDE STAFF DIRECTION CONCERNING PROCEEDING ON THIS MATTER SUBMITTED BY: Lauri Aylaian, Director of Community Development DATE: March 8, 2012 CONTENTS: 1. Technical Addendum to Fiscal Impact Analysis for Potential Annexation to the City of Palm Desert, dated February 8, 2012 2. Memorandum from Terra Nova Planning & Research regarding Clarification of Gas Tax and Measure A Revenues, dated February 21, 2012 3. Memorandum from Director of Public Works regarding Capital Improvements Needs in the Sun City Area, dated February 15, 2012 Recommendation By minute motion: That the City Council direct staff regarding further actions to take, if any, concerning annexation of areas north of Interstate 10. Background This report provides supplemental information to the Fiscal Impact Analysis for Potential Annexation to the City of Palm Desert, which was presented to the City Council at its January 26, 2012, meeting. In particular, a technical addendum that corrects for an invalid land use assumption is provided, as is a memorandum explaining the computation of Highway Users Gas Tax and Measure A Fund revenues. Additionally, the Director of Public Works has provided an order -of -magnitude estimate of the capital cost for filling existing infrastructure needs in the study areas. This information is not generally included in a fiscal impact analysis, since the goal of such analyses is to determine the financial viability of an area once, it has been fully developed and the infrastructure is complete. Nonetheless, it is useful information for a complete picture of the financial impact that annexation would have on the City of Palm Desert. M M TECHNICAL ADDENDUM TO FISCAL IMPACT ANALYSIS FOR POTENTIAL ANNEXATION TO THE CITY OF PALM DESERT Prepared for City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Prepared by Terra Nova Planning & Research, Inc. 42635 Melanie Place, Ste. 101 Palm Desert, CA 92211 February 8, 2012 TN/City of Palm Desert Tech. Addendum/Potential Annexation Table 1 Scenario B - Developed Acreage Revised to Reflect SP-343) Existing Existing Existing Dwelling Square Hotel Existing Land Use Designation Acreage Units' Footage Rooms Population Inside Scenario A: SP-281 Single -Family Residential 792.0 4,985 SF -- -- 9,000 SP-281 Golf Course 435.3 SP-281 Commercial 29.0 -- 277,912 -- -- SP-281 Commercial (Hotel) 2.2 -- 50,0004 72 -- Riv. Co. Commercial Retail 21.1 -- 202,205 -- -- Riv. Co. Commercial (Hotel) 1.4 -- 40,0004 82 -- Riv. Co. Comm./Tourist (RV Park) 26.3 Riv. Co. Industrial - Light 56.6 -- 542,409 -- -- SP-281 Fire Station 3.5 I-10 Corridor 79.2 Railroad Corridor 38.8 Outside Scenario A: Single -Family Residential 1.3 1 SF -- -- 2 SP-343 Golf Course/Facilities 245.9 SP-225 Private School 96.0 SP-225 RV Storage 5.2 Agriculture 9.3 I-10 Corridor 52.8 Railroad Corridor 34.1 Total: 1,930.0 4,986 1,112,526 154 9,002 Includes 4,869 detached and 116 attached units in Sun City, and one detached unit outside Sun City. SF = single-family dwelling unit. Assumes commercial and industrial buildings cover 22% of the lot, with the remaining area available for access roads, parking, landscaping, and other ancillary uses. 3 Includes an estimated 9,000 residents in Sun City (provided by Paul Brady, Sun City Community Assoc., Oct. 2011), and one additional dwelling unit at 2.08 persons/household (2010 U.S. Census). 4 Estimate for 72-room and 82-room hotels. *40 TN/City of Palm Desert Tech. Addendum/Potential Annexation III. BUILDOUT COMPARISON The following table compares build out of vacant acreage in SP-151, as described in the original report, and build out of vacant land in SP-343. Table 3 Build out Comparison by Land Use Category SP-151 and SP-343 Land Use Category SP-151 SP-343 Difference Hotel Facilities 250 rooms 350 rooms +100 rooms 200,000 sq.ft. 350,000 sq.ft. +150,000 sq.ft. Resort Golf -View Villas 0 46 SF du's +46 SF du's Resort Timeshare Units 0 184 MF du's +184 MF du's Golf -View Condos 0 468 MF du's +468 MF du's MixedUse Retail Village - residential 0 127 MF du's +127 MF du's - commercial 0 346,912 sq. ft. +346,912 sq. ft. Industrial Park 0 666,991 sq. ft. +666,991 sq.ft. Executive Office/Business Park 987,070 sq.ft. 153,331 sq.ft. -833,739 sq.ft. Community/Service Commercial 295,162 sq.ft. 100,000 sq.ft. -195,162 sq.ft. SF du = single-family dwelling unit; MF du = multi -family dwelling unit Build Out Assumptions Build out values have been calculated using the same methods and assumptions as those used in the original fiscal analysis. For residential land uses, it is projected that the number of dwelling units at build out will be 85% of the maximum permitted density (= # acres x maximum du's/acre x 85%). Dwelling units in SP-343 were determined to be single-family or multi -family based on descriptions provided in the NorthStar Specific Plan. For commercial, office/business park, and industrial land uses, it is projected that future building square footage will be equivalent to 22% lot coverage (= # acres x 43,560 sq.ft./acre x 22%). This level of building coverage is typical of traditional single -story development in the region; remaining lot square footage is necessary to meet local parking and landscaping requirements. This methodology was used in the original fiscal analysis, and it is duplicated here. An exception occurs in the SP-343 Community Commercial category, where the Specific Plan projects less than 22% lot coverage, for a maximum build out of 100,000 square feet. Based on the SP-343 Conceptual Land Use Plan, this revised analysis estimates that build out of SP-343 will add 3.0 more paved roadway miles to Scenario B. Build out Dwelling Units and Population As shown in Tables 3 and 4, build out of SP-343 is projected to result in the development of 825 more dwelling units than SP-151. With an average household size of 2.08 persons per household in Palm Desert, this equates to a population of 1,716 more residents than that projected in the original fiscal study. Should annexation of Scenario B occur, a total potential Scenario B population of 17,495 would be added to the City's existing population. 5 TN/City of Palm Desert Tech. Addendum/Potential Annexation the Specific Plan area, and including sales tax generated by the existing clubhouse at The Classic Club, as well as potential revenues generated by future timeshares. One-time revenues generated by Developer Impact Fees (DIF) are also projected to increase modestly due to more construction in the Specific Plan area and one-time timeshare development fees. Potential DIF revenues are projected to be $4.7 million at build out of each phase during the 20-year build out period. This represents an 8.5% increase over DIF revenues shown in the original analysis. Given the potential of SP-343 to develop 825 more dwelling units and accommodate 1,716 more residents than SP-151, the costs to the City for providing public services to the area will also increase. Costs include those required for general government operations, roadway maintenance, and the provision of emergency services. Annual costs at the end of the 20-year build out period are projected to be $14.7 million/annually. This represents an increase of 11.4% over the original report. After replacing SP-151 with SP-343, potential cash flow to the City at 20-year build out is projected to be a deficit of -$3.4 million/year. This is 1% more than that anticipated in the original fiscal analysis and is largely due to the costs of providing public services to an increased build out population. 7 400 TN/City of Palm Desert Tech. Addendum/Potential Annexation Table 6 Developer Impact Fee Revenues (One time only)' Annexation Scenario B (revised to include SP-343) Build out Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Phase III (Yrs 11-15) Phase IV (Yrs 16-20) New Construction Tax $949,113 $949,113 $949,113 $949,113 Art in Public Places Fund $698,162 $698,162 $698,162 $698,162 Low Income Housing Mitigation Fee $560,396 $560,396 $560,396 $560,396 Child Care Program Fund $705,257 $705,257 $705,257 $705,257 Traffic Signals Fund $243,961 $243,961 $243,961 $243,961 Planned Drainage Fund $180,750 $180,750 $180,750 $180,750 Parks & Recreation Facilities Fund $1,353,736 $1,353,736 $1,353,736 $1,353,736 Timeshare Development Fees $34,500 $34,500 $34,500 $34,500 Total Developer Impact Fee Revenues at Phase Build out: $4 725 875 $4 725 875 $4 725 875 $4 725 875 Developer impact fees occur only once, at the time the unit is permitted. '0 In En r -I a -j TERRA NOVA PLANNING & RESEARCH INC," MEMORANDUM TO: Lauri Aylaian, Community Development Director, City of Palm Desert FROM: Andrea Randall DATE: February 21, 2012 RE: Clarification of Gas Tax and Measure A Revenues Described in the Potential Annexation Fiscal Impact Analysis Terra Nova has been asked to provide clarification about projected revenues from the Highway User Gas Tax and Measure A Fund, as they pertain to potential annexation of land north of Interstate-10. Descriptions of these calculations are provided below. i-Iighway User Gas Tax L-Iighway User taxes are derived from state taxes on the sale of motor vehicle fuels. Revenues from the gas tax are deposited into the State's Highway Users Tax account and apportioned by the State Controller to cities and counties on a monthly basis. Apportionments are restricted for the construction, maintenance, and operation of local streets and roads. To project potential future City gas tax apportionments resulting from buildout of the two annexation areas (Scenario A and Scenario B), the fiscal impact model uses data from the State Controller's office. The Controller's records, which are available online, indicate that $1,216,771.71 was apportioned to the City of Palm Desert between July 2010 and June 2011 (the last complete fiscal year available). For other apportionment calculations, the State assumes a population of 52,067 for the City of Palm Desert; this population. figure was used to determine a per capita factor for gas tax revenues. $1,216,771.71/year _ 52,067 persons = $23.37/capita/year This per capita factor is applied to the projected buildout population of each annexation area. Buildout of Scenario A is projected to result in a buildout population of 15,144, which translates to potential Highway User gas tax revenues of $353,915 by the end of the 10-year buildout period. Under Scenario .B, the buildout population, as modified to include SP-343, is projected to be 17,495, which translates to $408,858 in Highway User gas tax revenues. (Projected revenues shown in the fiscal analysis are slightly higher due to rounding in the fiscal model.) Page 1 of 2 42635 MELANIE PLACE, SUITE 1010 PALM DESERT, CA 92211 ❑ (760) 341-480007 FAX (760) 341-4455 CITY OF PALM DESERT PUBLIC WORKS DEPARTMENT INTEROFFICE MEMORANDUM To: John Wohlmuth, City Manager From: Mark Greenwood, P.E., Director of Public Works Date: February 15, 2012 Subject: Capital Improvement Needs Fiscal Analysis for the Proposed Sun City Annexation At your request, I have conducted a cursory evaluation of capital improvement needs within the proposed Sun City annexation area. Since it is impossible to accurately estimate the ultimate cost of improvements without in-depth analysis, the following figures should be considered as estimates of the magnitude of potential costs. A much more detailed analysis will be needed to produce budget -level cost estimates. IMPROVEMENT TYPE QUANTITY UNIT COST TOTAL COST STREETS Arterials Only) 1,400,000 SF $20 $28,000,000 SIGNALS 5 $300,000 $1,500,000 STORM DRAINS Backbone only) 30,000 LF $400 $12,000,000 RETENTION BASINS 5 acres $500 000 $2,500,000 GRAND TOTAL $",000 000 The above analysis does not include amenities such as parks and recreation facilities, street lighting, etc., which would be at significant additional cost. This analysis i for Sce;roArea 'o B which is the largest alternative under consideration. Improyppq tts brad costs A only, are roughly half of the amount shown above. Mark )Grnwood, Director f Public' Cc: La6ri Aylaian, Director of Community Development o:P .wa cxewwj*Wwy oocumWWWaa oocusun car AnrwMtor, CIP COMA c * Continued to a date uncertain for further ongoing review of the matter as it relates to future planning activities in the City. 4-0 (Harnik ABSENT) CITY OF PALM DE DEPARTMENT OF COMMUNI STAFF REPORT '.do Icy/ %0//) .._ REQUEST: THAT THE CITY COUNCIL RECEIVE AND FILE DOCUMENTS PERTAINING TO THE POTENTIAL FISCAL IMPACT OF ANNEXATION OF AREAS NORTH OF THE INTERSTATE 10, AND PROVIDE STAFF DIRECTION CONCERNING PROCEEDING ON THIS MATTER SUBMITTED BY: DATE: CONTENTS: Recommendation Lauri Aylaian, Director of Community Development March 8, 2012 1. Technical Addendum to Fiscal Impact Analysis for Potential Annexation to the City of Palm Desert, dated February 8, 2012 2. Memorandum from Terra Nova Planning & Research regarding Clarification of Gas Tax and Measure A Revenues, dated February 21, 2012 3. Memorandum from Director of Public Works regarding Capital Improvements Needs in the Sun City Area, dated February 15, 2012 By minute motion: That the City Council direct staff regarding further actions to take, if any, concerning annexation of areas north of Interstate 10. Background This report provides supplemental information to the Fiscal Impact Analysis for Potential Annexation to the City of Palm Desert, which was presented to the City Council at its January 26, 2012, meeting. In particular, a technical addendum that corrects for an invalid land use assumption is provided, as is a memorandum explaining the computation of Highway Users Gas Tax and Measure A Fund revenues. Additionally, the Director of Public Works has provided an order -of -magnitude estimate of the capital cost for filling existing infrastructure needs in the study areas. This information is not generally included in a fiscal impact analysis, since the goal of such analyses is to determine the financial viability of an area once it has been fully developed and the infrastructure is complete. Nonetheless, it is useful information for a complete picture of the financial impact that annexation would have on the City of Palm Desert. Staff Report Potential Annexation Fiscal Impact Analysis March 8, 2012 Page 2of2 The information produced during the study demonstrates that neither area (described as Scenarios A and B in the analysis) north of Interstate 10 is financially viable under the conditions analyzed, and that annexation would pose a burden on the General Fund. More particularly, at build -out the annual costs would exceed annual revenues as follows: Scenario A (Sun City and area south of Avenue 38): -$5.5 million/year Scenario B (Scenario A plus Classic Club and Xavier Prep area): -$3.4 million/year While one-time costs and revenues would be as follows: Scenario A: $22 million cost for meeting existing infrastructure needs $10.2 million total revenue from Developer Impact Fees through build out Scenario B: $44 million cost for meeting existing infrastructure needs $18.9 million total revenue from Developer Impact Fees through build out If required by the Local Agency Formation Commission (LAFCO), inclusion of Bermuda Dunes in these analyses would further diminish the financial viabilities of any proposed annexation. Fiscal Analysis There is no fiscal impact with this request. If further study is directed by the City Council, additional appropriations will be required for consultants. Submitted By:i ter. - .. Lauri Aylaian, Community Development Director Department rem (� //fj. V Paul S. diah,-Direbtor of Finance Approval: M. Wohlmuth, City Manager glplanninglauri aylaian\sphere of influence and annexation\sun dty annexation fiscal impact analysis 3-8-12.docx PAGE: 1 CONY O0 IPMM 12w@T2 PURCHASE ORDER 73-510 FRED WARING DRIVE, PALM DESERT, CALIFORNIA 92260-2578 TELEPHONE (760) 346-0611 FAX (760) 341-4564 TO:TERRA NOVA PLANNING & RESEARCH 42635 MELANIE PLACE SUITE 101 PALM DESERT, CA 92211 P.O. NO: 017615 DATE: 10 / 18 / 11 SHIP TO: City of Palm Desert ATTN: PLANNING 73-510 FRED WARING DRIVE PALM DESERT, CA 92260 VENDOR NO. 4196 DELIVER BY SHIP VIA. F.O.B. '' TERMS 10/31/11 NET CONFIRM BY CONFIRM TO REQUISITIONED BY SEE REQUISITIONER/JRB TBECKER FREIGHT CONTRACT NO. ACCOUNT NO. `,% PROJECT REQ. NO. ;' REQ. DATE; 11044704123090 19847 10/12/11 ITEM AND DESCRIPTION UNIT COST EXTENDED • 1 18755.00 DL PROFESSIONL SERVICES OTHER 1.0000 18755.00 FISCAL ANALYSIS -SUN CITY ANNEXATION FEASIBILITY NOT TO EXCEED 2 1200.00 DL PROFESSIONL SERVICES 1.0000 1200.00 OTHER REIMBURSABLES NOT TO EXCEED CM APPROVED 10/06/2011 SUB -TOTAL 19955.00 TOTAL 19955.00 REMARKS: ATTN.VENDOR: If a similar order has been lace verbally, this P.O. serves as a CONFIRMING ORDER. �--� INVOICE PAID AMOUNT PAID AUTHORIZED BY PURCHASING OFFICER APPROVED FOR PAYMENT SEE REVERSE SIDE - INSTRUCTIONS PURCHASE ORDER TERMS AND CONDITIONS Acceptance: City reserves the right to refuse any goods and to cancel all or any part of the goods not conforming to applicable specifications, drawings, samples or descriptions. Acceptance of any part of the order shall not bind City to accept future shipments, nor deprive it of the right to return goods already accepted. 2. Late Deliveries: If delivery of the commodity or service cannot be made as specified or sooner and at the price shown, notify the City Purchasing Officer immediately. And correspondence, other than invoices, relating to this order must be sent to the Purchasing Officer. The City reserves the right to cancel order if delivery is not made by the time specified. 3. Risk of Loss: Delivery shall not be deemed to be complete until goods have been actually received and accepted by the City. 4. Defects: By accepting this order Seller acknowledges that the goods covered by this order are satisfactory for the purposes intended by City. Prices: Unless otherwise provided goods shall be furnished at the prices indicated on this order only. Invoices will be honored for purchase order prices only. Prices on the order include delivery to the Department within building unless otherwise specified on the order. 6. Patent Infringement: Seller agrees to indemnify City and hold it harmless from and against all liability, loss damage, and expense, including reasonable counsel fees, resulting from any actual or claimed trademark, patent or copyright infringement, or any litigation based thereon with respect to any part of the goods covered by this order, and such obligation shall survive acceptance of the goods and payment therefore by the City. 7. Packing: All goods, wrappers and containers must bear markings and labels required by applicable federal, state, and municipal laws and regulations for the protection and safety of persons and property and Seller warrants that prices include all charges to packing, crating, and transportation to f.o.b. point. 8. Nonassignment: This order must not be assigned or transferred to anyone without the written approval of the Purchasing Officer. 9. Labor Disputes: Whenever any actual or potential labor disputes delays or threatens to delay the timely performance of this order, Seller shall immediately give notice thereof to City. 10. HAZARDOUS MATERIAL: SELLER SHALL PROVIDE MATERIAL SAFETY DATA SHEETS FOR EACH PRODUCT CONTAINING HAZARDOUS SUBSTANCE AS LISTED BY CALIF. DIR. IND. REL. IN CALIF. ADM. CODE, TITLE 3, SEC 5194 AND LABOR COSTS. Seller agrees to furnish Material Safety Data Sheet (Form OSHA 20) as applicable for hazardous or potentially hazardous products. 11. Discounts: Discount period will be computed from date of receipt of invoice, or goods or services whichever is the later date. 12. Hold Harmless: Seller agrees to indemnify, defend and save City and its agents and employees harmless from any and all liability, claims, damages or injuries to any person, including injury to Seller's employees and all claims which arise from or are connected with the negligent performance of or failure to perform the work or other obligations of this agreement, or are caused or claim to be caused by the negligent acts of Seller, its agents or employees, and all expenses of investigating and defending against same; provided, however that this indemnification and hold harmless shall not include any claim arising from the sole negligence or willful misconduct of the City, its agents or employees. 13. Out of State vendors maybe required to have withholding for State Income Tax purposes. AGREEMENT FOR PROFESSIONAL SERVICES This AGREEMENT is made and entered into this 5th day of October, 2011, ("Effective Date") by and between the CITY OF PALM DESERT ("City") and Terra Nova Planning & Research, Inc. , a California Corporation ("Consultant") (sometimes referred to individually or collectively as "Party" or "Parties"). WITNESSETH WHEREAS, City desires to retain Consultant as an independent contractor to perform certain technical and professional consulting services in connection with the Sun City Area Annexation Fiscal Impact Analysis project, subject to the terms and conditions specified below, in the documents attached and incorporated herein, and applicable federal, state and local law. NOW, THEREFORE, in consideration of performance by the Parties of the mutual promises, covenants, and conditions herein contained, the Parties hereto agree as follows: 1. Consultant's Services. 1.1 Nature of Services. Consultant shall provide professional and technical services on a non-exclusive basis, as more particularly described in Section 3, below, and in Exhibit A, Scope of Services. 1.2 Personnel. Consultant represents that it has, or will secure at its own expense, all personnel required to perform the services under this Agreement. All of the services required under this Agreement will be performed by Consultant or under its direct supervision, and all personnel engaged in the work shall be qualified, and shall be authorized or permitted under state and local law to perform such services. 1.3 Standard of Performance. Consultant shall perform all services under this Agreement in accordance with the standard of care generally exercised by like professionals under similar circumstances and in a manner reasonably satisfactory to City. 1.4 Consultant Representative. For the purposes of this Agreement, the Consultant Representative shall be Nicole Criste, Principal ("Consultant Representative"). 1.5 Time of Commencement. The execution of this Agreement by the Parties constitutes an authorization to proceed. 1.6 Time of Performance/Time is of the Essence. Consultant shall commence the services contemplated under this Agreement immediately and shall prosecute to completion each task listed in Section 3 in a timely and diligent manner within sixty (60) calendar days. Professional Services Agreement — City — VA 2. Services by City: 2.1 City Representative. For the purposes of this Agreement, the City Representative shall be Lauri Aylaian or such other person designated by the City Manager ("City Representative"). 2.2 Provision of Data. All information, data, reports and records and maps as are existing and available from the City and necessary for the carryings out of the work outlined in Exhibit "A" hereof shall be furnished to Consultant without charge by City, and City shall cooperate in every way reasonable in the carrying out of the work without delay. 3. Consultant's Scope of Work. Upon receipt of a fully executed Agreement, Consultant shall immediately commence work pursuant to this Agreement. Consultant's scope of work shall consist of preparing a fiscal impact analysis for the potential annexation of certain areas north of the Interstate 10, including the Sun City community and commercial areas west of Washington Street and south of 38th Avenue and, as an alternate, areas between the Interstate 10 and the Coachella Valley Multiple Species Habitat Conservation Plan preserve, between the Palm Desert sphere of influence and approximately Cook Street. The scope of work is more particularly described in the Consultant's proposal dated 3 October 2011, and the detailed services are described in Exhibit A appended to this Agreement. 3.1 Reporting & Record Keeping. To assist City in the performance of its planning, reporting, and financial administration obligations, Consultant shall, throughout the term of this Agreement, keep City reasonably informed of progress on work required under this Agreement, and of any problems or delays, anticipated or otherwise, associated with each aspect of the work. Consultant shall promptly respond to any request by City for information, progress reports, or documentation. Consultant shall maintain accurate records of all work performed for each Assignment under this Agreement, including originals or copies, as applicable, of all deliverable documents described in Exhibit A. Upon the completion of work, and if requested by the City, Consultant shall deliver to City the originals of all documentation produced, and may retain copies of such documentation. 3.2 Compliance with Laws. Consultant shall at all times possess any and all licenses and permits necessary to provide the services herein, and shall comply with applicable federal, state and local laws, ordinances, codes and regulations in the performance of this Agreement, and with any and all applicable City of Palm Desert policies and guidelines. 3.3 Confidentiality. Except as otherwise permitted or required by law, Consultant shall maintain as confidential and shall not disclose any and/or all information received in the course of performing pursuant to this Agreement. Consultant shall promptly inform the City in the event Consultant receives a subpoena or court order requiring disclosure of confidential information. gAplanning\lauri aylaian\terra nova - sun city - prof svcs agmt.doc 2 4. Compensation. City shall pay Consultant for the Services provided under this Agreement on the following basis. 4.1 Not -to -Exceed Fee: City shall pay to Consultant a total amount not to exceed $ 18,755.00 for the basic services described in Exhibit A. Payment shall be made on a monthly basis, based upon the breakdown provided in Exhibit B and upon the hourly rates defined in Exhibit B, multiplied by the number of hours worked by each classification of personnel assigned to the project during the previous calendar month. The not -to -exceed fee shall not be exceeded without written agreement between the parties. 5.2 Additional Services: Additional services beyond those described in Exhibit A shall be reimbursed on a time -spent basis at the hourly rates described in Exhibit C. City shall not be obligated to compensate Consultant for additional services performed without advance authorization from the City Representative. 5.3 Reimbursable Expenses: City shall pay to Consultant actual costs plus ten percent (10%), subject to the limitation given below, for expenses incurred on behalf of the project for long distance telephone calls, reproduction, express delivery and courier services, postage, out-of-town travel if pre -approved in writing by the City Representative, and other expenses directly attributable to the project and expressly approved by the City Representative. Reimbursable expenses, including Consultant's mark-up, shall not exceed $ 1,200.00 for this project. 5.4 Extraordinary Expenses/Costs. No claims for additional services, expenses or costs incurred by Consultant will be allowed unless such additional services, expenses or costs are authorized by City in writing prior to the performance or incurrence of such services, expenses or costs. Any additional services, expenses or costs authorized by City shall be compensated at rates mutually agreed upon by the Parties in writing. 6. Method of Payment. 6.1 Invoices. Consultant shall submit to City invoices each month for all services completed, and all expenses or costs incurred pursuant to this Agreement during the preceding month. The invoices shall describe the services rendered during the period and shall show the number of hours worked, the hourly rates charged, and any milestone achievements. Copies of receipts for expenses or costs shall be submitted with each invoice. City shall review such invoices and notify Consultant in writing within fifteen (15) calendar days of any disputed amounts. 6.2 Payment. City shall pay all undisputed portions of the invoice within thirty (30) calendar days after receipt of the invoice up to the maximum amounts set forth in Section 5. 6.3 Audit of Records. At any time during regular working hours, all records, invoices, time cards, cost control sheets and other records maintained by Consultant shall be available for review and audit by the City. 7. Ownership of Work Product. 7.1 Property of City. All documents including reports, analyses or other written material developed or obtained by Consultant in the performance of this gAplanning\lauri aylaian\terra nova - sun city - prof svcs agmt.doc 3 Agreement shall be and remain the property of City without restriction or limitation upon its use or dissemination by City. 8. Conflict of Interest/Prohibited Conduct and Interests 8.1 Conflict of Interest. Consultant and its officers, employees, associates and sub consultants, if any, will comply with all conflict of interest statutes of the State of California applicable to Consultant's services under this Agreement, including, but not limited to, the Political Reform Act (Government Code Sections 81000, et seq.) and Government Code Section 1090. 8.2 No Solicitation. Consultant warrants that it has not employed or retained any company or person to solicit or secure this Agreement, and that it has not paid or agreed to pay any party any fee, commission, percentage, brokerage fee, gifts, or any other consideration, contingent upon or resulting from the award or making of this Agreement. 8.3 No Financial Interest - City. No officer, member or employee of City during his or her tenure or one year thereafter shall have any interest, direct or indirect, in this Agreement or the proceeds thereof. The Parties hereto covenant and agree that to their knowledge no member of the City Council, or officer or employee of City, has any interest, whether contractual, non -contractual, financial or otherwise, in this Agreement, or the subject matter thereof, nor any business or financial relationship with Consultant, and that if any such interest comes to the knowledge of either Party at any time a full and complete disclosure of all such information will be made in writing to the other Party or Parties, even if such interest would not be considered a conflict of interest under applicable laws. 8.4 No Financial Interest — Consultant. Consultant hereby covenants, on behalf of itself, and its officers, employees, agents and representatives, that at the time of executing this Agreement it has no interest, and that it shall not acquire any interest in the future, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed pursuant to this Agreement. Consultant further covenants that in the performance of this Agreement, no person having any such interest shall be employed by Consultant. 9. Indemnification. Other than in the performance of professional services and to the fullest extent permitted by law, Consultant shall indemnify, defend and hold the City, the City's elected officials, officers, employees, agents and volunteers free and harmless from and against all tort liability, including liability for claims, suits, actions, expenses or costs of any kind, whether actual, alleged or threatened, actual attorney's fees, court costs, and expert witness fees incurred by City or Agency, arising out of or in any way connected with, in whole or in part, the acts or omissions of Consultant, or any of Consultant's officers, agents, employees or contractors, in the performance of this Agreement, including but not limited to, claims, suits and liabilities for bodily injury, death or property damage to any individual or entity, including employees or officials of Consultant. The provisions of this paragraph shall not apply to claims arising out of the sole negligence or willful misconduct of City or Agency, any of City's elected officials, officers, employees or agents. gAplanning\lauri aylaian\terra nova - sun city - prof svcs agmt.doc 4 In addition to the foregoing, Consultant shall indemnify, protect, defend and hold harmless the Agency and the City of Palm Desert, their officials, employees, agents and representatives from and against any and all losses, liabilities, damages, costs, and expenses, including attorney's fees and costs to the extent same are caused in whole or in part by any negligent or wrongful act, error, or omission of the Consultant, its officers, agents, employees or subconsultants (or any entity or individual that the Consultant shall bear the legal liability thereof) in the performance of professional services under this agreement. 10. Insurance. Consultant will maintain insurance in conformance with the requirements set forth below. If Consultant's existing coverage does not meet the requirements set forth here, it will be amended to do so. Consultant acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. Any insurance proceeds available to City in excess of the limits and coverage required in this agreement and which is applicable to a given loss, will be available to City. 10.1 Workers' compensation and employer's liability. Consultant shall provide Workers Compensation and Employer's Liability Insurance on an approved policy form providing benefits as required by law with employer's liability limits no less that $1,000,000 per accident or disease. 10.2 Automobile liability. Consultant shall provide auto liability coverage with a limit of no less than $1,000,000 per accident. If Consultant owns no vehicles, this requirement may be met through a non -owned auto endorsement to the CGL policy. 10.3 Waiver. If the Consultant does not carry Worker's compensation coverage, or if the Consultant will not operate any vehicles at any time within the scope of the services in the agreement, provisions for these coverages may be waived upon review and approval of the City's Risk Manager. 11. Status as Independent Contractor. Consultant is, and shall at all times remain as to City, a wholly independent contractor. Consultant shall have no power to incur any debt, obligation, or liability on behalf of City. Neither City nor any of its officials, employees or agents shall have control over the conduct of Consultant or any of Consultant's employees, except as set forth in this Agreement. 12. Non -Assignability; Subcontracting. Consultant shall not assign or subcontract all or any portion of this Agreement without the City's prior, written consent. 13. Non -Discrimination and Equal Employment Opportunity. In the performance of this Agreement, Consultant shall not discriminate against any employee, subcontractor, or applicant for employment because of race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental disability, medical condition, or sexual orientation. Consultant will take affirmative action to ensure that subcontractors and applicants are employed, and that employees are treated during g:\planning\lauri aylaian\terra nova - sun city - prof svcs agmt.doc 5 employment, without regard to their race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental disability, medical condition, or sexual orientation. 14. Cooperation. in the event any claim or action is brought against the City relating to Consultant's performance or services rendered under this Agreement, Consultant shall render any reasonable assistance and cooperation which City might require. 15. Termination. The right is reserved by the City to terminate the Agreement at any time upon seven (7) days written notice, in the event the project is to be abandoned or indefinitely postponed, or in the event the Consultant's services, in the sole judgment of City, are unsatisfactory or because of the Consultant's failure to prosecute the work with diligence or within the time limits specified or because of his disability or death. In any such case, the Consultant shall be paid the reasonable value of the services rendered, based upon Consultant's standard hourly rates, up to the time of the termination. The Consultant shall keep adequate records to substantiate costs and provide copies of original time -cards in the event of termination or suspension. 16. Notices. Any notices, bills, invoices, or reports required by this Agreement shall be given by first class U.S. mail or by personal service. City: John M. Wohlmuth, City Manager City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260-2578 Tel: (760) 346-0611 Fax: (760) 341-6372 With a copy to: Lauri Aylaian, Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260-2578 Tel: (760) 346-0611 Fax: (760) 341-6372 Consultant: Nicole Sauviat Criste, Principal Terra Nova Planning & Research, Inc. 42635 Melanie Place, Suite 101 Palm Desert, CA 92211 Tel: (760) 341-4800 17. Non -Waiver of Terms, Rights and Remedies. Waiver by either Party of any one or more of the conditions of performance under this Agreement shall not be a waiver of any other condition of performance under this Agreement. In no event shall the making by City of any payment to Consultant constitute or be construed as a waiver by City of any breach of covenant, or any default which may then exist on the part of gAplanning\lauri aylaian\terra nova - sun city - prof svcs agmt.doc 6 Consultant, and the making of any such payment by City shall in no way impair or prejudice any right or remedy available to City with regard to such breach or default. 18. Attorney's Fees. In the event that either Party to this Agreement shall commence any legal action or proceeding for damages for breach, or to enforce or interpret the provisions of this Agreement, the prevailing party in such action or proceeding shall be entitled to recover its costs of suit, including reasonable attorney's fees and experts' costs. 19. Entire Agreement. This Agreement, and any other documents incorporated herein by specific reference, represents the entire and integrated agreement between Consultant and City. This Agreement supersedes all prior oral or written negotiations, representations or agreements. No promise or representation, whether oral or written, express or implied, that is not set forth herein, shall be binding or have any force or effect. This Agreement may not be amended, nor any provision waived, except in a writing signed by the Parties which expressly refers to this Agreement. 20. Partial Invalidity. In case any provision of this Agreement should be deemed by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions shall not be affected or impaired thereby. 21. Successors. This Agreement shall bind and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties to this Agreement. 22. Waivers. No waiver of any breach or default of any term or provision of this Agreement shall be deemed a waiver of any other term or provision of this Agreement, and no waiver shall be valid unless in writing and executed by the waiving party. IN WITNESS WHEREOF, said parties have executed this Agreement effective as of the Effective Date above. CONSULTANT I §7 - mt.doc CITY OF PALM DESERT anager 7 EXHIBIT A SCOPE OF FISCAL IMPACT ANALYSIS SERVICES SCOPE OF SERVICES Consultant shall provide the following services under the terms of the Agreement: Coordinate with City and County to secure current fiscal year budget, land use maps, General Plan documentation. etc, necessary to characterize the lands being considered for atuiexation. Collect base data from local, regional and state sources regarding revenues and costs: tax rates. state in lieu fees. County vs. City share of revenues. etc. Input all land use data for lands to be annexed. Model breaks out acreage by land use. County General Plan designations will be used for vacant lands. For existing development, assumptions regarding, revenue will be verified by existing data to the greatest extent possible. Should data not be available, assumptions will be made consistent with the "Riverside County Guide" for preparing fiscal impact studies. �- Update aiinual per capita estimated revenues from State sources. Update CSA revenues from County data. if applicable. Review and stuiuliarize data regarding railroad and freeway accident response {to be collected by City staff). and incorporate costs into draft report. Ruii fiscal model, test results, and confirm data. Prepare narrative discussion of assumptions. findings, and net beilefits/costs associated with potential annexation of either scenario. Submit draft to City staff for review, and amend as necessary. Provide revised narrative to City both electronically and in hard copy for use in staff reports! etc.. Attend one City Council hearing in support of staff presentation. g:\planning\lauri aylaian\terra nova - sun city - prof svcs; agmt.doc 8 EXHIBIT B COST BREAKDOWN AND HOURLY RATES Staff Time Amount Consultation and :Meetings (6 hours) $ 810.00 Data Collection & Analysis, Annexation Scenario A $ 4,320.00 Data Collection Sr Analysis, Annexation Scenario B $ 3.240.00 Modeling and Narrative Dociunent Drafting. Annexation Scenario A $ 5.965.00 Modeling and Narrative Doctunent Drafting. Annexation Scenario B $ 3,400.00 Preparation for and Attendance at 1 City Council Hearing $ 620.00 Admin. Support $ 400.00 Subtotal S 1S,755.00 disc. Office: Postage, telephone, FAX, photocopies, County GIS Research costs, etc. t $ 1.200.00 Total S 19.955.00 Total Annexation Scenario B Share S 6,640.00 1. Reimbursables are estimates and will be billed on a cost basis. Terra Nova Staff Hourly Rate Principal Planner $ 155.00 Senior Planner $ 135.00 Associate Plamier $ 110.00 Assistant Planter $ 95.00 Senior Bloloaist $ 135.00 Nviedia Specialist $ 85.00 Computer Aided Drafting $ 55.00 Draftsman $ 40.00 Administrative Assistant $ 40.00 Secretarial Services $ 25.00 gAplanning\lauri aylaian\terra nova - sun city - prof svcs agmt.doc 9 CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT INTEROFFICE MEMORANDUM To: John M. Wohlmuth, City Manager From: Lauri Aylaian, Director of Community Development Date: 6 October 2011 Subject: Sun City Area Fiscal Impact Analysis Professional Services Agreement This memo forwards for your approval and signature a professional services agreement with Terra Nova Planning & Research. The agreement is for the preparation of a fiscal impact analysis for potential annexation of areas north of Interstate 10. Dave Erwin reviewed an electronic version of the document and gave it his approval. If you sign and return the hard copies to me in time, I will ask Dave to sign them during his office hours on Monday, 10 October 2011. I will start a purchase order for this contract work using Account #110-4470-412-30.90, Community Development - Other Professional Services. However, as you and I discussed, this will encumber the total remaining balance in that account. Even though the Berger Foundation has offered to reimburse the City for a portion of the cost of the analysis, their reimbursement ($6,640) will not be sufficient to cover the expenses we expect to incur during the rest of the fiscal year. Therefore, we will need to make a mid -year budget adjustment for this account. If I can provide additional information, please call me at extension 481. Director of Community Development /la 6F G2 �r 4— - ,4%, K&LO C,a I V G`d/\ i7d C2 M 4,.J- cc: Paul Gibson, Director of Finance )l�r�ws1 lam. Pad I t 35 -1-yea David J. Erwin, City Attorney t� �,�,e s 64 ' ILI k"r . jkLi gAplanningVauri aylaian\memos\wohlmuth - terra nova contract - fiscal impact analysis - 10-6-11 Aocx CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT INTEROFFICE MEMORANDUM To: John Wohlmuth, City Manager From: Lauri Aylaian, Director of Community Development Date: 29 September 2011 Subject: SUN CITY AREA ANNEXATION — FISCAL IMPACT ANALYSIS This memorandum provides you with an update of information relative to the City Council's request that we study the costs of annexing Sun City and the commercial area west of Washington Street, south of Avenue 38, and north of 1-10 ("the Sun City Area") into the City of Palm Desert. I have spoken to representatives of four firms on the City's list of qualified consultants and of those, I recommend that we contract with Terra Nova Planning (first choice) and RSG, Inc. (second). I recommend Terra Nova because of their familiarity with the areas to be studied; because they are local which will make easier their data gathering and our communication; because 1 believe that their estimated schedule is most realistic; because of their successful track record of work with the City of Palm Desert; and because of the reasonableness of their cost. With your concurrence, I will prepare a professional services agreement with Terra Nova Planning & Research for your approval and execution. I will make certain that the scope includes analysis of the Classic Club area west of the Sun City Area as well, despite the fact that the City Council did not ask for this area to be included in the study. I will frame it as an alternate, such that the impact of that area can be separated out from the base area, which is the Palm Desert SOI area north of Interstate 10. 1 believe that the additional area should be considered because the Berger Foundation, who is the key property owner there, has requested that they be included in the Palm Desert SOI, and I don't believe that the annexation of the area north of 1-10 will be fiscally viable without this area. The information will be useful despite the fact that LAFCO just voted to include the Classic Club area in Cathedral City's SOI; inclusion therein does not prohibit the area from being changed to Palm Desert's SOI or even annexed into Palm Desert. For your information, I have summarized below comparative information of the four consultants considered for the fiscal analysis. All four consultants are on the City's Master List of Qualified Professional Services Consultants, so as City Manager you can negotiate and approve a contract of this magnitude. i + . Mr. John Wohlmuth Sun City Area Annexation Fiscal Analysis 29 September 2011 Page Two FIRM SCHEDULE COST COMMENTS Terra Nova Planning 3-4 weeks for research, $17.5K to $22.5K Need to know land use 2 weeks to run model. assumptions: as Could do in about two approved by County, or months if we start in other uses proposed by early October the City, if we want. Office location in Palm Desert provides best communication and access during project. Proposed staff has previously performed good work for the City. RSG, Inc. If they can start next Around $16K I am concerned that they week, they should be are overly optimistic done by the end of about the time it will take October. to get research data from the City and, especially, the County. Proposed staffing is unknown to us. Willdan Financial 6 to 8 weeks Less than $25K; Would use staff in Services maybe $22-24K. Temecula and Oakland, and pull in extra consultants, if needed. I'm not comfortable with how spread out the team is and the uncertainty of who would perform the work. Keyser Marston 3 — 4 weeks after scope "Definitely' under KMA has done a number Associates and contract are $25K of similar studies, but not confirmed, depending the formal studies needed on how long it takes to by LAFCO for annexation, et the info. if it comes to that. If my proposal to prepare a professional services agreement with Terra Nova for this project is acceptable to you, please indicate so below and return this memo to me. If I can provide additional information, please call me at extension 481. Lauri Aylaian Director of Community Development Wohlmuth, City Manager g:\planning\lauri aylaian\memos\wohlmuth - sun city annexation fiscal impact 9-29-11.docx I L -4 TERRA NOVA PLANNING & RESEARCH, INC. October 3, 2011 Ms. Lauri Aylaian Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 RE: Fiscal Impact Analysis, Potential Northern Annexation Dear Lauri: Following our conversation last week, and after review of the materials you forwarded to us, we offer the following scope of work and budget for the preparation of a fiscal impact analysis specific to the feasibility of annexing lands in and around the Sun City area: Understanding of the Project The City of Palm Desert is considering the feasibility of annexing lands on the north side of Interstate 10 (I-10), generally located on the west side of Washington Street, north of the I-10 right of way. The area includes the Sun City community and commercial lands immediately south of that community; as well as lands west of Washington Street and south of 38th Avenue which are partially developed with office and retail commercial land uses. For purposes of this letter, this area will be referred to as Annexation Scenario A. The City also wishes to consider an alternative annexation area that would encompass Annexation Scenario A, and all lands north of the I-10 right of way west of Washington Street and in the vicinity of Cook Street. The northern boundary of this area occurs at or near Frances Way (extended). Most of the additional area is currently vacant, with the exception of the Classic Club golf course and associated facilities. For purposes of this letter, this area will be referred to as Annexation Scenario B. The lands being considered under both Scenarios are currently under the jurisdiction of the County of Riverside. As such, the land use designations assigned under the County's General Plan would govern future development. Assumptions for potential build out units, commercial square footage, etc. will be based on the land use designations assigned in the General Plan. It is also understood that Specific Plan(s) have been approved but not developed within Annexation Scenario B. Terra Nova will confirm that these approvals are still valid, and include the land use proposed in the Specific Plan(s) in the assumptions for the fiscal analysis as appropriate. Finally, we have assumed that the Sun City community will provide data on the number of units within the project, and can assist in securing information on the assessed valuation of these units. Should any undeveloped lands remain within the project 42635 MELANIE PLACE, SUITE 101, PALM DESERT, CA 92211 (760) 341-4800 Ms. Lauri Aylaian October 3, 2011 Page 2 of 4 boundary, we also assume that the ultimate build out can be ascertained through Sun City. As requested, although the scope of work integrates Annexation Scenario A and B, the budget reflects the costs associated with research and documentation for that scenario separately. Scope of Work We offer the following scope of work to complete the project. ➢ Coordinate with City and County to secure current fiscal year budget, land use maps, General Plan documentation, etc., necessary to characterize the lands being considered for annexation. ➢ Collect base data from local, regional and state sources regarding revenues and costs: tax rates, state in lieu fees, County vs. City share of revenues, etc. ➢ Input all land use data for lands to be annexed. Model breaks out acreage by land use. County General Plan designations will be used for vacant lands. For existing development, assumptions regarding revenue will be verified by existing data to the greatest extent possible. Should data not be available, assumptions will be made consistent with the "Riverside County Guide" for preparing fiscal impact studies. ➢ Update annual per capita estimated revenues from State sources. ➢ Update CSA revenues from County data, if applicable. ➢ Review and summarize data regarding railroad and freeway accident response (to be collected by City staff), and incorporate costs into draft report. ➢ Run fiscal model, test results, and confirm data. ➢ Prepare narrative discussion of assumptions, findings, and net benefits/costs associated with potential annexation of either scenario. ➢ Submit draft to City staff for review, and amend as necessary. Provide revised narrative to City both electronically and in hard copy for use in staff reports, etc.. ➢ Attend one City Council hearing in support of staff presentation. Ms. Lauri Aylaian October 3, 2011 Paee 3 of 4 Project Budget The following reflects the above stated scope of work and level of effort expected to be required to complete the fiscal impact analysis. Staff Time Amount Consultation and Meetings (6 hours) $ 810.00 Data Collection & Analysis, Annexation Scenario A $ 4,320.00 Data Collection & Analysis, Annexation Scenario B $ 3,240.00 Modeling and Narrative Document Drafting, Annexation Scenario A $ 5,965.00 Modeling and Narrative Document Drafting, Annexation Scenario B $ 3,400.00 Preparation for and Attendance at 1 City Council Hearing $ 620.00 Admin. Support $ 400.00 Subtotal $ 18,755.00 Misc. Office: Posta e, telephone, FAX, photocopies, County GIS Research costs, etc. $ 1,200.00 Total $19,955.00 Total Annexation Scenario B Share $ 6,640.00 1. Reimbursables are estimates and will be billed on a cost basis. Schedule As we discussed, we expect that the fiscal impact analysis can be completed within 60 days of receiving a notice to proceed. Conclusion I believe that this proposal accurately reflects our conversation, and our understanding of what is needed to complete the fiscal impact analysis. Please feel free to contact me if you have any questions. Sincerely, Nicole Sauviat Criste Principal Ms. Lauri Aylaian October 3, 2011 Pave 4 of 4 r L -A TERRA NOVA PLANNING & RESEARCH, INC. 400 S. FARRELL DR., SUITE B-205 PALM SPRINGS, CA 92262 STANDARD FEE SCHEDULE 2011 Terra Nova invoices its clients on a cost -basis using an hourly billing system. The scope of each planning effort is typically broken down by task and assigned estimated necessary staff time and the applicable hourly rate. All payments for services rendered are to be made payable to Terra Nova Planning & Research, Inc. unless otherwise indicated. Clients are invoiced on a monthly basis, and invoices are due and payable upon receipt. A charge of 1.5% per month is added to all invoices over 30 days past due. The current fee schedule is provided below: Terra Nova Staff Hourly Rate Principal Planner $ 155.00 Senior Planner $ 135.00 Associate Planner $ 110.00 Assistant Planner $ 95.00 Senior Biologist $ 135.00 Media Specialist $ 85.00 Computer Aided Drafting $ 55.00 Draftsman $ 40.00 Administrative Assistant $ 40.00 Secretarial Services $ 25.00 REIMBURSABLES Photo Copies $ 0.15 ea. Blueprints/Xerox $ 0.30/sq. ft. Computer Plotter $15.00/Hr. Telephone Toll Charges Cost FAX Transmittals Cost Reproduction, Special photographic services, document printing, aerial photos, postage, etc. Cost +15%. CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT INTEROFFICE MEMORANDUM To: John M. Wohlmuth, City Manager From: Lauri Aylaian, Director of Community Development Date: 6 October 2011 Subject: Sun City Area Fiscal Impact Analysis Professional Services Agreement This memo forwards for your approval and signature a professional services agreement with Terra Nova Planning & Research. The agreement is for the preparation of a fiscal impact analysis for potential annexation of areas north of Interstate 10. Dave Erwin reviewed an electronic version of the document and gave it his approval. If you sign and return the hard copies to me in time, I will ask Dave to sign them during his office hours on Monday, 10 October 2011. I will start a purchase order for this contract work using Account #110-4470-412-30.90, Community Development — Other Professional Services. However, as you and I discussed, this will encumber the total remaining balance in that account. Even though the Berger Foundation has offered to reimburse the City for a portion of the cost of the analysis, their reimbursement ($6,640) will not be sufficient to cover the expenses we expect to incur during the rest of the fiscal year. Therefore, we will need to make a mid -year budget adjustment for this account. If I can provide additional information, please call me at extension 481. Lauri Aylaian UUh e P L.-AA,, Director of Community Development + 40 pot G %sc,�� /la cc: Paul Gibson, Director of Finance David J. Erwin, City Attorney 6`F IVLL a 'e'a 4- a '0"i" R-OW U h G j" Pd ca kc ",'� +'_ (1 "4 "l lk kv� la. Dot I ss fa fugs &9 wboi.A 6b ta,A acs� Ld k'.e1 gAplanning\lauri aylaian\memos\wohlmuth - terra nova contract - fiscal impact analysis - 10-6-11..docx ro CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT INTEROFFICE MEMORANDUM To: John Wohlmuth, City Manager From: Lauri Aylaian, Director of Community Development Date: 29 September 2011 Subject: SUN CITY AREA ANNEXATION — FISCAL IMPACT ANALYSIS This memorandum provides you with an update of information relative to the City Council's request that we study the costs of annexing Sun City and the commercial area west of Washington Street, south of Avenue 38, and north of 1-10 ("the Sun City Area") into the City of Palm Desert. I have spoken to representatives of four firms on the City's list of qualified consultants and of those, I recommend that we contract with Terra Nova Planning (first choice) and RSG, Inc. (second). I recommend Terra Nova because of their familiarity with the areas to be studied; because they are local which will make easier their data gathering and our communication; because I believe that their estimated schedule is most realistic; because of their successful track record of work with the City of Palm Desert; and because of the reasonableness of their cost. With your concurrence, I will prepare a professional services agreement with Terra Nova Planning & Research for your approval and execution. I will make certain that the scope includes analysis of the Classic Club area west of the Sun City Area as well, despite the fact that the City Council did not ask for this area to be included in the study. I will frame it as an alternate, such that the impact of that area can be separated out from the base area, which is the Palm Desert SOI area north of Interstate 10. 1 believe that the additional area should be considered because the Berger Foundation, who is the key property owner there, has requested that they be included in the Palm Desert SOI, and I don't believe that the annexation of the area north of 1-10 will be fiscally viable without this area. The information will be useful despite the fact that LAFCO just voted to include the Classic Club area in Cathedral City's SOI; inclusion therein does not prohibit the area from being changed to Palm Desert's SOI or even annexed into Palm Desert. For your information, I have summarized below comparative information of the four consultants considered for the fiscal analysis. All four consultants are on the City's Master List of Qualified Professional Services Consultants, so as City Manager you can negotiate and approve a contract of this magnitude. f + r Mr. John Wohlmuth Sun City Area Annexation Fiscal Analysis 29 September 2011 Page Two FIRM SCHEDULE COST COMMENTS Terra Nova Planning 3-4 weeks for research, $17.5K to $22.5K Need to know land use 2 weeks to run model. assumptions: as Could do in about two approved by County, or months if we start in other uses proposed by early October the City, if we want. Office location in Palm Desert provides best communication and access during project. Proposed staff has previously performed good work for the City. RSG, Inc. If they can start next Around $16K I am concerned that they week, they should be are overly optimistic done by the end of about the time it will take October. to get research data from the City and, especially, the County. Proposed staffing is unknown to us. Willdan Financial 6 to 8 weeks Less than $25K; Would use staff in Services maybe $22-24K. Temecula and Oakland, and pull in extra consultants, if needed. I'm not comfortable with how spread out the team is and the uncertainty of who would perform the work. Keyser Marston 3 — 4 weeks after scope "Definitely' under KMA has done a number Associates and contract are $25K of similar studies, but not confirmed, depending the formal studies needed on how long it takes to by LAFCO for annexation, et the info. I if it comes to that. If my proposal to prepare a professional services agreement with Terra Nova for this project is acceptable to you, please indicate so below and return this memo to me. If I can provide additional information, please call me at extension 481. Lauri Aylaian Director of Community Development Wohlmuth, City Manager a g:\planning\lauri aylaian\memos\wohlmuth - sun city annexation fiscal impact 9-29-11.docx CITY OF PALM DE TT.�...._:-.- DEPARTMENT OF COMMUNITY STAFF REPORT Continued t e item three months in order for staff to conduct additional study. (3-1, Benson NO, Harnik ABSENT) REQUEST: THAT THE CITY COUNCIL MEMBERS PROVIDE STAFF DIRECTION CONCERNING ANNEXATION OF AREAS NORTH OF THE INTERSTATE 10. SUBMITTED BY: Lauri Aylaian, Director of Community Development DATE: April 11, 2013 CONTENTS: 1. March 2012 Staff Report with Fiscal Impact Analysis (including Technical Addendum) for Potential Annexation to the City of Palm Desert, dated 8 February 2012 2. City of Palm Desert City Council Meeting Minutes for relevant portions of the 26 January, 23 February, and 8 March 2012 meetings 3. Staff Report and Draft Fiscal Analysis and Plan for Services for the City of Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms Recommendation By minute motion: That the City Council direct staff regarding further actions to take, if any, concerning potential annexation of areas north of Interstate 10. Background In recent years, Palm Desert policy makers have addressed several times the question of whether, and in what configuration, to annex areas north of Interstate 10 into the City. Most recently, in March 2012, the City Council received and reviewed a fiscal impact analysis (attached) that was prepared to study the potential annexation of the Sun City Palm Desert area and unincorporated lands to the west; one option was for the Sphere of Influence (SOI) lands that are north of Interstate 10 (described as Scenario A in the report), and another option was for the same area plus land within Cathedral City's SOI east of Jack Ivey Ranch (Scenario B). Scenario B lands include the Classic Club, Xavier Preparatory High School, and vacant lands on either side of Cook Street, which connects the area directly to Palm Desert. Ultimately the City Council continued staff's request for direction to a date uncertain. Var 1W Staff Report Potential Annexation Areas North of I-10 April 11, 2013 Page 2of4 During the last year, Cathedral City retained a consulting firm, Ralph Anderson & Associates, to prepare a fiscal analysis for annexing all of the unincorporated lands within their sphere of influence north of Interstate 10, which includes areas studied for annexation by Palm Desert under Scenario B. On Wednesday, 27 March 2013, the Ralph Anderson & Associates fiscal analysis was presented to the Cathedral City city council during a study session held to discuss the potential annexation. The council members directed staff to commence the process of applying to the Riverside County Local Agency Formation Commission (LAFCO) to annex the areas shown in red here: pf, ,se& w e a y If a tYAn�. EVE 1. ..WIL:.. F � Rl `�, 0 g:lplanrnngUaun aylaiamstatt reportslaun aty annexation 4-11-13 (2).docx Staff Report *081 0, Potential Annexation Areas North of 1-10 April 11, 2013 Page 3 of 4 Because the proposed Cathedral City annexation area (outlined in red) involves areas that Palm Desert studied last year for annexation, it is appropriate that the City Council determine now if they want to pursue annexation of these areas. Cathedral City is moving quickly towards annexation, which would preclude Palm Desert from having the opportunity to annex this area in the future. Although annexing land in the sphere of influence of another city is possible, it becomes increasingly difficult to do so as the land proceeds through the annexation process of the other city. In light of Cathedral City's impending annexation goals, staff requests direction from the City Council. Possible courses of action include: 1. Do nothing. Determine that Palm Desert 's growth and build out will focus on areas in current city limits and the Palm Desert SOI, and will not include any portion of the land that is currently in Cathedral City's sphere of influence. 2. Restudy potential revenue. Direct staff to identify and quantify additional revenue streams and land use changes that would be necessary to make cost neutral the annexation of some or all of the areas in question. This should be accompanied by informing LAFCO that Palm Desert will be requesting that the easternmost portion of the Cathedral City sphere of influence be detached from Cathedral City's sphere and annexed into Palm Desert's sphere. 3. Initiate annexation activity. Direct staff to retain a consultant to prepare the fiscal analysis and Plan for Services necessary to submit to LAFCO an application for annexation of areas north of Interstate 10. This could be done for either Scenario A (Sun City and associated areas currently in Palm Desert's SOI) or for Scenario B (Scenario A area I�us the land east of Jack Ivey Ranch that is out of the Multi Species Habitat Conservation Plan conservation area). Fiscal Analysis The information produced during the study prepared for Palm Desert in 2012 demonstrates that neither area (described as Scenarios A and B in the analysis) north of Interstate 10 is financially viable under the conditions analyzed, and that annexation would pose a burden on the General Fund. More particularly, at build -out the annual costs would exceed annual revenues as follows: Scenario A (Sun City and area south of Avenue 38): -$5.5 million/year Scenario B (Scenario A plus Classic Club and Xavier Prep area): -$3.4 million/year This adverse impact on the General Fund could be mitigated by such mechanisms as fiscalization of land use and augmenting revenue through assessment of a parcel tax or gAplanningUaurl aylalan\stalt reportAsun city annexation 4.11.13 (2).docx Staff Report %W W Potential Annexation Areas North of 1-10 April 11, 2013 Page 4 of 4 creation of a community facilities district. Whether or not an annexation could ever be revenue neutral is uncertain and would require additional study. The cost of preparing a detailed fiscal impact analysis and Plan for Services sufficient to meet the requirements of LAFCO's annexation application would be less than $50,000. No money is contained in the current budget for such a study. If desired by the City Council, an appropriation from the unobligated General Fund would be needed. Submitted By: Lauri Aylaian, Community Development Director Department Head: Paul S. Gibson, Director of Finance M. Wohlmuth, City Manager gAplanningVaud aylaian\staH reportslsun city annexation 4.11-13 (2).docx CM * Continued to a date unceri''ain for further ongoing review of the matter as it relates to future planning activities in the City. 4-0 (Earnik ABSENT) CITY OF PALM D DEPARTMENT OF COMMUNI STAFF REPORT REQUEST: THAT THE CITY COUNCIL RECEIVE AND FILE DOCUMENTS PERTAINING TO THE POTENTIAL FISCAL IMPACT OF ANNEXATION OF AREAS NORTH OF THE INTERSTATE 10, AND PROVIDE STAFF DIRECTION CONCERNING PROCEEDING ON THIS MATTER SUBMITTED BY: DATE: CONTENTS: Recommendation Lauri Aylaian, Director of Community Development March 8, 2012 1. Technical Addendum to Fiscal Impact Analysis for Potential Annexation to the City of Palm Desert, dated February 8, 2012 2. Memorandum from Terra Nova Planning & Research regarding Clarification of Gas Tax and Measure A Revenues, dated February 21, 2012 3. Memorandum from Director of Public Works regarding Capital Improvements Needs in the Sun City Area, dated February 15, 2012 By minute motion: That the City Council direct staff regarding further actions to take, if any, concerning annexation of areas north of Interstate 10. Background This report provides supplemental information to the Fiscal Impact.Analysis for Potential Annexation to the City of Palm Desert, which was presented to the City Council at its January 26, 2012, meeting. In particular, a technical addendum that corrects for an invalid land use assumption is provided, as is a memorandum explaining the computation of Highway Users Gas Tax and Measure A Fund revenues. Additionally, the Director of Public Works has provided an order -of -magnitude estimate of the capital cost for filling existing infrastructure needs in the study areas. This information is not generally included in a fiscal impact analysis, since the goal of such analyses is to determine the financial viability of an area once it has been fully developed and the infrastructure is complete. Nonetheless, it is useful information for a complete picture of the financial impact that annexation would have on the City of Palm Desert. Staff Report Potential Annexation Fiscal impact Analysis March 8, 2012 Page 2 of 2 The information produced during the study demonstrates that neither area (described as Scenarios A and B in the analysis) north of Interstate 10 is financially viable under the conditions analyzed, and that annexation would pose a burden on the General Fund. More particularly, at build -out the annual costs would exceed annual revenues as follows: Scenario A (Sun City and area south of Avenue 38): -$5.5 millionlyear Scenario B (Scenario A plus Classic Club and Xavier Prep area): -$3.4 million/year While one-time costs and revenues would be as follows: Scenario A: $22 million cost for meeting existing infrastructure needs $10.2 million total revenue from Developer Impact Fees through build out Scenario B: $44 million cost for meeting existing infrastructure needs $18.9 million total revenue from Developer Impact Fees through build out If required by the Local Agency Formation Commission (LAFCO), inclusion of Bermuda Dunes in these analyses would further diminish the financial viabilities of any proposed annexation. Fiscal Analysis There is no fiscal impact with this request. If further study is directed by the City Council, additional appropriations will be required for consultants. Submitted By: Lauri Aylaian, Community Development Director Department d: ri PS Paul S. di6britDireNor of Finance Approval: M. Wohlmuth, City Manager gAplanninglauri ayiman\sphere of inituence and annexadon\sun dty annexation fiscal Impact analysts 3-8-12.docx IM I CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT STAFF REPORT REQUEST: That the City Council receive and file a fiscal impact analysis and direct staff how to proceed regarding potential annexation of areas north of the Interstate 10 SUBMITTED BY: Lauri Aylaian, Director of Community Development DATE: 26 January 2012 CONTENTS: Fiscal Impact Analysis for Potential Annexation to the City of Palm Desert Recommendation That the City Council direct staff regarding further actions to take, if any, concerning annexation of areas north of Interstate 10. Executive Summary In September 2011, the City Council directed staff to obtain a feasibility study on territory north of Interstate 10 (1-10) for Sun City Palm Desert and the adjacent commercial -retail areas. They asked that the narrow strip of land between the current northern city limits and the centerline of 1-10 be included in the study, and later directed that the areas near the Classic Club and Xavier Preparatory High School, west of Palm Desert's current sphere of influence, be included in an alternative scenario. The City Council specifically excluded Bermuda Dunes from the areas to be studied, while acknowledging that LAFCO staff likely will not recommend to the LAFCO Commission annexation of Sun City without inclusion of Bermuda Dunes. This report provides the City Council with the results of the completed studies, and seeks direction on whether to further pursue potential annexation of any of the areas at this time. Discussion In response to direction from the City Council, staff retained Terra Nova Planning & Research to perform fiscal analyses of the potential annexation of territory to the city of Palm Desert. Such studies are generally undertaken by cities that are considering expansion to determine if -- and to what magnitude -- the area(s) under consideration will have a positive impact on the city's budget, or if they would require support'by the General Fund. In particular, these studies seek to establish the conditions once the area is built out, when one-time developer fees no longer provide short-term revenue enhancements. For the sake of this study, two different scenarios were considered. The first scenarioanalyzed revenues and expenditures for all of the Palm Desert sphere of influence land north of the current city limits. The boundaries of this option, called Scenario A, are as outlined in red on the following map. CM M Potential Annexation Fiscal Impact Analysis 26 January 2012 Page 2 of 5 The Scenario B analysis adds territory that is currently in the Cathedral City sphere of influence. It includes the Classic Club, Xavier Preparatory High School, and vacant lands on both sides of Cook Street, but excludes Jack Ivey Ranch. Scenario B boundaries are as shown below. g:lpianningYaud aylaianlstaff report"n city annexation fiscal impact analysis 1-26.12.docx Potential Annexation Fiscal Impact Analysis 26 January 2012 Page 3 of 5 The results of this analysis show that for both scenarios, the revenues fall far short of the City's cost of providing services. This holds true for the present, when large portions of the areas are undeveloped, and for the future when all areas are built out. One of the fundamental reasons for this shortfall is the high percentage of residential lands in the area, and the comparatively small percentage of commercial sales tax -generating development. For comparison sake, ten percent of the land within Palm Desert's existing boundaries is devoted to commercial development, which accounts for 34% of the revenue to the General Fund. However, in Scenarios A and B, the percentage of sales tax -generating commercial land is less than half of that. The conclusions of a fiscal impact analysis can change significantly by changing the assumptions regarding land use, general administrative costs, sales tax generation, and the costs of providing public safety. Consequently, staff worked closely with Terra Nova to identify and quantify the most likely impacts of annexing territory north of 1-10. Specifically, the following precepts were judged to be key for a valid calculation of fiscal impact: • Undeveloped lands are assumed to be developed with land uses consistent with those designated in approved specific plans or, where no specific plans have been approved, with the City of Palm Desert General Plan. Because some of the land is already developed, the City will see immediate revenues and costs with either Scenario A or Scenario B annexation. Police services will be required at the same officer -to -resident ratio as is provided in the rest of the city. Although Sun City itself may require lesser policing because it is a gated community with its own security, the converse is likely to be true in the remaining annexation areas, which are largely planned as medium -to -high density residential developments; this is true in other parts of the City that have a mix of country clubs and apartments or open subdivisions. The City will receive only 7% of the total 1 % property tax assessed projects in the annexation areas. Property tax revenues will be further reduced due to the City's mandated contributions to the Education Revenue Augmentation Fund (ERAF). Approximately half of the 7% property tax revenue collected by Riverside County is assumed to continue to be contributed to ERAF or an equivalent "revenue sharing" program. Some line items associated with the cost of general government will increase perceptibly as a result of annexation, while others will not. For instance, staffing levels, benefits, and overhead costs should not change for the City Manager's office, the City Council, and departments such as Finance, Special Events, and Risk Management. However, annexation would result in proportionally greater need for services such as: maintenance of roads, parks, storm drain and landscaping; police and fire services; code enforcement and animal control; and permitting, plan check, and inspections. • For years, the Redevelopment Agency and the General Fund have subsidized the Capital Reserve Fund by paying for major public works maintenance projects, such as drainage, paving, reroofing, and landscaping. The true cost of maintaining the City's infrastructure must be calculated using all funds spent on maintenance, not g:lptartning\lauri aylaianlstaff reports\sun city annexation fiscal impact analysis 1-26-12.docx W Potential Annexation Fiscal Impact Analysis 26 January 2012 Page 4 of 5 just those monies that were spent from the General Fund. These subsidies are not reflected in this study. It is therefore likely that the true cost of providing services to the annexation area will be greater than shown. Fiscal Analysis The findings of the fiscal impact analysis are briefly summarized here. Scenario A Annexation of Scenario A will add an estimated 15,144 residents to the City of Palm Desert. Build out of this area is projected to occur in ten years, at which time potentially $6.9 million annually in revenues would be generated. The largest single revenue generator is expected to be local Sales Tax ($2.3 million annually at 10-year build out), which is related to the second highest revenue source, Structural Fire Tax ($1.5 million annually at 10-year build out). These revenues are dependent upon commercial sales tax volume in the annexation area. The costs associated with serving this new area and its population are projected to be approximately $12.6 million annually at the end of the 10-year build out period. The most significant costs are those from Police Protection ($5.2 million annually at build out), closely followed by those from General Government operations ($4.2 million annually at build out). As such, development of the area is expected to result in an annual revenue shortfall of approximately $4.7 million at the end of the first five-year period. The shortfall is projected to grow to $5.6 million by build out at the end of the second five-year period. This is, in part, associated with the high percentage of residential development in the area and the costs of providing services to residents, and a comparatively small percentage of commercial sales tax - generating development. Residential lands comprise nearly 47% of the entire annexation area, and commercial lands account for 4%. Developer impact fee (DIF) revenues are projected to be $5.09 million at phase build out of each of the two phases. This assumes that development occurs evenly over the 10-year build out period. The highest sources of DIF revenue will be from the New Construction Tax and the Park & Recreation Facilities Fund, which will benefit from the future construction of new single-family and mufti -family dwelling units in the annexation area, particularly those in the Mirasera Specific Plan. Scenario B Annexation of Scenario B will result in a population increase of approximately 15,779 to the City of Palm Desert. Build out of the undeveloped lands in Scenario B is expected to take 20 years. Revenues at the end of the 20-year build out period are projected to be approximately $9.86 million annually. As with Scenario A, the largest revenue source will be local Sales Tax ($3.9 million annually), followed by Structural Fire Tax ($1.8 million annually) and Transient Occupancy Tax ($1.5 million annually). At the end of the 20-year build out period, annual costs are projected to be $13.4 million. As with Scenario A, the highest costs are associated with providing police protection ($5.5 million) and general government services ($4.49 million) to existing and future residents. g WanningVaud aylaianlstaff reportslsun city annexation fiscal impact analysis 1-26-12.docx Potential Annexation Fiscal Impact Analysis 26 January 2012 Page 5of5 Build out of Scenario B is expected to generate an annual revenue shortfall of approximately $3.9 million at the end of the first five-year build out period. However, the shortfall is projected to fall slightly to $3.5 million at the end of the fourth five-year period. Like Scenario A, residential development accounts for a much greater percentage of land in the annexation area (3711/6) than commercial development (50/6), and sales tax -generating opportunities are limited. One-time revenues resulting from Developer Impact Fees in Scenario B are expected to be $4.3 million at build out of each phase, assuming development occurs evenly over the 20-year build out period. These revenues will constitute a significant revenue source to the City over the 20- year build out period, but they are one-time revenues that will be realized only as new development occurs. Submitted by: Lauri Aylaian Director of Community Development M. Wohlmuth, City Manager Revi Awd by: P Gibson Director of Finance g:lplanninglauri aylaianWaif Warts\sun city annexation fiscal impact analysis 1-26-12.docx u En FISCAL IMPACT ANALYSIS FOR POTENTIAL ANNEXATION to the CITY OF PALM DESERT Prepared for City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Prepared by r L -A Terra Nova Planning & Research, Inc.® 42635 Melanie Place, Suite 101 Palm Desert, CA 92211 January 2012 0 M I. II. IV. ky Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation FISCAL IMPACT ANALYSIS for POTENTIAL ANNEXATION to the CITY OF PALM DESERT Table of Contents Introduction, Project Description and Demographics A. Introduction 3 B. Project Description 4 1. Scenario A Annexation Area 5 2. Scenario B Annexation Area 12 C. City of Palm Desert Demographics 16 Potential Revenue From Annexation A. General Fund 17 B. Special Revenue Funds 22 1. Annual Revenues 22 2. One -Time Revenues 23 C. Investment Income 26 Potential Costs From Annexation A. General Fund 27 B. Fire Fund 30 Build out Assumptions A. Build out Phasing 32 B. Land Use Designations 33 C. Build out Calculations 33 Cost/Revenue Analysis A. Cost/Revenue Summaries 37 B. Conclusions 42 cm n LIST OF EXHIBITS Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Exhibit 1: Scenario A Annexation Boundary Map 6 Exhibit 2: Sphere -of -Influence Map 7 Exhibit 3: Specific Plans Map 8 Exhibit 4: Land Use Map 11 Exhibit 5: Scenario B Annexation Boundary Map 13 LIST OF TABLES Table 1: Scenario A Developed Acreage 9 Table 2: Scenario A Vacant Acreage 10 Table 3: Scenario B Developed Acreage 14 Table 4: Scenario B Vacant Acreage 15 Table 5: Average Value of New Construction in Palm Desert 19 Table 6: Components of the 8.75% Sales & Use Tax 20 Table 7: Low -Income Housing Mitigation Fees 24 Table 8: Child Care Facilities Impact Mitigation Fees 24 Table 9: Annual Road Maintenance Costs, 2002-2011 29 Table 10: Total Potential Costs/Revenues Summary Table — Scenario A 38 Table 11: Developer Impact Fees Revenues — Scenario A 39 Table 12: Total Potential Costs/Revenues Summary Table — Scenario B 40 Table 13: Developer Impact Fees Revenues — Scenario B 41 LIST OF APPENDICES Appendix A: Scenario A Detailed Cost and Revenue Tables Appendix B: Scenario B Detailed Cost and Revenue Tables Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS I. INTRODUCTION, PROJECT DESCRIPTION AND DEMOGRAPHICS A. Introduction This Fiscal Impact Analysis is being prepared at the request of the Palm Desert City Council, which has received requests from property owners north of Interstate-10 (I-10) to consider annexation into the City limits. At the City's request, this report includes analysis of two scenarios (a detailed description is provided in section I.B., below): 1) Scenario A: the annexation of Sun City and land to the west that is within the City's sphere - of -influence, extending southerly across the Interstate 10 and railroads rights -of -way to the existing City limits, and 2) Scenario B: the annexation of Scenario A, and a larger expanse of land to the west extending beyond Cook Street to Jack Ivey Ranch, and southerly across the Interstate 10 and railroads rights -of -way to the existing City limits. The Riverside County Local Agency Formation Commission (LAFCO) is responsible for approving annexations proposed by cities in Riverside County. A comprehensive fiscal analysis is an integral part of this consideration, and Riverside County's "Guidelines to Preparing Fiscal Impact Reports" has been used as a basis for the analysis provided herein. This analysis addresses the costs and revenues that can be expected to be generated through build out of the potential annexation areas. The values, current revenues and costs associated with existing development have been calculated, and are assumed to occur immediately upon annexation. In addition, build out assumptions have been made for lands currently vacant in both scenarios. Tetra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Both scenarios are analyzed in five year increments. Given that a significant portion of the parcels in scenario A are already developed, a ten-year build out period is assumed. Many of the parcels in scenario B are vacant, and therefore, a twenty-year build out period is assumed for that scenario. Land use and acreage data were obtained from Riverside County Assessor's parcel rolls (October 2011), aerial photography (June 2011), and the Palm Desert GIS Department. Revenue and cost factors were obtained from a variety of sources, including the City of Palm Desert 2011-12 budget, Palm Desert Comprehensive Annual Financial Report, Palm Desert staff, Riverside County Transportation Commission, and the State of California. Factors from the Riverside County "Guide to Preparing Fiscal Impact Reports," adjusted for inflation, have also been used. The analysis applies the appropriate revenue and cost factors to existing development and undeveloped land in the annexation areas using land use designations assigned by Palm Desert and Riverside County. The revenue and cost categories used to develop this fiscal analysis are described in Sections II and III of this document, respectively. Assumptions associated with each annexation scenario are described in Section IV. The cost/revenue analysis for each scenario is provided in Section V. Both costs and revenues throughout this analysis are calculated in current dollars. No inflation adjustment has been made. Although costs and revenues will rise over the build out period of the annexation areas, the ratio of costs to revenues is not expected to change significantly. As a result, the analysis in constant dollars is representative of the framework of costs and revenues likely to be experienced by the City throughout the build out of both scenarios, and beyond. B. Project Description The purpose of this fiscal analysis is to consider the potential financial impacts to the City of Palm Desert resulting from two potential annexation scenarios: 1) annexation of 2,181± acres encompassing Sun City, a resort residential community north of the City of Palm Desert, and adjacent parcels located north of the existing City limits to Avenue 38; and 2) annexation of 2,988± acres, including those described in Scenario A, and additional land to the west extending just beyond Cook Street. Under both scenarios, it is assumed that all lands from the existing City limits northerly, including the Interstate 10 and railroad rights -of -way, would be included in the annexation. All land considered in both scenarios is currently under the jurisdiction of Riverside County. Some land is currently in the City's sphere -of -influence. 4 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation 1. Scenario A Annexation Area Scenario A involves annexation of Del Webb's Sun City, an age -restricted resort -residential community north of Palm Desert, which encompasses ±1,600 acres and includes a population of approximately 9,000 residents. Sun City is generally bounded by the City of Indio on the east, I- 10 and Varner Road on the south, Washington Street on the west, and Frances Way on the north. The annexation boundary also includes land immediately south of Sun. City, consisting of the Union Pacific Railroad and 1-10 corridors, and ±39 acres adjacent to the southeast corner of Sun City. The boundary encompasses an additional 580± acres to the west, generally bounded by Avenue 38 on the north and the 1-10 and railroad corridors on the south. Exhibit 1 illustrates the boundaries of Scenario A. Land in this area is currently under the jurisdiction of Riverside County and contained within the Palm Desert sphere -of -influence (SOI). Please also see Exhibit 2 for SOI boundaries. Two Specific Plans (SP) are located within the boundaries of Scenario A. Each is described below and shown in Exhibit 3. SP-281, Del Webb Sun City, is located in the eastern half of the annexation area. It contains approximately 1,600 acres and 4,985 residential units, golf course and other recreational amenities, community facilities, and retail commercial uses near the I- 10/Washington Street interchange. SP-281 is nearly 100% developed. The Mirasera Specific Plan is generally bounded by Avenue 38 on the north, Varner Road on the south, and existing business park development on the east. It encompasses approximately 190 acres. Of these, 178.5 acres are located in the potential annexation area. Land use designations include high and very high density residential, business park, mixed use, hotel and commercial retail. Open space designations include a village green, parks and trails. The remaining 11.3 acres are located outside of the. annexation area, immediately north of Avenue 38; these are undevelopable acres designated for drainage channel right-of-way. The parcels are currently vacant, with the exception of one manufactured unit owned by Mirasera. 0 2- 96■ , ij I� a '%ftr r AW Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation A land use map for both Scenarios A and B is provided in Exhibit 4 and serves as a basis for the following developed vs. vacant acreage calculations. The Scenario A annexation area encompasses a total of 2,181± acres. Of these, 1,485± are developed, and 696± are vacant/undeveloped. Table 1, below, describes developed acreage by land use category. Existing development includes 4,985 single-family homes, two golf courses, and three community clubhouses in Sun City. Commercial development is located along and in the immediate vicinity of Washington Street, and business park/light industrial structures are located west of Washington Street. Other development includes a fire station, two hotels, and an RV park. Table 1 Scenario A - Developed Acreage Existing Existing Existing Dwelling Square Hotel Existing Land Use Designation Acreage Units Footage Rooms Population SP-281 Single -Family Residential 792.0 4,985 SF -- -- 9,0003 SP-281 Golf Course 435.3 -- -- -- -- SP-281 Commercial 29.0 -- 277,912 -- -- SP-281 Commercial (Hotel) 2.2 -- 50,0004 72 -- Riv. Co. Commercial Retail 21.1 -- 202,205 -- -- Riv. Co. Commercial (Hotel) 1.4 -- 40,0004 82 -- Riv. Co. Comm./Tourist (RV Park) 26.3 -- -- -- -- Riv. Co. Industrial - Light 56.6 -- 542,409 -- -- SP-281 Fire Station 3.5 -- -- -- -- I-10 Corridor 79.2 -- -- -- -- Railroad Corridor 38.8 -- -- -- -- Total: 1,485.4 4,985 SF 1,112,526 154 9,000 Includes 4,869 detached units and 116 attached units. Source: Paul Brady, Sun City Palm Desert Community Association, October 2011. SF= single-family dwelling unit Assumes that commercial & industrial building square footage covers 22% of the lot, with the remainder of the lot available for access roads, parking, landscaping, and other ancillary uses. a Paul Brady, Sun City Palm Desert Community Association, Oct. 2011. 4 Estimate for 72-room and 82-room hotels. The Scenario A annexation area also includes 696± acres of vacant/undeveloped land. Table 2, below, describes how vacant acreage could develop in the future based on assigned land use designations. All land use designations within Sun City/SP-281 and Mirasera Specific Plan were assigned by Riverside County. Parcels within the Palm Desert sphere -of -influence are assumed to develop consistent with the land use designations assigned in the Palm Desert General Plan. M En Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 2 Scenario A - Vacant Acreage Potential Potential Potential Dwellings Square Hotel Potential Land Use Designation Acreage Units Footage Rooms' Population Non -Developable SP-281 Community Association 271.0 -- -- -- -- Public Utility (IID, CVWD) 18.1 -- -- -- -- Public Agency (County, State) 5.3 -- -- -- -- Riv. Co. Open Space/Water 10.4 -- -- -- -- Mirasera Open Space/Parks/Roads 39.5 -- -- -- -- Non-Developable Subtotal: 344.3 Developable PD Medium Density Residential (4-10 du/ac) 113.3 963 SF -- -- 2,003 Riv. Co. Medium -High Density Resid.(5-8 du/ac) 30.8 209 SF -- -- 434 Mirasera High Density Residential (12 du/ac) 22.6 230 SF -- -- 478 Mirasera Mixed Use Residential (16 du/ac) 10.5 142 MF -- -- 295 Mirasera Very High Density Resid. (20-25 du/ac) 66.4 1,411MF -- -- 2,934 SP-281 Commercial 3.0 -- 28,750 -- -- PD Community Commercial 10.7 -- 102,540 -- -- PD Industrial — Business Park 28.0 -- 268,330 -- -- PD Industrial — Light 26.6 -- 254,913 -- -- Mirasera Commercial Retail 17.6 -- 168,664 -- -- Mirasera Mixed Use Hotel 3.1 -- 100,000 150 -- Mirasera Office/Business Park 18.8 -- 180,164 -- -- Developable Subtotal: 351.4 Total: 695.7 2,955 1,103,361 150 6,144 Assumes future residential development occurs at 85% of the maximum density permitted. SF = single-family dwelling unit. MF = multi -family dwelling unit. 2 Assumes future commercial & industrial building square footage will cover 22% of the lot, with the remainder of the lot available for access roads, parking, landscaping, and other ancillary uses. Hotel square footage estimate based on available acreage. 3 Hotel room estimate based on single hotel and available acreage. ° Based on Palm Desert average of 2.08 persons/household (2010 U.S. Census). As described in the tables above, the Scenario A annexation area currently contains 4,985 dwelling units and a population of approximately 9,000. If buildout occurs according to the land use designations currently assigned, the annexation area could contain a total of 7,940 dwelling units and 15,144 residents at buildout. Commercial, business park, and industrial square footage could nearly double, from 1,112,526 square feet to 2,215,887 square feet. Similarly, the number of hotel rooms could increase by 50%, from 154 to 304 rooms. 10 a Terra Nova/City of Palm Desert Fiscal impact Analysis, Potential Annexation 2. Scenario B Annexation Area Under Scenario B, the annexation area is expanded to include all of Scenario A (described above) and additional lands to the west, for a total of 2,988± acres. This annexation area is generally bounded by Palm Desert's existing City limits on the south, the Coachella Valley Preserve on the north, the City of Indio on the east, and the western boundary of the Center Pointe Specific Plan on the west. The boundaries of Scenario B are shown in Exhibit 5. Existing development in Scenario B includes 4,985 single-family residences, two golf courses, and three community clubhouses within Sun City. Other development includes a fire station, two hotels, an RV park, commercial structures along and in the vicinity of Washington Street, and business park/light industrial structures west of Washington Street. Further west are 9± acres of agriculture, a gravel/construction facility, a private school (Xavier High School), two general commercial lots, and the Classic Club golf course, clubhouse and maintenance building. Residential development is limited to one single-family home along Cook Street (Shadow Valley Road). A manufactured unit also occurs on land owned by Mirasera, which is designated for future residential development. Land in Scenario B is currently under the jurisdiction of Riverside County. That portion described in Scenario A, south and east of Frank Sinatra Drive (extended), is located within the Palm Desert SOI. That portion further west, north and west of Frank Sinatra Drive (extended) is located within the Cathedral City SOI. Please refer to Exhibit 2 for SOI boundaries as they pertain to the annexation area. In addition to SP-281 and the Mirasera Specific Plan described in Scenario A, two other Specific Plans approved by Riverside County are located in Scenario B. Exhibit 3 illustrates the boundaries of each Specific Plan, and each is described below. • SP-225, Center Pointe, is located at the western edge of the annexation area. It encompasses 215 acres and was approved for golf course, residential, business park, and commercial development. Nearly half (96 acres) is now developed with a private high school. This analysis assumes the remainder of the Specific Plan will develop as originally approved. • SP-151, North Star Commerce Center and Golf Club, is located along the I-10 corridor in the western portion of the annexation area. It consists of 460 acres and was approved for golf course, business park, and highway commercial development, including hotels and motels. The golf course and clubhouse (The Classic Club) have been built, another parcel contains a gravel/construction site, and the remaining acreage is undeveloped. 12 0 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation The Scenario B annexation area encompasses a total of 2,988± acres. Of these, 1,987± are developed, and ±1,001 are vacant/undeveloped. Please refer to Exhibit 4 for a land use map, which serves as a basis for the following developed vs. vacant acreage calculations. Table 3 Scenario B - Developed Acreage Existing Existing Existing Dwelling Square Hotel Existing Land Use Designation Acreage Units' Footage2 Rooms Population Inside Scenario A: SP-281 Single -Family Residential 792.0 4,985 SF -- -- 9,000 SP-281 Golf Course 435.3 -- -- -- -- SP-281 Commercial 29.0 -- 277,912 -- -- SP-281 Commercial (Hotel) 2.2 -- 50,0004 72 -- Riv. Co. Commercial Retail 21.1 -- 202,205 -- -- Riv. Co. Commercial (Hotel) 1.4 -- 40'0004 82 -- Riv. Co. Comm./Tourist (RV Park) 26.3 -- -- -- -- Riv. Co. Industrial - Light 56.6 -- 542,409 -- -- SP-281 Fire Station 3.5 -- -- -- -- I-10 Corridor 79.2 -- -- -- -- Railroad Corridor 38.8 -- -- -- -- Outside Scenario A: Single -Family Residential 1.3 1 SF -- -- 2 SP-151 Golf Course/Facilities 271.2 -- -- -- -- SP-151 Gravel/Construction Facility 32.2 -- -- -- -- SP-225 Private School 96.0 -- -- -- -- SP-225 RV Storage 5.2 -- -- -- -- Agriculture 9.3 -- -- -- -- I-10 Corridor 52.8 -- -- -- -- Railroad Corridor 34.1 -- -- -- -- Total: 1,987.5 4,986 1,112,526 154 9,002 Includes 4,869 detached and 116 attached units in Sun City, and one detached unit outside Sun City. SF = single-family dwelling unit. 2 Assumes commercial and industrial buildings cover 22% of the lot, with the remaining area available for access roads, parking, landscaping, and other ancillary uses. Includes an estimated 9,000 residents in Sun City (provided by Paul Brady, Sun City Community Assoc., Oct. 2011), and one additional dwelling unit at 2.08 persons/household (2010 U.S. Census). 4 Estimate for 72-room and 82-room hotels. Scenario B also includes approximately 1,001 acres that are vacant/undeveloped. Table 4 describes how vacant acreage could develop in the future based on assigned land use designations. Where Specific Plans have been approved by Riverside County, those land use designations are applied, as it is assumed that upon annexation, the City would honor the provisions of the approved Specific Plans. Parcels outside the Specific Plans have been assigned land use designations in the City's General Plan. 14 Tetra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 4 Scenario B - Vacant Acreage Land Use Designation Potential Potential Potential Dwelling Square Hotel Potential Acreage Units' Footage2 Rooms3 Population Non -Developable Inside Scenario A: SP-281 Community Association 271.0 -- -- -- -- Public Utility (IID, CVWD) 18.1 -- -- -- -- Public Agency (County, State) 5.3 -- -- -- -- Riv. Co. Open Space/Water 10.4 -- -- -- -- Mirasera Open Space/Parks/Roads 39.5 -- -- -- -- Outside Scenario A: SP-225 Regional Circulation 6.4 -- -- -- -- Non-Developable Subtotal: 350.7 Developable Inside Scenario A: PD Medium Density Residential (4-10 du/ac) Riv. Co. Medium -High Density Resid.(5-8 du/ac) Mirasera High Density Residential (12 du/ac) Mirasera Mixed Use Residential (16 du/ac) Mirasera Very High Density Resid. (20-25 du/ac) SP-281 Commercial PD Community Commercial PD Industrial - Business Park PD Industrial - Light Mirasera Commercial Retail Mirasera Mixed Use Hotel Mirasera Office/Business Park Outside Scenario A: 113.3 963 SF -- -- 2,003 30.8 209 SF -- -- 434 22.6 230 SF -- -- 478 10.5 142 MF -- -- 295 66.4 1,411MF -- -- 2,934 3.0 -- 28,750 -- -- 10.7 -- 102,540 -- -- 28.0 -- 268,330 -- -- 26.6 -- 254,913 - -- 17.6 -- 168,664 -- -- 3.1 -- 100,000 150 -- 18.8 -- 180,164 -- -- PD Low Density Residential (0-4 du/ac) 72.0 244 SF -- -- 507 SP-151 Service Commercial 30.8 -- 295,162 -- -- SP-151 Service Commercial (Hotel) 3.0 -- 200,000 250 -- SP-151 Business Park 103.0 -- 987,070 -- -- SP-225 Medium -Density Residential (8 du/ac) 9.0 61 SF -- -- 126 SP-225 Golf Course 13.6 -- -- -- -- SP-225 Commercial 26.1 -- 250,121 -- -- SP-225 Business Park 41.0 -- 392,911 -- -- Developable Subtotal: 649.9 Total: 1000.6 3,260 3,228,625 400 6,777 Assumes future residential development will occur at 85% of the maximum density permitted. SF = single-family dwelling unit. MF = multi -family dwelling unit. 2 Assumes future building square footage will cover 22% of the lot, with the remainder of the lot available for access roads, ?arking, landscaping, and other ancillary uses. Hotel square footage based on 2 hotels and available acreage. Estimates based on available acreage for highway -serving hotel land uses. 4 Based on Palm Desert average of 2.08 persons/household (2010 U.S. Census). 15 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation As shown in the tables above, the Scenario B annexation area currently includes 4,986 dwelling units and a population of approximately 9,002. If future buildout occurs according to currently assigned land use designations, the annexation area could contain an estimated 8,246 dwelling units and 15,779 residents. Commercial, business park, and industrial square footage could increase by 190% from 1,112,526 square feet to 3,228,625 square feet. The number of hotel rooms could increase by 260%, from 154 to 554 rooms. C. City of Palm Desert Demographic Profile The population of the City of Palm Desert increased from 23,252 in 1990 to 41,155 by 2000, according to U.S. Census data. This represents an increase of approximately 76.9%. Census data for 2010 report a population of 48,445, representing an increase of 17.7% over the last decade. Palm Desert's 2011 population, as estimated by the California Department of Finance, is 49,111 residents. The City is also home to a significant seasonal population that is not factored into permanent population data. The City's General Plan indicates that the City's 1999 seasonal population was estimated at between 21,000 and 28,225 residents, and the City currently estimates its seasonal population to be 32,000.' The median age in Palm Desert in 1990 was 42.3 years, which increased to 48.0 years in 2000. By 2010, the median age had increased to 53.0 years. The number of housing units in the City was 18,248 in 1990 and 28,021 in 2000. This figure reached 37,073 by 2010. The 2010 Census reports that 28.1 % of housing units in the City are for seasonal, recreational, or occasional use, further illustrating the importance of the seasonal population to the local economy. In 1990 there were an average of 2.18 persons per household in Palm Desert; by 2000, the average was 2.13. The 2010 Census indicates there is now an average of 2.08 persons per household in Palm Desert. The median household income in Palm Desert in 1990 was $37,315. This had risen by approximately 29.4% in 2000, to $48,316. The 2010 Census has not, as of this writing, released household income data; however, the City estimates its current median household income to be $59,728.Z The 1990, the U.S. Census reported that the median housing unit value in Palm Desert was $172,600. By 2000, this figure increased by 9.5%, to $189,100. In the second quarter of 2011, the median new home price in Palm Desert was $249,123, and the median value of an existing home was $278,996.' ' City's website, Demographic Information, accessed October 25, 2011. 3 "Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, PhD., October 2011. 16 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS II. POTENTIAL REVENUES FROM ANNEXATION Annexation of either Scenario A or Scenario B has the potential to generate revenues to the City of Palm Desert. These revenues include taxes and fees based on real estate values, consumer spending, and per capita allocations from other agencies, among others. This analysis focuses on recurring revenues that the City would expect to receive on an annual basis. One-time fees from Developer Impact Fees are also included. Revenues will include monies that will be available through the General Fund, and can be spent for any activities or services allowed under the General Fund, and revenues that are restricted for spending on specific, predetermined services. All revenue sources are identified as being either restricted fund or General Fund revenues. A. General Fund The General Fund is the general operating fund of the City that accounts for all financial resources typically associated with government, except those which must be accounted for in restricted funds. General Fund revenues include property tax, property transfer tax, sales tax, transient occupancy tax and motor vehicle in -lieu fees. These revenue sources, as they relate to development in the proposed annexation area, have been estimated in this fiscal impact analysis. Property Tax The County of Riverside collects property tax annually at a rate of 1 % of assessed valuation. Property tax revenues are allocated between the County, the jurisdiction in which the land is located (if other than the County), and a variety of other public agencies. The City of Palm Desert is a No -Low Property Tax City and receives 0% of the County's 1% collection for land within its original boundaries. However, under current State law, the City receives 7% of the 17 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation County's 1% collection on lands annexed after 1978. Property tax revenues go to the City's General Fund. Should annexation of Scenario A or B occur, the City would receive 7% of the 1% property taxes collected for the area. It is important to note that property tax revenues will be reduced due to the City's mandated contributions to Education Revenue Augmentation Funds (ERAF). In fiscal year 1992, the State of California required cities and towns to shift a percentage of their property tax revenues to a countywide ERAF account to fund public schools. Based on prior annexations into the City of Palm Desert, the City receives approximately half (3.5%) of the 7% of property tax revenue collected by the County, and the remaining 3.5% is contributed to ERAF.4 In this analysis, properties flagged as "exempt" in Riverside County Assessor's parcel records are not included in property tax revenue calculations. In the annexation areas, these properties are largely owned by CVWD, California Department of Transportation (CalTrans), the County of Riverside, and Sun City Palm Desert Community Association. Additional properties owned by non-profit organizations receive tax exemptions and/or reductions. These include 90.4 acres owned by Xavier High School and 245.3 acres (Classic Club golf course, maintenance building, and clubhouse) owned by the Berger Foundations Property tax revenue calculations have been adjusted to account for these cases. The fiscal analysis assumes that all taxable properties within the annexation areas are taxed at a rate of 1% of valuation, and the collection rate is 100%. Future development in the potential annexation area will include residential, commercial and quasi -industrial development. In order to determine property value, and associated property tax generation for this development, a number of sources were utilized. The following table describes the average values of new residential, commercial and industrial development in Palm Desert. 4 Paul Gibson, Director of Finance/City Treasurer, City of Palm Desert, personal communication, October 27, 2011. 5 Based on property tax information provided by Mike Rover, Rover Armstrong, Berger Foundation representative, personal communication, November 29, 2011. 18 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 5 Average Value of New Construction in Palm Desert Type of Development Average Value Single-family Residential $249,123/unit Multi -family Residential $104,425/unit Commercial Lodging $110/sq. ft.'- or $68,512/room3 Commercial General/Retail $73/sq. ft. Office/Professional $169/sq. ft. Industrial $54/sq. ft.. Golf Course $40,43 1 /acre 4 Source: 2"d quarter 2011 median new home value, "Inland Empire Quarterly Economic Report," prepared for wRCOG by John Husing, Ph.D., October 2011. Includes value of land and structure. 2 Based on building permit data provided by the Palm Desert Building & Safety Department, Nov. 2011. Includes value of structure only. 3 Based on comparable existing highway -serving hotel in the annexation area, per Riv, Co. Assessor's records, Oct. 2011. 4 Based on average of multiple developed golf course parcels in annexation area, per Riv. Co. Assessor's records, Oct. 2011. All other values are based on building permit data provided by the Palm Desert Building and Safety Department, November 2011. Includes value of structure only. Property Transfer Tax Property Transfer Tax revenues are generated when a change of property ownership occurs. For analysis purposes, estimated Property Transfer Tax revenues are calculated according to the instructions provided in the Riverside County "Guide to Preparing Fiscal Impact Reports." Factors set forth in the Guide include a tax rate of $1.10 per $1,000 (or 0.11 %) of the unencumbered property value. The County retains 50% of the tax, and 50% is transmitted to the City in which the sale occurred." Upon the sale of a new unit, 100% of the unit's market value is subject to the property transfer tax. Upon change of ownership of an existing unit, the unencumbered value (assume average is 80%) of the property is subject to the property transfer tax. Change in ownership is assumed to begin in the fourth year of the project, and 10% of existing residential properties are assumed to change ownership per year. Property values are stated in year 2011 dollars. The average value of existing residential units in Sun City is $364,653.' For existing units outside Sun City, and future residential units, an average value of $249,123 is used (see table above for source). A resale rate of I % is assumed for single-family development. As discussed in Section III, this analysis assumes no re -sales during the build out timeframe for commercial and industrial development, as such sales are infrequent and sporadic. Assessor's Office, County of Riverside, personal communication, November 9, 2011. 7 Riverside County Assessor's parcel data, October 2011. 19 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Sales Tax Sales tax in Riverside County is collected at a rate of 8.75% by the State of California. The table below describes how sales tax revenues are allocated among public agencies. Table 6 Components of the 8.75% Sales and Use Tax Rate Jurisdiction 7.25% State of California 1.00% Local (City/County) 0.50% Riverside County Transportation Commission Source: "Detailed Description of the Sales and Use Tax Rate," California State Board of Equalization; and Palm Desert Budget 2010/11, p. 2-2. Of the sales tax collected by the State, one percent (1.0%) is allocated to the jurisdiction in which the sale occurred. The fiscal analysis estimates total taxable sales that could be generated from commercial development at build out of each proposed annexation scenario, then calculates 1 % of taxable sales to determine how much sales tax revenue would be generated to the City. The fiscal model addresses taxable sales generated by existing and potential future development for each annexation scenario. Where taxable sales for existing development are known, actual figures are used. This includes annual taxable sales of $2.46 million generated by restaurants and golf pro shops within the boundaries of Sun City.8 Where taxable sales are unknown, the analysis uses assumptions to estimate taxable sales. The analysis assumes that future retail commercial development will result in 22% lot coverage, and 90% of the net floor space will be dedicated to the sale of taxable goods. Average annual sales estimators from the Urban Land Institute's (ULI) 2008 "Dollars and Cents of Shopping Centers" are applied to the number of square feet dedicated to taxable sales. All existing and future commercial development in the annexation areas is considered Neighborhood Commercial in this analysis. The fiscal analysis calculates sales tax generation for Neighborhood Commercial development, based on the following ULI definition: "Neighborhood Commercial" development includes neighborhood scale shopping centers conveniently located near residential areas, and a variety of smaller commercial centers, specialty retail shops and personal service businesses. These centers sell merchandise for daily living, such as food, drugs, and hardware. This type of development generates an annual average of $326.13 per square foot in taxable sales. In both scenarios, some lands are designated for "business park" development. It is expected that these lands will develop with a mix of light industrial and office uses. Although small amounts of sales tax revenue are likely to be generated by this development, the amount is expected to be negligible. As a result, business park and industrial development is assumed to generate no taxable sales in this analysis. 8 Paul Brady, Sun City Palm Desert Community Association, personal communication, October/November 2011. 20 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Transient Occupancy Tax Transient Occupancy Tax (TOT) is collected from individuals when they occupy a hotel or motel room. In Palm Desert, TOT is collected at a rate of 9%. Potential TOT revenues are based on the number of hotel/motel rooms that are or could be constructed on annexation lands, the average nightly room rate charged, and the average occupancy rate. There are currently two hotels with a combined total of 154 hotel rooms in the annexation areas. The room rates at these properties are lower than the current average room rate in the City. Therefore, room rates have been calculated at $95.00 per night. In addition, annualized occupancy has been assumed to be 65%. Approximately 3 acres are designated for future hotel/motel development in SP-151, and this analysis assumes that two 125-room hotels will be constructed on these parcels in the future, for a total of 250 hotel rooms. An additional 3.1 acres are designated for hotel/motel development in the Mirasera Specific Plan, and this analysis assumes a single hotel/motel will contain 150 rooms. Therefore, future buildout of the annexation areas could result in the development of 400 new hotel rooms. Room rates for future development, particularly future development located near the Classic Club golf course, are expected to be consistent with current City average room rates of $145.00/night. This was determined using total hotel room sales for 2009/10 ($76 million), total number of hotel/motel rooms in Palm Desert (2,216), and an estimated occupancy rate of 65%. This rate is an average that reflects both the world -class hotels that characterize Palm Desert's resort and tourism industry, and more modest hotels/motels located throughout the city. The annexation areas contain 26.3 acres of developed RV Park parcels. In the City of Palm Desert, RV parks generate TOT revenue only during the high -tourism season from January through April, and only from visitors leasing for fewer than 30 days.9 Given the specific and limited nature of these parameters, this fiscal model does not estimate TOT revenue from RV parks. Motor Vehicle In -Lieu Fees Motor Vehicle In -Lieu Fees, or Motor Vehicle License Fees, are taxes on ownership of a registered vehicle. They are collected by the State of California and allocated to local jurisdictions on a monthly basis. These fees are levied on motorists in -lieu of a local property tax. During FY10/11, the City of Palm Desert received $167,177 in motor vehicle in -lieu fees.10 The State uses a City population figure of 52,067, which translates to $3.21 per capita annually. 9 Paul Gibson, Director of Finance/City Treasurer, City of Palm Desert, personal communication, December 2011. 10 Compilation of Motor Vehicle In -Lieu data from State Controller's Office, July 2010-June 2011. 21 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Other Revenue Sources Not Addressed The General Fund includes other revenue sources that will not be affected directly by annexation or will be one-time fees, and therefore, are not addressed in this analysis. These include timeshare mitigation fees, business license taxes, building and grading permit fees, plan check fees, and franchise fees. Timeshare development is not anticipated in the annexation area, so revenues from timeshare mitigation fees are not applicable to this project. Business license taxes will increase with annexation; however, these revenues are highly variable and development - specific, and estimates are not considered useful to this analysis. Building/grading permit fees and plan check fees are also based on specific development plans, which are determined at the time a project is proposed. B. Special Revenue Funds Special Revenue Funds are used to account for revenues/expenditures that are legally restricted for specific purposes. Each Special Revenue Fund that will be impacted by annexation is described below. 1. Annual Revenues The following Special Revenue Funds receive recurring revenues on an annual basis. Highway User Gas Tax Fund The State of California imposes a per gallon tax on all gasoline purchases. A portion of these revenues are allocated to counties and cities throughout the state. During FYI 0/11, the City of Palm Desert received $1,216,771 in Gas Tax revenue, or $23.37 per capita annually." Measure A Funds' 2 Of the 8.75% sales tax collected in Riverside County, 0.50% is contributed to the Measure A Fund for regional and local transportation projects. Measure A funds are distributed by region; approximately 24% is distributed to the Coachella Valley region. Coachella Valley funds are further allocated for specific purposes: 50% for State highways and regional road improvements, 35% for local streets and roads, and 15% for transit (Sunline Transit Agency). Of the 35% for local streets and roads, about 20% goes to the City of Palm Desert. This percentage is based on a formula that accounts for Palm Desert's total number of dwelling units and total taxable sales. The trickle -down effect is illustrated below. 11 Compilation of Highway Users Tax data from State Controller's Office, July 2010-June 2011. 12 Andrea Zureick, Riverside County Transportation Commission, personal communication, November 1, 2011. 22 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation 8.75% sales tax 1 0.50% of sales tax goes to county -wide Measure A Fund 1 24% of county -wide Measure A Fund goes to Coachella Valley region 1 35% of Coachella Valley portion goes to local streets and roads 20% of Coachella Valley streets and roads fund goes to the City of Palm Desert Fire Fund The City's Fire Fund receives revenue from two sources: 1) Proposition A Fire Tax, and 2) Structural Fire Tax. Each is described below. In 1982, the residents of Palm Desert approved the Proposition A Fire Tax for upgrading the City's fire protection and prevention capabilities. Revenues are restricted for the purposes of obtaining, furnishing, operating and maintaining fire protection/prevention services, equipment and apparatus. Annual residential tax rates range from $30 per vacant residential lot, to $45 for rental apartments with 4+ units, to $60 per single-family dwelling unit. Non-residential rates are $60 for buildings equal to or less than 2,600 sq. ft. For larger non-commercial buildings, rates are building -specific and based on a formula that calculates fire flow, requirements by square footage and takes into account the use of fire -resistive construction materials.13 This analysis estimates future Proposition A Fire Tax revenues for residential units, vacant parcels, and smaller non-commercial buildings. However, it does not attempt to project tax revenues for larger non-commercial buildings, given that the parameters required to project these revenues are building -specific and unknown at this time. The second revenue component of the Fire Fund is the Structural Fire Tax. For land not in a redevelopment area (this includes the proposed annexation areas), tax revenues are 5.87% of the 1 % property tax collected by Riverside County.14 They are remitted to the City's Fire Fund and restricted for the purpose of providing fire protection and prevention services. 2. One -Time Revenues The following Special Revenue Funds receive one-time revenues as a direct result of new development. These are typically paid to the City at the time building permits are issued. New development in the potential annexation areas would be required to contribute to these funds. Existing development would not pay these fees. Because they are one-time rather than recurring 13 Rates provided by Mark Dana, Willdan Financial, November 3, 2011. i4 "Comprehensive Annual Financial Report," City of Palm Desert Finance Department, June 30, 2010, page 186. 23 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation annual fees, they are not included in Cost/Revenue Summary Tables for the annexation scenarios. Instead, they are summarized separately in Table 10 for Scenario A, and Table 12 for Scenario B. New Construction Tax Fund Revenues to this fund are from taxes collected upon application for a building permit for the construction of any new building, addition or trailer space in the city. Funds are restricted for the acquisition and development of public facilities, such as parks, playgrounds and public structures. Fees are $0.40 per square foot. Art in Public Places Fund This fund is reserved for maintaining public artwork throughout the City. For residential development, the fee is 0.25 of 1% valuation of the structure; individual single-family dwellings not in a development are exempt for the first $100,000. For non-residential development, the fee is 0.50 of 1% valuation of the structure. Low Income Housing Mitigation Fee Fund Revenues from this fund pay for projects and programs that benefit low and moderate income households. All commercial development must pay this fee at the issuance of building permits, according to the fee schedule below. Table 7 Low Income Housing Mitigation Fees Development Type Fee General Mixed Commercial $1.00/sq. ft. Professional Office $0.50/sq. ft. Industrial $0.33/sq. ft. Resort Hotel $1,000/room Non -Resort Hotel $620/room Source: Palm Desert Building & Safety Department. Child Care Program Fund This fund is used for the purpose of providing child care programs. Fees are collected for all new non-residential square footage according to the fee schedule below. Table 8 Child Care Facilities Impact Mitigation Fees Development Type Fee Light Industrial $0.47/sq. ft. HotelNisitor Uses $0.77/sq. ft. Retail/Service Commercial $0.90/sq. ft. Office Uses $1.15/sq.ft. Source: Palm Desert Building Department. 24 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Traffic Signals Fund Revenues to this fund are collected for residential, commercial and industrial developments either at the time grading permits are paid or prior to the approval of the final map. Fees for residential development are $50 per unit. Fees for commercial development are $500 per 1,000 sq. ft. of building area, and fees for industrial development are $500 per acre.l5 Planned Draina eg Fund Drainage impact fees are collected to fund off -site drainage improvements.16 Fees are dependent upon the location of development, as described below: • South of Whitewater River = $4,000/acre • Between Whitewater and Sand Ridge = $1,500/acre • Between Sand Ridge and I-10 = $1,000/acre No fee has been established for land in the potential annexation areas (north of I-10). Since the annexation areas are most closely located to I-10, this analysis uses the $1,000/acre fee shown above. Park and Recreation Facilities Fund This fund is restricted for expenditures related to park development, maintenance and equipment. Fees are collected for residential subdivisions only, according to the following formula.17 Fee = (# of D.U.'s)(2.149)(5) X Current Land Value Per Acre 1,000 Other Funds Other Special Revenue Funds identified in the City Budget are impacted by new development, but do not apply to the annexation area. Landscape/Lighting District Funds only apply to specific neighborhoods or regions of the City for the purpose of providing landscape and lighting maintenance. These districts are established upon voter approval, and residents in the potential annexation area will contribute to such a fund only upon voter approval.18 Such funds are revenue -neutral and will not generate "extra" revenue for the City. New development in the potential annexation area will also generate revenues that are collected by the City, but transferred to other agencies. These include, but are not limited to, TUMF mitigation fees transmitted to CVAG, school impact mitigation fees remitted to the appropriate school district, and Strong Motion Instrumentation Program (SMIP) fees transmitted to the State. 15 Palm Desert Department of Public Works. 16 Ibid. 17 Ibid. 18 Lauri Aylaian, Community Development Director, City of Palm Desert, personal communication, October 26, 2011. 25 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation C. Investment Income The fiscal analysis assumes that the City will receive investment earnings on all annual revenues. To project potential investment earnings, the fiscal model applies the historical average interest rate of the 90-Day Treasury Bill. During the 25-year period from 1985 through 2010, the average interest earned on the 90-Day Treasury Bill was 4.39%.19 The fiscal model calculates investment income for all annual revenues calculated in this report. 19 Average historical interest rate determined using data from Table B.3, "Riverside County Guide to Preparing Fiscal Impacts Reports," January 1995; and "3-Month Treasury Constant Maturity Rates," from the Federal Reserve Board of Governors, as provided by The Financial Forecast Center. 26 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS III. POTENTIAL COSTS FROM ANNEXATION A. Potential Costs to the General Fund Annexation of developed and undeveloped acreage north of I-10 will not only generate additional revenues, but will also generate additional municipal costs. There will be expenditures for general government services, as well as the expansion and/or extension of infrastructure, utilities, roads and other public services, particularly public safety. The fiscal model projects the City's costs of providing general government services, public safety, and transportation/roadway maintenance to lands in the annexation area. Costs of General Government Costs of General Government are funded through the City's General Fund. Costs associated with general government include city-wide services, such as employee salaries and benefits, postage, printing, travel, equipment maintenance and repairs, contract services, computers, vehicles and other items necessary for the day-to-day functioning of government. They also include public and community services, such as code compliance and animal control, as well as municipal and support services. The City's 2011/12 Budget allocates $13,853,664 for the above -referenced general government services. This does not include expenditures for police protection and roadway maintenance, which are discussed and calculated separately below, and does not include other general government services that are provided by the City but will not be directly impacted by annexation. For residential development, this fiscal analysis translates the costs of general government to a per capita figure. Given the City's 2011 population of 49,111, the annual cost of providing 27 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation general government services to City residents is approximately $282 per capita. This factor is applied to the projected build out population of the annexation areas. The result is the estimated cost of providing general government services to residents living in the annexation areas. In order to capture costs for provision of General Government to commercial and industrial development, it was necessary to derive factors based on a per acre or per square foot basis. No such factors were available through the City. Therefore, this analysis uses factors provided in the Riverside County Guide, adjusted for inflation, to arrive at costs based on year 2011 dollars. Costs of Police Protection The same method used to calculate general government costs has been used to project costs of providing law enforcement services to existing and future residents in the annexation areas. The City contracts with the Riverside County Sheriff's Department for a wide range of police services, including patrol, traffic management, investigations, school resource programs, crime prevention, bike patrol and communications. The 2011/12 City Budget allocates $16,647,638 for police protection services. With a 2011 population of 49,111 residents, this equates to approximately $339 per resident annually. The fiscal model applies this per capita factor to the projected build out population of the annexation areas. Like General Government costs, to estimate the costs of providing police protection to commercial and industrial development, this analysis uses factors provided in the Riverside County Guide, adjusted for inflation. Costs of Roadway Maintenance Costs associated with repairing and maintaining future paved public roads in the annexation area are calculated using a per road mile cost factor. Costs associated with roadway maintenance include repairs and Americans with Disabilities Act retrofitting of sidewalks, resurfacing and restriping of roadways, and similar activities. These costs also include road improvement projects and the widening of roadways, which have averaged $6.1 million annually over the last ten years, as shown in the Table below20. These costs are paid through the General Fund, and include funds from a reserve fund maintained by the Public Works Department for such projects. 20 City of Palm Desert Budget calculations f7r roadway construction and maintenance calculations, January, 2012. 28 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 9 Annual Road Maintenance Costs, 2002-2011 Year Costs 2002 $1,610,521 2003 $9,026,890 2004 $3,587,830 2005 $10,216,200 2006 $4,220,000 2007 $6,236,627 2008 $10 437,052 2009 $7,558,700 2010 $5,257,500 2001 $2,764,936 10 Year Average $6,091,626 With 159 paved public road miles in Palm Desert, this translates to $38,312 per road mile. Scenario A: Should annexation of Scenario A occur, maintenance of private roads within the gates of Sun City will continue to be the responsibility of the homeowners association. Outside of Sun City, there are three areas that currently include, or can be developed to include, paved roads: 1) existing paved roads, 2) future paved roads in the Mirasera Specific Plan, and 3) future paved roads elsewhere in the annexation area. Existing road miles are estimated at 10.5 miles and include Washington Street, Varner Road, 381h Avenue, 40`h Avenue, and local roads that provide access to commercial and light industrial development near the I-10/Washington Street interchange. Buildout of the Mirasera Specific Plan will result in the construction of approximately 3.0 paved road miles. In addition, there are another 141.28 vacant acres available for development in Scenario A. To estimate the number of future road miles that could be constructed on these acres, the fiscal model uses a known road mile per square mile factor. There are currently 159 paved public road miles in the City of Palm Desert, and the existing City limits cover 25.5 square miles?' This equates to an average of 6.2 road miles per square mile of land area. Therefore, at buildout, these 141.28 vacant acres (0.22 square miles) are projected to include approximately 1.5 paved road miles. At buildout, all of Scenario A could include an estimated total of 15.0 paved road miles. These estimates do not include commercial driveways, interior parking lots or other paved facilities that would be located on private property and be privately maintained. To project future roadway maintenance costs in Scenario A, the fiscal model applies the City's costs of $38,312/road mile to these 15.0 road miles. 21 "Comprehensive Annual Financial Report," City of Palm Desert Finance Department, June 30, 2010, page 201. 29 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Scenario B: The same methodology described above is used to project road maintenance costs for Scenario B. At buildout, Scenario B is projected to include: 1) 15.0 miles of paved roadways located within Scenario A boundaries (described above); 2) ±3.5 miles of paved roadways currently existing outside Scenario A (largely limited to western Varner Road and Cook Street), and; 3) future roads constructed outside Scenario A during buildout, which are estimated below. There are approximately 301 vacant acres (0.47 square miles) outside Scenario A that could be built out to include paved roadways. Applying the ratio of 6.2 road miles per square mile of land area, this equates to 2.9 paved road miles. When added together with the miles described above, Scenario B is projected to include approximately 21.4 paved road miles at buildout. The fiscal model applies the City's costs of $38,312/road mile to these 21.4 road miles to estimate future maintenance costs. B. Potential Costs to the Fire Fund Annexation will also generate additional expenditures for fire and ambulance services. The City contracts with the Riverside County Fire Department for these services, which are accounted for in the Fire Fund (rather than the General Fund). The 2011/12 City Budget allocates $9,207,045 for Fire Fund expenditures. Costs of Fire Protection Services — Scenario A Parcels in Scenario A are currently served by Fire Station 81 on Washington Street, just north of Avenue 38. Upon annexation, the City would assume operation of this facility and its fire engine. The annual operating costs for this fire station are approximately $1.5 million. 2 The station is adequately equipped, and no new or upgraded equipment, facilities or personnel would be required upon annexation. These operating costs will be assumed by the City under both. Scenarios A and B. Costs of Fire Protection Services — Scenario B The eastern portion of Scenario B is served by Fire Station 81, as described above. Upon annexation, the City would assume annual costs of approximately $1.5 million for the operation of this fire station. The western portion of the annexation area in the vicinity of the Classic Club is currently served by a combination of three fire stations: 1) Station 71 in north Palm Desert, 2) Station 35 in Thousand Palms, and 3) Station 81 at Sun City (described above). A new fire station is planned in the north Palm Desert/College Park area, which is expected to directly serve this portion of the annexation area and other areas in northern Palm Desert.23 However, no construction date has been set; construction is expected to occur several years in the future. 22 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, November 14, 2011. 23 Ibid. 30 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Because the actual costs of providing fire protection services to the western portion of the annexation area are unknown at this time, the fiscal model estimates future costs on a per capita basis. The City's 2011-12 Budget allocates $9,946,973 for Fire Fund expenditures. With a current City population of 49,111 residents, this equates to $203 per resident annually. The model applies this per capita figure to the potential buildout population of all land outside the Scenario A boundaries. Costs of Ambulance Services Because the annexation area includes a stretch of I-10 extending from Cook Street to Washington Street, costs associated with providing ambulance services to emergency incidents on I-10 must be considered. Between 2006 and 2010, the Fire Department responded to 372 traffic collisions along I-10 between Monterey Avenue and Washington Street.24 This equates to an average of 74 incidents per year. Fire Department data gathered for the I-10 corridor in neighboring Indio show that, over a 3-year period, an average of 54% of traffic accidents resulted in patient transport via ambulance.25 The Fire Department considers this a reasonable assumption for that portion of I-10 that would be annexed into Palm Desert. This means that, each year, ambulance personnel could expect to respond to an average of 40 emergency incidents on I-10 in the annexation area. Ambulances would also provide emergency services to residents and development elsewhere in the annexation area. At the City's direction, a medic unit could be added to Fire Station 81 near Sun City. According to the Fire Department, first -year start-up costs for a medic unit total approximately $190,000.26 This includes the costs of an ambulance ($140,000), medic equipment ($40,000), and incidentals, such as radios and shoreline ($10,000). Annual operating costs for one ambulance staffed by 6 firefighter Il medics are $940,944. These costs would be assumed by the City under both Scenarios A and B. 24 Data provided by Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 12, 2011. 25 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 25, 2011. 26 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 13, 2011. 31 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS IV. BUILDOUT ASSUMPTIONS AND COST/REVENUE ANALYSIS The build out assumptions used to calculate costs and revenues associated with potential annexation are presented in this section. A. Build Out Phasing This analysis assumes a 10-year build out projection for Scenario A. Nearly 68% of this annexation area is already built out. Where future development could occur, this analysis assumes an even distribution of development over the 10-year period. The analysis has been conducted in constant 2011 dollars; therefore, the relative costs and revenues will be as calculated at build out of the annexation area, regardless of exactly when build out occurs. A larger portion of the Scenario B annexation area is vacant and can accommodate future development. Therefore, this analysis assumes a 20-year build out for Scenario B. Depending on market conditions, growth and development in the City and the annexation area will rise and fall. An even distribution of development in 5-year increments has been assumed for the 20-year build out period. The analysis has been conducted in constant 2011 dollars; therefore, the relative costs and revenues will be as calculated at build out of the annexation area, regardless of when this occurs. That is to say that although inflationary and recessionary factors will affect the City's revenues and costs over time, the relative cost of providing services, the relative amount of revenues generated within the annexation area, and the surplus or shortfall to the City, are represented in this analysis. 32 Terra Nova/CIty of Palm Desert Fiscal Impact Analysis, Potential Annexation B. Land Use Designations The annexation areas are currently under the jurisdiction of Riverside County, and much of the land contained within them is part of County -approved Specific Plans (see Exhibit 3). Where a Specific Plan has been approved, it is assumed that future build out will occur in accordance with the land use designations provided in the Specific Plan. Where development has taken place that is contrary to the original Specific Plan, as in the case of Xavier School in SP-225, existing development overrides the original Specific Plan. However, it is assumed that vacant land will still develop in accordance with the original Specific Plan. Where no Specific Plan exists, build out is assumed to occur in accordance with the Palm Desert General Plan land use map. C. Build out Calculations Residential For all residential land use categories, it is assumed that 15% of the currently vacant lands so designated would be needed for ancillary facilities, including streets, parking areas, parks and community open space. Based on this assumption, the development potential for these lands is equivalent to 85% of the maximum allowable density. Land designated for up to 12 dwelling units per acre is assumed to result in the development of single-family dwelling units, whether detached or attached. Land designated for 16 units per acre and higher is assumed to accommodate multi -family units. Scenario A: PD Medium Density Residential (4-10 du/ac) • total of 963 single-family units at build out (481.5 units in each five-year period) • Average value = $249,123 per unit Riv. Co. Medium -High Density Residential (5-8 du/ac) • total of 209 single-family units at build out (104.5 units in each five-year period) • Average value = $249,123 per unit Mirasera High Density Residential (12 du/ac) • total of 230 single-family units at build out (115 units in each five-year period) • Average value = $249,123 per unit Mirasera Mixed Use Residential (16 du/ac) • total of 142 multi -family units at build out (71 units in each five-year period) • Average value=$104,525 per unit Mirasera Very High Density Residential (20-25 du/ac) • total of 1,411 multi -family units at build out (705.5 units in each five-year period) • Average value = $104,425 per unit 33 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Scenario B: PD Low Density Residential (0-4 du/ac) • total of 244 single-family units at build out 61 units in each five-year period) • Average value = $249,123 per unit PD Medium Density Residential (4-10 du/ac) • total of 963 single-family units at build out (240.7 units in each five-year period) • Average value = $249,123 per unit Riv. Co. Medium -High Density Residential (5-8 du/ac) • total of 270 single-family units at build out (67.5 units in each five-year period) • Average value = $249,123 per unit Mirasera High Density Residential (12 du/ac) • total of 230 single-family units at build out (57.5 units in each five-year period) • Average value = $249,123 per unit Mirasera Mixed Use Residential (16 du/ac) • total of 142 multi -family units at build out (35.5 units in each five-year period) • Average value=$104,525 per unit Mirasera Very High Density Residential (20-25 du/ac) • total of 1,411 multi -family units at build out (352.7 units in each five-year period) • Average value = $104,425 per unit The average housing value for single-family units is based on the "Inland Empire Quarterly Economic Report" (October 2011). The average value for multi -family units is based on recent new multi -family residential construction in the City of Palm Desert. For residential property transfers, an annual resale rate of 1% change of ownership has been applied to single-family detached and attached units. These represent statistical averages that may be assumed to occur over the life of the annexation area, well beyond the build out year. This analysis also assumes that property transfer tax will begin in the 4`h year of development (no resales in the first three years). The population of Sun City is estimated at 9,000 by the Sun City Palm Desert Community Association.27 The population of other dwelling units, existing and future, is based on 2010 U.S. Census data which indicates there are 2.08 persons/household in the City of Palm Desert. Commercial, Hotel, Business Park, and Industrial Commercial, business park, and industrial designations assume that building square footage will cover 22% of the lot. The remaining acreage accounts for driveways, surface parking lots, stormwater retention/detention facilities, and similar ancillary facilities. The following sub -sections summarize assumptions used to calculate various revenues that could be generated by build out of the annexation area. 27 Paul Brady, Sun City Palm Desert Community Association, November 2011. 34 140. *.r Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Commercial Scenario A: • 149,977 square feet developed in each five-year period, for a total of 299,954 square feet at build out. • Per square foot value of $73, based on recent new commercial (general retail) construction valuation in the City of Palm Desert. Scenario B: • 211,309 square feet developed in each five-year period, for a total of 845,237 square feet at build out. • Per square foot value of $73, based on recent new commercial (general retail) construction valuation in the City of Palm Desert. The analysis assumes no revenues from transfer of commercial properties in the annexation area. Hotel Scenario A: • 25,000 square feet developed in each five-year period, for a total of 100,000 square feet at build out. • Per square foot value of $110, based on recent new hotel construction valuation in Palm Desert; or room value of $68,512, based on comparable existing highway -serving hotel development in the annexation boundary. Scenario B: • 75,000 square feet developed in each five-year period, for a total of 300,000 square feet at build out. • Per square foot value of $110, based on recent new hotel construction valuation in Palm Desert; or room value of $68,512, based on existing, comparable, highway -serving hotel development in the annexation boundary. The analysis assumes no revenues from transfer of hotel properties in the annexation area. Business Park Scenario A: • 224,247 square feet developed in each five-year period, for a total of 448,494 square feet at build out 35 M Tetra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation • Average value of $169 per square foot, based on recent new office/business park construction valuation in Palm Desert. Scenario B: • 457,118 square feet developed in each five-year period, for a total of 1,828,475 square feet at build out. • Average value of $169 per square foot, based on recent new office/business park construction valuation in Palm Desert. The analysis assumes no revenues from transfer of business park properties in the annexation area. Light Industrial Scenario A: • 127,456.5 square feet developed in each five-year period, for a total of 254,913 square feet at build out. • Average value of $54 per square foot, based on new industrial construction valuation in Palm Desert.28 Scenario B: • 63,728 square feet developed in each five-year period, for a total of 254,913 square feet at build out. • Average value of $54 per square foot, based on new industrial construction valuation in the City of Palm Desert.29 The analysis assumes no revenues from transfer of light industrial properties in the annexation area. 28 Average based on 5 months of new industrial development that occurred in 2006. According to the Palm Desert Building & Safety Department, this is the most recent industrial building permit valuation data available. 29 Ibid. 36 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS V. Cost/Revenue Analysis A. Cost/Revenue Summaries The following conclusions are based on the assumptions described above. It should be noted that all amounts are in Year 2011 dollars and are subject to rounding. For Scenario A, the total projected annual costs and revenues to the City over each five-year phase of the ] 0-year build out period are shown in Table 10. This table also shows the total costs and revenues that are projected annually at build out of the annexation area. For Scenario B, these costs and revenues for the 20-year build out period are shown in Table 12. It should be noted that the cost/revenue summaries do not include revenues from developer impact fees, which are one-time fees that occur at the time permits are pulled. These projections are shown in Table 11 for Scenario A and Table 13 for Scenario B. All of the tables in this section are summary tables. More detailed calculations for each revenue and cost category can be found in Appendices A and B. 37 n M Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 10 Total Potential Costs/Revenues Summary Table Annexation Scenario A Build out Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) ANNUAL REVENUES General Fund. - Property Tax $836,415 $947,279 Property Transfer Tax $112,171 $125,579 Sales Tax $1,874,090 $2,314,298 Transient Occupancy Tax $544,596 $776,804 Motor Vehicle In -Lieu Fees $38,761 $48,632 Total Annual General Fund Revenue at Phase Build out: $3 406 032 $4 212 592 Restricted Funds: Highway Users Gas Tax $282,195 $354,059 Measure A Funds $15,742 $19,440 Prop. A Fire Tax $386,607 $467,813 Structural Fire Tax $1,402,787 $1,588,723 Total Annual Restricted Fund Revenue at Phase Build out: $2,087 331 $2,430,035 Interest Earnings: Total Annual Revenues at Phase Build out: $5 493 362 $6 642 628 Historic Average Interest Rate, 90-day Treasury Bill: 4.39% 4.39% Anticipated Interest on Revenues: $241,159 $291,611 Total Annual Revenues with Interest at Phase Build out: $5 734 521 $6 934 239 ANNUAL COSTS General Fund: General Government $3,413,867 $4,295,120 Police Protection $4,137,575 $5,251,483 Roadway Maintenance $488,478 $574,680 Total Annual General Fund Costs at Phase Build out: $8 039,920 $10 121 283 Restricted Funds: Fire Protection $1,500,000 $1,500,000 Ambulance Services $940,944i0 $940,94426 Total Annual Restricted Fund Costs at Phase Build out: $2,440,94426 $2,440,94426 Totals: Total Annual Costs at Phase Build out: $10,480,864 $12,562,227 Projected Annual Cashflow at Phase Build out: -$4,746,343 -$5,627,988 30 Does not include one-time (year 1) start-up ambulance costs of $190,000. 38 In 1'M Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 11 Developer Impact Fee Revenues (One Time Only)' Annexation Scenario A Build out Phase Phase I Yrs 1-5 Phase H Yrs 6-10 New Construction Tax $1,107,172 $1,107,172 Art in Public Places Fund $963,967 $963,967 Low Income Housing Mitigation Fee $350,661 $350,661 Child Care Program Fund $491,268 $491,268 Traffic Signals Fund $180,514 $180,514 Planned Drainage Fund $175,700 $175,700 Parks & Recreation Facilities Fund $1,823,916 $1,823,916 Total Developer Impact Fee Revenues at Phase Build out: $5,093,198 $5,093,1.98 Developer impact fees occur only once, at the time the unit is permitted. 39 M cm Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 12 Total Potential Costs/Revenues Summary Table Annexation Scenario B Build out Phase Phase I (Yrs 1-5) Phase I1 (Yrs 6-10) Phase III (Yrs I1-15) Phase IV (Yrs 16-20) ANNUAL REVENUES General Fund: Property Tax $828,082 $915,621 $1 003 160 $1 090 698 Property Transfer Tax $96,687 $97,980 $99,274 $100,568 Sales Tax $2,078,761 $2,698,991 $3 319 220 $3,939.446 Transient Occupancy Tax $621,998 $931,610 $1 241 221 $1 550 832 Motor Vehicle In -Lieu Revenue $34,343 $39,789 $45 235 $50 682 Total Annual General Fund Revenue at Phase Build out: $3 659 871 $4 683 990 $5 708 110 $6 732 226 Restricted Funds: Highway Users Gas Tax $250,028 $289,679 $329,330 $368,981 Measure A Funds $17,642 $22,672 $27,881 $33,091 Prop. A Fire Tax $351,356 $395,453 $439,549 $483,645 Structural Fire Tax $1,390,562 $1,537,377 $1,684,193 $1,831,008 Total Annual Restricted Fund Revenue at Phase Build out: $2,009,408 $2,245,180 $2,480,952 $2,716,725 Interest Earnings: Total Annual Revenues at Phase Build out: $5 669 279 $6 929 171 $8 189 062 $9 448 950 Historic Average Interest Rate, 90-day Treasury Bill: 4.39% 4.39% 4.39% 4.39% Anticipated Interest on Revenues: $248,881 $304,191 $359,500 $414,809 Total Annual Revenues with Interest at Phase Build out, $5 918 160 $7 233 361 $8 548 562 $9 863 759 ANNUAL COSTS General Fund. - General Government $3,031,673 $3,517,392 $4,003,112 $4,488,831 Police Protection $3,701,198 $4,313,217 $4,925,236 $5,537,254 Roadway Maintenance $607,245 $678,122 $749 002 $819 879 Total Annual General Fund Costs at Phase Build out: $7 40 116 $8 508 731 $9 677 49 $10 845 965 Restricted Funds: Fire Protection $1,528,907 $1,557,408 $1,585,910 $1,614,411 Ambulance Services $940,94431 $940,94427 $940,94421 $940,944" Total Annual Restricted Fund Costs at Phase Build out: $2,469,85127 $2,498,35217 $2,526,85427 $2,555,35527 Totals: Total Annual Costs at Phase Build out: $9 809 967 $11 007 084 $12,204,203 $13,401 20 Projected Annual Cashflow at Phase Build out: -$3,891,807 -$3,773,723 -$3,655 641 -$3 537 560 31 Does not include one-time (year 1) start-up ambulance costs of $190,000. 40 rM CM Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 13 Developer Impact Fee Revenues (One time only)' Annexation Scenario B Build out Phase Phase I Yrs 1-5 Phase II Yrs 6-10 Phase III Yrs 11-15 Phase IV Yrs 16-20 New Construction Tax $811,863 $811,863 $811,863 $811,863 Art in Public Places Fund $787,633 $787,633 $787,633 $787,633 Low Income Housing Miti ation Fee $522,899 $522,899 $522,899 $522,899 Child Care Program Fund $803,567 $803,567 $803,567 $803,567 Traffic Signals Fund $187,230 $187,230 $187,230 $187,230 Planned Drainage Fund $162,475 $162,475 $162,475 $162,475 Parks & Recreation Facilities Fund $1,080,338 $1,080,338 $1,080,338 $1,080,338 Total Developer Impact Fee Revenues at Phase Build out: $4,356,004 $4,356,004 $4,356,004 $4,356,004 Developer impact fees occur only once, at the time the unit is permitted. 41 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation B. Conclusions 1. Scenario A Annexation of Scenario A will add an estimated 15,144 residents to the City of Palm Desert. The area is partially developed, and some costs and revenues will be realized almost immediately. Build out of land in Scenario A could potentially generate $6.9 million annually in revenues by the end of the 10-year build out timeframe. The largest single revenue generator is expected to be local Sales Tax ($2.3 million annually at 10-year build out), which is related to the second highest revenue source, Structural Fire Tax ($1.5 million annually at 10-year build out). These revenues are dependent upon commercial sales tax volume in the annexation area. The costs associated with serving this new area and its population are projected to be approximately $12.6 million annually at the end of the 10-year build out period. The most significant costs are those from Police Protection ($5.2 million annually at 10-year build out), closely followed by those from General Government operations ($4.2 million annually at 10-year build out). As such, build out of the area is expected to result in an annual revenue shortfall of approximately $4.7 million at the end of the first five-year period. The shortfall is projected to grow to $5.6 million by the end of the second five-year period. This is, in part associated with the high percentage of residential development in the area and the costs of providing services to residents, and a comparatively small percentage of commercial sales tax -generating development. Residential lands comprise nearly 47% of the entire annexation area, and commercial lands account for 4%. Developer impact fee (DIF) revenues are projected to be $5.09 million at phase build out of each phase. This assumes that development occurs evenly over the 10-year build out period. The highest sources of DIF revenue will be from the New Construction Tax and the Park & Recreation Facilities Fund, which will benefit from the future construction of new single-family and multi -family dwelling units in the annexation area, particularly those in the Mirasera Specific Plan. 2. Scenario B Annexation of Scenario B will result in a population increase of approximately 15,779 to the City of Palm Desert. The area is partially built out; some costs and revenues will be generated immediately, and others will be realized over the build out period. Projected revenues at the end of the 20-year build out period are projected to be approximately $9.86 million annually. The largest revenue source will be local Sales Tax ($3.9 million annually), followed by Structural Fire Tax ($1.8 million annually) and Transient Occupancy Tax ($1.5 million annually). 42 %%W terw Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation At the end of the 20-year build out period, annual costs are projected to be $13.4 million. As with Scenario A, the highest costs are associated with providing Police Protection ($5.5 million) and General Government services ($4.49 million) to existing and future residents. Build out of Scenario B is expected to generate an annual revenue shortfall of approximately $3.9 million at the end of the first five-year build out period. However, the shortfall is projected to fall slightly to $3.5 million at the end of the fourth five-year period. Like Scenario A, residential development accounts for a much greater percentage of land in the annexation area (37%) than commercial development (5%), and sales tax -generating opportunities are limited. One-time revenues resulting from Developer Impact Fees in Scenario B are expected to be $4.3 million at build out of each phase, assuming development occurs evenly over the 20-year build out period. These revenues will constitute a significant revenue source to the City over the 20- year build out period, but they are one-time revenues that will be realized only as new development occurs. 43 M M Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Appendix A Scenario A Detailed Cost and Revenue Tables 44 En Property Tax Revenue - Scenario A IFrom Existin¢ Conditions V✓ TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tax, Struc. EireTax Existing Conditions (developed parcels are taxed on value of land & structure; vacant parcels are taxed on value of land) Buildout Phase Phase I (Yrs. 1-5) Phase II (Yrs. 6-10) Calculation of Property Tax Revenue Total Value of allparcels' $2,087,295,429 $2,087,295,429 (subtract) Value of tax exemptparcels' $7,112,668 $7,112,668 Total value of taxable parcels $2,080,182,761 $2,080,182,761 Property Tax Rate 1 % t % Total Property Tax Collected by County at phase buildout $20,801,828 $20,801,828 Percent of Property Tax Allocated to Cit 's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $1,456,128 $1,456,128 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at 2hase buildout $728,064 $728,064 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $20,801,828 $20,801,828 Total Structural Fire Tax Revenue at phase buildout $1,221,067 $1,221,067 ' From Riverside County Assessors records, Oct. 2011. Includes value of land for vacant parcels, and value of land and structures for developed parcels. 'Tax exempt parcels, as flagged in Riverside County Assessors records, Oct. 2011. Includes 135.51 acres of land, primarily awned by CV WD, CA DOT, County of Riverside, and Sun City Palm Desert Community Association. From Future Residential Development Land Use Designation: Riv. Co. Medium High Density Residential (5- 8 dulac) Total No. Acres: 30.8 No. of Potential Buildout Units: 209' Buildout Phase Phase 1 (Yrs.1-5) Phase II (Yrs.6-10) Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) 8.0 8.0 Maximum potential units constructed during this phase 105 105 Number of total potential units constructed at buildout 105 209 Average value per unit' $249,123 $249,123 Total Value $26,088,161 $52,176 321 Property Tax Rate 1 %, 1 % Total Property Tax Collected by County at Phase Buildout $260,882 $521,763 Percent of Property Tax Allocated to City's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $18,262 $36323 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $9,131 $18262 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Properly Tax Revenue collected by County $260,882 $521,763 Total Structural Fire Tax Revenue at phase buildout $15,314 $30,627 'Assumes land will be developed at 85%of the maximum density permitted. : "Intand Empire Quarterly Economic Report," prepared for WRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. Paget of 48 n From Future Residential Development *00 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tax. Struc. Fire Tax Land Use Designation: PD Medium Density Residential (4-10 dulae) Total No. Acres: 113.3 No. of Potential Buildout Units: 963' Buildout Phase Phase I (Yrs.1-5) Phase I1 (Yrs. 6.10) Number of acres developed during phase 56.7 56.7 Maximum density permitted (units/acre) 10.0 10.0 Maximum potential units constructed during this phase 482 482 Number of total potential units constructed at buildout 482 963 Average value perunit' $249,123 $249,123 Total Value $119,958,953 $239,917,905 Property Tax Rate 1 %, 1 Total Property Tax Collected by County at Phase Buildout $1,199,590 $2,399,179 Percent of Property Tax Allocated to Cit 's General Fund 7.0% 7.0%, Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $83,971 $167,943 Percentage deducted for ERAF Contributions 3.5%1 3.5% Total Amount Allocated to City General Fund at phase buildout $41,9861 $83,971 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $1,199590 $2,199,179 Total Structural Fire Tax Revenue at phase buildout $70,416 $140,832 'Assumes land will be developed at 85% of the maximum density permitted. ' "Inland Empire Quarterly Economic Report;' prepared for WRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. From Future Residential Development Land Use Designation: Mirasera Nigh Density Residential (12 dulac) Total No. Acres: 22.6 No. of Potential Buildout Units: 230' Buildout Phase Phase I (Yrs,1-5) Phase 11 (Yrs. 6-10) Number of acres developed during phase 113 11.3 Maximum density permitted (units/acre) 12.0 12.0 Maximum potential units constructed during this phase 115 115 Number of total potential units constructed at buildout 115 231 Average value perunt' $249,123 $249,123 Total Value $28,713,917 $57,427,834 Property Tax Rate 1 %r 1 % Total Property Tax Collected by County at Phase Buildout $297,139 $574,278 Percent of Prora Tax Allocated to Ci 's General Fund 7.0%, 7.0% to ERAF) $20,100 $40,199 Percentage deducted for ERAF Contributions 3.5%1 3.5% Total Amount Allocated to City General Fund at phase buildout $10,0501 $20,100 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by Court $287,139 $574,278 Total Structural Fire Tax Revenue at phase buildout $16,855 $33,710 'Assumes land will be developed at 85%of the maximum density permitted. '"Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, Ph.D.. October 2011. Accounts for value of land and structure. Page 2 of 48 CM From Future Residential Development rat TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tax, Sttue. Fire Tax Land Use Designation: Mirasera Mixed Use Residential (16 dut") Total No. Acres: 10.5 No. of Potential Buildout Units: 141' Buildout Phase Phase I (Yrs.1-5) Phase II Yrs. 6-10) Number of acres developed during phase 53 53 Maximum density permitted (units/acre) 16.0 16.0 Maximum potential units constructed during this phase 71 71 Number of total potential units constructed at buildout 71 143 Average value per unit' $104,425 $104,425 Total Value $7,415,94.5 $14,911,890 Property Tax Rate I % I % Total Property Tax Collected by County at Phase Buildout $74,559 $149,119 Percent of Property Tax Allocated to Cit 's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $5,2191 $10,438 Percentage deducted for ERAF Contributions 3.5% 3.5%, Total Amount Allocated to City General Fund at hase buildout $2,610 $5219 Cakulation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $74559 $149,119 Total Structural Fire Tax Revenue at phase buildout $4377 $8,753 'Assumes land will be developed at 85% of the maximum density permitted. I Based on building permit data provided by the Palm Desert Building and Safety Dept., Nov. 2011. Includes value of structure only. From Future Residential Development Land Use Designation: Minusera Very High Density Residential (20- 25 dulac) Total No. Acres: 66.4 No. of Potential Buildout Units: 1 f411' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs.6-10) Number of acres developed during phase 33.2 33.2 Maximum density permitted (units/acre) 25.0 25.0 Maximum potential units constructed during this phase 706 706 Number of total potential units constructed at buildout 706 1,411 Average value perunit' $104,425 $10442.5 Total Value $73,671,838 $147343,675 Property Tax Rate 1 % I % Total Property Tax Collected by County at Phase Buildout $736.718 $1,473,437 Percent of !r02ertx Tax Allocated to Ci 'sGeneral Fund 7.0% 7.0%r, to ERAF) $51570 $103,141 Percentage deducted for ERAF Contributions 3.5% 3.5%, Total Amount Allocated to City General Fund at phase buildout $25,785 $51 570 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87%, 5.87% Property Tax Revenue collected by County $736,718 $1,473,437 Total Structural Fire Tax Revenue at phase buildout $43,245 $86,491 'Assumes land will be developed at 8.5% of the maximum density permitted z Based on building permit data provided by the Palm Desert Building and Safety Dept., Nov. 2011. Includes value of structure only. Page 3 of 48 M From Future Commercial Development Iwo TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tar, Struc. Fire Tax Land Use Designation: Commercial Total No. Acres: 31.3 No. of Potential Buildout S . Ft.: 299,954' Buildout Phase Phase I (Yrs.1-5) Phase Il (Yrs. 6-10) Number of acres developed during phase 15.7 15.7 Percentage of lot covered by structure' 22% 22% Square footage constructed during this phase 149,977 149,977 Square footage constructed at phase buildout 149,977 299,954 Average value per square foot' $73 $73 Total Value $10,948327 $21,896,654 Property Tax Rate 1% 1% Total Property Tax Collected by County at Phase Buildout $109,483 $218,967 Percent of Property Tax Allocated to Ci 's General Fund 7% 7% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $7,664 $15328 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $3,832 $7,664 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $109483 $218,967 Total Structural Fire Tax Revenue at phase buildout $6.427 $12.853 'Assumes structure will account for 22% lot coverage. Remainder of lot will include access roads, parking facilities, landscaping, and other ancillary uses. ' Based on compilation of building permit data provided by Palm Desert Building & Safety Department, October 2011. From Future Hotel Development Land Use Designation: Commercial (Hotel) Total No. Acres: 3.1 No. of Potential Buildout Sq. Ft.: 100,000' No. of Potential Room: 150 Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) No. of rooms constructed at phase buildout 75 150 Averse value per room' $68,512 $68 M 2 Total Value $5,138,400 $10,276,800 Property Tax Rate 1% 1% Total Property Tax Collected by County at Phase Buildout $51,384 $102,768 Percent of Property Tax Allocated to Cit 's General Fund 7% 7% to ERAF) $3,597 $7,194 Percentage deducted for ERAF Contributions 3-5%1 3.5% Total Amount Allocated to City General Fund at phase buildout $1,798 $3 597 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $51,3841 $102,768 Total Structural Fire Tax Revenue at phase buildout $3,016 $6.032 'Terra Nova estimate based on single hotel and available acreage. ' Based on comparable existing highway -serving hotel in the annexation area, per Riv. Co. Assessors records, Oct. 2011. Page 4 of 48 0 From Future Business Park Development '%wO TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tax, Struc. Fire Tax Land Use Designation: Business Park Total No. Acres: 46.8 No. of Potential Buildout S . Ft.: 448,494' Buildout Phase Phase I (Yrs.1-5) Phase 11 (Yrs. 6-10) Number of acres developed during phase 23.4 23.4 Percentage of lot covered by structure' 22% 22% Square footage constructed during this phase 224,247 224247 Square footage constructed at phase buildout 224,247 448,494 Average value persquare foot' $169 $169 Total Value $37,897,723 $75,795,445 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $378,977 $757,954 Percent of Property Tax Allocated to Cit 's General Fund 7% 7%, to ERAF) $26,5281 $53,057 Percentage deducted for ERAF Contributions 3.5%1 3.5% Total Amount Allocated to City General Fund at phase buildout $13,2641 $26,528 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% ProDertv Tax Revenue collected by County $378,977 $757,954 Total Structural Fire Tax Revenue at phase buildout $22246 $44,492 'Assumes structure will account for 22% lot coverage. Remainder of lot will include access roads, parking facilities, landscaping, and other ' Based on compilation of building permit data provided by Palm Desert Building & Safeq Department, October 2011. From Future Industrial Development Land Use Designation: Industrial Total No. Acres: 26.6 No. of Potential Buildout S . Ft.: 254,913' Buildout Phase Phase I (Yrs. 1.5) Phase 11 (Yrs. 6-10) Number of acres developed during phase 13.3 133 Percentage of lot covered by structure' 22% 22% Square footage constructed during this phase 127,457 127,457 Square footage constructed at phase buildout 127,457 254,913 Average value per square foot' $54 $54 Total Value $6,882,654 $13,765308 Property Tax Rate 1% 1% Total PrOPCTty Tax Collected by Counry at Phase Buildout $68,827 $137,653 Percent of Property Tax Allocated to Ci 's General Fund 7% 7% to ERAF) $4,818 $9,636 Percentage deducted for ERAF Contributions 3.5%1 3.5% Total Amount Allocated to City General Fund at phase buildout $2,4091 $4,818 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $68,827 $137,653 Total Structural Fire Tax Revenue at phasc buildout $4,040 $8,080 'Assumes structure will account for 22% lot coverage. Remainder of lot will include access roads, parking facilities, landscaping, and other ] Based on compilation of building permit data provided by Palm Desert Building & Safety Department, October 2011. Page 5 of 48 M *90 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tax, Stine. Fire Tax Property Max Revenue Summ ry Table Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Total property tax revenue to City General Fund at phase buildout from existing development $728,064 $728,064 ...from future Riv. Co. Medium High Density residential development $9,131 $18,262 ...from future PD Medium Density residential development UI,986 $83,971 .....from future Mirasera High Density residential development $10,050 $20,100 ...from future Mirasera Mixed Use residential development $2,610 $5219 ...from future Mirasera Very High Density residential development $25,785 $51,570 ...from future commercial development $3,832 $7,664 .....from future hotel development $1,798 $3,597 ...from future business park development $13,264 $26,528 ...from future industrial-li ht development $2AW $4,818 Subtotal $838,929 $949,793 Adjustment for loss of property tax revenue on vacant Sin le -Family parcels after development occurs Value of land on currently vacant (but developable) Single -Family Residentialparcels' $14365301 $14365301 City's Property Tax revenue on value of land for currently vacant (but developable) Single -Family residentialparcels' $5,028 $5,028 (subtract) Property Tax Revenue Loss from line above, phased over entire buildout timeframe $2,5141 $2,514 Total Propert Tax Revenue at Phase Buildout $836,415 $947 79 ' Refers to parcels that are currently vacant, but developable in the future for single-family residential development. Existing Conditions table includes property tar revenue currently generated by these parcels on their land value. Future Development tables pmjects future property tax revenue generated by these parcels on their land value and structure value. To avoid double -counting property tax revenue from land value, the current land value of these parcels is subtracted here. Page 6 of 48 CM TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax Property Transfer Tax Revenue - Scenario A From Existine Residential Development Existing Single -Family Residential Units Buildout Phase No. of Acres: 792 No. of Dwelling Units: 4,985 Phase I Phase If (Yrs.1-5) (Yrs.6-10) Exictinv flnitcfRO%n of market value is snhiect to tail Number of units existing in 1st year of this phase 4985 4985 Number of existing units changing ownership in lst year of this phase 499 499 Number of units existing in 2nd year of this phase 4985 4985 Number of existing units changing ownership in 2nd year of this phase 499 499 Number of units existing in 3rd year of this phase 4985 4985 Number of existing units changing ownership in 3rd year of this phase 499 499 Number of units existing in 4th year of this phase 4985 4985 Number of existing units changing ownership in 4th year of this phase 499 499 Number of units existing in 5th year of this phase 4985 4985 Number of existing units changing ownership in 5th year of this phase 499 499 Total number of units existing during this phase 4985 4985 Total number of existing units changing ownership during this phase 2493 2493 Property Value per dwelling unit' $364,653 $364,653 Unencumbered Value per unit (80% of value) $291,722 $291,722 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $727,118,082 $727,118,082 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $799,830 $799,830 Percent of Property Transfer Tax allocated to Palm Desert 50% 50% Total Property Transfer Tax Allocated to Palm Desert General Fund at phase buildout (for 5-year period) $399,915 $399,915 Number of years this phase ( to get annual average) 5 5 Total Annual Property Transfer Tax Allocated to Palm Desert at Phase Buildout $79,983 $79,983 'Average value of residential units in Sun City, based on Riverside County Assessors data, includes value of land and structure. Page 7 of 48 M From Future Residential of acres: 113.3 of potential buildout units: 963' INew Units (100% of market value is subiect to tax) TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax Buildout Phase Phase I I Phase II Number of acres developed during phase 56.7 56.7 Maximum Density permitted (units/acre) 10 10 Number of new units during thisphase' 482 482 Market Value per unit $249,123 $249,123 Amount Subject to Property Transfer Tax for all new units sold $119,958,953 $119,958,953 Page 8 of 48 cm Cn Residential of acres: 30.8 of potential buildout units: 209' INew Units (100% of market value is subiect to tax) TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop.'Fransfer'fax Buildout Phase Phase I Phase II Yrs.1-5) (Yrs.6-11 Number of acres developed during phase 15.4 15.4 Maximum Density permitted (units/acre) 8 8 Number of new units during thisphase' 105 105 Market Value per unit $249,123 $249,123 Amount Subject to Property Transfer Tax for all new units sold $26,088,161 $26,088,161 lExistine Units(80% of market value is subiect to tax) Number of units constructed in 1st year of this phase 20 125 Number of existing units changing ownership in 1st year of this phase 0 12 Number of units constructed by end of 2nd year of this phase 40 145 Number of existing units changing ownership in 2nd year of this phase 0 14 Number of units constructed by end of 3rd year of this phase 60 165 Number of existing units changing ownership in 3rd year of this phase 0 16 Number of units constructed by end of 4th year of this phase 80 185 Number of existing units changing ownership in 4th year of this phase 8 18 Number of units constructed by end of 5th year of this phase 105 184 Number of existing units changing ownership in 5th year of this phase 10 18 Total number of existing units changing ownership during this phase 18 80 Market Value per unit $249,123 $249,123 Unencumbered Value per unit (80% of market value) $199,298 $199,298 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $3,681,440 $16,001,270 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $29,769,601 $42,089,430 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $32,747 $46,298 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $16,373 $23,149 Number of years this phase (to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $3,275 $4,630 Page 9 of 48 cm Future Residential TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax Lana use uesignauon: mirasera nagn uensary aestuennas t « awac/ Buildout Phase No. of acres: 22.6 No. of potential buildout units: 230' Phase I Phase II (Yrs.1.5) (Yrs.6-10) INew Units (100% of market value is subiect to tax) Number of acres developed during phase I L3 11.3 Maximum Density permitted (units/acre) 12 12 Number of new units during thisphase' 115 115 Market Value per unit $249,123 $249,123 Amount Subject to Property Transfer Tax for all new units sold $28,713,9171 $28,713,917 Existing Units(80% of market value is subject to tax) Number of units constructed in 1st year of this phase 23 138 Number of existing units changing ownership in lst year of this phase 0 14 Number of units constructed by end of 2nd year of this phase 46 161 Number of existing units changing ownership in 2nd year of this phase 0 16 Number of units constructed by end of 3rd year of this phase 69 184 Number of existing units changing ownership in 3rd year of this phase 0 18 Number of units constructed by end of 4th year of this phase 92 207 Number of existing units changing ownership in 4th year of this phase 9 21 Number of units constructed by end of 5th year of this phase 115 203 Number of existing units changing ownership in 5th year of this phase 12 20 Total number of existing units changing ownership during this phase 21 89 Market Value per unit $249,123 $249,123 Unencumbered Value per unit (80% of market value) $199,298 $199,298 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $4,130,659 $17,818,074 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $32,844,576 $46,531,991 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $36,129 $51,185 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $18,065 $25,593 Number of years this phase ( to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $3,613 $5,119 Page 10 of 48 M Future Residential of acres: 10.5 of potential buildout units:142' New Units (100% of market value is subject to tax) TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax Buildout Phase Phase I Phase II Number of acres developed during phase 5.3 5.3 Maximum Density permitted (units/acre) 16 16 Number of new units during thisphase' 71 71 Market Value per unit $104,425 $104,425 Amount Subject to Property Transfer Tax for all new units sold $7,455,945 $7,455,945 Existing Units(80% of market value is subject to tax) Number of units constructed in Ist year of this phase 14 85 Number of existing units changing ownership in 1st year of this phase 0 9 Number of units constructed by end of 2nd year of this phase 28 99 Number of existing units changing ownership in 2nd year of this phase 0 10 Number of units constructed by end of 3rd year of this phase 42 113 Number of existing units changing ownership in 3rd year of this phase 0 11 Number of units constructed by end of 4th year of this phase 56 127 Number of existing units changing ownership in 4th year of this phase 6 13 Number of units constructed by end of 5th year of this phase 71 126 Number of existing units changing ownership in 5th year of this phase 7 13 Total number of existing units changing ownership during this phase 13 55 Market Value per unit $104,425 $104,425 Unencumbered Value per unit (80% of market value) $83,540 $83,540 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $1,064,300 $4,608,066 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $8 520.245 $12,064,011 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $9,372 $13,270 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $4,686 $6,635 Number of years this phase (to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $9371 $1,327 Page 11 of 48 0 n TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax From Future Residential Development Land seDesignation: Mirasera Very High Density Residential (20- ac) No. of acres: 66.4 No. of potential buildout units: 1,4111 Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs.6-10) New Units (100% of market value is subject to tax) Number of acres developed during phase 33.2 33.2 Maximum Density permitted (units/acre) 25 25 Number of new units during thisphase' 706 706 Market Value per unit $104,425 $104,425 Amount Subject to Property Transfer Tax for all new units sold $73,671,8381 $73,671,838 Existing Units(80% of market value is subject to tax) Number of units constructed in 1st year of this phase 141 847 Number of existing units changing ownership in 1st year of this phase 0 85 Number of units constructed by end of 2nd year of this phase 282 988 Number of existing units changing ownership in 2nd year of this phase 0 99 Number of units constructed by end of 3rd year of this phase 423 1129 Number of existing units changing ownership in 3rd year of this phase 0 113 Number of units constructed by end of 4th year of this phase 564 1270 Number of existing units changing ownership in 4th year of this phase 56 127 Number of units constructed by end of 5th year of this phase 706 1245 Number of existing units changing ownership in 5th year of this phase 71 125 Total number of existing units changing ownership during this phase 127 548 Market Value per unit $104,425 $104,425 Unencumbered Value per unit (80% of market value) $83,540 $83 540 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $10,605,403 $45,754,858 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $84,277,241 $119,426,696 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $92,705 $131,369 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $46,352 $65,685 Number of years this phase (to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $9,2701 $13,137 Page 12 of 48 CM LMM TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax Property 'htansfer Tax Revenue Summary Tkble Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Total tax revenue from existing resid. development $79,983 $79,983 ...from future PD Medium Density residential development $15,093 $21,384 ...from future Riv. Co. Medium -High Density residential development $3,275 $4,630 ...from future Mirasera High Density residential development $3,613 $5,119 ...from future Mirasera Mixed Use residential development $937 $1,327 ...from future Mirasera Very High Density residential development $9.270 $13,137 Total property transfer tax revenue at phase buildout 1 $112,171 $125,579 Page 13 of 48 M n Sales Tax Revenue Measure A Revenue - Scenario A From Existing Commercial Development TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Sales Tax, Measure A lana use Designarign: Commercial (Roes not Incluae norey No. ofAcres: 50.1 Square Feet of Bldg. Space: 480,118' Buildout Phase Phase I Vrs 1-5 Phase II Vrs 6-10 Land Use Data Number of acres developed 50.11 50.1 Number of square feet constructed' 480,1181 480,118 Calculation of Total Leasable Square Feet Percent leasable space 90% 90% No. of leasable square feet 432,1061 432,106 "Neighborhood Commercial" Developmeniz Percent of leasable s . ft. considered Neighborhood Commercial 1000/0 100% No. of leasable s . ft. considered Neighborhood Commercial 432,106 432,106 Ave. annual sales volume per s . ft. $326.13 $326.13 Total annual sales from Neighborhood Commercial development $140,922,795 $140,922,795 Calculation of Total Sales Tax Revenues Total annual sales at phase buildout $140,922,795 $140,922,795 Total annual sales generated by commercial venues within Sun City' $2,465,338 $2,465,338 Total annual sales generatedb all existing commercial development $143,388,133 $143,388,133 County sales tax rate 1% 1% Annual sales tax revenue collected by City at phase buildout $1,433,881 $1,433,881 Calculation of Measure A Revenues° County -wide Measure A tax rate 0.50% 0.50% Amount collected for County -wide Measure A fund $716,941 $716,941 Percent allocated to the Coachella Valley region 24% 24% Amount allocated to the Coachella VaHey region $172,066 $172,066 Percent allocated to local streets and roads 35% 35% Amount allocated to local streets and roads $60,223 $60,223 Percent allocated to City of Palm Desert 20% 20% Amount allocated to City of Palm Desert $12,0451 $12,045 ' Assumes building covers 22% of lot. The remaining area is used for landscaping, parking, roadway access, and other ancillary uses. 'Based on definitions and average sales volumes for U.S. Neighborhood Shopping Centers (Table 6-1), provided in "Dollars and Cents of Shopping Centers," Urban Land Institute, 2008. 'Data provided by Sun City Palm Desert Community Association. ' Measure A distribution data provided by Riverside County Transportation Commission. 14 of 48 Lon CM From Future Commercial Develonment TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Sales Tax, Measure A Land Use Designation: Commercial No, of Acres: 3L3 Square Feet of Bldg. Space: 299,954' Buildout Phase Phase I rs 1-5 Phase II rs 6-10 Land Use Data Number of acres developed during this phase 15.7 15.7 Number of square feet constructed during thisphase' 149,977 149,977 Number of acres developed at phase buildout 15.7 31.3 Number of square feet constructed at phase buildout 149,977 299,954 Calculation of Total Leasable Square Feet Percent leasable space 90% 90% No. of leasable square feet 134,979 269,959 "Neighborhood Commercial" Development' Percent of leasable s . ft. considered Neighborhood Commercial 100% 100% No. of leasable s . ft. considered Neighborhood Commercial 134,979 269,959 Ave. annual sales volume per s . ft.2 $326.13 $326.13 Total annual sales from Neighborhood Commercial development $44,020,823 $88,041,645 Calculation of Total Sales Tax Revenues Total annual sales at phase buildout $44,020,823 $88,041,645 County sales tax rate 1 % I % Annual sales tax revenue collected by City at phase buildout $440,208 $880,416 Calculation of Measure A Revenues' County -wide Measure A tax rate 0.50% 0.50% Amount collected for County -wide Measure A fund $220,104 $440,208 Percent allocated to the Coachella Valley region 24% 24% Amount allocated to the Coachella Valley region $52,925 $105,650 Percent allocated to local streets and roads 35% 35% Amount allocated to local streets and roads $18,4891 $36,977 Percent allocated to City of Palm Desert 20% 20% Amount allocated to City of Palm Desert $3,6981 $7,395 ' Assumes building covers 22% of lot. The remaining area is used for landscaping, parking, roadway access, and other ancillary uses. `Based on definitions and average sales volumes for U.S. Neighborhood Shopping Centers (Table 6-1), provided in 'Dollars and Cents of Shopping Centers," Urban Land Institute, 2008. 'Based on Measure A distribution data provided by Riverside County Transportation Commission. Sales Tax Revenue Summary Table Buildout Phase Phase I rs 1-5 Phase II Yrs 6-10 Total sales tax revenue from existing commercial development $1,433,881 $1,433,881 Total sales tax revenue from future commercial development $440,208 $880,416 Total sales tax revenue from all development $1,874,090 $2,314,298 Measure A Revenue Summary Table Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10 Total Measure A revenue from existing commercial development $12,045 $12,045 Total Measure A revenue from future commercial development $3,698 $7,395 Total Measure A revenue from all development $15,742 $19,440 15 of 48 cm �J TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: TOT Transient Occupancy Tax Revenue - Scenario A From Existing Hotel Development Land Use Designation: Commercial (Hotel) Total No. Acres: 3.6 Existing Rooms: 154 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed 3.601 3.60 Number of rooms developed 1541 154 Calculation of TOT Revenue Average room rate ($ per night) $95.00 $95.00 Average occupancy rate 65% 65% Annual revenue from all rooms at phase buildout $3,470,968 $3,470,968 Ci 's Transient Occupancy Tax Rate 9% 9% Ci 's annual TOT revenue at phase buildout $312,3871 $312,387 From Future Hotel Development Land Use Designation: Mirasera Mixed Use Hotel Buildout Phase Total No. Acres: 3.1 Phase I Phase Il Potential Rooms: 150 Yrs 1-5 Yrs 6-10) Number of acres developed 1.551 1.55 Number of rooms developed 751 150 Calculation of TOT Revenue Average room rate $ per night) $145.00 $145.00 Average occupancy rate 65% 65% Annual revenue from all rooms at phase buildout $2,580,094 $5,160,188 Ci 's Transient Occupancy Tax Rate 9% 9% Citv's annual TOT revenue at phase buildout $232,2081 $464,417 Page 16 of 48 CM 16 TN PD Potential Annexation Fiscal Analysis City of Palm Desert TOT 1(W lV A. Transient Occupancy Tax Revenue Summary Table Buildout Phase Phase I Yrs 1-5) Phase II Yrs 6-10) Annual TOT Revenue from existing hotels at phase buildout $312,387 $312,387 Annual TOT Revenue from future hotels at phase Buildout $232,208 $464,417 Total Annual TOT Revenue from all development $544,596 $776,804 Page 17 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Motor Vehicle In -Lieu Revenue - Scenario A Land Use Designation: SP-281 Residential Buildout Phase Total No. Acres: 792.0 Phase I Phase II No. of Existing Units: 4,985 Yrs 1-5 Yrs 6-10 T.anA iTca Rnildnnt data Number of acres developed at phase buildout 7921 792 Number of total units developed at phase buildout 4,9851 4,985 (Calculation of Annual Motor vehicle In -Lieu Revenue Existing Population' 9,0001 9,OOC Anticipated Annual Per Capita Revenue $3.211 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $28,8901 $28,89C 'Estimated population provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. From Future Develonment Land Use Designation: PD Medium Density Residential (4-10 du/ac) Total No. Acres: 113.3 No. of Potential Buildout Units: 963 Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density permitted units/acre) 10 10 Maximum potential units constructed during this phase 482 482 Number of total potential units constructed at phase buildout 1 4821 963 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 1,002 2,003 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $3,2151 $6,430 ' 2010 U.S. Census. Page 18 of 48 im i From Future Develonment TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Land Use Designation: Riv. Co. Medium -High Density Residential (5-8 du/ae) Total No. Acres: 30.8 No. of Potential Buildout Units: 209 Land Use Buildout Data Buildout Phase Phase I Phase II Yrs 1-5 (Yrs 6-10) Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) g 8 Maximum potential units constructed during this phase 105 105 Number of total potential units constructed at phase Buildout 105 209 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 218 436 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase Buildout 2010 U.S. Census. $699 $1,398 From Future Development Land Use Designation: Mirasera High Density Residential (12 Buildout Phase du/ac) Total No. Acres: 22.6 Phase I Phase II No. of Potential Buildout Units: 230 (Yrs 1-5) Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 11.3 11.3 Maximum density permitted units/acre) 12 12 Maximum potential units constructed durin this phase 115 115 Number of total potential units constructed at phase buildout 115 231 Calculation of Annual Motor Vehicle In-I.ien RevPnua Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 240 479 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at hase buildout n__---- $770 $1,539 t�� Page 19 of 48 rom CM From Future Development TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Land Use Designation: Mirasera Mixed Use Residential (16 du/ac) Total No. Acres: 10.5 No. of Potential Buildout Units: 142 Buildout Phase Phase I Yrs 1-5) Phase II (Yrs 6-10 Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted (units/acre) 16 16 Maximum potential units constructed during this phase 71 71 Number of total potential units constructed at phase buildout 71 143 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 149 297 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $477 $953 2010 U.S. Census. From Future Development Land Use Designation: Mirasera Very High Density Residential (20-25 du/ac) Total No. Acres: 66.4 No. of Potential Buildout Units: 1,411 Buildout Phase Phase I Yrs 1-5) Phase II Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density permitted (units/acre) 25 25 Maximum potential units constructed during this Fhase 706 706 Number of total potential units constructed at phase buildout 706 1,411 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 1,467 2,935 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase Buildout $4,710 $9,421 2010 U.S. Census. Page 20 of 48 M cm TN PD Potential Annexation Fiscal Analysis City of Palm Desert Motor Vehicle In -Lieu Revenue Summary Table Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Total Annual Motor Vehicle In -Lieu Revenue from existing residential development at phase buildout $28,890 $28,890 ...from future PD Medium Density residential development $3,215 $6,430 ...from future Riv. Co. Medium -High Density residential development $699 $1,398 ...from future Mirasera High Density residential development $770 $1,539 ...from future Mirasera Mixed Use residential development $477 $953 ...from future Mirasera Very High Density residential development $4,710 $9,421 Total Annual Motor Vehicle In -Lieu Revenue from all develo ment _$38,7611 $48,632 Page 21 of 48 .ieu 1'D Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu I Gas Tax Revenue - Scenario A I From Existina Develonment Land Use Designation: SP-281 Residential Buildout Phase Total No. Acres: 792.0 Phase I Phase II No. of Existing Units: 4,985 Yrs 1-5) Yrs 6-10) 1,nnd Ilse Ruildout Data Number of acres developed at phase buildout 7921 792 Number of total units developed at phase buildout 4,9851 4,985 Calculation of Annual Gas Tax Revenue Existing Population' 1 9,0001 9,000 Anticipated Annual Per Capita Revenue 1 $23.371 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout 1 1$210,3301 $210,330 ' Estimated population provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. From Future Develonment Land Use Designation: PD Medium Density Residential (4-10 dulac) Total No. Acres: 113.3 No. of Potential Buildout Units: 963 Buildout Phase Phase I Yrs 1-5) Phase II Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density permitted (units/acre) 10 10 Maximum potential units constructed during this phase 482 482 Number of total potential units constructed at phase buildout 482 963 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 1,002 2,003 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $23,407 $46,813 ' 2010 U.S. Census. Page 22 of 48 TN PD ilential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu From Future Develonment Land Use Designation: Riv. Co. Medium -High Density Residential (5-8 du/ac) Total No. Acres: 30.8 No. of Potential Buildout Units. 209 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) g g Maximum potential units constructed during this phase 105 105 Number of total potential units constructed at phase Buildout 105 209 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 218 436 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $5,090 $10,181 ' 2010 U.S. Census. From Future Land Use Designation: Mirasera High Density Residential (12 Buildout Phase dulac) Total No. Acres. 22.6 Phase I Phase 11 No. of Potential Buildout Units. 230 (Yrs 1-5) Yrs 6-10 Land Use Buildout Data Number of acres developed during phase 11.3 11.3 Maximum density permitted units/acre) 12 12 Maximum potential units constructed during this phase 115 115 Number of total potential units constructed at phase buildout 115 231 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 240 479 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $5,603 $11,205 i ",.., „aua. Page 23 of 48 'AJOD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Frnm F..tnrp 1Dpvp1nnmpnt Land Use Designation: Mirasera Mixed Use Residential (16 du/ac) Total No. Acres: 10.5 No. of Potential Buildout Units: 142 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted units/acre) 16 16 Maximum potential units constructed during this phase 71 71 Number of total potential units constructed at phase buildout 71 143 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 149 297 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $3,471 $6,941 2010 U.S. Census. From Future Development Land Use Designation: Mirasera very High Density Buildout Phase Residential (20-25 du/ac) Total No. Acres: 66.4 Phase I Phase II No. of Potential Buildout Units: 1,411 (Yrs 1-5) (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density permitted units/acre) 25 25 Maximum potential units constructed during this phase 706 706 Number of total potential units constructed at phase buildout 706 1,411 (`nienintion of Annual Gas Tax Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 1,467 2,935 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase Buildout $34,294 $68,588 1' 2010 U.S. Census. Page 24 of 48 M TN PD ntial Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Gas Tax Revenue Summary Table Buildout Phase Phase I Yrs 1-5) Phase II (Yrs 6-10) Total Annual Gas Tax Revenue from existing residential development at phase buildout $210,330 $210,330 ...from future PD Medium Density residential development $23,407 $46,813 from future Riv. Co. Medium -High Density residential development $5,090 $10,181 ...from future Mirasera High Density residential development $5,603 $11,205 ...from future Mirasera Mixed Use residential development $3,471 $6,941 ...from future Mirasera Very High Density residential development $34,294 $68,588 Total Annual Gas Tax Revenue from all development at Phase Buildout $282,195 $354,059 Page 25 of 48 N PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax Prop. A Fire Tax Revenue - Scenario A From Existing Conditions o Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10 Tax from Existing Residential Units Number of residential units existing at end of phase 4,985 4,985 Prop. A Fire Tax(per unit $60 $60 Total Prop. A Fire Tax revenue from existing residential development $299,100 $299,100 Tax from Existing Non -Residential Development Less Than 2,600 sq. ft. No. of buildings less than 2,600 sq. ft. 80 80 Prop. A Fire Tax(per unit $60 $60 Total Prop. A Fire Tax revenue from existing non-residential development less than 2,600 sq. ft. $4,8001 $4,800 Tax from Existing Non -Residential Development Greater Than 2,600 sq. ft. See footnote below' Tax From Vacant Parcels No. of vacant parcels 50 50 Prop. A Fire Tax rate(perparcel)' $30 $30 Total Prop. A Fire Tax revenue for vacant parcels $1,500 $1,500 Total Prop. A Fire Tax Revenue - Existing Conditions $305,400 $305,400 'Tax rates provided by Willdan Financial Services. ' Terra Nova estimate based on aerial photos and commercial characteristics in annexation area. 'Prop. A Fire Taxes for non-residential development greater than 2,600 sq. ft. in area are building -specific and determined using a formula that accounts for actual square footage and the use of fire restrictive building materials. These parameters are unknown for larger existing non-residential buildings in the annexation area, including 3 golf clubhouses, a supermarket, and a hotel. This analysis, therefore, is conservative as actual Prop. A Fire Tax revenues will be greater than those shown here. From Future Residential Development Land Use: PD Medium Density Residential (4-10 du/ac) No. of acres: 113.3 No. of potential buildout dwelling units. 963 Buildout Phase Phase I rs 1-5 Phase II Yrs 6-10 No. of Dwelling Units built during this phase 481.5 481.5 Total Dwelling Units at phase buildout 481.5 963 Prop. A Fire Tax(per SF dwelling unit) $60 $60 Total Prop. A Fire Tax revenue from future residential development $28,890 $57,780 'Tax rates provided by Willdan Financial Services. 26 of 48 �krri TN Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax From Future Residential Development Land Use: Medium -High Density Residential (5-8 dulac) (Riv. Co. designation) No. of acres: 30.8 No. of potential Buildout dwelling units: 209 Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10 No. of Dwelling Units built during this phase 104.5 104.5 Total Dwelling Units at phase buildout 104.5 209 Prop. A Fire Tax(per SF dwelling unit) $60 $60 Total Prop. A Fire Tax revenue from future residential development 1 $6.270 $12,540 Tax rates provided by Willdan Financial Services. From Future Residential Development Land Use: Mirasera High Density Residential (12 dulac)Buildout No. of acres: 22.6 No. ofpotendal buildout dwelling units: 230 Phase Phase I Yrs 1-5 Phase II Yrs 6-10 No. of Dwelling Units built during this phase 115 115 Total Dwelling Units at phase buildout 115 230 Prop. A Fire Tax (per SF dwelling unit) $60 $60 Total Prop. A Fire Tax revenue from future residential development $6,9001 $13,800 Tax rates provided by Willdan Financial Services. From Future Residential Development Land se: Mirasera mixed Use esientt ac No. of acres: 10.5 No. of potential buildout dwelling units: 142 Buildout Phase Phase I rs 1-5 Phase II rs 6-10 No. of Dwelling Units built during this phase 71 71 Total Dwelling Units at phase buildout 71 142 Prop. A Fire Tax (per SF dwelling unit)' $45 $45 Total Prop. A Fire Tax revenue from future residential development $3,1951 $6,390 Tax rates provided by Willdan Financial Services. From Future Residential Development Land Use: Mirasera Very High Density Residential (20-25 du/ac) No. of acres. 66.4 No. of potential buildout dwelling units: 1,411 Buildout Phase Phase I rs 1-5 Phase II rs 6-10 No. of Dwelling Units built during this phase 705.5 705.5 Total Dwelling Units at phase buildout 705.5 1411 Prop. A Fire Tax (per SF dwelling unit)' $45 $45 Total Prop. A Fire Tax revenue from future residential development 1 $31,748 $63,495 Tax rates provided by Willdan financial Services. 27 of 48 PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax From Future Commercial Development Land Use: Commercial (includes hotel) No. of acres. 34.4 No. ofpotential squarefeet. 399,954 Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10 Number of acres to be developed during this phase 17.2 17.2 Conversion of acres to number of lots/buildings Average acreage of developed commercial lot in annexation area' 1.31 1.3 Projected number of commercial buildings built during this phase 221 22 Projected number of commercial buildings built at phase buildout 221 45 Calculation of Fire Tax Revenue Prop. A Fire Tax(per commercial buildin) $60 $60 Total Prop. A Fire Tax revenue from future commercial development $1,342 $2,683 'Average acreage of multiple developed commercial lots in annexation area. 'Tax rates provided by Wiildan Financial Services. This analysis assumes that all future commercial development will be less than 2,600 sq. ft. and assessed a $60/building fee. Future development that is larger in size will be assessed a higher fee that is based on a formula which considers actual square footage and the use of fire restrictive building materials. These parameters are building -specific and are unknown at this time. From Future Business Park Development Land Use: Business Park No. of acres: 46.8 No. of potential square feet: 448,494 Buildout Phase Phase I rs 1-5 Phase II Yrs 6-10 Number of acres to be developed during this phase 23.4 23.4 Conversion of acres to number of lots/buildings Average acreage of developed commercial lot in annexation area 1.3 1.3 Projected number of commercial buildings built during this phase 301 30 Projected number of commercial buildings built at phase buildout 301 61 Calculation of Fire Tax Revenue Prop. A Fire Tax(per commercial buildin) $60 $60 Total Prop. A Fire Tax revenue from future commercial development $1,825 $3,650 'Average acreage of multiple developed commercial lots in annexation area. 'Tax rates provided by Willdan Financial Services. This analysis assumes that all future business park development will be less than 2,600 sq. ft. and assessed a $60/building fee. Future development that is larger in size will be assessed a higher fee that is based on a formula which considers actual square footage and the use of fire restrictive building materials. These parameters are building -specific and are unknown at this time. 28 of 48 M Frnm Fnture Industrial nevelonment TN PD tial Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax Land Use: Industrial No. of acres. 26.6 No. of potential square feet: 254,913 Buildout Phase Phase I Yrs 1-5) Phase Il Yrs 6-10 Number of acres to be developed during this phase 13.3 13.3 Conversion of acres to number of lots/buildings Average acreage of developed commercial lot in annexation area 1.3 1.3 Projected number of commercial buildings built during this phase 17 17 Projected number of commercial buildings built at phase buildout 17 35 Calculation of Fire Tax Revenue Prop. A Fire Tax (per commercial buildin) $60 $60 Total Prop. A Fire Tax revenue from future commercial development $1,037 $2,075 'Average acreage of multiple developed commercial lots in annexation area. 'Tax rates provided by Willdan Financial Services. This analysis assumes that all future industrial development will be less than 2,600 sq. ft. and assessed a $60/building fee. Future development that is larger in size will be assessed a higher fee that is based on a formula which considers actual square footage and the use of fire restrictive building materials. These parameters are building -specific and are unknown at this time. 29 of 48 *N PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax Prop. A Fire Tax Revenue - Summary Table Buildout Phase Phase I rs 1-5) Phase II (Yrs 6-10 Potential Annual Prop. A Fire Tax Revenue from existing development $305,400 $305,400 ...from future PD Medium Density residential development $28,890 $57,780 ...from future Riv. Co. Medium High Density residential dev. $6,270 $12,540 ...from future Mirasera High Density residential development $6,900 $13,800 ...from future Mirasera Mixed Use residential development $3,195 $6,390 ...from future Mirasera Very High Density residential dev. $31,748 $63,495 ...from future commercial development $1,342 $2,683 ...from future business park development $1,825 $3,650 ...from future industrial development $1,037 $2,075 Total Annual Prop. A Fire Tax Revenue from all development (at ,phase buildout) 1 $386,607 $467,813 30 of 48 E5 New Cnnstrurtinn Tor 111— — _ Cso..o— A ------ ------- Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) New Residential Development Number of dwelling units constructed durin this hale 1478 1478 Averse square footalge of new dwelling unit 1,500 1,500 New Construction Tax rate r sqare foot)' $0.40 $0.40 Total New Construction Tax collected on new residential development $886,500 $886,500 New Commercial Development Number of square feet constructed during this phase 149,977 149,977 New Construction Tax rate r square foot)' $0.40 $0.40 Total New Construction Tax collected on new commercial development $59,991 $59,991 New Commercial (Hotel) Development Number of square feet constructed during this phase 50,000 50,000 New Construction Tax rate(ar Euarc foot) $0.40 $0.40 Total New Construction Tax collected on new hotel development $20,000 $20,000 New Business Park Development Number of square feet constructed during this phase 224,247 224,247 New Construction Tax ratesquare foot $0.40 $0.40 Total New Construction Tax collected on new business park development $89,699 $89,699 New Industrial Development Number of square feet constructed during this phase 127,457 127,45 New Construction Tax rate r square foot $0.40 $0.40 Total New Construction Tax collected on new industrial development $50,983 $50 983 Total New Construction Tax Revenue at phase buildout $1,107,172 $1,107,172 terra nova estimate Dissect on permmed density and local residential characteristics. Palm Desert Building & Safety Dept. *VWPD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: City DIF Fees Page 31 of 48 M Art in Public Places Fund Revenue - Scenario A TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: City DI Fees Buildout Phase Phase I Phase 11 New Single -Family Residential Development Number ofdwelling units constructed during this phase 701 701 Average value unit)' S249,123 $249123 Total value of dwelling units at phase buildout $174 635 223 $174,635,223 1%of valuation of all new dwelling unite $1,746,352 $1,746,352 0.25 of I%valuation $436,588 $436,588 Total Art in Public Places fees collected on new SF residential development $436,588 $436,588 New Multi -Family Residential Development Number of dwelling units constructed during this phase 777 777 Averse value unit' $104,425 S104 425 Total value of dwelling units at phase buildout $81,086,013 $81,086,013 1 % of valuation of all new dwellingunits' $810 860 $810,860 0.25 of 1%valuation $202,715 $202,715 Total Art in Public Places fees collected on new MF residential development $202,715 $202,715 New Commercial Development Number of square feet constructed during this phase 149,977 149,977 Average valuesquare foot' $73 $73 Total value of commercial dev. at phase buildout $10,948,321 $10,948,321 1% of valuation of all new commercial development $109 483 $1.09,483 0.50 of 1% valuation $54 742 S54,742 Total Art in Public Places fees collected on new commercial development 1 $54,7421 $54,742 New Hotel Development Number of rooms constructed during this phase 75 75 Average value roomy $68,512 S68 512 Total value of hotel dev. at phase buildout $5,138,400 $5,138,400 1%of valuation of all new hotel development $51,384 $51 384 0.50 of 1 % valuation $25,692 $25 692 Total Art in Public Places fees collected on new hotel development $25,6921 $25 692 New Business Park Development Number of square feet constructed during this phase 224,247 224,247 Average valuesquare foot) $169 $169 Total value of commercial dev. at phase buildout $37,897,743F$37,897,7431%of valuation of all new commercial develo ent $378,9770.50 of 1% valuation $189489Total Art in Public Places fees collected on new commercial devel ment $189,489 New Industrial Development Number of square feet constructed during this phase 149,977 149,977 Average value (per square foot)' $73 $73 Total value of commercial dev. at phase buildout $10,948,321 $10,948,321 1% of valuation of all new commercial development $109,483 $109,483 0.50 of 1% valuation $54,742 $54,742 Total Art in Public Places fees collected on new commercial development $54,742 $54,742 Total Art in Public Places Revenue from all new development at phase buildout $963,967 $963,967 ' Assumes all dwelling units are in a development and, therefore, are not exempt for the first $100,000 of valuation. ' Based on compilation of building permit data provided by Palm Desert Building & Safety Dept., October 2011. ' Based on comparable existing highway -serving hotel in the annexation area, per Riv. Co. Assessor's records, Oct. 2011. Page 32 or 48 E5 Low Income Housing Mitivatinn Fee Revenue - Rrenarin A Buildout Phase Phase I rs 1-5 Phase II rs 6-10 New Commercial Development Number of square feet constructed during this phase 149,977 149,977 Low Income Housing Mitigation Fee rate stare foot $1 $1 Total Fees from Commercial Development at phase buildout $149,977 $149 977 New Hotel Development Number of rooms constructed during this phase 751 75 Low Income Housing Mitigation Fee rate room EE $620 $620 Total Fees from Hotel Development at phase buildout S46,5001 $46,500 New Business Park Development Number of square feet constructed during this phase 224,247 224,247 Low Income HousingMitigation Fee rate (per square foot)' $0.50 $0.50 Total Fees from Business Park Develo ment at phase buildout 1 $112,1241 $112,124 New Industrial Development Number of square feet constructed during this phase 127,457 127,457 Low Income Housing Mitigation Fee ratesquare foot)' $0.33 $0.33 Total Fees from Industrial Development at phase buildout $42,061 S42,061 Total Low Income Housing Mitigation Fees collected at base buildout 1 $350 66l $350 6 11 aim uesen nwmmg ac 3wery uepr. Child Care Facilities Imnact Mitigation Fee Revenue - Seenarin A Buildout Phase Phase I rs 1-5) Phase 11 Yrs 6-10 New Commercial Development Number of s uare feet constructed durin this hase 149,9771 149,977 foot ' $0.90 $0.90 Total Fees collected from commercial development $134,9791 $134,979 New Hotel Development Number of uare feet constructed durin this hale 50,000 50,006 foot)' $0.77 $0.77 Total Fees collected from hotel development $38,500 $38 500 New Business Park Development Number of uare fed constructed durl this phase 224,247 224,247 foot)' $1,15 $1.15 Total Fees collected from business park develo ment $257,884 $257,884 New Industrial Development Number of uare feet constructed durin this hose 127,457 127,457 f(ot)' $0.47 $0.47 Total Fees collected from indushial development $59,905 $59 905 Total Child Care Facilities Impact Mitigation Fee Revenue collected from all new development at phase buildout $491,268 $491,268 a,m uesen nwiwng a, query uepr. "WOOPD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: City DIF Fees Page 33 of 48 M Traffic Signals Fund Revenue - Scenario A *400 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: City DIF Fees Buildout Phase Phase I (Yrs 1-5(Yrs Phase 11 6-10) New Residential Development Number of dwelling units constructed during this hale 1478 1478 Traffic Signals Fund fee dwellingunit S50 S50 Total Traffic Signal fees collected on new residential development at phase buildout $73 875 $73,875 New Commercial Development Number of square feet constructed during this lase 149,977 149,977 Traffic Signal Fund fee(per 1,000 square feet) $500 $500 Total Traffic Signal Funds collected on new commercial development at phase buildout $74,98 $74 989 New Hotel Development Number of square feet constructed during this phase 50,000 50,000 Traffic Signal Fund fee r 1,000 square feet)' S500 $500 Total Traffic Signal Funds collected on new commercial development at phase buildout $25,000 $25,000 New Industrial Development Number of acres constructed during this phase 13.3 13.3 Traffic Signal Fund fee r 1,000 square feet)' $500 $500 Total Traffic Signal Funds collected on new commercial development at phase buildout $6,650 $6,650 Total Traffic Si al Fund Revenues at phase buildout $180,514 $180,514 Palm Desert Public Works Dept. Planned Drainage Fund Revenue - Scenario A Buildout Phase Phase I (Yrs 1-5) Phase II 1 (Yrs 6-10 All New Development Number of acres developed during this phase 175.7 175.7 Planned Drain a Fund fee acre Sl,()001 $1,000 Total Planned Drainage Fund Revenue at phase buildout 1 $175,7001 $175,700 Palm Desert Public Works Dept Park & Recreation Facilities Fund Revenue - Scenario A Buildout Phase Phase I Yrs 1-5 Phase 11 Yrs 6-10 New Residential Development (subdivisions only)' Number of dwelling units constructed during this phase 1478 1478 Park & Recreation Facilities Fee(step If 15.88 15.88 Current Value of Residential Land acre $114,887 $114 887 Park & Recreation Facilities Fee (st 2) $1,823,916 $1,823,916 Total Paris & Recreation Facilities Fund Revenue at phase buildout $1 823 916 $1,823,916 'This fee applies only to residential subdivisions For analysis purposes, it is assumed that all acres designated for residential development will be subdivided 'Palm Desert Public Works Dept. 'Average land value of multiple vacant parcels designated for residential development, from Riverside County Assessor's data, October 2011. Page 34 of 48 M Costs of General Government - Scenario A [From Exittinv Reaidentisil FU—I .... —t l PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use. SP-281 Residendal No. ofAcres: 792 No. of ExisdngDarlling Units: 4,985 BLAIdout Phase Phase I (Yrs 1- Phase II (Yrs 6-10 Number of acres developed at phase buildout 792 792 Number of dwelling units existing at phase buildout 4,985 4,985 Existing Population' 9,000 9,000 Cost of General Government (per ca its) $282 $282 Total annual cost of General Government at phase buildout 1 $2,538.0001 S2,538,0001 p.or,uw uy raw ii—lY, sun uty ralm ryesen t:ommunrty ASaderBtton, Uctober 2011. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. From Future Residential Develonment Land USe Ig a on: FV a lnm Imnaly ItemaenjigalBuildout dulac) No. ofAcres. 113.3 No. ojBuildout Units: 96Y Phase Phase 1 (Yrs 1-5) Phase Il (Yrs 6-10 Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density rmitted (units/acre) 10 10 Maximum potential units constructed during thisphase' 482 482 Number of total potential units constructed at phase buildout 482 963 Average number of persons per household 2.08 2.08 Total no. ofpotential residents at phase buildout 1 1,002 2,003 Calculatins Annual Costs of General Government Cost of General Government r c its $282 $282 Total annual cost of General Government at phase buildout $282,443 $564,887 assumes mture resmenual deveiopment occurs at zm/. of the maximum density permitted. ' 2010 U.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. From Future Residential Develonment Land Use Designation: Mu Co. Medium -High Density Residential (5-8 dulac) Na ofAcres: 3a8 No. o Buildout Units: 209' Buildout Phase Phase I (Yrs 1-5(Yrs Phase II 6-10 Land Use Buildout Data Number of acres developed during phase 15.4 15.4 Maximum density Permitted (unimlacre) 8 8 Maximum potential units constructed durin thisphase' 105 105 Number of total potential units constructed at phase buildout 105 209 Average number of persons per household= 2.08 2.08 Total no. ofpotcntial residents at phase buildout 218 436 ,Calculating Annual Costs of General Government Cast of General Government(per capita' $282 $282 Total annual cost of General Government at phase buildout $61,4251 $122 849 .,�w.,� .wwc tcsmawat aevmopmem occurs at ay i or the maximum density permitted. ' 2010 U.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. Page 35 of 48 M From Future Residential Development Land se nation: Miresera High Density Residential (12 du/ac) No. of Acres: 22.6 Na o Buildout Units: 23tV Buildout Phase Phase I rs 1-5 Phase 11 rs 6-10 Land Use Buildout Data Number of acres developed during phase 11.3 11.3 Maximum density permitted uniWacre 12 12 Maximum potential units constructed during thisphase' 115 115 Number of total potential units constructed at phase buildout 115 231 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 240 479 Calculating Annual Costs of General Government Cost of General Government(per capita)' 1 $2821 $282 Total annual cost of General Government at phase buildout 1 $67,607 $135,214 'Assumes future residential development occurs at 85%of the maximum density permitted. ' 2010 U.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. (From Future Residential Development Land Use Designation: Mirasera Mired Use Residential (16 du/ac) Na ojAcres: 10.5 No. o Bnildout Units: 142' Buildout Phase Phase I Yrs 1- Phase 11 rs 6-10 Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted units/acre 16 16 Maximum potential units constructed during thisphase' 71 71 Number of total potcntial units constructed at phase buildout 71 143 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 149 297 Calculating Annual Costs of General Government Cost of General Government capita) $282 $282 Total annual cost of General Government at Phase buildout 1 $41,8801 $83,761 'Assumes future residential development occurs at 85 %of the maximum density permitted. '- 2010 U.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011.2012. (From Future Residential Development Land Use Designation: Mirasera very High Density Residential (20-25 du/oc) No. ojAcres: 66.4 Na o Baildout Units: 1,4H' Buildout Phase Phase I Yrs 1- Phase 11 rs 6-10 Land Use Buildout Data Number of acres devclopcd during phase 33.2 33.2 Maximum density permitted units/acre 25 25 Maximum potential units constructed during thisphase' 706 706 Number of total potential units constructed at phase buildout 706 1411 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 1,467 2,935 Cacu ne Annual Costs of General Government Cost of General Government r capita' $282 $282 Tatal annual cost of General Government at phase buildout $413,818 $827,636 ' Assumes future residential development occurs at 75% of the maximum density permitted. 4100 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Govemment Costs Page 36 of 48 cm From Existing Commercial Develmmneet PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs x Use: CommerWal I includes h-o-ta & Commercial- ourtst No. ofAcres: 80.0 No. of Existing Square Footage: 570,117 Buildout Phase Phase I (Yrs I Phase 11 (Yn9 6 10) Land Use Buildout Data Number of acres developed at phase buildout 80.01 80.0 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Govcmmen[ $29.801 $29.8(1 Total cost of General Government at phase buildout $2,384.171 $2,384.17 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government icipal Services) $0.24 $0.24 Total cost of General Government (Municipal Services) at phase buildout $19.39 $19.39 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $5,050.95 $5,050.95 Total Annual Costs of Government Services at Phase Buildout $7,454.5 $7,454.52 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/industrial uses, Table A2. From Existing Develooment Land Use: Industrial - Light No. ofAcres. 566 No. of Existing Square Footage, 542,409 Buildout Phase Phase I (Yrs 1-5) Phase 11 rs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 56.6 56.6 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government' $29.80 $29.80 Total cost of General Government at phase buildout 1 $1 686.80 $1 686.90 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Ivlunici Services)' S0.2 $$0.24 Total cost of General Government (Municipal Services) at phase buildout $13.72 $13.72 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services) $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $3,573.55 $3 573.55 Total Annual Costs of Government Services at Phase Buildout $5,274.07 $5,274.07 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Page 37 of 48 Frnm Future Commercial Develonment TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use., Commercial Na of Acres: 3L3 No. o Potential Square Footage, 299,954 Buildout Phase Phase [ rs 1- Phase II rs 6-10 Land Use Buildout Data Number of acres developed during this phase 5.71 15.7 Number of acres developed at phase buildout 1 15.71 31.3 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government $29.80 $29.80 Total cost of General Government at phase buildout 1 $466.401 $932.81 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Municipal Services)' $0.241 $0.24 Total cost of General Government (Municipal Services) at phase buildout $3.79 $7.59 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Govemment (Support Services Services) $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $988.09 $1 976.19 Total Annual Costs of Government Services at Phase Buildout $1,458.29 $2 916,58 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Fnhur. Hotel Develnnment Land se: Commercial M-ot-eOBuildout Na ofAcres: 31 No. o Potential Square Footage, 90,000 Phase Phase I Yrs 1-5 Phase 11 rs 6-10 Land Use Buildout Data Number of acres developed during this phase 1.61 1.6 Number of acres developed at phase buildout 1.61 3.1 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government $29.80 $29.80 Total cost of General Government at phase buildout 1 $46.191 $92.39 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Municipal Services) $0.24 $0.24 Total cost of General Government (Municipal Services) at phase buildout 1 $0.38 $0.75 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $97.86 $195.72 Total Annual Costs of Government Services at Phase Buildout $144.43 $288.86 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Future Business Park Development Land se: Business Park Na ofAcres: 46.8 Na o Potential Square Footage: 448,494 Buildout Phase Phase I Yrs 1- Phase 11 rs 6-10 Land Use Buildout Data Number of acres developed during this phase 23.41 23.4 Number of acres developed at phase buildout 1 23.41 46.8 Calculating Annual Cosh of General Government (City-wide Services) Per acre cost of General Government $29.80 $29.80 Total cost of General Government at phase buildout $697.37 $1 394.74 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Goverment (Municipal Services)' $0.24 $0.24 Total cost of General Government (Municipal Services) at phase buildout $5.67 $11.35 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $1,477.40 $2,954.81 Total Annual Costs of Government Services at Phase Buildout $2,180.45 $4,360.89 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Page 38 of 48 CM From Future Industrial Develannrmt *WPD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use: Indxs&ial No. ojAcres: 166 No. ojPote"daf Spare Footage: 254,913 Buildout Phase Phase I rs 1-5) Phase 11 rs 6-10) Land Use Buildout Data Number of acres developed during this phase 13.3 13.3 Number of acres developed at phase buildout 13.3 26.6 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Govemment' $29.801 $29.80 Total cost of General Government at phase buildout $396.371 $792.74 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government Munici al Services $0.24 $0.24 Total cost of General Government (Municipal Services) at phase buildout $3,22 $6.45 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services) $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $839.72 $1,679.44 Total Annual Costs of Government Services at Phase Buildout $1,239.311 $2,478.63 �••�• •-�•••;a ni....... —'—.,uw.,y -Mu. vaiaa, tuna "et �osT mwupners Tor Uommerciawnaustnat uses, fable A.2. Costs of General Government Summ..•.. T.M. Bmldoat ase Plisse I Phase 11 Residential development Total Annual Govt. Costs from existing residential development at phase buildout $2,538,000 $2,538,000 ...from future PD Medium Density residential development $282,443 $564,887 .....from future Riv. Co. Medium -High Density resid. dev. $61,425 $122,849 ...from future Mirasera High Density resididential dev. $67 607 $135 214 ... _from future Mirascra Mixed Use residential devel ent $41,880 $83,761 ...from future Mirasera V Hi h De;iKy residential dev. 1 $413,8181 $827 636 Non -Residential development Total Annual Cost from existing Commercial Development at phase buildout $7,455 $7,455 .....from existin Industrial -Light development $5,274 $5,274 .....from future commercial development $1,458 $2,917 ...from future commercial -hotel development $144 $289 .....from future business park development $2,180 $4,361 .....from future industrial development $1,239 $2 479 Total Annual Govt. Costs at Phase Buildout $3,413,867 $4,295,120 Page 39 of 48 n Costs of Police Protection - Scenario A IF-- Friatino Rraidenfial 11~11nnment TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use: SP-281 Residential No. ojAcres: 792 No. ofExisdng DIRwIfing Units: 4,985 Buildout Phan Phan I Yrs 1- Phase II rs 6-10 Number of acres deircloped at phase buildout 792 792 Number of dwellin units existing at phasc buildout 4,98 T985 Existin Po ation 9 000 9 000 Cost of Police Protection capiW7 $339 $339 Total annual cost of Police Protection at phase buildout $3,051,0001 $3,05l,000 'Estimate provided by Paul Brady, Sun tatty Petm Vesen Community Association, uctoner su 11. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. IF-- Fnh—Reaidentw nevei—rut Lana use Zx3villanon:s. a nrtal (4-11F drVac) Na ojAcres: 113.3 Na o Buildout Units: 963r Buildout Phase Phan I Yrs 1- Phase II rs 6 10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density itted units/acre 10 10 Maximum potential units constructed during thisphase' 482 482 Number of total potential units constructed at phase buildout 482 963 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 1,002 2,003 Calculating Annual Costs of Police Protection Cost of Police Protectioncapita)" $339 $339 Total annual cost of Police Protection at phase buildout 1 $339 533 $679 066 'Assumes future residential development occurs at 85%of the maximum density permitted. ' 2010 U.S. Census. ' Terra Nova staff estimate based an population in City of Palm Desert and City Budget, Potice Protection expenditures 2011- 2012. From Future Residential Develonment Land Use Designation: Rine Co. Medium -High Densitp Residential (5-8 du/ac) Na ojAcres: 30.8 Na o Buildout Units: 20i✓ Buildout Phase Phase I rs 1- Phase II (Yrs 6-10 Land Use Buildout Data Number of acres developed during phase 15.4 15.4 Maximum dcnsity permitted units/acre 8 8 Maximum potential units constructed during thisphase' 105 105 Number of total potential units constructed at phaw buildout 105 209 Average number of persons per househol& 2.08 2.08 Total no. of potential residents at phasc buildout 1 218 436 Calculating Annual Costs of Police Protection Cost of Police Protection ita)a $339 $339 Total annual cost of Police Protection at phase buildout $73,8401 $147,680 'Assumes future residential development occurs at 85%of the maximum density permitted. ' 2010 U.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. Page 40 of 48 09 From Future Residential Development '*WPD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land se gnation: irasera High Imnsity Residential (I dulac) No. of Acres: 22.6 No. o Buildout Units. 230' Buildout Phase Phase 1 Yrs 1-5 Phase I1 rs 6-10 Land Use Buildout Data Number of acres developed during phase 11.3 11.3 Maximum density permitted units/acre 12 12 Maximum potential units constructed during thisphase' 1 l5 115 Number of total potential units constructed at phase buildout 115 231 Averse number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 240 479 ,Calculating Annual Costs of Police Protection Cost of Police Protection r capita)' $339 $339 Total annual cost of Police Protection at phase buildout $81,2721 $162,544 'Assumes future residential development occurs at 85%of the maximum density permitted. ' 2010 U.S. Census - 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. From Future Residential Development Land Use Designation: Mirasera Mixed Use Residential (16 dulac) No. ofAcres: 10.5 No. o Buildout Units: 1421 Buildout Phase Phase I rs 1-5 Phase I1 rs 6.10 Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted units4cre 16 16 Maximum potential units constructed during thisphase' 71 71 Number of total potential units constructed at phase buildout 71 143 Average number of persons per household' 2.08 2.08 Total no. ofpotential residents at phase buildout 149 297 Calculating Annual Costs of Police Protection Cost of Police Protectioncapita' $339 $339 Total annual cost of Police Protection at piase buildout 1 $50 346 $100-691 ' Assumes future residential development occurs at 85%of the maximum density permitted. ' 2010 U.S. Census 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2011 From Future Residential Develonment Land Use Designation: Mirasera Very High Density Residential (2O-25 dulac) No. ofAcres: 66,4 Na o Buildout Units: 1,4111 Buildout Phase Phase I (Yrs 1- Phase II rs 6.10 Land Use Buildout Data Number of acres developed during phase 33.21 33.2 Maximum density permitted (unimlacre) 25 25 Maximum potential units constructed during thisphase' 7061 706 Number of total potential units constructed at phase buildout 706 1,411 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 1,4671 2,935 Calculating Annual Costs of Police Protection Cost of Police Protection(per capita)" $339 $339 Total annual cost of Police Protection at phase buildout $497,4621 $994,924 .,-- ,wwc ,o>,ua,ua, u cn,pmmr occws ai "v or me maxtmtun aenstty permrnea. ' 2010 U.S. Census 'Terra Nova staff estimate based on population in City of Palm Desen and City Budget, Police Protection expenditures 2011. 2012. Page 41 of 48 4w *400 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Frnm Fria6na ('nmmwminl Ilevwlnnmont Land Use.Commercial inc u es hala & Commercial- onrraf No. ojAcres. 8A 0 No. afEdsiIng Square Footage. 570,117 Buildout Phase Phase I (Yrs 1- Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 80.0 80.0 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection $417.21 $417.21 Total cost of Police Protection at phase buildout 1 $33,376.801 $33,376.80 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $4,455.201 $4,455.20 Total Annual Costs of Police Protection at Phase Buildout $37,832,001 $37,832.00 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From F.:ictino Y)mpinnment Land Use: Industrial - Light Na ofAcres: 56.6 No. ofFiristing Square Footage, 542,409 Buildout Phase Phase 1 Y. 1-5 Phase Il Yrs 6-10 Land Use Buildout Data Number of acres developed at phase buildout 56.6 56.6 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection 1 $417.21 $417.21 Total cost of Police Protection at phase buildout 1 $23,614.09 $23,614.09 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection(Municipal Services)' $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $3,152.05 $3,152.05 Total Annual Costs of Police Protection at Phase Buildout $26 766.14 $26,766.14 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Page 42 of 48 In From Future Commercial Develonment D Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use. Commercial No. ofAcres: 3L3 Na o Potential Square Footage. 299,954 Buildout Phase Phase I Yrs 1-5 Phase II rs 6-10 Land Use Buildout Data Number of acres developed during this phase 15.71 15.7 Number of acres developed at phase buildout 15.71 31.3 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection I $417.21 $417.21 Total cost of Police Protection at phase buildout 1 $6,529.341 $13,058.67 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services) $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $871.55 $1,743.10 Total Annual Costs of Police Protection at Phase Buildout $7,400.89 $14 801.77 Cosa factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Future Hotel Develonment Land se: Comniiereial MRe7 No, afAeres: 3.1 No. o Potendal Square Footage., 90,000 Buildout Phase Phase I Yts 1- Phase II Yrs 6-10 Land Use Buildout Data Number of acres developed during this phase 1.6 1.6 Number of acres developed at phase buildout 1.6 3.1 Calculating Annual Costs of Police Protection (Ci -wide Services) Per acre cost of Police Protection $417.211 $417.21 Total cost of Police Protection at phase buildOat $646.68 $1,293.35 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services) $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $86.32 $172.64 Total Annual Costs of Police Protection at Phase Buildout $733.00 $1,465.99 Cost factors based on Riverside County Guide General Fend Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Future Business Park Develonment Land se. Business Park Na ofAcres: 46.8 Na of Potential S uare Footage: 448,494 —ad Buildout Phase Phase I (Yrs 1-5) Phase 11 rs 6-10) Us Use Buildout Data Number of acres developed during this phase 23 " 41 23.4 Number of acres developed at phase buildout 23.41 46.8 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police I $417.21 $417.21 Total cost of Police Protection at phase buildout $9,762.71 $19,525,43 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $1,303.15 $2,606.29 Total Annual Costs of Police Protection at Phase Buildout $11,065.86 $22,131.72 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Page 43 of 48 M From Future Industrial Development TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land se IndusVial No. ojAcres: 26,6 No. ojPotentral Square Footage: 254,913 Buildout Phase Phase I Yrs 1-.i Phase 11 rs 6-10) Land Use Buildout Data Number of acres developed during this phase 1331 13.3 Number of acres developed at phase buildout 1 13.31 26.6 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection' 1 $417.21 $417.21 Total cost of Police Protection at phase buildout 1 $5,548.891 $11,097.79 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $740.68 $1,481.35 Total Annual Costs of Police Protection at Phase Buildout $6,289.571 $12,579.14 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Costs of Police Protection Summary Table Buildout ase Phase I Phase II Residential development Total Annual Police Protection Costs from existing residential development at phase buildout $3,051,000 $3,051 000 ...from future PD Medium Density residential development $339 533 S679 066 ....from future Riv. Co. Medium-11igh Density resid. dev. $73,840 $147,680 ....,from future Mirasem High Density resididential dev. $81,272 $162,544 ...from future Mirasera Mixed Use residential development $50,346 1100,691 ...from future Mirasera V High Densityresidential dev. $497,462 $994,924 Non -Residential development Total Annual Cost from existing Commercial Development at phase buildout $37,832 $37,832 ...from existing Industrial -Light development $26,766 $26,766 ...from future commercial development $7,401 $14,902 .....from future commercial -hotel development $733 $1,466 ...from future business park development $111066 $22,132 ...from future industrial development $6,290 $12 579 Total Annual Police Protection Costs at Phase Buildout $4,137,575 $5,251,483 Page 44 of 48 09 TN PD *00otial Annexation Fiscal Analysis City of Palm Desert Scenario A: Roadway Maint. Costs Costs of Roadway Maintenance - Scenario A Buildout Phase Phase I (Yrs 1-5) Phase 11 Yrs 6-I0) Roadway Data No. of existing public paved road miles in annexation area` 10.5 10.5 No. of future public paved road miles at phase buildout 2.3 4.5 Total no. of paved road miles at phase buildout 12.8 15.0 Calculation of Roadway Costs Annual Costs ot ct y-wt e street maintenance, resur acing Improvement Pro'ects3 $6,091,625 $6,091,625 Number of paved road miles in current Palm Desert limits-,--159 159 Annual Cost of Roadway Maintenance Per Road Mile $38,312 $38,312 Annual Cost of Roadway Maintenance at Phase Buildout $488.478 $574,680 Terra Nova estimate based on aerial photography. Does not include private roads inside Sun City which will be privately maintained. 'Expenditures for street maintenance & resurfacing, City of Palm Desert Budget, 2011-2012. 3 "Comprehensive Annual Financial Report," City of Palm Desert Finance Dept., June 30,2010, p. 201. Estimate based on 3.0 road miles in Mirasera and 1.5 miles elsewhere in annexation area. Page 46 of 48 07"I D Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Fire, Ambulance Costs Costs of Fire Protection - Scenario A Buildout Phase Phase I Phase II (Yrs 1-5) (Yrs 6-10) Annual Costs of Operating Fire Station 81 at phase Buildout' 1 $1,500,000 $1,500,000 'Chief Dorian Cooley, Palm Desert Fire Dept., October 2011. Costs of Ambulance Service - Scenario A Buildout Phase Phase II Phase I Phase I (Yrs 6- Year 1) (Yrs 2-5) 10 Start-up costs for new ambulance service based out o Fire Station 81 (one-time fee) $190,000 $0 $0 Annual Costs of Ambulance Operation $940,944 $940,944 $940,944 Total Annual Costs of Ambulance Service at Phase Buildout $1,130,944 $940,944 $940,944 46 of 48 E5 TN tential Annexation Fiscal Analysis City of Palm Desert Scenario A: Costs/Revenues Summary Table Total Potential Costs/Revenues Summary Table Scenario A Buildout Phase Phase I Yrs 1-5 Phase 1I Yrs 6-10 ANNUAL REVENUES General Fund: Property Tax $836,415 $947,279 Property Transfer Tax $112,171 $125,579 Local Sales Tax $1,874,090 $2,314,298 Transient Occupancy Tax $544,596 $776,804 Motor Vehicle In -Lieu Fees $38,7611 $48,632 Subtotal Annual General Fund Revenue at Phase Buildout $3,406,032 $4,212,592 Restricted Funds: Highway Users Gas Tax $282,195 $354,059 Measure A $15,742 $19,440 Fire Fund - Prop. A Fire Tax $386,607 $467,813 Fire Fund - Structural Fire Tax $1,402,787 $1,588,723 Subtotal Annual Restr. Fund Revenue at Phase Buildout $2,087,331 $2,430,035 Total All Potential Revenues at Phase Buildout $5,493,362 $6,642,628 Interest Earnings: Historic Average Interest Rate on 90-Day Treasury Bills 4.39% 4.39% Anticipated Interest Earned on Revenues $241,159 $291,611 Total Potential Annual Revenue at Phase Buildout $5,734,521 $6,934,239 ANNUAL COSTS General Fund: Costs of General Government $3,413,867 $4,295,120 Costs of Police Protection $4,137,575 $5,251,483 Costs of Roadway Maintenance $488,478 $574,680 Subtotal Annual General Fund Costs at Phase Buildout $8,039,920 $10,121,283 Restricted Funds: Costs of Fire Protection $1,500,000 $1,500,000 Service'Costs of Ambulance $940,944 $940,944 Subtotal Annual Restricted Fund Costs at Phase Buildout $2,440,944 $2,440,944 Total Potential Annual Costs at Phase Buildout $10,480,864 $12,562,227 Potential Cashflow at Phase Buildout -$4,746,343 -$5,627,988 'Does not include one-time (year 1) start-up ambulance costs of V 90,000. Page 47 of 48 M TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Costs/Revenues Summary Table CITYDEVELOPER IMPACT FEES REVENUES (One time only) New Construction Tax $1,107,172 $1,107,172 Art in Public Places Fees $963,967 $963,967 Low Income Housing Mitigation Fees $350,661 $350,661 Child Care Program Fees $491,268 $491,268 Traffic Signals Fees $180,514 $180,514 Planned Drainage Fees $175,700 $175,700 Park & Recreation Facilities Fees $1,823,916 $1,823,916 Total Potential Developer Impact Fee Revenues at Phase Buildoutl $5,093,1981 $5,093,198 Page 48 of 48 M on Appendix B Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Scenario B Detailed Cost and Revenue Tables 45 m m 0 -- O �O N N �p 00 rN �O N OMM, N h n M 00 .N. OMM, N N flM+p1. pQ M N M h rj T 6 V1 M� N N MNM N �D MV V1 MN N d N 00 �y N N W [rram h 0M0 N r- N tn N N fM '• M h N Wes.. N �NMy M 7 NNM r: .�-� N O\ V� NMM N h N .� r NN a p oq O v1 N N N N R, p N rN(� N N N N O� V1 7 a. � NVi bNs °a o a O � 0 00 O 'C a a m Q o o w d a is d o� w � � •a d "� 175 r, w i' C � � C U � � � � O tz d o > o a d>> o W U z' z' z' ° ° % e° a ° a 98 ° U v,1 P.1 ° cm m 06 � M � 00 0 a� M CAD 06 QNN� 00 1- (V M [� P+ y W a p M V a� Od .-i un Epp O M wl fR .. v� N7N siq 6r9 +A ri a� b C v � •d � d � � t y 9 (V '�. u ' C b u 2 iy a �' U •a 13 ti aci o � a Q N U 'O h C C C1 V Tj E 23 in r 0 N N a m m ,n O a� �WMy Z � � O 'p0 7 pMp N O� t 0 O� �eOp�� V�1� ? b tn d� 3 b O � O of d � a w t n Oq e 4 C eC .0 y °' •cb � aw d U 06 lu A� C 'O LL o= c E E 4 y z4E°aE°a so0% cm LMM Nam+ Nt- V? h N Vmr1 pp N CT C ��}} fA M b 69 t V 6n 00 h M M � O h QM �q 00 � O pMp , �� pQ o� r � M oq � in (21 M �? 1T Z; f; 17� bi &&94 CO bVp91 :w y W 1. C4 'O 00 C^ p�p, �Cl) 6699 U9 l- 6R fR � �O M b9 a � 00 C W! "••� I �O V1 V1 00 r t� .•.' M 00 i:l 00 d� a� c d b y 7 = N r. O M 'U u C cc .9 IQ, ¢ zaFFa m m N ° MM `MMt bg oro r 8 r o V1 ur'} N W N M tn N lh M r .O L. a� N �` v? � * v vi ,r .N. 00 r o t N H N O � 69 69 V1 M of N d9 a� r a N r_ gti a GQ CDM. h h r ON U r ^r p va u=r 00 b N N C tqcq N pN�p N fR r N 69 d9 1� a �+ 'C! C a O 'O O ?J A c � � r° v i0 � �y. ccqq x •o dlip d U. c Q= z vi E a h° Z V Z�� Z¢ E- a F• a F° a F- V i a cm EM N .. r� N Q '80+, S@ O� M * O� O� M `C N M ^ of O 7 l� to M vN1 59 cq tn ^ Grp b9 OO ^ b r � V3 vs a �+ N 14D r- N 00 DM\ dN` V b$ Ot�` N ►y N r a� a 1V�1 a � N M M NV In y N r M 69 M d9 V1 rr r V1 6e l V3 a� e ,r o a c a o a x C "� > u a � � o a U •d O aci m j t u Cy 46 a�i qG Q� O � O E E O i 7 E� Co• d O � ti. E- � Z U Z Z Q° a° a a F° U vi a MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING JANUARY 26, 2012 XVI. OLD BUSINESS A. FwAE't� IMPACT "'AN Y$&-;,r,: REPORT-,",REGARDING.POTENTIAL¢' ANNEXATION; 5Y,, THE CITY -OF PALN[ DESERT FOR AREAS NORT14 OF� t* INTERSTATF= 1 Q11 Mayor Pro Tern Kroonen suggested continuing to a further date so that all the parties involved have had an opportunity to review the report. Mayor Pro Tem Kroonen moved to, by Minute Motion, continue this item to the meeting of February 23, 2012. Motion was seconded by Finerty and carried by a 5-0 vote. Mayor Spiegel explained this item was being continued in order to provide Mr. Bernheimer an opportunity to review the Palm Desert Annexation Study. XVII. PUBLIC HEARINGS A. REQUEST FOR APPROVAL OF THE VACATION OF DAISY LANE RIGHTS -OF -WAY AND EXCESS SIDEWALK, AND LANDSCAPE EASEMENTS ALONG SHEPHERD LANE IN TRACT NO. 29469 (Kristi Hanson Architects, Inc., Applicant). Mayor Spiegel stated he believed this item may need to be continued, because many people who live adjacently to Daisy Lane weren't aware of this public hearing and learned about it one or two days ago. He said they were not individually noticed in writing; the only notification made was in the newspaper in the Classified section. He thought it was only fair for these residents to get more information, but since many of them were here this evening, the Council was willing to hear them speak. Mayor Spiegel declared the public hearing open and invited anyone wishing to address the City Council on this matter to come forward at this time. MR. BILL TAYLOR, President of Terracina HOA, stated about one '/z years ago when KB Homes submitted a request to gate their area, the City sent out information to everyone in the neighborhood, which explained the request and what to expect. The community responded to the Council in opposition and the Council voted it down, which they appreciated. In this case, other than a 2-foot square sign on Shepherd Lane with limited information, no one knew what the real situation is all about. He said typically when people want to install a wall it's not to keep people in, but to keep them out. He personally didn't disagree with the idea of building it, but felt those affected should be notified about why and what is being planned. 25 MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING FEBRUARY 23, 2012 Councilmember Harnik said she would like to amend the motion and only move forward with the Change of Zone and General Plan Amendment, because it made sense, but paying money for a conservation easement didn't. Councilmember Finerty declined to amend her motion, because she understood the City Manager to say the City would go forward and zone the properties open space and continue discussions with the conservation easement to look at the cost and everything involved. And, she understood the amended motion was that because of the potential expense, which is unknown because it hasn't been fully investigated, is to just take it out, which she wouldn't support. Councilmember Harnik said her proposed amended motion was correctly understood. Mayor Pro Tem Kroonen stated he seconded Councilmember Finerty's motion observing it was only initiating a process of negotiation and not drawing any conclusions or entering into any contracts that imply any expense. Mr. Wohlmuth added a conservation easement couldn't be placed on this or any property without Council consideration. He said if there was a need to place a conservation easement, which he indicated in his staff report, may not be necessary because of the Zoning change. However, placement of a conservation easement would require the Council to vote affirmatively, because it was essentially a contract with a third party to manage the property. Further responding, he confirmed any costs involved would be known at that time. Mayor Spiegel called for the vote, and the motion carried by a 5-0 vote. B. FISCAL. - IMPACT- ANALYSIS11 REPORT-: REGARDING POTENTIAL, ANNEXATION BY THE CITY OF PALM DESERT FOR. AREAS NORTH OF:, INTERSTATE 10 (Continued from th meeting of January 26 2012). "" Mayor Spiegel stated staff requested this item to be continued, but he had a speaker card for this item. Councilmember Harnik recused herself from this item and left the Council Chamber. MS. ANNE LEACH, Representative of Sun City, Palm Desert, stated they supported a postponement of this item, because they are interested in having this Fiscal Analysis investigated as thoroughly as possible no matter how long it took, because they were in this for the long haul. 13 MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING FEBRUARY 23, 2012 Mayor Pro Tern Kroonen moved to, by Minute Motion, continue to the meeting of March 8, 2012. Motion was seconded by Finerty and carried by a 4-0 vote, with Harnik ABSENT. XVI. OLD BUSINESS None XVII. PUBLIC HEARINGS None XVIII. REPORTS AND REMARKS A. CITY MANAGER 1. City Manager Meeting Summaries for the Period of February 1-14, 2012. Rec: Receive and file. With City Council concurrence, received and filed. B. CITY ATTORNEY None C. CITY CLERK 1. Consideration of the Appointment of a Delegate and/or Alternate to the Southern California Association of Governments (SCAG) General Assembly — April 4-5, 2012, in Los Angeles, California. Following introduction of the item and discussion amongst Councilmembers, it was determined that due to the City Council Budget Study Session having been scheduled for Wednesday, April4, it would not be possible to attend the SCAG General Assembly. Therefore, no appointment of a Delegate or Alternate was made. 14 MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING MARCH 8, 2012 --� XV. CONTINUED BUSINESS A. FISCAL: - IMPA&I ANAL'tiISIREPOR7 REGARD NG.P`&EuTtAIZI ANN TIOO 41-_,THIEGITY OPPALM3ESERTIFOWAREMS NORTH O IN E S �hFE tt ; O'ontinuecP�,frorrr:; they :meetings � a Januaryi^.-: 2a� aad sit ,Februa 2X 20121",'A Councilmember Harnik recused herself from this item and left the Council Chamber. Ms. Aylaian stated this item had been continued in order to allow a completion of the analysis of the fiscal impact for potential annexation of some areas north of Interstate 10 (1-10). She said all the information requested by Council and interested parties had been collected and was before the City Council for consideration. She displayed a map showing all the cities of the Coachella Valley and their spheres of influence. The area for discussion this evening was the cross -hatched purple color, which is north of 1-10 along with the area shaded in red. Staff analyzed two different scenarios at the direction of the City Council. Scenario A includes Sun City and areas west and south of it, which is south of Avenue 38 down to 1-10. A fair amount of the commercial area has been developed as Business Park, and there are vacant lands besides. With Scenario A, staff took looked at cost and revenue and costs associated at build -out conditions; staff assumed the area will build out in approximately 10 years. She displayed a table summary showing total potential costs and revenues and pointed out that the highlighted amounts are relevant to the big picture. At the end of Phase Two, which is considered build out at 10 years from now, there will be approximately an annual revenue of $6.9 million and $12.5 million in costs, which would lead to an annual deficit of $5.6 million. Scenario B includes the same areas in Scenario A, and lands to the west, the Classic Club, and some areas just west of Cook Street, but staying on the east side of Jack Ivey Ranch. The costs and revenues are more favorable, but it still produces a deficit. The build out of this overall area was assumed to take 20 years rather than 10, because there are more undeveloped lands. At the end of the 20-year build -out period, there is approximately an annual revenue of $11 million and $14.7 million of expenses, which leads to an annual deficit of $3.4 million that would need to be covered by the General Fund or another revenue source. The Summary of the Fiscal Impact Analysis that looks at build -out conditions, assuming that all the infrastructure is adequate and in place, shows that with Scenario A there is a deficit of $5.5 million a year and a deficit of $3.4 million with Scenario B. Staff also looked at a one-time revenue source that is non -recurring and non -annual. With Scenario A, there would be a one-time $10.2 million from Developer Impact Fees and $18.9 million with Scenario B. Additionally, staff asked the Public Works Department to take a cursory look at existing infrastructure deficiencies north 10 MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING MARCH 8, 2012 of 1-10 to see what kind of magnitude or impact that would be as advice to the Council. The information provided indicates $22 million for Scenario A and $44 million for Scenario B of a one-time cost that would be needed. She reiterated this was just a cursory look, and results should be interpreted as costing tens of millions of dollars and nothing more to bring existing infrastructures up to the standards of Palm Desert. In conclusion, she said staff was looking for direction from the City Council for additional studies or further consideration of annexation of any of the areas north of 1-10. She noted there are interested parties present this evening that may wish to speak to the Council. MR. JOHN WILLACKER, Representative of Sun City Homeowners Association, stated they recognized the Fiscal Analysis findings, but disappointed results weren't more favorable. However, in the long run, they would like to find a way to be part of the City of Palm Desert, because it was part of their personal address, it is where they go to church, shop, and enjoy themselves. He complimented staff, Ms. Aylaian, and Mr. Wohlmuth for their openness and beyond, which they appreciated. He believed there will be an opportunity in the future to revisit this issue and hopefully the financials will look better. MR. ROB BERNHEIMER, Representing H N & Frances C Berger Foundation, stated the Foundation was an interested party in this discussion as they are probably the largest landowners in the area that's being considered for possible future annexation. With regards to the Fiscal Report, he didn't believe it was all that accurate, but tweaking it here and there probably wouldn't change the results given the parameters provided to staff. He said this wasn't about Palm Desert annexing this whole area and applying its City standards across the board to make it financially work. If the City was interested in annexation, it will need to step back and say it is willing to develop a new planning and zoning standard for areas north of 1-10 and look at something from a fiscal perspective to make it work. A directive in the future toward staff might ask for a plan for annexation that creates fiscal neutrality, because that will bring back options to the Council, which may require people to accept a parcel tax to those developers that have vacant lands or change their plans to create projects that are more revenue producing. The Council may have a whole laundry list of options that will create positive fiscal results. He said in today's world it is possible, but it will require some direction from the City Council to plan for north of the 1-10 differently than the rest of the City. He said the Berger Foundation believes it is part of the fabric of the City of Palm Desert, because it's been part of the development and certainly of the College campuses, and a major financial contributor on both sides of the freeway. He said the Berger Foundation believes there is a link between the Classic Club, Xavier Prep High School, their land, and what's been built at the college area. Even with the parameters of the Fiscal Analysis of Scenario B, if the Council just annexed 11 MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING MARCH 8, 2012 the 650 acres, it would produce a positive fiscal for the City. He thanked staff for extending a lot of time and consideration and hoped the City kept the annexation open in the future, because the Berger Foundation would like to be part of the City of Palm Desert. Councilmember Finerty stated as much as she knew Del Webb Sun City would like to be part of Palm Desert, and obviously the Council would like to include them, unfortunately, it didn't pencil out. She said it didn't pencil out in good times and it wasn't penciling out in these tougher times either. She said the bigger subject hadn't been addressed, which was what to do with Bermuda Dunes, because LAFCO would not allow Palm Desertto cherry pick and go across 1-10 and annex the nicely developed areas in Sun City. She too, hoped it was not the final discussion, and when things turn around, it will be revisited to see if things rendered a different direction. However, for now, considering the 50,000 residents of Palm Desert, she believed it was in their best interest to not move forward at this time, but not close the door completely either. Councilmember Benson stated her opinion was similar to Councilmember Finerty's, knowing the fact that the County was in such dire straights. She said it would be an uphill battle at this time, because the County was not about to release that revenue producing commercial area; years ago they were reluctant to let it go, because they needed that money. She believed that area will be annexed, but this was not the time to be undertaking anything that will place the City further in the hole. With the demise of the Redevelopment Agency, it will take several years for that to work itself out. The City needs to downsize to something the current budget can manage, let alone adding $5- or $10 million more to the budget. She agreed to leaving the door open on the issue, but she didn't believe jumping over to 1-10 at this point was fiscally responsible. Mayor Pro Tern Kroonen stated that while he was not in substantial disagreement with either of his colleagues, he hoped the Council will take a slightly different approach to the current issue. He referred to the Frederick Jackson Turner's Manifest Destiny Document, and said that without getting overly academic about this issue, his intuition told him that at some point down the road, Palm Desert will want to do significant things on the north side of 1-10. To that point, he suggested that within the next year or so, the Council sit down and initiate again a planning process, which at one time was lead by Councilmember Benson, to review the City's overall General Plan. He noted he served as a citizen member of that committee years ago when it discussed the north sphere across 1-10, but it didn't do much about it. However, because Palm Desert was changing in many dramatic ways, all options needed to be kept open, and at the appropriate time, take steps for further action with regards to understanding what is Napping out there. He said the City was entering a new era, which hopefully will bring about new 12 MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING MARCH 8, 2012 opportunities and new solutions. Therefore, as opposed to closing the door now, he would like to keep this topic alive, move forward as new information and approaches become available, and not exclude the possibility for the Council to be able to make this arrangement work. Mayor Spiegel concurred, stating today's newspaper stated there are some wonderful people living in Sun City, of which some were here in attendance this evening. He said he didn't want Palm Desert to lose the sphere of influence it had over Sun City, and he would like to investigate whether or not the Berger Foundation could be included, but not until it was fiscally responsible. Mayor Pro Tern Kroonen, moved to, by Minute Motion, continue to a date uncertain for further ongoing review of the matter as it relates to future planning activities in the City. Motion was seconded by Finerty. Councilmember Finerty said it made her nervous whenever any item is continued indefinitely, because it meant the item will die and go nowhere, but if Council wanted to look at a plan in 2020 or revisit the General Plan, the Council needed to decide where it wanted to go as a City and whether or not that included going north of 1-10. She was comfortable with having this matter continued to a date uncertain, but preferred it be worded into whatever the future planning program would be. Mayor Pro Tern Kroonen stated his motion asked for no action, but only to not close the door to annexation pending further planning activities. Because of the many changes the City was undergoing now, he" felt•strongly the Council needed to re-engage in the overall General Plan process. ' Mayor Spiegel called for the vote, and the motion carried by a 4-0 vote, with Harnik ABSENT. XVI. OLD BUSINESS None 13 M E5 TECHNICAL ADDENDUM TO FISCAL IMPACT ANALYSIS FOR POTENTIAL ANNEXATION TO THE CITY OF PALM DESERT Prepared for City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Prepared by Terra Nova Planning & Research, Inc. 42635 Melanie Place, Ste. 101 Palm Desert, CA 92211 February 8, 2012 TN/City of Palm Desert Tech. Addendum/Potential Annexation TECHNICAL ADDENDUM TO FISCAL IMPACT ANALYSIS FOR POTENTIAL ANNEXATION TO THE CITY OF PALM DESERT I. PURPOSE This Technical Addendum is being prepared to address changes to the original "Fiscal Impact Analysis for Potential Annexation to the City of Palm Desert," which was submitted to the City of Palm Desert in January 2012. Specific Plan 151 (SP-151), which is located in Scenario B under consideration for annexation, has been revised; the revised plan is referred to as Specific Plan 343 (SP-343), "NorthStar." Like SP-151, SP-343 is centered around the existing golf course (The Classic Club) and clubhouse, and it continues to allow for commercial and office/business park development. Revisions include the provision of single- and multi -family dwelling units, including timeshares, and light industrial uses. The revised plan also allows for a modest increase in hotel development, and requires the existing gravel/construction site to be removed for future development. Please refer to Exhibit 1 for the SP-343 Conceptual Land Use Plan. II. REVISIONS Land use tables for Scenario B have been revised, as shown below, to remove SP-151 and replace it with SP-343. Table I describes developed acreage in Scenario B, and Table 2 describes vacant acreage. 2 En 9M Table 1 Scenario B - Developed Acreage (Revised to Reflect SP-343) TN/City of Palm Desert Tech. Addendum/Potential Annexation Existing Existing Existing Dwelling Square Hotel Existing Land Use Designation Acreage Units' Footage, Rooms Population' Inside Scenario A: SP-281 Single -Family Residential 792.0 4,985 SF -- -- 9,000 SP-281 Golf Course 435.3 SP-281 Commercial 29.0 -- 277,912 -- -- SP-281 Commercial (Hotel) 2.2 -- 50,0004 72 -- Riv. Co. Commercial Retail 21.1 -- 202,205 -- -- Riv. Co. Commercial (Hotel) 1.4 -- 40'0004 82 -- Riv. Co. Comm./Tourist (RV Park) 26.3 Riv. Co. Industrial - Light 56.6 -- 542,409 SP-281 Fire Station 3.5 I-10 Corridor 79.2 Railroad Corridor 38.8 Outside Scenario A: Single -Family Residential 1.3 1 SF -- -- 2 SP-343 Golf Course/Facilities 245.9 SP-225 Private School 96.0 SP-225 RV Storage 5.2 Agriculture 9.3 I-10 Corridor 52.8 Railroad Corridor 34.1 Total: 1,930.0 4,986 1,112,526 154 9,002 Includes 4,869 detached and 116 attached units in Sun City, and one detached unit outside Sun City. SF = single-family dwelling unit. , Assumes commercial and industrial buildings cover 22% of the lot, with the remaining area available for access roads, parking, landscaping, and other ancillary uses. Includes an estimated 9,000 residents in Sun City (provided by Paul Brady, Sun City Community Assoc., Oct. 2011), and one additional dwelling unit at 2.08 persons/household (2010 U.S. Census). 4 Estimate for 72-room and 82-room hotels. M n Table 2 Scenario B - Vacant Acreage (Revised to Reflect SP-343) TN/City of Palm Desert Tech. Addendum/Potential Annexation Potential Potential Potential Dwelling Square Hotel Potential Land Use Designation Acreage Units' Footagez Rooms Population Non -Developable Inside Scenario A: SP-281 Community Association 271.0 -- -- -- -- Public Utility (IID, CVWD) 18.1 -- -- -- -- Public Agency (County, State) 5.3 -- -- -- --. Riv. Co. Open Space/Water 10.4 -- -- -- -- Mirasera Open Space/Parks/Roads 39.5 -- -- -- -- Outside Scenario A: SP-225 Regional Circulation 6.4 -- -- -- -- Non-Developable Subtotal: 350.7 Developable Inside Scenario A: PD Medium Density Residential (4-10 du/ac) 113.3 963 SF -- -- 2,003 Riv. Co. Medium -High Density Resid.(5-8 30.8 209 SF -- -- 434 du/ac) Mirasera High Density Residential (12 du/ac) 22.6 230 SF -- -- 478 Mirasera Mixed Use Residential (16 du/ac) 10.5 142 MF -- -- 295 Mirasera Very High Density Resid. (20-25 66.4 1,411MF -- -- 2,934 du/ac) SP-281 Commercial 3.0 -- 28,750 -- -- PD Community Commercial 10.7 -- 102,540 -- -- PD Industrial - Business Park 28.0 -- 268,330 -- -- PD Industrial - Light 26.6 -- 254,913 -- -- Mirasera Commercial Retail 17.6 -- 168,664 -- -- Mirasera Mixed Use Hotel 3.1 -- 100,000 150 -- Mirasera Office/Business Park 18.8 -- 180,164 -- -- Outside Scenario A: PD Low Density Residential (0-4 du/ac) 72.0 244 SF -- -- 507 SP-343 Deluxe Golf -View Hotel 17.6 -- 350,000 350 -- SP-343 Resort Golf -View Villas (7.4 du/ac) 7.3 46 SF -- -- 96 SP-343 Resort Timeshares (21.7 du/ac) 10.0 184 MF -- -- 383 SP-343 Golf -View Condos (16.6 du/ac) 33.2 468 MF -- -- 973 SP-343 MixedUse Retail Village (4.14 du/ac) 36.2 127 MF 346,912 -- 264 SP-343 Industrial Park 69.6 -- 666,991 -- -- SP-343 Executive Office 16.0 -- 153,331 -- -- SP-343 Community Commercial 20.0 -- 100,000 -- -- SP-225 Medium -Density Residential (8 du/ac) 9.0 61 SF -- -- 126 SP-225 Golf Course 13.6 -- -- -- -- SP-225 Commercial 26.1 -- 250,121 -- -- SP-225 Business Park 41.0 -- 392,911 -- -- Developable Subtotal: 723.0 Total: 1073.7 4,085 3,363,627 500 8,493 Assumes future residential development will occur at 85% of the maximum density permitted. SF = single-family dwelling unit. MF = multi -family dwelling unit. 2 Assumes future building square footage will cover 22% of the lot, with the remainder of the lot available for access roads, parking, landscaping, and other ancillary uses. Exception is SP-343 Community Commercial, where the Specific Plan calls for a maximum of 100,000 sq. ft. at build out, which is less than 22% lot coverage. Hotel square footage is estimated for one 150- room highway -serving hotel in Mirasera, and one 350-room resort hotel in SP-343. 3 Based on Palm Desert average of 2.08 persons/household (2010 U.S. Census). 4 In CM III. BUILDOUT COMPARISON TN/City of Palm Desert Tech. Addendum/Potential Annexation The following table compares build out of vacant acreage in SP-151, as described in the original report, and build out of vacant land in SP-343. Table 3 Build out Comparison by Land Use Category SP-151 and SP-343 Land Use Category SP-151 SP-343 Difference Hotel Facilities 250 rooms 200,000 sq.ft. 350 rooms 350,000 sq.ft. +100 rooms +150,000 sq.ft. Resort Golf -View Villas 0 46 SF du's +46 SF du's Resort Timeshare Units 0 184 MF du's +184 MF du's Golf -View Condos 0 468 MF du's +468 MF du's MixedUse Retail Village - residential - commercial 0 0 127 MF du's 346,912 sq. ft. +127 MF du's +346,912 sq ft Industrial Park 0 666,991 sq. ft. +666,991 sq.ft. Executive Office/Business Park 987,070 sq.ft. 153,331 sq.ft. -833,739 sq.ft. Community/Service Commercial 295,162 sq.ft. 100,000 sq.ft. -195,162 sq ft SF du = single-family dwelling unit; MF du = multi -family dwelling unit Build Out Assumptions Build out values have been calculated using the same methods and assumptions as those used in the original fiscal analysis. For residential land uses, it is projected that the number of dwelling units at build out will be 85% of the maximum permitted density (_ # acres x maximum du's/acre x 85%). Dwelling units in SP-343 were determined to be single-family or multi -family based on descriptions provided in the NorthStar Specific Plan. For commercial, office/business park, and industrial land uses, it is projected that future building square footage will be equivalent to 22% lot coverage (_ # acres x 43,560 sq.ft./acre x 22%). This level of building coverage is typical of traditional single -story development in the region; remaining lot square footage is necessary to meet local parking and landscaping requirements. This methodology was used in the original fiscal analysis, and it is duplicated here. An exception occurs in the SP-343 Community Commercial category, where the Specific Plan projects less than 22% lot coverage, for a maximum build out of 100,000 square feet. Based on the SP-343 Conceptual Land Use Plan, this revised analysis estimates that build out of SP-343 will add 3.0 more paved roadway miles to Scenario B. Build out Dwelling Units and Population As shown in Tables 3 and 4, build out of SP-343 is projected to result in the development of 825 more dwelling units than SP-151. With an average household size of 2.08 persons per household in Palm Desert, this equates to a population of 1,716 more residents than that projected in the original fiscal study. Should annexation of Scenario B occur, a total potential Scenario B population of 17,495 would be added to the City's existing population. TN/City of Palm Desert Tech. Addendum/Potential Annexation Table 4 Comparison of Dwelling Units & Population SP-151 and SP-343 At Build out SP-151 SP-343 Difference No. of Dwelling Units 0 825 +825 Potential Population in Specific Plan Area 0 1,716 +1,716 Potential Population in All of Scenario B 15,779 17,495 +1,716 — -Population projections are based on average 2.08 persons/household in City of Palm Desert, U.S. Census, 2010. IV. TIMESHARES In the City of Palm Desert, the revenue stream from timeshares can vary widely from one project to another. Transient Occupancy Tax (TOT) is collected on timeshare units that are rented for less than 30 days; TOT is 9% of the rental rate. In addition, if the proposed timeshare project does not include a golf course and hotel with 500 or more rooms, the City negotiates with the developer to collect one-time development fees and recurring annual fees based on the number of units being developed. SP-343 designates 9.95 acres for Resort Timeshare development, at a density of 21.7 dwelling units per acre. Assuming build out will occur at 85% of the maximum permitted density, 184 units could be constructed. The Specific Plan also includes an existing golf course (The Classic Club) and proposes a 350-room resort hotel. Therefore, the timeshare portion of the project will generate revenues from TOT, one-time fees at the time the project is constructed, and recurring annual fees. The fiscal model has been revised to include future revenues from timeshare development in SP- 343 using per unit estimates provided by the City's Finance and Community Development Departments. Based on other timeshare development in the City, TOT revenue of $600/unit/year, one-time development fees of $750/unit, and recurring annual fees of $1,500/unit/year are used in this analysis. Build out of the Specific Plan area is assumed to occur evenly over a 20-year period, with costs and revenues shown in 5-year increments. V. COST/REVENUE COMPARISON Potential costs and revenues to the City of Palm Desert resulting from annexation of Scenario B were projected in the original report. Using the same fiscal model, they have been revised to delete the SP-151 build out scenario, and replace it with the SP-343 build out scenario. Tables 5 and 6 show potential costs and revenues, as revised to reflect SP-343. Compared to the original analysis, build out of SP-343 is projected to result in modest increases in all revenue categories analyzed. At the end of the 20-year buildout period, total revenues are projected to be $11.3 million/year, which represents an increase of 14.8% over that shown in the original report. This is largely the result of adding dwelling units, population, and hotel rooms to 05 cm TN/City of Palm Desert Tech. Addendum/Potential Annexation the Specific Plan area, and including sales tax generated by the existing clubhouse at The Classic Club, as well as potential revenues generated by future timeshares. One-time revenues generated by Developer Impact Fees (DIF) are also projected to increase modestly due to more construction in the Specific Plan area and one-time timeshare development fees. Potential DIF revenues are projected to be $4.7 million at build out of each phase during the 20-year build out period. This represents an 8.5% increase over DIF revenues shown in the original analysis. Given the potential of SP-343 to develop 825 more dwelling units and accommodate 1,716 more residents than SP-151, the costs to the City for providing public services to the area will also increase. Costs include those required for general government operations, roadway maintenance, and the provision of emergency services. Annual costs at the end of the 20-year build out period are projected to be $14.7 million/annually. This represents an increase of 11.4% over the original report. After replacing SP-151 with SP-343, potential cash flow to the City at 20-year build out is projected to be a deficit of -$3.4 million/year. This is 1% more than that anticipated in the original fiscal analysis and is largely due to the costs of providing public services to an increased build out population. 7 n M TN/City of Palm Desert Tech. Addendum/Potential Annexation Table 5 Total Potential Costs/Revenues Summary Table Annexation Scenario B (revised to include SP-343) Build out Phase Phase IFPhase (Yrs 1-5) II Yrs 6-10) Phase Phase III 11-15) Phase IV (Yrs 16-20) ANNUAL REVENUES General Fund.• Property Tax $828,051 $915,581 $1,003,111 $1,092,730 Property Transfer Tax $99,321 $100,819 $102,317 $103,815 Sales Tax $2,351,230 $3,082,812 $3 814,394 $4 545,977 Transient Occupancy Tax (from hotels/motels) $699,401 $1,086,415 $1,473,429 $1,860,443 Transient Occupancy Tax (from timeshares) $27,600 $55,200 $82,800 $110,400 Annual Timeshare Fees $69,000 $138,000 $207,000 $276,000 Motor Vehicle In -Lieu Revenue $35,720 $42,544 $49,368 $56 192 Total Annual General Fund Revenue at Phase Build out: $4,110,323 SS 421,371 $6,732,419 $8 045,557 Restricted Funds: Highway Users Gas Tax $260,057 $309,737 $359,417 $409,097 Measure A Funds $19,750 $25,896 $32,041 $38,186 Prop. A Fire Tax $362,310 $417,360 $472,410 $527,460 Structural Fire Tax $1,390,525 $1,537,325 $1,684,125 $1,834,430 Total Annual Restricted Fund Revenue at Phase Build out: $2,032,642 $2,290,318 $2,547,993 $2,809,174 Totals: Total Annual Revenues at Phase Build out: $6,142,965 $7,711,689 $9,280,412 $10,854,731 Historic Average Interest Rate, 90-day Treasury Bill: 4.39% 4.39% 4.39% 4.39% Anticipated Interest on Revenues: $269,676 $338,543 $407 410 $476 523 Total Annual Revenues with Interest at Phase Build out: $6,412,641 $8,050,232 $9,687 822 $11,331,253 ANNUAL COSTS General Fund. General Government $3,152,797 $3,759,641 $4,366,485 $4,973,329 Police Protection $3,847,211 $4,605,243 $5,363,275 $6,121,307 Roadway Maintenance $508,143 $587,731 $667,327 $746,916 Total Annual General Fund Costs at Phase Build out: $7,508,151 $8,952,616 $10,397,087 $11,841 553 Restricted Funds: Fire Protection $1,615,994 $1,731,582 $1,847,171 $1,962,759 Ambulance Services $940,944' $940,944' $940,944' $940,944' Total Annual Restricted Fund Costs at Phase Build out: $2,556,938 $2,672,526 $2,788,115 $2,903,703 Totals: Total Annual Costs at Phase Build out: $10,065,089 $11,625,142 $13,185,202 $14,745,256 Projected Annual Cashflow at Phase Build out: -$3,652,448 -S3,574,910 -$3,497,379 -$3,414,002 ' Does not include one-time (year 1) start-up ambulance costs of $190,000. CM TN/City of Palm Desert Tech. Addendum/Potential Annexation Table 6 Developer Impact Fee Revenues (One time only)' Annexation Scenario B (revised to include SP-343) Build out Phase Phase I Yrs 1-5 Phase 11 Yrs 6-10 Phase Ili rs 11-15 Phase IV Yrs 16-20 New Construction Tax $949,113 $949,113 $949,113 $949,113 Art in Public Places Fund $698,162 $698,162 $698,162 $698,162 Low Income Housing Mitigation Fee $560,396 $560,396 $560,396 $560,396 Child Care Program Fund $705,257 $705,257 $705,257 $705,257 Traffic Signals Fund $243,961 $243,961 $243,961 $243,961 Planned Drainage Fund $180,750 $180,750 $180,750 $180,750 Parks & Recreation Facilities Fund $1,353,736 $1,353,736 $1,353,736 $1,353,736 Timeshare Development Fees $34,500 $34,500 $34,500 $34,500 Total Developer Impact Fee Revenues at Phase Build out: $4 725,875 $4,725,875 $4,725,875 $4,725,875 ' Developer impact fees occur only once, at the time the unit is permitted. m m 4c, -W mf CITY OF CATHEDRAL CITY CITY COUNCIL STUDY SESSION REPORT 'M 9pIHtlMM.vl V SUBJECT: Presentation of the Fiscal Analysis and Plan for Services for the Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms and Discussion of Next Steps DEPARTMENT: Economic Development CONTACT PERSON: Leisa Lukes, RLA APPROVED: �&-, 4�, c omi Development MEETING DATE: DEADLINE FOR ACTION: PA44�9 City Ma ger March 27, 2013 N/A Finance BACKGROUND Cathedral City's Sphere of Influence (S01) includes the area north of Interstate 10 from the City's easterly boundary (DaVall Drive extended) to just west of Washington Street and covers most of the unincorporated community of Thousand Palms, generally excluding the Coachella Valley Multiple Species Habitat Conservation area. It covers approximately 9,700 acres, with an estimated population of 7,715. This extended Sphere area was approved by the Riverside Local Agency Formation Commission (LAFCO) in December 2011 and was supported by the Thousand Palms Community Council, the Thousand Palms Chamber of Commerce, and the boards of the two country clubs in the community. The City pursued its expanded SOI for planning purposes and to determine the City's direction for future expansion and fiscal stability. In February 2012, The City Council authorized Ralph Andersen & Associates (Consultant) to prepare a Fiscal Analysis and Plan for Services suitable for submittal to LAFCO should the City Council determine that it would be advantageous to pursue annexation of its Sphere area. John Goss, Senior Associate, serves as the consultant project manager. Mr. Goss reviewed existing documents, conducted interviews, and performed a series of field examinations. He then prepared an analysis of the information and calculated the fiscal feasibility of annexing the entirety of the City's SOI. The findings are summarized below. The complete Fiscal Analysis and Plan for Services for the City of Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms (Study) is attached. FINDINGS AND ANALYSIS The purpose of the Study is to provide a fiscal analysis of the potential annexation of the City's SOI, both at the initial year of annexation as well as at build out. It also includes a Plan for Services as required by Riverside LAFCO, which spells out how the demand for local services will be met when the annexed area is completely developed. To complete the Study, the Consultant examined a number of financial and policy documents from the City, the County, LAFCO, and several special districts that currently serve the Thousand Palms community. Interviews were conducted with City, County, LAFCO and various I 1,11111111110 City Council Study Session Report March 27, 2013 Page 2 special district staff, well as with representatives of developers who have an interest in the Sphere area. Significant research was performed to identify the impacts the potential annexation may have on the City, surrounding local agencies and the Thousand Palms Community. The analysis assumed the future Berger Foundation and Messenger projects are closer to being development ready than the rest of the unincorporated Thousand Palms community. The Berger Foundation specific plan includes the area surrounding the Classic Club Golf Resort and the Messenger specific plan encompasses the area between the City's current eastern boundary and approximately Rio Del Sol Road. The Plan for Services (Study, Chapter IV) anticipates that there will be no change in most providers supplying local services to Thousand Palms. As shown on Table IV -A of the Report, utility services such as water, wastewater, flood control (Coachella Valley Water District), electricity (Imperial Irrigation District or Southern California Edison), natural gas (Southern California Gas Company), and garbage collection (Burrtec) will continue to provide their respective services if annexation occurs. Animal control services will continue to be provided by County Animal Control. Also, maintenance services, through a special assessment district, and recreation services will continue to be provided by the Desert Recreation District, with library services provided by the County Library System and schools operated by the Palm Springs Unified School District. It is anticipated that the provision of law enforcement services would, however, be transferred from the Riverside County Sheriffs Department to the Cathedral City Police Department. Street maintenance and street sweeping is also anticipated to be shifted from the County to the City, with the City providing these services at initial annexation through build out under this Plan. The Consultant noted that the provision of fire and emergency medical services (EMS) presented a more complex issue in developing the Plan of Services. The Study evaluated three options: (1) the City assumes fire/EMS services upon annexation; (2) the County through Cal Fire continues to provide services to Thousand Palms at Fire Station 3S; and (3) the County supplies fire/EMS services to this area transitioning to City services a number of years later. Because of cost and operational considerations, the Study concludes that upon annexation the City should contract with the County (Cal Fire) for fire/EMS services (Option #2). Whether Option 3 can be implemented several years from now depends on the City and County resolving certain financial and operational issues outlined in the Study. In terms of financing the services, the Consultant evaluated operating revenues/expenditures during the initial year of annexation, as well as at five and ten years and at build out. Chapter II of the Study is devoted to the crucial initial year of annexation since the City has had recent financial challenges and Thousand Palms is not a high tax ratable area. The Study demonstrates that during the first year, assuming that fire Option #2 is selected, the City could provide services at or above the level of service currently being received by the Thousand Palms Community. The level of police service in terms of officers assigned to the Sphere area would be higher than what is presently being provided in that area. Because the 1 City Council Study Session Report March 27, 2013 Page 3 "developed" portion of Thousand Palms is physically separate from the "developed" part of Cathedral City and because Thousand Palms is several miles long, two police patrol beats would be required as part of the basic "police staff infrastructure" to serve this area during the first year of annexation. Street maintenance/street sweeping would be supported by "restricted" revenues such as gas tax and Measure A funds. This would permit the current level of service to continue to be provided to this area through a two -person City crew and by various maintenance contracts. FISCAL SUMMARY Anticipated expenditures needed to serve the Thousand Palms area at build out include, in current dollars, a budget of $8.7 million for police services, nearly $4.0 million for fire/EMS services, nearly $2.3 million for Administration and Community Services, $0.4 million for Animal Control, and $1.4 million for street maintenance. The General Fund operating budget totals $15.4 million, increasing to $16.9 million when street maintenance services funded by "restricted" revenues are included (see Table Ill-D). The projected development at build out as provided by the approved Berger Foundation specific plan, the proposed Messenger project specific plan, and the County General Plan for all other areas, is estimated to generate at least $32.0 million in building development fees for various capital improvements, for both the annexed area as well as in the rest of Cathedral City. Another estimated $29.0 million would be obtained from the City's Development Impact Fees. The Study shows that during the first year expenditures are projected to exceed revenues by $61,289 (see Table II-F). However, a revenue/expenditure balance can be achieved by delaying the hiring of the second Police Sergeant for a short period of time. Nonetheless, the expenditures for serving this area are barely balanced by estimated revenues. Thereafter, as shown in Table III-C, the financial ability of the City to provide service to Thousand Palms improves significantly. As discussed in Chapter 111, within five years (2017-18) there is a projected surplus in current dollars of $1,196,045 and after 10 years the surplus would grow to $2,656,259. By build out (projected to occur in 30 years but could potentially be longer), the projected surplus is estimated at $9,311,035. There are several reasons for this increased surplus, including the immediate plans for the construction of a hotel near the 1-10/Bob Hope Interchange that will produce new Transient Occupancy Tax income, followed by another, larger hotel in that same area. A resort hotel is later planned near the Classic Club Golf Course, followed by four travel hotels projected near two new 1-10 interchanges that are planned to be constructed in the 2020s and 2030s. Further, major retail is expected to be added in several locations, particularly one that is part of an approved specific plan next to the Classic Club hotel, as well as other areas in Thousand Palms. POTENTIAL OUTCOME Chapter 11 outlines the potential advantages and disadvantages to both the Thousand Palms community and to Cathedral City should annexation occur. Adding undeveloped areas with excellent future freeway access will expand the City's financial base and create a more fiscally stable City in the long term, particularly as the unincorporated area develops. The Study found that, initially annexation would enable the City to develop and preserve a basic police staff infrastructure that could serve the annexed area while providing it with an improved level of CM City Council Study Session Report March 27, 2013 Page 4 service. It would also enable the Police Department to stabilize its staffing and service structure for both the existing city and the Thousand Palms area. Future revenues as the annexed area develops would also permit fire service to improve in this area while also improving the overall staffing and equipment infrastructure for the Fire Department. The annexation will not reduce services, or the ability to provide these services to the City's existing jurisdictional boundaries. The revenue/expenditure balance does initially appear to be negative, although it likely could be a "wash" or slight surplus if the City contracts with Cal Fire for fire/EMS service, and if police staffing is slightly adjusted during the first year of annexation. Chapter III of the Study further explains how annexation could be a financial benefit to the City. There are a number of advantages to Thousand Palms community should the Cathedral City annexation occur. Some of these include improved police patrol with two police patrol beats rather than the current one police beat, as well as the opportunity to provide public access to a police service office in the Thousand Palms community. Once increased revenue from new development occurs, fire service could also be improved to meet the national "2 in, 2 out" standard for structural fires, regardless of whether the service is provided by City Fire or Cal Fire. Access to City hall would be more convenient than to County offices in Riverside, thereby providing residents more opportunity to attend meetings, serve on advisory boards, and access land use and permitting information. There would be more opportunity for residents to run for local elective office as there are five council positions whereas there is only one supervisor position. Possible disadvantages include an increase in the sales and use tax by $0.1 until 2015 and an extension of the City's Utilities User's Tax to Thousand Palms. There may, however, be County assessments that would offset this. NEXT STEPS Without reservation, staff will proceed with the steps necessary for submittal of an annexation application to LAFCO. This entails establishing zoning designations for all lands within the potential annexation area through a pre -zoning process. The Riverside County -approved specific plan zones will be retained for the Berger properties, and the zones that are established through the City's current specific plan process for the Messenger properties will also be retained. Current County zoning designations for the remainder properties within the Sphere area will be retained by establishing parallel City zoning designations. A recommendation of approval by the Planning Commission and a pre -zoning approval by the Council is required. If it desired that the annexation process proceed at that time, the Council could adopt a resolution to that affect and notice to all interested agencies would be given. The resolution and pre - zoning, combined with an annexation application and associated fee of $13,800 would then be submitted to LAFCO. Chapter 5 of the Study outlines the complete annexation process. Ongoing communications between the City and the Thousand Palms community continue through participation in regularly -scheduled Community Council meetings, as well as communication with the County Supervisor's office and property owners. Increased communications with Cathedral City residents would commence with the annexation process. ATTACHMENT Ralph Andersen & Associates Draft Report, March 18, 2013 -Fiscal Analysis and Plan for Services for the City of Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms �O¢ �n.sa�mameo.»-i L� CITY OF CATHEDRAL CITY CITY COUNCIL STUDY SESSION REPORT SUBJECT: Presentation of the Fiscal Analysis and Plan for Services for the Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms and Discussion of Next Steps DEPARTMENT: Economic Development CONTACT PERSON: Leisa Lukes, RLA APPROVED: 4�— Ycdhornih lopment BACKGROUND MEETING DATE: DEADLINE FOR ACTION: Ilk& City-Markger March 27, 2013 N/A Finance Cathedral City's Sphere of Influence (SOI) includes the area north of interstate 10 from the City's easterly boundary (DaVall Drive extended) to just west of Washington Street and covers most of the unincorporated community of Thousand Palms, generally excluding the Coachella Valley Multiple Species Habitat Conservation area. It covers approximately 9,700 acres, with an estimated population of 7,715. This extended Sphere area was approved by the Riverside Local Agency Formation Commission (LAFCO) in December 2011 and was supported by the Thousand Palms Community Council, the Thousand Palms Chamber of Commerce, and the boards of the two country clubs in the community. The City pursued its expanded SOI for planning purposes and to determine the City's direction for future expansion and fiscal stability. In February 2012, The City Council authorized Ralph Andersen & Associates (Consultant) to prepare a Fiscal Analysis and Plan for Services suitable for submittal to LAFCO should the City Council determine that it would be advantageous to pursue annexation of its Sphere area. John Goss, Senior Associate, serves as the consultant project manager. Mr. Goss reviewed existing documents, conducted interviews, and performed a series of field examinations. He then prepared an analysis of the information and calculated the fiscal feasibility of annexing the entirety of the City's SOL The findings are summarized below. The complete Fiscal Analysis and Plan for Services for the City of Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms (Study) is attached. FINDINGS AND ANALYSIS The purpose of the Study is to provide a fiscal analysis of the potential annexation of the City's 501, both at the initial year of annexation as well as at build out. It also includes a Plan for Services as required by Riverside LAFCO, which spells out how the demand for local services will be met when the annexed area is completely developed. To complete the Study, the Consultant examined a number of financial and policy documents from the City, the County, LAFCO, and several special districts that currently serve the Thousand Palms community. Interviews were conducted with City, County, LAFCO and various City Council Study Session RepDTr March 27, 2013 Page 2 special district staff, well as with representatives of developers who have an interest in the Sphere area. Significant research was performed to identify the impacts the potential annexation may have on the City, surrounding local agencies and the Thousand Palms Community. The analysis assumed the future Berger Foundation and Messenger projects are closer to being development ready than the rest of the unincorporated Thousand Palms community. The Berger Foundation specific plan includes the area surrounding the Classic Club Golf Resort and the Messenger specific plan encompasses the area between the City's current eastern boundary and approximately Rio Del Sol Road. The Plan for Services (Study, Chapter IV) anticipates that there will be no change in most providers supplying local services to Thousand Palms. As shown on Table IV -A of the Report, utility services such as water, wastewater, flood control (Coachella Valley Water District), electricity (Imperial Irrigation District or Southern California Edison), natural gas (Southern California Gas Company), and garbage collection (Burrtec) will continue to provide their respective services if annexation occurs. Animal control services will continue to be provided by County Animal Control. Also, maintenance services, through a special assessment district, and recreation services will continue to be provided by the Desert Recreation District, with library services provided by the County Library System and schools operated by the Palm Springs Unified School District. It is anticipated that the provision of law enforcement services would, however, be transferred from the Riverside County Sheriff's Department to the Cathedral City Police Department. Street maintenance and street sweeping is also anticipated to be shifted from the County to the City, with the City providing these services at initial annexation through build out under this Plan. The Consultant noted that the provision of fire and emergency medical services (EMS) presented a more complex issue in developing the Plan of Services. The Study evaluated three options: (1) the City assumes fire/EMS services upon annexation; (2) the County through Cal Fire continues to provide services to Thousand Palms at Fire Station 35; and (3) the County supplies fire/EMS services to this area transitioning to City services a number of years later. Because of cost and operational considerations, the Study concludes that upon annexation the City should contract with the County (Cal Fire) for fire/EMS services (Option #2). Whether Option 3 can be implemented several years from now depends on the City and County resolving certain financial and operational issues outlined in the Study. In terms of financing the services, the Consultant evaluated operating revenues/expenditures during the initial year of annexation, as well as at five and ten years and at build out. Chapter II of the Study is devoted to the crucial initial year of annexation since the City has had recent financial challenges and Thousand Palms is not a high tax ratable area. The Study demonstrates that during the first year, assuming that fire Option #2 is selected, the City could provide services at or above the level of service currently being received by the Thousand Palms Community. The level of police service in terms of officers assigned to the Sphere area would be higher than what is presently being provided in that area. Because the am City Council Study Session Report *raw w March 27, 2013 Page 3 "developed" portion of Thousand Palms is physically separate from the "developed" part of Cathedral City and because Thousand Palms is several miles long, two police patrol beats would be required as part of the basic "police staff infrastructure" to serve this area during the first year of annexation. Street maintenance/street sweeping would be supported by "restricted" revenues such as gas tax and Measure A funds. This would permit the current level of service to continue to be provided to this area through a two -person City crew and by various maintenance contracts. FISCAL SUMMARY Anticipated expenditures needed to serve the Thousand Palms area at build out include, in current dollars, a budget of $8.7 million for police services, nearly $4.0 million for fire/EMS services, nearly $2.3 million for Administration and Community Services, $0.4 million for Animal Control, and $1.4 million for street maintenance. The General Fund operating budget totals $15.4 million, increasing to $16.9 million when street maintenance services funded by "restricted" revenues are included (see Table Ill-D). The projected development at build out as provided by the approved Berger Foundation specific plan, the proposed Messenger project specific plan, and the County General Plan for all other areas, is estimated to generate at least $32.0 million in building development fees for various capital improvements, for both the annexed area as well as in the rest of Cathedral City. Another estimated $29.0 million would be obtained from the City's Development Impact Fees. The Study shows that during the first year expenditures are projected to exceed revenues by $61,289 (see Table II-F). However, a revenue/expenditure balance can be achieved by delaying the hiring of the second Police Sergeant for a short period of time. Nonetheless, the expenditures for serving this area are barely balanced by estimated revenues. Thereafter, as shown in Table III-C, the financial ability of the City to provide service to Thousand Palms improves significantly. As discussed in Chapter III, within five years (2017-18) there is a projected surplus in current dollars of $1,196,045 and after 10 years the surplus would grow to $2,656,259. By build out (projected to occur in 30 years but could potentially be longer), the projected surplus is estimated at $9,311,035. There are several reasons for this increased surplus, including the immediate plans for the construction of a hotel near the 1-10/Bob Hope Interchange that will produce new Transient Occupancy Tax income, followed by another, larger hotel in that same area. A resort hotel is later planned near the Classic Club Golf Course, followed by four travel hotels projected near two new 1-10 interchanges that are planned to be constructed in the 2020s and 2030s. Further, major retail is expected to be added in several locations, particularly one that is part of an approved specific plan next to the Classic Club hotel, as well as other areas in Thousand Palms. POTENTIAL OUTCOME Chapter II outlines the potential advantages and disadvantages to both the Thousand Palms community and to Cathedral City should annexation occur. Adding undeveloped areas with excellent future freeway access will expand the City's financial base and create a more fiscally stable City in the long term, particularly as the unincorporated area develops. The Study found that, initially annexation would enable the City to develop and preserve a basic police staff infrastructure that could serve the annexed area while providing it with an improved level of City Council Study Session Re March 27, 2013 Page 4 service. It would also enable the Police Department to stabilize its staffing and service structure for both the existing city and the Thousand Palms area. Future revenues as the annexed area develops would also permit fire service to improve in this area while also improving the overall staffing and equipment infrastructure for the Fire Department. The annexation will not reduce services, or the ability to provide these services to the City's existing jurisdictional boundaries. The revenue/expenditure balance does initially appear to be negative, although it likely could be a "wash" or slight surplus if the City contracts with Cal Fire for fire/EMS service, and if police staffing is slightly adjusted during the first year of annexation. Chapter III of the Study further explains how annexation could be a financial benefit to the City. There are a number of advantages to Thousand Palms community should the Cathedral City annexation occur. Some of these include improved police patrol with two police patrol beats rather than the current one police beat, as well as the opportunity to provide public access to a police service office in the Thousand Palms community. Once increased revenue from new development occurs, fire service could also be improved to meet the national "2 in, 2 out" standard for structural fires, regardless of whether the service is provided by City Fire or Cal Fire. Access to City hall would be more convenient than to County offices in Riverside, thereby providing residents more opportunity to attend meetings, serve on advisory boards, and access land use and permitting information. There would be more opportunity for residents to run for local elective office as there are five council positions whereas there is only one supervisor position. Possible disadvantages include an increase in the sales and use tax by $0.1 until 2015 and an extension of the City's Utilities User's Tax to Thousand Palms. There may, however, be County assessments that would offset this. NEXT STEPS Without reservation, staff will proceed with the steps necessary for submittal of an annexation application to LAFCO. This entails establishing zoning designations for all lands within the potential annexation area through a pre -zoning process. The Riverside County -approved specific plan zones will be retained for the Berger properties, and the zones that are established through the City's current specific plan process for the Messenger properties will also be retained. Current County zoning designations for the remainder properties within the Sphere area will be retained by establishing parallel City zoning designations. A recommendation of approval by the Planning Commission and a pre -zoning approval by the Council is required. If it desired that the annexation process proceed at that time, the Council could adopt a resolution to that affect and notice to all interested agencies would be given. The resolution and pre - zoning, combined with an annexation application and associated fee of $13,800 would then be submitted to LAFCO. Chapter 5 of the Study outlines the complete annexation process. Ongoing communications between the City and the Thousand Palms community continue through participation in regularly -scheduled Community Council meetings, as well as communication with the County Supervisor's office and property owners. Increased communications with Cathedral City residents would commence with the annexation process. ATTACHMENT Ralph Andersen & Associates Draft Report, March 18, 2013 -Fiscal Analysis and Plan for Services for the City of Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms Ciry of Catixdrui Chy Table of Contents CHAPTERI — INTRODUCTION......................................................................................................... I Background...................................................................................................................................................1 ExhibitA........................................................................................................................................................2 GeneralInformation.......................................................................................................................................3 WhyChange the Status Quo?.......................................................................................................................3 Methodology..................................................................................................................................................4 CHAPTER 11— FISCAL ANALYSIS — INITIAL ANNEXATION..................................................................6 Revenues— Introduction.........................................................................................................................6 Revenues — Near Term (First Year) Projections.......................................................................................7 GeneralFund Revenues...............................................................................................................................7 PropertyTax Revenue............................................................................................................................7 PropertyTransfer Tax... .......... ............. ............................... .......................... ................. ....... ....... 8 Structural. Fire Tax..................................................................................................................................8 Property Tax In -lieu Vehicle License Fee...... ... __ .................... ........... ............................... ...... 8 MotorVehicle In -lieu Fee........................................................................................................................9 SalesTax................................................................................................................................................9 Sales Tax Comp Fund (Property Tax in lieu of Sales Tax).................................................................... 9 Transactionsand Use Tax (TUT) ...................................... ......... ..... .... ..... .................. ...................... ...... 9 Transient Occupancy Tax (TOT)..........................................................................................................10 TimeShares..........................................................................................................................................10 UtilityUsers Tax .............................. ..................................................... .............. ................................... 10 FranchiseFees.....................................................................................................................................10 Permit and Regulatory Fees .......................... ................................................................. ............. ......... 10 BusinessLicenses................................................................................................... .......10 Finesand Forfeitures............................................................................................................................11 Chargefor Services..............................................................................................................................11 Intergovernmental Revenue.. .................................................... ......... ...... .................................... __ I I OtherMunicipal Revenues..........................................................................................................................11 SpecialAssessments............................................................................................................................11 Useof Money and Property ............................................. _....... ................ ............................................ 11 RecreationPrograms............................................................................................................................11 RestrictedRevenue.....................................................................................................................................12 GasTax Funds.....................................................................................................................................12 MeasureA.............................................................................................................................................12 TotalRestricted Road Revenues..........................................................................................................12 Table II -A — Project First Year Restricted Road Revenues..................................................................12 RevenueSummary. .............................................................................................. ............................ ......... 12 Table II-B — Project First Year General Fund, Other Municipal Revenue and RestrictedRevenues.............................................................................................................................13 One -Time Revenues...................................................................................................................................14 Table II-C — Building Development Fees — Cathedral City...................................................................14 City of Cathedral C ii Table II-D — Development Impact Fees — Cathedral City.. .... .............................................................. 15 Expenditures — Near Term (First Year) Projections...............................................................................15 Administration............. ......... ......................... ...................... ............................... ........... ........ ......... ___ ...... 16 PublicSafety................................................................................................................................................17 PoliceDepartment................................................................................................................................17 AnimalControl............................................................................................. ......18 FireDepartment. ....................................... ................... ... _ ............ .......... ........ .......................... 19 FireService Cost..................................................................................................................................21 Expenditure Summary ...................................................................................... ..................22 ......................... Table II-E — Projected First Year General Fund Expenditures, Service to Thousand Palms...............22 Summary of Fiscal Impact — Initial Year of Annexation...............................................................................22 Table it-F — Summary of Annual Revenues/Expenditure, Initial year, Proposed Thousand Palms Annexation...............................................................................................23 Annexation Advantages/Disadvantages...............................................................................................23 CHAPTER III — FISCAL ANALYSIS, FUTURE DEVELOPMENT INCLUDING BUILD OUT THOUSANDPALMS.....................................................................................................................26 Introduction..................................................................................................................................................26 Assumptions.......................................................................................................................................... 26 PopulationsEstimates.................................................................................................................................28 Table Ill -A — Thousand Palms Population Projections Through Build Out.... ....................................... 29 RevenueEstimates.....................................................................................................................................29 PerCapita Revenue..............................................................................................................................29 Transient Occupancy Tax/Time Shares...............................................................................................30 SalesTax........................................................................................................ .................. 30 Non -General Fund Revenue., ............................................ ......................... ........................................ 31 Table III-B — Thousand Palms Estimated General Fund Revenue at Build Out...................................31 ExpenditureEstimates.................................................................................................................................31 Table III-C — Thousand Palms Estimated Revenues/Expenditures at Build Out ..................................32 Police....................................................................................................................................................32 AnimalControl ....................................... _.................................................................................. ........... 32 Fire........................................................................................................................................................33 Administration........................ .......................... ..... .......... ....... .................. .................. .............. ............. 33 CommunityDevelopment......................................................................................................................33 CityClerk...............................................................................................................................................33 PublicMaintenance...............................................................................................................................33 Expenditure III-D — Thousand Palms Expenditure Budget at Build Out...............................................34 Revenue for Capital Improvements.............................................................................................................34 BuildingDevelopment Fees..................................................................................................................34 Table III-E — Estimated Building Development Fees for Thousand Palms...........................................35 DevelopmentImpact Fees(DIF)...........................................................................................................35 Table III-F — Development Impact Fees for Thousand Palms..............................................................36 Summary.....................................................................................................................................................36 CHAPTER IV — PLAN OF SERVICES, COMMUNITY OF THOUSAND PALMS.........................................37 Background............................................................................................................. ........38 ............................ r PoliceProtection..........................................................................................................................................39 CurrentService Provider ............... .................................... ................... ....................... .......................... 39 NewService Provider................................................................................. ..........................40 FireProtection.............................................................................................................................................42 Background........................................................................................................................................... 42 CurrentService Provider.......................................................................................................................43 Map IVA — Fire Stations In and Around Thousand Palms...................................................................44 NewService Provider... ........ .......................... ..................................................... .................... _ 45 AnimalShelter/Control.................................................................................................................................47 Utilities.. ................................................ ...... ................................... ...... ............................. ...................... 47 Water.....................................................................................................................................................47 Map IV-2 Coachella Valley Water District Boundaries.........................................................................48 Sewer(Wastewater) Services.. ................................................. ....... ...................... ...................... 49 Drainage/Flood Control.........................................................................................................................49 Electricity............................................................................................................................................... 50 NaturalGas...........................................................................................................................................50 SolidWaste Collection.......................................................................................................................... 50 Map IV-3 — Imperial Irrigation District Map...........................................................................................51 MaintenanceServices.................................................................................................................................52 Street Maintenance/Street Sweeping...................................................................................................52 Lightingand Landscaping... .............................. _ ........ .................................. ............................. 53 Leisure Services........................................................................... ........53 Parksand Recreation............................................................................................................................53 LibraryServices............................................................................................ ..54 Schools........................................................................................................................................................54 Summary.................................. -..................................... .................. .......... ,.................... ............... ........... 55 Table IV -A — Thousand Palms Plan of Services...................................................................................55 FinancialServices.......................................................................................................................................55 CurrentProviders. .............. ........................................ ............................... ............ .................. 55 NewService Provider...........................................................................................................................55 CHAPTER V —ANNEXATION PROCESS....................................................... Steps Toward Annexation .................................................................................. Cortese —Knox-Hertzberg Local Government Reorganization Act of 2000 Annexation/Detachment/Reorganization Procedure Diagram ....................... .............................. 57 .................................. 57 ....I............................61 cm M The purpose of this report is to present a fiscal analysis and a Plan for Services for the City of Cathedral City's unincorporated portion of its Sphere of Influence (SOI) (see Map, Exhibit A). This fiscal analysis and Plan for Services is designed to assist the City Council in deciding whether or not to initiate the an- nexation of this unincorporated area, generally known as the community of Thousand Palms. The fiscal analysis identifies the financial impact any potential annexation will have on projected revenues and expenditures required to serve this area, both in the short term and at build out. The Plan for Ser- vices is a requirement of Riverside County's Local Agency Formation Commission (LAFCO). It spells out how various local services will be provided to the Thousand Palms community, whether the current ser- vice level now received will be maintained or exceeded, how these services will be financed, and whether or not the area's infrastructure requirements will be adequately met. Together, the fiscal analysis and Plan for Services will provide the necessary documentation for the City to submit an annexation applica- tion to LAFCO, if that is the decision and direction of the City Council. By way of general background, Cathedral City extended its incorporated area north of the 1-10 freeway several years ago. With the most recent annexation, the City adopted the North City Specific Plan which is a comprehensive planning tool to guide development in this area. The initial expansion of the SOI into the unincorporated Thousand Palms area (east of the City's jurisdic- tional boundary north of 1-10) resulted in the City's Sphere extending to Rio del Sol Road. The second and most recent Sphere expansion took in the remainder of the unincorporated Thousand Palms com- munity except for the majority of the Thousand Palms area that is covered by the Multiple Species Habi- tat Conservation Plan and an area already covered by the Palm Desert Sphere. Physically, as can be seen on the following map on Exhibit A, Thousand Palms is a mostly linear commu- nity along the northeasterly edge of the 1-10 freeway from the easterly City limits to just west of Washing- ton Street. It consists of over approximately 9,700 acres, with an estimated population of 7,715' and is the complete area being evaluated as part of this study. Thousand Palms is an unincorporated, partially inhabited area, with a substantial amount of vacant land. As indicated on the map shown on Exhibit A, it is bounded on the southwest by the I-10 freeway, the City of Cathedral City to the northwest, the Coachella Valley Multiple Species Habitat Conservation Area on the northeast, and the Palm Desert Sphere of Influence (SOI) to the southeast. Generally, the Thousand Palms community features mostly residential development in the vicinity of the I- 10 freeway, Monterey Avenue and Ramon Road. There is also freeway commercial in this area, along with a business park development. This part of the community is served by an elementary school, com- munity center, library and park, as well as Fire Station 35. Northerly there is scattered, but important in- dustrial development, including nearby surface mining. Running south along Varner Road toward "Palm Desert" Sun City are additional pockets of residential development, along with the Classic Club Golf Facil- ity and the private Xavier High School. 2010 US Census 0 C'ifj° crf C aflieifraI Ciij, On December 8, 2010, as part of the City's latest expansion of its SOI, the City Council gave direction to submit an application to expand the City's SO! to include the remainder of the Thousand Palms communi- ty from Rio del Sol Road to just west of Washington Street. The unincorporated area from Rio del Sol Road westerly to the Cathedral City limits was formally placed in Cathedral City's SOI by the Riverside County LAFCO in January 2012. This means that if the entire Cathedral City sphere area is ever annexed into a City it can only be annexed into Cathedral City. It a so means t a is commune is not a candi- date for incorporation as a city. While the City was interested primarily in annexing the area between Da Vall Drive extended and Rio del Sol Road, the entire sphere area is being assessed for potential annexa- tion because of the interest of the Thousand Palms community. General Information The City of Cathedral City was incorporated in 1981 in the heart of the Coachella Valley, located between the cities of Palm Springs and Rancho Mirage. According to the 2010 U.S. Census, the City consists of 22.9 square miles serving a population of 50,9052. The City contains 17,047 households, with an average household size of 2.99. Because of this larger family size, more families live in this community compared to Palm Desert, as an example, which has an average household size of 2.08. Cathedral City is known as a community diverse in ethnicity, income and lifestyle, with white-collar and blue-collar workers, professionals and retirees claiming the City as their home. The Thousand Palms community would appear to reflect demographics more comparable to Cathedral City than some other valley cities. With 2,899 households and a population of 7,715, its average house- hold size at 2.66 is more comparable to Cathedral City than, for example, Palm Desert, which as just mentioned has an average household size of 2.08. Currently, this community is served by Riverside County, which provides both police and fire/emergency medical service, with water, sewer and drainage facilities maintained and operated by the Coachella Val- ley Water District. Electrical service is provided by the Imperial Irrigation District. The Desert Recreation District maintains and programs the community park and center, street lights and a major street median. County Library Services operates a branch library next to the community center. Public schools are ad- ministered by the Palm Springs Unified School District. Why Change the Status Quo? The cities along the 1-10 corridor, such as Cathedral City, Rancho Mirage and Palm Desert, have histori- cally focused on developing their cities southwesterly of the freeway. That changed, however, when Ca- thedral City modified its SOI and annexed additional areas northeasterly of the 1-10. Subject to the North City Specific Plan, which was adopted by the City Council, this area is located northeasterly of the 1-10 between Da Val] Drive and Palm Drive and has established General Plan and zoning designations for high density residential and commercial development. (See Exhibit A). Subsequently, Cathedral City requested an expansion of its SOI to include the entire Thousand Palms community. This proposal was supported by the City of Rancho Mirage based on a Memorandum of Un- derstanding (MOU) between the two cities. It was also supported by the Thousand Palms Community Council, the Thousand Palms Chamber of Commerce, and the boards of the two country clubs in the community. This support may have started based upon LAFCO's long standing position that Thousand Palms does not have the resources to incorporate as a separate city. That created a concern among those living or doing business in Thousand Palms that the governance of the community would be fractured or split by a partial annexation of their community on the north by Cathedral City, coupled with the concern that Palm Desert might attempt to annex the area to the south, In other words, the Thousand Palms community po- tentially could have been fractured with two or three entities governing portions of, and providing service to, their community (Riverside County, Cathedral City, and Palm Desert). Since the community cannot 2 2010 US Census incorporate as a city, an opinion was expressed that the best option for retaining Thousand Palms' com- munity identity and providing unified governance is annexation into Cathedral City. Further, the City can provide a level of regulation which may be viewed as positive by the community and which some cases is beyond that provided by the County. In addition, while current service to Thousand Palms appears satisfactory, and efforts to maintain excel- lent communication links between the public and the County have been demonstrated, there could be more direct input from residents in this community related to local services. Location of a City Police De- partment Office at Fire Station 35, or in a community building planned near Bob Hope Drive and 1-10, should improve local access to law enforcement. Having a larger role voting in Mayor and City Council races as opposed to voting for gnly one member of the County Board of Supervisors, should allow more direct involvement in local government by Thousand Palms residents. In any event, the City may still want to maintain the current Community Council if annexation does occur since this appears to be an excellent means of receiving input from, and supplying information to, the community. TdIn early 2012, the City of Palm Desert authorized a fiscal analysis report with a rapid turnaround to deter- mine if it was economically feasible for them to consider annexation of two different areas northeast of the City. The first area included the "Palm Desert" Sun City community, which is in the Palm Desert SOI. The second area included the first area plus land extending northwesterly along the 1-10 corridor into Cathe- ral City's existing SOL Obviously this expanded area could not be annexed into Palm Desert without an adjustment between the city's two spheres, which would require approval by the Riverside County LAFCO. In any event, the study found that expenditures would exceed revenues for both areas, both in the near term and at build out. As a result there does not appear to be a current interest by the Cily of Palm De- sert to either annex a m Desert Sun Cit or seek to hrink Cathedral's S here in order to ex and m ese . This issue, however, could be revisited in the future by the Palm_ esertCi Council. In addition, another reason for Cathedral City to consider the annexation of Thousand Palms is to ensure the City's fiscal stability. It is projected that there will be substantial growth in the Coachella Valley in the long term. With several valley communities nearly built out within their current city boundaries, and with little or no room to expand, cities with more developable acreage could become more economically sus- tainable over time. With traveler commercial and hotels plus business park land uses mostly focused at freeway interchanges, the future development of interchanges at Portola (early 2020s) and Da Vall Drive (early 2030s), could produce important local tax revenues if these areas became part of the City. Also, there are plans for significant high -end residential development along with commercial development and a resort hotel in the Classic Club area which could generate substantial long-term revenue for the local government providing service to this area. If such an annexation proved beneficial to Cathedral City in the long term, there would be a correspond- ing benefit to the service levels provided to Thousand Palms, since the City should be financially stronger over time. Whether or not these economic assumptions or projections has merit, will be the subject of this analysis. Methodology The methodology of this study included reviewing documents and data supplied by the City of Cathedral City, Riverside County, the Coachella Valley Water District, the Desert Recreation District, landowners with development proposals and/or approvals, LAFCO staff, and residents of the Thousand Palms com- munity. This included financial, operational, land use, and procedural information. Interviews were con- ducted with the Cathedral City City Manager, Administrative Services Director, Community Development Director, Planning Director, Police Chief, former and current Fire Chiefs, Public Works Manager and Inter- im City Engineer, along with the LAFCO Executive Officer, and the Cal Fire Assistant Chief. � h C In addition, interviews were conducted with developer consultants to obtain information regarding the land use plans of the Berger Foundation in the Classic Club area as well as plans by developers near the in- terchange at the 1-10 and Bob Hope Drive/Rio del Sol Road. A meeting was held with representatives of the Coachella Valley Water District to learn about utility ser- vices to this area. Current zoning designations for the City's sphere were obtained from County Planning. 4 1 Page Information was also provided by the County Executive Office, County Surveyor, County Auditor, Regis- trar VfVotens, County Library Services, and County Animal Control. In order to more accurately assess the condition of the streets and roads of the Thousand Palms commu- nity, three volunteer graduate students from California State University,San Bernardino conducted a '.windshield survey" of these streets under the guidance of the Interim City Engineer. Public Works Man- ager and the consultant. Detailed data regarding these streets were obtained from Riverside County. Attendance at a meeting of the Thousand Palms Community Council took place, and a tour of Fire Station 35vwas provided bya Cal Fire Battalion Chief. The methodology for projecting current and future revenues and expenditures as part of the fiscal analy- sis in this report is based upon information provided by the City and other agencies, as well as examining the legal constraints on city revenues. Upon the advice ofLAFCD 6baff. Riverside County's "Guidelines to Preparing Fiscal Impact Reports," was not used as a guide for this report since apparently the guide was prepared some years ago and has not been updated. |nsbaad, elements of the general framework ofthe consultant's copyrighted Fiscal Impact of New Development (FIND Model) and actual reve- nue/expenditure analysis was used in projecting the fiscal impact ofthis possible annexation at build -out. LAFCO staff indicated that their interest in the annexation is more in determiningthe financial and service impacts on other agencies as well as the continuation of the current service levels to the area proposed to be annexed. The City, of course, is interested in the fiscal impact of any prospective annexation on Ca- thedra|Cih/. Even though every effort has been made to obtain the most accurate and precise information ponoUz|e, the estimated revenues and expenditures in this report are just that: estimates, They are calculated based on information supplied by either City staff orother |ouo/ agencies which serve the area. These are not precise figures that guarantee actual revenues or expenditures which will be received or expended should the potential annexation occur. 5 1 /1(m�e ~ '� n n City q Cutlye lrai City Chapter II Fiscal Analysis — Initial Annexation The fiscal analysis contained in this Chapter presents the projected initial year revenues and expendi- tures which would accrue to Cathedral City, if the Thousand Palms community were annexed to the City. Unless otherwise noted, these estimates are based on the City's actual revenues, with expenditures based on the City's 2012-13 budget. This provides the most current "actual revenues," and the most the most "realistic" expenditure base, as a result of the City's recent reduction in its expenditure plan. Also discussed are one-time revenues which occur as a result of development. These one-time revenues may accrue during the initial year of annexation, or later on as new development occurs. This section is applicable to the analysis in this chapter as well as the following chapter which presents the fiscal analy- sis of this potential annexation at build out. The fiscal analysis of the potential annexation is presented for the initial year of annexation in order that the City will learn the immediate impact the annexation will have on the City and the affected unincorpo- rated area. In Chapter III projected scenarios will be presented beyond the initial year until build out. These projections are more uncertain since the timing of development and the recovery of the economy are only educated guesses. Revenues Introduction The projected revenues are presented in four categories: 1. Income that will accrue to the City's General Fund; 2. Other municipal revenue; 3. Restricted income such as street and road revenue; and 4. One-time revenues. The General Fund revenues will include reallocation of property taxes per the Master Property Tax Agreement with Riverside County, the shift of sales tax revenue to the City as well as other taxes and fees that would apply to this area. It should be noted that there are certain revenues which are not currently collected in Thousand Palms by the County. These taxes, such as the Utilities Users Tax (UUT) and the City's limited -termed Transaction and Use Tax (TUT), would be extended to this unincorporated area and are, therefore, included in the immediate revenue projections contained in this report. The TUT, however, is not included in any revenue projections past its current termination date in 2015. It should be further noted that as a result of recent State action, City revenues have been shrinking. A long-term revenue — Motor Vehicle in Lieu Tax — is now projected as producing zero revenue to the City, both in its developed areas and in any areas that might be annexed to Cathedral City. For long-term revenue projections, it is assumed that existing and traditional revenue sources which are currently funded will remain in place. It is impossible at this time to project which additional municipal rev- enue sources will be pilfered by the State. In connection with expenditures, the immediate term projections will be presented based on estimated actual costs to provide service. For example, just because the City's population based on the 2010 Cen- sus would increase by an estimated 15% upon annexation of the entire Sphere area, certain basic costs of city government such as administration, city clerk, administrative services, planning, and other man- agement and support services should not increase by a like amount and should remain unchanged. In other words, the current staffing and expense related to management and support services should be sufficient to support the addition of the Thousand Palms area. 6 &1,7, , t in 01J, of Cratheallwi C itv On the other hand, police and fire/EMS service staffing expense will increase to serve Thousand Palms. These cost increases will be projected and included in the near term expense estimate, Much like devel- oping the biennial city budget, actual projected revenues and expenses will be used to determine the fis- cal impact of this proposed annexation. Revenues — Near Term (First Year) Projections This section presents revenues that will be received by the City as a result of the possible annexation of its unincorporated Sphere of Influence otherwise known as the Thousand Palms area. This section fo- cuses on current and near term revenue projections, with longer term projections presented in the follow- ing chapter. As discussed previously, these revenues are presented in the fallowing categories: General Fund Revenues; 2. Other Revenues; 3. Restricted Revenues; and 4. One-time Revenues. General Fund Revenues Property Tax Revenue A one percent tax is applied to the value of real property is collected by Riverside County and is appor- tioned to various agencies such as school districts, special districts, cities, and the County. When annexa- tion of unincorporated property occurs, the affected city receives its share of the property tax revenue for this annexed area. The Master Property Tax Agreement between Riverside County and the Cathedral City governs the shar- ing of property tax when an area is annexed. The specific agreement between the County and Cathedral City provides that the general tax levy will be allocated as follows based on the property tax revenue re- ceived by the County: the City receives 25% and the County receives 75%. This split appears to have been established about 29 years ago, and was agreed to by the City approximately 23 years ago. Since this formula may be out of date, it is unknown whether or not this apportionment of property tax revenue could be or should be renegotiated. In any event, this division of property tax income is net of the contribution to the Education Revenue Augmentation Fund (ERAF), the County's administrative charge for collecting the property tax, and tax exempt properties owned by other governmental agencies, such as Cal Trans, the Coachella Valley Wa- ter District, the Desert Recreation District, the Palm Springs Unified School District, and the County, and tax exempt properties owned by charitable organizations. This latter category includes, for example, 90.4 acres owned by Xavier High School and 245.3 acres owned by the Berger Foundation. The property tax revenue presented in this revenue category does not include the Structural Fire Property Tax, which is calculated separately. The County Auditor calculated the property tax revenue that would be received by the City if Thousand Palms were detached and annexed to Cathedral City. This estimate was based on a legal description of the area provided by LAFCO. The estimated property tax revenue calculated by the County Auditor is $817,O00.3 There does not appear to be much new development occurring in Thousand Palms, so in the first year it is assumed that increases in property tax revenue will be minimal. However, current preparation for de- 3 Email from Chief Accountant, Property Tax Division, Riverside County Auditor -Controller, dated June 19, 2012 71 i (r qc' City of Cathedral City, velopment activity in the northeast quadrant of the 1-10/13ob Hope Drive interchange could lead to some residential and commercial development in the near term. Property Transfer Tax When new property is sold, or more likely in Thousand Palms when an existing property is resold, a prop- erty transfer tax of $1.10 per $1,000 of transferred value is levied on the sale of real property. The result- ing revenue is then split between the City and Riverside County, with each obtaining $.55 of the trans- ferred value. Actual Property Transfer Tax received by the City in 2008-09 was $121,282, increasing to $137,770 in 2009-10. It declined to $108,217 in 2010-11. Assuming approximately the same level of property sales in the Thousand Palms area as in Cathedral City, it is estimated that the additional Property Transfer Tax revenue from this annexed area in proportion to the actual income received by Cathedral City in 2010-11 will be $16,406 (7,715/50,905 = .1516 x $108,217). If the 2012-13 estimate for this revenue source is accurate, then the revenue from this tax would be $22,740. However, to be conservative in making financial projections, a figure based on the actual reve- nue received in 2010-11 is used for this projection. Structural Fire Tax The City receives a Structural Fire Tax which must be used for the provision of fire suppression and pre- vention services. In 2010-11 the City received $470,237 from this source. The tax is based on 5.87% of the one -percent property tax collected in an area. Based on calculations by the County Auditor,4 it is estimated that during the first year of annexation Structural Fire Tax revenue would be $341,000. Note: This tax normally would be considered a "restricted revenue." However, it is included in this section to achieve consistency with the presentation of this tax in the City's biennial budget. As a practical matter, the revenue from this tax partially supports the Fire Department's budget which is a major part of general City operations and which is otherwise supported by the City's General Fund. If upon the initial annexa- tion, the City contracted with the Riverside County Fire Department (Cal Fire) to provide fire/EMS service to the annexed area, this revenue would be used to partially fund that contract. LAFCO staff advises after consulting with County Auditor staff, that, while the exact history of the struc- tural fire tax in Cathedral City is not entirely clear, it is likely the tax was transferred to the City around 1990 when the County changed the way it contracted out fire service, and the City began providing fire service directly instead of the County. Apparently, subsequent annexations incorrectly assumed that the master property tax agreements included the structural fire tax, even though the tax is not mentioned in these agreements. In any event, it would be prudent to update the master property tax agreement be- tween the County and Cathedral City to reference the structural fire tax. Property Tax In -lieu Vehicle License Fee Instead of the City receiving property tax revenue from vehicles, it is reimbursed from a portion of the mo- tor vehicle license fee. Unfortunately, this revenue source was permanently reduced by the State by near- ly two-thirds in 2004. Still, the City received $3,469,471 from this source in 2010-11. Assuming that the in -lieu VLF will increase in proportion to the increase in population upon annexation, it is estimated that during the first year of annexation this revenue source would produce $525,972 (7,715/50,905 = .1516 x $3,469,471). Motor Vehicle In -lieu Fee The regular Motor Vehicle in -lieu fee produced $241,108 for the City in 2010-11. However, this revenue source has been usurped by the State, with the result that the City will not receive any revenue from this a Email from Chief Accountant, Property Tax Division, Riverside County Auditor -Controller, dated June 19, 2012 8 1 Page On M C71V of Cath&hwl Katy, source on an on -going basis. Therefore, the projected revenue from this source due to annexation will be: $0. Sales Tax Without recounting the complexities of the "triple flip" caused by state legislation, the current sales and use tax rate in Riverside County is 8.0%. The rate is allocated as follows: • State General Fund 3,9375% • State Education Fund (Prop. 30) 25% • State Fiscal Recovery Fund .25% • State Local Revenue Fund (1991) .50% • State Local Revenue Fund (2011) 1.0625 • State Local Public Safety Fund .50% • City/County Local Tax 1.00% • Riverside Co. Transportation Commission (Measure A) .50% • Total Rate 8.00%' This is a major revenue source for Cathedral City. The City received $4,929,695 in sales tax income in 2010-11, which is a significant reduction compared to the past several fiscal years due to the downturn in the economy. This estimate assumes that the Thousand Palms sales tax generators are somewhat com- parable to those in Cathedral City, after the car dealerships are eliminated from the retail mix. Assuming the dealerships produce approximately one-third of the City's sales tax revenue, the remaining two-thirds of the City's sales tax is projected on a per capita basis for Thousand Palms. It is estimated that Thou- sand Palms would initially produce $498,477 in sales tax ($4,929,695 x .667 x .1516). This formula uses the City's sales tax income, times two-thirds, times the increase in population as a result of the potential annexation of Thousand Palms. Sales Tax Comp Fund (Property Tax in lieu of Sales Tax) This is revenue received by the City as part of the State's 2004 "triple flip," where 25% of the City portion of sales tax revenue was withheld, only to be backfilled the same amount from property taxes previously allocated to schools. The amount received by the City in 2010-11 from this source was $1,642,658. As- suming that a proportionate amount of this revenue would be produced from Thousand Palms, but again discounting income from the car dealers, then the projected annual income from this source would be $166,101 ($1,642,658 x .667 x .1516). Transactions and Use Tax (TUT) In Cathedral City, Measure H was adopted by the electorate in June 2010 which established a 1 % trans- action and use tax on City retailers. The revenue can be used for any general city purpose. The tax, how- ever, expires after five years unless extended by the voters. Again, assuming this amount would be col- lected in Thousand Palms at the same level as in Cathedral City, discounting income to the existing City from the car dealerships, income from the TUT would be $297,346 ($2,940,612 x .667 x .1516). However, as currently authorized, this income would cease in September 2015. Accordingly, while this revenue source is included as income during the first year of projected annexation, it is not projected past 2015 to the community's build out. One impact of this short term TUT is that it would temporarily increase the sales and use tax in Thousand Palms. Currently, the sales tax rate is 8.00% in this community, and it would increase to 9.00% until Sep- tember 2015. Transient Occupancy Tax (TOT) a City of Cathedral Adopted 2012-2013 Budget, p. 27, with .25% added due to Proposition 30. 7 City of 01theafrai City Effective January 1, 2007, the City's Transient Occupancy Tax (TOT) was established at 12% of the rent charge for staying at a hotel, inn, or motel. There is one lodging facility in the Thousand Palms communi- ty, the Red Roof Inn at 72215 Varner Road. This Inn has 116 rooms and its average room rate appears to be approximately $70 per night. Assuming an occupancy rate of 65%, it is estimated that the TOT income produced from this Inn is an estimated $236,000 (rounded). In the future, both tourist and resort hotels are planned to be constructed in this unincorporated area, and accordingly TOT income should become a much more substantial revenue source over the near and long term. Time Shares The City also receives a small amount of revenue when applying the 12% TOT to timeshares (non -owner stays). It is difficult to provide an estimate for this revenue source for the unincorporated Sphere area. For the purposes of this report it is estimated that $0 will be produced upon annexation. This revenue source will increase overtime, however, since the Berger Foundation Plan includes 216 time share units as part of their approved Specific Plan. Utility Users Tax Cathedral City adopted a Utility Users Tax (UUT) in 2008. The rate of 3% is applied on the use of tele- communications, cable, electricity, gas, and solid waste. Assuming roughly the same level of utility usage in the Thousand Palms community, it is estimated that additional income of $419,325 (2,765,996 x .1516) would be achieved if annexation of this area occurred. Franchise Fees The City also receives franchise fees from the various utilities for the use of City streets and other rights - of -way. Gas and electric franchise fees are 2% and cable franchise fees are 5% of gross receipts. The solid waste hauler is charged 12% of gross receipts, while the transportation and towing franchise fees are minimal. The actual franchise fees received by the City in 2010-11 were $1,850,657. It is expected that the gross receipts of these service providers will increase in proportion to the increase in population served if an- nexation occurred. As a result, it is projected that the franchise fee income from the Thousand Palms community would be $280,560 ($1,850,657 x .1516). Permit and Regulatory Fees Additional income will be produced from various permit and regulatory fees such as planning and zoning fees, engineering fees, building permit fees, other processing fees, and code enforcement fees. These revenues, however, basically only cover staff expenses necessary to provide the processing of various permit applications or enforcement of code violations. The revenues received and the resulting expendi- tures basically should be a "wash." As a result, this report does not project any income from these reve- nue sources, or any additional offsetting expenditures, for processing various permit applications, or for code enforcement. Business Licenses The City requires business licenses for all establishments conducting business within the City limits. They are renewed annually. The license fees are based on gross sales and the type of business being con- ducted. Based on actual 2010-11 income of $420,510, and assuming a similar amount of business activi- ty in the potential area to be annexed, the additional revenue from this area is estimated at $63,750 ($420,510 x .1516). Fines and Forfeitures Fines and forfeitures reflect income generated by motor vehicle and Municipal Code fines, and other mis- cellaneous fines and forfeitures. It is estimated that the City's actual income from this source will be $352,766 for 2011-126. Assuming that the Thousand Palms community would proportionately generate 6 March 8, 2012 email from Administrative Services Director. 10 1 age cm CM City of t.'athedrai Cii), about the same quantity of fines and forfeitures as Cathedral City, it is estimated that $53,480 ($352,766 x .1516) would be produced from this revenue source. Charge for Services In the City's 2011-12 budget, $3,131,112 is identified as income from charges for various services provid- ed by the City. Many of these charges would not apply to Thousand Palms as net new revenues to Ca- thedral City, since they are either charges which have offsetting expenditures such as plan check fees, or involve the cost of police dispatch services provided under contract to the City of Desert Hot Springs. There are some charges, however, which would apply to Thousand Palms, such as paramedic services, code abatement, vehicle impounds, purchase of police reports, and fire inspections. These services brought in $1,363,281 to City coffers in 2010-11. Assuming that the level of paramedic service, police re- ports purchased, and fire inspections will increase in proportion to the additional population served in Thousand Palms, the additional income from this revenue source is estimated to be $206,673 ($1,363,281 x .1516). It should be noted, however, that if in the initial year or years after annexation the City contracts with Cal Fire for fire/EMS services, with the County providing ambulance service, this revenue category will be reduced by $180,869 to reflect the absence of ambulance income. Under this scenario, the total income from Charge for Services would be $25,805. Intergovernmental Revenge Most of the revenue in this category is not applicable to the potential area to be annexed. This is because most of this income was from the City's Redevelopment Agency which no longer exists. As a result, the projection for Thousand Palms for this revenue category is: $0. Other Municipal Revenues Other municipal revenues received by Cathedral City are discussed in this section. Special Assessments The City includes $3,115,214 in the 2011-12 budget for Special Assessment revenue, which includes special assessment districts such as landscape and lighting districts. It is not expected that there would be any special assessments accruing to the City from this area. Therefore, the estimated revenue from this source is estimated at: $0. Use of Money and Property It is not anticipated that there will be an increase in the City's investment income based on the annexation of land in their SOL However, there could be some limited income as a result of sign sales and aban- doned property. As a result, the revenue from this source is estimated at $5,000. Recreation Programs The City does not provide `fee based' recreation programs, although in 2010-11 the City received $5,000 in Soccer Park income. Any other fees for use of the park and community in Thousand Palms should con- tinue to accrue to the Desert Recreation District, since the District is best able to provide services to this area. Therefore, revenue for recreation programs is projected at: $0. Restricted Revenue Gas Tax Funds Cities and counties receive a portion of the tax imposed on the purchase of gasoline. Revenues from gas taxes are deposited into the Highway Users Tax Account in the State's Transportation Tax Fund. These funds are then apportioned to cities and counties by the State Controller. The distribution of this revenue M City r f Crrthe(kai Cif;, is governed in large part by Streets and Highways Code Sections 2103 — 2107. Only counties benefit from Section 2104 and only cities benefit from Section 2107. If the Thousand Palms community were annexed, gas tax funds received by Riverside County, except for Section 2104 funds, would shift to the City. Plus, Cathedral City would receive Section 2107 funds for this area. The revenue expected to be received by the City for Fiscal Year 2011 is $1,365,380.7 While some sec- tions of the Streets and Highways Code allocated gas tax funds by population and street miles, it is as- sumed for the purposes of this report that the revenue from this source will be in proportion to the in- crease in population as a result of the potential annexation of Thousand Palms. Using this method, the gas tax funds for this unincorporated area are projected to be $206,992 ($1,365,380 x .1516). Measure A From the County's 8.00% sales tax, .50% flows to the Measure A Fund for regional and local transporta- tion projects. With these funds distributed by region, 24% of this money is distributed to the Coachella Valley area. These funds are further distributed with 50% devoted to State highway and regional road projects, 35% for local streets and roads, and 15% for transit, such as Sunline Transit. It is further distrib- uted to cities based on equivalent dwelling units (EDUs) (50%) and taxable sales (50%). Based on this formula, Cathedral City should receive $998,000. This is 11.6% of the net funds available for distribution. Assuming that the annexed area would receive a proportionate amount of this revenue source based on its population, it is projected that $161,297 ($998,000 x .1516) will be received from Measure A. This pro- jection is based on balancing the two variables which determine the amount of this revenue. It is assumed that Thousand Palms proportion of EDUs is slightly larger than Cathedral City because of its slightly smaller average household size, but that Thousand Palms has lower sales tax per capita. Total Restricted Road Revenues The amount of restricted road revenues produced in Thousand Palms initially will be an estimated $358,289. This data is summarized in Table II -A, entitled, "Projected First Year Restricted Road Reve- nues." Revenue Summary The total General Fund, other municipal revenues, and restricted funds are summarized in Table II-B, titled, "Projected First Year General Fund, Other Municipal Revenues and Restricted Revenues." This information is useful in projecting the first year impact of the potential annexation of the Thousand Palms area, and to assist the City Council in assessing, along with projected first year expenditures, the imme- diate fiscal impact of annexing this area. March 8, 2012 email, Administrative Services Director. 72 1 mare om cm ("it y of C'atlt edrr l City Table 11-13 Projected First Year Other Municipal Revenue General Fund Est. Amount Subtotal Est. Amount General Fund Property Tax $817,000 Property Transfer Tax $16,406 Structural Fire Tax $341,000 Property Tax In Lieu of Motor Vehicle License Fees $525,972 Motor Vehicle License Fees $0 Sales Tax $498,477 Sales Tax Comp Fund $166,101 Transaction and Use Tax $297,346 Transient Occupancy Tax $235,000 Transient Occupancy Tax (Time Share) $0 Utility Users Tax $419,324 Franchise Fees $280,560 Permits and Regulatory Fees $06 Business License Tax $63,750 Fines and Forfeitures $53,480 Charges for Service $206,673' Intergovernmental Revenues $0 Total General Fund Revenue $3,921,089 Other Municipal Revenue Special Assessments $0 Use of Money and Property $5,000 Recreation Programs $0 Total Other Municipal Revenue $5,000 Total Available for City Operations $3,926,089 Restricted Revenues Structural Fire Tax (included in GF Revenue) 0 Gas Tax Fund $206,992 Measure A $151,297 Total Restricted Revenues $358,289 Total Tax Revenue Produced by Thousand Palms $4,284,378 As explained in the text, while permit and regulatory fees will produce income, it is expected that this revenue will be offset by like expenditures. Therefore, neither the revenues nor expenditures from this activity are presented in this analysis. 9 If the City decides initially to contract with Cal Fire for fire/EMS service, this revenue source will be re- duced to $25,805, since the City will not receive income from its ambulance operations. This would re- duce the total available for City operations to $3,745,221 and the total tax revenue produced by Thou- sand Palms to $4,103,510. 10 Projection included in the General Fund revenue summary. 13 ; 11age t 1V of Cf1tfaed •tat t `It1 One -Time revenues As explained earlier in this chapter, the City will receive one-time revenues as the result of new develop- ment when an applicant seeks an entitlement or permit for land development and for the construction of residential, commercial, or industrial property. These revenues are in the form of building development fees and development impact fees. These revenues, of course, are not included in the on -going revenue projections, which support on -going municipal services, because they are restricted and only occur one- time. They are restricted in that they can only be used for a specific purpose as authorized by City Coun- cil resolution or ordinance, based on state law. These fees, or sometimes in the case of parks and land dedication, are usually collected when the building permit or other entitlement permit is issued. This section is presented at this point in the report since these one-time revenues can occur during the initial year of annexation, and during the period of time required to build out this unincorporated area. Many of the Building Department fees are collected to offset the City's processing costs, such as fees for plan checks, microfiche, building permits, grading permits, and permit issuance. Generally, these fees are offset by the cost of processing these permits. Other building fees are for specific purposes such as fees for police, fire, facilities, and signalization, the master undergrounding plan, transit development fee, park fees, art in public places, and maintenance of the General Plan. These fees which accrue to Cathedral City and how they are determined are listed in Table II-C. Excluded from this list are fees which are collected by the City on behalf of other agencies such as sup- port for the Coachella Valley Multiple Species Habitat Conservation Plan ($5,730/acre for commercial and industrial development), the Transportation Uniform Mitigation Fee (TUMF) collected on behalf of the Coachella Valley Association of Governments, and the Strong Motion Instrumentation Program which is a tax imposed by the State of California. Listed below in the following Table are the City's building development fees, including a brief description and a summary of how each fee is calculated. BuildingTable 11-C Development Fee Descri tian Fee Calculation Police, Fire, Facilities, and Si nalization $150/1,000 square feet or fraction thereof of all development Master Under roundin Fee $.15 per square foot of roofed area for all development Transit Development Fee $5.00/linear foot of frontage on major arterials Park Fees Number of dwelling units (DU) x avg. # of persons per DU x 3 acres per 1,000 residents x land cost per acre = total feel Art in Public Places 1 % of 90% of building valuation for buildings over 15,000 s . ft. City Facility Impact Fees $1,851/residential unit; varies per acre for commercial/industrial The park fees are based on California Government Code Section 66477 (Quimby Act). Under this Act the City is authorized to require either the dedication of parkland or the payment of fees in -lieu of such dedi- cation, or a combination of both, for every residential land subdivision. These fees are paid into the City's Park Acquisition and Development Fund which can be used only for the purpose of acquiring, building, improving, expanding, and/or developing city parks. These fees are separate from Park Development Im- pact Fees listed in Table II-D presented below. In addition, the City collects development impact fees, usually at some step during the entitlement pro- cess, such as when a subdivision is recorded or a building permit is issued. These fees are authorized in accordance with Government Code et. seq. (1987). The development impact fees can only be used for the purpose for which they are collected under state law and the City ordinance authorizing these fees. Also, for certain required public improvements, a de- veloper can obtain fee credits by building a park, for example, in advance of its normal development schedule. " For the purposes of Quimby Act or park in -lieu fees the City currently uses the average number of per- sons per DU of 3.03. 141 P(kg e Gil y= of C atlacctrcaf City Cathedral City has two sets of development impact fees, one for the existing developed City, and the oth- er to support the North City Plan. Since North City is mostly vacant land, some of the fees are substantial- ly higher than for the rest of the City since basic infrastructure such as roads and bridges need to be con- structed in this area. For the purposes of this analysis, and since Thousand Palms has most of its basic infrastructure installed, the fees charged in the developed portion of the City are used in projecting devel- opment costs in this community. They are presented in Table II-D, entitled, "Development Impact Fees — Cathedral City". Table r Developmentp. Facility Residential Retail Commercial Non -Retail Commer- Industrial {$I tJnit) ($!Acre ) cial $/Acre City Yard(Vehicle Storage) $95 $587 $454 Police Community Center $21 $132 $102 Public Safety Training Site $18 $110 $85 Interchange an Bridges $86 $4,145 $1,500 Unpaved Trails $53 $173 $134 Parks, Community Center, Pools $1,577 $5,141 $3,973 Again, these impact fees will be collected at subdivision recordation or building permit issuance, and can only be used for meeting the facility needs caused by future growth. These fees are established based on the policy that "growth should pay for itself" and not be subsidized by the existing property and business owners in the City. When the fees are received, they are placed in separate funds and not comingled with other city general fund or restricted revenues. Further, the funds are normally budgeted and spent on public works projects administered by the City. However, funds collected for interchange and bridge improvements are normally used for projects administered by the State or the local Council of Governments. Regarding development impact fees collected for parks and related improvements, and park fees collected as part of the building development fees, the City should coordinate with the Desert Recreation District in planning and spend- ing these revenues if the Thousand Palms area is annexed. This is because it is likely that the District will continue to provide, maintain and operate park improvements post -annexation. Expenditures _ Near Term (First Year) Projections The purpose of this section is to present and evaluate the initial expenditures needed to provide services to the Thousand Palms area, if annexed into Cathedral City. It is assumed that the level of service will be the same or better than the area receives now and will be at least at the level provided to the rest of Ca- thedral City. The cost projections contained in this section are for the first year of annexation. This will allow the com- parison of these expenditures with the latest "actual" revenues discussed earlier in this Chapter. This comparison is designed to provide the City Council the data needed to assess the initial financial feasibil- ity of pursuing this potential annexation. This cost information will also be the basis for projecting long- range expense in providing service to this area at build out, which is information LAFCO requires to be included in the Plan of Services for this area. This latter information is presented in Chapter III of this re- port. The first -year expense projections are not necessarily based on a cost formula, such as automatically increasing expenses solely using the City's projected General Fund expenditures on a per capita basis. The expenditure estimates used in this report are based on projected actual costs to provide service. So, for example, even though there will be a larger city to serve, there should be no increase in the City Man- ager's or City Attorney's budget. While there may be some additional work load experienced in these of- fices, it is not enough to justify an increase in the City's budget for these functions. On the other hand, there will be additional expenditures needed to provide police and fire service. Also, as explained earlier in this Chapter in discussing revenues, there are certain expenditures, such as building and plan checks, which are offset, or should be offset, by fees. For the purpose of this analysis, neither revenues nor expenditures for these activities will be presented in this report. IS 1 #'ark c: M UN of Cathedi'al City In the following paragraphs each part of the city organization will be discussed. Those departments or offices, which have no expected additional operating expenses upon initial annexation, will be discussed briefly, while those departments which will have expenditures increases will be discussed in more detail. Administration If annexation occurs, it is not expected that there will be a need to increase the budgets for the City Council, City Attorney, and City Management, including marketing. It is also assumed that, while there will be somewhat more risk assumed with additional street miles, the current budget for Risk Manage- ment will be sufficient. It may be speculated that there would be more risk to the City by adding more fire- fighters and police officers. However, because of the recent reductions in existing City staff, the increase in staff to serve the annexed area initially will not likely be significant enough to increase this part of the budget. There will be an additional expense for the City Clerk's Office for the provision of elections every other year. There are 11 precincts in the Thousand Palms, which usually translates into two to three voting pre- cincts. Based on 2,778 registered voters in this area, the County Registrar of Voters estimates that the City will experience additional election expense of $7,000 per election every two years.12 In addition to the regular election cycle, special elections could be scheduled. However, these extra costs are difficult to project since the frequency of special elections is unknown. They will need to be budgeted on an ad hoc basis, if and when special elections are called. For the purposes of this fiscal analysis, only the normal election expense is projected for anticipated regular elections. On an annual basis, it is esti- mated that there would be an additional yearly cost of $3,500. In addition, either through the Clerk's Office, Administrative Services, or Community Development, limited staff support for the Thousand Palms Community Council is provided, assuming that City will continue this organization as an advisory body to the City Council. While there will not be any additional expense for various staff providing liaison and information to the advisory council (police, fire, code enforcement, planning, etc.), funds for part-time assistance to schedule meetings, prepare minutes and other clerical support in the amount of $6,000 is budgeted for this function. For the purpose of this report, these funds are included in the Clerk's Office budget. In the Administrative Services Department, there will be an additional work load for Human Re- sources and Finance, but not to the extent where additional expense should be budgeted initially for these functions. While there could be an additional expense for Management Information Systems to extend data and telephone services to Fire Station 35 and to the community center, there should be no expense in the beginning, if initial fire service to this area is continued to be provided by Cal Fire, and the recreation programs continue to be provided by the Desert Recreation District as contemplated by the Plan of Services. As a result, no additional expense is projected for the Administrative Services Depart- ment upon initial annexation. While there likely will be additional permit and entitlement processing in the Planning, Building, and En- gineering Divisions of the Community Development Department, the expense of this work should be offset by fees and absorbed by existing staff given the overall decline in building and development activity in the Valley. As explained above, neither potential income nor expenses from planning, building, and engineering activity because of this annexation are included in this analysis. As a side note, the processing of development plans through Planning, Building, and Engineering should be more convenient to those living in Thousand Palms if the annexation occurred, In effect, the level of service to the public should improve. Meetings of the City Planning Commission and City Council, for ex- ample, take place at the nearby City Hall in Cathedral City. It is currently necessary for those interested in development issues in unincorporated areas like Thousand Palms to attend meetings of the County Plan- ning Commission and the Board of Supervisors in the City of Riverside. In terms of day-to-day development activity, the County has a planning and development office on Wash- ington near Palm Desert Sun City. While this location is more convenient for those in living in Thousand Palms, there have been substantial staff reductions at this office this past year due to a major reduction in 12 Email, Riverside County Assistant Registrar of Voters, May 29, 2012. . 16 ; Page City of Crallrertrcal City, development activity in the Valley. While this office still maintains a full-time counter person on a 4/10 work week to accept development and building plans, these plans must now be sent to Riverside for pro- cessing. So, for example, if an individual has submitted building plans which have been reviewed with corrections or other issues, that individual must travel to Riverside to review and discuss the corrections. Therefore, as a general rule, processing land use and development issues in Cathedral City should prove more convenient for those living in Thousand Palms. At this same location, the County still maintains Code Enforcement offices. Currently, these offices ap- parently are fully staffed, or nearly so. It is assumed that there will be no increase in the Community Organizations portion of the City budget. This is the portion of the budget which supports the Chamber of Commerce, Boys and Girls Club, and the senior center. Public Maintenance is responsible for street maintenance. While unlike most of the other expenditures discussed in this section, the budget for street maintenance is supported by two restricted revenues: gas tax and Measure A funds. Between these two revenue sources, the City expects to receive $358,289 to support street maintenance and the maintenance of traffic signals. Street lights, and the landscaped me- dian on Ramon Road, are funded by a local assessment district which is administered by the Desert Rec- reation District along with their maintenance of the community park. Street sweeping is provided through CVAG grants for major arterials and waste systems provider, Burrtec provides monthly residential street sweeping as part of its contract with the City. The City will pay for maintenance of the traffic signals and devote 2.0 FTE street maintenance workers and contract service to provide street, signal and sign maintenance in Thousand Palms. The initial budget to provide street maintenance to Thousand Palms is $358,289. Public Safety Police Department Thousand Palms Calls for Service (CFS) data was analyzed based on the Sheriffs Records Management System. In 2011, the Sheriff's Department reported 4,232 CFS, in 2010 the number was 4,028, and in 2009, it was 3,874. The crime data is not broken down by Part I and Part 11 crimes since the County Sheriff's Department as- sembles this data based on the entire unincorporated area within the Palm Desert station patrol area. However, the Captain in charge of this area observes that the major law enforcement issues in this com- munity involve crimes against property (burglary, theft, and vehicle theft) and drug related offenses. The response time goals provided by the Sheriff to this area are: • Priority 1 calls > 5 minutes • Priority 2 calls > 10 minutes • Priority 3 calls > 15 minutes This compares to Cathedral City where their actual response times are: • Priority 1 calls > 5 minutes • Priority 2 calls > 8 minutes Priority 3 calls > 10 minutes Another factor in analyzing law enforcement service for the community is the geographical length of the area being served, and the fact that currently the developed part of Thousand Palms is separated physi- cally from the developed portion of Cathedral City, which is served by the City Police Department. Since maintaining adequate response times in reacting to serious crimes is an important law enforcement ob- jective, providing a sufficient number of officers in the community to accommodate that response is es- sential. 171 PaN rn Mi C'`ity raffatheilral +City To provide this service, it is proposed that two officers be assigned to this area 24/7, each assigned to a separate beat. This will provide immediate backup for each officer assigned to Thousand Palms without waiting, potentially for several minutes, for a beat officer or a cover car to respond from the developed part of the City. To staff two officers 24/7 will require the addition of nine police officers at a cost of $1,342,818. In addition, it is proposed that the coverage of one Sergeant be added during the time of heaviest call for service volume in Thousand Palms. This would require adding two Sergeants positions at a cost of $427,634. It is also proposed that one .75 FTE Detective be provided at a cost of $119,350, a Records Clerk at a cost of $86,673, and a .5 FTE Dispatcher at a cost of $47,851 be added to the Police Department to serve the Thousand Palms community. The total cost of providing police staff to Thousand Palms is estimated at $2,024,327. Two new, fully equipped patrol cars will need to be purchased at a total cost of $116,000. Since a "sinking fund" or equipment replacement fund is not established for vehicles needed for Thousand Palms, these patrol cars can be purchased through a five year lease -purchase agreement at an annual cost of $23,200. The total cost for police services, including staff and vehicles, is estimated at $2,047,527. The officers and staff will be deployed from the Cathedral City Police Station. In terms of providing access to police and support staff in Thousand Palms, one option as part of the Plan for Services (Chapter IV) is for the Police Department to use an office in Fire Station 35 for report writing and for meeting the public. This fire station is oversized, and has the space for a small office for use by the Police Department. As an alternative, the Police Department could explore using space at the Thousand Palms Library for report writing only as is the current practice of the Riverside County Sheriff's Department. A third possibility, and possibly the best ultimate option, is to locate an office in a community building proposed to be constructed as part of the SDC Ventura, LLC development at the northeast quadrant of the 1-10/Bob Hope Drive Inter- change (Messenger Project). Over time, it may turn out that other developers in the area would want to consider donating space for a police office located in Thousand Palms. Assigning the Records Clerk to Fire Station 35, or to the proposed community building in the SDC Ventu- ra, LLC development, for part of the work week could facilitate service to the public. The Department would also continue to support the senior volunteer program called, Citizens on Patrol, which has an of- fice in the Tri-Palms community. It would appear that annexation of this area would provide an improved law enforcement service level to the community. This is because there will be two police beats assigned exclusively to Thousand Palms. This compares to the current law enforcement provider where only one police beat is assigned exclusive- ly to this area. Also, m LeAjby the numtLer of officers per 1,000 population served , tbp number of of-- ficers assigned To housand Palms would double. n l0 -,� , Also, the current closest public access for law enforcement is at the Sheriff's Palm Desert substation. There is the opportunity to provide limited public access for meetings, interviews, and inquiries by locating a Police Department Office at Fire Station 35, or eventually in the proposed development near the 1-10/Bob Hope Drive Interchange. Animal Control Cathedral City contracts for animal control services through Riverside County. They provide service from a shelter which serves the Coachella Valley at 72-050 Pet Land Place in Thousand Palms. Services in- clude field services as well as shelter and adoption services including licensing and vaccinations. The County Animal Control will charge Cathedral City $229,128 for these services in the coming fiscal year. This includes a .5 FTE Animal Control Officer (ACO) for field services and for Shelter Services. County Animal Control provided a cost estimate for serving Thousand Palms of $108,619, net of $3,500 in revenue.13 While the cost of shelter services seems in proportion to Cathedral City's population ($25,000 vs. $146,132) and seems reasonable, charging the same amount for Field Services for both areas does not. 13 Email, Deputy Director, County Animal Control, July 10, 2012, 8' 1 Page City ref C athedpal City The City indicates that they have not seen an increase in complaints by reducing the Field Services costs to the level of a 5 FTE ACO serving approxiAnn n—la Requiring a .5 FTE ACO for a com- munity of 7,715 does not appear reasonable. Of course, this report is not developing an exact contractual expense for the purposes of the actual provision of services to this area. It is only offering an estimate of what these costs will likely be initially if Thousand Palms were annexed by Cathedral City. Accordingly, the estimate from Animal Control is being reduced to reflect the services of a .25 ACO plus the amount required for Shelter Services. By making this adjustment, the estimated cost for Animal Control service in the first year of annexation is $70,483. Fire Department Provision of fire service to the Thousand Palms area is a more complex issue than the provision of law enforcement services. This is because the Riverside County Fire Department, under contract with Cal Fire, not only provides a response to fire and emergency medical calls to the immediate Thousand Palms community, but to all of the incorporated and unincorporated areas of the Coachella Valley, except the cities of Palm Springs and Cathedral City. Cal Fire provides immediate fire suppression and EMS response to Thousand Palms from Fire Station 35 with a Type I Engine, staffed with three firefighters (3 — 0 staffing). This engine responds to calls for ser- vice to Thousand Palms, plus portions of the cities of Palm Desert and Rancho Mirage. They also provide regional support to their entire service area from this station, including a Breathing Support Unit. Cal Fire is also considering moving their HazMat unit from Fire Station 81 in Bermuda Dunes to Thousand Palms. Fire Station 35, located at 31920 Robert Road, is a relatively new, oversized station. It became opera- tional November 1, 2009, and has approximately 9,100 square feet. It has three large garage bays which can accommodate up to six fire apparatus. It also has office space, an exercise/weight room, a spacious day room which includes a kitchen, dining, and TV areas, which are connected to an outdoor dining patio. It also has two separate living areas which can accommodate two fire crews. There are several options for providing fire and emergency medical service to Thousand Palms if it were annexed into Cathedral City. Option #1 would involve the City Fire Department moving a Type I fire en- gine, along with an ambulance, into Fire Station 35 and providing service to Thousand Palms and poten- tially the periphery of the surrounding cities through mutual or automatic aid. At times when both appa- ratus are available, this could provide approximately the same level of service to Thousand Palms in terms of response times currently provided by Cal Fire, if an efficient protocol for providing mutual or au- tomatic aid were able to be implemented. Also, Cathedral City would likely provide ambulance service rather than through the County service provider. These rights authorize Cathedral City to supply ambu- lance service within their City limits. Having both a fire engine and ambulance each staffed with two firefighters or fighter fighter/paramedics, — would mean that, base on a expenencnce ih Cathedral City, for about 70% of the fires the City could re- spond with four firefighters, rather than three. This would meet OSHA's "2 in, 2 out" rule, and would allow for better initial response during the first critical few minutes in responding to a structural fire. However, in at least 30% of the cases, the initial response would only be with two firefighters, which would require the arrival of a second unit before two firefighters can enter a burning structure, with two firefighters remain- ing outside. In those cases, Cal Fires' service level would be better than the City's at the point of initial attack (3-0 staffing). It should be noted that Cathedral City Fire is currently exploring achieving 3-0_staff-, ing on their engines which is the same as Cal Fire, and would be an improvement in the City's current The City could also respond with three or four firefighter/paramedics to major medical emergencies for most, but not all, incidents. This is superior to the current initial response of one fire engine with three fire staff, including one paramedic, since serious emergencies require four or more paramedics or EMTs to handle all of the duties at such an emergency. It should be noted that all but four Cathedral City firefight- ers are paramedics, and that all new hires are firefighter/paramedics. Option #2, and the best option per the analysis of this report, would envision Cathedral City contracting with Cal Fire for fire service, with Cal Fire operating from Fire Station 35 as is currently the case. The City may not initially support this option since it would lose an opportunity to enlarge and improve their De- partment's operation with additional staff and apparatus. A further reason for not supporting this option is that the City might not be able to provide ambulance service with firefighter/paramedics with another agency providing fire service. Due to the lack of initial financial resources to support the City Fire Depart- 19 1 ..., __ P'e�ge,: mi City of Callvedral Clfy ment at the beginning of providing service to Thousand Palms and several years thereafter, the City will need to contract with Cal Fire in order to balance revenues and expenditures in providing this service to Thousand Palms until future development occurs. Option #3 is to develop a Plan for Services (Chapter IV) whereby Cal Fire would provide fire service un- der Option #2 for a number of years, with the Cathedral City Fire Department and Cal Fire eventually sharing Fire Station 35. The station's apparatus room certainly has significant capacity as pointed out above. There is enough room for a City Type I fire engine, or a ladder truck, if that proves to be the best configuration of apparatus, especially with the high value, mid -rise Aqua Caliente Casino and Resort nearby. There is also more than enough space for an ambulance and one or more Cal Fire apparatus. Whether or not co -location of City and Cal Fire operations would otherwise be feasible, would be dis- cussed and/or negotiated sometime in the future. This likely would be several years (10 15 years) after initial annexation before this discussion would be needed given the inadequacy of the structural fire tax in Thousand Palms to support basic fire service for either the City or Cal Fire. Regarding the location of ladder trucks, there is one at Cal Fire's stations 33 (Palm Desert) and 86 (In- dio). With the Aqua Caliente Resort close by, the two agencies may wish to collaborate to determine the best configuration of apparatus to serve not only the Thousand Palms community, but the surrounding area as well, including portions of nearby Rancho Mirage and Palm Desert. Further, since in the recent past, Cal Fire closed the North Palm Springs fire station, that agency may wish to re-evaluate the configu- ration of the stations they staff and where their apparatus should be located, if this annexation occurs. It has been mentioned that Fire Station 35 also has a large living area. There are two separate living quarters at this station which could accommodate a crew from each agency. Since Cathedral City has two staff on each apparatus, these four firefighters can be considered one crew for housing purposes. Each wing has four rooms, with three of them currently used as bedrooms, with two bunks in each bedroom. With this option, Cal Fire's regional operations should not be disrupted, and service to Thousand Palms should be at or a better level of service as the area currently receives. Through joint operations, and pos- sibly through automatic aid or a boundary drop, the perimeter portions of Rancho Mirage and Palm De- sert closest to Fire Station 35 could still receive the same level of fire response, subject to resolving dis- patch issues between the two agencies. Clearly, the two fire agencies would need to cooperate in devel- oping a successful implementation plan for this third option to succeed. Further, these issues will not need to be resolved likely for another 10 —15 years. A variation of this option, if the City concludes it cannot subsidize ambulance service to Thousand Palms, is to provide fire suppression response, but continue with the current ambulance service provider. This is because the projected cost of staffing the ambulance exceeds the collection of an estimated $180,868 in offsetting fees. This will eliminate the benefit of having four firefighters responding to most fires and medi- cal emergencies from Fire Station 35. In fact, the level of service in Thousand Palms would diminish since the City only staffs its engines with two firefighters, therefore this variation is not recommended. Whether there would be an issue of the City losing its rights in providing ambulance service in part of the City, but not in the entire City, is not analyzed in this report. As an observation, however, it would appear that the City can still maintain the chain of the City's authority for providing ambulance service as long as it controls this service either by directly providing that service or by contract. Another fire facility immediately adjacent to Fire Station 35 is the Roy Wilson Training Center, jointly op- erated by Cal Fire and the College of the Desert. It has an estimated 9,000 square feet. According to Cal Fire staff, this training facility is operated separately from Fire Station 35. The Plan of Services antici- pates, therefore, that there would be no change in the operation of this fire training facility if the Thousand Palms area annexed to Cathedral City. Therefore, there would be no additional cost for operating this fa- cility as a result of this proposed annexation. Fire Service Cost For the City to provide fire service to Thousand Palms will require four Firefighters/Paramedics, including two person staffing for the Type I engine, and two firefighter/paramedics to staff an ambulance. To staff these two units 24/7 will require three Fire Captains, three Fire Engineers and six Firefighter/Paramedics. The cost of this staff is calculated at top step salary plus benefits. Administrative overhead is not in this cost since it not expected to increase as a result of this additional staffing. The estimated cost of the 12 fire staff is $2,019,384. 201 Page City of Cathrill-111 City There will be no need to purchase an ambulance, since the City has a spare, or a front line ambulance which is now in reserve. Also, the City is purchasing a new Type I -engine which is expected to be deliv- ered in April 2013. At that time a current front line engine will become a reserve engine. No funds are budgeted for apparatus in the initial year of annexation if the City provides direct fire service to Thousand Palms since it is assumed that either an existing apparatus will be transferred to Fire Station 35, or that one will be obtained through a grant. If there is a need to purchase an additional Type I Engine in addition to the one which will arrive in April, the City could purchase this apparatus through a 15-year lease pur- chase agreement from the supplier, which would even out the cost of such an acquisition over the life of the engine. It is estimated that additional annual cost for the purchase of a new, fully equipped Type I fire engine using this type of financing mechanism based on a recent quote provided to another California city is approximately $45,000.14 Initially however, since it appears that there is only a marginal revenue stream to support this level of ser- vice, the City should contract with Cal Fire for fire/EMS service, with ambulance service provided by the current County provider. This would mean that, while the City would not receive paramedic service in- come, it would save money by contracting with Cal Fire. The estimate for a Type I fire engine staffed with three firefighters, including overhead and equipment is $1,650,000.15 This includes the administrative charges charged by the State as well as an "engine use agreement" which funds the use and replace- ment of all apparatus. Adding an operations and maintenance expense of an estimated $30,000,16 the total projected first year cost for contracting with Cal Fire is $1,680,000. In summary, the options for providing fire/EMS service to Thousand Palms include: 1. Option #1.The provision of fire/EMS service by the Cathedral City Fire Department from Fire Station 35 with four firefighters or firefighter paramedics, assigned to two apparatus, provid- ing service through expedited mutual aid or automatic aid. 2. Option #2. Provision of fire/EMS service by the County of Riverside Fire Department (Cal Fire), with three firefighters, assigned to one apparatus, under contract with the City during the initial years of annexation. 3. Option #3. Provision of fire/EMS service by Cal Fire from Fire Station 35, with the Cathedral City Fire Department eventually providing fire/EMS service. When and if this occurs, the City Fire Department would then likely be able to provide service with three or four firefighters or firefighter paramedics assigned to a Type -I engine, and two paramedics/EMTs assigned to an ambulance. Service from this station to Rancho Mirage and Palm Desert could be provid- ed through automatic aid depending upon resolving payment for service and dispatch issues. City Fire and Cal Fire could co- locate in Fire Station 35, with Cal Fire continuing to provide regional fire service from this facility assuming that these other issues can be resolved. It is strongly suggested, because of current revenue constraints, that Option #2 be pursued. Eventually Option #3 could be considered If financial, dispatch and other issues can be resolved. Expenditure Summary Total projected General Fund expenditures are summarized in Table II-E, "Projected First Year General Fund Expenditures, Service to Thousand Palms." These expenditures, primarily to provide police and fire services, are required to provide the same or better level of service to Thousand Palms as it currently re- ceives, and is comparable to the service levels provided in the developed portions of Cathedral City. In the following table, the estimated expenses for the initial year after annexation, are shown with the pro- jected cost for fire/EMS service Options #1 and #3, which are the same, and for Option #2. 14 Email, City of Morgan Hill, July 31, 2012. 15 Email, June 26, 2012, Assistant Chief Cooley, Cal Fire. 16 Email, July 27, 2012, Assistant Chief Cooley, Cal Fire. 211 Page C`ir; crf Catitedrrrt Cite City Council City Attome , City Manager $0 $0 City Clerk Elections $8,500 $8,500 Administrative Services Finance, Human Resources $0 $0 Management Information Services $0 $0 Community Development (Planning, Engineering, Building) $0 $0 Animal Control $70,483 $70,483 Police $2,047,527 $2 047,527 Fire $2,019,384 $1 680,000 Total General Fund Expenditures $4,145,894 $3,806,510 In addition, it is estimated that there will be an additional expenditure of restricted revenues (Gas Tax, Measure A) in the amount of $358,289. This would mean a total operating budget of $4,504,183 for Fire Options 1 & 3, and $4,164,799 for the recommended Fire Option #2. Service to Thousand Palms would mostly be provided by contract, especially if Fire Option #2 is selected. In that case, the City would add staff of 13.25 FTEs to the Police Department and 2.0 FTEs to Public Maintenance, or a total of 15.25 FTEs. Summary of Fiscal Impact -- Initial Year of Annexation There have been numerous changes in the fiscal structure of California municipalities in recent years. Not only because of the economic downturn, but more importantly because of the steps taken by the State to balance their budget on the backs of cities and counties, a significant reduction in revenue to support lo- cal services has occurred. The loss of redevelopment funds, the elimination of the Motor Vehicle in -lieu tax, and the diversion of other local revenues to state coffers are recent examples of major state takea- ways. Plus the State continues to adopt legislative mandates on cities without providing the needed reve- nue to implement these mandates as required by law. It is within this context that the fiscal impact of the potential annexation of Thousand Palms by Cathedral City is being evaluated. This analysis assumes that the state takeaways in recent years will not be re- stored, The projections in this report further assume that the revenue base now allowed cities will contin- ue in its current structure, not only for the first year of annexation but throughout the years until Thousand Palms is built out. This is because there is noway of predicting what the State may do next to attack the revenue base of cities and counties. The expenditure projections for the potential annexation of Thousand Palms are based on projected ac- tual expenditures to provide needed services to this community. Even though Cathedral City has had to significantly restructure its spending plan this fiscal year to achieve a balanced budget, it is appears that the City has adapted its expenditure model to match its reduced revenue stream. As it concerns the proposed Thousand Palms annexation, it appears that Cathedral City can more com- fortably annex this area with a balanced budget only under a scenario where the City contracts for fire/EMS service from Cal Fire. As this unincorporated area develops over time, the City will develop the fiscal capability to solidify its revenue base and support needed municipal services to Thousand Palms. It should be noted that it is expected that the tax base, during the first few years after annexation, will grow without requiring a proportionate increase in public safety expenditures, which is the major cost of extending municipal service to Thousand Palms. The public safety staff infrastructure will be established in the initial year, and then grow much more slowly compared to the rise in revenue due to increases in property tax, transient occupancy tax, and sales tax. For example, the Police Department will initially begin servicing the area with two patrol beats. It is unlikely that the number of beats will need to increase for many years, if ever. But there will be a need to incrementally increase the number of sergeant, detec- tive, and support staff hours as the area grows. So, the basic staff infrastructure to provide police service will be established at the very beginning, and then supervisory and support services will grow slowly and incrementally over time. In any event, assuming that fire/EMS service will initially be provided by Cal Fire, the following Table II-F, entitled, "Summary of Annual Revenues/Expenditures, Initial Year, Proposed Thousand Palms Annexa- tion," shows the projected revenues will roughly balance the needed expenditure to provide these ser- vices. City �f (,a3`he'dral t','riv Summary of • • Initial Year Proposed • • Palms Annexation Fire Options 1 and 3 Fire Option 2 Revenue $3,926,089 $3,745,221 Expenditures $4,145,896 $3,806,510 Revenue Under Expenditures $219,807 $61,289 See Table 11-6, 'Total Available for City Operations," footnote #7 s See Table II-E, "Fire Option #2" Table 11-F shows that estimated expenditures would slightly exceed projected revenues available for gen- eral municipal purposes produced from the Thousand Palms area by an estimated $61,289 ($3,806,51017 — $3,745,221) during the first year of annexation. This is based on an expenditure plan that would involve the City contracting with Cal Fire for fire service to the annexed area per Fire Option #2. The City has the ability through its expenditure plan to change this slight deficit into a slight surplus by delaying the filling one of the two Sergeant positions until expected development at the 1-10/13ob Hope Drive interchange gets underway. If, as part of the annexation, the City provided fire/EMS service initially as described in Fire Options #1 or #3, the projected expenditure plan would cost $4,145,896 which would produce a first year deficit of $219,807 ($4,145,896 - $3,926,089). The cost differential of initially providing City rather than Cal Fire service is due to Cal Fire's longer duty week, and the City's per shift deployment of four, rather than three, firefighters for Fire Station 35. This will require funding 12 rather than 9 firefighters to provide basic fire/EMS response, including ambulance service. Eventually, the revenues would increase as development occurs, permitting the City to decide whether it would be advantageous to extend City fire and ambulance service to this area. If that decision is eventu- ally made, the City obviously would need to work with Cal Fire to enable that agency to continue its 're- gional' response responsibilities as discussed in this report. There also will be a need to negotiate issues related to cost sharing and the provision of dispatch services. Annexation Advantages/Disadvantages It appears that, if the annexation occurred, service level to Thousand Palms would improve. Examples of these service improvements are: • Improved police patrol with two police patrol beats, rather than one police beat. • The opportunity to provide public access to a police service office in the Thousand Palms com- munity. • When increased revenue from new development allows, fire service, whether provided by the City or Cal Fire, can be improved to four firefighter/paramedics for the initial response unit to a struc- tural fire or emergency medical response. This will enable either agency to meet the national "2 in, 2 out" standard for structural fires upon initial response. • Access to meetings where decisions are made affecting Thousand Palms will be much more con- venient to area residents. (City Council vs. Board of Supervisor meetings; City Planning Commis- sion vs. County Planning Commission meetings.) These "decision meetings" will be in Cathedral City rather than in Riverside. • Residents of Thousand Palms will have the opportunity to serve on city-wide advisory boards and commissions. • Voters in Thousand Palms will have more of an opportunity to run for local elective office (5 coun- cil positions vs. one member of the Board of Supervisors). 17 $3,926,089 as shown on Table 11-13, Total Available for City Operations, is reduced to $3,745,221 to reflect the absence of ambulance revenue if Cal Fire initially provides fire/EMS service as contemplated by fire option #2. 221 Page City of Cathedral Cit,3, • Access to most land use and permit processing will be in Cathedral City rather than in the City of Riverside. • The City has higher standards for the provision and funding of parks than the Desert Recreation District, potentially resulting in the provision of more park acreage and improvements in Thou- sand Palms. • The City has other Development Impact Fees which will help improve the infrastructure of Thou- sand Palms and the remainder of the City. • The City has some development regulations which are different than those provided by the Coun- ty. Other services, such as animal control, code enforcement, and street maintenance should be comparable to the service currently provided to Thousand Palms. Park maintenance, recreation programs, and street median and street light maintenance will not change since these services will continue to be provided by the Desert Recreation District. In addition, water, sewer and drainage and flood control will continue to be provided by the Coachella Valley Water District, electricity will be provided by the Imperial irrigation Dis- trict, and gas will be supplied by the Southern California Gas Company. Perhaps the most important advantage of a potential annexation is that the community will have unified governance and not be split with portions of the community overseen by the County, and another portion of the community overseen by one or two cities. Possible disadvantages of the annexation to Thousand Palms are: • An increase in the sales and use tax by $.01 until 2015; and • An extension of the City's Utilities User's Tax to Thousand Palms. The benefits of an annexation to Cathedral City are: • It will add undeveloped areas with excellent future freeway access which, as the unincorporated area develops, will expand the City's financial base, creating a more fiscally stable City in the long term. • The initial annexation would enable the City to develop and preserve a basic police staff 'infra- structure' to serve this area, while at the same time providing an improved level of service to Thousand Palms. This would also enable the Department to stabilize its staffing and service structure for both the existing city and the Thousand Palms area. • Future revenues as the annexed area develops will permit fire service to improve in this area. This could improve the basic staff and equipment infrastructure for the Fire Department. • The annexation will not reduce services, or the ability to provide these services, to the existing City. The disadvantage of the annexation of all of Thousand Palms to Cathedral City is: • The revenue/expenditure balance appears to be a negative balance, although it likely could be a "wash" or a slight surplus if the City contracts initially with Cal Fire for fire/EMS service, and police staffing is slightly adjusted during the first year of annexation. So, the City can avoid a negative impact on its current service levels in the initial year due to annexing the entire area by adjusting its expenditures for police service. Thereafter, as explained in Chapter III, the annexation should be a financial benefit to the City. As surprising as it may seem, given the recent fiscal challenges faced by both the City and the County, there appears to be some clear advantages to both Thousand Palms and Cathedral City to pursue the proposed annexation. In Chapter III which follows, the first year expenditure/revenue projections just discussed will be expand- ed to include estimates of expenditures/revenues after five years, ten years and at build out. 24 1 aX e . In M 00 O,f Catheliral +Cin, Chapter III Fiscal Analysis Future Development Including Build Out Introduction In Chapter 11, the initial year fiscal analysis regarding the potential annexation of Thousand Palms by the City of Cathedral City was presented. This analysis compared projected first year revenues which would be produced in Thousand Palms with expenditures required to maintain or exceed current local govern- ment service levels. As required by LAFCO, this chapter projects future revenues and expenditures to determine if an ade- quate level of service can be properly funded in Thousand Palms at build out. Using the revenue/ expenditure data from the Chapter II, these projections are based on the future land use plans for this area as reflected in the County's General Plan, with the exception of the already approved Specific Plan of the Berger Foundation for their Classic Club development, and the plans for property northeasterly of the 1-10/Bob Hope Drive Interchange, otherwise known as the Messenger project. The period of time to achieve build out is assumed to be 30 years. It is recognized, however, that eco- nomic conditions can fluctuate over three decades, so the length of time to achieve build out likely will vary, and could range anywhere from 25 — 60 years. Often, over a 30 year period, financial projections are made on a straight line basis using current estimat- ed revenues and expenditures. While, as explained below, some of the projections in this report use a straight line analysis, the effort of this study is to provide a more refined approach in preparing future rev- enue and expenditure estimates for this area. Not only are revenue/expenditure estimates at build out provided, but revenue/expenditure estimates during the first five and ten years are provided as well. As an example of this more refined approach, this report assumes that the Berger Foundation and Mes- senger projects are more nearly ready for development than the remainder of Thousand Palms. There- fore, these two projects are assumed to be fully developed much sooner than a 30 year period, possibly over the next 15 years. For the remainder of Thousand Palms, however, it is assumed that single family development will continue on a minimal to modest basis for the next five years, and then gradually in- crease to a higher rate of development for the next 25 years using a straight line projection, especially as the Berger and Messenger projects near completion. Regarding multi -family development in this area, except for the Berger Foundation and Messenger properties, it is assumed that this housing type in the rest of Thousand Palms will not be constructed during the first 5 years, and then will be constructed over the following 25 years to build out, again using a straight line projection. Assumptions Some of the other specific assumptions which are used to achieve a less generalized and more refined future expenditure/revenue projections until build out are as follows: Two planned freeway interchanges in the area along the 4 in . 2022 and 2032, and -if —is—projected that each new interchange will see the construction of two l y2 ? travel hotels of 125 rooms each, 2. It is assumed that the hotel at the Classic Club will be constructed during the first 5 — 10 years after annexation. 3. It is assumed that commercial/industrial development in Thousand Palms during the first 5 — 10 years after annexation will be concentrated in the Berger Foundation and Messenger pro- . Purge.. M City of C'atltedfal Citj, jects, with the remaining commercial/industrial in the remaining area developed subsequent to those two projects in accordance with the County's General Plan. 4. It is assumed in this report that the County's General Plan will provide the basis for land use development outside of the property which will be developed by the Berger Foundation and the Messenger Project. It is realized that over a 30-year period, changes in these General Plan designations may occur. This report does not, however, speculate on any possible land use changes. 5. As a note to this study, while this report provides revenue and expenditures estimates five and ten years after annexation, that level of development along with the revenue it will pro- duce and expenditures it will require, could easily be stretched to a longer time frame, say 10 — 20 years. This reflects the uncertainty of the timing and extent of economic recovery over the intermediate and long term. In addition to the specific assumptions just mentioned, there are a number of general assumptions used by this report in making revenue and expenditure projections for the next 30 years in achieving build out. These general assumptions are: • Build Out. As previously mentioned, the period of time for build out is assumed to be 30 years. This is based on the assumption that economic recovery will delay the momentum of economic development for the next 2 — 4 years, but that most of the area will be developed within 25 years. It likely will take an additional five years to develop the more difficult remaining properties, with to- tal build out occurring within 30 years. Again, build out, however, could take 40, 50, or even 60 years to complete. • Land Uses. The land use assumptions for preparing revenue/expenditure projections are based on the County's General Plan for the vacant areas in Thousand Palms. Exceptions to the County General Plan land uses are SP-343 (Berger Foundation Specific Plan) and the land use pro- posals for approximately 166 acres at the northeast quadrant of 1-10 and Bob Hope Drive, some- times referred to as the Messinger Project. • Yield. Standard measures for projecting the number of residential units, or commercial square footage, based on land use acreage in the County General Plan, are used in this report. Excep- tions will be specific proposals, including adopted specific plans, where the yield for different land use types has already been established by the property owner and/or developer. For example, for all residential units to be developed under the County's General Plan, it is assumed that there will be 2.56 pph (persons per household) in developing population estimates for this area. However, for the Berger Foundation, it is projected that occupancy will reflect data from Palm Desert, or 2.2 pph. For the Messenger Project, it is assumed that there will be 3.0 pph for single family residen- tial development, and 1.8 pph for multi -family residential development. These latter figures are used by the City of Cathedral City and seem more appropriate for the type of development pro- posed in this area. Further, it is assumed that the residential units identified in the Berger Founda- tion and Messinger Projects are the actual number of units expected to be constructed, while the DUs covered by the County's General Plan are "gross" numbers. In this latter case, the actual projected units are reduced by 15% to account for roads, streets, utility easements, and other constraints in developing residential property. • Revenue Data Base. The primary source of financial data used to develop long-term revenue projections is income information obtained from the City's actual revenues, plus current revenue data supplied by the County, where applicable. Revenues for the first year of annexation are pre- sented in Chapter 11, and these figures are projected into the future until build out using either a per capita basis or another formula which pertains to a specific type of revenue. • Expenditure Data Base. The primary source of data to prepare long-term expenditure projec- tions is information from the City's budget, plus current cost estimates from County service agen- cies, when pertinent, Again, the expenditures for the first year of annexation are presented in Chapter II and are projected into the future based on either a per capita basis or on other formu- lae. • Revenue Sources. No attempt has been made to predict new sources of revenue or changes in rates or formulas for various revenue sources. An exception is the Transactions and Use Tax CM 0 c (v uf'Cathedral City, (TUT). While this tax may be extended by voter approval, this report assumes that the TUT will expire in June 2015. Offsetting Revenues/Expenditures. As in Chapter II, the report assumes that certain operations or functions, such as building, planning, and code enforcement, will not be included in revenue or cost projections, since fees pay, or should pay, for the expense of these services. If that is not occurring on a current basis, the City may need to review their fees to insure that offsetting reve- nue is received for specific services provided by the City, and that these services are not being subsidized by the general taxpayer. For the next several years until build out, it is assumed that the City's fee schedule will cover the costs for building, planning, and code enforcement services. Exceptions to this include General Plan updates, over the counter consultations, and collabora- tion with other local and regional agencies. Funding for these services are included in future pro- jected costs. + Inflation. The Model upon which this report is based allows the reader/user to use the numbers presented using different inflation rates. This report, however, assumes an inflation rate of zero. As a result current and future revenues/expenditures will be presented in constant dollars. This assumes that any future inflationary increases will impact revenues and expenditures equally. These assumptions are just that: assumptions. They are useful for the purposes of a study, but are not necessarily an exact predictor of where or when specific development or development types will occur. Again, residential development may be completely constructed over the next 30 years, but build out may not occur for a longer time period. Population Estimates Key to predicting future revenues and expenditures is estimating the population growth of the Thousand Palms areas. This information will help determine the amount of future revenues produced in this area as well as the cost to serve the new people living in this community. Currently, based on the 2010 census it is estimated that the Thousand Palms population is 7,715. It is estimated that 24,242 new residents will eventually be added to this area, and at build out the estimated p. This estimated build out population is based on the construction of an addition- arZ,-7 5 singl family mily homes and 6,429 multi -family homes, or a total of 10,090 new residential dwelling units (DUs). Of this total, 754 DUs would be constructed in the Berger Foundation project, 2,200 DUs in the Messenger project, and 7,136 DUs in the remainder of the area in accordance with the County's General Plan. As previously mentioned, this report assumes that the Berger Foundation and Messinger projects would be constructed initially over the first 15 years after annexation, with residential development in the re- mainder of the area occurring on a minimal to modest basis initially, and then accelerating after the Ber- ger Foundation and Messenger projects are well established. Based on these assumptions, it is projected that the population of the Thousand Palms area will be 9,489 in the fifth year after annexation, and 10,579 in year ten. Depending upon the economy and the rate of growth for Thousand Palms and the Coachella Valley, the population estimates for years five and ten may turn out to be the estimates for some future years like years 10 and 20. Providing periodic five year popu- lation projections beyond year ten as presented but are imprecise. Based on these assumptions, the following Table III -A presents the population projections through build out. 271 Page City of Craaltedrul Qv Table 111-A Thousand Palms Population Projections Through Build Out Year Est. Po ulation 2012-13 Base Year 7,715 2017-18 5 Years 9,489 2022-23 10 Years 10,579 2027-28 15 Years 18,250 2032-33 20 Years 22,815 2037-38 25 Years 27,380 2042-43 Build Out 31,945 In addition to the population estimates at 5, 10, 15, 20, and 25 years and at build out, it is projected that there will be substantial non-residential development. A portion of this development will consist of 16 acres of executive office, or 230,000 square feet per the Berger Foundation Specific Plan. The Messen- ger Plan proposes 190 square feet of office and other services. For commercial, retail, and retail mixed use development, it is a projected that there will be 3,435,163 square feet of development. Of this amount, 500,000 square feet is in the Berger Foundation Specific Plan for the land use designations of mixed use retail village or community commercial development. For the Messenger Project, 320,000 square feet of commercial and restaurants is proposed. The remainder of the projected commercial development is in the County's General Plan. The combined plans contain 17,036,020 square feet of business park and industrial development. This includes 1,200,000 square feet (Research and Development) on 69.60 acres per the Berger Foundation Specific Plan, and 2,220,000 square feet of light industrial is projected in the Messenger project. The re- maining business park/industrial square footage is included in the County's General Plan. Since the projected business park and industrial development reflects a significant amount of square footage to be absorbed by the market place — perhaps more than could reasonably be absorbed by the market given similar projects which may be proposed in the Valley over the next 30 years or more — this report in developing its property tax revenue estimates uses a per capita projection based on the current ratio of property tax income/population. While this may produce a more conservative revenue projection for this tax, this approach may provide more useful data than to assume that over 17 million square feet of business park and industrial development will be absorbed by the market during the next 30 years. Revenue Estimates Per Capita Revenue As just mentioned, the property tax revenue is projected on a per capita basis. The current revenue pro- duced by Thousand Palms is divided by the current population, and the resulting property tax per person income is projected based on increases in the area's population. Again, this approach was used since it was concluded that property tax income based on over 17 million square feet of business park and indus- trial development and over 3.4 million square feet of retail/commercial may produce an unreasonably op- timistic result. It may be that over time some of this acreage (over 1,000 acres in the County General Plan outside of the Berger Foundation and Messenger Project land), will be rezoned to residential, institutional, or some other use. In addition to property tax, other revenues are projected on a per capita basis including the:. • Structural Fire Tax; • Property Tax In Lieu; • Sales Tax Comp Fund; • Transaction and Use Tax (until June 2015); • Utilities User's Tax; • Franchise Fees; • Business License Fees; 28 Page cm E5 Ciij, af'Cathedral Ciry • Fines and Forfeitures; and • Charge for Services. Revenue from these sources is calculated at $387.60 per capita until June 2015 at which time the per capita amount is reduced to $349.06. These revenue sources are projected to produce $42,636 during 2013-14, increasing to $619,232 by 2017-18, and then growing to $999 708 by 022-23 using the as- sumptions in this report. By build out, these re ven 723 annually due o the Transient Occupancy Tax/Time Shares The Transient Occupancy Tax (TOT) is the so-called hotel or bed tax charged by cities in the Coachella Valley for visitors lodging at local motels, hotels, and resorts. In Cathedral City the rate is 12%. In Thousand Palms there is one travel hotel, the Red Roof Inn. Proposed to be constructed as part of the Messenger Project is an upscale hotel and a travel hotel at the Bob Hope and 1-10 Interchange. It is ex- pected that both hotels will be constructed within the first five years after annexation, with the first hotel beginning construction during 2013-14. This 100-room hotel is expected to be completed by 2014-15 and a 300-room hotel by 2017-18, Expected to be constructed during the first 5 — 10 years after annexation is the resort hotel at the Classic Club (350 rooms). This facility is identified as the Golf View Hotel on the Berger Foundation Specific Plan, and is located on 17.60 acres next to the Classic Club Golf Course. The Plan also envisions the construc- tion of 216 time share units. It is assumed that, over time, four more travel hotels will be constructed, two each at the two new inter- � ��, changes expected to be built in the future. For the purposes of this report, it is projected that one inter -fir change, along with two travel hotels, will be constructed in 2022, and the other interchange, also with two ot travel hotels, will be constructed in 2032. The construction of these facilities will have a significant impact on the short-term and long-term financial feasibility of this annexation. The construction of the two hotels by Messenger and the resort hotel by the Berger Foundation is estimated to produce a $3.2 million in additional revenue to this area. The construc- tion of the four additional travel hotels plus the Berger Foundation timeshares during the next 20+ years will produce another $1.3 million of increased income in terms of today's revenue. Sates Tax This report assumes that the 500,000 square feet of retail/commercial for the Berger Foundation Specific Plan will be developed over the next 15 years using a straight line projection. This includes 400,000 square feet of retail in a mixed use retail village per the Berger Foundation Specific Plan. Based on the developer's projections, it is assumed in this report that most of the Messenger Project's 320,000 square feet will be developed by 2021. While major development of commercial square footage for this project may occur within a 5-year time frame, the 15-year projection is used since future commer- cial development in the context of the current economy is uncertain. The remainder of the area covered by the County's General Plan contains 276.96 acres which would pro- duce approximately 2.6 million square feet of commercial development. This amount of commercial seems excessive for this area and for the Coachella Valley as a whole, and, over time, this acreage may be converted to other land uses.. For the purposes of this analysis the report assumes that the retail/commercial for the Berger Foundation and Messenger Projects will be developed over a 10 - 15 year period, and that the remainder of the commercial will be absorbed over a 30-year period until build out. It is estimated that Thousand Palms will produce an additional $440,000 in sales tax income annually af- ter five years of annexation, which will increase to approximately $2.2 million annually after 10 years. At build out the estimated annual revenue from this source is an estimated $7.8 million. 29 I pag— j i . (Jiv of Cathedral Clty Non -General Fund Revenue The report only assumes the receipt of non -General Fund income consisting of state gas tax funds and Measure A funds. These two revenue sources are projected on a per capita basis based on the report's population projections. It is estimated that the per capita income produced by these two sources are: Gas Tax ($26.83/per capi- ta), and Measure A ($19.61 per capita), or a total of $46.44 per capita. It is estimated that these two re- stricted revenues will produce $465,793 in 2017-18, and $715,176 in 2022-23. At build out, it is estimated that these two revenue sources will produce $1,460,306 ($46.44 x 31,445) annually. These funds are re- stricted to street construction and maintenance activities and cannot be used for any "general city pur- pose." The projected revenues related to the potential Thousand Palms annexation are summarized in the fol- lowing Table III-B. Thousand Year Table 111-B Palms Estimated General Est. General Fund Revenue Fund Revenue at Build Out Est, Non -General Fund Revenue 2012-13 $3,745,211 $358,289 2013-14 3,875,861 2017-18 5,126,153 465,793 2022-23 10,751,547 715,176 2027-28 15,436,963 2032-33 18,898, 916 2037-38 21,820, 074 2042-43 24,744, 721 1,460,306 As can be seen in this table, there is a gradual increase in revenue to support general operations, mostly based on the projected increase in population since many of the estimated revenues accruing to the City are based on per capita projections. There is a much larger increase between 2017-18 and 2022-23 as- suming the construction and operation of the resort hotel at the Classic Club Golf Course and the Mes- senger hotels along the 1-10 freeway. Of course, there is no guarantee that build out will be accomplished in 30 years. The revenue estimates for the first ten years may not be accomplished in that time frame, but may take longer to achieve de- pending upon economic conditions in the Valley. Also, based on the acreage set aside for commercial development in the County's General Plan, the sales tax revenue in these projections may be optimistic. On the other hand, as explained earlier, the property tax revenue projections are likely conservative. Expenditure Estimates The expenditure projections are based on the cost of police, fire, and other city services currently being provided to the City of Cathedral City and in providing service to Thousand Palms during the first year of annexation as described in Chapter II of this report. Based on that analysis, providing City services to Thousand Palms in 2013-14 would cost $3,806,510 against $4,012,685 in revenue, providing a slim bal- ance of $206,175. Initially, this balance would stay about the same, and, by 2017-18, it is estimated that expenditures to serve Thousand Palms with an estimated population of 9,489 would total $5,126,153 against revenue of $6,322,198, or a surplus of $1,196,045., urin t ars with construction of the�sohotel and other improvements, this surplus would grow to $ ,65 ,2 9 by 2022- 3. 1 u Most of es ving Thousand Palms in terms of General Fund expenditures is estimated at $15,428,686 against General Fund income of $24,744,721, or a surplus of $9,316,035 in current dol- lars. Of course, these numbers are only estimates that could change dramatically based on rate of growth, type of development, and changes in basic land uses. These figures are summarized in Table Ill- C which presents the cost of serving Thousand Palms over the next 30-years, or until build out occurs. iB 11'la e Cily of CfZlhL'&W 6'i1y Year ThousandTable Est. GF Revenue lli-C • Revenues/Expenditures at I Est. GF Expenditures Build Out Surplus (Deficit) 2013-14 4,012,683 3,806,510 206,173 2017-18 6,322,198 5,126,153 1,196,045 2022-23 10,751,547 8,095,228 2,656,259 2042-43 24,744,721 15,928,686 9,311,035 These figures demonstrate that initially revenues would barely support needed expenditures. And this expenditure plan assumes that the City would contract with Cal Fire for fire service, otherwise the City would experience a deficit each year. This Table also shows that b the fifth year after annexation a substantial General Fund revenue surplus would accrue. This is based on t e substantial TOT income which would be produced by the two notels on a essenger Prope . his assumes that both facilities will be constructed by the fifth year of an- nexation. Additional revenue would be produced by the resort hotel at the Classic Club between the fifth and tenth year after annexation. Further, substantial increases in sales tax will occur by this time due to development of retail at the Berger Foundation and Messenger projects. Without this income stream, the revenues and expenditures would be evenly matched, and no major revenue surplu�' s'would be created. By the tenth year of annexation revenues would clearly exceed expenditures even if the classic club re- sort hotel were not on line. By the 30th year, or whenever build out occurs, this annexed area would clear- ly pay for needed municipal services in Thousand Palms and would have a significant positive economic benefit to Cathedral City. Expenditures for specific services were calculated as described in the following paragraphs. Instead of providing a straight line projection of expenses, an effort was made to anticipate the specific needs of the community based on its population and budget for those services, especially for the major cost of police and fire service. Police In the initial year of annexation as explained in Chapter 11 there would be 11.75 Full-time Equivalent (FTE) police officers with additional support staff such as a Records Clerk and .5 FTE Dispatcher, for a total of 13.25 FTE police staff. This provides basic police staff infrastructure to serve Thousand Plans at the level of 1.52 police officers per thousand vs. the current service level of .75 sheriff's deputy per thousand popu- iation. During the following five years there would be the addition of two FTE Sergeants. This would increase the number of Sergeants assigned to Thousand Palms from two to four, providing a Sergeant on duty 24/7. Also budgeted would be an additional Detective, Dispatcher, and Records Clerk. The number of police staff would then increase to 18.25 FTEs. Also two additional police vehicles would be purchased. During the next five year period (2019 — 2023), the City would add per the projected expenditures in this report four police officers, two Sergeants, one Detective, one Dispatcher and two Records Clerks. By the end of this period, and ten years after annexation, the Police Department would have 21,75 police officers to service a community of 10,579. This would amount to 2.06 police officers/thousand, a temporary in- crease from the initial level of staffing using the measure of police staffing of staff/1,000. It would be a level of staffing substantially higher than is currently being provided. Overall Police Department staff would total 28.25 FTEs. Also, three additional police vehicles would be purchased. During the next 20 years to build out, it is estimated that there would be added to the Police Department, 15 additional police officers, four detectives, two Sergeants, three Dispatchers and four more Record Clerks. Six additional police vehicles would be acquired. By 2042-43 there would be 42.75 FTE police officers to serve an estimated population of 31,945. This amounts to 1.34 officers per thousand popula- tion served. Total Police Department staff would number 62.25 FTEs. Animal Control The funding for Animal control in the initial year is $70,483, increasing to $141,000 by year ten. As the population for Thousand Palms doubles in 10 years, so would the amount budgeted for this service. At build out, it is projected that the cost of Animal Control is projected to be $400,000. M M Fire Ci�v of Cathettral City As mentioned in Chapters II and IV, it is recommended initially that the City contract with Cal Fire for fire/EMS service for both operational and financial reasons. The 30-year projection assumes that this ar- rangement will be in place for at least ten years. By the 10th year, it is assumed that the Palm Desert fire station which would partially serve Thousand Palms would be constructed and staffed. As a result, 40% of that station's staffing expense would be included in this budget, increasing the fire budget in current dollars to $2,352,000. This assumes that there will be a continued contract with Cal Fire at this time. By build out the Fire budget is projected at $3,986,400. Still assuming a service contract with Cal Fire, the budget would include the purchase of an ambulance with the City paying $1,000,000 for its operation. It is also projected that a fourth firefighter would be added to the engine company at Fire Station 35. This budget amount would give the City the flexibility to continue the contract with Cal Fire, provide additional money for apparatus, add a fourth firefighter/paramedic to the current Cal Fire Type 1 engine located at FS 35, and to support an additional Cal Fire engine company in Palm Desert which would partially serve Thousand Palms. Or this level of funding could support the provision of fire service by the City at Fire Sta- tion 35 using three or four person staffing of the engine at that location. Administration In the initial year of annexation, additional staff is not added to administration which includes finance, hu- man resources, MIS, and, in a broad sense, legal services. As the area grows, however, additional staff- ing will be needed. The expenditure projection for Administration staff and services includes an annual cost increase of $247;000 for two positions by year five and $494,000 by year ten with the addition of an- other clerical and a professional position. At build out, this expense increases to $988,000 with the addi- tion of four more positions to this Department or accumulated total of 8 full-time positions. Community Development As in administration, additional staff is not added to this function (planning, engineering, public works) in the initial year of annexation. As the area grows, however, funds for increased staff would be needed. By the fifth year after annexation, there would be an annual increase of $247,000 to support two new posi- tions in this Department. This amount would grow to $654,000 annually by year ten with the addition of three new positions. At build out this budget would grow to $1,308,000 with the addition of five more cleri- cal and professional positions, or a accumulated total of 10 full-time positions. City Clerk The cost of election service is estimated at an annual amount of $3,500 initially. By year five, it is estimat- ed to be $5,000 annually, and by year ten, $7,000. Again, the cost of elections will double in concert with a similar population increase. At build out, it is estimated that the cost of elections will be $15,000. In ad- dition, $5,000 will be included in this budget to support the Thousand Palms Community Council, for a total budget of $20,000. Public Maintenance Public maintenance is basically street, signal, and sign maintenance. The expenditures for this function is based solely on revenue from gas tax and Measure A funds. In the initial year this amount is estimated at $358,000. By 2017-18, this revenue source is expected to produce $465,793, and by 2022-23 this amount should be $715,176. By build out, this revenue source should produce $1,460,306. By build out, the General Fund expenditure portion of the City budget is projected to be $15,549,683, with an additional $1,460,306 in restricted revenue to support street maintenance services. The overall esti- mated City budget for Thousand Palms at build out is $17,009,989 as presented in Table 111-D, "Thousand Palms Expenditure Budget at Build Out." l5 321Pabe E5 City of C whedral C ii y Thousand Department ExpenditureTable 111-13 Palms .. . Out General Fund Expenditure Gas Tax/Measure A Expenditure Police $8,731,286 Fire 3,986,400 Administration 988,00 Community Development 1,308,0001 Animal Control 400,000 Clerk (Elections) 20,000 Street Maintenance $1,460,306 Total General Fund Budget $15,433686 Total City Budget $16,893:992 Revenue for Capital Improvements In Chapter Il it is mentioned that one-time revenues will be produced as a result of new development. This income is created from building development fees and development impact fees (DIF). This revenue cannot be used to support on -going municipal services or operations, but are restricted by state law and implemented by City ordinances only for needed capital improvements. These improvements are de- signed to support new development. These fees are normally paid when an applicant seeks an entitle- ment or permit for land development and/or a permit for the construction of residential, commercial or in- dustrial development. The development fees in Cathedral City consist of two categories. One are Building Development fees collected for Police and Fire, City facilities, and signalization; the Master Undergrounding Fee; Transit Development Fee; Park Fees; Art in Public Places; and the City Facility Impact Fee. The other category of fees is Development Impact Fees (DIF). These fees are designed for new devel- opment to pay its share of overall City facility needs. The DIF fees in Cathedral City apply to the City Yard (vehicle storage); Police Community Center; Public Safety Training Site; Interchanges and Bridges; Un- paved Trails; and Parks, Community Center, and Pools. Each fee category will be discussed in this section. While it is feasible to provide specific estimates of to- tal DIF fees, such estimates are not feasible for all Building Development Fees. This is because elements of the formulae for these latter fees cannot be determined at this time, such as the "land cost per acre" at the time of development which is an element in determining the park fee. These issues are explained in the following paragraphs. Building Development Fees The Building Development Fees, as just mentioned, consist of Police, Fire, Facilities, and Signalization; Master Undergrounding Fee; Transit Development Fee; Park Fees; Art in Public Places; and City Facility Impact Fees. It is impossible to project the income from all of these fees at this time due to unknown ele- ments in some of the fee formulae. For example, Park Fees are determined by the number of DUs x av- erage # of persons per DU x 3 acres per 1,000 residents x land cost per acre = total fee. Unfortunately, it is impossible to determine at this time the "land cost per acre" when the fee is calculated. For Art in Public Places the formula is 1 % of 90% of building valuation for buildings over 15,000 square feet. It is impossible at this time to determine how many buildings over 15,000 will be constructed at build out, or their valuation. While a guess could be taken as to how many square feet of roofed area will be constructed at build out, it likely would be too imprecise to estimate the Master Undergrounding Fee. This Fee is based on a for- mula of $.15 per square foot of roofed area for all development. Revenue estimates for portions of the Building Development Fees, however, can be estimated. For ex- ample, the City Facility Impact Fee is $1,851/residential unit. Based on an estimate of 9,796 DUs at build out, it is estimated that this fee will produce $18,132,396 in terms of current dollars ($1,851 x 9,796). The fee is $10,288/Acre for retail commercial, which is estimated to produce $3,707,281 ($10,288/Ac x 360.35 Acres). The fee for non -retail commercial/industrial is $6,247/Acre. This will produce an estimated �3 1 Page, Qv of Calkedial C70 $7,214,348 ($6,247 x 1,154.85). The total estimated amount that would be collected by build out for the City Facility Impact Fee is $29,054,025. The fee for Police, Fire, Facilities, and Signalization is $150/1,000 square feet of all development. Since the average square feet of the 9,796 DUs yet to be constructed in Thousand Palms is difficult to project, only income for this fee from commercial and industrial development has been estimated. While the current estimates of square footage for commercial and industrial development at build out seem excessive, based on the Berger Foundation, Messenger, and County General Plans, the following estimates for this fee are as follows: Commercial = $569,550 (3,797,000 square feet x $150/1,000 square feet); Industrial = $2,550,000 (17,000,000 square feet x $150/1,000 square feet). This would provide a total of $3,119,550 for this fee category from commercial and industrial land uses. The estimated Building Development fees for Thousand Palms are presented in Table III-E, entitled, "Es- timated Building Development Fees for Thousand Palms." Ill-E Estimated Building DevelopmentTable Fee Description Residential Commercial Industrial Total Police, Fire, Facili- ties and Signaliza- Unable to Determine $569,550 $2,550,000 $3,119,550 tion City Facility Impact Fees $18,132,396 $ 3,707,281 $7,214,348 $29,054,025 Development Impact Fees (DIF) Unlike the Building Development Fees, it is possible to project revenue projections for all of the DIF fees at build out. The fees are either determined based on $/DU for residential development, or $/Acre for re- tail commercial development and non -retail commercial industrial development. There are six DIF fees imposed by the City. In summary, the amount produced from residential develop- ment includes: $930,620 toward the City Yard ($95/DU x 9,796); $205,716 for the Police Community Cen- ter ($21/DU x 9,796); $176,328 toward a public safety training site ($18/DU x 9,796); $842,456 ($86/DU x 9,796); $519,188 for unpaved trails ($53/DU x 9,796); and $15.448,292 for parks, a community center and pools ($1,577/DU x 9,796). This latter fee will supplement the resources from the Desert Recreation District in providing parks and recreation facilities to the benefit of Thousand Palms. The amount produced from retail commercial development is based on $/Acre. In summary, for the City Yard the DIF fee on commercial development will produce $211,531 ($587/Acre x 360.35 acres). For the Police Community Center the amount collected by build out will be $47,566 ($132/AC x 360.35 acres). The amount produced for the public safety training site will be $39,639 ($110/AC x 360.35 acres); for the Interchanges and Bridges the amount collected will be $1,492,930 ($4,143/AC x 360.35 acres); for un- paved trails the amount produced will be $62,341 ($173/AC x 360.35 acres); and for parks, a community center, and pools $1,852,559 will be produced ($5,141/AC x 360.35 acres). The revenue received from non -retail commercial industrial development is also based on $/AC. Devel- opment of a City Yard is projected to receive $524,302 ($454/AC x 1,154.85 acres); the Police Communi- ty Center should receive $117,795 ($102/AC x 1,154.85); the public safety training site should be sup- ported in the amount of $98,162 ($85/AC x 1,154.85 acres); Interchanges and Bridges should receive $1,732,275 ($1,500/AC x 1,154.85 acres); Unpaved Trails should obtain $154,750 ($134/AC x 1,154.85 acres); and parks, a community center, and pools should secure $4,588,219 ($3,973/AC x 1,154.85 acres). This data is summarized in Table III-F, entitled, "Development Impact Fees for Thousand Palms." 34 j Pq,e City of Critfaedr of Crt1, 111-F DevelopmentTable .. Fee Residential Commercial Industrial Total City Yard $930,620 $211,531 $524,302 $1,666,454 Police Communication 205,716 47,566 117,795 371,077 Center Public Safety Train Site 176,325 39,639 98,162 314,126 Interchanges & Bridges 842,256 1,492,930 1,732,275 4,067,461 Unpaved Trails 519,188 62,341 154,750 736,279 Parks, Community 15,448,292 1,852,559 4,588,219 21,889,070 Center, Pools As can be seen from Tables III-E and Ill-F, there will be a significant amount of one-time revenue collect- ed from DIF fees for various City-wide public improvements during the development of Thousand Palms. These revenues will supplement income from DIF fees applied to other parts of the City. Examples of city- wide improvements are the City Yard ($1,666,454), Police Community Center ($371,077), the Public Safety Training Site ($314,126), and Unpaved Trails ($736,279). Examples of improvements which, while city-wide in application, will have a more direct impact on Thousand Palms are the fees for Interchanges and Bridges ($4,067,461) and Parks, Community Center, and Pools ($21,889,070). This latter fee cou- pled with the Park Fees which will be collected as a Building Development Fee will provide substantial resources for park and recreation facilities in Thousand Palms and rest of Cathedral City. Summary Based on the projections in this report, it appears that there should be sufficient General Fund and re- stricted revenue to support basic City services to Thousand Palms during the first 5 years after annexa- tion. Revenues, however, will not be sufficient to accumulate any significant surplus during this period of time. Between the fifth and tenth years after annexation, however, there is projected to be a revenue sur- plus to support City services, and after ten years until build out the revenue surplus will grow significantly and should be substantial. At the same time, services will equal or exceed services now received in Thousand Palms, and will equal or exceed those services currently received in Cathedral City. Also, there appears to be sufficient one-time revenue to support major capital improvement projects in Thousand Palms as well as provide that communities' share of city-wide capital improvements. The in- come collected for these improvements, particularly for parks and recreation facilities, appear to exceed what could be obtained otherwise. This is because of the City's authority to impose DIF fees compared to the Desert Recreation District. As can be seen by this report, the Building Development Fees and Devel- opment Impact Fees over time will produce a significant amount of capital improvement revenue. . 35 1 ,pra,?e . M n 04y tlf C(AMettral City Chapter IV Plan of Services Community of Thousand Palms The Riverside County Local Agency Formation Commission (LAFCO) requires as part of any annexation process that a Plan of Services be prepared for the area proposed for annexation. The purpose of the Plan is to articulate the service demand for the area at complete development, and indicate how that de- mand will be met. In the case of the Plan for Services for Thousand Palms, not only will the service demand at build -out be analyzed and discussed, but service demand has been evaluated during the initial year of annexation as discussed in Chapter 11 of this report. This approach is designed to assure LAFCO, the citizens of Thou- sand Palms, and the City of Cathedral City that adequate and satisfactory services will be provided both initially as well as at full development in a fiscally responsible and balanced manner. These services will be provided not only by the City, but by other agencies which currently serve Thousand Palms. In order to develop a comprehensive Plan of Services, LAFCO has developed a draft checklist of infor- mation which should be provided in this Plan. This checklist is used as a guide in developing this report. The Plan of Services checklist specifies that the following areas should be analyzed and discussed: • Background • Police Protection • Fire Protection • Animal Shelter and Control • Water • Wastewater • Electricity • Solid Waste Collection • Street Maintenance • Lighting, Landscaping, and Street Sweeping • Parks and Recreation • Library • Financial Information In addition, this Plan of Services also includes: • Schools Also, the Plan of Services has grouped under the heading of "Utilities" the following utility services: • Water; • Wastewater; • Electricity; and • Solid Waste Collection Services. En E5 City aj'C"alheatrai City In addition to the utility services specified by LAFCO, the following services have been added under the "Utilities" category: • Drainage/Flood Control; and • Gas (natural). Further, this Plan of Services also has moved Street Sweeping into the more appropriate category of Street Maintenance. Finally, parks, recreation, and library services are grouped under the heading of "Leisure Services." In each category of service, the LAFCO checklist asks for a description of the level of service standard provided by the current service provider, and the level of service which will be provided by the new ser- vice provider, in this case, the City of Cathedral City. Where the service provider will not change due to the annexation, and there will be no change in land use designations, a limited analysis of these services to the area is required. This presumably is based upon the assumption that the current service provider will be able to continue its current service role, and to meet the requirements for implementing its master plan in the impacted service area. Background The Thousand Palms community stretches along the northeasterly edge of the 1-10 freeway, from west of Rio del Sol Road to 381h Avenue, and then easterly to Washington. It consists of over 5,600 acres, with an estimated population of 7,71518. When added to the 4,100 acres from Da Vall Drive to Rio del Sol Road, a total of 9,700 acres is being evaluated as part of this Plan for Services. This unincorporated area is partly inhabited, but with a significant amount of vacant land. As shown in the map on Exhibit A (See Chapter 1), it is bounded on the southwest by the 1-10 freeway, the City of Cathe- dral City to the northwest, the Coachella Valley Multiple Species Habitat Conservation Area on the north- west, and the Palm Desert Sphere of Influence (SOI) to the southeast. Thousand Palms is mostly a residential community with most of its inhabitants living in the vicinity of the I- 10 freeway, Monterey Avenue, and Ramon Road. There is also freeway commercial in this area, along with a business park. This part of the community is served by an elementary school, a park with a com- munity center and library, and Fire Station 35. Adjacent to the fire station is a major fire training facility which serves the entire desert region. Northerly there is scattered, though important industrial development, including nearby surface mining. Running south along Varner Road toward Palm Desert Sun City are additional pockets of residential de- velopment, along with the Classic Club Golf Facility and the private Xavier High School. Currently, Thousand Palms is served by Riverside County, which provides both police and fire/emergency medical service. Water, sewer, and drainage facilities are maintained and operated by the Coachella Val- ley Water District. Electrical Service is provided by the Imperial Irrigation District. The Desert Recreation District maintains and programs the park and community center, and maintains street lights and a major street median (Ramon Road). County Library Services operates a branch library next to the community center, and the public schools are administered by the Palm Springs Unified School District. On December 8, 2010, the City Council gave direction to submit an application to expand the City's SOI to include the remainder of the Thousand Palms community. This unincorporated area was formally placed in Cathedral City's SOI by the Riverside County LAFCO in January 2012. This means that if the area is annexed into a City, it can only be annexed into Cathedral City while it is in the City's SOI. While the City was interested primarily in annexing the area between Da Vall Drive and Rio del Sol Road, the entire area is being assessed for potential annexation because of the interest of those living and working in the Thousand Palms community. Police Protection 18 2010 U. S. Census. 371 Pa!€j. M CM City q f Catlsedral Ut�, Current Service Provider The current service provider of police protection to the Thousand Palms community is the Riverside County Sheriffs Department. In accordance with LAFCO's Plan of Services checklist, the following infor- mation has been provided by the Sheriffs Department. Level of service standard (target or goal). The officer to population ratio projected this summer (2012) is .75/1,000, Due to County budget cuts, this ratio was reduced from 1.2011,000 during the past two years. It should be noted that many professionals in the law enforcement community do not believe that the number of officers per 1,000 population is an appropriate measure of law enforcement service levels. This is because socioeconomic factors play a more important role in determining the need for the number of officers to serve a particular community. Nevertheless, this information is provided as required by the checklist. The response time goals by priority type are: • Priority 1 calls < 5 minutes • Priority 2 calls < 10 minutes • Priority 3 calls < 15 minutes Where is the nearest station providing counter services to the affected area? The closest fully staffed Sheriffs substation with counter service is located in Palm Desert. The address of this substation is 73705 Gerald Ford Drive, Palm Desert, CA 92260. This facility is approximately one- half mile from the middle of Thousand Palms at Cook Road, and is approximately 4.5 miles from Fire Sta- tion 35 which is located in the midst of this community's population base. While not providing counter or public access, a report writing office space is maintained by the Sheriff at the Thousand Palms Library, 31189 Robert Road, Thousand Palms, CA 92276. What is the actual level of service being provided within the unincorporated service area of a station? Regarding officer to population ratio, it is .75 per 1,000, beginning in summer 2012. As pointed out by the Sheriffs Department, this number can vary up or down depending upon budget considerations. For ex- ample, the ratio was 1.20 per 1,000 population two years ago. In addition, supplementing this patrol staff- ing, the California Highway Patrol provides traffic enforcement and accident investigation service to this community. Concerning the requested number of daily patrol hours provided to this area, a specific number was not able to be provided by the Sheriff's Department. The Department did indicate, however, that there is one beat officer dedicated to Thousand Palms, meaning that there are at least 24 patrol hours provided to this community each day. In addition, this beat can be assisted by a Deputy from an adjacent beat when nec- essary. Further, there is a canine unit assigned out of the Palm Desert Substation to serve the Depart- ment's unincorporated area in the Valley. Regarding the average response times by priority type, this information was not specifically available for Thousand Palms, except for the response goals by priority type presented above. List and briefly describe any specialized units. In addition to the above mentioned canine unit, the Sheriffs Department has a number of specialized in- vestigative units which investigates homicides, narcotics, and other high profile cases. As a large law en- forcement agency, the Department has a number of other specialized units and equipment as well, It should be noted that most of these units are also available to city police agencies in accordance with County policy and through mutual aid. New Service Provider 38 i Page CM on Gty qf catherfrral City The new service provider is the Cathedral City Police Department. In accordance with LAFCO's checklist, the following information is provided. Number of sworn officers employed by the agency. As of July 1, 2012, the City of Cathedral City currently employs 47 sworn police officers as authorized in the City's 2012-13 budget. Level of service standard (target or goal). The current level of service goal in Cathedral City is an officer to population ratio of slightly less than 1.0/1,000 based on current practice. However, given the geographical characteristics of Thousand Palms at the time of initial annexation, the Plan for Services envisions the Police Department providing two pa- trol beats 24/7, plus necessary supervisory and support staff. This will result in 11.75 sworn police officers (9 officers, 2 Sergeants, and .75 Detective) being added to the Police Department to serve Thousand Palms. As a result, the initial staffing goal will be an officer to population ratio slightly more than 1.50/1,000, As explained in Chapter II, the requirement for two patrol beats is, in part, because of the physical length of the Thousand Palms service area. Also, this community is physically separate from the developed part of Cathedral City, so there is a need for two beats to provide immediate backup and assis- tance for emergency calls. It should be noted that, in addition to the number of sworn officers required to serve Thousand Palms, additional civilian staff will be needed, including 1 Records Clerk and a .5 Dispatcher. This will result in a total initial Police Department staffing of 13.25 FTEs (Full -Time Equivalents). If annexation occurs, and as the area grows, the need to expand beyond two beats will not be required in the foreseeable future. There will be a need, however, to add Sergeants, Detectives and support staff to met future demands of a larger population. Basically, the initial annexation will involve the investment in "basic sworn officer infrastructure" to provide needed patrol services now and in the foreseeable future, with additional supervisory and support staff added in the future. This means that the number of officers per 1,000 population served will slightly decline by build out, but will continue to exceed the number of officers per 1,000 currently provided to Thousand Palms as well as to the existing City. The response time goals by priority type, and based on actual response times in Cathedral City, are; • Priority 1 calls < 5 minutes • Priority 2 calls < 8 minutes • Priority 3 calls < 10 minutes These response time goals are slightly higher than the actual average response times currently experi- enced in Cathedral City. With the two beat structure proposed for Thousand Palms, it is expected that these response times will be at or lower than those stated above. Actual level of service being provided city-wide. With the adoption of the City's 2012-13 budget the city-wide officer to population ratio is .92/1,000. As just mentioned, since the developed portion of Thousand Palms is physically separate from the developed parts of Cathedral City, the Police Plan of Services provides for two patrol beats 24/7 to serve this area. This Plan envisions dedicating two patrol beats exclusively to serve Thousand Palms. Through this staffing configuration there will be back up for each officer patrolling this community. Along with providing staff for the patrol sergeant function which supervises these beats, and a .75 FTE detec- tive, it is projected that the officer to population ratio will be slightly greater than 1.50/1,000. As can be seen from this comparison with the existing service level, this will be an improvement over the current level of law enforcement service and staffing provided to Thousand Palms at the time of initial an- nexation. This ratio will likely decline slightly by build out and at complete development, since the City would invest in a significant portion of the basic "patrol infrastructure" during the first year of annexation. The number of daily patrol hours currently provided city-wide, not including supervising patrol sergeants, is 144 hours. The number of patrol hours per day which will be provided to Thousand Palms is 48 hours, 391 Page In M namely two 24/7 patrol beats. Again, this is an increase over the current level of service being provided to this area. The average response times by priority type provided city-wide are: • Priority 1 calls < 4.5 minutes • Priority 2 calls < 6.9 minutes • Priority 3 calls < T2 minutes It is expected that the response times to Thousand Palms will be at or better than these average re- sponse times. Additional personnel/facilities required at build -out Based on projected land uses at build -out for the affected area, this part of the LAFCO checklist asks how many additional personnel and facilities will be required to maintain the existing level of service. Initially, there will be a need for the City to add approximately 9.0 full-time equivalent police officers to staff two patrol beats in Thousand Palms. There will be a need to also add 2.0 Sergeants, .75 Detective, .5 Dis- patcher, and 1.0 Records Clerk. Based on the projected initial City service level staffing of slightly more than 1.50 officers per 1,000 population served, plus support staff and vehicles, the cost of the first year of police service to the annexed area is estimated at $2,047,527. At build -out it is projected that there will be 62.25 FTE police staff, including 42.75 sworn officers at a cost of $8,847,283. These officers, plus support staff, will be funded by General Fund revenues produced in Thousand Palms such as property tax, sales tax, transient occupancy tax, property transfer tax, utility us- ers' tax, fines and forfeitures, service charges, and franchise fees. It is not expected that a new police facility will be needed to serve this area. The area will be served from the Cathedral City police station. It is projected that over time with the expected growth in Thousand Palms, the current police station, without expansion, can satisfactorily provide service to this area. There is the likely possibility, however, that a satellite facility will be located in Thousand Palms. At a min- imum, building space for report writing can be provided, which will allow patrol officers to stay within their beat while engaged in writing police reports. Currently, the Sheriff uses space at the County Library for this purpose, and there also appears to be space which could be made available at Fire Station 35. The proposed plan for development at the northeast quadrant of the 1-10/Bob Hope Drive interchange antici- pates a community facility which could also accommodate office space and limited public access space for the Police Department. By locating an office at the Fire Station, or the proposed community facility, the opportunity for limited public access for police business will be afforded. The Library and Fire Station are located on Robert Road, and the community facility will be located be- tween Varner Road and the 1-10, slightly north of Bob Hope Drive. It is not expected that there will be a construction expense for any of these potential police office locations, since the Library and Fire Station are already in place, and the proposed community facility would be provided through developer coopera- tion. Where are the nearest two police stations providing counter service to the affected are? The two nearest police stations providing counter service to Thousand Palms are the Sheriff's Palm De- sert substation at 73750 Gerald Ford Drive, Palm Desert, CA 92260, and the Cathedral City police station located at 68700 Avenida Lalo Guerrero, Cathedral City, CA 92234. The Sheriff's substation is approxi- mately 4.5 miles from Fire Station 35, near the bulk of the residential, commercial, and business park de- velopment in Thousand Palms. The City police station is an estimated 6.6 miles from that same location. List any specialized units of the Police Department. The Cathedral City Police Department participates in the Coachella Valley Violent Gang Team Task Force and participates in the Palm Springs/Cathedral City joint SWAT Team. Fire Protection �� 40 1 Piiqe C"n Criy of Cathedral 0y Background Currently, fire protection and emergency medical services (EMS) are provided to the Thousand Palms area by the Riverside County Fire Department under contract with the state fire agency, commonly known as Cal Fire. These services are provided from Fire Station 35, located in the Thousand Palms community at 31920 Robert Road. Cal Fire responds to fire and EMS calls with one Type-1 fire engine staffed by three firefighters (3 — 0 staffing), including at least one firefighter/paramedic. Ambulance services are pro- vided by American Medical Response to unincorporated areas, including the Thousand Palms communi- ty, under contract with Riverside County. The ambulance is staffed with at least one paramedic, but the ambulance staff is not qualified as firefighters. Cal Fire can also provide ambulance service for cities which contracts with that agency for fire service. By contrast, Cathedral City provides fire, EMS, and ambulance services through its Fire Department. One scenario evaluated by this report anticipates that these services will be provided to Thousand Palms by the City, using Fire Station 35. Under this scenario (See Option I, Chapter II), a fire engine would be lo- cated at Fire Station 35 and staffed by two firefighter/paramedics. An ambulance would also be located at this fire station, staffed by two firefighterslparamedics19. This means that for approximately 70% of the fire calls, Cathedral City can respond with a fire engine and an ambulance, and will have four firefighters available for the initial fire attack. This meets the OSHA standard of "2 in, 2 out" for the initial fire re- sponse. It should be noted, however, that in 30% of the cases when the ambulance is "on call," the City would initially respond with two firefighters, requiring a backup engine, or City staffed ambulance, before the "2 in, 2 out" standard can be met. This would be a lower level of service than is currently received in Thousand Palms. A second scenario (See Option II, Chapter 11) is to contract with Cal Fire to provide service to Thousand Palms. This Option was developed due to the reduced level of service during approximately 30% of the fire calls if fire response was provided by the City, and the projected deficit in tax revenue available to support both full City police and fire service to this area during the first several years after annexation. A third scenario (See Option III, Chapter 11) is Cal Fire providing fire/EMS service in the initial years after annexation, and then Cathedral City providing fire, EMS, and ambulance service from Fire Station 35 when revenues from growth in Thousand Palms can support these services. This option envisions City Fire and Cal Fire eventually sharing Fire Station 35, an oversized station. The apparatus and crew capac- ity of this station is detailed in Chapter II. It should be noted that particularly under Options I and III, as a backup to the Fire Station 35 engine com- pany, there would be fire responses into Thousand Palms from both Cal Fire and Cathedral City stations, either through an initial or backup response 20. As a result, an automatic aid agreement or a complete "boundary drop" would need to be negotiated between the two agencies, likely a statistically based cost sharing agreement between Cal Fire and the City likely would need to be negotiated21 since there will be more responses into this area from Cal Fire than from the City. In addition, dispatch issues would need to be resolved as well. It is recommended that, because of current operational and revenue constraints, Option #2 be imple- mented, possibly moving to Option #3 sometime in the future. If Option #3 is pursued, operational and revenue issues would need to be resolved between the City and Cal Fire as the area develops and the tax base enlarges. The process of transitioning from Option #2 to Option #3 could take several years, possibly in the 10 — 15 year time frame, and possibly longer. In reviewing the responses to the Plan of Services checklist, one should keep in mind the different sce- narios under which fire, EMS, and ambulance service can be provided to Thousand Palms. In Options 2 and 3 the level of service to the community will either be the same or improve. This is because the re- sources in Thousand Palms will grow to the point of supporting four firefighter/paramedics on a Type I Engine, whether staffed by the City or Cal Fire. 19 All entry level career Cathedral City firefighters are firefighters/paramedic. 2° The distance of the two agency's stations on the periphery of Thousand Palms are listed in the follow- ing section. 21 Email, Assistant Chief Cooley, June 22, 2012. At build -out it is expected that either Cal Fire or the City Fire Department will provide fire, EMS, and am- bulance service to Thousand Palms. Current Service Provider The current service provider is the Riverside County Fire Department through a contract with Cal Fire, the state fire agency. The Department serves the Thousand Palms area, and the periphery of the cities of Rancho Mirage and Palm Desert, from Fire Station 35. This primarily response service is with a Type I Fire Engine, with three firefighters or firefighter/paramedics. They also provide apparatus from this station to serve the regional needs of the Coachella Valley, with a Breathing Support vehicle assigned to Fire Station 35. Location of the three nearestfire stations, and their distance to Thousand Palms. The primary response station is Fire Station 35 which is located in Thousand Palms. The other nearby Cal Fire stations are Fire Stations 69, 71 and 81. Fire Station 69 is in North Rancho Mirage at 71751 Gerald Ford Drive, and is 2.5 miles from the northern portion of the annexation area. Fire Station 71 is in North Palm Desert at 73995 Country Club Drive, and is 2.8 miles from the central portion of the proposed annexed area at Cook and 1-10. Fire Station 81 is in North Bermuda Dunes at 37955 Washington Street, and is 1.7 miles from the southern portion of the annexed area at 38th Avenue and Varner. Cathedral City has three fire stations, 411, 412, and 413. Fire Station 412 is at 32-100 Desert Vista Road, near Ramon Road, and is 3.5 miles to the northern portion of Thousand Palms at Varner and Bob Hope Drive. Fire Station 413 is at 27610 Landau, and is 5.2 miles from Varner and Bob Hope. Fire station 411 at 36910 Date Palm is 5.7 miles from the northern part of Thousand Palms. Please see Map IV-1 for the location of the fire stations in and around Thousand Palms for both the City and Cal Fire. What is the level of service standard? In a general sense, the level of service should be similar, whether response is by the City (Option 1 and 3) or Cal Fire (Option #2) since either agency will be responding from Fire Station 35 with a Type I fire engine. It is expected that the responses in either case will be in less than 8 minutes for a fire emergency, and 5 minutes or less in most emergencies. The response by Cal Fire currently is with a 3 person crew, while the City will respond with a 2 person engine crew, plus a 2 person crew from the ambulance, when it is not otherwise engaged. It is recommended that the City contract with Cal Fire to provide fire service, with the City considering providing service when the tax base expands in Thousand Palms and can sup- port an extra firefighter. Due to staffing, operational, and dispatch issues, however, the City could be well served by continuing the contract with Cal Fire for the duration, even to build out. For ambulance service, the City provides a 2 person crew with firefighter/paramedics, and the County provides service to this unincorporated area through a contract with AMR, which includes one paramedic which is not a firefighter. For a major medical emergency, the City would be able to supply four firefight- er/paramedics (two from the ambulance; two from the fire engine) in most cases when fire engine is not otherwise engaged. A backup engine or ambulance would be dispatched from the nearest station to pro- vide staff in those cases. It is recommended, however, that initially emergency medical response be pro- vided by either Cal Fire or AMR. What are the actual average response times? The average response time to an emergency should be 8 minutes or less as a goal, but often is 5 minutes or less. There should be no reduction in response times, whether the response is by the City or by Cal Fire. ►a Lo J City of �crtirer/ral City Equipment/staffing at each station. The equipment and staffing assigned to the Cal Fire Stations in and on the periphery of Thousand Palms, and which occasionally respond to calls in Thousand Palms, either initially or as backup, include: • Fire Station 35: Type 1 fire engine, with crew, and a Breathing Support Unit (often referred to as a Light and Air Unit) with crew. • Fire Station 69: Type 1 fire engine, with crew, a medic ambulance, with crew, and a reserve med- ic ambulance. • Fire Station 71: Type 1 fire engine, with crew, a medic ambulance, with crew, and a reserve Type 1 fire engine. • Fire Station 81: Type 1 fire engine, with crew, HazMat response unit, a HazMat Squad, a reserve HazMat Squad, and a HazMat support trailer. The fire engine and HazMat units are crossed - staffed along with a HazMat Captain and Engineer, providing a minimum of five staff on duty dai- ly. New Service Provider Location of the three nearestfire stations to the affected area. Again, the primary response station under any of the three scenarios described above is Fire Station 35 which is located in Thousand Palms. The other nearest stations are Cathedral City Fire Station 412 (3.5 miles from the northern part of Thousand Palms), County Fire Station 69 (2.5 miles from the northern por- tion of Thousand Palms), County Fire Station 71 (2.8 miles from the central part of this community), and County Fire Station 81 (1.7 miles from the southern portion of Thousand Palms). The fire stations currently operated by Cathedral City are Fire Station 411 (downtown station) located at 36913 Date Palm Drive, Fire Station 412 (headquarters station), located at 32100 Desert Vista Road, and Fire Station 413 (freeway station), located at 27610 Landau Boulevard. Station 411 is 5.7 miles from Var- ner and Bob Hope Drive in the northern portion of Thousand Palms. Station 412 is 3.5 miles from this in- tersection and station 413 is 5.2 miles from this location. Again, please see Map IV-1 which shows the fire stations of the City and Cal Fire in and near Thousand Palms. What is the Level of Service? The level of service should remain unchanged if the recommendations of this report are followed, specifi- cally that current service providers (County Fire through Cal Fire, and AMR) continue to provide service to Thousand Palms. Over time, if it makes economic, service and logistical sense, the City and Cal Fire might discuss co -locating in Fire Station 35, or the City continuing a contract with Cal Fire for fire service. By this time there should be enough resources to support four firefighters assigned to a Type I -Engine for initial fire attack or medical emergency whether service is provided by the City or Cal Fire. Also, whether the engine is staffed by the City or Cal Fire, there is enough room to place a Cal Fire unit at the station in addition to the Type I -Engine. Since this decision would be made a number of years from now, there would be a substantial period of time to resolve any financial and dispatch issues if the City operated the Type I -Engine. If in several years the City provided ambulance service to Thousand Palms, there will be two firefight- er/paramedics to respond to medical emergencies. With the Type 1-engine on the scene as well, there would be 5 — 6 firefighter/paramedics to address a major medical emergency since by that time the City would be able to support either 3 — 0 or 4 — 0 staffing on the fire engine. The level of service to areas on the periphery of Thousand Palms should remain unchanged during the initial years after annexation, if the City contracts with Cal Fire for fire/EMS service. The level of service should also remain unchanged if the City assumes the role of fire/EMS service provider, but only if an automatic aid agreement between the City and the County is in place, or a full "boundary drop" is negoti- ated. Any such agreement likely would need to be supported by a cost sharing agreement, based upon a statistical analysis of the mutual benefits to the two agencies at that time. Finally, dispatch issues would need to be resolved. These issues would not likely to be addressed for several years, say in 10 - 15 years, after annexation depending upon Thousand Palms growth rate. 44 1 Pi�ge In cm What are the actual response times? City (> f Cathedral Go In responding to an emergency, the average response time goal is 8 minutes or less. More often, the re- sponse time will be 5 minutes or less. There should be no reduction in response times to Thousand Palms, whether the response is by the City or by Cal Fire. Equipment at each station The equipment assigned to Fire Station 35 in Thousand Palms is a Type 1 fire engine and a Breathing Support apparatus, often referred to a Light and Air Unit. If and when the City provides service at this Sta- tion, there would be assigned a Type 1 fire engine, with crew, and a medic ambulance, with crew. The equipment assigned to the Cathedral City Fire Stations includes: • Fire Station 411: A Type 1 fire engine, medic ambulance, and a reserve medic ambulance; • Fire Station 412: A Type 1 fire engine and two reserve medic ambulances; and • Fire Station 413: A Type 1 fire engine, a reserve Type 1 fire engine (OES), and a medic ambu- lance. The City is currently purchasing a Type 1 fire engine which will be delivered in April. At that time one of the current Type 1 engine will be placed in reserve. What additional facilities and personnel will be required to maintain the existing level of ser- vice? If required, how will these facilities and personnel be financed? The basic facility, equipment, and staffing infrastructure to service Thousand Palms now and in the future are already in place. Exceptions to this are plans already in place by both agencies for the construction of future fire stations. Cathedral City plans to construct a fire station in its "North City" planning area immedi- ately north of Thousand Palms. This station and equipment will be financed by developer exactions and staffing will be funded by tax revenue produced from "North City" when it develops. County Fire (Cal Fire) when they prepared the "Thousand Palms Response Overview C" shows a future fire station in Palm Desert, just on the other side of the freeway from Thousand Palms, southerly of the Cook Street/1-10 interchange. It appears that about 40% of its initial response area would be to the middle portion of Thousand Palms. If Cathedral City annexes Thousand Palms and if this Palm Desert station is constructed, then there may be a need for the two cities to discuss shared construction costs. If a shared construction agreement is not negotiated, Cal Fire and Palm Desert may seek another site for the station. However, Cathedral City should be able to share financing a portion of station construction and equipment, if necessary. The City's share would be paid for by the developers benefitting from this station, either through the City's Building Development Fees, developer exactions, or by an assessment district for this and other infrastructure im- provements. Any shared staffing expense should be funded through taxes produced by new develop- ment. Identify any fire service inter -agency agreements that would apply to the annexation area There are potential fire service/EMS inter -agency agreements which would be required if Thousand Palms were annexed by Cathedral City. The nature of these agreements would depend upon which fire service option is pursued and adopted. If, in the initial years of annexation, fire service is provided by Cal Fire and ambulance service is offered by either Cal Fire or by American Medical Response, the following agreements would need to be devel- oped: An agreement between the City and Riverside County, or possibly Cal Fire directly, to provide fire service to Thousand Palms. It is assumed that the service level will be at its present level and generally at the cost estimated in this report's fiscal analysis. 2. An agreement with Cal Fire, or American Medical Response, to provide ambulance service. Contracting with Cal Fire could be the preferred option since they already provide ambulance service under contract with other cities in the Coachella Valley. The advantage of contracting 4S 1 Page C: ty q f C ath,,dral C ifiv through the County for service by AMR is that there would be no cost to the City for this ser- vice. In any case, the City should maintain control over the provision of ambulance service in the newly annexed area through a service contract in order to maintain the City's current am- bulance service. By so doing, the City will be able to provide ambulance service to Thousand Palms in the future as discussed in other portions of this report. A potential cost sharing agreement with the City of Palm Desert for the construction and pos- sible operation of a fire station which would partly serve Thousand Palms. If, at some point several years from now, the City provides direct fire and ambulance service to Thousand Palms, the following agreements likely will be necessary: An automatic aid agreement, or even an agreement to secure a boundary drop, for those ar- eas served by Cal Fire to serve not only Thousand Palms, but areas on the periphery of this community. In turn, this will enable responses from stations on the periphery of Thousand Palms into Thousand Palms. This agreement should include a cost sharing formula with the County Fire depending upon the mutual benefit of this agreement between the two agencies at the time the agreement is negotiated. Also, the dispatch issue would need to be resolved. 2. A potential cost sharing agreement with the City of Palm Desert for the construction and pos- sible operation of a fire station which would partly serve Thousand Palms. As indicated in Chapter III whether fire service is provided by the City or Cal Fire, at build out there should be enough resources to support 3 — 0 or 4 — 0 staffing of the Type-1 fire engine as well as staffing an am- bulance at Fire Station 35, and to pay for 40% of the construction and operational cost of a future Palm Desert fire station which would partially serve Thousand Palms. Animal Shelter/Control The current shelter and animal control services are provide through Riverside County Animal Control Ser- vices. In fact, the animal shelter for the Coachella Valley is located in the Thousand Palms community at 72-050 Pet Land Place. What will change upon annexation is that the City will need to contract with the County Animal Control for shelter and field services. As explained in Chapter 11, it is expected that the cost of this service initially will be $70,000. This should preserve the current level of service to the com- munity, and will equal or exceed the level of service currently provided in Cathedral City. Utilities One purpose of the Plan for Services is to determine whether there will be adequate service to the area proposed for annexation, and whether there would be a reduction in service to the area. In connection with utility services, they are currently being provided to the Thousand Palms community either through the Coachella Valley Water District (water, sewer, and drainage), the Imperial Irrigation District (electrici- ty), or Southern California Edison (gas). A summary of these utility services, including water, sewer, drainagelflood control, electricity, gas, and solid waste collection, are summarized in this section. It should be noted that most of the information in this section is from the perspective that there will be no change in the service provider, but there eventually could be a change in land uses. Water The Coachella Valley Water District provides water, sewer, and flood control service for the Coachella Valley, including Thousand Palms. A map from the District's recently completed Water Master Plan Up- date outlines the District's boundaries is shown in Map IV-2. 46 1 Page COau a] LL C-li S. a O U I �E: M n GiY of cdatfaeilrral City For water service, the Thousand Palms community is served by the Coachella Valley Water District most- ly from wells southwesterly of the 1-10 freeway, although there are some wells in this unincorporated area as well. In the future, the District plans to construct a 10 million gallon reservoir immediately north of the Thousand Palms area. Further to the south, in the Classic Club area, a 24" water line has been installed to serve this facility from the other side of the 1-10. Recently, the District completed and adopted the "2010 Coachella Valley Water Management Plan Up- date," which looks at and plans for the Valley's water supply for the next 35 years. Successful implemen- tation of this Plan, which anticipates major future growth, should enable the Thousand Palms area and the rest of the Valley to have a sufficient source of water during this time period. To provide the water supply for future development of the Thousand Palms community, developers will be required to install needed facilities for their area related to water storage and distribution. They will also be required to pay an infrastructure charge and a supplemental water supply charge. Together, water and sewer charges currently amount to $10,000 - $12,000 per residential lot (25 acre). A developer will re- ceive credits against these fees for any basic water infrastructure improvements constructed in advance of their normal installation. These fees and improvements are usually considered the normal "cost of business." They often are fi- nanced by various bonding mechanisms, such as assessment districts to serve the area being devel- oped. Since the area being annexed is being served by an existing water district, further information for water service from the LAFCO Plan of Services Checklist does not need to be provided. This Plan of Services does not recommend any change in the water service provider to Thousand Palms. Sewer (Wastewater) Services The Coachella Valley Water District also provides sewer service to the Thousand Palms community. The main trunk sewer starts at Bob Hope Drive and flows to Sewer Treatment Plant #7 in Indio. This plant has a capacity of 5,000,000 gallons, but its capacity could be easily upgraded if and when needed. Also, as growth occurs, there may be a need to upgrade the main trunk sewer line. In the future, there will be a need to construct a new main trunk sewer from Desert Hot Springs to Rio del Sol. A builder constructing new development in Thousand Palms will be required to construct needed sewer lines to connect to the main sewer as well as to pay a Sanitation Capacity charge. As some individual residential lots have been constructed, septic tanks have been allowed to be installed in this area. Basically, through the District's facilities, the current and future Thousand Palms community can be served by the District. Similar to water service, since sewer service will continue to be provided by the existing water district, additional information required by the LAFCO Plan of Services Checklist does not need to be provided. The Plan of Services for Thousand Palms does not recommend any change to the provision of sewer or wastewater services to the area proposed to be annexed. Drainage/Flood Control The Coachella Valley Water District has spent the past 15 years working with the U.S. Army Corps of En- gineers to develop a master drainage plan for the Thousand Palms area. The design of this plan is esti- mated as 90% complete. Recently, the District took over total responsibility for completing the design of the plan, and it is anticipated that the design and related environmental documents will be completed dur- ing the next 12 —18 months. The entire Thousand Palms area is in flood zones of one, two, or three feet. So, currently, if a person de- sires to build a new home, they must elevate the building pad, the height of which depends upon which flood zone in which they are located. The construction of a major new development will require elevation of the entire building site as well as allowing the flow through of surface water drainage. This is similar to what was required southeast of this area in Palm Desert Sun City, where the golf courses act as flood control channels, accepting surface water runoff and allowing it to flow through the project. cm l Ci1v of C'trthedral City, The flood control project for Thousand Palms, based on a 100-year flood event, is estimated to cost $70,000,000. It will consist of levees and excavated channels, beginning at Rio del Sal, and stretching to the Mirasera Flood Control Channel at Avenue 38. Reach 1 Levee will stretch from Rio del Sol just past Vista De Oro, north of 30`n Avenue. Reaches 2 and 3 are east of Vista del Oro, and will cover the areas north and south of Ramon Road, down to Cook Street and Calle Tosca. There, storm water will flow through an excavated channel past Xavier School to the Classic Club Golf Course. Past the golf course there is the Reach 4 Levee and excavated channel to the Mirasera Flood Control Channel. The construction timing of this flood control project is unknown, since its implementation depends on funding. Likely, it would be financed by federal funds as well as some measure of the district's property tax revenue. In the meantime, storm water drainage can be accommodated following the rules and re- quirements of the Water District. There are no requirements in the LAFCO Plan of Services Checklist for providing the service of storm water runoff protection. Nevertheless, the current provision drainage for this area is described in this Plan of Services. The Plan does not propose any change in the control or authority over storm water runoff for the Thousand Palms community. This responsibility will remain with the District. Electricity The Imperial Irrigation District (IID) provides electrical service to portions of the Coachella Valley, with the rest of the Valley served by Southern California Edison. This service authority is based on a 1934 agree- ment between I I D and the Coachella Valley Water District. As can be seen on the following map entitled, "Imperial Irrigation District, Coachella Valley Service Area Map," there are three service areas in the Valley. Service Area 1 includes Thousand Palms southeasterly of Rio del Sol. The area northeasterly of this road will be served by Southern California Edison. It appears that current and future electrical service will be available to the unincorporated sphere area of Cathedral City now and at build -out. The LAFCO Plan of Services Checklist does not require any additional information if there is no proposed change in the service provider, which is the case for the provision of electrical service. Natural Gas Southern California Gas Company (SoCalGas) provides gas service to most of Southern California, in- cluding the Thousand Palms community. Serving nearly 20,000,000 people, this utility has the capacity to provide current service to this community as well as the ability to provide service to future development. The LAFCO Plan of Services Checklist does not mention the provision of natural gas to annexed areas. This Plan of Services, however, identifies the current service provider, and, of course, recommends that no change be made in the provision of this service to Thousand Palms. Solid Waste Collection Garbage collection in both Cathedral City and Thousand Palms is provided by the Burrtec Corporation. The company has a landfill in Salton City, and transfer stations in the Cities of Coachella and Cathedral City. This latter facility is located near Thousand Palms at 70-100 Edom Hill Road. Since no change is proposed in this Plan for Services for solid waste collection, additional information regarding this service is not required by the LAFCO Plan for Services Checklist. 49 (Page rn Map IV-3 — Imperial Irrigation District Map IMPERIAL IRRIGATION DISTRICT Coachella Valley Service Area Map TRAMS MASTOKWO 9ANTESTMUN CARLOS PUENTENOSE GUM= ROBAUNOA ESCOSEOOMMANOO SANOOIAL cm Ewn Maintenance Services Street Maintenance/Street Sweeping City of ('at};<.ttr ce1 City Currently, street maintenance is provided by the Riverside County Transportation Land Use Agency. Cur- rently, they provide a basic level of service for 49 miles of streets in this unincorporated area. With this prospective annexation, the City would assume street maintenance which would be funded by state gas tax and Measure A funds produced from this area. It is estimated currently that $358,289 will be available from these sources to maintain the area's roads upon initial annexation. It should be noted that street medians (Ramon Road) and street lights will continue to be maintained by the Recreation District. A street condition "windshield survey" was conducted by graduate students from California State Universi- ty, San Bernardin022. This information will be folded into the City's inventory of street conditions for the existing City, if annexation occurs. City funding for street maintenance will pay for basic street and sign maintenance, including traffic signal maintenance, if annexation occurs. This will include the funding of two Street Maintenance Workers as well as street maintenance services provided by contract. The annexation will eventually provide road improvements to this community as developers propose and construct projects which will require expansion or extension of existing roads or the construction of new roads. In the future, interchanges affecting this area will be constructed along the 1-10 corridor at Portola and Da Vall, using local and regional funds. Per the CVAG Master Plan all improvements funded by this Plan, including the two interchanges mentioned in this report, will be constructed by 2038. Current Provider Street maintenance is provided by Riverside County. The County maintains a current road inventory sys- tem. Based on that system, the County provides street maintenance as needed, except for Street lights and street medians on Ramon Road which are maintained by the Desert Recreation District from funds from a landscaping and lighting district. Presumably street maintenance is funded by County gas tax funds. Street sweeping is presently provided by the County. This service is funded through CSA 152. New Service Provider Except for maintenance of street lights and street medians which is provided by the Desert Recreation District, the City expects to provide street maintenance at the current service level. In addition to securing the County road inventory, this information was supplemented by a street condition "windshield survey" conducted by graduate students at California State University, San Bernardino as was just mentioned. Funding will not only provide for road maintenance, but maintenance and operation of the traffic signals as well. Regarding street sweeping, in the existing City, both arterial and residential streets are swept monthly. The arterial street sweeping is administered by the Coachella Valley Association of Governments (CVAG) with funds the City receives from the Air Quality Fund. Residential street sweeping is provided by Burrtec, the solid waste service provider, through their contract with the City. Both Burrtec and CVAG contract with the firm, Clean Streets, to sweep streets in Cathedral City. Either the Burrtec contract would extend the service to Thousand Palms if that area were annexed, and the City could obtain additional grant funds for arterial sweeping, or funding through CSA 152 will be used for this service. Street maintenance will be funded by increased City gas tax funds and Measure A funds as a result of the annexation. The annexation will result in road improvements as new development occurs. Portions of ma- 22 "Thousand Palms Project," Myles Foster Barter, Christina Salazar, Emmanuel Sarpong, 2012. 51 aay 4> zn Ciry qj C"alhedi,ul Cily jor arterials such as Varner Road and Ramon Road will be widened as a result of new development, and new streets will be constructed to serve new subdivisions, business parks and commercial projects. Over time, regional and local funds will be used to construct two new freeway interchanges at 1-10 and Portola and 1-10 at De Vall. Upon initial annexation, street, sign and signal maintenance will be provided by the City. Much of this work will be performed by contract, but 2.0 FTE new street maintenance positions would be created and would be devoted to provide street maintenance service to Thousand Palms. Lighting and Landscaping Limited lighting and landscaping services are provided in Thousand Palms, The Desert Recreation Dis- trict administers a beneficial assessment district which funds the maintenance of a median landscaping along Ramon Road between Varner and Monterey. It also pays for the maintenance and operation of 239 street lights in the community. As pointed out elsewhere in this Plan for Services, the landscaping and lighting functions takes only a small part of the funding from the assessment district. The main focus of the assessment district is to fund the maintenance and operation of the park and community center. The Plan for Services recommends that there be no change in the service provider for this limited lighting and landscaping service. If the annexation occurs, however, the District and City should explore whether it would be mutually beneficial for the City to provide this maintenance activity, since the City has staff already performing this type of work in the existing Cathedral City. Leisure Services In response to LAFCO's Plan of Services Checklist, the required information for leisure services, such as parks, recreation, and library, is provided in the following section. Parks and Recreation The current service provider for parks and recreation services in Thousand Palms is the Desert Recrea- tion District, also previously known when it was created in 1950 as the Coachella Valley Recreation and Park District. The District has a Sphere of Influence of 1,800 square miles and serves approximately 275,000 people. It serves 16 communities, including Thousand Palms, with a service area ranging from Bob Hope Drive on the north to the Salton Sea on the south. The District is funded by program revenue (34%), property taxes (32%), benefit assessment districts (13%), and other revenue sources (21%)23 In Thousand Palms the District operates and maintains a community park and community center at 31- 189 Robert Road. The land for the park is owned by the Palm Springs School District, with the improve- ments owned by the District. The improvements were funded by the Riverside County Economic Devel- opment Agency. Immediately to the north of the park, Legacy Homes is dedicating an additional 13 unde- veloped park acres, although basic infrastructure to support park developed is in place such as water, sewer, and sidewalks. The currently improved park consists of softball fields with soccer field overlays, and a limited number of picnic benches. The community center is open Monday — Friday from 8:00 a.m. — 5:00 p.m., and fee based classes are held at this location as well as community meetings. The basic cost for the operation and maintenance of the park and community center is from a Thousand Palms based benefit assessment district. The assessment district not only provides for the operation and maintenance of the park and community center, but also provides funding to maintain the median on Ra- mon Road from Varner to Monterey, and to maintain and operate 239 street lights. 23 Coachella Valley Recreation and Park District Master Plan. J W cm C."IT ufC at;ILW a! C:itV Cathedral City has a limited recreation and park function. This function is restricted to maintaining certain park facilities in the City funded by Landscaping and Lighting Districts. The City does not directly operate any recreation programs, with that function assumed by volunteer organized sports programs, such as AYSO soccer. Upon annexation of this area, the City could assume the District's share of the property tax in Thousand Palms, and could operate the facilities using that tax as well as funds from the benefit assessment district. Since the City, however, does not have the "organizational infrastructure" to oversee and administer basic recreation programs, and the District has a well established parks and recreation function, this Plan of Services recommends that the Desert Recreation District continue to provide parks and recreation ser- vices, including administering the community park and community center, and maintaining the Ramon Road median strip and the area's street lights. As new development occurs, based on this recommendation, there is the issue of whether the District or City's park standards and fee structure would be used in obtaining park land and improvements from de- velopers. The District's practice is to defer to the standards and fees of the City in which the improve- ments will be constructed. In other words, the City would be responsible for accomplishing new park facili- ties through developer fees, dedications, and exactions, and then turning those improvements over to the District for administration and operation. The City has an advantage in achieving these improvements in that it is not limited to only to provisions of the State Quimby Act like the Recreation District. The City also has the ability to charge Development Impact Fees for park and other improvements, which authority the District does not have. These fees are listed on Tables II-C and II-D in Chapter II. Also, as pointed out in Table III-F, the Thousand Palms area would produce a significant amount of one-time revenue for parks, community centers, and swimming pools. Library Services Library service is provided both to the City of Cathedral City and the Thousand Palms community by the Riverside County Library System. The City's library is located at 33520 Date Palm Drive, and is open dai- ly except Friday, for a total of 44 hours a week. The size of the library is 20,000 square feet and it con- tains approximately 81,000 volumes. The Thousand Palms library is located at 31189 Robert Road, and is open every day except Friday and Sunday, for a total of 40 hours a week. The library has 4,500 square feet. Both libraries use the same catalogue system. Since the two branch libraries are operated as part of the larger County Library System, and since it likely would not be cost effective for the City to create its own library department, the Plan of Services recom- mends no change in the service provider for Thousand Palms. Schools Public schools are provided by the Palm Springs Unified School District (PSUSD) to the Thousand Palms community. There are also private schools in the area, such as Xavier High School. In Thousand Palms, PSUSD staffs and operates the Delia S. Lindley Elementary School. The area is also served through the 12`" grade at other schools within the District. Regarding developer impact fees for public schools, after June 23, 2012, the PSUSD fees will be $.51 per square foot for commercial development, $3.44 per square foot for new residential, and $3.20 per square foot for additions to existing residential structures of 500 square feet or more. It appears that PSUSD has the authority, capacity, and funding to provide public elementary through high school education to the Thousand Palms community, now and in the future. LAFCO's Plan for Services Checklist does not require the provision of information about education. This basic information, however, is provided due to the size of the proposed annexation. d Summary In the following table, the various services currently provided to Thousand Palms are listed, indicating whether the current service provider will continue to provide that service, or whether Cathedral City will be the new service provider. Table IV -A Thousand Palms Plan of Services Continue Current Service Provider Current Provider Provider Yes No {iff applicable) Public Safety Police Protection ✓ County Sheriff Cathedral City Fire Protection ✓ County Fire Cal Fire Animal Control ✓ County Animal Control Utilities Water Service ✓ Coachella Valley Water District Wastewater ✓ Coachella Valley Water District Flood Control ✓ Coachella Valley Water District Electricity ✓ Imperial Irrigation District / Southern California Edison Natural Gas ✓ Southern California Gas Com- pany Garbage Collection ✓ Burrtec franchise agreement) Maintenance Street Maintenance/Street Sweeping ✓ Co. Transportation Cathedral City Lighting/Landscaping Desert Recreation District Leisure Services Parks and Recreation ✓ Desert Recreation District Library Services ✓ County Library System Schools ✓ Palm Springs Unified School District Financial Services Current Providers Services provided by the County to Thousand Palms are financed by various general revenues received by the County such as property taxes, sales taxes, and the structural fire tax. There are also special rev- enues which support street maintenance such as gas tax funds and Measure A funds. The Desert Recreation District maintains the park, community center, street lights, and the median on Ramon Road as well as operates programs at the park and community center. This maintenance and programming is funded by a beneficial assessment district. Other services, such as various utilities, are supported by various fees and charges. New Service Provider The general taxes which would be received by the City if it annexed Thousand Palms include: The City's share of the property tax per the Master Property Tax Agreement with the County; • Structural Fire Tax; • Property Transfer Tax; • Property Tax In -lieu Vehicle License Fee; • Sales Tax; CM of C,'Rlr c(b,t, (. i"t)l • Utility Use Tax; • Franchise Fee; • Fines and Forfeitures; and • Transient Occupancy Tax. The level of these taxes for those living in Thousand Palms will remain the same upon annexation. How- ever, new to this annexed area are the following taxes: • Transactions and Use Tax which imposes a 1% transaction and use tax on City retailers. This was approved by the Cathedral City voters in June 2010, and expires September 2015, unless extended by the electorate. The projections in this report assume that it will not be extended. • A 3% utilities users tax which is applied to the use of telecommunications, cable, electricity, gas, and solid waste services. This was approved by the electorate in 2008. In terms of special assessments, such as those which accrue to the Desert Recreation District, this Plan of Services does not propose a change in these assessments or the continued flow of this revenue to the District. In terms of current bonded indebtedness applied to the unincorporated area, it would continue even if the area were annexed to the City. In terms of general bonded indebtedness of the existing City that would be extended to the annexed area, that would be a policy decision of the City Council. Overall, as pointed out in Chapter 111, at build out the City's General Fund operating costs are projected to be $15,544,683. With $23,429,068 in General Fund revenue, there would be an annual surplus of $7,884,385 (See Table III — C). By adding restricted Gas Tax and Measure A funds to the operating ex- penditures, the City's budget to service Thousand Palms would total $17,009,989 (See Table III — D). Fur- ther, the City's Business Development and Development Impact Fees would produce significant one-time revenues for capital projects related to interchanges and bridges, police and fire facilities, parks and rec- reation facilities, and City improvements (See Table III — E and Table III — F). M M Chapter V Annexation Process The purpose of this Chapter is to outline the procedures required to annex the unincorporated portion of Cathedral City's Sphere of Influence, the area generally known as Thousand Palms. It is undetermined if the City Council will approve submitting an annexation application for this area. This Chapter, however, outlines the steps that should be followed in case an annexation is pursued by Cathedral City. The annexation process is controlled by the Local Agency Formation Commission (LAFCO) of each coun- ty. Established in 1963, LAFCOs have the authority to approve annexations per Sections 56000 et. seq. of the California Government Code. Pursuant to Government Code Section 56425, LAFCO is required, as a planning tool, to identify logical municipal providers for areas throughout the County where services are currently provided or will be pro- vided within the short and mid-term. As part of this process, LAFCO is required to establish Spheres of Influence (SOI) for all cities and special districts. In this connection, on January 27, 2011, and on Sep- tember 21, 2011, the Riverside LAFCO approved two separate expansions to Cathedral City's SOI to in- clude the entire area evaluated by this report, and is shown on the map found on Exhibit A in Chapter I of this report. Regarding the annexation of property within the City's SOI, LAFCO's Policies and Procedures24 pro- scribes in Section 2.3.8 that "LAFCO shall encourage all developed urban land inside a city's sphere of influence to annex to the City." 25 Further, Section 2.2.1 of LAFCO's Policies and Procedures provides, in part, that "... LAFCO will evaluate proposals for changes of organization with the following hierarchy in mind (in descending order of prefer- ence)," This hierarchy provides, in order of preference. 1. Annexation to an existing city, 2. Annexation to an existing multiple purpose or single purpose special district (paragraphs b and c), 3. Formation of a County Service Area (paragraph d), 4. Incorporation of a new City (paragraph f), or 5. Maintaining an unincorporated community (paragraph g)25. It is clear according to LAFCO's adopted policies that the first preference for annexing urban land within an existing city's SOI is to that city. It is therefore appropriate to understand the specific steps that will be necessary to achieve that annexation, if Cathedral City decides to pursue such a course of action. Steps Toward Annexation If the City of Cathedral City determines that it would be advantageous to annex the unincorporated area in its SOI, in all or in part, the steps summarized in the following paragraphs would need to be followed. It should be noted that LAFCO staff may vary these steps slightly based on the specific annexation pro- posal. The following steps also assume that the City would be the applicant for the annexation. The City mails a notice to interested agencies at least 20 days before the City Council adopts a resolution to submit an annexation application to LAFCO. 24 LAFCO Policies and Procedures, Riverside Local Agency Formation Commission, August 26, 2004. 25 Ibid., p. 10. 26 Ibid, p. 7. 56 Pa on M L h', o! !rTr [.f.�.f 2. The City resolution will include the following information and related materials: • Resolution/Petition • Map • Pre -zoning • Legal description • Processing fees ($13,800, LAFCO processing fee; $1,000 deposit, and $137/hour, County Surveyor charge for reviewing annexation legal description; $3,500, State Board of Equalization; possible miscellanous fees from the Registrar of Voters and County GIS) • A Plan for Services • CEQA documents, as applicable • Resolutions by the affected agencies (City and County) agreeing to a transfer/split of the ad valorem property tax revenues generated in the subject territory 3. LAFCO reviews the application. This review includes: • Determination that the application is complete • Notice to the City that the application is complete or incomplete. In the latter case, the City can revise the application to ensure that the application is complete to the satisfaction of the LAFCO Executive Officer. 4. After the annexation is determined to be complete, the following steps should be taken: • LAFCO notices the County Assessor of the proposal • The Assessor determines which Tax Rate Areas (TRA) are involved and calculates the total assessed valuation (AV) of the affected territory • The Assessor issues a report of the TRAs and AV to the County Auditor • The Auditor determines the total property tax revenues for the area proposed for annexation and issues a report to the City and the County of the total revenues involved27. • The City and County are notified that they have 60 days to reach an agreement on the transfer of property tax revenue from the County to the City, although the Master Property Tax Agreement, if one exists for a particular city, can be used for this purpose. 5. Upon determination by the LAFCO Executive Officer that the application is complete, the Ex- ecutive Officer issues a Certificate of Filing and sets a hearing date for the proposed annexa- tion. 6. A notice of Commission hearing is given by the Executive Officer by posting, publication to property owners and registered voters within the boundaries of the area proposed to be an- nexed at least 21 days before the hearing date. If over 2,000 notices are required, a 1/8 page display ad may be used in lieu of mailed notice. 7. The LAFCO Commission holds a public hearing on the proposed annexation, considering the staff report, testimony of affected agencies and parties, the Plan of Service, and CEQA doc- umentation. The Commission may make the following determinations: • Approve the application 27 This information has already been estimated as part of this report, however, the Auditor will complete the precise and official final amount as part of the formal annexation process. M • Approve the application subject to terms and conditions, or • Deny the application. 8. Assuming that the Commission approves the application or approves it subject to terms and conditions, LAFCO adopts a resolution making these determinations, approving the applica- tion, and sending a copy of the resolution to the applicant, in this case, the City. The Com- mission also directs the Executive Officer to conduct a protest hearing. 9. The Executive Officer gives notice of posting, publication or mail to property owners and reg- istered voters of a protest hearing at least 21 days before the date of the hearing. 10. The Executive Officer holds a protest hearing. Written protests must be filed on a LAFCO protest form with the Executive Officer prior to the conclusion of the hearing. The results of the written protest will be determined by the Executive Officer within 30 days of the hearing. 11. The outcome of the protest hearing is determined solely by the level of written protest re- ceived, as follows: * < 25% and < 25% landowner protest — the proposal will be completed without an election; * If there is a 25 — 50% voter protest, or a 25% or more landowner protest, the proposal will be ordered subject to an election conducted by the City; • If there is a voter protest of 50% or more, the proceedings will be terminated. 12. If any of the conditions in Step 11 are met, an election is held among the registered voters in the subject area only, and not within the existing City. 13. If the majority of voters approve the annexation, LAFCO sends a Certificate of Completion to the County Recorder's Office, and upon satisfaction of all terms and conditions specified in the Commission's Resolution. The annexation is complete upon recordation of the Certificate of Completion. 14. If there is insufficient protest to force an election, or if the voters approve the annexation, LAFCO then sends the Certificate of Completion to the County Recorder's Office, and upon satisfaction of all terms and conditions specified in the Commission's Resolution. The annex- ation is complete upon recordation of the Certificate of Completion. These steps to achieve annexation of the unincorporated area in Cathedral City's SOI assume that there is an affirmative action taken during each step of the process. Obviously, there are other actions which may be taken during this process, which may delay or stop the annexation. To more fully understand the options that may occur during this process, please see Chart V-1, which pre- sents a procedure diagram for annexations in accordance with the Cortese -Knox -Hertzberg Local Gov- ernment Reorganization Act of 2000. A further complexity to this process is the enactment during 2011 of SIB 244. This new law requires the inclusion of an adjacent "disadvantaged unincorporated community" (DUC) as part of any proposed an- nexation. So, if an annexation is proposed, and there is an adjacent, unincorporated inhabited area with 12 or more registered voters where the community average median household income is below 80% of the statewide annual median income,28 which is the definition of a DUC, then the City must also propose to annex the DUC as well, Under SIB 244 the LAFCO Commission is prohibited from approving the initial annexation unless an application to annex the DUC has also been filed and considered. While the Commission is not required to approve the DUC as part of the annexation application review, it empowers LAFCO to link the two decisions29. This adds a further complexity to the review process, pos- sibly increase the cost of annexations, making it more difficult for a City to pursue an annexation without 28 Water Code Section 79505.5. 29 C&L Newsletter; Update on Public Law, Winter 2012. G i fly; it[{ [riiitCtt _r { :'P± considering the needs of an adjacent unincorporated, disadvantaged community. Unfortunately, but pre- dictably, this new mandate is unfunded by the State. As it applies to this proposed annexation, SB 244 may preclude the City proposing to annex only a por- tion of its unincorporated SOL This is a very preliminary conclusion, however, since SB 244 has been in effect for only a few months and the data and processes necessary to implement this law have not been fully evaluated by LAFCOs statewide. Riverside County LAFCO has been attempting to identify "disad- vantaged unincorporated communities" throughout the County. They are working with the County's Cen- ter for Demographic Research to determine the best manner to obtain pertinent income data for the mul- tiple small areas where SB 244 might apply throughout the County. Preliminary information released by LAFCO seems to indicate that possibly portions of the City's SOI could be annexed rather than the entire unincorporated Thousand Palms community. Besides SB 244, one requirement of the initial LAFCO application is to "pre -zone" the area prior to con- sideration of the annexation application by the Commission. The most expeditious method to accomplish pre -zoning is to use the existing County zoning. It should be noted, however, that state law requires zon- ing designated during the pre -zoning process remain in place for two years. Therefore, it may be benefi- cial for the City to pre -zone its unincorporated SOI before submitting an annexation application to reflect the land use the City would Pike to see developed if the annexation process were successful. If the City was generally satisfied with the County zoning, however, and/or did not expect that the significant amount of vacant property in this area would see near -term development, use of County zoning could satisfactori- ly meet the City's interests. If a pre -zoning process is initiated, it is expected that any zoning plans will be reviewed by the Thousand Palms Community Council. Again, this chapter has presented the necessary steps for processing an annexation of its unincorporated SOI area, if the City decides to pursue such an annexation. 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A", COU111LETION OF PfZ0PO',,'iAL I Omn.1 Umowd cWhom love been arts A, a (AmAdwon QUAuNumm, oy Vo (mumd"wo, 61 Pay Drof t Report Fiscal Analysis and Plan for Services for the City of Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms March 18, 2073 Project Staff: John Goss Ralph Andersen & Associates .Vww.rQIphondersen.cotn Chy of Cathedral C,hy Table of Contents CHAPTERI — INTRODUCTION.........................................................................................................I Background.........................................................................................................................................I.........1 ExhibitA........................................................................................................................................................ 2 GeneralInformation....................................................................................................................................... 3 WhyChange the Status Quo?.......................................................................................................................3 Methodology..................................................................................................................................................4 CHAPTER 11— FISCAL ANALYSIS — INITIAL ANNEXATION..................................................................6 Revenues — Introduction.............................................................................................................................6 Revenues — Near Term (First Year) Projections.......................................................................................7 GeneralFund Revenues ...................... ......................................................................................... :............... 7 PropertyTax Revenue............................................................................................................................7 PropertyTransfer Tax..............................................................................................................................8 StructuralFire Tax.................................................................................................................................. 8 Property Tax In -lieu Vehicle License Fee...............................................................................................8 MotorVehicle In -lieu Fee........................................................................................................................9 SalesTax................................................................................................................................................ 9 Sales Tax Comp Fund (Property Tax in lieu of Sales Tax).................................................................... 9 Transactionsand Use Tax (TUT)........................................................................................................... 9 TransientOccupancy Tax (TOT)..........................................................................................................10 TimeShares..........................................................................................................................................10 UtilityUsers Tax....................................................................................................................................10 FranchiseFees.....................................................................................................................................10 Permitand Regulatory Fees.................................................................................................................10 BusinessLicenses................................................................................................................................10 Finesand Forfeitures............................................................................................................................11 Chargefor Services..............................................................................................................................11 IntergovernmentalRevenue..................................................................................................................11 OtherMunicipal Revenues..........................................................................................................................11 SpecialAssessments............................................................................................................................11 Useof Money and Property..................................................................................................................11 RecreationPrograms.................................................................................................I...........................11 RestrictedRevenue.....................................................................................................................................12 GasTax Funds....................................................................................................................................12 MeasureA.............................................................................................................................................12 Total Restricted Road Revenues..........................................................................................................12 Table II -A — Project First Year Restricted Road Revenues..................................................................12 RevenueSummary ......................................................................................................................................12 Table II-B — Project First Year General Fund, Other Municipal Revenue and RestrictedRevenues .................. ..........:................................................................................................ 13 One -Time Revenues...................................................................................................................................14 Table 11-C — Building Development Fees — Cathedral City ..................... ... .......14 City t�� f Cathedral C'it;, Table II-D — Development Impact Fees — Cathedral City.....................................................................15 Expenditures — Near Term (First Year) Projections...............................................................................15 Administration..............................................................................................................................................16 PublicSafety ................................................................................................................................................17 PoliceDepartment................................................................................................................................17 AnimalControl......................................................................................................................................18 FireDepartment....................................................................................................................................19 FireService Cost..................................................................................................................................21 ExpenditureSummary .................................................................................................................................22 Table II-E — Projected First Year General Fund Expenditures, Service to Thousand Palms...............22 Summary of Fiscal Impact — Initial Year of Annexation...............................................................................22 Table II-F — Summary of Annual Revenues/Expenditure, Initial year, Proposed Thousand Palms Annexation...............................................................................................23 Annexation Advantages/Disadvantages...............................................................................................23 CHAPTER III — FISCAL ANALYSIS, FUTURE DEVELOPMENT INCLUDING BUILD OUT THOUSANDPALMS..................................................................................................................... 26 Introduction.................................................................................................................................................. 26 Assumptions.......................................................................................................................................... 26 PopulationsEstimates.................................................................................................................................28 Table III -A — Thousand Palms Population Projections Through Build Out...........................................29 RevenueEstimates.....................................................................................................................................29 PerCapita Revenue..............................................................................................................................29 Transient Occupancy Tax/Time Shares...............................................................................................30 SalesTax.............................................................................................................................................. 30 Non -General Fund Revenue.................................................................................................................31 Table III-B — Thousand Palms Estimated General Fund Revenue at Build Out...................................31 ExpenditureEstimates.................................................................................................................................31 Table III-C — Thousand Palms Estimated Revenues/Expenditures at Build Out... ............................. - 32 Police....................................................................................................................................................32 AnimalControl......................................................................................................................................32 Fire........................................................................................................................................................ 33 Administration.......................................................................................................................................33 CommunityDevelopment. ...................................... .......................................................................... 33 CityClerk...............................................................................................................................................33 PublicMaintenance...............................................................................................................................33 Expenditure 111-D —Thousand Palms Expenditure Budget at Build Out...............................................34 Revenue for Capital Improvements ..................................... ... ................. I.......................................... 34 BuildingDevelopment Fees..................................................................................................................34 Table III-E — Estimated Building Development Fees for Thousand Palms...........................................35 DevelopmentImpact Fees(DIF)...........................................................................................................35 Table III-F — Development Impact Fees for Thousand Palms..............................................................36 Summary...................................................................................._................................................................36 CHAPTER IV — PLAN OF SERVICES, COMMUNITY OF THOUSAND PALMS.........................................37 Background.................................................................................................................................................38 City r f Ccnt.'tebwl 01V PoliceProtection..........................................................................................................................................39 CurrentService Provider.......................................................................................................................39 NewService Provider...........................................................................................................................40 FireProtection.............................................................................................................................................42 Background........................................................................................................................................... 42 CurrentService Provider.......................................................................................................................43 Map IV-1 — Fire Stations In and Around Thousand Palms...................................................................44 NewService Provider...........................................................................................................................45 AnimalShelter/Control.................................................................................................................................47 Utilities.........................................................................................................................................................47 Water..................................................................................................................................................... 47 Map IV-2 Coachella Valley Water District Boundaries.........................................................................48 Sewer(Wastewater) Services...............................................................................................................49 Drainage/Flood Control.........................................................................................................................49 Electricity............................................................................................................................................... 50 NaturalGas...........................................................................................................................................50 SolidWaste Collection..........................................................................................................................50 Map IV-3 — Imperial Irrigation District Map...........................................................................................51 MaintenanceServices.................................................................................................................................52 Street Maintenance/Street Sweeping...................................................................................................52 Lightingand Landscaping.....................................................................................................................53 LeisureServices..........................................................................................................................................63 Parksand Recreation...........................................................................................................................53 LibraryServices.................................................................................................................................... 54 Schools........................................................................................................................................................ 54 Summary.....................................................................................................................................................55 Table IV -A — Thousand Palms Plan of Services...................................................................................55 FinancialServices....................................................................................................................................... 55 CurrentProviders..................................................................................................................................65 NewService Provider.........................................................................................................................._ 55 CHAPTERV — ANNEXATION PROCESS.........................................................................I...............67 StepsToward Annexation...........................................................................................................................57 Cortese —Knox-Hertzberg Local Government Reorganization Act of 2000 Annexation/Detachment/Reorganization Procedure Diagram..............................................................61 0 City 2f'Cathudi-al City Chapter I Introduction The purpose of this report is to present a fiscal analysis and a Plan for Services for the City of Cathedral City's unincorporated portion of its Sphere of Influence (S01) (see Map, Exhibit A). This fiscal analysis and Plan for Services is designed to assist the City Council in deciding whether or not to initiate the an- nexation of this unincorporated area, generally known as the community of Thousand Palms. The fiscal analysis identifies the financial impact any potential annexation will have on projected revenues and expenditures required to serve this area, both in the short term and at build out. The Plan for Ser- vices is a requirement of Riverside County's Local Agency Formation Commission (LAFCO). It spells out how various local services will be provided to the Thousand Palms community, whether the current ser- vice level now received will be maintained or exceeded, how these services will be financed, and whether or not the area's infrastructure requirements will be adequately met. Together, the fiscal analysis and Plan for Services will provide the necessary documentation for the City to submit an annexation applica- tion to LAFCO, if that is the decision and direction of the City Council. Background By way of general background, Cathedral City extended its incorporated area north of the 1-10 freeway several years ago. With the most recent annexation, the City adopted the North City Specific Plan which is a comprehensive planning tool to guide development in this area. The initial expansion of the SOI into the unincorporated Thousand Palms area (east of the City's jurisdic- tional boundary north of 1-10) resulted in the City's Sphere extending to Rio del Sol Road. The second and most recent Sphere expansion took in the remainder of the unincorporated Thousand Palms com- munity except for the majority of the Thousand Palms area that is covered by the Multiple Species Habi- tat Conservation Plan and an area already covered by the Palm Desert Sphere. Physically, as can be seen on the following map on Exhibit A, Thousand Palms is a mostly linear commu- nity along the northeasterly edge of the 1-10 freeway from the easterly City limits to just west of Washing- ton Street. It consists of over approximately 9,700 acres, with an estimated population of 7,7151 and is the complete area being evaluated as part of this study. Thousand Palms is an unincorporated, partially inhabited area, with a substantial amount of vacant land. As indicated on the map shown on Exhibit A, it is bounded on the southwest by the 1-10 freeway, the City of Cathedral City to the northwest, the Coachella Valley Multiple Species Habitat Conservation Area on the northeast, and the Palm Desert Sphere of Influence (SOI) to the southeast. Generally, the Thousand Palms community features mostly residential development in the vicinity of the I- 10 freeway, Monterey Avenue and Ramon Road. There is also freeway commercial in this area, along with a business park development. This part of the community is served by an elementary school, com- munity center, library and park, as well as Fire Station 35. Northerly there is scattered, but important in- dustrial development, including nearby surface mining. Running south along Varner Road toward "Palm Desert" Sun City are additional pockets of residential development, along with the Classic Club Golf Facil- ity and the private Xavier High School. 2010 US Census r4 M i Fry Aj LY CA 7j V, Ci -I 'VVVd (r act v,lavv; tftc''rs) /0 C'ily o�f Cathedral City On December 8, 2010, as part of the City's latest expansion of its SOI, the City Council gave direction to submit an application to expand the City's SOl to include the remainder of the Thousand Palms communi- ty from Rio del Sol Road to just west of Washington Street. The unincorporated area from Rio del Sol Road westerly to the Cathedral City limits was formally placed in Cathedral City's SOI by the Riverside County LAFCO in January 2012. This means that if the entire Cathedral City sphere area is ever annexed into a City, it can only be annexed into Cathedral City. It also means that this community is not a candi- date for incorporation as a city. While the City was interested primarily in annexing the area between Da Vail Drive extended and Rio del Sol Road, the entire sphere area is being assessed for potential annexa- tion because of the interest of the Thousand Palms community. General Information The City of Cathedral City was incorporated in 1981 in the heart of the Coachella Valley, located between the cities of Palm Springs and Rancho Mirage. According to the 2010 U.S. Census, the City consists of 22.9 square miles serving a population of 50,905'. The City contains 17,047 households, with an average household size of 2.99. Because of this larger family size, more families live in this community compared to Palm Desert, as an example, which has an average household size of 2.08. Cathedral City is known as a community diverse in ethnicity, income and lifestyle, with white-collar and blue-collar workers, professionals and retirees claiming the City as their home. The Thousand Palms community would appear to reflect demographics more comparable to Cathedral City than some other valley cities. With 2,899 households and a population of 7,715, its average house- hold size at 2.66 is more comparable to Cathedral City than, for example, Palm Desert, which as just mentioned has an average household size of 2.08. Currently, this community Is served by Riverside County, which provides both police and fire/emergency medical service, with water, sewer and drainage facilities maintained and operated by the Coachella Val- ley Water District. Electrical service is provided by the Imperial Irrigation District. The Desert Recreation District maintains and programs the community park and center, street lights and a major street median. County Library Services operates a branch library next to the community center. Public schools are ad- ministered by the Palm Springs Unified School District. Why Change the Status Quo? The cities along the 1-10 corridor, such as Cathedral City, Rancho Mirage and Palm Desert, have histori- cally focused on developing their cities southwesterly of the freeway_ That changed, however, when Ca- thedral City modified its Sol and annexed additional areas northeasterly of the 1-10. Subject to the North City Specific Plan, which was adopted by the City Council, this area is located northeasterly of the 1-10 between Da Vail Drive and Palm Drive and has established General Plan and zoning designations for high density residential and commercial development. (See Exhibit A). Subsequently, Cathedral City requested an expansion of its SOI to include the entire Thousand Palms community. This proposal was supported by the City of Rancho Mirage based on a Memorandum of Un- derstanding (MOU) between the two cities. It was also supported by the Thousand Palms Community Council, the Thousand Palms Chamber of Commerce, and the boards of the two country clubs in the community. This support may have started based upon LAFCO's long standing position that Thousand Palms does not have the resources to incorporate as a separate city. That created a concern among those living or doing business in Thousand Palms that the governance of the community would be fractured or split by a partial annexation of their community on the north by Cathedral City, coupled with the concern that Palm Desert might attempt to annex the area to the south. In other words, the Thousand Palms community po- tentially could have been fractured with two or three entities governing portions of, and providing service to, their community (Riverside County, Cathedral City, and Palm Desert). Since the community cannot 2 2010 US Census �1 s ('Page City of Cathedral Gtv incorporate as a city, an opinion was expressed that the best option for retaining Thousand Palms' com- munity identity and providing unified governance is annexation into Cathedral City. Further, the City can provide a level of regulation which may be viewed as positive by the community and which some cases is beyond that provided by the County. In addition, while current service to Thousand Palms appears satisfactory, and efforts to maintain excel- lent communication links between the public and the County have been demonstrated, there could be more direct input from residents in this community related to local services. Location of a City Police De- partment Office at Fire Station 35, or in a community building planned near Bob Hope Drive and 1-10, should improve local access to law enforcement. Having a larger role voting in Mayor and City Council races as opposed to voting for only one member of the County Board of Supervisors, should allow more direct involvement in local government by Thousand Palms residents. In any event, the City may still want to maintain the current Community Council if annexation does occur since this appears to be an excellent means of receiving input from, and supplying information to, the community. In early 2012, the City of Palm Desert authorized a fiscal analysis report with a rapid turnaround to deter- mine if it was economically feasible for them to consider annexation of two different areas northeast of the City. The first area included the Palm Desert" Sun City community, which is in the Palm Desert SOL The second area included the first area plus land extending northwesterly along the 1-10 corridor into Cathe- dral City's existing SOL Obviously this expanded area could not be annexed into Palm Desert without an adjustment between the city's two spheres, which would require approval by the Riverside County LAFCO. In any event, the study found that expenditures would exceed revenues for both areas, both in the near term and at build out. As a result, there does not appear to be a current interest by the City of Palm De- sert to either annex Palm Desert Sun City or seek to shrink Cathedral's Sphere in order to expand the Palm Desert SOL This issue, however, could be revisited in the future by the Palm Desert City Council. In addition, another reason for Cathedral City to consider the annexation of Thousand Palms is to ensure the City's fiscal stability. It is projected that there will be substantial growth in the Coachella Valley in the long term. With several valley communities nearly built out within their current city boundaries, and with little or no room to expand, cities with more developable acreage could become more economically sus- tainable over time. With traveler commercial and hotels plus business park land uses mostly focused at freeway interchanges, the future development of interchanges at Portola (early 2020s) and Da Vail Drive ,(early 2030s), could produce important local tax revenues if these areas became part of the City. Also, there are plans for si nificant high -end residential development along with commercial development and a resort hotel in the Classic Clu area w ilis cou d generate substantial long-term reve ocal aovemment orovidino service to this area. If such an annexation proved beneficial to Cathedral City in the long term, there would be a correspond- ing benefit to the service levels provided to Thousand Palms, since the City should be financially stronger over time. Whether or not these economic assumptions or projections has merit, will be the subject of this analysis. Methodology The methodology of this study included reviewing documents and data supplied by the City of Cathedral City, Riverside County, the Coachella Valley Water District, the Desert Recreation District, landowners with development proposals and/or approvals, LAFCO staff, and residents of the Thousand Palms com- munity. This included financial, operational, land use, and procedural information. Interviews were con- ducted with the Cathedral City City Manager, Administrative Services Director, Community Development Director, Planning Director, Police Chief, former and current Fire Chiefs, Public Works Manager and Inter- im City Engineer, along with the LAFCO Executive Officer, and the Cal Fire Assistant Chief. In addition, interviews were conducted with developer consultants to obtain information regarding the land use plans of the Berger Foundation in the Classic Club area as well as plans by developers near the in- terchange at the 1-10 and Bob Hope Drive/Rio del Sol Road. A meeting was held with representatives of the Coachella Valley Water District to learn about utility ser- vices to this area. Current zoning designations for the City's sphere were obtained from County Planning. 41,N&, t.'itV g1'Cathetiral 0t> Information was also provided by the County Executive Office, County Surveyor, County Auditor, Regis- trar of Voters, County Library Services, and County Animal Control. In order to more accurately assess the condition of the streets and roads of the Thousand Palms commu- nity, three volunteer graduate students from California State University, San Bernardino conducted a "windshield survey" of these streets under the guidance of the Interim City Engineer, Public Works Man- ager and the consultant. Detailed data regarding these streets were obtained from Riverside County. Attendance at a meeting of the Thousand Palms Community Council took place, and a tour of Fire Station 35 was provided by a Cal Fire Battalion Chief. The methodology for projecting current and future revenues and expenditures as part of the fiscal analy- sis in this report is based upon information provided by the City and other agencies, as well as examining the legal constraints on city revenues. Upon the advice of LAFCO staff, Riverside County's "Guidelines to Preparing Fiscal Impact Reports," was not used as a guide for this report since apparently the guide was prepared some years ago and has not been updated. Instead, elements of the general framework of the consultant's copyrighted Fiscal Impact of New Development (FIND Model) and actual reve- nue/expenditure analysis was used in projecting the fiscal impact of this possible annexation at build -out. LAFCO staff indicated that their interest in the annexation is more in determining the financial and service impacts on other agencies as well as the continuation of the current service levels to the area proposed to be annexed. The City, of course, is interested in the fiscal impact of any prospective annexation on Ca- thedral City. Even though every effort has been made to obtain the most accurate and precise information possible, the estimated revenues and expenditures in this report are just that: estimates. They are calculated based on information supplied by either City staff or other local agencies which serve the area. These are not precise figures that guarantee actual revenues or expenditures which will be received or expended should the potential annexation occur. City gl'Curkedruf City Chapter II Fiscal Analysis — Initial Annexation The fiscal analysis contained in this Chapter presents the projected initial year revenues and expendi- tures which would accrue to Cathedral City, if the Thousand Palms community were annexed to the City. Unless otherwise noted, these estimates are based on the City's actual revenues, with expenditures based on the City's 2012-13 budget. This provides the most current "actual revenues," and the most the most "realistic" expenditure base, as a result of the City's recent reduction in its expenditure plan. Also discussed are one-time revenues which occur as a result of development. These one-time revenues may accrue during the initial year of annexation, or later on as new development occurs. This section is applicable to the analysis in this chapter as well as the following chapter which presents the fiscal analy- sis of this potential annexation at build out. The fiscal analysis of the potential annexation is presented for the initial year of annexation in order that the City will learn the immediate impact the annexation will have on the City and the affected unincorpo- rated area. In Chapter III projected scenarios will be presented beyond the initial year until build out. These projections are more uncertain since the timing of development and the recovery of the economy are only educated guesses. Revenues — Introduction The projected revenues are presented in four categories: 1. Income that will accrue to the City's General Fund; 2. Other municipal revenue; 3. Restricted income such as street and road revenue; and 4. One-time revenues. The General Fund revenues will include reallocation of property taxes per the Master Property Tax Agreement with Riverside County, the shift of sales tax revenue to the City as well as other taxes and fees that would apply to this area. It should be noted that there are certain revenues which are not currently collected in Thousand Palms by the County. These taxes, such as the Utilities Users Tax (UUT) and the City's limited -termed Transaction and Use Tax (TUT), would be extended to this unincorporated area and are, therefore, included in the immediate revenue projections contained in this report. The TUT, however, is not included in any revenue projections past its current termination date in 2015. It should be further noted that as a result of recent State action, City revenues have been shrinking. A long-term revenue — Motor Vehicle in Lieu Tax — is now projected as producing Zero revenue to the City, both in its developed areas and in any areas that might be annexed to Cathedral City. For long-term revenue projections, it is assumed that existing and traditional revenue sources which are currently funded will remain in place. It is impossible at this time to project which additional municipal rev- enue sources will be pilfered by the State. In connection with expenditures, the immediate term projections will be presented based on estimated actual costs to provide service. For example, just because the City's population based on the 2010 Cen- sus would increase by an estimated 15% upon annexation of the entire Sphere area, certain basic costs of city government such as administration, city clerk, administrative services, planning, and other man- agement and support services should not increase by a like amount and should remain unchanged. In other words, the current staffing and expense related to management and support services should be sufficient to support the addition of the Thousand Palms area. 6 1 Pag e City of Cathedrrcl City On the other hand, police and fire/EMS service staffing expense will increase to serve Thousand Palms. These cost increases will be projected and included in the near term expense estimate. Much like devel- oping the biennial city budget, actual projected revenues and expenses will be used to determine the fis- cal impact of this proposed annexation. Revenues — Near Term (First Year) Projections This section presents revenues that will be received by the City as a result of the possible annexation of its unincorporated Sphere of Influence otherwise known as the Thousand Palms area. This section fo- cuses on current and near term revenue projections, with longer term projections presented in the follow- ing chapter. As discussed previously, these revenues are presented in the following categories: 1. General Fund Revenues; 2. Other Revenues; 3. Restricted Revenues; and 4. One-time Revenues. General Fund Revenues Property Tax Revenue A one percent tax is applied to the value of real property is collected by Riverside County and is appor- tioned to various agencies such as school districts, special districts, cities, and the County. When annexa- tion of unincorporated property occurs, the affected city receives its share of the property tax revenue for this annexed area. The Master Property Tax Agreement between Riverside County and the Cathedral City governs the shar- ing of property tax when an area is annexed. The specific agreement between the County and Cathedral City provides that the general tax levy will be allocated as follows based on the property tax revenue re- ceived by the County: the City receives 25% and the County receives 75%. This split appears to have been established about 29 years ago, and was agreed to by the City approximately 23 years ago. Since this formula may be out of date, it is unknown whether or not this apportionment of property tax revenue could be or should be renegotiated. In any event, this division of property tax income is net of the contribution to the Education Revenue Augmentation Fund (ERAF), the County's administrative charge for collecting the property tax, and tax exempt properties owned by other governmental agencies, such as Cal Trans, the Coachella Valley Wa- ter District, the Desert Recreation District, the Palm Springs Unified School District, and the County, and tax exempt properties owned by charitable organizations. This latter category includes, for example, 90.4� acres owned by Xavier High School and 245.3 acres owned by the Berger Foundation. The property tax revenue presented in this revenue category does not include the Structural Fire Property Tax, which is calculated separately. The County Auditor calculated the property tax revenue that would be received by the City if Thousand Palms were detached and annexed to Cathedral City. This estimate was based on a legal description of the area provided by LAFCO. The estimated property tax revenue calculated by the County Auditor is % $817'000.3 There does not appear to be much new development occurring in Thousand Palms, so in the first year it is assumed that increases in property tax revenue will be minimal. However, current preparation for de- 3 Email from Chief Accountant, Property Tax Division, Riverside County Auditor -Controller, dated June 19, 2012 71 Page l� City cif Cathedral City velopment activity in the northeast quadrant of the I-10/Bob Hope Drive interchange could lead to some residential and commercial development in the near term. Property Transfer Tax When new property is sold, or more likely in Thousand Palms when an existing property is resold, a prop- erty transfer tax of $1.10 per $1,000 of transferred value is levied on the sale of real property. The result- ing revenue is then split between the City and Riverside County, with each obtaining $.55 of the trans- ferred value. Actual Property Transfer Tax received by the City in 2008-09 was $121,282, increasing to $137,770 in 2009-10. It declined to $108,217 in 2010-11. Assuming approximately the same level of property sales in the Thousand Palms area as in Cathedral City, it is estimated that the additional Property Transfer Tax revenue from this annexed area in proportion to the actual income received by Cathedral City in 2010-11 will be $16,406 (7,715150,905 = .1516 x $108,217). If the 2012-13 estimate for this revenue source is accurate, then the revenue from this tax would be $22,740. However, to be conservative in making financial projections, a figure based on the actual reve- nue received in 2010-11 is used for this projection. Structural Fire Tax The City receives a Structural Fire Tax which must be used for the provision of fire suppression and pre- vention services. In 2010-11 the City received $470,237 from this source. The tax is based on 5.87% of the one -percent property tax collected in an area. Based on calculations by the County Auditor,4 it is estimated that during the first year of annexation Structural Fire Tax revenue would be $341,000. Note: This tax normally would be considered a "restricted revenue." However, it is included in this section to achieve consistency with the presentation of this tax in the City's biennial budget. As a practical matter, the revenue from this tax partially supports the Fire Department's budget which is a major part of general City operations and which is otherwise supported by the City's General Fund. If upon the initial annexa- tion, the City contracted with the Riverside County Fire Department (Cal Fire) to provide fire/EMS service to the annexed area, this revenue would be used to partially fund that contract. LAFCO staff advises after consulting with County Auditor staff, that, while the exact history of the struc- tural fire tax in Cathedral City is not entirely clear, it Is likely the tax was transferred to the City around 1990 when the County changed the way it contracted out fire service, and the City began providing fire service directly instead of the County. Apparently, subsequent annexations incorrectly assumed that the master property tax agreements included the structural fire tax, even though the tax is not mentioned in these agreements. In any event, it would be prudent to update the master property tax agreement be- tween the County and Cathedral City to reference the structural fire tax. Property Tax In -lieu Vehicle License Fee Instead of the City receiving property tax revenue from vehicles, it is reimbursed from a portion of the mo- tor vehicle license fee. Unfortunately, this revenue source was permanently reduced by the State by near- ly two-thirds in 2004. Still, the City received $3,469,471 from this source in 2010-11 _ Assuming that the in -lieu VLF will increase in proportion to the increase in population upon annexation, it is estimated that during —the first year of annexation is 72, (7,715/50,905 = .1516 x $3,469,471). Motor Vehicle In -lieu Fee The regular Motor Vehicle in -lieu fee produced $241,108 for the City in 2010-11. However, this revenue source has been usurped by the State, with the result that the City will not receive any revenue from this ` Email from Chief Accountant, Property Tax Division, Riverside County Auditor -Controller, dated June 19, 2012 8 j Page /b City rf Catkedrat City source on an on -going basis. Therefore, the projected revenue from this source due to annexation will be: $0. Sales Tax Without recounting the complexities of the "triple flip" caused by state legislation, the current sales and use tax rate in Riverside County is 8.0%. The rate Is allocated as follows: • State General Fund 3.9375% • State Education Fund (Prop. 30) .25% • State Fiscal Recovery Fund .25% • State Local Revenue Fund (1991) _50% • State Local Revenue Fund (2011) 1.0625 • State Local Public Safety Fund .50% • City/County Local Tax 1.00% • Riverside Co. Transportation Commission (Measure A) .50% • Total Rate g 00%5 This is a major revenue source for Cathedral City. The City received $4,929,695 in sales tax income in 2010-11, which is a significant reduction compared to the past several fiscal years due to the downturn in the economy. This estimate assumes that the Thousand Palms sales tax generators are somewhat com- parable to those in Cathedral City, after the car dealerships are eliminated from the retail mix. Assuming the dealerships produce approximately one-third of the City's sales tax revenue, the remaining two-thirds of the City's sales tax is projected on a per capita basis for Thousand Palms. It is estimated that Thou- sand Palms would initially produce $498,477 in sales tax ($4,929,695 x .667 x .1516). This formula uses the City's sales tax income, times two-thirds, times the increase in population as a result of the potential annexation of Thousand Palms. Sales Tax Comp Fund (Property Tax in lieu of Sales Tax) This is revenue received by the City as part of the State's 2004 "triple flip," where 25% of the City portion of sales tax revenue was withheld, only to be backfilled the same amount from property taxes previously allocated to schools. The amount received by the City in 2010-11 from this source was $1,642,658. As- suming that a proportionate amount of this revenue would be produced from Thousand Palms, but again discounting income from the car dealers, then the projected annual income from this source would be $168,101 ($1,642,658 x .667 x .1516). Transactions and Use Tax (TUT) In Cathedral City, Measure H was adopted by the electorate in June 2010 which established a 1 % trans- action and use tax on City retailers. The revenue can be used for any general city purpose. The tax, how- ever, expires after five years unless extended by the voters. Again, assuming this amount would be col- lected in Thousand Palms at the same level as in Cathedral City, discounting income to the existing City from the car dealerships, income from the TUT would be $297,346 ($2,940,612 x .667 x .1516). However, as currently authorized, this income would cease in September 2015. Accordingly, while this revenue source is included as income during the first year of projected annexation, it is not projected past 2015 to the community's build out. One impact of this short term TUT is that it would temporarily increase the sales and use tax in Thousand Palms. Currently, the sales tax rate is 8.00% in this community, and it would increase to 9.00% until Sep- tember 2015. Transient Occupancy Tax (TOT) s City of Cathedral Adopted 2012-2013 Budget, p. 27, with .25% added due to Proposition 30, 91 Page '7 City of Cathedrui City Effective January 1, 2007, the City's Transient Occupancy Tax (TOT) was established at 12% of the rent charge for staying at a hotel, inn, or motel. There is one lodging facility in the Thousand Palms communi- ty, the Red Roof Inn at 72215 Varner Road. This Inn has 116 rooms and its average room rate appears to be approximately $70 per night.,J sumin a 65%, it is estimated that the TOT income produced from this Inn is an estimate 236,000 (rounded). In the future, bath tourist� and resort hotels are 4Aanned to be constructed in this unincorporated,.rea, and accordingly TOT income should become a much more substantial revenue source over the near and longterm. Time Shares The City also receives a small amount of revenue when applying the 12Js..� timeshares (non -owner stays). It is difficult to provide an estimate for this revenue source for Fher unincorporated Sphere area. For the purposes of this report it is estimated that $0 will be produced upon annexation. This revenue source will increase overtime, however, since the Berger Foundation Plan includes 216 time share units as part of their approved Specific Plan. Utility Users Tax Cathedral City adopted a Utility Users Tax (UUT) in 2008. The rate of 3% is applied on the use of tele- communications, cable el and solid waste. Assuming roughly the same level of utility usage in the hous n alms community, it is estima ed that additional income of $419,325 (2,765,996 x .1516) would be achieved if annexation of this area occurred. Franchise Fees The City also receives franchise fees from the various utilities for the use of City streets and other rights - of -way. Gas and electric franchise fees are 2% and cable franchise fees are 5% of gross receipts. The n, solid waste hauler is charged 12% of gross receipts, while the transportation and towing franchise fees C " e, M are minimal. The actual franchise fees received by the City in 2010-11 were $1,850,657. It is expected that the gross lr { receipts of these service providers Wil increase in ro orti erved if an- nexation occurred. As a result, it is projected that t e franchise fee income from the Thousand Palms community would be $280,560 ($1,850,657 x .1516). Permit and Regulatory Fees Additional income will be produced from various permit and regulatory fees such as planning and zoning fees, engineering fees, building permit fees, other processing fees, and code enforcement fees. These revenues, however, basically only cover staff expenses necessary to provide the processing of various permit applications or enforcement of code violations. The revenues received and the resulting expendi- tures basically should be a "wash." As a result, this report does not project any income from these reve- nue sources, or any additional offsetting expenditures, for processing various permit applications, or for code enforcement. Business Licenses The City requires business licenses for all establishments conducting business within the City limits. They are renewed annually. The license fees are based on gross sales and the type of business being con- ducted. Based on actual 2010-11 income of $420,510, and assuming a similar amount of business activi- ty in the potential area to be annexed, the additional revenue from this area is estimated at $63,750 ($420,510 x .1516). Fines and Forfeitures Fines and forfeitures reflect income generated by motor vehicle and Municipal Code fines, and other mis- cellaneous fines and forfeitures. It is estimated that the City's actual income from this source will be $352,766 for 2011-126. Assuming that the Thousand Palms community would proportionately generate 6 March 8, 2012 email from Administrative Services Director. 10 Page r City q f Ca[1redral Citi' about the same quantity of fines and forfeitures as Cathedral City, it is estimated that $53,480 ($352,766 x .1516) would be produced from this revenue source. Charge for Services In the City's 2011-12 budget, $3,131,112 is identified as income from charges for various services provid- ed by the City. Many of these charges would not apply to Thousand Palms as net new revenues to Ca- thedral City, since they are either charges which have offsetting expenditures such as plan check fees, or involve the cost of police dispatch services provided under contract to the City of Desert Hot Springs. There are some charges, however, which would apply to Thousand Palms, such as_paramedic services, code abatement, vehicle impounds, purchase of police reports, and fireirizo ctons. These services Vi VuynL +n ,p I,ovo,4Q i w %+ny VVtICIN If cV 1 V- If. HSSuming mat ine level or arameolC agrylCe. police re__ jy- f Offs purchased, and ure in chons will increase in pro ion to the additional population served in f C> Thous Palms, the additional income from this revenue source is estimated to be $206,673 ($1,363,281 x .1516). It should be noted, however, that if in the initial year or years after annexation the City contra s with Cal Fire for fire/EMS services, with the County providing ambulance service, this revenue ca gory will be reduced by $180,869 to reflect the absence of ambulance income. Under this scenario, a total income from Charge for Services would be $25,805. Intergovernmental Revenue �-' C t F r-e jS Most of the revenue in this category is not applicable to the potential area to be annexed. This is because most of this income was from the City's Redevelopment Agency which no longer exists. As a result, the projection for Thousand Palms for this revenue category is: $0. Other Municipal Revenues Other municipal revenues received by Cathedral City are discussed in this section. Special Assessments The City includes $3,115,214 in the 2011-12 budget for Special Assessment revenue, which includes special assessment districts such as landscape and lighting districts. It is not expected that there would be any special assessments accruing to the City from this area. Therefore, the estimated revenue from this source is estimated at: $0. Use of Money and Property It is not anticipated that there will be an increase in the City's investment income based on the annexation of land in their SOL However, there could be some limited income as a result of sign sales and aban- doned property. As a result, the revenue from this source is estimated at $6,000. Recreation Programs The City does not provide 'fee based' recreation programs, although in 2010-11 the City received $5,000 in Soccer Park income. Any other fees for use of the park and community in Thousand Palms should con- tinue to accrue to the Desert Recreation District, since the District is best able to provide services to this area. Therefore, revenue for recreation programs is projected at: $0. Restricted Revenue Gas Tax Funds Cities and counties receive a portion of the tax imposed on the purchase of gasoline. Revenues from gas taxes are deposited into the Highway Users Tax Account in the State's Transportation Tax Fund. These funds are then apportioned to cities and counties by the State Controller. The distribution of this revenue 111 Page City of Cathedral Citr is governed in large part by Streets and Highways Code Sections 2103 — 2107. Only counties benefit from Section 2104 and only cities benefit from Section 2107. If the Thousand Palms community were annexed, gas tax funds received by Riverside County, except for Section 2104 funds, would shift to the City. Plus, Cathedral City would receive Section 2107 funds for this area. The revenue expected to be received by the City for Fiscal Year 2011 is $1,365,380.' While some sec- tions of the Streets and Highways Code allocated gas tax funds by population and street miles, it is as- sumed for the purposes of this report that the revenue from this source will be in proportion to the in- crease in population as a result of the potential annexation of Thousand Palms. Using this method, the gas tax funds for this unincorporated area are projected to be $206,992 ($1,365,380 x .1516). Measure A From the County's 8,00% sales tax, .50% flows to the Measure A Fund for regional and local transporta- tion projects. With these funds distributed by region, 24% of this money is distributed to the Coachella Valley area. These funds are further distributed with 50% devoted to State highway and regional road projects, 35% for local streets and roads, and 15% for transit, such as Sunline Transit. It is further distrib- uted to cities based on equivalent dwelling units (EDUs) (50%) and taxable sales (50%). Based on this formula, Cathedral City should receive $998,000. This is 11.6% of the net funds available for distribution. Assuming that the annexed area would receive a proportionate amount of this revenue source based on its population, it is projected that $151,297 ($998,000 x .1516) will be received from Measure A. This pro- jection is based on balancing the two variables which determine the amount of this revenue. It is assumed that Thousand Palms proportion of EDUs is slightly larger than Cathedral City because of its slightly smaller average household size, but that Thousand Palms has lower sales tax per capita. Total Restricted Road Revenues The amount of restricted road revenues produced in Thousand Palms initially will be an estimated $358,289. This data is summarized in Table 11-A, entitled, "Projected First Year Restricted Road Reve- nues." Revenue Summary The total General Fund, other municipal revenues, and restricted funds are summarized in Table II-B, titled, "Projected First Year General Fund, Other Municipal Revenues and Restricted Revenues." This information is useful in projecting the first year impact of the potential annexation of the Thousand Palms area, and to assist the City Council in assessing, along with projected first year expenditures, the imme- diate fiscal impact of annexing this area. 7 March 8, 2012 email, Administrative Services Director. 12 j Page ProjectedTable 11-B RevenueOther MUniCipal Revenue Est. Amount Subtotal Est. Amount General Fund Property Tax $817,000 Property Transfer Tax $16,406 Structural Fire Tax $341,000 Property Tax In Lieu of Motor Vehicle License Fees $525,972 Motor Vehicle License Fees $0 Sales Tax $498,477 Sales Tax Comp Fund $166,101 Transaction and Use Tax $297,346 Transient Occupancy Tax $235,000 Transient Occupancy Tax (Time Share) $0 Utility Users Tax $419,324 Franchise Fees $280,560 Permits and Regulatory Fees $0 Business License Tax $63,750 Fines and Forfeitures $53,480 Charges for Service $206,673 Intergovernmental Revenues $0 Total General Fund Revenue $3,921,089 Other Municipal Revenue Special Assessments $0 Use of Money and Property $5,000 Recreation Programs $0 Total Other Municipal Revenue $6,000 Total Available for City Operations $3,926,089 Restricted Revenues Structural Fire Tax (included in GF Revenue) ° Gas Tax Fund $206,992 Measure A $151,297 Total Restricted Revenues $358,289 Total Tax Revenue Produced by Thousand Palms $4,284,378 8 As explained in the text, while permit and regulatory fees will produce income, it is expected that this revenue will be offset by like expenditures. Therefore, neither the revenues nor expenditures from this activity are presented in this analysis, 9 If the City decides initially to contract with Cal Fire for fire(EMS service, this revenue source will be re- duced to $25,805, since the City will not receive income from its ambulance operations. This would re- duce the total available for City operations to $3,745,221 and the total tax revenue produced by Thou- sand Palms to $4,103,510. t0 Projection included in the General Fund revenue summary. J 13 Page tuv of Caiheriral City One-Time Revenues As explained earlier in this chapter, the City will receive one-time revenues as the result of new develop- ment when an applicant seeks an entitlement or permit for land development and for the construction of residential, commercial, or industrial property. These revenues are in the form of building development fees and development impact fees. These revenues, of course, are not included in the on -going revenue projections, which support on -going municipal services, because they are restricted and only occur one- time. They are restricted in that they can only be used for a specific purpose as authorized by City Coun- cil resolution or ordinance, based on state law. These fees, or sometimes in the case of parks and land dedication, are usually collected when the building permit or other entitlement permit is issued. This section is presented at this point in the report since these one-time revenues can occur during the initial year of annexation, and during the period of time required to build out this unincorporated area. Many of the Building Department fees are collected to offset the City's processing costs, such as fees for plan checks, microfiche, building permits, grading permits, and permit issuance. Generally, these fees are offset by the cost of processing these permits. Other building fees are for specific purposes such as fees for police, fire, facilities, and signalization, the master undergrounding plan, transit development fee, park fees, art in public places, and maintenance of the General Plan. These fees which accrue to Cathedral City and how they are determined are listed in Table II-C. Excluded from this list are fees which are collected by the City on behalf of other agencies such as sup- port for the Coachella Valley Multiple Species Habitat Conservation Plan ($5,730/acre for commercial and industrial development), the Transportation Uniform Mitigation Fee (TUMF) collected on behalf of the Coachella Valley Association of Governments, and the Strong Motion Instrumentation Program which is a tax imposed by the State of California. Listed below in the following Table are the City's building development fees, including a brief description and a summary of how each fee is calculated. Fee Descri tlon Table 11-C Fee Calculation Police Fire Facilities and Si nalization $15011,000 square feet or fraction thereof of all development Master Undergrounding Fee $A 5 per square foot of roofed area for all development Transit Development Fee $5.00/linear foot of frontage on major arterials Park Fees Number of dwelling units (DU) x avg. # of persons per DU x 3 acres per 1,000 residents x land cost per acre - total fee' Art in Public Places 1% of 90% of building valuation for buildings over 15,000 s . ft. City Facility Impact Fees $1,851/residential unit; varies per acre for c ommerciallndustrial The park fees are based on California Government Code Section 66477 (Quimby Act). Under this Act the City is authorized to require either the dedication of parkland or the payment of fees in -lieu of such dedi- cation, or a combination of both, for every residential land subdivision. These fees are paid into the City's Park Acquisition and Development Fund which can be used only for the purpose of acquiring, building, improving, expanding, and/or developing city parks. These fees are separate from Park Development Im- pact Fees listed in Table 11-D presented below. In addition, the City collects development impact fees, usually at some step during the entitlement pro- cess, such as when a subdivision is recorded or a building permit is issued. These fees are authorized in accordance with Government Code et. seq. (1987). The development impact fees can only be used for the purpose for which they are collected under state law and the City ordinance authorizing these fees. Also, for certain required public improvements, a de- veloper can obtain fee credits by building a park, for example, in advance of its normal development schedule. " For the purposes of Quimby Act or park in -lieu fees the City currently uses the average number of per- sons per DU of 3.03. > 14 1 Page City of Cathedivr! Crtt Cathedral City has two sets of development impact fees, one for the existing developed City, and the oth- er to support the North City Plan. Since North City is mostly vacant land, some of the fees are substantial- ly higher than for the rest of the City since basic infrastructure such as roads and bridges need to be con- structed in this area. For the purposes of this analysis, and since Thousand Palms has most of its basic infrastructure installed, the fees charged in the developed portion of the City are used in projecting devel- opment costs in this community. They are presented in Table [I-D, entitled, "Development Impact Fees — Cathedral City". Table 11-13 Development Facility Residential Retail Commercial Non -Retail Commer- ($JUnit) ($!Acre) cial industrial S/Acre CityYard (Vehicle Storage) $95 $587 $454 Police Community Center $21 $132 102 Public Safet Trainin Site $18 $110 $85 Interchange an Bridges $86 $4145 $1,500 Unpaved Trails $53 $173 $134 Parks, Community Center Pools 1 $1 577 $5,141 $3 973 Again, these impact fees will be collected at subdivision recordation or building permit issuance, and can only be used for meeting the facility needs caused by future growth. These fees are established based on the policy that "growth should pay for itself" and not be subsidized by the existing property and business owners in the City. When the fees are received, they are placed in separate funds and not comingled with other city general fund or restricted revenues. Further, the funds are normally budgeted and spent on public works projects administered by the City. However, funds collected for interchange and bridge improvements are normally used for projects administered by the State or the local Council of Governments. Regarding development impact fees collected for parks and related improvements, and park fees collected as part of the building development fees, the City should coordinate with the Desert Recreation District in planning and spend- ing these revenues if the Thousand Palms area is annexed. This is because it is likely that the District will continue to provide, maintain and operate park improvements post -annexation. Expenditures -- Near Term (First Year) Projections The purpose of this section is to present and evaluate the initial expenditures needed to provide services to the Thousand Palms area, if annexed into Cathedral City. It is assumed that the level of service will be the same or better than the area receives now and will be at least at the level provided to the rest of Ca- thedral City. The cost projections contained in this section are for the first year of annexation. This will allow the com- parison of these expenditures with the latest "actual" revenues discussed earlier in this Chapter. This comparison is designed to provide the City Council the data needed to assess the initial financial feasibil- ity of pursuing this potential annexation. This cost information will also be the basis for projecting long- range expense in providing service to this area at build out, which is information tAFCO requires to be included in the Plan of Services for this area. This latter information is presented in Chapter III of this re- port. The first -year expense projections are not necessarily based on a cost formula, such as automatically increasing expenses solely using the City's projected General Fund expenditures on a per capita basis. The expenditure estimates used in this report are based on projected actual costs to provide service. So, for example, even though there will be a larger city to serve, there should be no increase in the City Man- ager's or City Attorney's budget. While there may be some additional work load experienced in these of- fices, it is not enough to justify an increase in the City's budget for these functions. On the other hand, there will be additional expenditures needed to provide police and fire service. Also, as explained earlier in this Chapter in discussing revenues, there are certain expenditures, such as building and plan checks, which are offset, or should be offset, by fees. For the purpose of this analysis, neither revenues nor expenditures for these activities will be presented in this report. 1S j Page City of Cathedral City In the following paragraphs each part of the city organization will be discussed. Those departments or offices, which have no expected additional operating expenses upon initial annexation, will be discussed briefly, while those departments which will have expenditures increases will be discussed in more detail. Administration If annexation occurs, it is not expected that there will be a need to increase the budgets for the City Council, City Attorney, and City Management, including marketing. It is also assumed that, while there will be somewhat more risk assumed with additional street miles, the current budget for Risk Manage- ment will be sufficient. It may be speculated that there would be more risk to the City by adding more fire- fighters and police officers. However, because of the recent reductions in existing City staff, the increase in staff to serve the annexed area initially will not likely be significant enough to increase this part of the budget. There will be an additional expense for the City Clerk's Office for the provision of elections every other year. There are 11 precincts in the Thousand Palms, which usually translates into two to three voting pre- cincts. Based on 2,778 registered voters in this area, the County Registrar of Voters estimates that the City will experience additional election expense of $7,000 per election every two years.12 In addition to the regular election cycle, special elections could be scheduled. However, these extra costs are difficult to project since the frequency of special elections is unknown. They will need to be budgeted on an ad hoc basis, if and when special elections are called. For the purposes of this fiscal analysis, only the normal election expense is projected for anticipated regular elections. On an annual basis, it is esti- mated that there would be an additional yearly cost of $3,500. In addition, either through the Clerk's Office, Administrative Services, or Community Development, limited staff support for the Thousand Palms Community Council is provided, assuming that City will continue this organization as an advisory body to the City Council. While there will not be any additional expense for various staff providing liaison and information to the advisory council (police, fire, code enforcement, planning, etc.), funds for part-time assistance to schedule meetings, prepare minutes and other clerical support in the amount of $5,000 is budgeted for this function. For the purpose of this report, these funds are included in the Clerk's Office budget, In the Administrative Services Department, there will be an additional work load for Human Re- sources and Finance, but not to the extent where additional expense should be budgeted initially for these functions. While there could be an additional expense for Management Information Systems to extend data and telephone services to Fire Station 35 and to the community center, there should be no expense in the beginning, if initial fire service to this area is continued to be provided by Cal Fire, and the recreation programs continue to be provided by the Desert Recreation District as contemplated by the Plan of Services. As a result, no additional expense is projected for the Administrative Services Depart- ment upon initial annexation. While there likely will be additional permit and entitlement processing in the Planning, Building, and En- gineering Divisions of the Community Development Department, the expense of this work should be offset by fees and absorbed by existing staff given the overall decline in building and development activity in the Valley. As explained above, neither potential income nor expenses from planning, building, and engineering activity because of this annexation are included in this analysis. As a side note, the processing of development plans through Planning, Building, and Engineering should be more convenient to those living in Thousand Palms if the annexation occurred. In effect, the level of service to the public should improve. Meetings of the City Planning Commission and City Council, for ex- ample, take place at the nearby City Hall in Cathedral City. It is currently necessary for those interested in development issues in unincorporated areas like Thousand Palms to attend meetings of the County Plan- ning Commission and the Board of Supervisors in the City of Riverside. In terms of day-to-day development activity, the County has a planning and development office on Wash- ington near Palm Desert Sun City. While this location is more convenient for those in living in Thousand Palms, there have been substantial staff reductions at this office this past year due to a major reduction in 12 Email, Riverside County Assistant Registrar of Voters, May 29, 2012. --),4 16; Pave City of Crrtltedrul City development activity in the Valley. While this office still maintains a full-time counter person on a 4/10 work week to accept development and building plans, these plans must now be sent to Riverside for pro- cessing. So, for example, if an individual has submitted building plans which have been reviewed with corrections or other issues, that individual must travel to Riverside to review and discuss the corrections. Therefore, as a general rule, processing land use and development issues in Cathedral City should prove more convenient for those living in Thousand Palms. At this same location, the County still maintains Code Enforcement offices. Currently, these offices ap- parently are fully staffed, or nearly so. It is assumed that there will be no increase in the Community Organizations portion of the City budget. This is the portion of the budget which supports the Chamber of Commerce, Boys and Girls Club, and the senior center. Public Maintenance is responsible for street maintenance. While unlike most of the other expenditures discussed in this section, the budget for street maintenance is supported by two restricted revenues; gas tax and Measure A funds. Between these two revenue sources, the City expects to receive $368,289.to support street maintenance and the maintenance of traffic signals. Street lights, and the landscaped me- dian on Ramon Road, are funded by a local assessment district which is administered by the Desert Rec- reation District along with their maintenance of the community park. Street sweeping is provided through CVAG grants for major arterials and waste systems provider, Burrtec provides monthly residential street sweeping as part of its contract with the City. The City will pay for maintenance of the traffic signals and devote 2.0 FTE street maintenance workers and contract service to provide street, signal and sign maintenance in Thousand Palms. The initial budget to provide street maintenance to Thousand Palms is $358,289. Public Safety Police Department Thousand Palms Calls for Service (CFS) data was analyzed based on the Sheriffs Records Management System. In 2011, the Sheriffs Department reported 4,232 CFS, in 2010 the number was 4,028, and in 2009, it was 3,874. The crime data is not broken down by Part I and Part 11 crimes since the County Sheriffs Department as- sembles this data based on the entire unincorporated area within the Palm Desert station patrol area. However, the Captain in charge of this area observes that the major law enforcement issues in this com- munity involve crimes against property (burglary, theft, and vehicle theft) and drug related offenses. The response time goals provided by the Sheriff to this area are: • Priority 1 calls > 5 minutes • Priority 2 calls > 10 minutes • Priority 3 calls > 15 minutes This compares to Cathedral City where their actual response times are: • Priority 1 calls > 5 minutes • Priority 2 calls > 8 minutes • Priority 3 calls > 10 minutes Another factor in analyzing law enforcement service for the community is the geographical length of the area being served, and the fact that currently the developed part of Thousand Palms is separated physi- cally from the developed portion of Cathedral City, which is served by the City Police Department. Since maintaining adequate response times in reacting to serious crimes is an important law enforcement ob- jective, providing a sufficient number of officers in the community to accommodate that response is es- sential. 171 Page City t�l. cathedral City To provide this service, it is proposed that two officers be assigned to this area 24/7, each assigned to a separate beat. This will provide immediate backup for each officer assigned to Thousand Palms without waiting, potentially for several minutes, for a beat officer or a cover car to respond from the developed part of the City. To staff two officers 24/7 will require the addition of nine police officers at a cost of $1,342,818. In addition, it is proposed that the coverage of one Sergeant be added during the time of heaviest call for service volume in Thousand Palms. This would require adding two Sergeants positions at a cost of $427,634. It is also proposed that one .75 FTE Detective be provided at a cost of $119,350, a Records Clerk at a cost of $86,673, and a .5 FTE Dispatcher at a cost of $47,851 be added to the Police Department to serve the Thousand Palms community. The total cost of providing police staff to Thousand Palms is estimated at $2,024,327. Two new, fully equipped patrol cars will need to be purchased at a total cost of $116,000. Since a "sinking fund" or equipment replacement fund is not established for vehicles needed for Thousand Palms, these patrol cars can be purchased through a five year lease -purchase agreement at an annual cost of $23,200. The total cost for police services, including staff and vehicles, is estimated at $2,047,527. The officers and staff will be deployed from the Cathedral City Police Station. In terms of providing access to police and support staff in Thousand Palms, one option as part of the Plan for Services (Chapter IV) is for the Police Department to use an office in Fire Station 35 for report writing and for meeting the public. This fire station is oversized, and has the space for a small office for use by the Police Department. As an alternative, the Police Department could explore using space at the Thousand Palms Library for report writing only as is the current practice of the Riverside County Sheriffs Department. A third possibility, and possibly the best ultimate option, is to locate an office in a community building proposed to be constructed as part of the SDC Ventura, LLC development at the northeast quadrant of the 1-10/Bob Hope Drive Inter- change (Messenger Project). Over time, it may turn out that other developers in the area would want to consider donating space for a police office located in Thousand Palms. Assigning the Records Clerk to Fire Station 35, or to the proposed community building in the SDC Ventu- ra, LLC development, for part of the work week could facilitate service to the public. The Department would also continue to support the senior volunteer program called, Citizens on Patrol, which has an of- fice in the Tri-Palms community. It would appear that annexation of this area would provide an improved law enforcement service level to the community. This is because there will be two police beats assigned exclusively to Thousand Palms. This compares to the current law enforcement provider where only one police beat is assigned exclusive- ly to this area. Also, measured by the number of officers per 1,000 population served, the number of of- ficers assigned to Thousand Palms would double. Also, the current closest public access for law enforcement is at the Sheriffs Palm Desert substation. There is the opportunity to provide limited public access for meetings, interviews, and inquiries by locating a Police Department Office at Fire Station 35, or eventually in the proposed development near the 1-10/Bob Hope Drive Interchange. Animal Control Cathedral City contracts for animal control services through Riverside County. They provide service from a shelter which serves the Coachella Valley at 72-050 Pet Land Place in Thousand Palms. Services in- clude field services as well as shelter and adoption services including licensing and vaccinations. The County Animal Control will charge Cathedral City $229,128 for these services in the coming fiscal year. This includes a .5 FTE Animal Control Officer (ACO) for field services and for Shelter Services. County Animal Control provided a cost estimate for serving Thousand Palms of $108,619, net of $3,500 in revenue.13 While the cost of shelter services seems in proportion to Cathedral City's population ($25,000 vs. $146,132) and seems reasonable, charging the same amount for Field Services for both areas does not. 13 Email, Deputy Director, County Animal Control, July 10, 2012. 181 Page City of Cathedral ( y The City indicates that they have not seen an increase in complaints by reducing the Field Services costs to the level of a .5 FTE ACO serving approximately 51,000 people. Requiring a .5 FTE ACO for a com- munity of 7,715 does not appear reasonable. Of course, this report is not developing an exact contractual expense for the purposes of the actual provision of services to this area. It is only offering an estimate of what these costs will likely be initially if Thousand Palms were annexed by Cathedral City. Accordingly, the estimate from Animal Control is being reduced to reflect the services of a .25 ACO plus the amount required for Shelter Services. By making this adjustment, the estimated cost for Animal Control service in the first year of annexation is $70,483. Fire Department Provision of fire service to the Thousand Palms area is a more complex issue than the provision of law enforcement services. This is because the Riverside County Fire Department, under contract with Cal Fire, not only provides a response to fire and emergency medical calls to the immediate Thousand Palms community, but to all of the incorporated and unincorporated areas of the Coachella Valley, except the cities of Palm Springs and Cathedral City. Cal Fire provides immediate fire suppression and EMS response to Thousand Palms from Fire Station 35 with a Type 1 Engine, staffed with three firefighters (3 — 0 staffing). This engine responds to calls for ser- vice to Thousand Palms, plus portions of the cities of Palm Desert and Rancho Mirage. They also provide regional support to their entire service area from this station, including a Breathing Support Unit. Cal Fire is also considering moving their HazMat unit from Fire Station 81 in Bermuda Dunes to Thousand Palms. Fire Station 35, located at 31920 Robert Road, is a relatively new, oversized station. It became opera- tional November 1, 2009, and has approximately 9,100 square feet. It has three large garage bays which can accommodate up to six fire apparatus. It also has office space, an exercise/weight room, a spacious day room which includes a kitchen, dining, and TV areas, which are connected to an outdoor dining patio. It also has two separate living areas which can accommodate two fire crews. There are several options for providing fire and emergency medical service to Thousand Palms if it were annexed into Cathedral City. Option #1 would involve the City Fire Department moving a Type I fire en- gine, along with an ambulance, into Fire Station 35 and providing service to Thousand Palms and poten- tially the periphery of the surrounding cities through mutual or automatic aid. At times when both appa- ratus are available, this could provide approximately the same level of service to Thousand Palms in terms of response times currently provided by Cal Fire, if an efficient protocol for providing mutual or au- tomatic aid were able to be implemented. Also, Cathedral City would likely provide ambulance service rather than through the County service provider. These rights authorize Cathedral City to supply ambu- lance service within their City limits. Having both a fire engine and ambulance each staffed with two firefighters or fighter fighter/paramedics, would mean that, based on the experience in Cathedral City, for about 70% of the fires the City could re- spond with four firefighters, rather than three. This would meet OSHA's "2 in, 2 our rule, and would allow for better initial response during the first critical few minutes in responding to a structural fire. However, in at least 30% of the cases, the initial response would only be with two firefighters, which would require the arrival of a second unit before two firefighters can enter a burning structure, with two firefighters remain- ing outside. In those cases, Cal Fires' service level would be better than the City's at the point of initial attack (3-0 staffing). It should be noted that Cathedral City Fire is currently exploring achieving 3-0 staff- ing on their engines which is the same as Cal Fire, and would be an improvement in the City's current response pattern. The City could also respond with three or four firefighter/paramedics to major medical emergencies for most, but not all, incidents. This is superior to the current initial response of one fire engine with three fire staff, including one paramedic, since serious emergencies require four or more paramedics or EMTs to handle all of the duties at such an emergency. It should be noted that all but four Cathedral City firefight- ers are paramedics, and that all new hires are firefighter/paramedics. Option #2, and the best option per the analysis of this report, would envision Cathedral City contracting with Cal Fire for fire service, with Cal Fire operating from Fire Station 35 as is currently the case. The City may not initially support this option since it would lose an opportunity to enlarge and improve their De- partment's operation with additional staff and apparatus. A further reason for not supporting this option is that the City might not be able to provide ambulance service with firefighter/paramedics with another agency providing fire service. Due to the lack of initial financial resources to support the City Fire Depart- I9 1 f'age City of Cathedral City ment at the beginning of providing service to Thousand Palms and several years thereafter, the City will need to contract with Cal Fire in order to balance revenues and expenditures in providing this service to Thousand Palms until future development occurs. Option #3 is to develop a Plan for Services .(Chapter 1V) whereby Cal Fire would provide fire service un- der Option #2 for a number of years, with the Cathedral City Fire Department and Cal Fire eventually sharing Fire Station 35. The station's apparatus room certainly has significant capacity as painted out above. There is enough room for a City Type I fire engine, or a ladder truck, if that proves to be the best configuration of apparatus, especially with the high value, mid -rise Aqua Caliente Casino and Resort nearby. There is also more than enough space for an ambulance and one or more Cal Fire apparatus. Whether or not co -location of City and Cal Fire operations would otherwise be feasible, would be dis- cussed and/or negotiated sometime in the future. This likely would be several years (10 — 15 years) after initial annexation before this discussion would be needed given the inadequacy of the structural fire tax in Thousand Palms to support basic fire service for either the City or Cal Fire. Regarding the location of ladder trucks, there is one at Cal Fire's stations 33 (Palm Desert) and 86 (In- dio). With the Aqua Caliente Resort close by, the two agencies may wish to collaborate to determine the best configuration of apparatus to serve not only the Thousand Palms community, but the surrounding area as well, including portions of nearby Rancho Mirage and Palm Desert. Further, since in the recent past, Cal Fire closed the North Palm Springs fire station, that agency may wish to re-evaluate the configu- ration of the stations they staff and where their apparatus should be located, if this annexation occurs. It has been mentioned that Fire Station 35 also has a large living area. There are two separate living quarters at this station which could accommodate a crew from each agency. Since Cathedral City has two staff on each apparatus, these four firefighters can be considered one crew for housing purposes. Each wing has four rooms, with three of them currently used as bedrooms, with two bunks in each bedroom. With this option, Cal Fire's regional operations should not be disrupted, and service to Thousand Palms should be at or a better level of service as the area currently receives. Through joint operations, and pos- sibly through automatic aid or a boundary drop, the perimeter portions of Rancho Mirage and Palm De- sert closest to Fire Station 35 could still receive the same level of fire response, subject to resolving dis- patch issues between the two agencies. Clearly, the two fire agencies would need to cooperate in devel- oping a successful implementation plan for this third option to succeed. Further, these issues will not need to be resolved likely for another 10 —15 years. A variation of this option, if the City concludes it cannot subsidize ambulance service to Thousand Palms, is to provide fire suppression response, but continue with the current ambulance service provider. This is because the projected cost of staffing the ambulance exceeds the collection of an estimated $180,868 in offsetting fees. This will eliminate the benefit of having four firefighters responding to most fires and medi- cal emergencies from Fire Station 35. In fact, the level of service in Thousand Palms would diminish since the City only staffs its engines with two firefighters, therefore this variation is not recommended. Whether there would be an issue of the City losing its rights in providing ambulance service in part of the City, but not in the entire City, is not analyzed in this report. As an observation, however, it would appear that the City can still maintain the chain of the City's authority for providing ambulance service as long as it controls this service either by directly providing that service or by contract. Another fire facility immediately adjacent to Fire Station 35 is the Roy Wilson Training Center, jointly op- erated by Cal Fire and the College of the Desert. It has an estimated 9,000 square feet. According to Cal Fire staff, this training facility is operated separately from Fire Station 35. The Plan of Services antici- pates, therefore, that there would be no change in the operation of this fire training facility if the Thousand Palms area annexed to Cathedral City. Therefore, there would be no additional cost for operating this fa- cility as a result of this proposed annexation. Fire Service Cost For the City to provide fire service to Thousand Palms will require four Firefighters/Paramedics, including two person staffing for the Type I engine, and two firefighter/paramedics to staff an ambulance. To staff these two units 24/7 will require three Fire Captains, three Fire Engineers and six FirefightedParamedics. The cost of this staff is calculated at top step salary plus benefits. Administrative overhead is not in this cost since it not expected to increase as a result of this additional staffing. The estimated cost of the 12 fire staff is $2,019,384. 20 1 Page City of Cathedral City There will be no need to purchase an ambulance, since the City has a spare, or a front line ambulance which is now in reserve. Also, the City is purchasing a new Type I -engine which is expected to be deliv- ered in April 2013. At that time a current front line engine will become a reserve engine. No funds are budgeted for apparatus in the initial year of annexation if the City provides direct fire service to Thousand Palms since it is assumed that either an existing apparatus will be transferred to Fire Station 35, or that one will be obtained through a grant. If there is a need to purchase an additional Type I Engine in addition to the one which will arrive in April, the City could purchase this apparatus through a 15-year lease pur- chase agreement from the supplier, which would even out the cost of such an acquisition over the life of the engine. It is estimated that additional annual cost for the purchase of a new, fully equipped Type I fire engine using this type of financing mechanism based on a recent quote provided to another California city is approximately $45'000.14 Initially however, since it appears that there is only a marginal revenue stream to support this level of ser- vice, the City should contract with Cal Fire for fire/EMS service, with ambulance service provided by the current County provider. This would mean that, while the City would not receive paramedic service in- come, it would save money by contracting with Cal Fire. The estimate for a Type I fire engine staffed with three firefighters, including overhead and equipment is $1,650,000.16 This includes the administrative charges charged by the State as well as an "engine use agreement" which funds the use and replace- ment of all apparatus. Adding an operations and maintenance expense of an estimated $30,000,1e the total projected first year cost for contracting with Cal Fire is $1,680,000. In summary, the options for providing fire/EMS service to Thousand Palms include: 1. Option #1.The provision of fire/EMS service by the Cathedral City Fire Department from Fire Station 35 with four firefighters or firefighter paramedics, assigned to two apparatus, provid- ing service through expedited mutual aid or automatic aid. 2. Option #2. Provision of fire/EMS service by the County of Riverside Fire Department (Cal Fire), with three firefighters, assigned to one apparatus, under contract with the City during the initial years of annexation. 3. Option #3. Provision of fire/EMS service by Cal Fire from Fire Station 35, with the Cathedral City Fire Department eventually providing fire/EMS service. When and if this occurs, the City Fire Department would then likely be able to provide service with three or four firefighters or firefighter paramedics assigned to a Type -I engine, and two paramedics/EMTs assigned to an ambulance. Service from this station to Rancho Mirage and Palm Desert could be provid- ed through automatic aid depending upon resolving payment for service and dispatch issues. City Fire and Cal Fire could co- locate in Fire Station 35, with Cal Fire continuing to provide regional fire service from this facility assuming that these other issues can be resolved. It is strongly suggested, because of current revenue constraints, that Option #2 be pursued. Eventually Option #3 could be considered If financial, dispatch and other issues can be resolved. Expenditure Summary Total projected General Fund expenditures are summarized in Table II-E, "Projected First Year General Fund Expenditures, Service to Thousand Palms." These expenditures, primarily to provide police and fire services, are required to provide the same or better level of service to Thousand Palms as it currently re- ceives, and is comparable to the service levels provided in the developed portions of Cathedral City. In the following table, the estimated expenses for the initial year after annexation, are shown with the pro- jected cost for fire/EMS service Options #1 and #3, which are the same, and for Option #2. 14 Email, City of Morgan Hill, July 31, 2012. 15 Email, June 26, 2012, Assistant Chief Cooley, Cal Fire. 1e Email, July 27, 2012, Assistant Chief Cooley,a Cal Fire. 211 Page City q/ Cathedral Cltt Cit y Council City Aftomey, City Manager $0 $0 City Clerk Elections $8 500 $8,500 Administrative Services Finance, Human Resources $0 $0 Management Information Services $0 $0 Community Development(Planning, Engineering, Building) $0 $0 Animal Control $70 483 $70 483 Police $2 047,527 $2 047,527 Fire $2,019,384 $1 680 000 Total General Fund Expenditures $4,145,894 $3,806,510 In addition, it is estimated that there will be an additional expenditure of restricted revenues (Gas Tax, Measure A) in the amount of $358,289. This would mean a total operating budget of $4,504,183 for Fire Options 1 & 3, and $4,164,799 for the recommended Fire Option #2. Service to Thousand Palms would mostly be provided by contract, especially if Fire Option #2 is selected. In that case, the City would add staff of 13.25 FTEs to the Police Department and 2.0 FTEs to Public Maintenance, or a total of 15.25 FTEs. Summary of Fiscal Impact — Initial Year of Annexation There have been numerous changes in the fiscal structure of California municipalities in recent years. Not only because of the economic downturn, but more importantly because of the steps taken by the State to balance their budget on the backs of cities and counties, a significant reduction in revenue to support lo- cal services has occurred. The loss of redevelopment funds, the elimination of the Motor Vehicle in -lieu tax, and the diversion of other local revenues to state coffers are recent examples of major state takea- ways. Plus the State continues to adopt legislative mandates on cities without providing the needed reve- nue to implement these mandates as required by law. It is within this context that the fiscal impact of the potential annexation of Thousand Palms by Cathedral City is being evaluated. This analysis assumes that the state takeaways in recent years will not be re- stored. The projections in this report further assume that the revenue base now allowed cities will contin- ue in its current structure, not only for the first year of annexation but throughout the years until Thousand Palms is built out. This is because there is no way of predicting what the State may do next to attack the revenue base of cities and counties. The expenditure projections for the potential annexation of Thousand Palms are based on projected ac- tual expenditures to provide needed services to this community. Even though Cathedral City has had to significantly restructure its spending plan this fiscal year to achieve a balanced budget, it is appears that the City has adapted its expenditure model to match its reduced revenue stream. As it concerns the proposed Thousand Palms annexation, it appears that Cathedral City can more com- fortably annex this area with a balanced budget only under a scenario where the City contracts for fire/EMS service from Cal Fire. As this unincorporated area develops over time, the City will develop the fiscal capability to solidify its revenue base and support needed municipal services to Thousand Palms. It should be noted that it is expected that the tax base, during the first few years after annexation, will grow without requiring a proportionate increase in public safety expenditures, which is the major cost of extending municipal service to Thousand Palms. The public safety staff infrastructure will be established in the initial year, and then grow much more slowly compared to the rise in revenue due to increases in property tax, transient occupancy tax, and sales tax. For example, the Police Department will initially begin servicing the area with two patrol beats. It is unlikely that the number of beats will need to increase for many years, if ever. But there will be a need to incrementally increase the number of sergeant, detec- tive, and support staff hours as the area grows. So, the basic staff infrastructure to provide police service will be established at the very beginning, and then supervisory and support services will grow slowly and incrementally over time. In any event, assuming that fire/EMS service will initially be provided by Cal Fire, the following Table II-F, entitled, "Summary of Annual Revenues/Expenditures, Initial Year, Proposed Thousand Palms Annexa- tion," shows the projected revenues will roughly balance the needed expenditure to provide these ser- vices. 22 1 Page City of Cathedral C'lty SUrnmary of Annual Revemles/ExpendltUre Proposed ThOUsand Initial Year Palins Annexation Fire O lions 1 and a FIre Option 2 Revenue $3 926,089 $3,745,221 Expenditures $4,145,896 $3 806,510 Revenue Under Expenditures $219,80 $61 289 See Table II-B, "Total Available for City Operations,' footnote #7 a See Table I I-E "Fire Option #2" Table II-F shows that estimated expenditures would slightly exceed projected revenues available for gen- eral municipal purposes produced from the Thousand Palms area by an estimated $61,289 ($3,806,510" — $3,745,221) during the first year of annexation. This is based on an expenditure plan that would involve the City contracting with Cal Fire for fire service to the annexed area per Fire Option #2. The City has the ability through its expenditure plan to change this slight deficit into a slight surplus by delaying the filling one of the two Sergeant positions until expected development at the 1-10/Bob Hope Drive interchange gets underway. If, as part of the annexation, the City provided fire/EMS service initially as described in Fire Options #1 or #3, the projected expenditure plan would cost $4,145,896 which would produce a first year deficit of $219,807 ($4,145,896 - $3,926,089). The cost differential of initially providing City rather than Cal Fire service is due to Cal Fire's longer duty week, and the City's per shift deployment of four, rather than three, firefighters for Fire Station 35, This will require funding 12 rather than 9 firefighters to provide basic fire/EMS response, including ambulance service. Eventually, the revenues would increase as development occurs, permitting the City to decide whether it would be advantageous to extend City fire and ambulance service to this area. If that decision is eventu- ally made, the City obviously would need to work with Cal Fire to enable that agency to continue its 're- gional' response responsibilities as discussed in this report. There also will be a need to negotiate issues related to cost sharing and the provision of dispatch services. Annexation Advantages/Disadvantages It appears that, if the annexation occurred, service level to Thousand Palms would improve. Examples of these service improvements are: • Improved police patrol with two police patrol beats, rather than one police beat. + The opportunity to provide public access to a police service office in the Thousand Palms com- munity. • When increased revenue from new development allows, fire service, whether provided by the City or Cal Fire, can be improved to four firefighter/paramedics for the initial response unit to a struc- tural fire or emergency medical response. This will enable either agency to meet the national "2 in, 2 out" standard for structural fires upon initial response. • Access to meetings where decisions are made affecting Thousand Palms will be much more con- venient to area residents. (City Council vs. Board of Supervisor meetings; City Planning Commis- sion vs. County Planning Commission meetings.) These "decision meetings" will be in Cathedral City rather than in Riverside. • Residents of Thousand Palms will have the opportunity to serve on city-wide advisory boards and commissions. • Voters in Thousand Palms will have more of an opportunity to run for local elective office (5 coun- cil positions vs. one member of the Board of Supervisors). " $3,926,089 as shown on Table II-B, Total Available for City Operations, is reduced to $3,745,221 to reflect the absence of ambulance revenue if Cal Fire initially provides fire/EMS service as contemplated by fire option #2. .?3 .page City of Cothedral 01j, • Access to most land use and permit processing will be in Cathedral City rather than in the City of Riverside. • The City has higher standards for the provision and funding of parks than the Desert Recreation District, potentially resulting in the provision of more park acreage and improvements in Thou- sand Palms. • The City has other Development Impact Fees which will help improve the infrastructure of Thou- sand Palms and the remainder of the City. + The City has some development regulations which are different than those provided by the Coun- ty. Other services, such as animal control, code enforcement, and street maintenance should be comparable to the service currently provided to Thousand Palms. Park maintenance, recreation programs, and street median and street light maintenance will not change since these services will continue to be provided by the Desert Recreation District. In addition, water, sewer and drainage and flood control will continue to be provided by the Coachella Valley Water District, electricity will be provided by the Imperial irrigation Dis- trict, and gas will be supplied by the Southern California Gas Company. Perhaps the most important advantage of a potential annexation is that the community will have unified governance and not be split with portions of the community overseen by the County, and another portion of the community overseen by one or two cites. Possible disadvantages of the annexation to Thousand Palms are: + An increase in the sales and use tax by $.01 until 2015; and • An extension of the City's Utilities User's Tax to Thousand Palms. The benefits of an annexation to Cathedral City are: • It will add undeveloped areas with excellent future freeway access which, as the unincorporated area develops, will expand the City's financial base, creating a more fiscally stable City in the long term. • The initial annexation would enable the City to develop and preserve a basic police staff 'infra- structure' to serve this area, while at the same time providing an improved level of service to Thousand Palms. This would also enable the Department to stabilize its staffing and service structure for both the existing city and the Thousand Palms area. • Future revenues as the annexed area develops will permit fire service to improve in this area. This could improve the basic staff and equipment infrastructure for the Fire Department. • The annexation will not reduce services, or the ability to provide these services, to the existing City. The disadvantage of the annexation of all of Thousand Palms to Cathedral City is: • The revenuetexpenditure balance appears to be a negative balance, although it likely could be a "wash' or a slight surplus if the City contracts initially with Cal Fire for fire/EMS service, and police staffing is slightly adjusted during the first year of annexation. So, the City can avoid a negative impact on its current service levels in the initial year due to annexing the entire area by adjusting its expenditures for police service. Thereafter, as explained in Chapter III, the annexation should be a financial benefit to the City. As surprising as it may seem, given the recent fiscal challenges faced by both the City and the County, there appears to be some clear advantages to both Thousand Palms and Cathedral City to pursue the proposed annexation. In Chapter III which follows, the first year expenditure/revenue projections just discussed will be expand- ed to include estimates of expenditures/revenues after five years, ten years and at build out. 24 1 Page Ciry (tf Cathedral 04, Chapter III Fiscal Analysis Future Development Including Build Out Thousand Palms Introduction In Chapter 11, the initial year fiscal analysis regarding the potential annexation of Thousand Palms by the City of Cathedral City was presented. This analysis compared projected first year revenues which would be produced in Thousand Palms with expenditures required to maintain or exceed current local govern- ment service levels. As required by LAFCO, this chapter projects future revenues and expenditures to determine if an ade- quate level of service can be properly funded in Thousand Palms at build out. Using the revenue/ expenditure data from the Chapter II, these projections are based on the future land use plans for this area as reflected in the County's General Plan, with the exception of the already approved Specific Plan of the Berger Foundation for their Classic Club development, and the plans for property northeasterly of the 1-10/Bob Hope Drive Interchange, otherwise known as the Messenger project. The period of time to achieve build out is assumed to be 30 years. It is recognized, however, that eco- nomic conditions can fluctuate over three decades, so the length of time to achieve build out likely will vary, and could range anywhere from 25 — 60 years. Often, over a 30 year period, financial projections are made on a straight line basis using current estimat- ed revenues and expenditures. While, as explained below, some of the projections in this report use a straight line analysis, the effort of this study is to provide a more refined approach in preparing future rev- enue and expenditure estimates for this area. Not only are revenue/expenditure estimates at build out provided, but revenue/expenditure estimates during the first five and ten years are provided as well. As an example of this more refined approach, this report assumes that the Berger Foundation and Mes- senger projects are more nearly ready for development than the remainder of Thousand Palms. There- fore, these two projects are assumed to be fully developed much sooner than a 30 year period, possibly over the next 15 years. For the remainder of Thousand Palms, however, it is assumed that single family development will continue on a minimal to modest basis for the next five years, and then gradually in- crease to a higher rate of development for the next 25 years using a straight line projection, especially as the Berger and Messenger projects near completion. Regarding multi -family development in this area, except for the Berger Foundation and Messenger properties, it Is assumed that this housing type in the rest of Thousand Palms will not be constructed during the first 5 years, and then will be constructed over the following 25 years to build out, again using a straight line projection. Assumptions Some of the other specific assumptions which are used to achieve a less generalized and more refined future expenditure/revenue projections until build out are as follows: Two planned freeway interchanges in the area along the 1-10 corridor will be constructed in 2022 and 2032, and it is projected that each new interchange will see the construction of two travel hotels of 125 rooms each, 2. It is assumed that the hotel at the Classic Club will be constructed during the first 5 — 10 years after annexation. 3. It is assumed that commercial/industrial development in Thousand Palms during the first 5 — 10 years after annexation will be concentrated in the Berger Foundation and Messenger pro- , ... ,, 2S I Page City of Cathedral City jects, with the remaining commercial/industrial in the remaining area developed subsequent to those two projects in accordance with the County's General Plan. 4. It is assumed in this report that the County's General Plan will provide the basis for land use development outside of the property which will be developed by the Berger Foundation and the Messenger Project. It is realized that over a 30-year period, changes in these General Plan designations may occur. This report does not, however, speculate on any possible land use changes. 5. As a note to this study, while this report provides revenue and expenditures estimates five and ten years after annexation, that level of development along with the revenue it will pro- duce and expenditures it will require, could easily be stretched to a longer time frame, say 10 — 20 years. This reflects the uncertainty of the timing and extent of economic recovery over the intermediate and long term. In addition to the specific assumptions just mentioned, there are a number of general assumptions used by this report in making revenue and expenditure projections for the next 30 years in achieving build out. These general assumptions are: • Build Out. As previously mentioned, the period of time for build out is assumed to be 30 years. This is based on the assumption that economic recovery will delay the momentum of economic development for the next 2 — 4 years, but that most of the area will be developed within 25 years. It likely will take an additional five years to develop the more difficult remaining properties, with to- tal build out occurring within 30 years. Again, build out, however, could take 40, 50, or even 60 years to complete. • Land Uses. The land use assumptions for preparing revenue/expenditure projections are based on the County's General Plan for the vacant areas in Thousand Palms. Exceptions to the County General Plan land uses are SP-343 (Berger Foundation Specific Plan) and the land use pro- posals for approximately 166 acres at the northeast quadrant of 1-10 and Bob Hope Drive, some- times referred to as the Messinger Project. • Yield. Standard measures for projecting the number of residential units, or commercial square footage, based on land use acreage in the County General Plan, are used in this report. Excep- tions will be specific proposals, including adopted specific plans, where the yield for different land use types has already been established by the property owner and/or developer. For example, for all residential units to be developed under the County's General Plan, it is assumed that there will be 2.56 pph (persons per household) in developing population estimates for this area. However, for the Berger Foundation, it Is projected that occupancy will reflect data from Palm Desert, or 2.2- pph. For the Messenger Project, it is assumed that there will be 3.0 pph for single family residen- tial development, and 1.8 pph for multi -family residential development. These latter figures are used by the City of Cathedral City and seem more appropriate for the type of development pro- posed in this area. Further, it is assumed that the residential units identified in the Berger Founda- tion and Messinger Projects are the actual number of units expected to be constructed, while the DUs covered by the County's General Plan are "gross" numbers. In this latter case, the actual projected units are reduced by 15% to account for roads, streets, utility easements, and other constraints in developing residential property. • Revenue Data Base. The primary source of financial data used to develop long-term revenue projections is income information obtained from the City's actual revenues, plus current revenue data supplied by the County, where applicable. Revenues for the first year of annexation are pre- sented in Chapter 11, and these figures are projected into the future until build out using either a per capita basis or another formula which pertains to a specific type of revenue. • Expenditure Data Base. The primary source of data to prepare long-term expenditure projec- tions is information from the City's budget, plus current cost estimates from County service agen- cies, when pertinent. Again, the expenditures for the first year of annexation are presented in Chapter II and are projected into the future based on either a per capita basis or on other formu- lae. • Revenue Sources. No attempt has been made to predict new sources of revenue or changes in rates or formulas for various revenue sources. An exception is the Transactions and Use Tax dr' 26111age City u/'Cathedral Uly (TUT). While this tax may be extended by voter approval, this report assumes that the TUT will expire in June 2015. Offsetting Revenues/Expenditures. As in Chapter II, the report assumes that certain operations or functions, such as building, planning, and code enforcement, will not be included in revenue or cost projections, since fees pay, or should pay, for the expense of these services. If that is not occurring on a current basis, the City may need to review their fees to insure that offsetting reve- nue is received for specific services provided by the City, and that these services are not being subsidized by the general taxpayer. For the next several years until build out, it is assumed that the City's fee schedule will cover the costs for building, planning, and code enforcement services. Exceptions to this include General Plan updates, over the counter consultations, and collabora- tion with other local and regional agencies. Funding for these services are included in future pro- jected costs. • Inflation. The Model upon which this report is based allows the reader/user to use the numbers presented using different inflation rates. This report, however, assumes an inflation rate of zero. As a result current and future revenues/expenditures will be presented in constant dollars. This assumes that any future inflationary increases will impact revenues and expenditures equally. These assumptions are just that: assumptions. They are useful for the purposes of a study, but are not necessarily an exact predictor of where or when specific development or development types will occur. Again, residential development may be completely constructed over the next 30 years, but build out may not occur for a longer time period. Population Estimates Key to predicting future revenues and expenditures is estimating the population growth of the Thousand Palms areas. This information will help determine the amount of future revenues produced in this area as well as the cost to serve the new people living in this community. Currently, based on the 2010 census it is estimated that the Thousand Palms population is 7,715. It is estimated that 24,242 new residents will eventually be added to this area, and at build out the estimated population will be 31,457. This estimated build out population is based on the construction of an addition- al 3,715 single family homes and 6,429 multi -family homes, or a total of 10,090 new.residential dwelling units (DUs). Of this total, 754 DUs would be constructed in the Berger Foundation project, 2,200 DUs in the Messenger project, and 7,136 DUs in the remainder of the area in accordance with the County's General Plan. As previously mentioned, this report assumes that the Berger Foundation and Messinger projects would be constructed initially over the first 15 years after annexation, with residential development in the re- mainder of the area occurring on a minimal to modest basis initially, and then accelerating after the Ber- ger Foundation and Messenger projects are well established. Based on these assumptions, it is projected that the population of the Thousand Palms area will be 9,489 in the fifth year after annexation, and 10,579 in year ten. Depending upon the economy and the rate of growth for Thousand Palms and the Coachella Valley, the population estimates for years five and ten may turn out to be the estimates for some future years like years 10 and 20. Providing periodic five year popu- lation projections beyond year ten as presented but are imprecise. Based on these assumptions, the following Table Ili -A presents the population projections through build out. 271 Page City of Cathedral Ci1v Table 111-A Year Est. Population 2012-13 Base Year 7,715 2017-18 5 Years 9,489 2022-23 00 Years 10,579 2027-28 05 Years 18,250 2032-33 20 Years 22,815 2037-38 25 Years 27,380 2042-43 Build Out 31.945 In addition to the population estimates at 5, 10, 15, 20, and 25 years and at build out, it is projected that there will be substantial non-residential development. A portion of this development will consist of 16 acres of executive office, or 230,000 square feet per the Berger Foundation Specific Plan. The Messen- ger Plan proposes 190 square feet of office and other services. For commercial, retail, and retail mixed use development, it is a projected that there will be 3,435,163 square feet of development. Of this amount, 500,000 square feet is in the Berger Foundation Specific Plan for the land use designations of mixed use retail village or community commercial development For the Messenger Project, 320,000 square feet of commercial and restaurants is proposed. The remainder of the projected commercial development is in the County's General Plan. The combined plans contain 17,036,020 square feet of business park and industrial development. This includes 1,200,000 square feet (Research and development) on 69.60 acres per the Berger Foundation Specific Plan, and 2,220,000 square feet of light industrial is projected in the Messenger project The re- maining business park/industrial square footage is included in the County's General Plan. Since the projected business park and industrial development reflects a significant amount of square footage to be absorbed by the market place — perhaps more than could reasonably be absorbed by the market given similar projects which may be proposed in the Valley over the next 30 years or more — this report in developing its property tax revenue estimates uses a per capita projection based .on the current ratio of property tax income/population. While this may produce a more conservative revenue projection for this tax, this approach may provide more useful data than to assume that over 17 million square feet of business park and industrial development will be absorbed by the market during the next 30 years. Revenue Estimates Per Capita Revenue As just mentioned, the property tax revenue is projected on a per capita basis. The current revenue pro- duced by Thousand Palms is divided by the current population, and the resulting property tax per person income is projected based on increases in the area's population. Again, this approach was used since it was concluded that property tax income based on over 17 million square feet of business park and indus- trial development and over 3.4 million square feet of retail/commercial may produce an unreasonably op- timistic result. It may be that over time some of this acreage (over 1,000 acres in the County General Plan outside of the Berger Foundation and Messenger Project land), will be rezoned to residential, institutional, or some other use. In addition to property tax, other revenues are projected on a per capita basis including the: + Structural Fire Tax; • Property Tax In Lieu; • Sales Tax Comp Fund; • Transaction and Use Tax (until June 2015); • Utilities User's Tax; + Franchise Fees; • Business License Fees; 28 Page Cily oj'Cathedrat City, • Fines and Forfeitures; and • Charge for Services. Revenue from these sources is calculated at $387.60 per capita until June 2015 at which time the per capita amount is reduced to $349.06. These revenue sources are projected to produce $42,636 during 2013-14, increasing to $619,232 by 2017-18, and then growing to $999,708 by 2022-23 using the as- sumptions in this report. By build out, these revenue sources will produce $8,457,723 annually due to the projected population increase in Thousand Palms. Transient Occupancy Tax/Time Shares The Transient Occupancy Tax (TOT) is the so-called hotel or bed tax charged by cities in the Coachella Valley for visitors lodging at local motels, hotels, and resorts. In Cathedral City the rate is 12%. In Thousand Palms there is one travel hotel, the Red Roof Inn. Proposed to be constructed as part of the Messenger Project is an upsca hotel and a travel hotel at the Bob Hope and 1-10 Interchange., It is ex- pected that both hotels w� constructed within the first five years a er annexation, with -the first hotel beginning construction during 2013-14. This 100-room hotel is expected to be completed by 2014-15 and a 300-room hotel by 2017-18. Expected to be constructed during the first 5 — 10 years after annexation is the resort hotel at the Classic Club (350 rooms). This facility is identified as the Golf View Hotel on the Berger Foundation Specific Plan, and is located on 17.60 acres next to the Classic Club Golf Course. The Plan also envisions the construc- tion of 216 time share units. It is assumed that, over time, four more travel hotels will be constructed two each at the_two nPw j►,tar- shanges expected to be built in the future. For the purposes of this report, it is projected that one inter- change, along with two travel hotels, will be constructed in 2022, and the other interchange, also with two travel hotels, will be constructed in 2032. The construction of these facilities will have a significant impact on the short-term and long-term financial feasibility of this annexation. The construction of the two hotels by Messenger and the resort hotel by the Berger Foundation is estimated to produce a $3.2 million in additional revenue to this area. The construc- tion of the four additional travel hotels plus the Berger Foundation timeshares during the next 20+ years will produce another $1.3 million of increased income in terms of today's revenue. Sates Tax This report assumes that the 500,000 square feet of retail/commercial for the Berger Foundation Specific Plan will be developed over the next 15 years using a straight line projection. This includes 400,000 square feet of retail in a mixed use retail village per the Berger Foundation Specific Plan. Based on the developer's projections, it is assumed in this report that most of the Messenger Projects 320,000 square feet will be developed by 2021. While major development of commercial square footage for this project may occur within a 5-year time frame, the 15-year projection is used since future commer- cial development in the context of the current economy is uncertain. The remainder of the area covered by the County's General Plan contains 276.96 acres which would pro- duce approximately 2.6 million square feet of commercial development. This amount of commercial seems excessive for this area and for the Coachella Valley as a whole, and, over time, this acreage may be converted to other land uses. For the purposes of this analysis the report assumes that the retail/commercial for the Berger Foundation and Messenger Projects will be developed over a 10 - 15 year period, and that the remainder of the commercial will be absorbed over a 30-year period until build out. It is estimated that Thousand Palms will produce an additional $440,000 in sales tax income annually af- ter five years of annexation, which will increase to approximately $2.2 million annually after 10 years. At build out the estimated annual, revenue from this source is an estimated $7.8 million. 29I Purge City of Catliedral City Ton -General Fund Revenue The report only assumes the receipt of non -General Fund income consisting of state gas tax funds and Measure A funds. These two revenue sources are projected on a per capita basis based on the report's population projections. It is estimated that the per capita income produced by these two sources are: Gas Tax ($26.83/per capi- ta), and Measure A ($19.61 per capita), or a total of $46.44 per capita. It is estimated that these two re- stricted revenues will produce $465,793 in 2017-18, and $715,176 in 2022-23. At build out, it is estimated that these two revenue sources will produce $1,460,306 ($46.44 x 31,445) annually. These funds are re- stricted to street construction and maintenance activities and cannot be used for any "general city pur- pose." The projected revenues related to the potential Thousand Palms annexation are summarized in the fol- lowing Table III-B. ThOLIsand Year Table 111-B Palms Estimated General Est General Fund Revenue Fund Revenue at Build Est Non -General Fund Revenue 2012-13 $3 745 211 $358,289 2013-14 3,875,861 2017-18 5,126,153 465,793 2022-23 10,751,547 715,176 2027-28 15,436,963 2032-33 18,898,916 2037-38 1 21,820,074 2042-43 24,744 721 1,460 306 As can be seen in this table, there is a gradual increase in revenue to support general operations, mostly based on the projected increase in population since many of the estimated revenues accruing to the City are based on per capita projections. There is a much larger increase between 2017-18 and 2022-23 as- suming the construction and operation of the resort hotel at the Classic Club Golf Course and the Mes- senger hotels along the 1-10 freeway. Of course, there is no guarantee that build out will be accomplished in 30 years. The revenue estimates for the first ten years may not be accomplished in that time frame, but may take longer to achieve de- pending upon economic conditions in the Valley. Also, based on the acreage set aside for commercial development in the County's General Plan, the sales tax revenue in these projections may be optimistic. On the other hand, as explained earlier, the property tax revenue projections are likely conservative. Expenditure Estimates The expenditure projections are based on the cost of police, fire, and other city services currently being provided to the City of Cathedral City and in providing service to Thousand Palms during the first year of annexation as described in Chapter 11 of this report. Based on that analysis, providing City services to Thousand Palms in 2013-14 would cost $3,806,510 against $4,012,686 in revenue, providing a slim bal- ance of $206,175. Initially, this balance would stay about the same, and, by 2017-18, it is estimated that expenditures to serve Thousand Palms with an estimated population of 9,489 would total $5,126,153 against revenue of $6,322,198, or a surplus of $1,196,045. During the next five years, with the expected construction of the resort hotel and other improvements, this surplus would grow to $2,656,259 by 2022- 23. At build out, the cost of serving Thousand Palms in terms of General Fund expenditures is estimated at $15,428,686 against General Fund income of $24,744,721, or a surplus of $9,316,035 in current dol- lars. Of course, these numbers are only estimates that could change dramatically based on rate of growth, type of development, and changes in basic land uses. These figures are summarized in Table III- C which presents the cost of serving Thousand Palms over the next 30-years, or until build out occurs. 30 ; Page rty nSf �,rfrnl G`i1y Year Est. GF Revenue Table 111-C I t. GF Ex nditures I Su lug Deficit 2013-14 4,012,683 3,806,510 206,173 2017-18 6,322,198 5126153 1,196,045 2022-23 10,751,647 8,095,228 2,666,259 2042-43 24,744,721 15,928,686 9,311,035 These figures demonstrate that initially revenues would barely support needed expenditures. And this expenditure plan assumes that the City would contract with Cal Fire for fire, service, otherwise the City would experience a deficit each year. This Table also shows that by the fifth year after annexation a substantial General Fund revenue surplus would accrue. This is based on the substantial TOT income which would be produced by the two hotels on the Messenger Property. This assumes that both facilities will be constructed by the fifth year of an- nexation. Additional revenue would be produced by the resort hotel at the Classic Club between the fifth and tenth year after annexation. Further, substantial increases in sales tax will occur by this time due to development of retail at the Berger Foundation and Messenger projects. Without this income stream, the revenues and expenditures would be evenly matched, and no major revenue surplus would be created. By the tenth year of annexation revenues would clearly exceed expenditures even if the classic club re- sort hotel were not on line. By the 30th year, or whenever build out occurs, this annexed area would clear- ly pay for needed municipal services in Thousand Palms and would have a significant positive economic benefit to Cathedral City. Expenditures for specific services were calculated as described in the following paragraphs. Instead of providing a straight line projection of expenses, an effort was made to anticipate the specific needs of the community based on its population and budget for those services, especially for the major cost of police and fire service. Police In the initial year of annexation as explained in Chapter II there would be 11.75 Full-time Equivalent (FTE) police officers with additional support staff such as a Records Clerk and .5 FTE Dispatcher, for a total of 13.25 FTE police staff. This provides basic police staff infrastructure to serve Thousand Plans at the level of 1.52 police officers per thousand vs. the current service level of .75 sheriffs deputy per thousand popu- lation. During the following five years there would be the addition of two FTE Sergeants. This would increase the number of Sergeants assigned to Thousand Palms from two to four, providing a Sergeant on duty 24/7. Also budgeted would be an additional Detective, Dispatcher, and Records Clerk. The number of police staff would then increase to 18.25 FTEs. Also two additional police vehicles would be purchased. During the next five year period (2019 — 2023), the City would add per the projected expenditures in this report four police officers, two Sergeants, one Detective, one Dispatcher and two Records Clerks. By the end of this period, and ten years after annexation, the Police Department would have 21.75 police officers to service a community of 10,579. This would amount to 2.06 police oficersithousand, a temporary in- crease from the initial level of staffing using the measure of police staffing of staff/1,000. It would be a level of staffing substantially higher than is currently being provided. Overall Police Department staff would total 28.25 FTEs. Also, three additional police vehicles would be purchased. During the next 20 years to build out, it is estimated that there would be added to the Police Department, 15 additional police officers, four detectives, two Sergeants, three Dispatchers and four more Record Clerks. Six additional police vehicles would be acquired. By 2042-43 there would be 42.75 FTE police officers to serve an estimated population of 31,945. This amounts to 1.34 officers per thousand popula- tion served. Total Police Department staff would number 62.25 FTEs. Animal Control The funding for Animal control in the initial year is $70,483, increasing to $141,000 by year ten. As the population for Thousand Palms doubles in 10 years, so would the amount budgeted for this service. At build out, it is projected that the cost of Animal Control is projected to be $400,000. 311 Page City of Cathedral City Fire As mentioned in Chapters II and IV, it is recommended initially that the City contract with Cal Fire for fire/EMS service for both operational and financial reasons. The 30-year projection assumes that this ar- rangement will be in place for at least ten years. By the 10`" year, it is assumed that the Palm Desert fire station which would partially serve Thousand Palms would be constructed and staffed. As a result, 40% of that station's staffing expense would be included in this budget, increasing the fire budget in current dollars to $2,352,000. This assumes that there will be a continued contract with Cal Fire at this time. By build out the Fire budget is projected at $3,986,400. Still assuming a service contract with Cal Fire, the budget would include the purchase of an ambulance with the City paying $1,000,000 for its operation. It is also projected that a fourth firefighter would be added to the engine company at Fire Station 35. This budget amount would give the City the flexibility to continue the contract with Cal Fire, provide additional money for apparatus, add a fourth firefighter/paramedic to the current Cal Fire Type I engine located at FS 35, and to support an additional Cal Fire engine company in Palm Desert which would partially serve Thousand Palms. Or this level of funding could support the provision of fire service by the City at Fire Sta- tion 35 using three or four person staffing of the engine at that location. Administration In the initial year of annexation, additional staff is not added to administration which includes finance, hu- man resources, MIS, and, in a broad sense, legal services. As the area grows, however, additional staff- ing will be needed. The expenditure projection for Administration staff and services includes an annual cost increase of $247,000 for two positions by year five and $494,000 by year ten with the addition of an- other clerical and a professional position. At build out, this expense increases to $988,000 with the addi- tion of four more positions to this Department or accumulated total of 8 full-time positions. Community Development As in administration, additional staff is not added to this function (planning, engineering, public works) in the initial year of annexation. As the area grows, however, funds for increased staff would be needed. By the fifth year after annexation, there would be an annual increase of $247,000 to support two new posi- tions in this Department. This amount would grow to $654,000 annually by year ten with the addition of three new positions. At build out this budget would grow to $1,308,000 with the addition of five more cleri cal and professional positions, or a accumulated total of 10 full-time positions. City Clerk The cost of election service is estimated at an annual amount of $3,500 initially. By year five, it is estimat- ed to be $5,000 annually, and by year ten, $7,000. Again, the cost of elections will double in concert with a similar population increase. At build out, it is estimated that the cost of elections will be $15,000. In ad- dition, $5,000 will be included in this budget to support the Thousand Palms Community Council, for a total budget of $20.000. Public Maintenance Public maintenance is basically street, signal, and sign maintenance. The expenditures for this function is based solely on revenue from gas tax and Measure A funds. In the initial year this amount is estimated at $358,000. By 2017-18, this revenue source is expected to produce $465,793, and by 2022-23 this amount should be $715,176. By build out, this revenue source should produce $1,460,306. By build out, the General Fund expenditure portion of the City budget is projected to be $15,549,683, with an additional $1,460,306 in restricted revenue to support street maintenance services. The overall esti- mated City budget for Thousand Palms at build out is $17,009,989 as presented in Table III-D, "Thousand Palms Expenditure Budget at Build Out." j > 32 1 Page City of Ciaherbal City [housand Department Table 111-D Palms Expenditure Budget at Build Out General Fund Expenditure Gas Tax/Measure A Ex ndifure Police $8 731 286 Fire 3,986,400 Administration 988,000 Community Deve! meet 1,308,000 Animal Control 400,000 Clerk Elections 20,000 Street Maintenance $1,460,306 Total General Fund Budget $15,433,686 Total City Budget $16,893,992 Revenue for Capital Improvements In Chapter II it is mentioned that one-time revenues will be produced as a result of new development. This income is created from building development fees and development impact fees (DIF). This revenue cannot be used to support on -going municipal services or operations, but are restricted by state law and implemented by City ordinances only for needed capital improvements. These improvements are de- signed to support new development. These fees are normally paid when an applicant seeks an entitle- ment or permit for land development and/or a permit for the construction of residential, commercial or in- dustrial development. The development fees in Cathedral City consist of two categories. One are Building Development fees collected for Police and Fire, City facilities, and signalization; the Master Undergrounding Fee; Transit Development Fee; Park Fees; Art in Public Places; and the City Facility Impact Fee. The other category of fees is Development Impact Fees (DIF). These fees are designed for new devel- opment to pay its share of overall City facility needs. The DIF fees in Cathedral City apply to the City Yard (vehicle storage); Police Community Center; Public Safety Training Site; Interchanges and Bridges; Un- paved Trails; and Parks, Community Center, and Pools. Each fee category will be discussed in this section. While it is feasible to provide specific estimates of to- tal DIF fees, such estimates are not feasible for all Building Development Fees. This is because elements of the formulae for these latter fees cannot be determined at this time, such as the "land cost per acre" at the time of development which is an element in determining the park fee. These issues are explained in the following paragraphs. Building Development Fees The Building Development Fees, as just mentioned, consist of Police, Fire, Facilities, and Signalization; Master Undergrounding Fee; Transit Development Fee; Park Fees; Art in Public Places; and City Facility Impact Fees. It is impossible to project the income from all of these fees at this time due to unknown ele- ments in some of the fee formulae. For example, Park Fees are determined by the number of DUs x av- erage # of persons per DU x 3 acres per 1,000 residents x land cost per acre = total fee. Unfortunately, it is impossible to determine at this time the "land cost per acre" when the fee is calculated. For Art in Public Places the formula is 1 % of 90% of building valuation for buildings over 15,000 square feet. It is impossible at this time to determine how many buildings over 15,000 will be constructed at build out, or their valuation. While a guess could be taken as to how many square feet of roofed area will be constructed at build out, it likely would be too imprecise to estimate the Master Undergrounding Fee. This Fee is based on a for- mula of $.15 per square foot of roofed area for all development. Revenue estimates for portions of the Building Development Fees, however, can be estimated. For ex- ample, the City Facility Impact Fee is $1,851/residential unit. Based on an estimate of 9,796 DUs at build out, it is estimated that this fee will produce $18,132,396 in terms of current dollars ($1,851 x 9,796). The fee is $10,288/Acre for retail commercial, which is estimated to produce $3,707,281 ($10,288/Ac x 360.35 Acres). The fee for non -retail commercial/industrial is $6,247/Acre. This will produce an estimated 331 page City of Cathedral Wiry $7,214,348 ($6,247 x 1,154.85). The total estimated amount that would be collected by build out for the City Facility Impact Fee is $29,054,025. The fee for Police, Fire, Facilities, and Signalization is $150/1,000 square feet of all development Since the average square feet of the 9,796 DUs yet to be constructed in Thousand Palms is difficult to project, only income for this fee from commercial and industrial development has been estimated. While the current estimates of square footage for commercial and industrial development at build out seem excessive, based on the Berger Foundation, Messenger, and County General Plans, the following estimates for this fee are as follows: Commercial = $569,550 (3,797,000 square feet x $150/1,000 square feet); Industrial = $2,550,000 (17,000,000 square feet x $150/1,000 square feet). This would provide a total of $3,119,550 for this fee category from commercial and industrial land uses. The estimated Building Development fees for Thousand Palms are presented in Table III-E, entitled, "Es- timated Building Development Fees for Thousand Palms." Development Impact Fees (DIF) Unlike the Building Development Fees, it is possible to project revenue projections for all of the DIF fees at build out. The fees are either determined based on $/DU for residential development, or $/Acre for re- tail commercial development and non -retail commercial industrial development. There are six DIF fees imposed by the City. In summary, the amount produced from residential develop- ment includes: $930,620 toward the City Yard ($95/DU x 9,796); $205,716 for the Police Community Cen- ter ($21/DU x 9,796); $176,328 toward a public safety training site ($18/DU x 9,796); $842,456 ($86/DU x 9,796); $519,188 for unpaved trails ($53/DU x 9,796); and $15,448,292 for parks, a community center and pools ($1,577/DU x 9,796). This latter fee will supplement the resources from the Desert Recreation District in providing parks and recreation facilities to the benefit of Thousand Palms. The amount produced from retail commercial development is based on $/Acre. In summary, for the City Yard the DIF fee on commercial development will produce $211,531 ($587/Acre x 360.35 acres). For the Police Community Center the amount collected by build out will be $47,566 ($132/AC x 360.35 acres). The amount produced for the public safety training site will be $39,639 ($110/AC x 360.35 acres); for the Interchanges and Bridges the amount collected will be $1,492,930 ($4,143/AC x 360.35 acres); for un- paved trails the amount produced will be $62,341 ($173/AC x 360.35 acres); and for parks, a community center, and pools $1,852,559 will be produced ($5,141/AC x 360.35 acres). The revenue received from non -retail commercial industrial development is also based on $/AC. Devel- opment of a City Yard is projected to receive $524,302 ($454/AC x 1,154.86 acres); the Police Communi- ty Center should receive $117,795 ($102/AC x 1,154.85); the public safety training site should be sup- ported in the amount of $98,162 ($85/AC x 1,154.85 acres); Interchanges and Bridges should receive $1,732,275 ($1,500/AC x 1,154.85 acres); Unpaved Trails should obtain $154,750 ($134/AC x 1,154.85 acres); and parks, a community center, and pools should secure $4,588,219 ($3,973/AC x 1,154.85 acres). This data is summarized in Table III-F, entitled, "Development Impact Fees for Thousand Palms." 3.11 Page _. ..... _...,.. _ City of Catheclrat City Fee Development Impact Residential Fcos for Thousand Commercial Palms Industrial Total City Yard $930620 $211,531 $524,302 $1,566454 Police Communication Center 205,716 47,566 117,795 371.077 Public Safety Train Site 176,325 39,639 98,162 314,126 Interchanges & Bridges 842,256 1,492,930 1,732,275 4.067,461 Unpaved Trails 519188 62,341 154,750 736,279 Parks, Community Center, Pools 16,448,292 1,852,569 4,688,219 21,889,070 As can be seen from Tables III-E and III-F, there will be a significant amount of one-time revenue collect- ed from DIF fees for various City-wide public improvements during the. development of Thousand Palms. These revenues will supplement income from DIF fees applied to other parts of the City. Examples of city- wide improvements are the City Yard ($1,666,454), Police Community Center ($371,077), the Public Safety Training Site ($314,126), and Unpaved Trails ($736,279). Examples of improvements which, while city-wide in application, will have a more direct impact on Thousand Palms are the fees for Interchanges and Bridges ($4,067,461) and Parks, Community Center, and Pools ($21,889,070). This latter fee cou- pled with the Park Fees which will be collected as a Building Development Fee will provide substantial resources for park and recreation facilities in Thousand Palms and rest of Cathedral City. Summary Based on the projections in this report, it appears that there should be sufficient General Fund and re- stricted revenue to support basic City services to Thousand Palms during the first 5 years after annexa- tion. Revenues, however, will not be sufficient to accumulate any significant surplus during this period of time. Between the fifth and tenth years after annexation, however, there is projected to be a revenue sur- plus to support City services, and after ten years until build out the revenue surplus will grow significantly and should be substantial. At the same time, services will equal or exceed services now received in Thousand Palms, and will equal or exceed those services currently received in Cathedral City. Also, there appears to be sufficient one-time revenue to support major capital improvement projects in Thousand Palms as well as provide that communities' share of city-wide capital improvements. The in- come collected for these improvements, particularly for parks and recreation facilities, appear to exceed what could be obtained otherwise. This is because of the City's authority to impose DIF fees compared to the Desert Recreation District. As can be seen by this report, the Building Development Fees and Devel- opment Impact Fees over time will produce a significant amount of capital improvement revenue. 351 Page Oly of Cathedral City Chapter IV Plan of Services Community of Thousand Palms The Riverside County Local Agency Formation Commission (LAFCO) requires as part of any annexation process that a Plan of Services be prepared for the area proposed for annexation. The purpose of the Plan is to articulate the service demand for the area at complete development, and indicate how that de- mand will be met. In the case of the Plan for Services for Thousand Palms, not only will the service demand at build -out be analyzed and discussed, but service demand has been evaluated during the initial year of annexation as discussed in Chapter 11 of this report. This approach is designed to assure LAFCO, the citizens of Thou- sand Palms, and the City of Cathedral City that adequate and satisfactory services will be provided both initially as well as at full development in a fiscally responsible and balanced manner. These services will be provided not only by the City, but by other agencies which currently serve Thousand Palms. In order to develop a comprehensive Plan of Services, LAFCO has developed a draft checklist of infor- mation which should be provided in this Plan. This checklist is used as a guide in developing this report. The Plan of Services checklist specifies that the following areas should be analyzed and discussed: • Background • Police Protection • Fire Protection • Animal Shelter and Control • Water • Wastewater • Electricity • Solid Waste Collection • Street Maintenance • Lighting, Landscaping, and Street Sweeping • Parks and Recreation • Library • Financial information In addition, this Plan of Services also includes: Schools Also, the Plan of Services has grouped under the heading of "Utilities" the following utility services: • Water, • Wastewater; • Electricity, and • Solid Waste Collection Services. 3G 1 "age City oj'Catlied'ral City In addition to the utility services specified by LAFCO, the following services have been added under the "Utilities" category: • Drainage/Flood Control; and • Gas (natural). Further, this Plan of Services also has moved Street Sweeping into the more appropriate category of Street Maintenance. Finally, parks, recreation, and library services are grouped under the heading of "Leisure Services." In each category of service, the LAFCO checklist asks for a description of the level of service standard provided by the current service provider, and the level of service which will be provided by the new ser- vice provider, in this case, the City of Cathedral City. Where the service provider will not change due to the annexation, and there will be no change in land use designations, a limited analysis of these services to the area is required. This presumably is based upon the assumption that the current service provider will be able to continue its current service role, and to meet the requirements for implementing its master plan in the impacted service area. Background The Thousand Palms community stretches along the northeasterly edge of the 1-10 freeway, from west of Rio del Sol Road to 3e Avenue, and then easterly to Washington. It consists of over 6,600 acres, with an estimated population of 7,71518. When added to the 4,100 acres from Da Vail Drive to Rio del Sol Road, a total of 9,700 acres is being evaluated as part of this Plan for Services. This unincorporated area is partly inhabited, but with a significant amount of vacant land. As shown in the map on Exhibit A (See Chapter 1). it is bounded on the southwest by the 1-10 freeway, the City of Cathe- dral City to the northwest, the Coachella Valley Multiple Species Habitat Conservation Area on the north- west, and the Palm Desert Sphere of Influence (SOI) to the southeast. Thousand Palms is mostly a residential community with most of its inhabitants living in the vicinity of the I- 10 freeway, Monterey Avenue, and Ramon Road. There is also freeway commercial in this area, along with a business park. This part of the community is served by an elementary school, a park with a com- munity center and library, and Fire Station 35. Adjacent to the fire station is a major fire training facility which serves the entire desert region. Northerly there is scattered, though important industrial development, including nearby surface mining. Running south along Vamer Road toward Palm Desert Sun City are additional pockets of residential de- velopment, along with the Classic Club Golf Facility and the private Xavier High School. Currently, Thousand Palms is served by Riverside County, which provides both police and fire/emergency medical service. Water, sewer, and drainage facilities are maintained and operated by the Coachella Val- ley Water District. Electrical Service is provided by the Imperial Irrigation District. The Desert Recreation District maintains and programs the park and community center, and maintains street lights and a major street median (Ramon Road). County Library Services operates a branch library next to the community center, and the public schools are administered by the Palm Springs Unified School District. On December 8, 2010, the City Council gave direction to submit an application to expand the City's SOI to include the remainder of the Thousand Palms community. This unincorporated area was formally placed in Cathedral City's SOI by the Riverside County LAFCO in January 2012. This means that if the area is annexed into a City, it can only be annexed into Cathedral City while it is in the City's SOL While the City was interested primarily in annexing the area between Oa Vail Drive and Rio del Sol Road, the entire area is being assessed for potential annexation because of the interest of those living and working in the Thousand Palms community. Police Protection 18 2010 U. S. Census. 371 Page City of Cathedral City Current Service Provider The current service provider of police protection to the Thousand Palms community is the Riverside County Sheriffs Department. In accordance with LAFCO's Plan of Services checklist, the following infor- mation has been provided by the Sheriffs Department. Level of service standard (target or goal). The officer to population ratio projected this summer (2012) is .7511,000. Due to County budget cuts, this ratio was reduced from 1.20/1,000 during the past two years. It should be noted that many professionals in the law enforcement community do not believe that the number of officers per 1,000 population is an appropriate measure of law enforcement service levels. This is because socioeconomic factors play a more important role in determining the need for the number of officers to serve a particular community. Nevertheless, this information is provided as required by the checklist. The response time goals by priority type are: • Priority 1 calls < 5 minutes • Priority 2 calls < 10 minutes • Priority 3 calls < 15 minutes Where is the nearest station providing counter services to the affected area? The closest fully staffed Sheriffs substation with counter service is located in Palm Desert. The address of this substation is 73705 Gerald Ford Drive, Palm Desert, CA 92260. This facility is approximately one- half mile from the middle of Thousand Palms at Cook Road, and is approximately 4.5 miles from Fire Sta- tion 35 which is located in the midst of this community's population base. While not providing counter or public access, a report writing office space is maintained by the Sheriff at the Thousand Palms Library, 31189 Robert Road, Thousand Palms, CA 92276. What is the actual level of service being provided within the unincorporated service area of a station? Regarding officer to population ratio, it is .75 per 1,000, beginning in summer 2012. As pointed out by the Sheriffs Department, this number can vary up or down depending upon budget considerations. For ex- ample, the ratio was 1.20 per 1,000 population two years ago. In addition, supplementing this patrol staff- ing, the California Highway Patrol provides traffic enforcement and accident investigation service to this community. Concerning the requested number of daily patrol hours provided to this area, a specific number was not able to be provided by the Sheriffs Department. The Department did indicate, however, that there is one beat officer dedicated to Thousand Palms, meaning that there are at least 24 patrol hours provided to this community each day. In addition, this beat can be assisted by a Deputy from an adjacent beat when nec- essary. Further, there is a canine unit assigned out of the Palm Desert Substation to serve the Depart- ment's unincorporated area in the Valley. Regarding the average response times by priority type, this information was not specifically available for Thousand Palms, except for the response goals by priority type presented above. List and briefly describe any specialized units. In addition to the above mentioned canine unit, the Sheriffs Department has a number of specialized in- vestigative units which investigates homicides, narcotics, and other high profile cases. As a large law en- forcement agency, the Department has a number of other specialized units and equipment as well. It should be noted that most of these units are also available to city police agencies in accordance with County policy and through mutual aid. New Service Provider 33 1 Pa e City of Cathedral City The new service provider is the Cathedral City Police Department. In accordance with LAFCO's checklist, the following information is provided. Number of sworn officers employed by the agency. As of July 1, 2012, the City of Cathedral City currently employs 47 sworn police officers as authorized in the City's 2012-13 budget. Level of service standard (target or goal). The current level of service goal in Cathedral City is an officer to population ratio of slightly less than 1.0/1,000 based on current practice. However, given the geographical characteristics of Thousand Palms at the time of initial annexation, the Plan for Services envisions the Police Department providing two pa- trol beats 24/7, plus necessary supervisory and support staff. This will result in 11.75 sworn police officers (9 officers, 2 Sergeants, and .75 Detective) being added to the Police Department to serve Thousand Palms. As a result, the initial staffing goal will be an officer to population ratio slightly more than 1.50/1,000. As explained in Chapter 11, the requirement for two patrol beats is, in part, because of the physical length of the Thousand Palms service area. Also, this community is physically separate from the developed part of Cathedral City, so there is a need for two beats to provide immediate backup and assis- tance for emergency calls. It should be noted that, in addition to the number of sworn officers required to serve Thousand Palms, additional civilian staff will be needed, including 1 Records Clerk and a .5 Dispatcher. This will result in a total initial Police Department staffing of 13.25 FTEs (Full -Time Equivalents). If annexation occurs, and as the area grows, the need to expand beyond two beats will not be required in the foreseeable future. There will be a need, however, to add Sergeants, Detectives and support staff to met future demands of a larger population. Basically, the initial annexation will involve the investment in "basic sworn officer infrastructure" to provide needed patrol services now and in the foreseeable future, with additional supervisory and support staff added in the future. This means that the number of officers per 1,000 population served will slightly decline by build out, but will continue to exceed the number of officers per 1,000 currently provided to Thousand Palms as well as to the existing City. The response time goals by priority type, and based on actual response times in Cathedral City, are: • Priority 1 calls < 5. minutes • Priority 2 calls < 8 minutes • Priority 3 calls < 10 minutes These response time goals are slightly higher than the actual average response times currently experi- enced in Cathedral City. With the two beat structure proposed for Thousand Palms, it is expected that these response times will be at or lower than those stated above_ Actual level of service being provided city-wide: With the adoption of the City's 2012-13 budget the city-wide officer to population ratio is .92/1,000. As just mentioned, since the developed portion of Thousand Palms is physically separate from the developed parts of Cathedral City, the Police Plan of Services provides for two patrol beats 24/7 to serve this area. This Plan envisions dedicating two patrol beats exclusively to serve Thousand Palms. Through this staffing configuration there will be back up for each officer patrolling this community. Along with providing staff for the patrol sergeant function which supervises these beats, and a .75 FTE detec- tive, it is projected that the officer to population ratio will be slightly greater than 1.50/1,000. As can be seen from this comparison with the existing service level, this will be an improvement over the current level of law enforcement service and staffing provided to Thousand Palms at the time of initial an- nexation. This ratio will likely decline slightly by build out and at complete development, since the City would invest in a significant portion of the basic "patrol infrastructure" during the first year of annexation. The number of daily patrol hours currently provided city-wide, not including supervising patrol sergeants, is 144 hours. The number of patrol hours per day which will be provided to Thousand Palms is 48 hours, tf 39(Page 7 � City of Cathedral City namely two 2417 patrol beats. Again, this is an increase over the current level of service being provided to this area. The average response times by priority type provided city-wide are., • Priority 1 calls < 4.5 minutes • Priority 2 calls < 6.9 minutes • Priority 3 calls < 7.2 minutes It is expected that the response times to Thousand Palms will be at or better than these average re- sponse times. Additional personnel/facilides required at build -out Based on projected land uses at build -out for the affected area, this part of the LAFCO checklist asks how many additional personnel and facilities will be required to maintain the existing level of service. Initially, there will be a need for the City to add approximately 9.0 full-time equivalent police officers to staff two patrol beats in Thousand Palms. There will be a need to also add 2.0 Sergeants, .75 Detective, .5 Dis- patcher, and 1.0 Records Clerk. Based on the projected initial City service level staffing of slightly more than 1.50 officers per 1,000 population served, plus support staff and vehicles, the cost of the first year of police service to the annexed area is estimated at $2,047,527, At build -out it is projected that there will be 62.25 FTE police staff, including 42.75 sworn officers at a cost of $8,847,283. These officers, plus support staff, will be funded by General Fund revenues produced in Thousand Palms such as property tax, sales tax, transient occupancy tax, property transfer tax, utility us- ers' tax, fines and forfeitures, service charges, and franchise fees. It is not expected that a new police facility will be needed to serve this area. The area will be served from the Cathedral City police station. It is projected that over time with the expected growth in Thousand Palms, the current police station, without expansion, can satisfactorily provide service to this area. There is the likely possibility, however, that a satellite facility will be located in Thousand Palms. At a min- imum, building space for report writing can be provided, which will allow patrol officers to stay within their beat while engaged in writing police reports. Currently, the Sheriff uses space at the County Library for this purpose, and there also appears to be space which could be made available at Fire Station 35. The proposed plan for development at the northeast quadrant of the 1-10/Bob Hope Drive interchange antici- pates a community facility which could also accommodate office space and limited public access space for the Police Department. By locating an office at the Fire Station, or the proposed community facility, the opportunity for limited public access for police business will be afforded. The Library and Fire Station are located on Robert Road, and the community facility will be located be- tween Varner Road and the 1-10, slightly north of Bob Hope Drive. It is not expected that there will be a construction expense for any of these potential police office locations, since the Library and Fire Station are already in place, and the proposed community facility would be provided through developer coopera- tion. Wl:ere are the nearest two police stations providing counter service to the affected are? The two nearest police stations providing counter service to Thousand Palms are the Sheriff's Palm De- sert substation at 73750 Gerald Ford Drive, Palm Desert, CA 92260, and the Cathedral City police station located at 68700 Avenida Lalo Guerrero, Cathedral City, CA 92234. The Sheriff's substation is approxi- mately 4.5 miles from Fire Station 35, near the bulk of the residential, commercial, and business park de- velopment in Thousand Palms. The City police station is an estimated 6.6 miles from that same location. List any specialized units of the Police Department The Cathedral City Police Department participates in the Coachella Valley Violent Gang Team Task Force and participates in the Palm Springs/Cathedral City joint SWAT Team. Fire Protection 401 Page C- City, ofcarh.edral cuy Background Currently, fire protection and emergency medical services (EMS) are provided to the Thousand Palms area by the Riverside County Fire Department under contract with the state fire agency, commonly known as Cal Fire. These services are provided from Fire Station 35, located in the Thousand Palms community at 31920 Robert Road. Cal Fire responds to fire and EMS calls with one Type-1 fire engine staffed by three firefighters (3 — 0 staffing), including at least one firefighter/paramedic. Ambulance services are pro- vided by American Medical Response to unincorporated areas, including the Thousand Palms communi- ty, under contract with Riverside County. The ambulance is staffed with at least one paramedic, but the ambulance staff is not qualified as firefighters. Cal Fire can also provide ambulance service for cities which contracts with that agency for fire service. By contrast, Cathedral City provides fire, EMS, and ambulance services through its Fire Department. One scenario evaluated by this report anticipates that these services will be provided to Thousand Palms by the City, using Fire Station 35. Under this scenario (See Option 1, Chapter 11), a fire engine would be lo- cated at Fire Station 35 and staffed by two firefighter/paramedics. An ambulance would also be located at this fire station, staffed by two firefighters/paramedics". This means that for approximately 70% of the fire calls, Cathedral City can respond with a fire engine and an ambulance, and will have four firefighters available for the initial fire attack. This meets the OSHA standard of "2 in, 2 out" for the initial fire re- sponse. It should be noted, however, that in 30% of the cases when the ambulance is "on call," the City would initially respond with two firefighters, requiring a backup engine, or City staffed ambulance, before the "2 in, 2 our standard can be met. This would be a lower level of service than is currently received in Thousand Palms. A second scenario (See Option II, Chapter II) is to contract with Cal Fire to provide service to Thousand Palms. This Option was developed due to the reduced level of service during approximately 30% of the fire calls if fire response was provided by the City, and the projected deficit in tax revenue available to support both full City police and fire service to this area during the first several years after annexation. A third scenario (See Option 111, Chapter II) is Cal Fire providing fire/EMS service in the initial years after annexation, and then Cathedral City providing fire, EMS, and ambulance service from Fire Station 35 when revenues from growth in Thousand Palms can support these services. This option envisions City Fire and Cal Fire eventually sharing Fire Station 35, an oversized station. The apparatus and crew capac- ity of this station is detailed in Chapter II. It should be noted that particularly under Options I and III, as a backup to the Fire Station 35 engine com- pany, there would be fire responses into Thousand Palms from both Cal Fire and Cathedral City stations, either through an initial or backup response20. As a result, an automatic aid agreement or a complete "boundary drop" would need to be negotiated between the two agencies, likely a statistically based cost sharing agreement between Cal Fire and the City likely would need to be negotiated27 since there will be more responses into this area from Cal Fire than from the City. In addition, dispatch issues would need to be resolved as well. It is recommended that, because of current operational and revenue constraints, Option #2 be imple- mented, possibly moving to Option #3 sometime in the future. If Option #3 is pursued, operational and revenue issues would need to be resolved between the City and Cal Fire as the area develops and the tax base enlarges. The process of transitioning from Option #2 to Option #3 could take several years, possibly in the 10 —15 year time frame, and possibly longer. In reviewing the responses to the Plan of Services checklist, one should keep in mind the different sce- narios under which fire, EMS, and ambulance service can be provided to Thousand Palms. In Options 2 and 3 the level of service to the community will either be the same or improve. This is because the re- sources in Thousand Palms will grow to the point of supporting four firefighter/paramedics on a Type I Engine, whether staffed by the City or Cal Fire. 19 All entry level career Cathedral City firefighters are firefighters/paramedic. 20 The distance of the two agency's stations on the periphery of Thousand Palms are listed in the follow- ing section. 21 Email, Assistant Chief Cooley, June 22, 2012. r 411 Panne City giCatheifra1 City. At build -out it is expected that either Cal Fire or the City Fire Department will provide fire, EMS, and am- bulance service to Thousand Palms. Current Service Provider The current service provider is the Riverside County Fire Department through a contract with Cal Fire, the state fire agency. The Department serves the Thousand Palms area, and the periphery of the cities of Rancho Mirage and Palm Desert, from Fire Station 35. This primarily response service is with a Type I Fire Engine, with three firefighters or firefighter/paramedics. They also provide apparatus from this station to serve the regional needs of the Coachella Valley, with a Breathing Support vehicle assigned to Fire Station 35. Location of the three nearest fire stations, and their distance to Thousand Palms. The primary response station is Fire Station 35 which is located in Thousand Palms. The other nearby Cal Fire stations are Fire Stations 69, 71 and 81. Fire Station 69 is in North Rancho Mirage at 71751 Gerald Ford Drive, and is 2.5 miles from the northern portion of the annexation area. Fire Station 71 is in North Palm Desert at 73995 Country Club Drive, and is 2.8 miles from the central portion of the proposed annexed area at Cook and 1-10. Fire Station 81 is in North Bermuda Dunes at 37955 Washington Street, and is 1.7 miles from the southern portion of the annexed area at 381h Avenue and Varner. Cathedral City has three fire stations, 411, 412, and 413. Fire Station 412 is at 32.100 Desert Vista Road, near Ramon Road, and is 3.5 miles to the northern portion of Thousand Palms at Varner and Bob Hope Drive. Fire Station 413 is at 27610 Landau, and is 5.2 miles from Varner and Bob Hope. Fire station 411 at 36910 Date Palm is 5.7 miles from the northern part of Thousand Palms. Please see Map IV-1 for the location of the fire stations in and around Thousand Palms for both the City and Cal Fire. What is the level of service standard? In a general sense, the level of service should be similar, whether response is by the City (Option 1 and 3) or Cal Fire (Option #2) since either agency will be responding from Fire Station 35 with a Type I fire engine. It is expected that the responses in either case will be in less than 8 minutes for a fire emergency, and 5 minutes or less in most emergencies. The response by Cal Fire currently is with a 3 person crew, while the City will respond with a 2 person engine crew, plus a 2 person crew from the ambulance, when it is not otherwise engaged. It is recommended that the City contract with Cal Fire to provide fire service, with the City considering providing service when the tax base expands in Thousand Palms and can sup- port an extra firefighter. Due to staffing, operational, and dispatch issues, however, the City could be well served by continuing the contract with Cal Fire for the duration, even to build out. For ambulance service, the City provides a 2 person crew with firefighter/paramedics, and the County provides service to this unincorporated area through a contract with AMR, which includes one paramedic which is not a firefighter. For a major medical emergency, the City would be able to supply four firefight- er/paramedics (two from the ambulance; two from the fire engine) in most cases when fire engine is not otherwise engaged. A backup engine or ambulance would be dispatched from the nearest station to pro- vide staff in those cases. It is recommended, however, that initially emergency medical response be pro- vided by either Cal Fire or AMR. What are the actual average response times? The average response time to an emergency should be 8 minutes or less as a goal, but often is 5 minutes or less. There should be no reduction in response times, whether the response is by the City or by Cal Fire. p 42 1 Page Lvt, r- City q f edra City . _...,�... .. 'atlr 1 Equipment/staffing at each station. The equipment and staffing assigned to the Cal Fire Stations in and on the periphery of Thousand Palms, and which occasionally respond to calls in Thousand Palms, either initially or as backup, include: • Fire Station 35: Type 1 fire engine, with crew, and a Breathing Support Unit (often referred to as a Light and Air Unit) with crew. • Fire Station 69: Type 1 fire engine, with crew, a medic ambulance, with crew, and a reserve med- ic ambulance. • Fire Station 71: Type 1 fire engine, with crew, a medic ambulance, with crew, and a reserve Type 1 fire engine. • Fire Station 81: Type 1 fire engine, with crew, HazMat response unit, a HazMat Squad, a reserve HazMat Squad, and a HazMat support trailer. The fire engine and HazMat units are crossed - staffed along with a HazMat Captain and Engineer, providing a minimum of five staff on duty dai- ly. New Service Provider Location of the three nearestfrre stations to the affected area. Again, the primary response station under any of the three scenarios described above is Fire Station 35 which is located in Thousand Palms. The other nearest stations are Cathedral City Fire Station 412 (3.5 miles from the northern part of Thousand Palms), County Fire Station 69 (2.5 miles from the northern por- tion of Thousand Palms), County Fire Station 71 (2.8 miles from the central part of this community), and County Fire Station 81 (1.7 miles from the southern portion of Thousand Palms). The fire stations currently operated by Cathedral City are Fire Station 411 (downtown station) located at 36913 Date Palm Drive, Fire Station 412 (headquarters station), located at 32100 Desert Vista Road, and Fire Station 413 (freeway station), located at 27610 Landau Boulevard. Station 411 is 5.7 miles from Var- ner and Bob Hope Drive in the northern portion of Thousand Palms. Station 412 is 3.5 miles from this in- tersection and station 413 is 5.2 miles from this location. Again, please see Map IV-1 which shows the fire stations of the City and Cal Fire in and near Thousand Palms. What is the Level of Service? The level of service should remain unchanged if the recommendations of this report are followed, specifi- cally that current service providers (County Fire through Cal Fire, and AMR) continue to provide service to Thousand Palms. Over time, if it makes economic, service and logistical sense, the City and Cal Fire might discuss co -locating in Fire Station 35, or the City continuing a contract with Cal Fire for fire service. By this time there should be enough resources to support four firefighters assigned to a Type I -Engine for initial fire attack or medical emergency whether service is provided by the City or Cal Fire. Also, whether the engine is staffed by the City or Cal Fire, there is enough room to place a Cal Fire unit at the station in addition to the Type I -Engine. Since this decision would be made a number of years from now, there would be a substantial period of time to resolve any financial and dispatch issues if the City operated the Type I -Engine. If in several years the City provided ambulance service to Thousand Palms, there will be two firefight- er/paramedics to respond to medical emergencies. With the Type 1-engine on the scene as well, there would be 5 — 6 firefighter/paramedics to address a major medical emergency since by that time the City would be able to support either 3 — 0 or 4 — 0 staffing on the fire engine. The level of service to areas on the periphery of Thousand Palms should remain unchanged during the initial years after annexation, if the City contracts with Cal Fire for fire/EMS service. The level of service should also remain unchanged if the City assumes the role of fire/EMS service provider, but only if an automatic aid agreement between the City and the County is in place, or a full "boundary drop* is negoti- ated. Any such agreement likely would need to be supported by a cost sharing agreement, based upon a statistical analysis of the mutual benefits to the two agencies at that time. Finally, dispatch issues would need to be resolved. These issues would not likely to be addressed for several years, say in 10 - 15 years, after annexation depending upon Thousand Palmsgrowthrate. 441 Page City of Cathedral City What are the actual response times? In responding to an emergency, the average response time goal is 8 minutes or less. More often, the re- sponse time will be 5 minutes or less. There should be no reduction in response times to Thousand Palms, whether the response is by the City or by Cal Fire. Equipment at each station The equipment assigned to Fire Station 35 in Thousand Palms is a Type 1 fire engine and a Breathing Support apparatus, often referred to a light and Air Unit. If and when the City provides service at this Sta- tion, there would be assigned a Type 1 fire engine, with crew, and a medic ambulance, with crew. The equipment assigned to the Cathedral City Fire Stations includes: • Fire Station 411: A Type 1 fire engine, medic ambulance, and a reserve medic ambulance; • Fire Station 412: A Type 1 fire engine and two reserve medic ambulances; and • Fire Station 413: A Type 1 fire engine, a reserve Type 1 fire engine (QES), and a medic ambu- lance. The City is currently purchasing a Type 1 fire engine which will be delivered in April. At that time one of the current Type 1 engine will be placed in reserve. What additional facilities and personnel will be required to maintain the existing level of ser- vice? If required, how will these facilities and personnel befinanced? inanced? The basic facility, equipment, and staffing infrastructure to service Thousand Palms now and in the future are already in place. Exceptions to this are plans already in place by both agencies for the construction of future fire stations. Cathedral City plans to construct a fire station in its "North City" planning area immedi- ately north of Thousand Palms. This station and equipment will be financed by developer exactions and staffing will be funded by tax revenue produced from "North City" when it develops. County Fire (Cal Fire) when they prepared the "Thousand Palms Response Overview — C" shows a future fire station in Palm Desert, just on the other side of the freeway from Thousand Palms, southerly of the Cook Streettl-10 interchange. It appears that about 40% of its initial response area would be to the middle portion of Thousand Palms. If Cathedral City annexes Thousand Palms and if this Palm Desert station is constructed, then there may be a need for the two cities to discuss shared construction costs. If a shared construction agreement is not negotiated, Cal Fire and Palm Desert may seek another site for the station. However, Cathedral City should be able to share financing a portion of station construction and equipment, if necessary. The City's share would be paid for by the developers benefitting from this station, either through the City's Building Development Fees, developer exactions, or by an assessment district for this and other infrastructure im- provements. Any shared staffing expense should be funded through taxes produced by new develop- ment. Identify any fire service inter -agency agreements that would apply to the annexation area. There are potential fire service/EMS inter -agency agreements which would be required if Thousand Palms were annexed by Cathedral City. The nature of these agreements would depend upon which fire service option is pursued and adopted. If, in the initial years of annexation, fire service is provided by Cal Fire and ambulance service is offered by either Cal Fire or by American Medical Response, the following agreements would need to be devel- oped: 1. An agreement between the City and Riverside County, or possibly Cal Fire directly, to provide fire service to Thousand Palms. It is assumed that the service level will be at its present level and generally at the cost estimated in this report's fiscal analysis. 2. An agreement with Cal Fire, or American Medical Response, to provide ambulance service. Contracting with Cal Fire could be the preferred option since they already provide ambulance service under contract with other cities in the Coachella Valley. The advantage of contracting a .a 4S i 1'01411! City of Cathedral City through the County for service by AMR is that there would be no cost to the City for this ser- vice. In any case, the City should maintain control over the provision of ambulance service in the newly annexed area through a service contract in order to maintain the City's current am- bulance service. By so doing, the City will be able to provide ambulance service to Thousand Palms in the future as discussed in other portions of this report. 3. A potential cost sharing agreement with the City of Palm Desert for the construction and pos- sible operation of a fire station which would partly serve Thousand Palms. If, at some point several years from now, the City provides direct fire and ambulance service to Thousand Palms, the following agreements likely will be necessary: An automatic aid agreement, or even an agreement to secure a boundary drop, for those ar- eas served by Cal Fire to serve not only Thousand Palms, but areas on the periphery of this community. In turn, this will enable responses from stations on the periphery of Thousand Palms into Thousand Palms. This agreement should include a cost sharing formula with the County Fire depending upon the mutual benefit of this agreement between the two agencies at the time the agreement is negotiated. Also, the dispatch issue would need to be resolved. 2. A potential cost sharing agreement with the City of Palm Desert for the construction and pos- sible operation of a fire station which would partly serve Thousand Palms. As indicated in Chapter III whether fire service is provided by the City or Cal Fire, at build out there should be enough resources to support 3 — 0 or 4 — 0 staffing of the Type-1 fire engine as well as staffing an am- bulance at Fire Station 35, and to pay for 40% of the construction and operational cost of a future Palm Desert fire station which would partially serve Thousand Palms. Animal Shelter/Control The current shelter and animal control services are provide through Riverside County Animal Control Ser- vices. In fact, the animal shelter for the Coachella Valley is located in the Thousand Palms community at 72-050 Pet Land Place. What will change upon annexation is that the City will need to contract with the County Animal Control for shelter and held services. As explained in Chapter II, it is expected that the cost of this service initially will be $70,000. This should preserve the current level of service to the com- munity, and will equal or exceed the level of service currently provided in Cathedral City. Utilities One purpose of the Plan for Services is to determine whether there will be adequate service to the area proposed for annexation, and whether there would be a reduction in service to the area. In connection with utility services, they are currently being provided to the Thousand Palms community either through the Coachella Valley Water District (water, sewer, and drainage), the Imperial Irrigation District (electrici- ty), or Southern California Edison (gas). A summary of these utility services, including water, sewer, drainage/flood control, electricity, gas, and solid waste collection, are summarized in this section. It should be noted that most of the information in this section is from the perspective that there will be no change in the service provider, but there eventually could be a change in land uses. Water The Coachella Valley Water District provides water, sewer, and flood control service for the Coachella Valley, including Thousand Palms. A map from the District's recently completed Water Master Plan Up- date outlines the District's boundaries is shown in Map IV-2. 461 fI Page.: a m = 3 ■ Ln _■ �\ & �i \2� .2 � City of Cathedral City For water service, the Thousand Palms community is served by the Coachella Valley Water District most- ly from wells southwesterly of the 1-10 freeway, although there are some wells in this unincorporated area as well. In the future, the District plans to construct a 10 million gallon reservoir immediately north of the Thousand Palms area. Further to the south, in the Classic Club area, a 24" water line has been installed to serve this facility from the other side of the I-10. Recently, the District completed and adopted the "2010 Coachella Valley Water Management Plan Up- date," which looks at and plans for the Valley's water supply for the next 35 years. Successful implemen- tation of this Plan, which anticipates major future growth, should enable the Thousand Palms area and the rest of the Valley to have a sufficient source of water during this time period. To provide the water supply for future development of the Thousand Palms community, developers will be required to install needed facilities for their area related to water storage and distribution. They will also be required to pay an infrastructure charge and a supplemental water supply charge. Together, water and sewer charges currently amount to $10,000 - $12,000 per residential lot (.25 acre). A developer will re- ceive credits against these fees for any basic water infrastructure improvements constructed in advance of their normal installation. These fees and improvements are usually considered the normal "cost of business." They often are fi- nanced by various bonding mechanisms, such as assessment districts to serve the area being devel- oped. Since the area being annexed is being served by an existing water district, further information for water service from the LAFCO Plan of Services Checklist does not need to be provided. This Plan of Services does not recommend any change in the water service provider to Thousand Palms. Sewer (Wastewater) Services The Coachella Valley Water District also provides sewer service to the Thousand Palms community. The main trunk sewer starts at Bob Hope Drive and flows to Sewer Treatment Plant #7 in Indio. This plant has a capacity of 5,000,000 gallons, but its capacity could be easily upgraded if and when needed. Also, as growth occurs, there may be a need to upgrade the main trunk sewer line. In the future, there will be a need to construct a new main trunk sewer from Desert Hot Springs to Rio del Sol. A builder constructing new development in Thousand Palms will be required to construct needed sewer lines to connect to the main sewer as well as to pay a Sanitation Capacity charge. As some individual residential lots have been constructed, septic tanks have been allowed to be Installed in this area. Basically, through the District's facilities, the current and future Thousand Palms community can be served by the District. Similar to water service, since sewer service will continue to be provided by the existing water district, additional information required by the LAFCO Plan of Services Checklist does not need to be provided. The Plan of Services for Thousand Palms does not recommend any change to the provision of sewer or wastewater services to the area proposed to be annexed. Drainage/Flood Control The Coachella Valley Water District has spent the past 15 years working with the U.S. Army Corps of En- gineers to develop a master drainage plan for the Thousand Palms area. The design of this plan is esti- mated as 90% complete. Recently, the District took over total responsibility for completing the design of the plan, and it is anticipated that the design and related environmental documents will be completed dur- ing the next 12 —18 months. The entire Thousand Palms area is in flood zones of one, two, or three feet. So, currently, if a person de- sires to build a new home, they must elevate the building pad, the height of which depends upon which flood zone in which they are located. The construction of a major new development will require elevation of the entire building site as well as allowing the flow through of surface water drainage. This is similar to what was required southeast of this area in Palm Desert Sun City, where the golf courses act as flood control channels, accepting surface water runoff and allowing it to flow through the project. 48 1 ?'ttge CUP nJ Cathedral City The flood control project for Thousand Palms, based on a 100-year flood event, is estimated to cost $70,000,000. It will consist of levees and excavated channels, beginning at Rio del Sol, and stretching to the Mirasera Flood Control Channel at Avenue 38. Reach 1 Levee will stretch from Rio del Sol just past Vista De Oro, north of 30`" Avenue. Reaches 2 and 3 are east of Vista del Oro, and will cover the areas north and south of Ramon Road, down to Cook Street and Calle Tosca. There, storm water will flow through an excavated channel past Xavier School to the Classic Club Golf Course. Past the golf course there is the Reach 4 Levee and excavated channel to the Mirasera Flood Control Channel. The construction timing of this flood control project is unknown, since its implementation depends on funding. Likely, it would be financed by federal funds as well as some measure of the district's property tax revenue. In the meantime, storm water drainage can be accommodated following the rules and re- quirements of the Water District. There are no requirements in the LAFCO Plan of Services Checklist for providing the service of storm water runoff protection. Nevertheless, the current provision drainage for this area is described in this Plan of Services. The Plan does not propose any change in the control or authority over storm water runoff for the Thousand Palms community. This responsibility will remain with the District. Electricity The Imperial Irrigation District (IID) provides electrical service to portions of the Coachella Valley, with the rest of the Valley served by Southern California Edison. This service authority is based on a 1934 agree- ment between IID and the Coachella Valley Water District. As can be seen on the following map entitled, 'Imperial Irrigation District, Coachella Valley Service Area Map," there are three service areas in the Valley. Service Area 1 includes Thousand Palms southeasterly of Rio del Sol. The area northeasterly of this road will be served by Southern California Edison. It appears that current and future electrical service will be available to the unincorporated sphere area of Cathedral City now and at build -out. The LAFCO Plan of Services Checklist does not require any additional information if there is no proposed change in the service provider, which is the case for the provision of electrical service. Natural Gas Southern California Gas Company (SoCalGas) provides gas service to most of Southern California, in- cluding the Thousand Palms community. Serving nearly 20,000,000 people, this utility has the capacity to provide current service to this community as well as the ability to provide service to future development. The LAFCO Plan of Services Checklist does not mention the provision of natural gas to annexed areas. This Plan of Services, however, identifies the current service provider, and, of course, recommends that no change be made in the provision of this service to Thousand Palms. Solid Waste Collection Garbage collection in both Cathedral City and Thousand Palms is provided by the Burrtec Corporation. The company has a landfill in Salton City, and transfer stations in the Cities of Coachella and Cathedral City. This latter facility is located near Thousand Palms at 70-100 Edom Hill Road. Since no change is proposed in this Plan for Services for solid waste collection, additional information regarding this service is not required by the LAFCO Plan for Services Checklist. 49 1 .Page Map IV-3 — Imperial Irrigation District Map IMPERIAL IRRIGATION DISTRICT Coachella Valley Service Area Map n%WB M+KTCN&W 9AltfUnU MI CAR=KMWW XM WbW= P NLAWNM 69CONGDONVOMA00 GAND WAL City of C'athod hd City Maintenance Services Street Maintenance/Street Sweeping Currently, street maintenance is provided by the Riverside County Transportation Land Use Agency. Cur- rently, they provide a basic level of service for 49 miles of streets in this unincorporated area. With this prospective annexation, the City would assume street maintenance which would be funded by state gas tax and Measure A funds produced from this area. It is estimated currently that $358,289 will be available from these sources to maintain the area's roads upon initial annexation. It should be noted that street medians (Ramon Road) and street lights will continue to be maintained by the Recreation District. A street condition "windshield survey" was conducted by graduate students from California State Universi- ty, San Bemardin022. This information will be folded into the City's inventory of street conditions for the existing City, if annexation occurs. City funding for street maintenance will pay for basic street and sign maintenance, including traffic signal maintenance, if annexation occurs. This will include the funding of two Street Maintenance Workers as well as street maintenance services provided by contract. The annexation will eventually provide road improvements to this community as developers propose and construct projects which will require expansion or extension of existing roads or the construction of new roads. In the future, interchanges affecting this area will be constructed along the 1-10 corridor at Portola and Da Vail, using local and regional funds. Per the CVAG Master Plan all improvements funded by this Plan, including the two interchanges mentioned in this report, will be constructed by 2038. Current Provider Street maintenance is provided by Riverside County. The County maintains a current road inventory sys- tem. Based on that system, the County provides street maintenance as needed, except for Street lights and street medians on Ramon Road which are maintained by the Desert Recreation District from funds from a landscaping and lighting district. Presumably street maintenance is funded by County gas tax funds. Street sweeping is presently provided by the County. This service is funded through CSA 152. New Service Provider Except for maintenance of street lights and street medians which is provided by the Desert Recreation District, the City expects to provide street maintenance at the current service level. In addition to securing the County road inventory, this information was supplemented by a street condition "windshield survey" conducted by graduate students at California State University, San Bernardino as was just mentioned. Funding will not only provide for road maintenance, but maintenance and operation of the traffic signals as well. Regarding street sweeping,.in the existing City, both arterial and residential streets are swept monthly. The arterial street sweeping is administered by the Coachella Valley Association of Governments (CVAG) with funds the City receives from the Air Quality Fund. Residential street sweeping is provided by Burrtec, the solid waste service provider, through their contract with the City. Both Burrtec and CVAG contract with the firm, Clean Streets, to sweep streets in Cathedral City. Either the Burrtec contract would extend the service to Thousand Palms if that area were annexed, and the City could obtain additional grant funds for arterial sweeping, or funding through CSA 152 will be used for this service. Street maintenance will be funded by increased City gas tax funds and Measure A funds as a result of the annexation. The annexation will result in road improvements as new development occurs. Portions of ma- 22 "Thousand Palms Project," Myles Foster Barter, Christina Salazar, Emmanuel Sarpong, 2012. 51 , r,alre, C'ify of C'rtfh�cfiu? C'iiv jor arterials such as Varner Road and Ramon Road will be widened as a result of new development, and new streets will be constructed to serve new subdivisions, business parks and commercial projects. Over time, regional and local funds will be used to construct two new freeway interchanges at 1-10 and Portola and 1-10 at De Vall. Upon initial annexation, street, sign and signal maintenance will be provided by the City. Much of this work will be performed by contract, but 2.0 FTE new street maintenance positions would be created and would be devoted to provide street maintenance service to Thousand Palms. Lighting and Landscaping Limited lighting and landscaping services are provided in Thousand Palms. The Desert Recreation Dis- trict administers a beneficial assessment district which funds the maintenance of a median landscaping along Ramon Road between Varner and Monterey. It also pays for the maintenance and operation of 239 street lights in the community. As pointed out elsewhere in this Plan for Services, the landscaping and lighting functions takes only a small part of the funding from the assessment district. The main focus of the assessment district is to fund the maintenance and operation of the park and community center. The Plan for Services recommends that there be no change in the service provider for this limited lighting and landscaping service. If the annexation occurs, however, the District and City should explore whether it would be mutually beneficial for the City to provide this maintenance activity, since the City has staff already performing this type of work in the existing Cathedral City. Leisure Services In response to LAFCO's Plan of Services Checklist, the required information for leisure services, such as parks, recreation, and library, is provided in the following section. Parks and Recreation The current service provider for parks and recreation services in Thousand Palms is the Desert Recrea- tion District, also previously known when it was created in 1950 as the Coachella Valley Recreation and Park District. The District has a Sphere of Influence of 1,800 square miles and serves approximately 275,000 people. It serves 16 communities, including Thousand Palms, with a service area ranging from Bob Hope Drive on the north to the Salton Sea on the south. The District is funded by program revenue (34%), property taxes (32%), benefit assessment districts (13%), and other revenue sources (21%)23. In Thousand Palms the District operates and maintains a community park and community center at 31- 189 Robert Road. The land for the park is owned by the Palm Springs School District, with the improve- ments owned by the District. The improvements were funded by the Riverside County Economic Devel- opment Agency. Immediately to the north of the park, Legacy Homes is dedicating an additional 13 unde- veloped park acres, although basic infrastructure to support park developed is in place such as water, sewer, and sidewalks. The currently improved park consists of softball fields with soccer field overlays, and a limited number of picnic benches. The community center is open Monday — Friday from 8:00 a.m. — 5:00 p.m., and fee based classes are held at this location as well as community meetings. The basic cost for the operation and maintenance of the park and community center is from a Thousand Palms based benefit assessment district. The assessment district not only provides for the operation and maintenance of the park and community center, but also provides funding to maintain the median on Ra- mon Road from Varner to Monterey, and to maintain and operate 239 street lights. 23 Coachella Valley Recreation and Park District Master Plan. �.. .. 3w Pu�c City of Crrth ulral City' Cathedral City has a limited recreation and park function. This function is restricted to maintaining certain park facilities in the City funded by Landscaping and Lighting Districts. The City does not directly operate any recreation programs, with that function assumed by volunteer organized sports programs, such as AYSO soccer. Upon annexation of this area, the City could assume the Districts share of the property tax in Thousand Palms, and could operate the facilities using that tax as well as funds from the benefit assessment district. Since the City, however, does not have the "organizational infrastructure" to oversee and administer basic recreation programs, and the District has a well established parks and recreation function, this Plan of Services recommends that the Desert Recreation District continue to provide parks and recreation ser- vices, including administering the community park and community center, and maintaining the Ramon Road median strip and the area's street lights, As new development occurs, based on this recommendation, there is the issue of whether the District or City's park standards and fee structure would be used in obtaining park land and improvements from de- velopers. The District's practice is to defer to the standards and fees of the City in which the improve- ments will be constructed. In other words, the City would be responsible for accomplishing new park facili- ties through developer fees, dedications, and exactions, and then turning those improvements over to the District for administration and operation. The City has an advantage in achieving these improvements in that it is not limited to only to provisions of the State Quimby Act like the Recreation District. The City also has the ability to charge Development Impact Fees for park and other improvements, which authority the District does not have. These fees are listed on Tables II-C and II-D in Chapter II. Also, as pointed out in Table III-F, the Thousand Palms area would produce a significant amount of one-time revenue for parks, community centers, and swimming pools. Library Services Library service is provided both to the City of Cathedral City and the Thousand Palms community by the Riverside County Library System. The City's library is located at 33520 Date Palm Drive, and is open dai- ly except Friday, for a total of 44 hours a week. The size of the library is 20,000 square feet and it con- tains approximately 81,000 volumes. The Thousand Palms library is located at 31189 Robert Road, and is open every day except Friday and Sunday, for a total of 40 hours a week. The library has 4,500 square feet. Both libraries use the same catalogue system. Since the two branch libraries are operated as part of the larger County Library System, and since it likely would not be cost effective for the City to create its own library department, the Plan of Services recom- mends no change in the service provider for Thousand Palms. Schools Public schools are provided by the Palm Springs Unified School District (PSUSD) to the Thousand Palms community. There are also private schools in the area, such as Xavier High School. In Thousand Palms, PSUSD staffs and operates the Della S. Lindley Elementary School. The area is also served through the 12`" grade at other schools within the District. Regarding developer impact fees for public schools, after June 23, 2012, the PSUSD fees will be $.51 per square foot for commercial development, $3.44 per square foot for new residential, and $3.20 per square foot for additions to existing residential structures of 500 square feet or more. It appears that PSUSD has the authority, capacity, and funding to provide public elementary through high school education to the Thousand Palms community, now and in the future. LAFCO's Plan for Services Checklist does not require the provision of information about education. This basic information, however, is provided due to the size of the proposed annexation. 53 1 Pa,,c (:it), .?f Cat&drul C iry Summary In the following table, the various services currently provided to Thousand Palms are listed, indicating whether the current service provider will continue to provide that service, or whether Cathedral City will be the new service provider. Table IV -A Thousand Palms Plan of Services Continua Current New Provider Service Provider Current Provider (if applicable) Yes No Public Safety Police Protection ✓ County Sheriff Cathedral ity Fire Protection ✓ County Fire Cal Fire Animal Control ✓ County Animal Control Utilities Water Service ✓ Coachella Valley Water District Wastewater ✓ Coachella Valley Water District Flood Control ✓ Coachella Valley Water District Electricity ✓ Imperial Irrigation District / Southern California Edison Natural Gas ✓ Southern California Gas Com- pany Garbage Collection ✓ Burrtec franchise a reern r Maintenance Street Maintenance/Street Sweeping ✓ Co. Transportation Cathedral City Li htin Landscaping Desert Recreation District Leisure Services Parks and Recreation ✓ Desert Recreation District Library Services ✓ County Library System Schools ✓ Palm Springs Unified School District Financial Services Current Providers Services provided by the County to Thousand Palms are financed by various general revenues received by the County such as property taxes, sates taxes, and the structural fire tax. There are also special rev- enues which support street maintenance such as gas tax funds and Measure A funds. The Desert Recreation District maintains the park, community center, street lights, and the median on Ramon Road as well as operates programs at the park and community center. This maintenance and programming is funded by a beneficial assessment district. Other service, such as various utilities, are supported by various fees and charges. New Service Provider The general taxes which would be received by the City if it annexed Thousand Palms include: • The City's share of the property tax per the Master Property Tax Agreement with the County; • Structural Fire Tax; • Property Transfer Tax; • Property Tax In -lieu Vehicle License Fee; • Sales Tax; ("li)' of Catheth-al oily • Utility Use Tax; • Franchise Fee; • Fines and Forfeitures; and • Transient Occupancy Tax. The level of these taxes for those living in Thousand Palms will remain the same upon annexation. How- ever, new to this annexed area are the following taxes; • Transactions and Use Tax which imposes a 1% transaction and use tax on City retailers, This was approved by the Cathedral City voters in June 2010, and expires September 2015, unless extended by the electorate. The projections in this report assume that it will not be extended. • A 3% utilities users tax which is applied to the use of telecommunications, cable, electricity, gas, and solid waste services. This was approved by the electorate in 2008. In terms of special assessments, such as those which accrue to the Desert Recreation District, this Plan of Services does not propose a change in these assessments or the continued flow of this revenue to the District. In terms of current bonded indebtedness applied to the unincorporated area, it would continue even if the area were annexed to the City. In terms of general bonded indebtedness of the existing City that would be extended to the annexed area, that would be a policy decision of the City Council. Overall, as pointed out in Chapter III, at build out the City's General Fund operating costs are projected to be $15,544,683, With $23,429,068 in General Fund revenue, there would be an annual surplus of $7,884,385 (See Table III — C). By adding restricted Gas Tax and Measure A funds to the operating ex- penditures, the City's budget to service Thousand Palms would total $17,009,989 (See Table III — D). Fur- ther, the City's Business Development and Development Impact Fees would produce significant one-time revenues for capital projects related to interchanges and bridges, police and fire facilities, parks and rec- reation facilities, and City improvements (See Table III — E and Table III — F). 55, 5Pu,e City o/'(, ttku?ut a1 Cit): Chapter V Annexation Process The purpose of this Chapter is to outline the procedures required to annex the unincorporated portion of Cathedral City's Sphere of Influence, the area generally known as Thousand Palms. It is undetermined if the City Council will approve submitting an annexation application for this area. This Chapter, however, outlines the steps that should be followed in case an annexation is pursued by Cathedral City. The annexation process is controlled by the Local Agency Formation Commission (LAFCO) of each coun- ty. Established in 1963, LAFCOs have the authority to approve annexations per Sections 56000 et. seq. of the California Government Code. Pursuant to Government Code Section 56425, LAFCO is required, as a planning tool, to identify logical municipal providers for areas throughout the County where services are currently provided or will be pro- vided within the short and mid-term. As part of this process, LAFCO is required to establish Spheres of Influence (SOI) for all cities and special districts. In this connection, on January 27, 2011, and on Sep- tember 21, 2011, the Riverside LAFCO approved two separate expansions to Cathedral City's SOI to in- clude the entire area evaluated by this report, and is shown on the map found on Exhibit A in Chapter I of this report. Regarding the annexation of property within the City's SOI, LAFCO's Policies and Procedures" pro- scribes in Section 2.3.8 that "LAFCO shall encourage all developed urban land inside a city's sphere of influence to annex to the City. Further, Section 2.2.1 of LAFCO's Policies and Procedures provides, in part, that"... LAFCO will evaluate proposals for changes of organization with the following hierarchy in mind (in descending order of prefer- ence)." This hierarchy provides, in order of preference: 1. Annexation to an existing city, 2. Annexation to an existing multiple purpose or single purpose special district (paragraphs b and c), 3. Formation of a County Service Area (paragraph d), 4. Incorporation of a new City (paragraph f), or 5. Maintaining an unincorporated community (paragraph g)28. It is clear according to LAFCO's adopted policies that the first preference for annexing urban land within an existing city's SOI is to that city. It is therefore appropriate to understand the specific steps that will be necessary to achieve that annexation, if Cathedral City decides to pursue such a course of action. Steps Toward Annexation If the City of Cathedral City determines that it would be advantageous to annex the unincorporated area in its SOI, in all or in part, the steps summarized in the following paragraphs would need to be followed. It should be noted that LAFCO staff may vary these steps slightly based on the specific annexation pro- posal. The following steps also assume that the City would be the applicant for the annexation. The City mails a notice to interested agencies at least 20 days before the City Council adopts a resolution to submit an annexation application to LAFCO. 24 LAFCO Policies and Procedures, Riverside Local Agency Formation Commission, August 26, 2004. 21 Ibid., p. 10. 28 Ibid, p. 7. 56 Pure 2. The City resolution will include the following information and related materials: • Resolution/Petition • Map • Pre -zoning • Legal description • Processing fees ($13,800, LAFCO processing fee; $1,000 deposit, and $137/hour, County Surveyor charge for reviewing annexation legal description; $3,500, State Board of Equalization; possible miscellanous fees from the Registrar of Voters and County GIS) • A Plan for Services • CEQA documents, as applicable • Resolutions by the affected agencies (City and County) agreeing to a transfer/split of the ad valorem property tax revenues generated in the subject territory 3, LAFCO reviews the application. This review includes: • Determination that the application is complete • Notice to the City that the application is complete or incomplete. In the latter case, the City can revise the application to ensure that the application is complete to the satisfaction of the LAFCO Executive Officer. 4. After the annexation is determined to be complete, the following steps should be taken: • LAFCO notices the County Assessor of the proposal • The Assessor determines which Tax Rate Areas (TRA) are involved and calculates the total assessed valuation (AV) of the affected territory • The Assessor issues a report of the IRAs and AV to the County Auditor • The Auditor determines the total property tax revenues for the area proposed for annexation and issues a report to the City and the County of the total revenues involved27. • The City and County are notified that they have 60 days to reach an agreement on the transfer of property tax revenue from the County to the City, although the Master Property Tax Agreement, if one exists for a particular city, can be used for this purpose. 5. Upon determination by the LAFCO Executive Officer that the application is complete, the Ex- ecutive Officer issues a Certificate of Filing and sets a hearing date for the proposed annexa- tion. 6. A notice of Commission hearing is given by the Executive Officer by posting, publication to property owners and registered voters within the boundaries of the area proposed to be an- nexed at least 21 days before the hearing date. If over 2,000 notices are required, a 1/8 page display ad may be used in lieu of mailed notice. 7. The LAFCO Commission holds a public hearing on the proposed annexation, considering the staff report, testimony of affected agencies and parties, the Plan of Service, and CEQA doc- umentation. The Commission may make the following determinations: • Approve the application 27 This information has already been estimated as part of this report, however, the Auditor will complete the precise and official final amount as part of the formal annexation process. • Approve the application subject to terms and conditions, or • Deny the application. 8. Assuming that the Commission approves the application or approves it subject to terms and conditions, LAFCO adopts a resolution making these determinations, approving the applica- tion, and sending a copy of the resolution to the applicant, in this case, the City. The Com- mission also directs the Executive Officer to conduct a protest hearing. 9. The Executive Officer gives notice of posting, publication or mail to property owners and reg- istered voters of a protest hearing at least 21 days before the date of the hearing. 10, The Executive Officer holds a protest hearing. Written protests must be filed on a LAFCO protest form with the Executive Officer prior to the conclusion of the hearing. The results of the written protest will be determined by the Executive Officer within 30 days of the hearing. 11. The outcome of the protest hearing is determined solely by the level of written protest re- ceived, as follows: • < 25% and < 25% landowner protest — the proposal will be completed without an election; • If there is a 25 — 50% voter protest, or a 25% or more landowner protest, the proposal will be ordered subject to an election conducted by the City, • If there is a voter protest of 50% or more, the proceedings will be terminated. 12. If any of the conditions in Step 11 are met, an election is held among the registered voters in the subject area only, and not within the existing City. 13. If the majority of voters approve the annexation, LAFCO sends a Certificate of Completion to the County Recorder's Office, and upon satisfaction of all terms and conditions specified in the Commission's Resolution. The annexation is complete upon recordation of the Certificate of Completion. 14. If there is insufficient protest to force an election, or if the voters approve the annexation, LAFCO then sends the Certificate of Completion to the County Recorder's Office, and upon satisfaction of all terms and conditions specified in the Commission's Resolution. The annex- ation is complete upon recordation of the Certificate of Completion. These steps to achieve annexation of the unincorporated area in Cathedral City's SOI assume that there is an affirmative action taken during each step of the process. Obviously, there are other actions which may be taken during this process, which may delay or stop the annexation. To more fully understand the options that may occur during this process, please see Chart V I, which pre- sents a procedure diagram for annexations in accordance with the Cortese -Knox -Hertzberg Local Gov- ernment Reorganization Act of 2000. A further complexity to this process is the enactment during 2011 of SB 244. This new law requires the inclusion of an adjacent "disadvantaged unincorporated community" (DUC) as part of any proposed an- nexation. So, if an annexation is proposed, and there is an adjacent, unincorporated inhabited area with 12 or more registered voters where the community average median household income is below 80% of the statewide annual median income m which is the definition of a DUC, then the City must also propose to annex the DUC as well. Under SS 244 the LAFCO Commission is prohibited from approving the initial annexation unless an application to annex the DUC has also been filed and considered. While the Commission is not required to approve the DUC as part of the annexation application review, it empowers LAFCO to link the two decisions . This adds a further complexity to the review process, pos- sibly increase the cost of annexations, making it more difficult for a City to pursue an annexation without 28 Water Code Section 79505.5. 29 C&L Newsletter, Update on Public Law, Winter 2012. C 11) nf L tllhuu' od C h- considering the needs of an adjacent unincorporated, disadvantaged community. Unfortunately, but pre- dictably, this new mandate is unfunded by the State. As it applies to this proposed annexation, SB 244 may preclude the City proposing to annex only a por- tion of its unincorporated SOL This is a very preliminary conclusion, however, since SB 244 has been in effect for only a few months and the data and processes necessary to implement this law have not been fully evaluated by LAFCOs statewide. Riverside County LAFCO has been attempting to identify "disad- vantaged unincorporated communities" throughout the County. They are working with the County's Cen- ter for Demographic Research to determine the best manner to obtain pertinent income data for the mul- tiple small areas where SB 244 might apply throughout the County. Preliminary information released by LAFCO seems to indicate that possibly portions of the City's SOI could be annexed rather than the entire unincorporated Thousand Palms community. Besides SB 244, one requirement of the initial LAFCO application is to "pre -zone" the area prior to con- sideration of the annexation application by the Commission. The most expeditious method to accomplish pre -zoning is to use the existing County zoning. It should be noted, however, that state law requires zon- ing designated during the pre -zoning process remain in place for two years. Therefore, it may be benefi- cial for the City to pre -zone its unincorporated SOI before submitting an annexation application to reflect the land use the City would like to see developed if the annexation process were successful. If the City was generally satisfied with the County zoning, however, and/or did not expect that the significant amount of vacant property in this area would see near -term development, use of County zoning could satisfactori- ly meet the City's interests. If a pre -zoning process is initiated, it is expected that any zoning plans will be reviewed by the Thousand Palms Community Council. Again, this chapter has presented the necessary steps for processing an annexation of its unincorporated SOI area, if the City decides to pursue such an annexation. It is designed to be a guide for the process which may be required if such an annexation application is filed. City W Ciahedral Chy (;ORTESE-KNOX-HERTZBERG LOCAL GOVERNMENT REORGANIZATION ACT OF 2000 ANNEXATIONtOETACHMENTARI!ORGANIZATtON PROCEDURE DIAGRAM COMMISSION PROCEEDINGS AGENCY PRE -NOTICE NOTICE OF IN re'NI Mailedmfica by proponent to May be initiated by resolution of TO CIRCUWE PETITION st4titact fjild rntY,rostednWociet i aPI*fAH0n by afteCted agency, Or petitiOrt Must be filed with Executive ill 1"ast ?Ad'lyn before vAth required signature of landowners or I W1101001) ad(mholl kinlows 100% o,9istfAfsd voters. Officer prior to circulation of the potition. RESOLUTION PETITION v. Resolution of application try wiln reqWrW *igriatuuib ut jando""ll S affeMed fox it agency. or registered voters wit AF GO liorspe0.1 APPLICATIO'NISUBMITTAL ApplicaWn is submitted to LAFCO in form required by 0. nvironniontal Revww i Cornmission to include resolutiontpetition, map, pi is performed if L.AFCO 1 zoning (for city annexations) and legal description, is the lean; agency. t applicable fees, CFQA compliance documents and comprehensive plan for services. APPLICATIOPi REVIEW are adopted by i Reqttest for informatic)n from other a"icies or afftvAed- agencies, if counties; Executive Officer prepares report and IIi applicable. i recommendation on proposal., report malted at least 5 days . .. . . . . ...... Prior to hearing, NOTICE OF HEARING Notice of Conuni"on hearing Is given by Execfive OfficF.-r, notim, owen by posting, putsie*itioo and 'mailing -to proper owners and rogislemd volonwilhin boundaries (within 300- bW feat) at least 21 days before dale of heating. '(It %2.000 noticxK, 118 page display ad to 6au of mailed MkAi.) iM COMMISSION HEARING At the homing the Cooludssion will consider staff repcM and iaclwa relalod to proposal, Watiolony of affected agencies wid pasties,-woArl- plan, CV0A dommeitlation. and mike dMkraiinations. COMMISSION DENIES PROPOSAL, CO#AMMSIC*4 APPIROVE$ PROPOM It denied, no similar proposal may be Wy be apt moved vAh rwviaansrconrkkons. Conuiwasign dim is made Execkll" OtficXlf to 03MOU PlOtOM Prcxinrdu,gs. AtVimv,jl within one Ye21% explim wthin are year it not c"nilkited (spa nett pe-ge) WAIVER OF PROTEST HEARING Commi"lon may vrilve hoanng it IQ", kwWow0i cotmwil,vwl cilow7urrents) ruin Affw'tad Vend" IS" next P,'tK,) v, ly -jjhjty. i1i:Wri 60 i Page Cit), of Cathedral City CORTESE-KNOX-HERTZBERG LOCAL GOVERNMENT REORGANIZATION ACT OF 2000 ANNEXATION/DETAC"MEMTIREORGANIZATiON PROCEDURE DIAGRAM PROTEST PROCEEDINGS WAIVER OF A public hearing must be held to determine PROTEST whether there is enough protest to warrant HEARING an election or terminate proceedings. It protest it. wzkived, proposal NOTICE OF HEARING i may tie Notice is given by Executive Officer by posting, publication and 'mailing to property owners and registered voters (if inhabitect) within boundaries at least 21 days before date of hearing. 1;1",22,000 noliceg, 1/8 page display ad in Lieu of mailed notice.) PROTEST HEARING Protest hearing is held by the Executive Officer on date and time of notice: written protests must be filed on LAFCO protest form with Executive Officer prior to the conclusion of the hearing and each must have proper date, signature, and address. Value of written protest determined by Executive Office within 30 days of hearing, Urvinhabft*d(,q 112 registered voters) 50% landowner (valua) protest. landowner %vome, protam. between 25-50% voter protest, or a 251.14 landowner protest, ELECTION Subject agency must call election by voters, ERS APPROVE r.VOTERS DENY Inhabited (� 12 registered voters) '25% voter protest gird 25% Widower protest. TERMINATION A certificate of termination Is re tired. 4-1-----, ---- COMPLETION OF PROPOSAL Once all temi and conditions have been inet, a Certificate of Completion is ret.otdW. The Change is effective upon rwordation ur ik.-ss another date tg1,4 f4t by live Commission, `'I lle CiJro rietw(J.'ed pox:udure.s. ),1rocemirig of sp*.iIlic. proposals call varysIjgtllly. 61 'PaAre From: raLr, VL0 Sent: To: 2013 APR -9 AM Cc: Subject: Lauri, ❑+ Nidy H M ploy, April 08, 2013 6:00 PM K. 1 Gnal , Lauri, mrover@roverarmstrong.com; mgialdini@rcbos.org; Dorian.Cooley@fire.ca.gov; Sonia.Cooley@fire.ca.gov; ps8888@msn.com; willacker@aol.com; Wohimuth, John; Rob@RobBernheimer.com; Leisa Lukes; GSpiliotis@lafco.org; Greg Pettis (gregpettis.com); Stan Henry; Patricia Saleh Klassen, Rachelle RE: Annexation and Sphere of Influence Discussions Thank you for providing a copy of the staff report. Without question, it is important for the City of Palm Desert to consider the future growth and expansion of the community, and inclusion of areas in the Thousand Palms Community Council Planning District is a very appropriate and timely issue. However, the staff report seems to imply that Palm Desert would have options not available to the City of Cathedral City. As you recall, the actions of Cathedral City were directed by LAFCO in response to a request to expand the city's Sphere of Influence (SOI) and eventually annex the vacant land between Rio Del Sol and our current eastern city boundary (Da Vall Road extended). It certainly seemed simple enough at the time; a simple exchange of property previously in the Rancho Mirage SOI into the Cathedral City SOI, with the support of Rancho Mirage. The Thousand Palms Community Council, Chamber of Commerce and several residents rose in protest claiming the expansion of Cathedral City to Rio Del Sol (completely vacant property) would inhibit their ability to incorporate. After it was determined Thousand Palms would not qualify to become an independent municipality, LAFCO emphatically directed Cathedral City to include the entirety of Thousand Palms (with the exception of the MSHCP) in the S01 expansion in response to a request by the Community Council and the residents to keep the community whole; rather than splitting it up into pieces resulting in more than one municipality carving out the lucrative portions of the community and leaving behind the lower revenue producing areas. Unhappy with the decision of LAFCO, the Berger Foundation, with valid reasons, appealed the decision of the LAFCO Board and the appeal was denied. Once again, the LAFCO Board strongly indicated the need to keep Thousand Palms whole. Failure to include the decisions of LAFCO in the staff report might give the City Council the impression that carving out the Berger Foundation and Xavier School would be permitted by LAFCO. Short of a double standard for one community versus another, this would not be consistent with the initial decision or the appeal denied by the Board. If LAFCO is so inclined, perhaps we should rethink our approach by seeking to annex only the high taxable or potentially high taxable areas. Another factor that probably needs to be reviewed is the proximity to disadvantaged communities. Should the LAFCO Board determine it is now appropriate to only annex a portion of Thousand Palms, you may need to revise your request to avoid being adjacent to any defined disadvantaged communities. That may be a difficult task in the Thousand Palms area according to some of our preliminary studies. Cathedral City and Palm Desert share an important and cordial relationship. It is critical that we continue to work together on important issues such as the eventual incorporation of Thousand Palms. Either Palm Desert or Cathedral City will likely be providing the municipal services to Thousand Palms at some point in the future. Whichever community is tasked with that responsibility, they should be given the best opportunity to succeed without the other municipality taking portions of the developable property that will provide the necessary revenues to provide the service. Therefore, if the Palm Desert City Council determines it is appropriate for the city to consider annexation of the entire Thousand Palms area, perhaps Cathedral City needs to discuss scaling back its current SOI so that you can provide effective services all the way to Rio Del Sol. The economic feasibility study clearly indicates that without the Classic Club area and the property of the Berger Foundation included in the annexation, providing municipal services to the area is not feasible. Again, thanks for the heads up and helping us work through this critical issue. Let me know if there are any questions I can answer for you. Andy Hall, AICP City Manager City of Cathedral City ah a l l@ c ath edral c ity. go v 760.770.0391 From: laylaian@cityofpalmdesert.org [mailto:laylaian@cityofpalmdesert.org] Sent: Monday, April 08, 2013 3:15 PM To: mrover@roverarmstrong.com; mgialdini@rcbos.org; Dorian.Cooley@fire.ca.gov; Sonia.Cooley@flre.ca.gov; ps8888@msn.com; willacker@aol.com; jwohlmuth@cityofpalmdesert.org; Rob@RobBemheimer.com; Leisa Lukes; Andy Hall Cc: rklassen@cityofpalmdesert.org Subject: Annexation and Sphere of Influence Discussions Greetings, City of Palm Desert staff is asking for direction from the Palm Desert City Council regarding their intentions (or lack thereof) for annexation of lands north of Interstate 10. This request for Council direction results from Cathedral City's current consideration of annexation of all of their sphere of influence north of the freeway. The item is on the agenda for the Palm Desert City Council meeting this Thursday, 11 April 2013, at 4:00 PM. You can find the Council agenda and staff report by clicking on this link: http://citvofoalmdesert.granicus.com/MetaViewer.phr)?view id=2&event id=3&meta id=17398. The staff report itself is relatively brief, but there are almost 200 pages of attachments so give your computer a minute to load up the full document. If you have strong feelings regarding Palm Desert's future areas of incorporation, I suggest that you make your concerns known by letter, email, telephone call, or in person at Thursday's meeting. You may forward any written communications to the City Clerk, who will distribute them to all members of the Council. The email address of the City Clerk, Rachelle Klassen, is RKlassenC@cityofpalmdesert.org. Sincerely, Lauri Aylaian Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 760.346.0611 phone 760776.6417 fax Klassen, FV&6NED 0 From: PALM1)k`i�r;T Sent: To: 2013 APR -9 AM Cc: Subject: Lauri, �iidy Hall [AHall@cathedralcity.gov] M ay, April 08, 2013 6:00 PM $14�1 an, Lauri; mrover@roverarmstrong.com; mgialdini@rcbos.org; Dorian. Cooley@fire.ca.gov; Sonia.Cooley@fire.ca.gov; ps8888@msn.com; willacker@aol.com; Wohlmuth, John; Rob@RobBernheimer.com; Leisa Lukes; w GSpiliotis@lafco.org; Greg Pettis (gregpettis.com); Stan Henry; Patricia Saleh Klassen, Rachelle 4 F RE: Annexation and Sphere of Influence Discussions P 2 a Thank you for providing a copy of the staff report. Without question, it is important for the City of Palm Desert to consider the future growth and expansion of the community, and inclusion of areas in the Thousand Palms Community Council Planning District is a very appropriate and timely issue. However, the staff report seems to imply that Palm Desert would have options not available to the City of Cathedral City. As you recall, the actions of Cathedral City were directed by LAFCO in response to a request to expand the city's Sphere of Influence (SOl) and eventually annex the vacant land between Rio Del Sol and our current eastern city boundary (Da Vall Road extended). It certainly seemed simple enough at the time; a simple exchange of property previously in the Rancho Mirage SOl into the Cathedral City SOI, with the support of Rancho Mirage. The Thousand Palms Community Council, Chamber of Commerce and several residents rose in protest claiming the expansion of Cathedral City to Rio Del Sol (completely vacant property) would inhibit their ability to incorporate. After it was determined Thousand Palms would not qualify to become an independent municipality, LAFCO emphatically directed Cathedral City to include the entirety of Thousand Palms (with the exception of the MSHCP) in the SOl expansion in response to a request by the Community Council and the residents to keep the community whole; rather than splitting it up into pieces resulting in more than one municipality carving out the lucrative portions of the community and leaving behind the lower revenue producing areas. Unhappy with the decision of LAFCO, the Berger Foundation, with valid reasons, appealed the decision of the LAFCO Board and the appeal was denied. Once again, the LAFCO Board strongly indicated the need to keep Thousand Palms whole. Failure to include the decisions of LAFCO in the staff report might give the City Council the impression that carving out the Berger Foundation and Xavier School would be permitted by LAFCO. Short of a double standard for one community versus another, this would not be consistent with the initial decision or the appeal denied by the Board. If LAFCO is so inclined, perhaps we should rethink our approach by seeking to annex only the high taxable or potentially high taxable areas. Another factor that probably needs to be reviewed is the proximity to disadvantaged communities. Should the LAFCO Board determine it is now appropriate to only annex a portion of Thousand Palms, you may need to revise your request to avoid being adjacent to any defined disadvantaged communities. That may be a difficult task in the Thousand Palms area according to some of our preliminary studies. Cathedral City and Palm Desert share an important and cordial relationship. It is critical that we continue to work together on important issues such as the eventual incorporation of Thousand Palms. Either Palm Desert or Cathedral City will likely be providing the municipal services to Thousand Palms at some point in the future. Whichever community is tasked with that responsibility, they should be given the best opportunity to succeed without the other municipality taking portions of the developable property that will provide the necessary revenues to provide the service. Therefore, if the Palm Desert City Council determines it is appropriate for the city to consider annexation of the entire Thousand Palms area, perhaps Cathedral City needs to discuss scaling back its current SOI so that you can provide effective services all the way to Rio Del Sol. The economic feasibility study clearly indicates that without the Classic Club area and the property of the Berger Foundation included in the annexation, providing municipal services to the area is not feasible. Again, thanks for the heads up and helping us work through this critical issue. Let me know if there are any questions I can answer for you. Andy Hall, AICP City Manager City of Cathedral City ahall a cathcdralcity.gov 760.770.0391 From: laylaian@cityofpalmdesert.org [mailto:laylaian@cityofpalmdesert.org] Sent: Monday, April 08, 2013 3:15 PM To: mrover@roverarmstrong.com; mgialdini@rcbos.org; Dorian.Cooley@fire.ca.gov; Sonia.Cooley@fire.ca.gov; ps8888@msn.com; willacker@aol.com; jwohlmuth@cityofpalmdesert.org; Rob@RobBernheimer.com; Leisa Lukes; Andy Hall Cc: rklassen@cityofpalmdesert.org Subject: Annexation and Sphere of Influence Discussions Greetings, City of Palm Desert staff is asking for direction from the Palm Desert City Council regarding their intentions (or lack thereof) for annexation of lands north of Interstate 10. This request for Council direction results from Cathedral City's current consideration of annexation of all of their sphere of influence north of the freeway. The item is on the agenda for the Palm Desert City Council meeting this Thursday, 11 April 2013, at 4:00 PM. You can find the Council agenda and staff report by clicking on this link: http://citvofpalmdesert.p,ranicus.com/MetaViewer.r)hr)?view id=2&event id=3&meta id=17398. The staff report itself is relatively brief, but there are almost 200 pages of attachments so give your computer a minute to load up the full document. If you have strong feelings regarding Palm Desert's future areas of incorporation, I suggest that you make your concerns known by letter, email, telephone call, or in person at Thursday's meeting. You may forward any written communications to the City Clerk, who will distribute them to all members of the Council. The email address of the City Clerk, Rachelle Klassen, is RKlassen[c@citvofpalmdesert.org. Sincerely, Lauri Aylaian Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 760.346.0611 phone 760776.6417 fax Aylaian, Lauri From: Aylaian, Lauri Sent: Friday, May 24, 2013 4:52 PM To: 'Nicole Criste' Subject: New Project in SOI Nicole, I am presently reviewing a new (or newly revised?) project that is going through the County for entitlements. Since it's in our sphere of influence, I thought I'd keep you up to speed on what the most likely development will be for the 40 acres at the NW corner of Adams Street and 401h Avenue. The 40-acre parcel is zoned for planned residential (R-4) and Watercourse, Watershed, and Conservation Areas (W-1). This project, which is bounded by Sun City on two sides, the auto mall on the south side, and Adams on the east side, will be 202 age -restricted single family dwellings up to 1,903 SF in size. I met with the engineer and a project rep today, and they told me that the developer intends this community to be "just like" Sun City, except that there is no golf course. It will be gated and have a single clubhouse and communal swimming pool, but no other features of any particular significance. The developer plans to be under construction by the end of this calendar year. They didn't have a projection of absorption rate. Use this info however might be appropriate. Have a good weekend, Lauri A PS: I'm playing phone tag with Patricia Saleigh from Jack Ivey Ranch. Still haven't caught up with her. PPS: Yesterday the Mayor and I met with five representatives of various boards and committees in the Bermuda Dunes area. On behalf of their various organizations, they all expressed eagerness to be annexed into Palm Desert. They would also like to meet with you whenever might be appropriate to assist you in whatever way possible. They indicated that the County has done a fair amount of infrastructure work — particularly for storm water and retention — in the last five or so years, so that the capital burden for bringing up the infrastructure should be less than the $42M estimated in the 2007 report. We'll have to chase this down a little more from the County. Lauri Aylaian Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 760,346.0611 phone 760776.6417 fax Cw9 r L J TERRA NOVA PLANNING & RESEARCH, INC. April 18, 2013 Ms. Lauri Aylaian Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 RE: Northern Annexation Fiscal Impact Analysis UpcJdte & Review of Cathedral City Fiscal Impact Analysis Dear Lauri: Following your request on Monday, �VjkhXve researched the issues, and offer the following scope of work and bWarce�these ters for the above referenced work. As we discussed yesterday, there are aoptions the City can take in this case, and the scope and budget are structured options into separate and distinct parts. In 2012, Terra Nova was as � b the City of Palm Desert to prepare an analysis of the potential costs and reve e s fated with the potential annexation of lands north of the I-10 freeway, an in lu la ds immediately east of the Ivey Ranch (just west of Cook Street), lands in a edr C' y's Sphere of Influence to the east of Ivey Ranch, and the City's northern Sp e of fluence, including the existing Sun City project (these lands were collectively ide of d as Scenario B, and are referred to as such in the text below). The analysis was com eted, and found that the costs associated with the annexation would exceed the rev ues generated by it. The City Council opted to c consideration of annexation of the areas due to the negative fiscal impact. Ce/lh-.n ve The City of Cath dral City recently completed and released a fiscal impact analysis for its northern Spher ,which extends from Rio del Sol on the west to the eastern boundary of the Classic ub property, east of Cook Street. The fiscal impact analysis predicts a? positive cas flow to the Cit of Cathedral Ci in the short term. The area a�e compassed in the Sphere totals over 9,700 acres. Terra Nova staff has had a conversation with LAFCo staff prior to preparing this scope of �AI f rit work and budget. The results of that conversation are:JT- If Palm Desert were to proceed with annexation of its northern Sphere, LAFCo 6 r,f would likely require the inclusion of the Bermuda Dunes Sphere of Influence area as well. Since ind, and rhana c in law have mane i difficult to perpetuate County islands, any annexation effort will likely be required to include Bermuda Dunes. 42635 MELANIE PLACE, SUITE 101, PALM DESERT, CA 92211 (760) 341-4800 rn M Ms. Lauri Aylaian April 18, 2013 Page 2 of 7 0 If Palm Desert were to pursue an effort to annex lands to the west of its current Sphere, consistent with Scenario B, two issues will arise: o LAFCo has consistently held that Thousand Palms is to be annexed, if it is annexed at all, as a whole. This includes lands from the eastern end of the Classic Club to Rio del Sol on the west. LAFCo will therefore not support a "breaking off' of the lands east of the IveX Ranch, as they consider these lands part of Thousand Palms. o Even if LAFCo were to consider a "breaking off' of part of Thousand Palms, if Palm Desert were to make application to annex the area in Scenario B, re legislation will require that the Ci take ad' c n sadvanta ed nm_ comer orated Communities (DUC) located immediately west of Scenario B (please see attached map). DUCs cannot be left out of annexation efforts, and must be included if a request for annexation is made in their vicinity. At a minimum, Ivek Ranch would be included by LAFCo, but it is possible that the other two D Cs would be included, particularly since that would in essence support the concept of keeping Thousand Palms whole. These specific issues assume that Palm Desert would be successful in having its northern Sphere amended — which will require the official removal of the Scenario B lands from Cathedral City's designated Sphere. Understanding of the Project Based on your email of April 151h, and the discussion above, the City wishes to have Terra Nova complete the following: n Review the Cathedral City fiscal impact analysis, and determine where its assumptions and findings differ from Palm Desert's fiscal impact analysis. Please note that the scale of the Cathedral City analysis, including considerably more land than was considered in Palm Desert's analysis has a major bearing on the outcome of the analysis. Update the Palm Desert fiscal impact analysis for Scenarios A and B to current conditions, and expand the analysis to include franchise fees for utilities and services. This task will also include update of the infrastructure analysis, and consideration of the inclusion of a CFD, or similar financial mechanism, to recoup these costs. n Add Bermuda Dunes to the fiscal impact analysis, on the assumption that LAFCo will require its inclusion in any annexation effort. Modify analysis to include Ivey Ranch in fiscal analysis, on the assumption that LAFCo will require their inclusion in any annexation effort. In order to accomplish these tasks, we offer the following scopes of work and budgets. l fm Ms. Lauri Aylaian April 18, 2013 Paae 3 of 7 Scope of Work: Review of Cathedral City Fiscal Impact Analysis 0 Comprehensively review the assumptions in the Cathedral City analysis, breaking down assumptions by revenue and cost category. This will include a comparison of levels of service assumed, per capita costs based on Cathedral City's budget, and revenue assumptions based on land use designations. 0 Prepare a letter report, to include comparison tables where appropriate, describing the findings of the review. As necessary, consider where differing assumptions may have impacted findings, and describe same. Consider whether, if needed, changes in assumptions in the Palm Desert analysis would impact the outcome of the original analysis. 0 Provide letter report to City staff for review, and meet with same to review. 0 Amend report as needed based on staff comments, and provide paper and electronic copies for use by City. 0 Attend up to two City Council meetings and represent report to Council. Proposed Budget: Review of Cathedral City Fiscal Impact Analysis Staff Time Amount Consultation and Meetings (4 hours) $ 660.00 Research and Documentation $ 4,680.00 Document Drafting $ 2,320.00 Preparation for and Attendance at 2 City Council Hearings $ 990.00 Exhibit Preparation $ 180.00 Admin. Support $ 270.00 Subtotal $ 9,100.00 Scope of Work: Update Palm Desert Analysis and Add Bermuda Dunes Coordinate with City and County to secure current fiscal year budget, land use maps, General Plan documentation, etc., necessary to characterize the lands being considered for annexation. Both Scenarios will now include Bermuda Dunes. Update base data from local, regional and state sources regarding revenues and costs: tax rates, state in lieu fees, County vs. City share of revenues, etc. Ms. Lauri Aylaian April 18, 2013 Pase 4 of 7 Add all land use data for Bermuda Dunes. Model acreage by land use. Where City land use designations have been applied, they will be used. Otherwise, County land use designations will be applied. For existing development, assumptions regarding revenue will be verified by existing data to the greatest extent possible. Should data not be available, assumptions will be made consistent with the "Riverside County Guide" for preparing fiscal impact studies. 0 Update annual per capita estimated revenues from State sources. 0 Update CSA revenues from County data, as applicable. 0 Run fiscal model, test results, and confirm data. 0 Coordinate with Public Works Director regarding infrastructure analysis update. Confirm costs for potential CFD, and develop per capita or household cost based on land use assumptions. This task will include updating for Scenario A and B, and new analysis for Bermuda Dunes. Prepare narrative discussion of assumptions, findings, and net benefits/costs associated with potential annexation of either scenario. 0 Submit draft to City staff for review, and amend as necessary. Provide revised narrative to City both electronically and in hard copy for use in staff reports, etc. 0 Attend two City Council hearings in support of staff presentation. Project Budget: Update Palm Desert Analysis and Add Bermuda Dunes Staff Time Amount Consultation and Meetings (10 hours) $ 1,650.00 Data Collection & Analysis $ 8,400.00 Review of Infrastructure and Calculation of CFD $ 2,600.00 Modeling and Narrative Document Drafting $ 6,300.00 Preparation for and Attendance at 2 City Council Hearings $ 990.00 Exhibit Preparation $ 480.00 Admin. Support $ 360.00 Subtotal $ 20,780.00 Misc. Office: Postage, telephone, FAX, photocopies, County GIS Research costs, etc. Total on In Ms. Lauri Aylaian April 18, 2013 Paue 5 of 7 Scope of Work and Budget: Add Ivey Ranch to Fiscal Impact Analysis — ✓LO This task can be added to the task above, and included in Scenario B. As the Ivey Ranch is developed, we would assume an average current value for the residential units, and base calculations on that value. Income levels have been calculated by LAFCo. Limited sales tax and similar revenues can be expected from the golf facilities. The cost of this addition would be $3,000.00, if undertaken at the same time as the Update and Bermuda Dunes analysis described above. Cost Summary: Concurrent Execution of Multiple Tasks Should all three scopes of work be undertaken concurrently, the total cost of the project would be $32,830.00. The reduction assumes that meetings, consultations and hearing time would be reduced. Schedule We expect that the fiscal impact analysis can be completed within 45 to 60 days of receiving a notice to proceed. Conclusion I believe that this proposal accurately reflects understanding of what is needed to complete the fiscal impact analysis. Please feel free to contact me if you have any questions. Sincerely, Nicole Sauviat Criste Principal M r I Ms. Lauri Aylaian April 18, 2013 Page 6 of 7 L -A TERRA NOVA PLANNING & RESEARCH, INC.® 42635 MELANIE PLACE, SUITE 101 PALM DESERT, CA 92211 STANDARD FEE SCHEDULE 2013 Terra Nova invoices its clients on a cost -basis using an hourly billing system. The scope of each planning effort is typically broken down by task and assigned estimated necessary staff time and the applicable hourly rate. Reimbursable expenses are charged on a cost basis, except where otherwise indicated. All payments for services rendered are to be made payable to Terra Nova Planning & Research, Inc. unless otherwise indicated. Clients are invoiced on a monthly basis, and invoices are due and payable upon receipt. A charge of 1.5% per month is added to all invoices over 30 days past due. The current fee schedule is provided below: Terra Nova Staff Hourly Rate Principal Planner $ 165.00 Senior Planner $ 140.00 Associate Planner $ 115.00 Assistant Planner $ 95.00 Graphic Design Specialist $ 60.00 Administrative Assistant $ 45.00 REIMBURSABLES Photo Copies (BW) $ 0.15 ea. Photo Copies (Color) $ 1.00 ea. Telephone Toll Charges Cost FAX Transmittals Cost Reproduction, Special photographic services, document printing, aerial photogrammetry, postage, etc. Cost +15% cm Im V) Ui F— z D LU 0 CL cr- 0 U z z Ui z U1 0 0) U c 0 CL m > LA Ms. Lauri Aylaian April 18, 2013 Paize 7 of 7 --i m V) W • L JO L 35ud E I OZ '8 1 jpdV uuivjXV pnu-I -sW r_j .r +y CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT STAFF REPORT REQUEST: APPROVE CONTRACT NO.C32760 IN THE AMOUNT OF $29,110.00 WITH TERRA NOVA PLANNING & RESEARCH FOR FINANCIAL ANALYSES ASSOCIATED WITH POTENTIAL ANNEXATIONS OF AREA TO THE CITIES OF PALM DESERT AND CATHEDRAL CITY, AND APPROPRIATE $32,021.00 FOR SAID CONTRACT AND 10 PERCENT CONTINGENCY FROM UNOBLIGATED GENERAL FUND RESERVES TO ACCOUNT NO. 110-4470-412-30.90 SUBMITTED BY: Lauri Aylaian, Director of Community Development CONTRACTOR: Terra Nova Planning & Research 42635 Melanie Place, Suite 101 Palm Desert, CA 92211 DATE: May 9, 2013 CONTENTS: Contract No. c3276o Recommendation By Minute Motion: 1. Approve Contract No. C32760 with Terra Nova Planning & Research to: analyze a fiscal impact analysis and plan for municipal services prepared by Ralph Anderson & Associates for Cathedral City; and prepare a fiscal impact analysis for the lands currently in the northerly portion of the Palm Desert Sphere of Influence, including Bermuda Dunes, Sun City, and the commercial areas between 38tn Avenue and Interstate 10; 2. Decline at this time to study the potential financial impact of annexing any area(s) outside of the Palm Desert sphere of influence; and 3. Appropriate $29,110 plus 10 percent contingency (totaling $32,021) from unobligated General Fund reserves to Account No. 110-4470- 412-30.90 for the subject contract. Staff Report Potential Annexation Areas North of 1-10 May 9, 2013 Page 2of6 Background At its April 11, 2013 meeting, the City Council directed staff to prepare updated financial analyses on several issues related to potential annexation of areas north of Interstate 10 (1-10). Staff has worked with Terra Nova Planning & Research ("Terra Nova") to develop a detailed scope of work for these analyses, and is now returning to the Council to confirm the scope of the studies and to request authorization to award the contract. The proposed studies differ from those requested by the Council at the April 11, 2013, meeting for reasons described below. Sun City Annexation Analysis: LAFCO staff has confirmed that any annexation of land north of 1-10 in Palm Desert's sphere of influence must also include Bermuda Dunes. Therefore, the scope of services for the proposed contract with Terra Nova includes a fiscal analysis of revenues and expenditures for Sun City, the commercial properties south of Avenue 38, and Bermuda Dunes. The fiscal impact analysis will be for the area shown in green here: Sun City, commercial area, and Bermuda Dunes gAplanningVauri aylaianlsphere of influence and annexationlannexation fiscal imipact analysis 5-9-13.docx Staff Report Potential Annexation Areas North of 1-10 May 9, 2013 Page 3 of 6 Cathedral City Proposed Annexation: Cathedral City is considering annexation of all areas in their current sphere of influence. As part of their study, Cathedral City retained Ralph Anderson & Associates to prepare a fiscal impact analysis and plan for municipal services for their unincorporated sphere areas. A comprehensive review and analysis of the Ralph Anderson report will be performed by Terra Nova under the proposed contract with the City of Palm Desert. The goal is to gain a thorough understanding of why the results of Cathedral City's study are so different from the results that would be predicted from Palm Desert's earlier study of overlapping lands. The information gleaned from this review will inform the City Council as they consider whether to support, oppose, or take no position during public hearings on Cathedral City's annexation proposal. The area that is the subject of Cathedral City's analysis and plan for services is outlined in red here: Cathedral City proposed annexation area gAplanningUauri aylaian\sphere of influence and annexationlannexation fiscal imipact analysis 5-9-13.docx *00,00 Staff Report Potential Annexation Areas North of 1-10 May 9, 2013 Page 4 of 6 Annexation of Areas Outside of the Palm Desert Sphere of Influence: A 2012 study by Terra Nova examined the fiscal impact of Palm Desert annexing Sun City plus areas to the west that are not currently in the Palm Desert SOL This area, generally east of Jack Ivey Ranch and south of multi -species habitat conservation lands, is technically in Cathedral City's SOI, but has common interests with — and ties to — Palm Desert, with whom they share 1.8 miles of boundary along Interstate 10. The area contains the Classic Club and Xavier Preparatory High School and is shown in yellow here: and community ties to Palm Desert, and has also been studied for potential annexation. On April 11, 2013, the City Council asked staff to include this area in analyses of potential annexation of Sun City and other areas already in the Palm Desert SOL However, after subsequent investigation, staff recommends that this area not be included in the analyses, and the proposed Terra Nova contract does not include this scope of work. The reason for omitting this area from further study is that the gAplanningVauri aylaianlsphere of influence and annexationlannexation fiscal irnipact analysis 5-9-13.docx Staff Report Potential Annexation Areas North of 1-10 May 9, 2013 Page 5 of 6 annexation as proposed would violate recently -enacted legislation, and modifying the proposed annexation area to comport with State law and LAFCO directives would likely require that Palm Desert annex all of Thousand Palms, which is a concept not previously contemplated by the Palm Desert City Council. The legislation that would prevent annexation of the land as configured above was enacted under SB 244 to protect Disadvantaged Unincorporated Communities ("DUC"s). The law requires that DUCs not be left out of annexation efforts, and that they be included if an annexation is proposed in the vicinity. Three disadvantaged communities have been identified in Thousand Palms, including Jack Ivey Ranch, which marks the boundary of the territory in which the Council has expressed interest. Therefore, application for annexation of the area of interest to Palm Desert would necessarily include Jack Ivey Ranch and, because of LAFCO's previous insistence on keeping Thousand Palms whole, would probably include two more DUCs. The Palm Desert City Council has not expressed interest in annexing all of Thousand Palms, and the 2012 Terra Nova fiscal analysis of Sun City and areas extending to Jack Ivey Ranch showed an annual deficit of $3.4 million. The cost of studying the fiscal impact of adding one to three disadvantaged unincorporated communities (Jack Ivey Ranch and potentially DUC 1 and DUC 2, shown below) is not warranted without a specific request from the City Council. Therefore, the scope of the proposed contract does not include fiscal analysis of any of the land outside of Palm Desert's sphere of influence. While Palm Desert previously studied annexation of land at the far east end of Cathedral City's SOI, Jack Ivey Ranch ("DUC X) - and possibly DUCs 1 and 2 -- would now be required to be a part of any future application for annexation. g.Vanning\lauri aylaianlsphere of influence and annexationlannexation fiscal imipact analysis 5-9-13.docx Staff Report Potential Annexation Areas North of 1-10 May 9, 2013 g Page 6 of 6 a da�N Fiscal Analysis 4.4 U I The cost of the professional services proposed under the subject contract is $29,110; ° ti a no money has been budgeted for this expenditure. Therefore, approval of the contract a will require that the Council appropriate $29,110 plus 10 percent (or $2,911) for contingencies from unobligated General Fund reserves. c co u •� The information produced during the study prepared for Palm Desert in 2012 a b demonstrates that neither area (described as Scenarios A and B in the analysis) north of Interstate 10 is financially viable under the conditions analyzed, and that annexation w c would pose a burden on the General Fund. More particularly, at build -out the annual M " costs would exceed annual revenues as follows: 3 Scenario A (Sun City and area south of Avenue 38): -$5.5 million/year a u a Scenario B (Scenario A plus Classic Club and Xavier Prep area): -$3.4 million/year Palm Desert's most recent fiscal study of Bermuda Dunes was prepared in September b H .� 2007. This study showed General Fund expenditures exceeding revenues by more than w $4.1 million in the initial year. The financial picture for Bermuda Dunes is further a complicated by the fact that a large capital program would need to be undertaken in order N to bring the existing infrastructure up to Palm Desert standards. b a, d y This adverse impact on the General Fund could be mitigated to some extent by such v ,0 mechanisms as fiscalization of land use in undeveloped areas, augmenting revenue " through assessment of a parcel tax, or creation of a community facilities district (CFD). To a a establish a CFD would allow the cost of the capital improvements to be spread over time, but would require approval of 2/3 of the registered voters in the impacted area. In 11114 b Bermuda Dunes there are approximately 3,700 housing units and more than $42 million in d n infrastructure deficiencies (as of 2007). This could translate to assessments of such a c y 10 magnitude that it would be difficult to gain the votes needed to forma CFD. A o ' V 04 Whether or not an annexation of Bermuda Dunes, Sun City, and the commercial lands in •;4.1 the Palm Desert SOI could ever be revenue neutral is uncertain and would require „ additional study. c c 0 � 0 •ri :J d N Submitted By: Revi d By' o 0 0 --7 ,aiu�a Lauri Aylaian, Community Development Director P Gibson, Finance Director Z ,C D,•O q r. CITYCOMILAGSiOM A prove, , APPROVED +� * ping" k ) %/ �_- RECEIVED NOMMIMM OTHER Jo h . Wohlmuth, City Manager MEETING DATE AYES: „;,. NOES:,.......,.,.1Bensow gAplanning\lauri aylaianlsphere of influence and annexation iEMea, - ABSTAIN: VERIFIED BYt., ^'' lk AGREEMENT FOR PROFESSIONAL SERVICES This AGREEMENT is made and entered into this 91h day of May , 2013, ("Effective Date") by and between the CITY OF PALM DESERT ("City") and Terra Nova Planning & Research, Inc. , a California Corporation ("Consultant") (sometimes referred to individually or collectively as "Party" or "Parties"). WITNESSETH WHEREAS, City desires to retain Consultant as an independent contractor to perform certain technical and professional consulting services in connection with the Analyses of Cathedral City and Palm Desert Potential Annexations project, subject to the terms and conditions specified below, in the documents attached and incorporated herein, and applicable federal, state and local law. NOW, THEREFORE, in consideration of performance by the Parties of the mutual promises, covenants, and conditions herein contained, the Parties hereto agree as follows: 1. Consultant's Services. 1.1 Nature of Services. Consultant shall provide professional and technical services on a non-exclusive basis, as more particularly described in Section 3, below, and in Exhibit A, Scope of Services. 1.2 Personnel. Consultant represents that it has, or will secure at its own expense, all personnel required to perform the services under this Agreement. All of the services required under this Agreement will be performed by Consultant or under its direct supervision, and all personnel engaged in the work shall be qualified, and shall be authorized or permitted under state and local law to perform such services. 1.3 Standard of Performance. Consultant shall perform all services under this Agreement in accordance with the standard of care generally exercised by like professionals under similar circumstances and in a manner reasonably satisfactory to City. 1.4 Consultant Representative. For the purposes of this Agreement, the Consultant Representative shall be Nicole Criste, Principal ("Consultant Representative"). 1.5 Time of Commencement. The execution of this Agreement by the Parties constitutes an authorization to proceed. 1.6 Time of Performance/Time is of the Essence. Consultant shall commence the services contemplated under this Agreement immediately and shall prosecute to completion each task listed in Section 3 in a timely and diligent manner within sixty (60) calendar days. Professional Services Agreement — City — VA 2. Services by City: 2.1 City Representative. For the purposes of this Agreement, the City Representative shall be Lauri Avlaian , or such other person designated by the City Manager ("City Representative"). 2.2 Provision of Data. All information, data, reports and records and maps as are existing and available from the City and necessary for the carryings out of the work outlined in Exhibit "A" hereof shall be furnished to Consultant without charge by City, and City shall cooperate in every way reasonable in the carrying out of the work without delay. 3. Consultant's Scope of Work. Upon receipt of a fully executed Agreement, Consultant shall immediately commence work pursuant to this Agreement. Consultant's scope of work shall consist of preparing: a detailed review and analysis of the Ralph Anderson & Associates "Draft Fiscal Analysis and Plan for Services for the Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms"; and a fiscal impact analysis of annexation of the northern portion of Palm Desert's sphere of influence, including Bermuda Dunes, Sun City, and the commercial area bounded by Washington Street, 38th Avenue, and Interstate 10. The scope of work is more particularly described in the Consultant's proposal dated 23 April 2013, and the detailed services are described in Exhibit A appended to this Agreement. 3.1 Reporting & Record Keeping. To assist City in the performance of its planning, reporting, and financial administration obligations, Consultant shall, throughout the term of this Agreement, keep City reasonably informed of progress on work required under this Agreement, and of any problems or delays, anticipated or otherwise, associated with each aspect of the work. Consultant shall promptly respond to any request by City for information, progress reports, or documentation. Consultant' shall maintain accurate records of all work performed for each Assignment under this Agreement, including originals or copies, as applicable, of all deliverable documents described in Exhibit A. Upon the completion of work, and if requested by the City, Consultant shall deliver to City the originals of all documentation produced, and may retain copies of such documentation. 3.2 Compliance with Laws. Consultant shall at all times possess any and all licenses and permits necessary to provide the services herein, and shall comply with applicable federal, state and local laws, ordinances, codes and regulations in the performance of this Agreement, and with any and all applicable City of Palm Desert policies and guidelines. 3.3 Confidentiality. Except as otherwise permitted or required by law, Consultant shall maintain as confidential and shall not disclose any and/or all information received in the course of performing pursuant to this Agreement. Consultant shall promptly inform the City in the event Consultant receives a subpoena or court order requiring disclosure of confidential information. g:\planning\lauri aylaian\sphere of influence and annexation\terra nova - 2013 prof svcs agmt.doc 2 4. Compensation. City shall pay Consultant for the Services provided under this Agreement on the following basis. 4.1 Not -to -Exceed Fee: City shall pay to Consultant a total amount not to exceed $ 29,110.00 for the basic services described in Exhibit A. Payment shall be made on a monthly basis, based upon the hourly rates defined in Exhibit B, multiplied by the number of hours worked by each classification of personnel assigned to the project during the previous calendar month. The not -to -exceed fee shall not be exceeded without written agreement between the parties. 5.2 Additional Services: Additional services beyond those described in Exhibit A shall be reimbursed on a time -spent basis at the hourly rates described in Exhibit B. City shall not be obligated to compensate Consultant for additional services performed without advance authorization from the City Representative. 5.3 Reimbursable Expenses: City shall pay to Consultant actual costs plus ten percent (10%), subject to the limitation given below, for expenses incurred on behalf of the project for long distance telephone calls, reproduction, express delivery and courier services, postage, out-of-town travel if pre -approved in writing by the City Representative, and other expenses directly attributable to the project and expressly approved by the City Representative. Reimbursable expenses, including Consultant's mark-up, shall not exceed $ 1,500.00 for this project. 5.4 Extraordinary Expenses/Costs. No claims for additional services, expenses or costs incurred by Consultant will be allowed unless such additional services, expenses or costs are authorized by City in writing prior to the performance or incurrence of such services, expenses or costs. Any additional services, expenses or costs authorized by City shall be compensated at rates mutually agreed upon by the Parties in writing. 6. Method of Payment. 6.1 Invoices. Consultant shall submit to City invoices each month for all services completed, and all expenses or costs incurred pursuant to this Agreement during the preceding month. The invoices shall describe the services rendered during the period and shall show the number of hours worked, the hourly rates charged, and any milestone achievements. Copies of receipts for expenses or costs shall be submitted with each invoice. City shall review such invoices and notify Consultant in writing within fifteen (15) calendar days of any disputed amounts. 6.2 Payment. City shall pay all undisputed portions of the invoice within thirty (30) calendar days after receipt of the invoice up to the maximum amounts set forth in Section 5. 6.3 Audit of Records. At any time during regular working hours, all records, invoices, time cards, cost control sheets and other records maintained by Consultant shall be available for review and audit by the City. 7. Ownership of Work Product. 7.1 Property of City. All documents including reports, analyses or other written material developed or obtained by Consultant in the performance of this g:\planning\lauri aylaian\sphere of influence and annexation\terra nova - 2013 prof svcs agmt.doc 3 Agreement shall be and remain the property of City without restriction or limitation upon its use or dissemination by City. 8. Conflict of Interest/Prohibited Conduct and Interests 8.1 Conflict of Interest. Consultant and its officers, employees, associates and sub consultants, if any, will comply with all conflict of interest statutes of the State of California applicable to Consultant's services under this Agreement, including, but not limited to, the Political Reform Act (Government Code Sections 81000, et seq.) and Government Code Section 1090. 8.2 No Solicitation. Consultant warrants that it has not employed or retained any company or person to solicit or secure this Agreement, and that it has not paid or agreed to pay any party any fee, commission, percentage, brokerage fee, gifts, or any other consideration, contingent upon or resulting from the award or making of this Agreement. 8.3 No Financial Interest - City. No officer, member or employee of City during his or her tenure or one year thereafter shall have any interest, direct or indirect, in this Agreement or the proceeds thereof. The Parties hereto covenant and agree that to their knowledge no member of the City Council, or officer or employee of City, has any interest, whether contractual, non -contractual, financial or otherwise, in this Agreement, or the subject matter thereof, nor any business or financial relationship with Consultant, and that if any such interest comes to the knowledge of either Party at any time a full and complete disclosure of all such information will be made in writing to the other Party or Parties, even if such interest would not be considered a conflict of interest under applicable laws. 8.4 No Financial Interest — Consultant. Consultant hereby covenants, on behalf of itself, and its officers, employees, agents and representatives, that at the time of executing this Agreement it has no interest, and that it shall not acquire any interest in the future, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed pursuant to this Agreement. Consultant further covenants that in the performance of this Agreement, no person having any such interest shall be employed by Consultant. 9. Indemnification. Other than in the performance of professional services and to the fullest extent permitted by law, Consultant shall indemnify, defend and hold the City, the City's elected officials, officers, employees, agents and volunteers free and harmless from and against all tort liability, including liability for claims, suits, actions, expenses or costs of any kind, whether actual, alleged or threatened, actual attorney's fees, court costs, and expert witness fees incurred by City or Agency, arising out of or in any way connected with, in whole or in part, the acts or omissions of Consultant, or any of Consultant's officers, agents, employees or contractors, in the performance of this Agreement, including but not limited to, claims, suits and liabilities for bodily injury, death or property damage to any individual or entity, including employees or officials of Consultant. The provisions of this paragraph shall not apply to claims arising out of the sole negligence or willful misconduct of City or Agency, any of City's elected officials, officers, employees or agents. g:\planning\lauri aylaian\sphere of influence and annexation\terra nova - 2013 prof svcs agmt.doc 4 Nftw In addition to the foregoing, Consultant shall indemnify, protect, defend and hold harmless the Agency and the City of Palm Desert, their officials, employees, agents and representatives fro! ;'and against any and all losses, liabilities, damages, costs, and expenses, including_ ;torney's fees and costs to the extent same are caused in whole or in part by any negligent or wrongful act, error, or omission of the Consultant, its officers, agents, employees or subconsultants (or any entity or individual that the Consultant shall bear the legal liability thereof) in the performance of professional services under this agreement. 10. Insurance. Consultant will maintain insurance in conformance with the requirements set forth below. If Consultant's existing coverage does not meet the requirements set forth here, it will be amended to do so. Consultant acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. Any insurance proceeds available to City in excess of the limits and coverage required in this agreement and which is applicable to a given loss, will be available to City. 10.1 Workers' compensation and employer's liability. Consultant shall provide Workers Compensation and Employer's Liability Insurance on an approved policy form providing benefits as required by law with employer's liability limits no less that $1,000,000 per accident or disease. 10.2 Automobile liability. Consultant shall provide auto liability coverage with a limit of no less than $1,000,000 per accident. If Consultant owns no vehicles, this requirement may be met through a non -owned auto endorsement to the CGL policy. 10.3 Waiver. If the Consultant does not carry Worker's compensation coverage, or if the Consultant will not operate any vehicles at any time within the scope of the services in the agreement, provisions for these coverages may be waived upon review and approval of the City's Risk Manager. 11. Status as Independent Contractor. Consultant is, and shall at all times remain as to City, a wholly independent contractor. Consultant shall have no power to incur any debt, obligation, or liability on behalf of City. Neither City nor any of its officials, employees or agents shall have control over the conduct of Consultant or any of Consultant's employees, except as set forth in this Agreement. 12. Non -Assignability; Subcontracting. Consultant shall not assign or subcontract all or any portion of this Agreement without the City's prior, written consent. 13. Non -Discrimination and Equal Employment Opportunity. In the performance of this Agreement, Consultant shall not discriminate against any employee, subcontractor, or applicant for employment because of race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental disability, medical condition, or sexual orientation. Consultant will take affirmative action to ensure that subcontractors and applicants are employed, and that employees are treated during g:\planning\lauri aylaian\sphere of influence and annexation\terra nova - 2013 prof svcs agmt.doc 5 employment, without regard to their race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental di -ability, medical condition, or sexual orientation. 14. Cooperation. In the event any claim or Vion is brought against the City relating to Consultant's performance or services rendered under this Agreement, Consultant shall render any reasonable assistance and cooperation which City might require. 15. Termination. The right is reserved by the City to terminate the Agreement at any time upon seven (7) days written notice, in the event the project is to be abandoned or indefinitely postponed, or in the event the Consultant's services, in the sole judgment of City, are unsatisfactory or because of the Consultant's failure to prosecute the work with diligence or within the time limits specified or because of his disability or death. In any such case, the Consultant shall be paid the reasonable value of the services rendered, based upon Consultant's standard hourly rates, up to the time of the termination. The Consultant shall keep adequate records to substantiate costs and provide copies of original time -cards in the event of termination or suspension. 16. Notices. Any notices, bills, invoices, or reports required by this Agreement shall be given by first class U.S. mail or by personal service. City: John M. Wohlmuth, City Manager City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260-2578 Tel: (760) 346-0611 Fax: (760) 341-6372 With a copy to: Lauri Aylaian, Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260-2578 Tel: (760) 346-0611 Fax: (760) 341-6372 Consultant: Nicole Sauviat Criste, Principal Terra Nova Planning & Research, Inc. 42635 Melanie Place, Suite 101 Palm Desert, CA 92211 Tel: (760) 341-4800 17. Non -Waiver of Terms, Rights and Remedies. Waiver by either Party of any one or more of the conditions of performance under this Agreement shall not be a waiver of any other condition of performance under this Agreement. In no event shall the making by City of any payment to Consultant constitute or be construed as a waiver by City of any breach of covenant, or any default which may then exist on the part of g:\planning\lauri aylaian\sphere of influence and annexation\terra nova - 2013 prof svcs agmt.doc 6 Consultant, and the making of any such payment by City shall in no way impair or prejudice any right or remedy available to City with regard to such breach or default. 18. Attorney's Fees. In the event that either Party to this Agreement shall commence any legal action or proceeding for damages for breach, or to enforce or interpret the provisions of this Agreement, the prevailing party in such action or proceeding shall be entitled to recover its costs of suit, including reasonable attorney's fees and experts' costs. 19. Entire Agreement. This Agreement, and any other documents incorporated herein by specific reference, represents the entire and integrated agreement between Consultant and City. This Agreement supersedes all prior oral or written negotiations, representations or agreements. No promise or representation, whether oral or written, express or implied, that is not set forth herein, shall be binding or have any force or effect. This Agreement may not be amended, nor any provision waived, except in a writing signed by the Parties which expressly refers to this Agreement. 20. Partial Invalidity. In case any provision of this Agreement should be deemed by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions shall not be affected or impaired thereby. 21. Successors. This Agreement shall bind and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties to this Agreement. 22. Waivers. No waiver of any breach or default of any term or provision of this Agreement shall be deemed a waiver of any other term or provision of this Agreement, and no waiver shall be valid unless in writing and executed by the waiving party. IN WITNESS WHEREOF, said parties have executed this Agreement effective as of the Effective Date above. CONSULTANT CITY OF PALM DESERT By: Its: APPROVED AS TO FORM Dave Erwin, City Attorney City Manager g:\planning\lauri aylaian\sphere of influence and annexation\terra nova - 2013 prof svcs agmt.doc 7 EXHIBIT A SCOPE OF SERVICES SCOPE OF SERVICES Consultant shall provide the following services under the terms of the Agreement: Cathedral City Fiscal Report Review and Compariso Comprehensively review the assumptions in the Cathedral City analysis. breaking do-,vii assumptions by revenue and cost category. This will include a comparison of levels of service assumed, per capita costs based on Cathedral City's budget. and revenue assumptions based on land use designations. Prepare a letter report, to include comparison tables where appropriate, describing the findings of the review. As necessary. consider where differing assumptions may have impacted findings, and describe same. Consider whether, if needed, changes in assumptions in the Palm Desert analysis would impact the outcome of the original analysis. Provide letter report to City staff for review, and meet with same to review. Amend report as needed based on staff comments. and provide paper and electronic copies for use by City. Palm Desert Fiscal Impact Report Update and Expansion Coordinate with City and County to secure current fiscal year budget, land use maps, General Plan documentation, etc., necessary to characterize the lairds being considered for annexation, Scenario B will be removed from the analysis. Update base data from local, regional and state sources regarding revenues and costs: tax rates, state in lieu fees. County vs, City share of revenues. etc. Add all land use data for Bermuda Dunes, Model acreage by land use. 'Wliere City land use designations have been applied, they will be used, Otherwise. County land use designations will be applied. For existing development, assumptions regarding revenue will be verified by existfilg, data to the greatest extent possible. Should data I - not be available. assumptions will be made consistent with the `-Riverside County Guide- for preparing fiscal impact studies. gAplanning\lauri aylaian\sphere of influence and annexation\terra nova - 2013 prof svcs agmt.doc 8 EXHIBIT A SCOPE OF SERVICES (continued) ]�o Update annual per capita estimated revenues from State sources. Update CSA reventies, from Cotinty data., as applicable. Rim fiscal model. test results. and confirm data. Coordinate with Public Works Director regarding infrastructure analysis update. regarding costs for potential CFD. and develop per capita orliousehold cost based on land use assiunptions. This task will include updating for Scenario A and new arialysis for Bell-nucht Dimes. Prepare narrative discussion of assimiptions. findings, and net benefits/costs associated with potential annexation of either scenario. S , ubmit draft to City staff for review. and amend as necessary. Provide revised narrative to City both electronically and in hard copy for use in staff reports, etc. Attend two City Cotuicil hearings in support of staff presentation. g:\planning\lauri aylaian\sphere of influence and annexation\terra nova - 2013 prof svcs agmt.doc 9 %P111111110 *Oro# '* I "P . COST BREAKDOWN AND HOURLY RATES Staff Time Amount Consultation and Meetings (12 hours) S 1.980.00 Cathedral City Report Research and Documentation S 4.680.00 Letter Report Drafting S 2,320.00 Palter Desert Fiscal Impact Analysis Data Collection & Analysis S 7.600.00 Review of Infrastructure and Calculation of CFD S' 2.600.00 Revised Fiscal Modelingand Narrative Document Drafting S 6.300.00 Preparation for and Attendance at 2 City Council Hearings S 990.00 E.-diibit Preparation S 600.00 Admin. Support S 540M Subtotal S 27,610.00 N,Iisc. Office: Postage.. telephone. FAX, photocopies., County GIS Research costs. etc. 1,500.00 Total $29,110.00 Terra Nova Staff Hourly Rate Principal Planner $165.00 Senior Planner $140.00 Associate Planner $115,00 Assistant Planner $95.00 Graphic Design Specialist $60.00 Administrative Assistant $45.00 I 'XI -I x M I Photo Copies (BW) $ 0.15 ea. Photo Copies (Color) $ 1.00 ea. Telephone Toll Charges Cost FAX Transmittals Cost Reproduction. Special photographic services, document printing. aerial photogranimetry, postage., etc, Cost + 15% g:\planning\lauri aylaian\sphere of influence and annexationVerra nova - 2013 prof svcs agmt.doc 10 L -A TERRA NOVA PLANNING & RESEARCH, INC. May 13, 2013 Ms. Lauri Aylaian Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 RE: Revised Northern Annexation Fiscal Impact Analysis Update & Review of Cathedral City Fiscal Impact Analysis Dear Lauri: Please find below our revised scope of work for the fiscal impact analysis work. The revisions we have made are based on the City Council's comments last week. As I understand their direction, we are to undertake the review and comparison of the Cathedral City documents as originally planned. The revision to the scope is associated with the northern City of Palm Desert Sphere, and addresses: • The inclusion of the Bermuda Dunes fiscal analysis document provided to use without update. • The inclusion of the Scenario B analysis we prepared last year, with the addition of Jack Ivey Ranch. • The revision of the Scenario B analysis to include and recommend a land use and build out mix that brings the annexation to revenue -neutral or revenue -generating status. • We would also recommend that we provide an explanation of what would be required to include those lands in Scenario B but outside the City of Palm Desert's Sphere of Influence in an annexation effort. Background In 2012, Terra Nova was asked by the City of Palm Desert to prepare an analysis of the potential costs and revenues associated with the potential annexation of lands north of the I-10 freeway, and including lands immediately east of the Ivey Ranch (just west of Cook Street), lands in Cathedral City's Sphere of Influence to the east of Ivey Ranch, and the City's northern Sphere of Influence, including the existing Sun City project (these lands were collectively identified as Scenario B, and are referred to as such in the text below). The analysis was completed, and found that the costs associated with the annexation would exceed the revenues generated by it. The City Council opted to cease consideration of annexation of these areas due to the negative fiscal impact. The City of Cathedral City recently completed and released a fiscal impact analysis for its northern Sphere, which extends from Rio del Sol on the west to the eastern boundary of the 42635 MELANIE PLACE, SUITE 101, PALM DESERT, CA 92211 (760) 341-4800 Ms. Lauri Aylaian May 13, 2013 Paee 2 of 7 Classic Club property, east of Cook Street. The fiscal impact analysis predicts a positive cash flow to the City of Cathedral City in the long term, but not in the short term. The area encompassed in the Sphere totals over 9,700 acres. Terra Nova staff has had a conversation with LAFCo staff prior to preparing this scope of work and budget. The results of that conversation are: • If Palm Desert were to proceed with annexation of its northern Sphere, LAFCo would likely require the inclusion of the Bermuda Dunes Sphere of Influence area as well. Since Bermuda Dunes is an island, and changes in law have made it difficult to perpetuate County islands, any annexation effort will likely be required to include Bermuda Dunes. • If Palm Desert were to pursue an effort to annex lands to the west of its current Sphere, consistent with Scenario B, two issues will arise: o LAFCo has consistently held that Thousand Palms is to be annexed, if it is annexed at all, as a whole. This includes lands from the eastern end of the Classic Club to Rio del Sol on the west. LAFCo will therefore not support a "breaking off' of the lands east of the Ivery Ranch, as they consider these lands part of Thousand Palms. o Even if LAFCo were to consider a "breaking off' of part of Thousand Palms, if Palm Desert were to make application to annex the area in Scenario B, recent legislation will require that the City take in adjacent Disadvantaged Unincorporated Communities (DUC) located immediately west of Scenario B (please see attached map). DUCs cannot be left out of annexation efforts, and must be included if a request for annexation is made in their vicinity. At a minimum, Ivery Ranch would be included by LAFCo, but it is possible that the other two DUCs would be included, particularly since that would in essence support the concept of keeping Thousand Palms whole. These specific issues assume that Palm Desert would be successful in having its northern Sphere amended — which will require the official removal of the Scenario B lands from Cathedral City's designated Sphere. Understanding of the Project The City wishes to have Terra Nova analyze two issues: • Review the Cathedral City fiscal impact analysis, and determine where its assumptions and findings differ from Palm Desert's fiscal impact analysis. Please note that the scale of the Cathedral City analysis, including considerably more land than was considered in Palm Desert's analysis has a major bearing on the outcome of the analysis. • Add the City's Bermuda Dunes Sphere of Influence to the Scenario B analysis, utilizing the fiscal analysis completed for the City by Muni Financial. Also add Jack Ivey Ranch to Scenario B. This task will also include update of the infrastructure analysis prepared by the Public Works Department, and consideration of the inclusion of a CFD, or similar financial mechanism, to recoup these costs. Finally, this task will include recommendations for changes to the land use assumptions to increase potential revenues, arr -rr" Ms. Lauri Aylaian May 13, 2013 Page 3 of 7 and/or decrease expenditures to the City. It is likely that this effort will include the elimination or significant reduction in residential land uses, and assumptions increasing the retail commercial and resort commercial land uses in the Scenario B area. Scope of Work Cathedral City Fiscal Report Review and Comparison ➢ Comprehensively review the assumptions in the Cathedral City analysis, breaking down assumptions by revenue and cost category. This will include a comparison of levels of service assumed, per capita costs based on Cathedral City's budget, and revenue assumptions based on land use designations. ➢ Prepare a letter report, to include comparison tables where appropriate, describing the findings of the review. As necessary, consider where differing assumptions may have impacted findings, and describe same. Consider whether, if needed, changes in assumptions in the Palm Desert analysis would impact the outcome of the original analysis. ➢ Provide letter report to City staff for review, and meet with same to review. ➢ Amend report as needed based on staff comments, and provide paper and electronic copies for use by City. Palm Desert Fiscal Impact Report ➢ Coordinate with City and County to secure land use maps, approved project information and General Plan documentation, etc., necessary to characterize the lands being considered in Scenario B. ➢ Add Muni Financial data regarding Bermuda Dunes. Model vacant acreage by land use. Incorporate Jack Ivey Ranch lands as a built out project. Average unit costs and land valuation will be used to determine current revenues for the Ranch lands. ➢ Run fiscal model, test results, and confirm data. ➢ Make assumptions regarding potential land use changes on all vacant lands within the Scenario B land area. This will include analysis of significant changes in land use to generate revenues. This will also mean that approved projects, including approved Specific Plans within Scenario B will be open to modification. Terra Nova will work with City staff, and would also consult with the Berger Foundation, as their land holdings are significant, and have the potential to significantly impact the revenue generation in the area. Generate build out square footage/unit/room counts for proposed land use scenario. ➢ Run model using revised land use assumptions, test results and confirm data. Ms. Lauri Aylaian May 13, 2013 Pape 4 of 7 ➢ Coordinate with Public Works Director regarding infrastructure analysis update, including Bermuda Dunes area for which analysis has been conducted in the past. Confirm costs for potential CFD, and develop per capita or household cost based on land use assumptions. ➢ Prepare narrative discussion of assumptions, findings, and net benefits/costs associated with land use assumptions. ➢ Submit draft to City staff for review, and amend as necessary. Provide revised narrative to City both electronically and in hard copy for use in staff reports, etc. ➢ Attend two City Council hearings in support of staff presentation. Proposed Budget Assuming that both tasks were to be undertaken concurrently, and that City Council hearings would occur for both tasks concurrently, we estimate the following project budget. Staff Time Amount Consultation and Meetings (12 hours) $ 1,980.00 Cathedral City Report Research and Documentation $ 4,680.00 Letter Report Drafting $ 2,320.00 Palm Desert Fiscal Impact Analysis Data Collection & Analysis $ 7,600.00 Review of Infrastructure and Calculation of CFD $ 2,600.00 Revised Fiscal Modeling and Narrative Document Drafting $ 6,300.00 Preparation for and Attendance at 2 City Council Hearings $ 990.00 Exhibit Preparation $ 600.00 Admin. Support $ 540.00 Subtotal $ 27,610.00 Misc. Office: Postage, telephone, FAX, photocopies, County GIS Research costs, etc. $ 1,500.00 Total $ 29,110.00 Schedule We expect that the review of Cathedral City's report and the updating of the fiscal impact analysis can be completed within 45 to 60 days of receiving a notice to proceed. Conclusion I believe that this proposal accurately reflects understanding of what is needed to complete the fiscal impact analysis. Please feel free to contact me if you have any questions. Sincerely, Ms. Lauri Aylaian May 13, 2013 Paee 5 of Nicole Sauviat Criste Principal IA� Ms. Lauri Aylaian May 13, 2013 Page 6 of 7 L � TERRA NOVA PLANNING & RESEARCH, INC.® 42635 MELANIE PLACE, SUITE 101 PALM DESERT, CA 92211 STANDARD FEE SCHEDULE 2013 Terra Nova invoices its clients on a cost -basis using an hourly billing system. The scope of each planning effort is typically broken down by task and assigned estimated necessary staff time and the applicable hourly rate. Reimbursable expenses are charged on a cost basis, except where otherwise indicated. All payments for services rendered are to be made payable to Terra Nova Planning & Research, Inc. unless otherwise indicated. Clients are invoiced on a monthly basis, and invoices are due and payable upon receipt. A charge of 1.5% per month is added to all invoices over 30 days past due. The current fee schedule is provided below: Terra Nova Staff Hourly Rate Principal Planner $ 165.00 Senior Planner $ 140.00 Associate Planner $ 115.00 Assistant Planner $ 95.00 Graphic Design Specialist $ 60.00 Administrative Assistant $ 45.00 REIMBURSABLES Photo Copies (BW) $ 0.15 ea. Photo Copies (Color) $ 1.00 ea. Telephone Toll Charges Cost FAX Transmittals Cost Reproduction, Special photographic services, document printing, aerial photogrammetry, postage, etc. Cost +15% Ms. Lauri Aylaian May 11,2013 Page 7 of 7 DISADVANTAGED UNINCORPORATED COMMUNITIES City of Cathedral City- Sphere of Influence Vicinity Map C I I Y Of P H L M 7 3 - 5 1 o FRED WARING DRIVE PALM DESERT, CALIFORNIA 92260-2578 TEL: 760 346-061I info@cityofpalmdesert.org May 15, 2013 Terra Nova Planning and Research Inc. 42635 Melanie Place, Suite 101 Palm Desert, California 92211 Dear SWe�T n: f � City of Palm Desert Community Development MAY 15 2013 Subject: Contract No. C32760 - Professional Consulting Services in Connection with the Analyses of Cathedral City and Palm Desert Potential Annexations At its regular meeting of May 9, 2013, the Palm Desert City Council, by Minute Motion, awarded the subject contract to Terra Nova Planning and Research Inc., Palm Desert, California, in the amount of $29,110 and authorized the Mayor to execute same. Enclosed are two original Agreements. Please sign where indicated, have notarized (California All -Purpose Acknowledgment), and return them to us at your earliest convenience. We will then forward to you a fully executed Agreement for your records. Additionally, we call your attention to the insurance requirements for the subject services. We ask that all required information be returned with the signed Agreements, including the appropriate Certificate of Insurance, to expedite processing of the document and commencement of the services. If you have any questions or require any additional information, please do not hesitate to contact us. Sincerely, � t RACHELLE D. KLASSEN, MMC CITY CLERK RDK:glm Enclosures (as noted) cc: Lauri Aylaian, Director of Community Development Z V PAINTED ON AF[Y(LFO PNPFA G4 (lipa Contract No. C32760 AGREEMENT FOR PROFESSIONAL SERVICES This AGREEMENT is made and entered into this 9"' day of May , 2013, ("Effective Date") by and between the CITY OF PALM DESERT ("City") and Terra Nova Plannina & Research, Inc. , a California Corporation ("Consultant") (sometimes referred to individually or collectively as "Party" or "Parties"). WITNESSETH WHEREAS, City desires to retain Consultant as an independent contractor to perform certain technical and professional consulting services in connection with the Analyses of Cathedral City and Palm Desert Potential Annexations project, subject to the terms and conditions specified below, in the documents attached and incorporated herein, and applicable federal, state and local law. NOW, THEREFORE, in consideration of performance by the Parties of the mutual promises, covenants, and conditions herein contained, the Parties hereto agree as follows: 1. Consultant's Services. 1.1 Nature of Services. Consultant shall provide professional and technical services on a non-exclusive basis, as more particularly described in Section 3, below, and in Exhibit A, Scope of Services. 1.2 Personnel. Consultant represents that it has, or will secure at its own expense, all personnel required to perform the services under this Agreement. All of the services required under this Agreement will be performed by Consultant or under its direct supervision, and all personnel engaged in the work shall be qualified, and shall be authorized or permitted under state and local law to perform such services. 1.3 Standard of Performance. Consultant shall perform all services under this Agreement in accordance with the standard of care generally exercised by like professionals under similar circumstances and in a manner reasonably satisfactory to City. 1.4 Consultant Representative. For the purposes of this Agreement, the Consultant Representative shall be Nicole Criste. Principal ("Consultant Representative"). 1.5 Time of Commencement. The execution of this Agreement by the Parties constitutes an authorization to proceed. 1.6 Time of Performance/Time is of the Essence. Consultant shall commence the services contemplated under this Agreement immediately and shall prosecute to completion each task listed in Section 3 in a timely and diligent manner within sixty (60) calendar days. Contract No. C32760 13. Non -Discrimination and Equal Employment Opportunity. In the performance of this Agreement, Consultant shall not discriminate against any employee, subcontractor, or applicant for employment because of race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental disability, medical condition, or sexual orientation. Consultant will take affirmative action to ensure that subcontractors and applicants are employed, and that employees are treated during employment, without regard to their race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental disability, medical condition, or sexual orientation. 14. Cooperation. In the event any claim or action is brought against the City relating to Consultant's performance or services rendered under this Agreement, Consultant shall render any reasonable assistance and cooperation which City might require. 15. Termination. The right is reserved by the City to terminate the Agreement at any time upon seven (7) days written notice, in the event the project is to be abandoned or indefinitely postponed, or in the event the Consultant's services, in the sole judgment of City, are unsatisfactory or because of the Consultant's failure to prosecute the work with diligence or within the time limits specified or because of his disability or death. In any such case, the Consultant shall be paid the reasonable value of the services rendered, based upon Consultant's standard hourly rates, up to the time of the termination. The Consultant shall keep adequate records to substantiate costs and provide copies of original time -cards in the event of termination or suspension. 16. Notices. Any notices, bills, invoices, or reports required by this Agreement shall be given by first class U.S. mail or by oersonal servirA_ City: John M. Wohlmuth, City Manager City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260-2578 Tel: (760) 346-0611 Fax: (760) 341-6372 With a copy to: Lauri Aylaian, Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260-2578 Tel: (760) 346-0611 Fax: (760) 341-6372 Contract No. C32760 Consultant: Nicole Sauviat Cdste, Principal Terra Nova Planning & Research, Inc. 42635 Melanie Place, Suite 101 Palm Desert, CA 92211 Tel: (760) 341-4800 17. Non -Waiver of Terms, Rights and Remedies. Waiver by either Party of any one or more of the conditions of performance under this Agreement shall not be a waiver of any other condition of performance under this Agreement. In no event shall the making by City of any payment to Consultant constitute or be construed as a waiver by City of any breach of covenant, or any default which may then exist on the part of Consultant, and the making of any such payment by City shall in no way impair or prejudice any right or remedy available to City with regard to such breach or default. 18. Attorney's Fees. In the event that either Party to this Agreement shall commence any legal action or proceeding for damages for breach, or to enforce or interpret the provisions of this Agreement, the prevailing party in such action or proceeding shall be entitled to recover its costs of suit, including reasonable attorney's fees and experts' costs. 19. Entire Agreement. This Agreement, and any other documents incorporated herein by specific reference, represents the entire and integrated agreement between Consultant and City. This Agreement supersedes all prior oral or written negotiations, representations or agreements. No promise or representation, whether oral or written, express or implied, that is not set forth herein, shall be binding or have any force or effect. This Agreement may not be amended, nor any provision waived, except in a writing signed by the Parties which expressly refers to this Agreement. 20. Partial Invalidity. In case any provision of this Agreement should be deemed by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions shall not be affected or impaired thereby. 21. Successors. This Agreement shall bind and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties to this Agreement. 22. Waivers. No waiver of any breach or default of any term or provision of this Agreement shall be deemed a waiver of any other term or provision of this Agreement, and no waiver shall be valid unless in writing and executed by the waiving party. 7 4 " P Contract No. C32760 IN WITNESS WHEREOF, said parties have executed this Agreement effective as of the Effective Date above. CONSULTANT By: Its: CITY OF PALM DESERT Jan C. Harnik, Mayor APPROVED AS TO FORM Dave Erwin, City Attorney N. CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of On before me, Date personally appeared Place Notary Seal and/or Stamp Above Here Insert Name and Title of the Name(s) of who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature: Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): ❑ Individual ❑ Partner — ❑ Limited ❑ General Top of thumb here ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: Number of Pages: Signer's Name: ❑ Corporate Officer — Title(s): ❑ Individual ❑ Partner — ❑ Limited ❑ General Top of thumb here ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: 02008 National Notary Association- 9350 De Soto Ave., P.O. Box 2402 -Chatsworth, CA 91313-2402- www.NationalNotary.org Item #5907 Reorder: Call Toll -Free 1-800-876-6827 64 EXHIBIT A SCOPE OF SERVICES SCOPE OF SERVICES Contract No. C32760 Consultant shall provide the following services under the terms of the Agreement: Cathedral City Fiscal Report Review and Comparison ➢ Comprehensively review the assumptions in the Cathedral City analysis, breaking down assumptions by revenue and cost category. This will include a comparison of levels of service assumed, per capita costs based on Cathedral City's budget, and revenue assumptions based on lazed use designations. > Prepare a letter report, to include comparison tables where appropriate, describing the findings of the review. As necessary, consider where differing assumptions may have impacted findings, and describe same. Consider whether, if needed, changes in assumptions in the Pahn Desert analysis would impact the outcome of the original analysis. Provide letter report to City staff for review, and meet with same to review. ➢ Amend report as needed based on staff comments, and provide paper and electronic copies for use by City. Palm Desert Fiscal Impact Report ➢ Coordinate with City and County to secure land use maps, approved project information and General Plan documentation, etc., necessary to characterize the lands being considered in Scenario B. ➢ Add Muni Financial data regarding Bermuda Dunes. Model vacant acreage by land use. Incorporate Jack Ivey Ranch lands as a built out project. Average unit costs and land valuation will be used to determine cunvW revenues for the Ranch lands. ➢ Run fiscal model, test results, and confirm data- 9 0 EXHIBIT A SCOPE OF SERVICES (continued) Contract No. C32760 ➢ Make assumptions regarding potential land use changes on all vacant lands within the Scenario B land area This will include analysis of significant changes in land use to generate revenues. This will also mean that approved projects, including approved Specific Plans within Scenario B will be open to modification. Terra Nova will work with City staff; and would also consult with the Berger Foundation, as their land holdings are significant, and have the potential to significantly impact the revenue generation in the area. Generate build out square footagehmittroom counts for proposed land use scenario. ➢ Run model using revised land use assumptions, test results and confirm data Y Coordinate with Public Works Director regarding infrastructure analysis update, including Bermuda Dunes area for which analysis has been conducted in the past. Confirm costs for potential CFD, and develop per capita or household cost based on land use assumptions. T> Prepare narrative discussion of assumptions, findings, and net benefits/costs associated with land use assumptions. A Submit draft to City staff for review, and amend as necessary. Provide revised narrative to City both electronically and in hard copy for use in staff reports, etc. ➢ Attend two City Council hearings in support of staff presentation 10 Contract No. C32760 EXHIBIT B COST BREAKDOWN AND HOURLY RATES Staff Time Amount Consultation and Meetings (12 hours) $ 1,980.00 Cathedral City Report Research and Documentation $ 4,680.00 Letter Report Drafting $ 2,320.00 Palm Desert Fiscal Impact Analysis Data Collection & Analysis $ 7,600.00 Review of Infrastructure and Calculation of CFD $ 2,600.00 Revised Fiscal Modeling and Narrative Document Drafting $ 6,300.00 Preparation for and Attendance at 2 City Council Hearings $ 990.00 Exhibit Preparation S 600.00 Admin. Support S 540.00 Subtotal $ 27,610.00 Misc. Office: Postage, telephone, FAX, photocopies, County GIs Research costs, etc. $ 1,500.00 Total $ 29,110.00 Terra Novi Stall' Hourly Rate Principal Planner $ 165.00 Senior Planner $ 140.00 Associate Planner $ 115.00 Assistant Planner $ 95.00 Graphic Design Specialist $ 60.00 Administrative Assistant $ 45.00 REEMBURSABLES Photo Copies (BV) $ 0.15 ea. Photo Copies (Color) $ 1.00 ea. Telephone Toll Charges Cost FAX TransuiittaEls Cost Reproduction, Special photographic services, document printing, aerial photogrammetry, postage, etc. Cost +15% 11 r I I I y Of P H I M 0ESER1�c 73-5 I o FRED WARING DRIVE any Of Pell" DOW PALM DESERT, CALIFORNIA 92260-257 Development TEL: 760 346-061Iommuntty info(alcityofpalmdesert.org MAY S 12013 May 30, 2013 Terra Nova Planning and Research, Inc. 42635 Melanie Place, Suite 101 Palm Desert, California 92211 Dear Sir or Madam: Subject: Contract No. C32760 — Professional Consulting Services in Connection With the Analyses of Cathedral City and Palm Desert Potential Annexations At its regular meeting of May 9, 2013, the Palm Desert City Council, by Minute Motion, awarded the subject contract to Terra Nova Planning and Research, Inc., Palm Desert, California, in the amount of $29,110 and authorized the Mayor to execute same. Enclosed is a copy of the fully executed Agreement for your records. If you have any questions or require additional information, please do not hesitate to contact us. Sincerely, ,14 RACHELLE D. KLASSEN, MMC CITY CLERK RDK:mgs Enclosur (as noted) cc/enc: Lauri Aylaian, Director of Community Development Finance Department " PRINif D DX REfY(lED IRNFR Contract No. C32760 AGREEMENT FOR PROFESSIONAL SERVICES This AGREEMENT is made and entered into this 9ch day of May , 2013, ("Effective Date") by and between the CITY OF PALM DESERT ("City") and Terra Nova Planning & Research Inc. , a California Corporation ("Consultant") (sometimes referred to individually or collectively as "Party" or "Parties"). WITNESSETH WHEREAS, City desires to retain Consultant as an independent contractor to perform certain technical and professional consulting services in connection with the Analyses of Cathedral City and Palm Desert Potential Annexations project, subject to the terms and conditions specified below, in the documents attached and incorporated herein, and applicable federal, state and 'local law. NOW, THEREFORE, in consideration of performance by the Parties of the mutual promises, covenants, and conditions herein contained, the Parties hereto agree as follows: 1. Consultant's Services. 1.1 Nature of Services. Consultant shall provide professional and technical services on a non-exclusive basis, as more particularly described in Section 3, below, and in Exhibit A, Scope of Services. 1.2 Personnel. Consultant represents that it has, or will secure at its own expense, all personnel required to perform the services under this Agreement. All of the services required under this Agreement will be performed by Consultant or under its direct supervision, and all personnel engaged in the work shall be qualified, and shall be authorized or permitted under state and local law to perform such services. 1.3 Standard of Performance. Consultant shall perform all services under this Agreement in accordance with the standard of care generally exercised by like professionals under similar circumstances and in a manner reasonably satisfactory to City. 1.4 Consultant Representative. For the purposes of this Agreement, the Consultant Representative shall be Nicole Criste Principal ("Consultant Representative"). 1.5 Time of Commencement. The execution of this Agreement by the Parties constitutes an authorization to proceed. 1.6 Time of Performance/Time is of the Essence. Consultant shall commence the services contemplated under this Agreement immediately and shall prosecute to completion each task listed in Section 3 in a timely and diligent manner within sixty (60) calendar days. Contract No. C32760 2. Services by City: 2.1 City Representative. For the purposes of this Agreement, the City Representative shall be Lauri Aylaian , or such other person designated by the City Manager ("City Representative"). 2.2 Provision of Data. All information, data, reports and records and maps as are existing and available from the City and necessary for the carryings out of the work outlined in Exhibit "A" hereof shall be furnished to Consultant without charge by City, and City shall cooperate in every way reasonable in the carrying out of the work without delay. 3. Consultant's Scope of Work. Upon receipt of a fully executed Agreement, Consultant shall immediately commence work pursuant to this Agreement. Consultant's scope of work shall consist of preparing: a detailed review and analysis of the Ralph Anderson & Associates "Draft Fiscal Analysis and Plan for Services for the Cathedral City Sphere of Influence within the Unincorporated Community of Thousand Palms"; and a fiscal impact analysis of annexation of the northern portion of Palm Desert's sphere of influence, including Bermuda Dunes, Sun City, and the commercial area bounded by Washington Street, 38th Avenue, and Interstate 10. The scope of work is more particularly described in the Consultant's proposal dated 13 May 2013, and the detailed services are described in Exhibit A appended to this Agreement. 3.1 Reporting & Record Keeping. To assist City in the performance of its planning, reporting, and financial administration obligations, Consultant shall, throughout the term of this Agreement, keep City reasonably informed of progress on work required under this Agreement, and of any problems or delays, anticipated or otherwise, associated with each aspect of the work. Consultant shall promptly respond to any request by City for information, progress reports, or documentation. Consultant shall maintain accurate records of all work performed for each Assignment under this Agreement, including originals or copies, as applicable, of all deliverable documents described in Exhibit A. Upon the completion of work, and if requested by the City, Consultant shall deliver to City the originals of all documentation produced, and may retain copies of such documentation. 3.2 Compliance with Laws. Consultant shall at all times possess any and all licenses and permits necessary to provide the services herein, and shall comply with applicable federal, state and local laws, ordinances, codes and regulations in the performance of this Agreement, and with any and all applicable City of Palm Desert policies and guidelines. 3.3 Confidentiality. Except as otherwise permitted or required by law, Consultant shall maintain as confidential and shall not disclose any and/or all information received in the course of performing pursuant to this Agreement. Consultant shall promptly inform the City in the event Consultant receives a subpoena or court order requiring disclosure of confidential information. 2 Contract No. C32760 4. Compensation. City shall pay Consultant for the Services provided under this Agreement on the following basis. 4.1 Not -to -Exceed Fee: City shall pay to Consultant a total amount not to exceed $ 29.110.00 for the basic services described in Exhibit A. Payment shall be made on a monthly basis, based upon the hourly rates defined in Exhibit B, multiplied by the number of hours worked by each classification of personnel assigned to the project during the previous calendar month. The not -to -exceed fee shall not be exceeded without written agreement between the parties. 5.2 Additional Services: Additional services beyond those described in Exhibit A shall be reimbursed on a time -spent basis at the hourly rates described in Exhibit B. City shall not be obligated to compensate Consultant for additional services performed without advance authorization from the City Representative. 5.3 Reimbursable Expenses: City shall pay to Consultant actual costs plus ten percent (10%), subject to the limitation given below, for expenses incurred on behalf of the project for long distance telephone calls, reproduction, express delivery and courier services, postage, out-of-town travel if pre -approved in writing by the City Representative, and other expenses directly attributable to the project and expressly approved by the City Representative. Reimbursable expenses, including Consultant's mark-up, shall not exceed $ 1,500.00 for this project. 5.4 Extraordinary Expenses/Costs. No claims for additional services, expenses or costs incurred by Consultant will be allowed unless such additional services, expenses or costs are authorized by City in writing prior to the performance or incurrence of such services, expenses or costs. Any additional services, expenses or costs authorized by City shall be compensated at rates mutually agreed upon by the Parties in writing. 6. Method of Payment. 6.1 Invoices. Consultant shall submit to City invoices each month for all services completed, and all expenses or costs incurred pursuant to this Agreement during the preceding month. The invoices shall describe the services rendered during the period and shall show the number of hours worked, the hourly rates charged, and any milestone achievements. Copies of receipts for expenses or costs shall be submitted with each invoice. City shall review such invoices and notify Consultant in writing within fifteen (15) calendar days of any disputed amounts. 6.2 Payment. City shall pay all undisputed portions of the invoice within thirty (30) calendar days after receipt of the invoice up to the maximum amounts set forth in Section 5. 6.3 Audit of Records. At any time during regular working hours, all records, invoices, time cards, cost control sheets and other records maintained by Consultant shall be available for review and audit by the City. 3 Contract No. C32760 7. Ownership of Work Product. 7.1 Property of City. All documents including reports, analyses or other written material developed or obtained by Consultant in the performance of this Agreement shall be and remain the property of City without restriction or limitation upon its use or dissemination by City. 8. Conflict of Interest/Prohlbited Conduct and Interests 8.1 Conflict of Interest. Consultant and its officers, employees, associates and sub consultants, if any, will comply with all conflict of interest statutes of the State of California applicable to Consultant's services under this Agreement, including, but not limited to, the Political Reform Act (Government Code Sections 81000, of seq.) and Government Code Section 1090. 8.2 No Solicitation. Consultant warrants that it has not employed or retained any company or person to solicit or secure this Agreement, and that it has not paid or agreed to pay any party any fee, commission, percentage, brokerage fee, gifts, or any other consideration, contingent upon or resulting from the award or making of this Agreement. 8.3 No Financial Interest - City. No officer, member or employee of City during his or her tenure or one year thereafter shall have any interest, direct or indirect, in this Agreement or the proceeds thereof. The Parties hereto covenant and agree that to their knowledge no member of the City Council, or officer or employee of City, has any interest, whether contractual, non -contractual, financial or otherwise, in this Agreement, or the subject matter thereof, nor any business or financial relationship with Consultant, and that if any such interest comes to the knowledge of either Party at any time a full and complete disclosure of all such information will be made in writing to the other Party or Parties, even if such interest would not be considered a conflict of interest under applicable laws. 8.4 No Financial Interest — Consultant. Consultant hereby covenants, on behalf of itself, and its officers, employees, agents and representatives, that at the time of executing this Agreement it has no interest, and that it shall not acquire any interest in the future, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed pursuant to this Agreement. Consultant further covenants that in the performance of this Agreement, no person having any such interest shall be employed by Consultant. 9. Indemnification. Other than in the performance of professional services and to the fullest extent permitted by law, Consultant shall indemnify, defend and hold the City, the City's elected officials, officers, employees, agents and volunteers free and harmless from and against all tort liability, including liability for claims, suits, actions, expenses or costs of any kind, whether actual, alleged or threatened, actual attorney's fees, court costs, and expert witness fees incurred by City or Agency, arising out of or in any way connected with, in whole or in part, the acts or omissions of Consultant, or any of Consultant's officers, agents, employees or contractors, in the performance of this Agreement, including but not limited to, claims, suits and liabilities for bodily injury, 4 Contract No. C32760 death or property damage to any individual or entity, including employees or officials of Consultant. The provisions of this paragraph shall not apply to claims arising out of the sole negligence or willful misconduct of City or Agency, any of City's elected officials, officers, employees or agents. In addition to the foregoing, Consultant shall indemnify, protect, defend and hold harmless the Agency and the City of Palm Desert, their officials, employees, agents and representatives from and against any and all losses, liabilities, damages, costs, and expenses, including attorney's fees and costs to the extent same are caused in whole or in part by any negligent or wrongful act, error, or omission of the Consultant, its officers, agents, employees or subconsultants (or any entity or individual that the Consultant shall bear the legal liability thereof) in the performance of professional services under this agreement. 10. Insurance. Consultant will maintain insurance in conformance with the requirements set forth below. If Consultant's existing coverage does not meet the requirements set forth here, it will be amended to do so. Consultant acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. Any insurance proceeds available to City in excess of the limits and coverage required in this agreement and which is applicable to a given loss, will be available to City. 10.1 Workers' compensation and emplover's liability. Consultant shall provide Workers Compensation and Employer's Liability Insurance on an approved policy form providing benefits as required by law with employer's liability limits no less that $1,000,000 per accident or disease. 10.2 Automobile liability. Consultant shall provide auto liability coverage with a limit of no less than $1,000,000 per accident. If Consultant owns no vehicles, this requirement may be met through a non -owned auto endorsement to the CGL policy. 10.3 Waiver. If the Consultant does not carry Worker's compensation coverage, or if the Consultant will not operate any vehicles at any time within the scope of the services in the agreement, provisions for these coverages may be waived upon review and approval of the City's Risk Manager. 11. Status as Independent Contractor. Consultant is, and shall at all times remain as to City, a wholly independent contractor. Consultant shall have no power to incur any debt, obligation, or liability on behalf of City. Neither City nor any of its officials, employees or agents shall have control over the conduct of Consultant or any of Consultant's employees, except as set forth in this Agreement. 12. Non -Assignability; Subcontracting. Consultant shall not assign or subcontract all or any portion of this Agreement without the City's prior, written consent. 5 Contract No. C32760 13. Non -Discrimination and Equal Employment Opportunity. In the performance of this Agreement, Consultant shall not discriminate against any employee, subcontractor, or applicant for employment because of race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental disability, medical condition, or sexual orientation. Consultant will take affirmative action to ensure that subcontractors and applicants are employed, and that employees are treated during employment, without regard to their race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental disability, medical condition, or sexual orientation. 14. Cooperation. In the event any claim or action is brought against the City relating to Consultant's performance or services rendered under this Agreement, Consultant shall render any reasonable assistance and cooperation which City might require. 15. Termination. The right is reserved by the City to terminate the Agreement at any time upon seven (7) days written notice, in the event the project is to be abandoned or indefinitely postponed, or in the event the Consultant's services, in the sole judgment of City, are unsatisfactory or because of the Consultant's failure to prosecute the work with diligence or within the time limits specified or because of his disability or death. In any such case, the Consultant shall be paid the reasonable value of the services rendered, based upon Consultant's standard hourly rates, up to the time of the termination. The Consultant shall keep adequate records to substantiate costs and provide copies of original time -cards in the event of termination or suspension. 16. Notices. Any notices, bills, invoices, or reports required by this Agreement shall be given by first class U.S. mail or by personal service. City: John M. Wohlmuth, City Manager City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260-2578 Tel: (760) 346-0611 Fax: (760) 341-6372 With a copy to: Lauri Aylaian, Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260-2578 Tel: (760) 346-0611 Fax: (760) 341-6372 n Contract No. C32760 Consultant: Nicole Sauviat Criste, Principal Terra Nova Planning & Research, Inc. 42635 Melanie Place, Suite 101 Palm Desert, CA 92211 Tel: (760) 341-4800 17. Non -Waiver of Terms, Rights and Remedies. Waiver by either Party of any one or more of the conditions of performance under this Agreement shall not be a waiver of any other condition of performance under this Agreement. In no event shall the making by City of any payment to Consultant constitute or be construed as a waiver by City of any breach of covenant, or any default which may then exist on the part of Consultant, and the making of any such payment by City shall in no way impair or prejudice any right or remedy available to City with regard to such breach or default. 18. Attorney's Fees. In the event that either Party to this Agreement shall commence any legal action or proceeding for damages for breach, or to enforce or interpret the provisions of this Agreement, the prevailing party in such action or proceeding shall be entitled to recover its costs of suit, including reasonable attorney's fees and experts' costs. 19. Entire Agreement. This Agreement, and any other documents incorporated herein by specific reference, represents the entire and integrated agreement between Consultant and City. This Agreement supersedes all prior oral or written negotiations, representations or agreements. No promise or representation, whether oral or written, express or implied, that is not set forth herein, shall be binding or have any force or effect. This Agreement may not be amended, nor any provision waived, except in a writing signed by the Parties which expressly refers to this Agreement. 20. Partial Invalidity. In case any provision of this Agreement should be deemed by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions shall not be affected or impaired thereby. 21. Successors. This Agreement shall bind and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties to this Agreement. 22. Waivers. No waiver of any breach or default of any term or provision of this Agreement shall be deemed a waiver of any other term or provision of this Agreement, and no waiver shall be valid unless in writing and executed by the waiving party. 7 Contract No. C32760 IN WITNESS WHEREOF, said parties have executed this Agreement effective as of the Effective Date above. CONSULTANT CITY OF PALM DESERT By: 2AL lei Its:. y I die 06 C. Har-Ak,-Mayor APPROVED AS TO FORM Erwin,`i Attorney CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of f On g i >7 0 i 3 _ before me, Ct �Gt V�� J tC" Date " t c� Here Insert Name and tle of the Officer personally appeared y i o C, Li 1� 1 G- G V j -ST C Name(s) of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(,6) whose name(s) is/ire subscribed to the within instrument and acknowledged to me that he/ey executed the same in his/her heir auth nzed capacity(i ), and that by his/ er/eir signature(s) on the instrument the J. STANGE person($), or the entity upon behalf of which the Comm. # 1874046 I� person(4) acted, executed the instrument. NOTARY PUBLIC-CALIFORNIA N ` RIVERSIDE COUNTY rf NY COMM. EXP. JAN. 1T, 20� JA I certify under PENALTY OF PERJURY under the SS........��............ """"'"""" laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature Place Notary Seal and/or Stamp Above OPTIONAL Sign re of Notary Public Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document _ Title or Type of Document: an rajVL L t Document Date: `�5 Signer(s) Other Than Named Above: _ Capacity(ies) Claimed by Signer(s) Number of Pages: t / Signer's Name: Signer's Name: ❑ Corporate Officer — Title(s): D Individual ❑ Partner — ❑ Limited ❑ General Top of thumb here ❑ Attorney in Fact Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: ❑ Corporate Officer — Title(s): ❑ Individual ❑ Partner — ❑ Limited ❑ General Top of thumb here ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: 02008 National Notary Association- 9350 De Soto Ave., P.O. Box 2402 -Chatsworth, CA 91313-2402 - www.NationalNotary.org Item #5907 Reorder: Call Toll -Free 1.800.876.6827 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of 1 ve V-S Ac e J On 1:1 a°� 8 before me, LLeri0a Date Here Insert Name and Title of the Officer personally appeared X VI C',- M GRACE L. MENDOZA� Commission # 1879180 z : �u Notary Public - California z z Riverside County My COMM Fxplres Mar 2, 2014 who proved to me on the basis of satisfactory evidence to be the persor4s) whose name�'I /are subscribed to the within instrument and acknowledged to me that -I h�/t av executed the same in er their authorized capacity(4es), and that by er signature(4 on the instrument the persorVA, or the entity upon behalf of which the person(.s4cted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature: .c�1 L- Place Notary Seal and/or Stamp Above Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Doc ment)1 ,^ Title or Type of Document: Aa&Aa2 en�- rv-�SSl L t(y(1�7e Document Date: 5, Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): 11 Individual FJ Partner — ❑ Limited ❑ General Top of thumb here ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator El Other: Signer Is Signer's Name: _ ❑ Corporate Officer ❑ Individual �D P er — ❑ Limited ❑ General Top of thumb here ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator [I Other: Signer Is Representing 02008 National Notary Association- 9350 De Soto Ave., P.O. Box 2402 -Chatsworth, CA 91313-2402 - www.NationaiNotary.org Item 05907 Reorder: Call Toll -Free 1-600-876.6827 EXHIBIT A SCOPE OF SERVICES SCOPE OF SERVICES Contract No. C32760 Consultant shall provide the following services under the terms of the Agreement: Cathedral City Fiscal Report Review and Comparison Comprehensively review the assumptions in the Cathedral City analysis, breaking down assumptions by revenue and cost category. This will include a comparison of levels of service assumed, per capita costs based on Cathedral City*s budget, and revenue assumptions based on land use designations. ➢ Prepare a letter report, to include comparison tables where appropriate, describing the findings of the review. As necessary, consider where differing assumptions may have impacted findings, and describe same. Consider whether, if needed, changes in assumptions in the Palm Desert analysis would impact the outcome of the original analysis. > Provide letter report to City staff for review, and meet with same to review. Y Amend report as needed based on staff continents, and provide paper and electronic copies for use by City. Palm Desert Fiscal impact Report A Coordinate with City and County to secure land use maps, approved project information and General Plan documentation, etc., necessary to characterize the lands being considered in Scenario B. Y Add Muni Financial data regarding Bermuda Dunes. Model vacant acreage by land use. Incorporate Jack Ivey Ranch lands as a built out project. Average unit costs and land valuation will be used to determine current revenues for the Ranch lands. S> Run fiscal model, test results, and confirm data. N Contract No. C32760 EXHIBIT A SCOPE OF SERVICES (continued) > Make assumptions regarding potential land use changes on all vacant lands within the Scenario B land area. This will include analysis of significant changes in land use to generate revenues. This will also mean that approved projects, including approved Specific Plans within Scenario B will be open to modification. Terra Nova -will work with City staff, and would also consult with the Berger Foundation, as their land holdings are significant, and have the potential to significantly impact the revenue generation in the area. Generate build out square footage/unittroom counts for proposed land use scenario. > Rim model using revised land use assumptions, test results and confirm data. > Coordinate with Public Works Director regarding infrastructure analysis update, including Bermuda, Dunes area for which analysis has been conducted in the past. Confirm costs for potential CFD, and develop per capita or household cost based on land use assumptions. > Prepare narrative discussion of assumptions, findings, and net benefiWcosts associated with land use assumptions. ➢ Submit draft to City staff for review, and amend as necessary. Provide revised narrative to City -both electronically and in hard copy for use in staff reports, etc. > Attend two City Council hearings in support of staff presentation. 10 Contract No. C32760 EXHIBIT B COST BREAKDOWN AND HOURLY RATES Staff Time Amount Consultation and Meetings (12 hours) $ 1,980.00 Cathedral City Report Research and Documentation $ 4,680.00 Letter Report Drafting $ 2,320.00 Palm Desert Fiscal Impact Analysis Data Collection & Analysis $ 7,600.00 Review of infrastructure and Calculation of CFD $ 2,600.00 Revised Fiscal Modeling and Narrative Document Drafting $ 6,300.00 Preparation for and Attendance at 2 City Council Hearings $ 990.00 Exhibit Preparation $ 600.00 Admin. Support $ 540.00 Subtotal $ 27,610.00 Misc. Office: Postage, telephone, FAX, photocopies, County GIS Research costs, etc. $ 1,500.00 Total $ 29,110.00 Terra Nova. Staff Hourly hate Principal Planner $165.00 Senior Planner $ 140.00 Associate Planner $ 1 I5.00 Assistant Planner $ 95.00 Graphic Design Specialist $ 60.00 Administrative Assistant $ 45.00 REIM BURSABLES Photo Copies (BBW) $ 0.15 ea. Photo Copies (Color) $1.00 ea. Telephone Toll Charges Cost FAX Transmittals Cost Reproduction, Special photographic services, document printing, aerial photogrammetry, postage, etc, Cost +15010 11 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California nn __ County of Ilj��lK�� On rflnij 9,q, Q6 13 before me, L. ff_�-_N64-a t C_� !! DW . — ` \ Here Insert Name and Title If the Officer personally appeared M Name(s) who proved to me on the basis of satisfactory evidence to be the person(&) whose namie(sXsa�e subscribed to the within instrument and acknowledged to me that # he executed the same in .�Ae_'j/ti�& authorized capacity(ies), and that by � signature(4) on the instrument the person(&), or the entity upon behalf of which the �.- - -..•. person.(&). acted, executed the instrument. GRACE L. MENDOZA — . — Commission # 1879180 Notary Public -California zz I certifyunder PENALTY OF PERJURY under the z " % "� i Riverside County il laws of the State of California that the foregoing My Comm Expires Mar 2, 2014 paragraph is true and correct. WITNESS my hand and official seal. Signature: 2 ._ (,- Me -A Place Notary Seal and/or Stamp Above Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached ocument (� Title or Type of Document: �3a _7 LoO &VV1 Document Date: �- �C) �� Number of Pages: Signer(s) Other Than Named Above: _ Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: C] Corporate Officer — Title(s): ❑ Individual ❑ Partner — L] Limited ❑ General Top of thumb here ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator El Other: Signer Is El Corporate Officer ❑ Individual ❑ P er — ❑ Limited ❑ General Top of thumb here ❑ Attorney in Fact ❑ Trustee Guardian or Conservator ❑ Other: Signer Is Representing: ILI 02008 National Notary Association- 9350 De Soto Ave., P.O. Box 2402 -Chatsworth, CA 91313-2402-www.NationalNotary.org Item #5907 Reorder. Call Toll -Free 1.800-876-6827 ' GM201I03 CITY OF PALM DESERT 6/03/13 Budget Adjustment Transaction 15:59:07 Group number . . . . . . 2246 BUDGET ADJ FOR MAY 2013 Accounting period . . . 11/2013 mm/yyyy Posting date . . . . . . 05/30/2013 mm/dd/yyyy Transaction information: Transaction date . . . . Document number . . . Account number . . . . . Project number . . . . . Amount . . . . . . . . . Description 1 . . . . . Description 2 . . . . . Transaction type code . Press Enter to continue. 05/31/2013 A05001 110-4470-412.30-90 32,021.00 TERRA NOVA PLANNING CC:5-09-13 mm/dd/yyyy PROF - OTHER F3=Exit F12=Cancel F15=Group Inquiry F20=Imaging PAGE: 1 CONY d PMM 10(BaM PURCHASE ORDER P.O. NO:018513 73-510 FRED WARING DRIVE, PALM DESERT, CALIFORNIA 92260-2578 DATE: 06/06/13 TELEPHONE (760) 346-0611 FAX (760) 341-4564 TO:TERRA NOVA PLANNING & RESEARCH 42635 MELANIE PLACE SUITE 101 PALM DESERT, CA 92211 SHIP TO: City of Palm Desert ATTN: PLANNING 73-510 FRED WARING DRIVE PALM DESERT, CA 92260 > VENDOR NO. 4196 DELIVER BY SHIP; VIA F.O.B. TERMS 07/15/13 NET CONFIRM BY CONFIRM TO REQUISITIONED BY SEE REQUISITIONER/JRB L.AYLAIAN/MO FREIGHT CONTRACT NO. ACCOUNT NO. '' PROJECT REQ. NO. REQ' DATE 11044704123090 20909 06/03/13 • QUANTITY ITEM AND DESCRIPTION UNIT COST EXTENDED 1 29110.00 DL PROFESSIONL SERVICES 1.0000 29110.00 OTHER PROFESSIONAL SERVICES FOR THE ANALYSES OF CATHERAL CITY AND PALM DESERT POTENTIAL ANNEXATIONS. CITY COUNCIL APPROVED: MAY 9, 2013 CONTRACT NO: C32760 SUB -TOTAL 29110.00 TOTAL 29110.00 REMARKS: **NOTE** Payments will not be processed by the requesting department until a signed contract s received by the City Clerk.******* Lal INVOICE PAID AMOUNT PAID'' AUTHORIZED BY PURCHASING OFFICER APPROVED FOR PAYMENT SEE REVERSE SIDE - INSTRUCTIONS PURCHASE ORDER TERMS AND CONDITIONS Acceptance: City reserves the right to refuse any goods and to cancel all or any part of the goods not conforming to applicable specifications, drawings, samples or descriptions. Acceptance of any part of the order shall not bind City to accept future shipments, nor deprive it of the right to return goods already accepted. 2. Late Deliveries: If delivery of the commodity or service cannot be made as specified or sooner and at the price shown, notify the City Purchasing Officer immediately. And correspondence, other than invoices, relating to this order must be sent to the Purchasing Officer. The City reserves the right to cancel order if delivery is not made by the time specified. 3. Risk of Loss: Delivery shall not be deemed to be complete until goods have been actually received and accepted by the City. 4. Defects: By accepting this order Seller acknowledges that the goods covered by this order are satisfactory for the purposes intended by City. Prices: Unless otherwise provided goods shall be furnished at the prices indicated on this order only. Invoices will be honored for purchase order prices only. Prices on the order include delivery to the Department within building unless otherwise specified on the order. 6. Patent Infringement: Seller agrees to indemnify City and hold it harmless from and against all liability, loss damage, and expense, including reasonable counsel fees, resulting from any actual or claimed trademark, patent or copyright infringement, or any litigation based thereon with respect to any part of the goods covered by this order, and such obligation shall survive acceptance of the goods and payment therefore by the City. 7. Packing: All goods, wrappers and containers must bear markings and labels required by applicable federal, state, and municipal laws and regulations for the protection and safety of persons and property and Seller warrants that prices include all charges to packing, crating, and transportation to f.o.b. point. 8. Nonassignment: This order must not be assigned or transferred to anyone without the written approval of the Purchasing Officer. 9. Labor Disputes: Whenever any actual or potential labor disputes delays or threatens to delay the timely performance of this order, Seller shall immediately give notice thereof to City. 10. HAZARDOUS MATERIAL: SELLER SHALL PROVIDE MATERIAL SAFETY DATA SHEETS FOR EACH PRODUCT CONTAINING HAZARDOUS SUBSTANCE AS LISTED BY CALIF. DIR. IND. REL. IN CALIF. ADM. CODE, TITLE 3, SEC 5194 AND LABOR COSTS. Seller agrees to furnish Material Safety Data Sheet (Form OSHA 20) as applicable for hazardous or potentially hazardous products. 11. Discounts: Discount period will be computed from date of receipt of invoice, or goods or services whichever is the later date. 12. Hold Harmless: Seller agrees to indemnify, defend and save City and its agents and employees harmless from any and all liability, claims, damages or injuries to any person, including injury to Seller's employees and all claims which arise from or are connected with the negligent performance of or failure to perform the work or other obligations of this agreement, or are caused or claim to be caused by the negligent acts of Seller, its agents or employees, and all expenses of investigating and defending against same; provided, however that this indemnification and hold harmless shall not include any claim arising from the sole negligence or willful misconduct of the City, its agents or employees. 13. Out of State vendors maybe required to have withholding for State Income Tax purposes. FISCAL IMPACT. ANALYSIS FOR POTENTIAL ANNEXATION to the CITY OF PALM DESERT Prepared for City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Prepared by I L � Terra Nova Planning & Research, Inc 42635 Melanie Place, Suite 101 Palm Desert, CA 92211 January 2012 Tetra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation FISCAL IMPACT ANALYSIS for POTENTIAL ANNEXATION to the CITY OF PALM DESERT Table of Contents I. Introduction, Project Description and Demographics A. Introduction 3 B. Project Description 4 1. Scenario A Annexation Area 5 2. Scenario B Annexation Area 12 C. City of Palm Desert Demographics 16 II. Potential Revenue From Annexation A. General Fund 17 B. Special Revenue Funds 22 1. Annual Revenues 22 2. One -Time Revenues 23 C. Investment Income 26 III. Potential Costs From Annexation A. General Fund 27 B. Fire Fund 30 IV. Build out Assumptions A. Build out Phasing 32 B. Land Use Designations 33 C. Build out Calculations 33 V. Cost/Revenue Analysis A. Cost/Revenue Summaries 37 B. Conclusions 42 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation LIST OF EXHIBITS Exhibit 1: Scenario A Annexation Boundary Map 6 Exhibit 2: Sphere -of -Influence Map 7 Exhibit 3: Specific Plans Map 8 Exhibit 4: Land Use Map 11 Exhibit 5: Scenario B Annexation Boundary Map 13 LIST OF TABLES Table 1: Scenario A Developed Acreage 9 Table 2: Scenario A Vacant Acreage 10 Table 3: Scenario B Developed Acreage 14 Table 4: Scenario B Vacant Acreage 15 Table 5: Average Value of New Construction in Palm Desert 19 Table 6: Components of the 8.75% Sales & Use Tax 20 Table 7: Low -Income Housing Mitigation Fees 24 Table 8: Child Care Facilities Impact Mitigation Fees 24 Table 9: Annual Road Maintenance Costs, 2002-2011 29 Table 10: Total Potential Costs/Revenues Summary Table — Scenario A 38 Table 11: Developer Impact Fees Revenues — Scenario A 39 Table 12. Total Potential Costs/Revenues Summary Table — Scenario B 40 Table 13: Developer Impact Fees Revenues — Scenario B 41 LIST OF APPENDICES Appendix A: Scenario A Detailed Cost and Revenue Tables Appendix B: Scenario B Detailed Cost and Revenue Tables Terre Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS I. INTRODUCTION, PROJECT DESCRIPTION AND DEMOGRAPHICS A. Introduction This Fiscal Impact Analysis is being prepared at the request of the Palm Desert City Council, which has received requests from property owners north of Interstate-10 (I-10) to consider annexation into the City limits. At the City's request, this report includes analysis of two scenarios (a detailed description is provided in section I.B., below): 1) Scenario A: the annexation of Sun City and land to the west that is within the City's sphere - of -influence, extending southerly across the Interstate 10 and railroads rights -of -way to the existing City limits, and 2) Scenario B: the annexation of Scenario A, and a larger expanse of land to the west extending beyond Cook Street to Jack Ivey Ranch, and southerly across the Interstate 10 and railroads rights -of -way to the existing City limits. The Riverside County Local Agency Formation Commission (LAFCO) is responsible for approving annexations proposed by cities in Riverside County. A comprehensive fiscal analysis is an integral part of this consideration, and Riverside County's "Guidelines to Preparing Fiscal Impact Reports" has been used as a basis for the analysis provided herein. This analysis addresses the costs and revenues that can be expected to be generated through build out of the potential annexation areas. The values, current revenues and costs associated with existing development have been calculated, and are assumed to occur immediately upon annexation. In addition, build out assumptions have been made for lands currently vacant in both scenarios. Tetra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Both scenarios are analyzed in five year increments. Given that a significant portion of the parcels in scenario A are already developed, a ten-year build out period is assumed. Many of the parcels in scenario B are vacant, and therefore, a twenty-year build out period is assumed for that scenario. Land use and acreage data were obtained from Riverside County Assessor's parcel rolls (October 2011), aerial photography (June 2011), and the Palm Desert GIS Department. Revenue and cost factors were obtained from a variety of sources, including the City of Palm Desert 2011-12 budget, Palm Desert Comprehensive Annual Financial Report, Palm Desert staff, Riverside County Transportation Commission, and the State of California. Factors from the Riverside County "Guide to Preparing Fiscal Impact Reports," adjusted for inflation, have also been used. The analysis applies the appropriate revenue and cost factors to existing development and undeveloped land in the annexation areas using land use designations assigned by Palm Desert and Riverside County. The revenue and cost categories used to develop this fiscal analysis are described in Sections II and III of this document, respectively. Assumptions associated with each annexation scenario are described in Section IV. The cost/revenue analysis for each scenario is provided in Section V. Both costs and revenues throughout this analysis are calculated in current dollars. No inflation adjustment has been made. Although costs and revenues will rise over the build out period of the annexation areas, the ratio of costs to revenues is not expected to change significantly. As a result, the analysis in constant dollars is representative of the framework of costs and revenues likely to be experienced by the City throughout the build out of both scenarios, and beyond. B. Project Description The purpose of this fiscal analysis is to consider the potential financial impacts to the City of Palm Desert resulting from two potential annexation scenarios: 1) annexation of 2,181± acres encompassing Sun City, a resort residential community north of the City of Palm Desert, and adjacent parcels located north of the existing City limits to Avenue 38; and 2) annexation of 2,988± acres, including those described in Scenario A, and additional land to the west extending just beyond Cook Street. Under both scenarios, it is assumed that all lands from the existing City limits northerly, including the Interstate 10 and railroad rights -of -way, would be included in the annexation. All land considered in both scenarios is currently under the jurisdiction of Riverside County. Some land is currently in the City's sphere -of -influence. 4 Tetra Nove/City of Palm Desert Fiscal Impact Analysis, Potential Annexation 1. Scenario A Annexation Area Scenario A involves annexation of Del Webb's Sun City, an age -restricted resort -residential community north of Palm Desert, which encompasses ±1,600 acres and includes a population of approximately 9,000 residents. Sun City is generally bounded by the City of Indio on the east, I- 10 and Varner Road on the south, Washington Street on the west, and Frances Way on the north. The annexation boundary also includes land immediately south of Sun City, consisting of the Union Pacific Railroad and I-10 corridors, and ±39 acres adjacent to the southeast corner of Sun City. The boundary encompasses an additional 580± acres to the west, generally bounded by Avenue 38 on the north and the I-10 and railroad corridors on the south. Exhibit 1 illustrates the boundaries of Scenario A. Land in this area is currently under the jurisdiction of Riverside County and contained within the Palm Desert sphere -of -influence (SOI). Please also see Exhibit 2 for SOI boundaries. Two Specific Plans (SP) are located within the boundaries of Scenario A. Each is described below and shown in Exhibit 3. SP-281, Del Webb Sun City, is located in the eastern half of the annexation area. It contains approximately 1,600 acres and 4,985 residential units, golf course and other recreational amenities, community facilities, and retail commercial uses near the I- 10/Washington Street interchange. SP-281 is nearly 100% developed. The Mirasera Specific Plan is generally bounded by Avenue 38 on the north, Varner Road on the south, and existing business park development on the east. It encompasses approximately 190 acres. Of these, 178.5 acres are located in the potential annexation area. Land use designations include high and very high density residential, business park, mixed use, hotel and commercial retail. Open space designations include a village green, parks and trails. The remaining 11.3 acres are located outside of the. annexation area, immediately north of Avenue 38; these are undevelopable acres designated for drainage channel right-of-way. The parcels are currently vacant, with the exception of one manufactured unit owned by Mirasera. .y � a y� s ._ .r... `. �. { r�l " " Legend T "Stm>rns .1" Bou�Csry t.ny _.. S�erts '' ,!f! ssdc, lg11 r� L / TERRA NOVA' Pi—.. s K—n W Palm Desert Potential Anuciation Scenario A Boundary Map Palm Desert, California # A i Mr Y t < r* 4", y l � 1 TERRA NOVA Palm Desert Potential Annexation Sphere of Influence Slap Z M..uga Rc on:k 1— Palm Desert, California uw M Legend Bwndtly Lne spe fw Pfaa 2111 sparit;c Nan 151 specific Plan 225 spmflc M. �ilcaKla �� .".' aaa.... C., ac P.Yi Dann aae C., P.J. rm. {vir )lwn. Lunt.. rw� �ai+t: riHaelt louse, 2011 r-I L J TERRA NOVA Plam.,j C K—c 1— -4i ta�Sl r,u TV t n� .�+M1 e.l�..k osA{{ . tii � *1f...+i 6 . ��f�• , '1w g " ` J '7i7 i■ a lK Palm Desert Potential Annexation Specific Plan Map 3 Palm Dpert, Caliturnia Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation A land use map for both Scenarios A and B is provided in Exhibit 4 and serves as a basis for the following developed vs. vacant acreage calculations. The Scenario A annexation area encompasses a total of 2,181± acres. Of these, 1,485± are developed, and 696± are vacant/undeveloped. Table 1, below, describes developed acreage by land use category. Existing development includes 4,985 single-family homes, two golf courses, and three community clubhouses in Sun City. Commercial development is located along and in the immediate vicinity of Washington Street, and business park/light industrial structures are located west of Washington Street. Other development includes a fire station, two hotels, and an RV park. Table 1 Scenario A - Developed Acreage Existing Existing Existing Dwelling Square Hotel Existing Land Use Designation Acreage Units Footage2 Rooms Population SP-281 Single -Family Residential 792.0 4,985 SF -- -- 9,000 SP-281 Golf Course 435.3 -- -- -- -- SP-281 Commercial 29.0 -- 277,912 -- -- SP-281 Commercial (Hotel) 2.2 -- 50,0004 72 -- Riv. Co. Commercial Retail 21.1 -- 202,205 -- -- Riv. Co. Commercial (Hotel) 1.4 -- 40,0004 82 -- Riv. Co. Comm./Tourist (RV Park) 26.3 -- -- -- -- Riv. Co. Industrial - Light 56.6 -- 542,409 -- -- SP-281 Fire Station 3.5 -- -- -- -- I-10 Corridor 79.2 -- -- -- -- Railroad Corridor 38.8 -- -- -- -- Total: 1,485.4 4,985 SF 1,112,526 154 9,000 Includes 4,869 detached units and 116 attached units. Source: Paul Brady, Sun City Palm Desert Community Association, October 2011. SF= single-family dwelling unit '- Assumes that commercial & industrial building square footage covers 22% of the lot, with the remainder of the lot available for access roads, parking, landscaping, and other ancillary uses. 3 Paul Brady, Sun City Palm Desert Community Association, Oct. 2011. 4 Estimate for 72-room and 82-room hotels. The Scenario A annexation area also includes 696± acres of vacant/undeveloped land. Table 2, below, describes how vacant acreage could develop in the future based on assigned land use designations. All land use designations within Sun City/SP-281 and Mirasera Specific Plan were assigned by Riverside County. Parcels within the Palm Desert sphere -of -influence are assumed to develop consistent with the land use designations assigned in the Palm Desert General Plan. 9 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 2 Scenario A - Vacant Acreage Potential Potential Potential Dwelling[ Square Hotel Potential Land Use Designation Acreage Units Footage2 Rooms3 Population _ Non -Developable SP-281 Community Association 271.0 -- -- -- -- Public Utility (11D, CVWD) 18.1 Public Agency (County, State) 5.3 -- -- -- -- Riv. Co. Open Space/Water 10.4 -- -- -- -- Mirasera Open Space/Parks/Roads 39.5 -- -- -- -- Non-Developable Subtotal: 344.3 Developable PD Medium Density Residential (4-10 du/ac) 113.3 963 SF -- -- 2,003 Riv. Co. Medium -High Density Resid.(5-8 du/ac) 30.8 209 SF -- -- 434 Mirasera High Density Residential (12 du/ac) 22.6 230 SF -- -- 478 Mirasera Mixed Use Residential (16 du/ac) 10.5 142 MF -- -- 295 Mirasera Very High Density Resid. (20-25 du/ac) 66.4 1,411MF -- -- 2,934 SP-281 Commercial 3.0 -- 28,750 -- -- PD Community Commercial 10.7 -- 102,540 -- -- PD Industrial — Business Park 28.0 -- 268,330 -- -- PD Industrial — Light 26.6 -- 254,913 -- -- Mirasera Commercial Retail 17.6 -- 168,664 -- -- Mirasera Mixed Use Hotel 3.1 -- 100,000 150 -- Mirasera Office/Business Park 18.8 -- 180,164 -- -- Developable Subtotal: 351.4 Total: 695.7 2,955 1,103,361 150 6,144 Assumes future residential development occurs at 85% of the maximum density permitted. SF = single-family dwelling unit. MF = multi -family dwelling unit. 2 Assumes future commercial & industrial building square footage will cover 22% of the lot, with the remainder of the lot available for access roads, parking, landscaping, and other ancillary uses. Hotel square footage estimate based on available acreage. Hotel room estimate based on single hotel and available acreage. ° Based on Palm Desert average of 2.08 persons/household (2010 U.S. Census). As described in the tables above, the Scenario A annexation area currently contains 4,985 dwelling units and a population of approximately 9,000. If buildout occurs according to the land use designations currently assigned, the annexation area could contain a total of 7,940 dwelling units and 15,144 residents at buildout. Commercial, business park, and industrial square footage could nearly double, from 1,112,526 square feet to 2,215,887 square feet. Similarly, the number of hotel rooms could increase by 50%, from 154 to 304 rooms. 10 t t /4�~IVf # i JI IS i 71 Il�ii11� :�J i<i d.'.) (:6 *—) gem L J TERRA NOVA Palm Desert Potential Annexation PAM"aR—MUL1u, Land Use Map Palm Desert, California 4 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation 2. Scenario B Annexation Area Under Scenario B, the annexation area is expanded to include all of Scenario A (described above) and additional lands to the west, for a total of 2,988± acres. This annexation area is generally bounded by Palm Desert's existing City limits on the south, the Coachella Valley Preserve on the north, the City of Indio on the east, and the western boundary of the Center Pointe Specific Plan on the west. The boundaries of Scenario B are shown in Exhibit 5. Existing development in Scenario B includes 4,985 single-family residences, two golf courses, and three community clubhouses within Sun City. Other development includes a fire station, two hotels, an RV park, commercial structures along and in the vicinity of Washington Street, and business park/light industrial structures west of Washington Street. Further west are 9± acres of agriculture, a gravel/construction facility, a private school (Xavier High School), two general commercial lots, and the Classic Club golf course, clubhouse and maintenance building. Residential development is limited to one single-family home along Cook Street (Shadow Valley Road). A manufactured unit also occurs on land owned by Mirasera, which is designated for future residential development. Land in Scenario B is currently under the jurisdiction of Riverside County. That portion described in Scenario A, south and east of Frank Sinatra Drive (extended), is located within the Palm Desert SOL That portion further west, north and west of Frank Sinatra Drive (extended) is located within the Cathedral City SOI. Please refer to Exhibit 2 for SOI boundaries as they pertain to the annexation area. In addition to SP-281 and the Mirasera Specific Plan described in Scenario A, two other Specific Plans approved by Riverside County are located in Scenario B. Exhibit 3 illustrates the boundaries of each Specific Plan, and each is described below. SP-225, Center Pointe, is located at the western edge of the annexation area. It encompasses 215 acres and was approved for golf course, residential, business park, and commercial development. Nearly half (96 acres) is now developed with a private high school. This analysis assumes the remainder of the Specific Plan will develop as originally approved. • SP-151, North Star Commerce Center and Golf Club, is located along the I-10 corridor in the western portion of the annexation area. It consists of 460 acres and was approved for golf course, business park, and highway commercial development, including hotels and motels. The golf course and clubhouse (The Classic Club) have been built, another parcel contains a gravel/construction site, and the remaining acreage is undeveloped. 12 .. _� t . � s 3 _� ' ,.._ , 4�„ - *� � �t1#R • i�r��+r�w ,r irk • jam! �. 'A J lot 61. �• ��y i� � - ^q> 'It'yw.rw.,,.r�..w..r .u�w.c.+,y+a.4-�;,.,,�7i 'r`'' ,y�py, o�i�w.+,w r^i s�--q�,..r,.wr ar,� ,s �. i ♦q�ti / '�i' '' e_. •�• �.M,is''� : jy wq,.. «a �alfl:ti� c„ •�.�. '`i► �rg,r�r : �"`a.2"`.s,,, wv�� s _ Y i F cps,.+. .r►..., .».. }+CT s'I i n+li.b... sawAi is - ki"', .�. ""7'*"�A�' _ nTI ,\ Mer".a ii.l�.75wv T ►. J TERRA NOVA' PI—V r k mh. !w. Palm Desert Potential Annexation Scenario B Boundary Map Palm Desert, California r 0 W ' f..� Tetra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation The Scenario B annexation area encompasses a total of 2,988± acres. Of these, 1,987f are developed, and ±1,001 are vacant/undeveloped. Please refer to Exhibit 4 for a land use map, which serves as a basis for the following developed vs. vacant acreage calculations. Table 3 Scenario B - Develoaed Acreage Existing Existing Existing Dwelling Square Hotel Existin Land Use Designation Acreage Units' Footage2 Rooms Population Inside Scenario A: SP-281 Single -Family Residential 792.0 4,985 SF -- -- 9,000 SP-281 Golf Course 435.3 SP-281 Commercial 29.0 -- 277,912 -- -- SP-281 Commercial (Hotel) 2.2 -- 50,0004 72 -- Riv. Co. Commercial Retail 21.1 -- 202,205 -- -- Riv. Co. Commercial (Hotel) 1.4 - 40,000' 82 -- Riv. Co. Comm./Tourist (RV Park) 26.3 Riv. Co. Industrial - Light 56.6 -- 542,409 -- -- SP-281 Fire Station 3.5 I-10 Corridor 79.2 Railroad Corridor 38.8 Outside Scenario A: Single -Family Residential 1.3 1 SF -- -- 2 SP-151 Golf Course/Facilities 271.2 -- -- -_ _ SP-151 Gravel/Construction Facility 32.2 SP-225 Private School 96.0 SP-225 RV Storage 5.2 Agriculture 9.3 -- -- -- __ I-10 Corridor 52.8 Railroad Corridor 34.1 -- -- -_ -- Total: 1,987.5 4,986 1,112,526 154 9,002 Includes 4,869 detached and 116 attached units in Sun City, and one detached unit outside Sun City. SF = single-family dwelling unit. 2 Assumes commercial and industrial buildings cover 22% of the lot, with the remaining area available for access roads, landscaping, and other ancillary uses. .Varking, Includes an estimated 9,000 residents in Sun City (provided by Paul Brady, Sun City Community Assoc., Oct. 2011), and one additional dwelling unit at 2.08 persons/household (2010 U.S. Census). 4 Estimate for 72-room and 82-room hotels. Scenario B also includes approximately 1,001 acres that are vacant/undeveloped. Table 4 describes how vacant acreage could develop in the future based on assigned land use designations. Where Specific Plans have been approved by Riverside County, those land use designations are applied, as it is assumed that upon annexation, the City would honor the provisions of the approved Specific Plans. Parcels outside the Specific Plans have been assigned land use designations in the City's General Plan. 14 Tetra Nova/City of Palm Desert Fiscal impact Analysis, Potential Annexation Table 4 Scenario B - Vacant Acreage Land Use Designation Potential Dwelling Acreage Unitst Potential Potential Square Hotel Potential Footage Rooms3 Population Non -Developable Inside Scenario A: SP-281 Community Association 271.0 -- -- -- -- Public Utility (IID, CVWD) 18.1 -- -- -- -- Public Agency (County, State) 5.3 -- -- -- -- Riv. Co. Open Space/Water 10.4 -- -- -- -- Mirasera Open Space/Parks/Roads 39.5 -- -- -- -- Outside Scenario A: SP-225 Regional Circulation 6.4 -- -- -- -- Non-Developable Subtotal: 350.7 Developable Inside Scenario A: PD Medium Density Residential (4-10 du/ac) Riv. Co. Medium -High Density Resid.(5-8 du/ac) Mirasera High Density Residential (12 du/ac) Mirasera Mixed Use Residential (I6 du/ac) Mirasera Very High Density Resid. (20-25 du/ac) SP-281 Commercial PD Community Commercial PD Industrial - Business Park PD Industrial - Light Mirasera Commercial Retail Mirasera Mixed Use Hotel Mirasera Office/Business Park Outside Scenario A: 113.3 963 SF -- -- 2,003 30.8 209 SF -- -- 434 22.6 230 SF -- -- 478 10.5 142 MF -- - 295 66.4 1,411MF -- -- 2,934 3.0 -- 28,750 -- -- 10.7 -- 102,540 -- -- 28.0 -- 268,330 -- -- 26.6 -- 254,913 -- -- 17.6 -- 169,664 -- -- 3.1 -- 100,000 150 -- 18.8 -- 180,164 -- -- PD Low Density Residential (0-4 du/ac) 72.0 244 SF -- -- 507 SP-151 Service Commercial 30.8 -- 295,162 -- -- SP-151 Service Commercial (Hotel) 3.0 -- 200,000 250 -- SP-151 Business Park 103.0 -- 987,070 -- -- SP-225 Medium -Density Residential (8 du/ac) 9.0 61 SF -- - 126 SP-225 Golf Course 13.6 -- -- -- -- SP-225 Commercial 26.1 -- 250,121 -- -- SP-225 Business Park 41.0 -- 392,911 -- -- Developable Subtotal: 649.9 Total: 1000.6 3,260 3,228,625 400 6,777 Assumes future residential development will occur at 85% of the maximum density permitted. SF = single-family dwelling unit. MF = multi -family dwelling unit. 2 Assumes future building square footage will cover 22% of the lot, with the remainder of the lot available for access roads, .?arking, landscaping, and other ancillary uses. Hotel square footage based on 2 hotels and available acreage. Estimates based on available acreage for highway -serving hotel land uses. 4 Based on Palm Desert average of 2.08 persons/household (2010 U.S. Census). E Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation As shown in the tables above, the Scenario B annexation area currently includes 4,986 dwelling units and a population of approximately 9,002. If future buildout occurs according to currently assigned land use designations, the annexation area could contain an estimated 8,246 dwelling units and 15,779 residents. Commercial, business park, and industrial square footage could increase by 190% from 1,112,526 square feet to 3,228,625 square feet. The number of hotel rooms could increase by 260%, from 154 to 554 rooms. C. City of Palm Desert Demographic Profile The population of the City of Palm Desert increased from 23,252 in 1990 to 41,155 by 2000, according to U.S. Census data. This represents an increase of approximately 76.9%. Census data for 2010 report a population of 48,445, representing an increase of 17.7% over the last decade. Palm Desert's 2011 population, as estimated by the California Department of Finance, is 49,111 residents. The City is also home to a significant seasonal population that is not factored into permanent population data. The City's General Plan indicates that the City's 1999 seasonal population was estimated at between 21,000 and 28,225 residents, and the City currently estimates its seasonal population to be 32,000.' The median age in Palm Desert in 1990 was 42.3 years, which increased to 48.0 years in 2000. By 2010, the median age had increased to 53.0 years. The number of housing units in the City was 18,248 in 1990 and 28,021 in 2000. This figure reached 37,073 by 2010. The 2010 Census reports that 28.1% of housing units in the City are for seasonal, recreational, or occasional use, further illustrating the importance of the seasonal population to the local economy. In 1990 there were an average of 2.18 persons per household in Palm Desert; by 2000, the average was 2.13. The 2010 Census indicates there is now an average of 2.08 persons per household in Palm Desert. The median household income in Palm Desert in 1990 was $37,315. This had risen by approximately 29.4% in 2000, to $48,316. The 2010 Census has not, as of this writing, released household income data; however, the City estimates its current median household income to be $59,728.' The 1990, the U.S. Census reported that the median housing unit value in Palm Desert was $172,600. By 2000, this figure increased by 9.5%, to $189,100. In the second quarter of 2011, the median new home price in Palm Desert was $249,123, and the median value of an existing home was $278,996.' City's website, Demographic Information, accessed October 25, 2011. ' ,Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, PhD., October 2011. M. Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS II. POTENTIAL REVENUES FROM ANNEXATION Annexation of either Scenario A or Scenario B has the potential to generate revenues to the City of Palm Desert. These revenues include taxes and fees based on real estate values, consumer spending, and per capita allocations from other agencies, among others. This analysis focuses on recurring revenues that the City would expect to receive on an annual basis. One-time fees from Developer Impact Fees are also included. Revenues will include monies that will be available through the General Fund, and can be spent for any activities or services allowed under the General Fund, and revenues that are restricted for spending on specific, predetermined services. All revenue sources are identified as being either restricted fund or General Fund revenues. A. General Fund The General Fund is the general operating fund of the City that accounts for all financial resources typically associated with government, except those which must be accounted for in restricted funds. General Fund revenues include property tax, property transfer tax, sales tax, transient occupancy tax and motor vehicle in -lieu fees. These revenue sources, as they relate to development in the proposed annexation area, have been estimated in this fiscal impact analysis. Property Tax The County of Riverside collects property tax annually at a rate of 1 % of assessed valuation. Property tax revenues are allocated between the County, the jurisdiction in which the land is located (if other than the County), and a variety of other public agencies. The City of Palm Desert is a No -Low Property Tax City and receives 0% of the County's 1 % collection for land within its original boundaries. However, under current State law, the City receives 7% of the R Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation County's 1% collection on lands annexed after 1978. Property tax revenues go to the City's General Fund. Should annexation of Scenario A or B occur, the City would receive 7% of the 1% property taxes collected for the area. --_ - It is important to note that property tax revenues will be reduced due to the City's mandated contributions to Education Revenue Augmentation Funds (ERAF). In fiscal year 1992, the State of California required cities and towns to shift a percentage of their property tax revenues to a countywide ERAF account to fund public schools. Based on prior annexations into thrCity of Palm Desert_ the City receives approximately half 3.51 e o pf property tax revenue collected by the County, and the remaining 3.5% is contributed to ERAF. In this analysis, properties flagged as "exempt" in Riverside County Assessor's parcel records are not included in property tax revenue calculations. In the annexation areas, these properties are largely owned by CVWD, California Department of Transportation (CalTrans), the County of Riverside, and Sun City Palm Desert Community Association. Additional properties owned by on -profit organizations receive tax exemptions and/or reductions. These include 90.4 acres owned by Xavier High School and 245.3 acres (Classic Club golf course, maintenance building, and clubhouse) owned by the Berger Foundation.5 Property tax revenue calculations have been adjusted to account for these cases. The fiscal analysis assumes that all taxable properties within the annexation areas are taxed at a rate of 1% of valuation, and the collection rate is 100%. Future development in the potential annexation area will include residential, commercial and quasi -industrial development. In order to determine property value, and associated property tax generation for this development, a number of sources were utilized. The following table describes the average values of new residential, commercial and industrial development in Palm Desert. 4 Paul Gibson, Director of Finance/City Treasurer, City of Palm Desert, personal communication, October 27, 2011. 5 Based on property tax information provided by Mike Rover, Rover Armstrong, Berger Foundation representative, personal communication, November 29, 2011. 18 Tetra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 5 Average Value of New Construction in Palm Desert Type of Development Average Value Single-family Residential $249,123/unit Multi -family Residential $104,425/unit Commercial Lodging $110/sq. ft.2 or $68,512/room3 Commercial General/Retail $73/sq. ft. Office/Professional $169/sq. ft. Industrial $54/sq. ft. Golf Course $40,43 I/acre4 Source: 2"d quarter 2011 median new home value, "Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, Ph.D., October 2011. Includes value of land and structure. 2 Based on building permit data provided by the Palm Desert Building & Safety Department, Nov. 2011. Includes value of structure only. 3 Based on comparable existing highway -serving hotel in the annexation area, per Riv. Co. Assessor's records, Oct. 2011. 4 Based on average of multiple developed golf course parcels in annexation area, per Riv. Co. Assessor's records, Oct. 2011. All other values are based on building permit data provided by the Palm Desert Building and Safety Department, November 2011. Includes value of structure only. Property Transfer Tax Property Transfer Tax revenues are generated when a change of property ownership occurs. For analysis purposes, estimated Property Transfer Tax revenues are calculated according to the instructions provided in the Riverside County "Guide to Preparing Fiscal Impact Reports." Factors set forth in the Guide include a tax rate of $1.10 per $1,000 (or 0.11%) of the unencumbered property value. The County retains 50% of the tax, and 50% is transmitted to the City in which the sale occurred.6 Upon the sale of a new unit, 100% of the unit's market value is subject to the property transfer tax. Upon change of ownership of an existing unit, the unencumbered value (assume average is 80%) of the property is subject to the property transfer tax. Change in ownership is assumed to begin in the fourth year of the project, and 10% of existing residential properties are assumed to change ownership per year. Property values are stated in year 2011 dollars. The average value of existing residential units in Sun City is $364,653.' For existing units outside Sun City, and future residential units, an average value of $249,123 is used (see table above for source). A resale rate of 1 % is assumed for single-family development. As discussed in Section III, this analysis assumes no re -sales during the build out timeframe for commercial and industrial development, as such sales are infrequent and sporadic. Assessor's Office, County of Riverside, personal communication, November 9, 2011. 7 Riverside County Assessor's parcel data, October 2011. 19 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Sales Tax Sales tax in Riverside County is collected at a rate of 8.75% by the State of California. The table below describes how sales tax revenues are allocated among public agencies. Table 6 Components of the 8.75% Sales and Use Tax Rate Jurisdiction 7.25% State of California 1.00% Local (City/County) 0.50% Riverside County Transportation Commission Source: "Detailed Description of the Sales and Use Tax Rate," California State Board of Equalization; and Palm Desert Budget 2010/11, p. 2-2. Of the sales tax collected by the State, one percent (1.0%) is allocated to the jurisdiction in which the sale occurred. The fiscal analysis estimates total taxable sales that could be generated from commercial development at build out of each proposed annexation scenario, then calculates 1 % of taxable sales to determine how much sales tax revenue would be generated to the City. The fiscal model addresses taxable sales generated by existing and potential future development for each annexation scenario. Where taxable sales for existing development are known, actual figures are used. This includes annual taxable sales of $2.46 million generated by restaurants and golf pro shops within the boundaries of Sun City.8 Where taxable sales are unknown, the analysis uses assumptions to estimate taxable sales. The analysis assumes that future retail commercial development will result in 22% lot coverage, and 90% of the net floor space will be dedicated to the sale of taxable goods. Average annual sales estimators from the Urban Land Institute's (ULI) 2008 "Dollars and Cents of Shopping Centers" are applied to the number of square feet dedicated to taxable sales. All existing and future commercial development in the annexation areas is considered Neighborhood Commercial in this analysis. The fiscal analysis calculates sales tax generation for Neighborhood Commercial development, based on the following ULI definition: "Neighborhood Commercial" development includes neighborhood scale shopping centers conveniently located near residential areas, and a variety of smaller commercial centers, specialty retail shops and personal service businesses. These centers sell merchandise for daily living, such as food, drugs, and hardware. This type of development generates an annual average of $326.13 per square foot in taxable sales. In both scenarios, some lands are designated for "business park" development. It is expected that these lands will develop with a mix of light industrial and office uses. Although small amounts of sales tax revenue are likely to be generated by this development, the amount is expected to be negligible. As a result, business park and industrial development is assumed to generate no taxable sales in this analysis. 8 Paul Brady, Sun City Palm Desert Community Association, personal communication, October/November 2011. 20 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Transient Occupancy Tax Transient Occupancy Tax (TOT) is collected from individuals when they occupy a hotel or motel room. In Palm Desert, TOT is collected at a rate of 9%. Potential TOT revenues are based on the number of hotel/motel rooms that are or could be constructed on annexation lands, the average nightly room rate charged, and the average occupancy rate. There are currently two hotels with a combined total of 154 hotel rooms in the annexation areas. The room rates at these properties are lower than the current average room rate in the City. Therefore, room rates have been calculated at $95.00 per night. In addition, annualized occupancy has been assumed to be 65%. Approximately 3 acres are designated for future hotel/motel development in SP-,W, and this au& si assumes that two 125-room hotels will be constructed on these parcels in the future, for 3�U a total 'hotel rooms. An additional 3.1 acres are designated for hotel/motel development in the Mirasera Specific Plan, and this analysis assumes a single hotel/motel will contain 150 rooms. Therefore, future buiidout of the annexation areas could result in the development of" 5oe new hotel rooms. Room rates for future development, particularly future development located near the Classic Club golf course, are expected to be consistent with current City average room rates of $145.00/night. This was determined using total hotel room sales for 2009/10 ($76 million), total number of hotel/motel rooms in Palm Desert (2,216), and an estimated occupancy rate of 65%. This rate is an average that reflects both the world -class hotels that characterize Palm Desert's resort and tourism industry, and more modest hotels/motels located throughout the city. The annexation areas contain 26.3 acres of developed RV Park parcels. In the City of Palm Desert, RV parks generate TOT revenue only during the high -tourism season from January through April, and only from visitors leasing for fewer than 30 days 9 Given the specific and limited nature of these parameters, this fiscal model does not estimate TOT revenue from RV parks. Motor Vehicle In -Lieu Fees Motor Vehicle In -Lieu Fees, or Motor Vehicle License Fees, are taxes on ownership of a registered vehicle. They are collected by the State of California and allocated to local jurisdictions on a monthly basis. These fees are levied on motorists in -lieu of a local property tax. During FY10/11 the '_'itv of Palm Desert received $167 17 motor vehicle in -lieu fees.10 The State uses a City population figure o 2,067, which translates to $3.21 per capita annually. 9 Paul Gibson, Director of Finance/City Treasurer, City of Palm Desert, personal communication, December 2011. 10 Compilation of Motor Vehicle In -Lieu data from State Controller's Office, July 2010-June 2011. 21 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Other Revenue Sources Not Addressed The General Fund includes other revenue sources that will not be affected directly by annexation or will be one-time fees, and therefore, are not addressed in this analysis. These include timeshare mitigation fees, business license taxes, building and grading permit fees, plan check fees, and franchise fees. Timeshare development is not anticipated in the annexation area, so revenues from timeshare mitigation fees are not applicable to this project. Business license taxes will increase with annexation; however, these revenues are highly variable and development - specific, and estimates are not considered useful to this analysis. Building/grading permit fees and plan check fees are also based on specific development plans, which are determined at the time a project is proposed. B. Special Revenue Funds Special Revenue Funds are used to account for revenues/expenditures that are legally restricted for specific purposes. Each Special Revenue Fund that will be impacted by annexation is described below. 1. Annual Revenues The following Special Revenue Funds receive recurring revenues on an annual basis. Highway User Gas Tax Fund The State of California imposes a per gallon tax on all gasoline purchases. A portion of these revenues are allocated to counties and cities throughout the state. During FY10/11, the City of Palm Desert received $1,216,771 in Gas Tax revenue, or $23.37 per capita annually." Measure A Funds' 2 Of the 8.75% sales tax collected in Riverside County, 0.50% is contributed to the Measure A Fund for regional and local transportation projects. Measure A funds are distributed by region; approximately 24% is distributed to the Coachella Valley region. Coachella Valley funds are further allocated for specific purposes: 50% for State highways and regional road improvements, 35% for local streets and roads, and 15% for transit (Sunline Transit Agency). Of the 35% for local streets and roads, about 20% goes to the City of Palm Desert. This percentage is based on a formula that accounts for Palm Desert's total number of dwelling units and total taxable sales. The trickle -down effect is illustrated below. " Compilation of Highway Users Tax data from State Controller's Office, July 2010-June 2011. 12 Andrea Zureick, Riverside County Transportation Commission, personal communication, November I, 2011. 22 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation 8.75% sales tax 1 0.50% of sales tax goes to county -wide Measure A Fund 1 24% of county -wide Measure A Fund goes to Coachella Valley region 1 35% of Coachella Valley portion goes to local streets and roads 1 20% of Coachella Valley streets and roads fund goes to the City of Palm Desert Fire Fund The City's Fire Fund receives revenue from two sources: 1) Proposition A Fire Tax, and 2) Structural Fire Tax. Each is described below. In 1982, the residents of Palm Desert approved the Proposition A Fire Tax for upgrading the City's fire protection and prevention capabilities. Revenues are restricted for the purposes of obtaining, furnishing, operating and maintaining fire protection/prevention services, equipment and apparatus. Annual residential tax rates range from $30 per vacant residential lot, to $45 for rental apartments with 4+ units, to $60 per single-family dwelling unit. Non-residential rates are $60 for buildings equal to or less than 2,600 sq. ft. For larger non-commercial buildings, rates are building -specific and based on a formula that calculates fire flow'requirements by square footage and takes into account the use of fire -resistive construction materials.13 This analysis estimates future Proposition A Fire Tax revenues for residential units, vacant parcels, and smaller non-commercial buildings. However, it does not attempt to project tax revenues for larger non-commercial buildings, given that the parameters required to project these revenues are building -specific and unknown at this time. The second revenue component of the Fire Fund is the Structural Fire Tax. For land not in a redevelopment area (this includes the proposed annexation areas), tax revenues are 5.87% of the 1% property tax collected by Riverside County.14 They are remitted to the City's Fire Fund and restricted for the purpose of providing fire protection and prevention services. 2. One -Time Revenues The following Special Revenue Funds receive one-time revenues as a direct result of new development. These are typically paid to the City at the time building permits are issued. New development in the potential annexation areas would be required to contribute to these funds. Existing development would not pay these fees. Because they are one-time rather than recurring 13 Rates provided by Mark Dana, Willdan Financial, November 3, 2011. 14 '`Comprehensive Annual Financial Report," City of Palm Desert Finance Department, June 30, 2010, page 186. 23 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation annual fees, they are not included in Cost/Revenue Summary Tables for the annexation scenarios. Instead, they are summarized separately in Table 10 for Scenario A, and Table 12 for Scenario B. New Construction Tax Fund Revenues to this fund are from taxes collected upon application for a building permit for the construction of any new building, addition or trailer space in the city. Funds are restricted for the acquisition and development of public facilities, such as parks, playgrounds and public structures. Fees are $0.40 per square foot. Art in Public Places Fund This fund is reserved for maintaining public artwork throughout the City. For residential development, the fee is 0.25 of 1% valuation of the structure; individual single-family dwellings not in a development are exempt for the first $100,000. For non-residential development, the fee is 0.50 of 1% valuation of the structure. Low Income Housing Mitigation Fee Fund Revenues from this fund pay for projects and programs that benefit low and moderate income households. All commercial development must pay this fee at the issuance of building permits, according to the fee schedule below. Table 7 Low Income Housing Mitigation Fees Development Type Fee General Mixed Commercial $1.00/sq. ft. Professional Office $0.50/sq. ft. Industrial $0.33/sq. ft. Resort Hotel $1,000/room Non -Resort Hotel $620/room Source: Palm Desert Building & Safety Department. Child Care Program Fund This fund is used for the purpose of providing child care programs. Fees are collected for all new non-residential square footage according to the fee schedule below. Table 8 Child Care Facilities Impact Mitigation Fees Development Type Fee Light Industrial $0.47/sq. ft. HotelNisitor Uses $0.77/sq. ft. Retail/Service Commercial $0.90/sq. ft. Office Uses $1.15/sq.ft. Source: Palm Desert Building Department. 24 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Traffic Signals Fund Revenues to this fund are collected for residential, commercial and industrial developments either at the time grading permits are paid or prior to the approval of the final map. Fees for residential development are $50 per unit. Fees for commercial development are $500 per 1,000 sq. ft. of building area, and fees for industrial development are $500 per acre.15 Planned Drainage Fund Drainage impact fees are collected to fund off -site drainage improvements. 16 Fees are dependent upon the location of development, as described below: • South of Whitewater River = $4,000/acre • Between Whitewater and Sand Ridge = $1,500/acre • Between Sand Ridge and I-10 = $1,000/acre No fee has been established for land in the potential annexation areas (north of I-10). Since the annexation areas are most closely located to I-10, this analysis uses the $1,000/acre fee shown above. Park and Recreation Facilities Fund This fund is restricted for expenditures related to park development, maintenance and equipment. Fees are collected for residential subdivisions only, according to the following formula.17 Fee = O of D.U.'s)(2.149)(5) X Current Land Value Per Acre 1,000 Other Funds Other Special Revenue Funds identified in the City Budget are impacted by new development, but do not apply to the annexation area. Landscape/Lighting District Funds only apply to specific neighborhoods or regions of the City for the purpose of providing landscape and lighting maintenance. These districts are established upon voter approval, and residents in the potential annexation area will contribute to such a fund only upon voter approval.18 Such funds are revenue -neutral and will not generate "extra" revenue for the City. New development in the potential annexation area will also generate revenues that are collected by the City, but transferred to other agencies. These include, but are not limited to, TUMF mitigation fees transmitted to CVAG, school impact mitigation fees remitted to the appropriate school district, and Strong Motion Instrumentation Program (SMIP) fees transmitted to the State. 15 Palm Desert Department of Public Works. 16 Ibid. 17 Ibid, 18 Lauri Aylaian, Community Development Director, City of Palm Desert, personal communication, October 26, 2011. 25 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation C. Investment Income The fiscal analysis assumes that the City will receive investment earnings on all annual revenues. To project potential investment earnings, the fiscal model applies the historical average interest rate of the 90-Day Treasury Bill. During the 25-year period from 1985 through 2010, the average interest earned on the 90-Day Treasury Bill was 4.39%.19 The fiscal model calculates investment income for all annual revenues calculated in this report. 19 Average historical interest rate determined using data from Table B.3, "Riverside County Guide to Preparing Fiscal Impacts Reports," January 1995; and "3-Month Treasury Constant Maturity Rates," from the Federal Reserve Board of Governors, as provided by The Financial Forecast Center. 26 Terra Nova/City of Palm Desert Fisca! Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS III. POTENTIAL COSTS FROM ANNEXATION A. Potential Costs to the General Fund Annexation of developed and undeveloped acreage north of I-10 will not only generate additional revenues, but will also generate additional municipal costs. There will be expenditures for general government services, as well as the expansion and/or extension of infrastructure, utilities, roads and other public services, particularly public safety. The fiscal model projects the City's costs of providing general government services, public safety, and transportation/roadway maintenance to lands in the annexation area. Costs of General Government Costs of General Government are funded through the City's General Fund. Costs associated with general government include city-wide services, such as employee salaries and benefits, postage, printing, travel, equipment maintenance and repairs, contract services, computers, vehicles and other items necessary for the day-to-day functioning of government. They also include public and community services, such as code compliance and animal control, as well as municipal and support services. The City's 2011/12 Budget allocates $13,853,664 for the above -referenced general government services. This does not include expenditures for police protection and roadway maintenance, which are discussed and calculated separately below, and does not include other general government services that are provided by the City but will not be directly impacted by annexation. For residential development, this fiscal analysis translates the costs of general government to a per capita figure. Given the City's 2011 population of 49,111, the annual cost of providing 27 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation general government services to City residents is approximately $282 per capita. This factor is applied to the projected build out population of the annexation areas. The result is the estimated cost of providing general government services to residents living in the annexation areas. In order to capture costs for provision of General Government to commercial and industrial development, it was necessary to derive factors based on a per acre or per square foot basis. No such factors were available through the City. Therefore, this analysis uses factors provided in the Riverside County Guide, adjusted for inflation, to arrive at costs based on year 2011 dollars. Costs of Police Protection The same method used to calculate general government costs has been used to project costs of providing law enforcement services to existing and future residents in the annexation areas. The City contracts with the Riverside County Sheriff's Department for a wide range of police services, including patrol, traffic management, investigations, school resource programs, crime prevention, bike patrol and communications. The 2011/12 City Budget allocates $16,647,638 for police protection services. With a 2011 population of 49,111 residents, this equates to approximately $339 per resident annually. The fiscal model applies this per capita factor to the projected build out population of the annexation areas. Like General Government costs, to estimate the costs of providing police protection to commercial and industrial development, this analysis uses factors provided in the Riverside County Guide, adjusted for inflation. Costs of Roadway Maintenance Costs associated with repairing and maintaining future paved public roads in the annexation area are calculated using a per road mile cost factor. Costs associated with roadway maintenance include repairs and Americans with Disabilities Act retrofitting of sidewalks, resurfacing and restriping of roadways, and similar activities. These costs also include road improvement projects and the widening of roadways, which have averaged $6.1 million annually over the last ten years, as shown in the Table below20. These costs are paid through the General Fund, and include funds from a reserve fund maintained by the Public Works Department for such projects. 20 City of Palm Desert Budget calculations f7r roadway construction and maintenance calculations, January, 2012. 28 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 9 Annual Road Maintenance Costs, 2002-2011 Year Costs 2002 $1,610,521 2003 $9,026 890 2004 $3,587,830 2005 $10,216,200 2006 $4,220,000 2007 $6,236,627 2008 $10 437,052 2009 $7,558,700 2010 $5,257 500 2001 $2,764,936 10 Year Average $6,091,626 With 159 paved public road miles in Palm Desert, this translates to $38,312 per road mile. Scenario A: Should annexation of Scenario A occur, maintenance of private roads within the gates of Sun City will continue to be the responsibility of the homeowners association. Outside of Sun City, there are three areas that currently include, or can be developed to include, paved roads: 1) existing paved roads, 2) future paved roads in the Mirasera Specific Plan, and 3) future paved roads elsewhere in the annexation area. Existing road miles are estimated at 10.5 miles and include Washington Street, Varner Road, 381n Avenue, 40`'' Avenue, and local roads that provide access to commercial and light industrial development near the I-10/Washington Street interchange. Buildout of the Mirasera Specific Plan will result in the construction of approximately 3.0 paved road miles. In addition, there are another 141.28 vacant acres available for development in Scenario A. To estimate the number of future road miles that could be constructed on these acres, the fiscal model uses a known road mile per square mile factor. There are currently 159 paved public road miles in the City of Palm Desert, and the existing City limits cover 25.5 square miles?' This equates to an average of 6.2 road miles per square mile of land area. Therefore, at buildout, these 141.28 vacant acres (0.22 square miles) are projected to include approximately 1.5 paved road miles. At buildout, all of Scenario A could include an estimated total of 15.0 paved road miles. These estimates do not include commercial driveways, interior parking lots or other paved facilities that would be located on private property and be privately maintained. To project future roadway maintenance costs in Scenario A, the fiscal model applies the City's costs of $38,312/road mile to these 15.0 road miles. Z' '`Comprehensive Annual Financial Report," City of Palm Desert Finance Department, June 30, 2010, page 201. 29 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Scenario B: The same methodology described above is used to project road maintenance costs for Scenario B. At buildout, Scenario B is projected to include: 1) 15.0 miles of paved roadways located within Scenario A boundaries (described above); 2) ±3.5 miles of paved roadways currently existing outside Scenario A (largely limited to western Varner Road and Cook Street), and; 3) future roads constructed outside Scenario A during buildout, which are estimated below. There are approximately 301 vacant acres (0.47 square miles) outside Scenario A that could be built out to include paved roadways. Applying the ratio of 6.2 road miles per square mile of land area, this equates to 2.9 paved road miles. When added together with the miles described above, Scenario B is projected to include approximately 21.4 paved road miles at buildout. The fiscal model applies the City's costs of $38,312/road mile to these 21.4 road miles to estimate future maintenance costs. B. Potential Costs to the Fire Fund Annexation will also generate additional expenditures for fire and ambulance services. The City contracts with the Riverside County Fire Department for these services, which are accounted for in the Fire Fund (rather than the General Fund). The 2011/12 City Budget allocates $9,207,045 for Fire Fund expenditures. Costs of Fire Protection Services — Scenario A Parcels in Scenario A are currently served by Fire Station 81 on Washington Street, just north of Avenue 38. Upon annexation, the City would assume operation of this facility and its fire engine. The annual operating costs for this fire station are approximately $1.5 million?Z The station is adequately equipped, and no new or upgraded equipment, facilities or personnel would be required upon annexation. These operating costs will be assumed by the City under both Scenarios A and B. Costs of Fire Protection Services — Scenario B The eastern portion of Scenario B is served by Fire Station 81, as described above. Upon annexation, the City would assume annual costs of approximately $1.5 million for the operation of this fire station. The western portion of the annexation area in the vicinity of the Classic Club is currently served by a combination of three fire stations: 1) Station 71 in north Palm Desert, 2) Station 35 in Thousand Palms, and 3) Station 81 at Sun City (described above). A new fire station is planned in the north Palm Desert/College Park area, which is expected to directly serve this portion of the annexation area and other areas in northern Palm Desert.'' However, no construction date has been set; construction is expected to occur several years in the future. 22 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, November 14, 2011. 2' Ibid. 30 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Because the actual costs of providing fire protection services to the western portion of the annexation area are unknown at this time, the fiscal model estimates future costs on a per capita basis. The City's 2011-12 Budget allocates $9,946,973 for Fire Fund expenditures. With a current City population of 49,111 residents, this equates to $203 per resident annually. The model applies this per capita figure to the potential buildout population of all land outside the Scenario A boundaries. Costs of Ambulance Services Because the annexation area includes a stretch of I-10 extending from Cook Street to Washington Street, costs associated with providing ambulance services to emergency incidents on I-10 must be considered. Between 2006 and 2010, the Fire Department responded to 372 traffic collisions along 1-10 between Monterey Avenue and Washington Street .'`4 This equates to an average of 74 incidents per year. Fire Department data gathered for the 1-10 corridor in neighboring Indio show that, over a 3-year period, an average of 54% of traffic accidents resulted in patient transport via ambulance.25 The Fire Department considers this a reasonable assumption for that portion of I-10 that would be annexed into Palm Desert. This means that, each year, ambulance personnel could expect to respond to an average of 40 emergency incidents on I-10 in the annexation area. Ambulances would also provide emergency services to residents and development elsewhere in the annexation area. At the City's direction, a medic unit could be added to Fire Station 81 near Sun City. According to the Fire Department, first -year start-up costs for a medic unit total approximately $190,000.26 This includes the costs of an ambulance ($140,000), medic equipment ($40,000), and incidentals, such as radios and shoreline ($10,000). Annual operating costs for one ambulance staffed by 6 firefighter II medics are $940,944. These costs would be assumed by the City under both Scenarios A and B. 24 Data provided by Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 12, 2011. 25 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 25, 2011. 26 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 13, 2011. 31 Terra Novo/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS IV. BUILDOUT ASSUMPTIONS AND COST/REVENUE ANALYSIS The build out assumptions used to calculate costs and revenues associated with potential annexation are presented in this section. A. Build Out Phasing This analysis assumes a 10-year build out projection for Scenario A. Nearly 68% of this annexation area is already built out. Where future development could occur, this analysis assumes an even distribution of development over the 10-year period. The analysis has been conducted in constant 2011 dollars; therefore, the relative costs and revenues will be as calculated at build out of the annexation area, regardless of exactly when build out occurs. A larger portion of the Scenario B annexation area is vacant and can accommodate future development. Therefore, this analysis assumes a 20-year build out for Scenario B. Depending on market conditions, growth and development in the City and the annexation area will rise and fall. An even distribution of development in 5-year increments has been assumed for the 20-year build out period. The analysis has been conducted in constant 2011 dollars; therefore, the relative costs and revenues will be as calculated at build out of the annexation area, regardless of when this occurs. That is to say that although inflationary and recessionary factors will affect the City's revenues and costs over time, the relative cost of providing services, the relative amount of revenues generated within the annexation area, and the surplus or shortfall to the City, are represented in this analysis. 32 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation B. Land Use Designations The annexation areas are currently under the jurisdiction of Riverside County, and much of the land contained within them is part of County -approved Specific Plans (see Exhibit 3). Where a Specific Plan has been approved, it is assumed that future build out will occur in accordance with the land use designations provided in the Specific Plan. Where development has taken place that is contrary to the original Specific Plan, as in the case of Xavier School in SP-225, existing development overrides the original Specific Plan. However, it is assumed that vacant land will still develop in accordance with the original Specific Plan. Where no Specific Plan exists, build out is assumed to occur in accordance with the Palm Desert General Plan land use map. C. Build out Calculations Residential For all residential land use categories, it is assumed that 15% of the currently vacant lands so designated would be needed for ancillary facilities, including streets, parking areas, parks and community open space. Based on this assumption, the development potential for these lands is equivalent to 85% of the maximum allowable density. Land designated for up to 12 dwelling units per acre is assumed to result in the development of single-family dwelling units, whether detached or attached. Land designated for 16 units per acre and higher is assumed to accommodate multi -family units. Scenario A: PD Medium Density Residential (4-10 du/ac) • total of 963 single-family units at build out (481.5 units in each five-year period) • Average value = $249,123 per unit Riv. Co. Medium -High Density Residential (5-8 du/ac) • total of 209 single-family units at build out (104.5 units in each five-year period) • Average value = $249,123 per unit Mirasera High Density Residential (12 du/ac) • total of 230 single-family units at build out (115 units in each five-year period) • Average value = $249,123 per unit Mirasera Mixed Use Residential (16 du/ac) • total of 142 multi -family units at build out (71 units in each five-year period) • Average value=$104,525 per unit Mirasera Very High Density Residential (20-25 du/ac) • total of 1,411 multi -family units at build out (705.5 units in each five-year period) • Average value = $104,425 per unit 33 Tetra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Scenario B: PD Low Density Residential (0-4 du/ac) • total of 244 single-family units at build out 61 units in each five-year period) • Average value = $249,123 per unit PD Medium Density Residential (4-10 du/ac) • total of 963 single-family units at build out (240.7 units in each five-year period) • Average value = $249,123 per unit Riv. Co. Medium -High Density Residential (5-8 du/ac) • total of 270 single-family units at build out (67.5 units in each five-year period) • Average value = $249,123 per unit Mirasera High Density Residential (12 du/ac) • total of 230 single-family units at build out (57.5 units in each five-year period) • Average value = $249,123 per unit Mirasera Mixed Use Residential (16 du/ac) • total of 142 multi -family units at build out (35.5 units in each five-year period) • Average value=$104,525 per unit Mirasera Very High Density Residential (20-25 du/ac) • total of 1,411 multi -family units at build out (352.7 units in each five-year period) • Average value = $104,425 per unit The average housing value for single-family units is based on the "Inland Empire Quarterly Economic Report" (October 2011). The average value for multi -family units is based on recent new multi -family residential construction in the City of Palm Desert. For residential property transfers, an annual resale rate of 1% change of ownership has been applied to single-family detached and attached units. These represent statistical averages that may be assumed to occur over the life of the annexation area, well beyond the build out year. This analysis also assumes that property transfer tax will begin in the 4`s year of development (no resales in the first three years). The population of Sun City is estimated at 9,000 by the Sun City Palm Desert Community Association.27 The population of other dwelling units, existing and future, is based on 2010 U.S. Census data which indicates there are 2.08 persons/household in the City of Palm Desert. Commercial, Hotel, Business Park, and Industrial Commercial, business park, and industrial designations assume that building square footage will cover 22% of the lot. The remaining acreage accounts for driveways, surface parking lots, stormwater retention/detention facilities, and similar ancillary facilities. The following sub -sections summarize assumptions used to calculate various revenues that could be generated by build out of the annexation area. 27 Paul Brady, Sun City Palm Desert Community Association, November 2011. 34 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Commercial Scenario A: • 149,977 square feet developed in each five-year period, for a total of 299,954 square feet at build out. • Per square foot value of $73, based on recent new commercial (general retail) construction valuation in the City of Palm Desert. Scenario B: • 211,309 square feet developed in each five-year period, for a total of 845,237 square feet at build out. • Per square foot value of $73, based on recent new commercial (general retail) construction valuation in the City of Palm Desert. The analysis assumes no revenues from transfer of commercial properties in the annexation area. Hotel Scenario A: • 25,000 square feet developed in each five-year period, for a total of 100,000 square feet at build out. • Per square foot value of $110, based on recent new hotel construction valuation in Palm Desert; or room value of $68,512, based on comparable existing highway -serving hotel development in the annexation boundary. Scenario B: • 75,000 square feet developed in each five-year period, for a total of 300,000 square feet at build out. • Per square foot value of $110, based on recent new hotel construction valuation in Palm Desert; or room value of $68,512, based on existing, comparable, highway -serving hotel development in the annexation boundary. The analysis assumes no revenues from transfer of hotel properties in the annexation area. Business Park Scenario A: • 224,247 square feet developed in each five-year period, for a total of 448,494 square feet at build out 35 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation • Average value of $169 per square foot, based on recent new office/business park construction valuation in Palm Desert. Scenario B: • 457,118 square feet developed in each five-year period, for a total of 1,828,475 square feet at build out. • Average value of $169 per square foot, based on recent new office/business park construction valuation in Palm Desert. The analysis assumes no revenues from transfer of business park properties in the annexation area. Light Industrial Scenario A: • 127,456.5 square feet developed in each five-year period, for a total of 254,913 square feet at build out. • Average value of $54 per square foot, based on new industrial construction valuation in Palm Desert.28 Scenario B: • 63,728 square feet developed in each five-year period, for a total of 254,913 square feet at build out. • Average value of $54 per square foot, based on new industrial construction valuation in the City of Palm Desert.29 The analysis assumes no revenues from transfer of light industrial properties in the annexation area. 28 Average based on 5 months of new industrial development that occurred in 2006. According to the Palm Desert Building & Safety Department, this is the most recent industrial building permit valuation data available. 29 [bid. 36 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation CITY OF PALM DESERT POTENTIAL ANNEXATION FISCAL IMPACT ANALYSIS V. Cost/Revenue Analysis A. Cost/Revenue Summaries The following conclusions are based on the assumptions described above. It should be noted that all amounts are in Year 2011 dollars and are subject to rounding. For Scenario A, the total projected annual costs and revenues to the City over each five-year phase of the 10-year build out period are shown in Table 10. This table also shows the total costs and revenues that are projected annually at build out of the annexation area. For Scenario B, these costs and revenues for the 20-year build out period are shown in Table 12. It should be noted that the cost/revenue summaries do not include revenues from developer impact fees, which are one-time fees that occur at the time permits are pulled. These projections are shown in Table 1 I for Scenario A and Table 13 for Scenario B. All of the tables in this section are summary tables. More detailed calculations for each revenue and cost category can be found in Appendices A and B. 37 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 10 Total Potential Costs/Revenues Summary Table Annexation Scenario A Build out Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) ANNUAL REVENUES General Fund: Property Tax $836,415 $947,279 Property Transfer Tax $112,171 $125,579 Sales Tax $1,874,090 $2,314,298 Transient Occupancy Tax $544,596 $776,804 Motor Vehicle In -Lieu Fees $38,761 $48,632 Total Annual General Fund Revenue at Phase Build out: S3,406,032 $4 212 592 Restricted Funds: Highway Users Gas Tax $282,195 $354,059 Measure A Funds $15,742 $19,440 Prop. A Fire Tax $386,607 $467,813 Structural Fire Tax $1,402,787 $1,588,723 Total Annual Restricted Fund Revenue at Phase Build out: S2,087 331 S2,430,035 Interest Earnings: Total Annual Revenues at Phase Build out: $5 493 362 $6 642 628 Historic Average Interest Rate, 90-day Treasury Bill: 4.39% 4.39% Anticipated Interest on Revenues: $241,159 $291,611 Total Annual Revenues with Interest at Phase Build out: $5 734 521 $6 934 239 ANNUAL COSTS General Fund. - General Government $3.413,867 $4,295,120 Police Protection $4,137,575 $5,251,483 Roadway Maintenance $488,478 $574,680 Total Annual General Fund Costs at Phase Build out: $8 039,920 $10 121 283 Restricted Funds: Fire Protection $1,500,000 $1,500,000 Ambulance Services $940,944'0 $940,94416 Total Annual Restricted Fund Costs at Phase Build out: $2,440,94416 $29440,944' Totals: Total Annual Costs at Phase Build out: $10,480,864 $12,562,227 Projected Annual Cashflow at Phase Build out: -$4,746,343 -$5,627,988 30 Does not include one-time (year 1) start-up ambulance costs of $190,000. 38 Tetra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table II Developer Impact Fee Revenues (One Time Only)' Annexation Scenario A Build out Phase Phase I Yrs 1-5 Phase II Yrs 6-10 New Construction Tax $1,107,172 $1,107,172 Art in Public Places Fund $963,967 $963,967 Low Income Housing Mitigation Fee $350,661 $350,661 Child Care Program Fund $491,268 $491,268 Traffic Signals Fund $180,514 $180,514 Planned Drainage Fund $175,700 $175,700 Parks & Recreation Facilities Fund $1,823,916 $1,823,916 Total Developer Impact Fee Revenues at Phase Build out: $5,093,198 $5,093,198 'Developer impact fees occur only once, at the time the unit is permitted. 39 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 12 Total Potential Costs/Revenues Summary Table AnneYntinn Cranar;n R Build out Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Phase III (Yrs 11-15) Phase IV (Yrs 16-20) ANNUAL REVENUES General Fund: Property Tax $828,082 $915,621 $1 003 160 $1 090 698 Property Transfer Tax $96,687 $97,980 $99,274 $100 568 Sales Tax $2,078,761 $2,698,991 $3 319,220 $3,939,446 Transient Occupancy Tax $621,998 $931,610 $1 241 221 $1 55Q 832 Motor Vehicle In -Lieu Revenue $34,343 $39,789 $45 235 $50 682 Total Annual General Fund Revenue at Phase Build out: $3 659 871 S4,683,990 $5 708 110 1 $6 732 226 Restricted Funds: Highway Users Gas Tax 5250,028 $289,679 $329,330 $368,981 Measure A Funds $17,642 522,672 $27,881 $33,091 Prop. A Fire Tax $351,356 $395,453 $439,549 $483,645 Structural Fire Tax $1,390,562 $1,537,377 $1,684,193 $1,831,008 Total Annual Restricted Fund Revenue at Phase Build out: $2,009,408 $2,245,180 1 $2,480,952 S2,716,725 Interest Earnings: Total Annual Revenues at Phase Build out: $5 669 279 $6 929 171 $8 189 062 $9 448 950 Historic Average Interest Rate, 90-day Treasury Bill: 4.39% 4.39% 4.39% 4.39% Anticipated Interest on Revenues: $248,881 $304,191 $359,500 $414,809 Total Annual Revenues with Interest at Phase Build out: $5 918 160 $7 233 361 $8 548 562 S9,863,759 ANNUAL COSTS General Fund: General Government $3,031,673 $3,517,392 $4,003,112 $4,488,831 Police Protection $3,701,198 $4,313,217 $4,925,236 $5,537,254 Roadway Maintenance $607,245 $678,122 $749 002 $819 879 Total Annual General Fund Costs at Phase Build out: S7 40,116 $8 08 731 S9,677,349 $10,845 965 Restricted Funds: Fire Protection $1,528,907 $1,557,408 $1,585,910 $1,614,411 Ambulance Services $940,94431 $940,94427 $940,94421 $940,944" Total Annual Restricted Fund Costs at Phase Build out: $2,469,85127 $2,498,352" $2,526,854" $2,555,355" Totals: Total Annual Costs at Phase Build out: $9,809 967 S11,007,084 $12,204,203 513,401 20 Projected Annual Cashllow at Phase Build out:I -53,891,8071 -33,773,7231 -$3,655,6421 -$3,537 560 31 Does not include one-time (year 1) start-up ambulance costs of $190,000. 40 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Table 13 Developer Impact Fee Revenues (One time only)' Annexation Scenario B Build out Phase Phase I Yrs 1-5 Phase II Yrs 6-10 Phase III Yrs 11-15 Phase IV Yrs 16-20 New Construction Tax $811,863 $811,863 $811,863 $811,863 Art in Public Places Fund $787,633 $787,633 $787,633 $787,633 Low Income Housing Miti ation Fee $522,899 $522,899 $522,899 $522,899 Child Care Program Fund $803,567 $803,567 $803,567 $803,567 Traffic Signals Fund $187,230 $187,230 $187,230 $187,230 Planned Drainage Fund $162,475 $162,475 $162,475 $162,475 Parks & Recreation Facilities Fund $1,080,338 $1,080,338 $1,080,338 $1,080,338 Total Developer Impact Fee Revenues at Phase Build out: $4,356,004 $4,356,004 $4,356,004 $4,356,004 ' Developer impact fees occur only once, at the time the unit is permitted. 41 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation B. Conclusions 1. Scenario A Annexation of Scenario A will add an estimated 15,144 residents to the City of Palm Desert. The area is partially developed, and some costs and revenues will be realized almost immediately. Build out of land in Scenario A could potentially generate $6.9 million annually in revenues by the end of the 10-year build out timeframe. The largest single revenue generator is expected to be local Sales Tax ($2.3 million annually at 10-year build out), which is related to the second highest revenue source, Structural Fire Tax ($1.5 million annually at 10-year build out). These revenues are dependent upon commercial sales tax volume in the annexation area. The costs associated with serving this new area and its population are projected to be approximately $12.6 million annually at the end of the 10-year build out period. The most significant costs are those from Police Protection ($5.2 million annually at 10-year build out), closely followed by those from General Government operations ($4.2 million annually at 10-year build out). As such, build out of the area is expected to result in an annual revenue shortfall of approximately $4.7 million at the end of the first five-year period. The shortfall is projected to grow to $5.6 million by the end of the second five-year period. This is, in part associated with the high percentage of residential development in the area and the costs of providing services to residents, and a comparatively small percentage of commercial sales tax -generating development. Residential lands comprise nearly 47% of the entire annexation area, and commercial lands account for 4%. Developer impact fee (DIF) revenues are projected to be $5.09 million at phase build out of each phase. This assumes that development occurs evenly over the 10-year build out period. The highest sources of DIF revenue will be from the New Construction Tax and the Park & Recreation Facilities Fund, which will benefit from the future construction of new single-family and multi -family dwelling units in the annexation area, particularly those in the Mirasera Specific Plan. 2. Scenario B Annexation of Scenario B will result in a population increase of approximately 15,779 to the City of Palm Desert. The area is partially built out; some costs and revenues will be generated immediately, and others will be realized over the build out period. Projected revenues at the end of the 20-year build out period are projected to be approximately $9.86 million annually. The largest revenue source will be local Sales Tax ($3.9 million annually), followed by Structural Fire Tax ($1.8 million annually) and Transient Occupancy Tax ($1.5 million annually). 42 Terra Nova/Clty of Palm Desert Fiscal Impact Analysis, Potential Annexation At the end of the 20-year build out period, annual costs are projected to be $13.4 million. As with Scenario A, the highest costs are associated with providing Police Protection ($5.5 million) and General Government services ($4.49 million) to existing and future residents. Build out of Scenario B is expected to generate an annual revenue shortfall of approximately $3.9 million at the end of the first five-year build out period. However, the shortfall is projected to fall slightly to $3.5 million at the end of the fourth five-year period. Like Scenario A, residential development accounts for a much greater percentage of land in the annexation area (37%) than commercial development (5%), and sales tax -generating opportunities are limited. One-time revenues resulting from Developer Impact Fees in Scenario B are expected to be $4.3 million at build out of each phase, assuming development occurs evenly over the 20-year build out period. These revenues will constitute a significant revenue source to the City over the 20- year build out period, but they are one-time revenues that will be realized only as new development occurs. 43 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Appendix A Scenario A Detailed Cost and Revenue Tables 44 Property Tax Revenue - Scenario A IPrnm Rxictina Conditions TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A. Pmp. Tax, Struc. Fire 1 ax Existing Conditions (developed parcels are taxed on value of land & structure; vacant parcels are taxed on value of land) Buildout Phase Phase I (Yrs. 1-S) Phase 11 (Yrs. 6-10) Calculation of Property Tax Revenue Total Value of all arcels' $2,087.295,429 $2,087,295,429 subtract Value of tax exemptparcels' $7,112,668 $7,112,668 Total value of taxable parcels $2,080,182,761 $2,080,182,761 Property Tax Rate 1% 1% 'Total Property Tax Collected by County at phase buildout $20,801,828 $20,801,828 Percent of Property Tax Allocated to Cit 's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $1,456,128 $1,456,128 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $728,064 $728,064 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% ,Property Tax Revenue collected by County $20,801,828 $20,801,828 Total Structural Fire Tax Revenue at phase buildout $1,221,067 $1,221,067 ' From Riverside County Assessors records, Oct. 2011. Includes value of land for vacant parcels, and value of land and structures for developed parcels. 'Tax exempt parcels, as flagged in Riverside County Assessors records, Oct. 20l 1. Includes 135.51 acres of land, primarily owned by CV WD, CA DOT, County of Riverside, and Sun City Palm Desert Community Association. From Future Residential Development Land Use Designation: Riv. Co. Medium High Density Residential (5" 8 du/ac) Total No. Acres:.30.8 No. of Potential Buildout Units: 20Y Buildout Phase Phase I (Yrs.1-5) Phase 1I (Yrs.6-10) Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) 8.0 8.0 Maximum potential units constructed during this phase 105 105 Number of total potential units constructed at buildout 105 209 Average value per unit' $249,123 $249,123 Total Value $26,088,161 $52,176321 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $260,882 $521,763 Percent of Property Tax Allocated to City's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $18,262 $36523 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $9,131 $18.262 Calculation or Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Proocrtv Tax Revenue collected by County $2601882 $521,763 Total Structural Fire Tax Revenue at phase buildout $15,314 $30,627 'Assumes land will be developed at 85%of the maximum density permitted. '"Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. Page 1 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tax. Struc. Fire Tax From Future Residential Development Land Use Designation: PD Medium Density Residential (4-10 du/ac) Total No. Acres: 1133 No. of Potendd Buildout Units: 963' Buildout Phase Phase I (Yrs. 1-5) Phase II (Yrs.6-10) Number of acres developed during phase 56.7 56.7 Maximum density permitted (units/acre) 10.0 10.0 Maximum potential units constructed during this phase 482 482 Number of total potential units constructed at buildout 482 963 Average value perunit' $249,123 $249,123 Total Value $119,958,953 $239,917,905 Property Tax Rate 1 °% 1 % Total Property Tax Collected by County at Phase Buildout $1,199,590 $2399,179 Percent of Property Tax Allocated to Ci 's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $83,971 S167,943 Percentage deducted for ERAF Contributions 3.5%1 3.5% Total Amount Allocated to City General Fund at phase buildout $41,9861 $83,971 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87%1 5.87% Property Tax Revenue collected by County $1,19"9-5901 $2 399,179 Total Structural Fire Tax Revenue at phase buildout $70,416 $140,832 'Assumes land will be developed at 85% of the maximum density permitted. ' "inland Fmpire Quarterly Rmnomic Report," prepared for WRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. From Future Residential Development Land Use Designation: Mirasera High Density Residential (12 du/ae) Tots! No. Acres: 22.6 No. of Potential Buildout Units: 230' Buildout Phase Phase I (Yrs.1-5) Phase 11 (Yrs.6-10) Number of acres developed during phase 113 113 Maximum density rmitted (units/acre) 12.0 12.0 Maximum potential units constructed during this phase 115 115 Number of total potential units constructed at buildout 115 231 Average value perunit' $249,123 $249,123 Total Value $28,713,917 $57,427,834 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $287,139 S574,278 Percent of Pro= Tax Allocated to Cit 's General Fund 7.0% 7.0% to F,RAF) $20,100 $40,199 Percentage deducted for ERAF Contributions 3.5?b 3.5% Total Amount Allocated to City General Fund at phase buildout $10,0501 $20,100 Calculation of Structural Fire Tax Revenue Structural FireTax Rate -5.87%1 5.87% Property Tax Revenue collected by County $287,139 $574,278 Total Structural Fire Tax Revenue at phase buildout $16,85,51 $33,710 'Assumes lard will he developed at 85% of the maximum density permitted. ' "Inland Enpire Quarterly Economic Report," prepared for WRC(X1 by John Husing, Ph.D.. tktober 2011. Accounts for value of land and structure. Page 2 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop.'rax, Struc. Fire'1'ax Frnm Fntnre Residential Develonment Land Use Designation: Mirasera Mired Use Residential (16 du/ac) Total No. Acres: 105 No. of Potential Buildout Units: 141' Buildout Phase Phase I (Yrs. 1-5) Phase II Yrs. 6.10) Number of acres developed during phase 53 53 Maximum density permitted (unitslacre) 16.0 16.0 Maximum potential units constructed during this phase 71 71 Number of total potential units constructed at buildout 71 143 Avera evalue perunit' $104,425 $104,425 Total Value $7,455,945 $14,911,890 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $74559 $149,119 Percent of Property Tax Allocated to Cit 's General Fund 7.0% 7.0% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $5,219 $10,438 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $2,610 $5219 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $74,559 $149,119 Total Structural Fire Tax Revenue at phase buildout $4377 $8,753 'Assumes land will be developed at 85% of the maximum density permitted. ' Based on building permit data pmvided by the Palm Desert Building and Safety Dept., Nov. 2011. Includes value of structure only. Frnm Putum Residential Ikvelnnment Land Use Designation: Mirasera Very High Density Residential (20- 25 dulac) Total No. Acres: 66.4 No. of Potential Buildout Units: 1,411' Buildout Phase Phase I (Yrs. 1-5) Phase II (Yrs.6-10) Number of acres developed during phase 33.2 33.2 Maximum density permitted (units/acre) 25.0 25.0 Maximum potential units constructed during this phase 706 706 Number of total potential units constructed at buildout 706 1,411. Average value perunie $104,425 $104,425 Total Value $73,671,838 $147343,675 Property Tax Rate I % 1 cfi Total Property Tax Collected by County at Phase Buildout $736,718 $1,473,437 Percent of ProwProwx Tax Allocated to Ct 's General Fund 7.0% 7.0% to ERAF) $51,570 $103,141 Percentage deducted for ERAF Contributions 35% 3.5% Total Amount Allocated to City General Fund at phase buildout $25,785 $51 570 Calculation of Structural Fire Tax Revenue Structural Fire'fax Rate 5.87% 5.87% Property Tax Revenue collected by County $736,718 $1,473,437 Total Structural Fire Tax Revenue at phase buildout $43,245 $86,491 'Assumes land will be developed at 85%of the maximum density permitted. z Based on building permit data provided by the Palm Desert Building and Safety Dept., Nov. 2011. Includes value of structure only. Page 3 of 48 TN PD Potential Annexatiun Fiscal Analysis City of Palm Desert Scenario A: Prop. Tax, Struc. Fire Tax From Future Commercial Tlevelnnment Land Use Designation: Commercial Total No. Acres: 31.3 No. of Potential Buildout S . Ft.: 299,954' Buildout Phase Phase I (Yrs. 1-5) Phase Il (Yrs. 6-10) Number of acres developed during phase 15.7 15.7 Percentage of lot covered by structure' 22% 22% Square footage constructed during this phase 149,977 149,977 Square footage constructed at phase buildout 149,977 299,954 Average value per square foot' $73 $73 Total Value $10,948327 $21,896,654 Property Tax Rate 1 % 1 % Total Property Tax Collected by County at Phase Buildout $109,483 $218,967 Percent of PropertyFax Allocated to Ci 's General Fund 7% 7% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $7,664 $15328 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $3,832 $7,664 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $109,483 $218967 Total Structural Fire Tax Revenue at phase buildout $6,427 $12353 Assumes structure will account for 22% lot coverage. Remainder of lot will include access roads, parking facilities, landscaping, and other ancillary uses. ' Based on compilation of building permit data provided by Palm Desert Building & Safety Department, October 2011. From Future Hotel DevetnmmPnt Land Use Designation: Commercial (Hotel) Total No. Acres: 3.1 No. of Potential Buildout Sq. Ft.: 100,000' No. of Potential Room: 150 Buildout Phase Phase I (Yrs, 1-5) Phase II (Yrs.6-10) No. of rooms constructed at phase buildout 75 150 Average value perroom' $68512 $68512 Total Value $5,138,400 $10,276,800 Property Tax Rate 1 % 1 % "Total Property Tax Collected by County at Phase Buildout $51384 $102,768 Percent of Property Tax Allocated to Ci 's General Fund 7>f, 7% to ERAF) $3,597 $7,194 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $1,7981 $3 597 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate -5.87(4,1 5,87% Pro rt Tax Revenue collected by County $51,3841 $102,768 Total Structural Fire Tax Revenue at phase buildout $3,0161 $6,032 - terra mom estimate ixtsea on stngte tutel and available acreage. ' Basal on comparable existing highway -serving hutel in the annexation area, per Riv. Co. Assessor's records, Oct, 20l t. Page 4 of 48 IN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tar, Struc. Fire Tax From Future Business Park Development Land Use Designation: Business Park Total No. Acres: 46.8 No. of Potential Buildout S . Ft.: 448,494' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Number of acres developed during phase 23.4 23.4 Percentage of lot covered by structure' 22% 22% Square footage constructed during this phase 224247 224247 Square footage constructed at phase buildout 224,247 448,494 Averse value per square foot' $169 $169 Total Value $37,897,723 $75,795,445 Property Tax Rate 1>a 1% Total Property Tax Collected by County at Phase Buildout $378,977 $757,954 Percent of Property Tax Allocated to Cit 's General Fund 7% 7% to ERAF) $26,528 $53,057 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $13,264 $26,528 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $378,977 $757,954 Total Structural Fire Tax Revenue at phase buildout $22,246 $•W,492 'Assumes structure will account for 22% lot coverage. Remainder of lot will include access roads, parting facilities, landscaping, and other 'Based on compilation of building permit data provided by Palm Desert Building & Safety Department, October 2011. From Future Industrial Development Land Use Designation: Industrial Total No. Acres: 26.6 No. of Potential Buildout S . Ft.: 254,913' Buildout Phase Phase I (Yrs. 1.5) Phase II (Yrs. 6.10) Number of acres developed during phase 133 133 Percentage of lot covered by structure' 22% 22% Square footage constructed during this phase 127,457 127,457 Square footage constructed at phase buildout 127,457 254,913 Averse value per square foot' $54 $54 Total Value $6,982,654 $13,765308 Noperty Tax Rate 1% 1% Total Property Tax Collccted by County at Phase Buildout $68,827 $137,653 Percent of Property Tax Allocated to Ci 's General Fund 7% 7% to ERAF) $4,819 $9,636 Percentage deducted for ERAF Contributions 3.5% 3.5% Total Amount Allocated to City General Fund at phaw Buildout $2,409 $4A18 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% Property Tax Revenue collected by County $68,827 $137,653 Total Structural Fire Tax Revenue at phase buildout $4,040 $8,080 'Assumes structure will account for 22% lot coverage. Remainder of lot will include access roads, parking facilities, landscaping, and other ' Based on compilation of building permit data provided by Palm Desert Building & Safety Department, October 2011. Page 5 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Tat, Struc. Fire Tax Property Tax Revenue Summ ry Table Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Total property tax revenue to City General Fund at phase badout from existinp development $728,064 $728,064 ...from future Riv. Co. Medium High Density residential development $9,131 $18,262 ...from future PD Medium Density residential development S41,986 $83,971 ...from future Mirasera High Density residential development $10,050 $20,100 ...from future Mirasera Mixed Use residential development S2,610 $5219 ...from future Mirasera Very High Density residential development $25,785 $51,570 ...from future commercial development $3,832 $7,664 ...from future hotel development $1,798 $3,597 ...from future business park development $13,264 $26,528 ...from future industrial-li ht development s2A091 $4,818 Subtotal $838,9291 $949,793 Adjustment for loss of property tax revenue on vacant Sin le-Familparcels after development occurs Value of land on currently vacant (but developable) Single -Family Residentialparcels' $14.365301 $14365301 City's Property Tax revenue on value of land for currently vacant (but ,developable) Single -Family residential parcels $5,028 $5,028 (subtract) Property Tax Revenue Loss from line above, phased over entire buildout timeframe $2,514 $2,514 Total Pro2!rty Tax Revenue at Phase Buildout $836,415 $947 79 ' Refers to parcels that are currently vacant, but developable in the future for single-family residential development. Existing Conditions table includes property tax revenue currently generated by these parcels on their land value. Future Development tables projects future property tax revenue generated by these parcels on their land value and structure value. To avoid double -counting property tax revenue from land value, the current land value of these parcels is subtracted here. Page 6 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax Property Transfer Tax Revenue - Scenario A From Existing Residential Development Existing Single -Family Residential Units Buildout Phase No. of Acres: 792 f Phase I (Yhase e No. of Dwelling Units: 4,985 Phase (Yrs. a 1 IExistina Units(80% of market vahte is suhieet to ta:l Number of units existing in Ist year of this phase 4985 4985 Number of existing units changing ownership in 1st year of this phase 499 499 Number of units existing in 2nd year of this phase 4985 4985 Number of existing units changing ownership in 2nd year of this phase 499 499 Number of units existing in 3rd year of this phase 4985 4985 Number of existing units changing ownership in 3rd year of this phase 499 499 Number of units existing in 4th year of this phase 4985 4985 Number of existing units changing ownership in 4th year of this phase 499 499 Number of units existing in 5th year of this phase 4985 4985 Number of existing units changing ownership in 5th year of this phase 499 499 Total number of units existing during this phase 4985 4985 Total number of existing units changing ownership during this phase 2493 2493 Property Value per dwelling unit' $364,653 $364,653 Unencumbered Value per unit (80% of value) $291,722 $291,722 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $727,118,082 $727,118,082 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $799,830 $799,830 Percent of Property Transfer Tax allocated to Palm Desert 50% 50% Total Property Transfer Tax Allocated to Palm Desert General Fund at phase buildout (for 5-year period) $399,915 $399,915 Number of years this phase ( to get annual average) 5 5 Total Annual Property Transfer Tax Allocated to Palm Desert at Phase Buildout $79,9831 $79,983 Average value of residential units in Sun City, based on Riverside County Assessors data, includes value of land and structure. Page 7 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. 'rransferTax From Future Residential Land UseDesignation: PD Medium Density Residential (4-10 du/ac) Buildout Phase No. of acres: 113.3 No. of potential buildout units: 963' Phase I Phase II (Yrs.1-5) (Yrs.6-10) Hued it —it. t i nrim of .,,ter —t —i— ie m,hiret to myl Number of acres developed during phase 56.7 56.7 Maximum Density permitted (units/acre) 10 10 Number of new units during thisphase' 482 482 Market Value per unit S249,123 $249,123 Amount Subject to Property Transfer Tax for all new units sold $119,958,9531 $119,958,953 Page 8 of 48 From Future Residential of acres: 30.8 of potential buildout units: 209' INew Units (100% of market value is subiect to tax) TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer'lax Buildout Phase Phase I Phase 11 Yrs.1-5) (Yrs.6-lf Number of acres developed during phase 15.4 15.4 Maximum Density permitted (units/acre) 8 8 Number of new units during thisphase' 105 105 Market Value per unit $249,123 $249,123 Amount Subject to Property Transfer Tax for all new units sold $26,088,161 S26,088,161 IExistin¢ Units(80% of market value is subiect to tax) Number of units constructed in 1st year of this phase 20 125 Number of existing units changing ownership in 1st year of this phase 0 12 Number of units constructed by end of 2nd year of this phase 40 145 Number of existing units changing ownership in 2nd year of this phase 0 14 Number of units constructed by end of 3rd year of this phase 60 165 Number of existing units changing ownership in 3rd year of this phase 0 16 Number of units constructed by end of 4th year of this phase 80 185 Number of existing units changing ownership in 4th year of this phase 8 18 Number of units constructed by end of 5th year of this phase 105 184 Number of existing units changing ownership in 5th year of this phase 10 18 Total number of existing units changing ownership during this phase 18 80 Market Value per unit $249,123 $249,123 Unencumbered Value per unit (80% of market value) $199,298 $199298 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $3,681,4401 $16,001,270 Page 9 of 48 From Future Residential of acres: 22.6 of potential buildout units: 230' INew Units (100% of market value is subiect to tax) TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer'rax Buildout Phase Phase 11 I Phase 11 Yrs.1-5) (Yrs.6-115 Number of acres developed during phase 11.3 11.3 Maximum Density permitted (units/acre) 12 12 Number of new units during thisphase' 115 115 Market Value per unit $249,123 $249,123 Amount Subject to Property Transfer Tax for all new units sold $28,713,917 $28,713,917 Existing Units(80% of market value is subject to tax) Number of units constructed in 1st year of this phase 23 138 Number of existing units changing ownership in 1st year of this phase 0 14 Number of units constructed by end of 2nd year of this phase 46 161 Number of existing units changing ownership in 2nd year of this phase 0 16 Number of units constructed by end of 3rd year of this phase 69 184 Number of existing units changing ownership in 3rd year of this phase 0 18 Number of units constructed by end of 4th year of this phase 92 207 Number of existing units changing ownership in 4th year of this phase 9 21 Number of units constructed by end of 5th year of this phase 115 203 Number of existing units changing ownership in 5th year of this phase 12 20 Total number of existing units changing ownership during this phase 21 89 Market Value per unit $249,123 $249,123 Unencumbered Value per unit (80% of market value) $199,298 $199,298 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $4,130,659 $17,818,074 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $32,844576 $46,531,991 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $36,129 $51,185 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $18,065 $25,593 Number of years this phase ( to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $3,6131 $5,119 Page 10 of 48 Future Residential of acres: 10.5 of potential Buildout units: 142' TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Pmp.'CransferTax Buildout Phase Phase [ I Phase II New Units (100% of market value is subject to tax) Number of acres developed during phase 5.3 5.3 Maximum Density permitted (units/acre) 16 16 Number of new units during thisphase' 71 71 Market Value per unit $104,425 $104,425 Amount Subject to Property Transfer Tax for all new units sold $7,455,9451 $7,455,945 Existine Units(80% of market value is subiect to tax) Number of units constructed in Ist year of this phase 14 85 Number of existing units changing ownership in 1st year of this phase 0 9 Number of units constructed by end of 2nd year of this phase 28 99 Number of existing units changing ownership in 2nd year of this phase 0 10 Number of units constructed by end of 3rd year of this phase 42 113 Number of existing units changing ownership in 3rd year of this phase 0 11 Number of units constructed by end of 4th year of this phase 56 127 Number of existing units changing ownership in 4th year of this phase 6 13 Number of units constructed by end of 5th year of this phase 71 126 Number of existing units changing ownership in 5th year of this phase 7 13 Total number of existing units changing ownership during this phase 13 55 Market Value per unit $104,425 $104,425 Unencumbered Value per unit (80% of market value) $83,540 $83,540 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $1,064,300 $4,608,066 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $8,520,245 $12,064,011 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $9,372 $13,270 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property TransferTax Allocated to Palm Desert at phase buildout (for 5- year period) $4,686 $6,635 Number of years this phase (to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $9371 $1,327 Page 11 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer Tax From Future Residential Develo ment Land Use Designation: Mirasera Very ffig ensity Residential (20-23 dulac) No. of acres: 66.4 No. of potential buildout units: 1,411' Buildout Phase Phase I Yrs.1-5) Phase II (Yrs.6.10) New Units (100% of market value is subject to tax) Number of acres developed during phase 33.2 33.2 Maximum Density permitted (units/acre) 25 25 Number of new units during thisphase' 706 706 Market Value per unit $104,425 $104,425 Amount Subject to Property Transfer Tax for all new units sold S73,671,8381 $73,671,838 Existing Units(80% of market value is subject to tax) Number of units constructed in 1st year of this phase 141 847 Number of existing units changing ownership in 1st year of this phase 0 85 Number of units constructed by end of 2nd year of this phase 282 988 Number of existing units changing ownership in 2nd year of this phase 0 99 Number of units constructed by end of 3rd year of this phase 423 1129 Number of existing units changing ownership in 3rd year of this phase 0 113 Number of units constructed by end of 4th year of this phase 564 1270 Number of existing units changing ownership in 4th year of this phase 56 127 Number of units constructed by end of 5th year of this phase 706 1245 Number of existing units changing ownership in 5th year of this phase 71 125 Total number of existing units changing ownership during this phase 127 548 Market Value per unit $104,425 $104,425 Unencumbered Value per unit (80% of market value) $83,540 $83,540 Amount subject to Property Transfer Tax for all existing units changing ownership during this phase $10,605,403 $45,754,858 New Units & Existing Units Combined Total amount subject to Property Transfer Tax (includes all new units sold & all existing units changing ownership) $84,277,241 $119,426,696 Property Transfer Tax Rate 0.11 % 0.11 % Total Property Transfer Tax Collected at Phase Buildout $92,705 $131,369 Percent of Property Transfer Tax allocated to Palm Desert General Fund 50% 50% Total Property Transfer Tax Allocated to Palm Desert at phase buildout (for 5- year period) $46,352 $65,685 Number of years this phase (to get annual average) 5 5 Total Annual Property Transfer Tax allocated to Palm Desert at phase buildout $9,2701 $13,137 Page 12 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. Transfer -Tax Property Transfer Tax Revenue Summar Table Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Total tax revenue from existing resid. development $79,983 $79,983 ...from future PD Medium Density residential development $15,093 $21,384 .....from future Riv. Co. Medium -High Density residential development $3275 S4,630 ...from future Mirasera High Density residential development $3,613 $5,119 ...from future Mirasera Mixed Use residential development $937 $1,327 ...from future Mirasera Very High Density residential development $9,270 $13,137 Total property transfer tax revenue at phase buildout $112 171 $125,579 Page 13 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Sales Tax, Measure A Sales Tax Revenue Measure A Revenue - Scenario A From Existing Commercial Development Lana VITUNIgnarlon:1-ommeroal (Does not Incluae norey No. ojAcres: 50.1 Square Feet of Bldg- Space: 480,118' Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10 Land Use Data Number of acres developed 50.1 50.1 Number of square feet constructed' 480,1181 480,118 Calculation of Total Leasable Square Feet Percent leasable space 90% 90% No. of leasable square feet 432,1061 432,106 "Neighborhood Commercial" Development Percent of leasable s . ft. considered Neighborhood Commercial 100% 100% No. of leasable s . ft. considered Neighborhood Commercial 432,106 432,106 Ave. annual sales volume per s . ft.' $326.13 $326.13 Total annual sales from Neighborhood Commercial development $140,922,795 $140,922,795 Calculation of Total Sales Tax Revenues Total annual sales at phase buildout $140,922,795 $140,922,795 Total annual sales generated by commercial venues within Sun City' $2,465,338 $2,465,338 Total annual sales generated by all existing commercial development $143,388,133 $143,388,133 County sales tax rate 1% 1% Annual sales tax revenue collected by City at phase buildout $1,433,881 $1,433,881 Calculation of Measure A Revenues' County -wide Measure A tax rate 0.50% 0.50% Amount collected for County -wide Measure A fund $716,941 $716,941 Percent allocated to the Coachella Valley region 24% 24% Amount allocated to the Coachella Valley region $172,066 $172,066 Percent allocated to local streets and roads 35% 35% Amount allocated to local streets and roads $60,2231 $60,223 Percent allocated to City of Palm Desert 20% 20% Amount allocated to City of Palm Desert 1 $12,0451 $12,045 'Assumes building covers 22% of lot. The remaining area is used for landscaping, parking, roadway access, and other ancillary uses. 'Based on definitions and average sales volumes for U.S. Neighborhood Shopping Centers (Table 6-1), provided in "Dollars and Cents of Shopping Centers," Urban Land Institute, 2008. 'Data provided by Sun City Palm Desert Community Association. ' Measure A distribution data provided by Riverside County Transportation Commission. 14 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Sales Tax, Measure A G'— F..*— f nm-61 Dwnlnnmpnt Land Use Designation: Commercial Na of Acres: 31.3 Square Fee! of Bldg. Space. 299,954' Buildout Phase Phase I rs 1-5 Phase II rs 6-10 Land Use Data Number of acres developed during this phase 15.7 15.7 Number of square feet constructed during thisphase' 149,977 149,977 Number of acres developed at phase buildout 15.7 31.3 Number of square feet constructed at phase buildout 149,977 299,954 Calculation of Total Leasable Square Feet Percent leasable space 90% 90% No. of leasable square feet 134,9791 269,959 "Neighborhood Commercial" Develo menu Percent of leasable s . ft. considered Neighborhood Commercial 100% 100% No. of leasable s . ft. considered Neighborhood Commercial 134,979 269,959 Ave. annual sales volume per s . ft.2 $326.13 $326.13 Total annual sales from Neighborhood Commercial development $44,020,823 $88,041,645 Calculation of Total Sales Tax Revenues Total annual sales at phase buildout 1 $44,020,8231 $88,041,645 County sales tax rate 1%1 1 % Annual sales tax revenue collected by City at phase buildout $440.2081 $880,416 Calculation of Measure A Revenuesa County -wide Measure A tax rate 0.50% 0.50% Amount collected for County -wide Measure A fund $220,104 $440,208 Percent allocated to the Coachella Valley region 24% 24% Amount allocated to the Coachella Valley region $52,825 $105,650 Percent allocated to local streets and roads 1 35% 35% Amount allocated to local streets and roads $18,489 $36,977 Percent allocated to City of Palm Desert 201/6 204/6 Amount allocated to City of Palm Desert $3,6981 $7,395 Assumes building covers 22% of lot. The remaining area is used for landscaping, parking, roadway accem, and other ancillary uses. ' Based on definitions and average sales volumes for U.S. Neighborhood Shopping Centers (Table 6-1), provided in "Dollars and Cents of Shopping Centers," Urban Land Institute, 2008. ' Based on Measure A distribution data provided by Riverside County Transportation Commission. Sales Tax Revenue Summary Table Buildout Phase Phase I rs 1-5 Phase 11 Yrs 6-10 Total sales tax revenue from existing commercial development $1,433,881 $1,433,881 Total sales tax revenue from future commercial development $440,208 $880,416 Total sales tax revenue from all development $1,874,090 $2,314,298 Measure A Revenue Summary Table Buildout Phase Phase I Yrs 1-5 Phase 11 Yrs 6-10 Total Measure A revenue from existing commercial development $12,045 $12,045 Total Measure A revenue from future commercial development $3,698 $7,395 Total Measure A revenue from all development $15,742 $19,440 15 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: TOT Transient Occupancy Tax Revenue - Scenario A From Existing Hotel Development Land Use Designation: Commercial (Hotel) Total No. Acres: 3.6 Existing Rooms: 154 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed 3.601 3.60 Number of rooms developed 1541 15 Calculation of TOT Revenue Average room rate ($ per night) $95.00 $95.00 Average occupancy rate 65% 65% Annual revenue from all rooms at phase buildout $3,470,968 $3,470,968 Ci 's Transient Occupancy Tax Rate 9% 9% Ci 's annual TOT revenue at phase Buildout $312,3871 $312,387 From Future Hotel Development Land Use Designation: Mirasera Mixed Use Hotel Total No. Acres: 3.1 Potential Rooms: 150 Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10) Land Use Buildout Data Number of acres developed 1.551 1.55 Number of rooms developed 751 150 Calculation of TOT Revenue Average room rate $ per night) $145.00 $145.00 Average occupancy rate 65% 65% Annual revenue from all rooms at phase buildout $2,580,094 $5,160,188 Ci 's Transient Occupancy Tax Rate 9% 9% Ci 's annual TOT revenue at phase buildout $232,2081 $464,417 Page 16 of 48 'CN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: TOT Transient Occupancy Tax Revenue Summary Table Buildout Phase Phase I Yrs 1-5) Phase II Yrs 6-10) Annual TOT Revenue from existing hotels at phase buildout $312,387 $312,387 Annual TOT Revenue from future hotels at phase buildout $232,208 $464,417 Total Annual TOT Revenue from all development 1 $544,5961 $776,804 Page 17 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Motor Vehicle In -Lieu Revenue - Scenario A From Existing Development Land Use Designation: SP-281 Residential Buildout Phase Total No. Acres: 79Z0 Phase I Phase II No. of Existing Units: 4,985 Yrs 1-5 (Yrs 6-10 i n"a I faa nizatinn* Plata Number of acres developed at phase buildout 7921 792 Number of total units developed at phase buildout 4,9851 4,985 Calculation of Annual Motor Vehicle to -Lieu Revenue Existing Population' 9,000 9,000 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $28,890 $28,89C '-Estimated population provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. Tirnm T'I .. +..ra 11awaln Yf mant Land Use Designation: PD Medium Density Residential (4-10 du/ac) Total No. Acres: 113.3 No. of Potential Buildout Units: 963 Buildout Phase Phase I Yrs 1-5 Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density permitted units/acre 10 10 Maximum potential units constructed during this phase 482 482 Number of total potential units constructed at phase buildout 4821 963 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 1,002 2,003 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $3,215 $6,430 2010 U.S. Census. Page 18 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu From Future Develo ment Land Use Designation: Riv. Co. Medium -High Density Residential (5-8 du/ac) Total No. Acres: 30.8 No. of Potential Buildout Units: 209 Buildout Phase Phase I Yrs 1-5) Phase II (Yrs 6-10 Land Use Buildout Data Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) 8 8 Maximum potential units constructed during this phase 105 105 Number of total potential units constructed at phase buildout 105 209 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 218 436 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $699 $1,398 2010 U.S. Census. From Future Development Land Use Designation: Mirasera High Density Residential (12 Buildout Phase Total No. Acres: 22.6 Potential Buildout Units: 230 Land Use Buildout Data Phase I Phase II Yrs 1-5) (Yrs 6-10 Number of acres developed during phase 11.3 11.3 Maximum density permitted units/acre) 12 12 Maximum potential units constructed during this phase 115 115 Number of total potential units constructed at phase buildout 115 231 (Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 240 479 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $770 $1,539 1' 2010 U.S. Census. Page 19 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu From Future Development Land Use Designation: Mirasera Mixed Use Residential (16 du/ac) Total No. Acres: 10.5 No. of Potential Buildout Units: 142 Buildout Phase Phase I Yrs 1-5) Phase II (Yrs 6-10 Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted (units/acre) 16 16 Maximum potential units constructed during this phase 71 71 Number of total potential units constructed at phase buildout 71 143 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 149 297 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $477 $953 2010 U.S. Census. From Future Development Land Use Designation: Mirasera Very High Density Residential (20-25 du/ac) Total No. Acres: 66.4 No. of Potential Buildout Units: 1,411 Buildout Phase Phase I Yrs 1-5) Phase II Yrs 6-10 Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density permitted units/acre) 25 25 Maximum potential units constructed during this phase 706 706 Number of total potential units constructed at phase buildout 706 1,411 Calculation of Annual Motor Vehicle In -Lieu Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 1,467 2,935 Anticipated Annual Per Capita Revenue $3.21 $3.21 Annual Motor Vehicle In -Lieu Revenue at phase buildout $4,710 $9,421 2010 U.S. Census. Page 20 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Motor Vehicle In -Lieu Revenue Summary Table Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Total Annual Motor Vehicle In -Lieu Revenue from existing residential development at phase buildout $28,890 $28,890 ...from future PD Medium Density residential development $3,215 $6,430 from future Riv. Co. Medium -High Density residential development $699 $1,398 ...from future Mirasera High Density residential development $770 $1,539 ...from future Mirasera Mixed Use residential development $477 $953 ...from future Mirasera Very High Density residential development $4,710 $9,421 Total Annual Motor Vehicle In -Lieu Revenue from all develo ment $38,761 $48,632 Page 21 of 48 TN Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Gas Tax Revenue - Scenario A I From Existing Development Land Use Designation: SP-281 Residential Total No. Acres: 79Z0 No. of Existing Units: 4,985 Buildout Phase Phase I Yrs 1-5) Phase II Yrs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 7921 792 Number of total units developed at phase buildout 4,9851 4,985 Calculation of Annual Gas Tax Revenue Existing Population' 9,000 9,000 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $210,330 $210,330 ' Estimated population provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. From Future Development Land Use Designation: PD Medium Density Residential (4-10 du/ac) Total No. Acres: 113.3 No. of Potential Buildout Units: 963 Buildout Phase Phase I (Yrs 1-5) Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density permitted (units/acre) 10 10 Maximum potential units constructed during this phase 482 482 Number of total potential units constructed at phase buildout 4821 963 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 1,002 2,003 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $23,407 $46,813 ' 2010 U.S. Census. Page 22 of 48 TN I )tential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu L'..__ V..+.— Ilnunlnnman* Land Use Designation: Riv. Co. Medium -High Density Residential (5-8 du/ac) Total No. Acres: 30.8 No. of Potential Buildout Units: 209 Buildout Phase Phase I Yrs 1-5) Phase If (Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 15.4 15.4 Maximum density permitted (units/acre) 8 8 Maximum potential units constructed during this phase 105 105 Number of total potential units constructed at phase buildout 105 209 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 218 436 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $5,090 $10,181 ' 2010 U.S. Census. From Future Development Land Use Designation: Mirasera High Density Residential (12 Buildout Phase du/ac) Total No. Acres: 22.6 Phase I Phase II No. of Potential Buildout Units: 230 (Yrs 1-5) Yrs 6-10 i.anA iTea Rniltinnt data Number of acres developed during phase 11.3 11.3 Maximum density permitted units/acre 12 12 Maximum potential units constructed during this phase 115 115 Number of total potential units constructed at phase buildout 115 231 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household' 2.08 2.08 Potential Population at Phase Buildout 240 479 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $5,6031 $11,205 2010 U.S. Census. Page 23 of 48 TT Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Frnm Future Development Land Use Designation: Mirasera Mixed Use Residential (16 du/ac) Total No. Acres: 10.5 No. of Potential Buildout Units: 142 Buildout Phase Phase I (Yrs 1-5) Phase II (Yrs 6-10) Land Use Buildout Data Number of acres developed uring phase 5.3 5.3 Maximum density permitted units/acre) 16 16 Maximum potential units constructed during this phase 71 71 Number of total potential units constructed at phase buildout 71 143 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 149 297 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $3,471 $6,941 2010 U.S. Census. Frnm Future Development Land Use Designation: Mirasera Very High Density Residential (20-25 du/ac) Total No. Acres: 66.4 No. of Potential Buildout Units: 1,411 Buildout Phase Phase I Yrs 1-5 Phase 1I Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density permitted units/acre) 25 25 Maximum potential units constructed during this phase 706 706 Number of total potential units constructed at phase buildout 706 1,411 Calculation of Annual Gas Tax Revenue Average No. of Persons Per Household 2.08 2.08 Potential Population at Phase Buildout 1,467 2,935 Anticipated Annual Per Capita Revenue $23.37 $23.37 Annual Motor Vehicle In -Lieu Revenue at phase buildout $34,294 $68,588 2010 U.S. Census. Page 24 of 48 TN 1 otential Annexation Fiscal Analysis City of Palm Desert Scenario A: Motor Veh. In -Lieu Gas Tax Revenue Summary Table Buildout Phase Phase I Yrs 1-5) Phase II (Yrs 6-10) Total Annual Gas Tax Revenue from existing residential development at phase buildout $210,330 $210,330 ...from future PD Medium Density residential development $23,407 $46,813 ...from future Riv. Co. Medium -High Density residential development $5,090 $10,181 ...from future Mirasera High Density residential development $5,603 $11,205 ...from future Mirasera Mixed Use residential development $3,471 $6,941 ...from future Mirasera Very High Density residential development $34,294 $68,588 Total Annual Gas Tax Revenue from all development at Phase Buildout $282,1951 $354,059 Page 25 of 48 Prop. A Fire Tax Revenue - Scenario A From Existing Conditions D Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax Buildout Phase Phase I Yrs 1-5) Phase II Yrs 6-10 Tax from Existing Residential Units Number of residential units existing at end of phase 4,985 4,985 Prop. A Fire Tax(per unit)'____$60 $60 Total Prop. A Fire Tax revenue from existing residential development $299,100 $299,100 Tax from Existing Non -Residential Development Less Than 2,600 sq. ft. No. of buildings less than 2,600 sq. ft. 80 80 Prop. A Fire Tax(per unit $60 $60 Total Prop. A Fire Tax revenue from existing non-residential development less than 2,600 sq. ft. $4,800 $4,800 Tax from Existing Non -Residential Development Greater Than 2,600 sq. ft. See footnote below' Tax From Vacant Parcels No. of vacant parcels 50 50 Prop. A Fire Tax rate(perparcel)' $30 $30 Total Prop. A Fire Tax revenue for vacant parcels $1,500 $1,500 Total Prop. A Fire Tax Revenue - Existing Conditions $305,400 $305,400 Tax rates provided by Willdan Financial Services. ' Terra Nova estimate based on aerial photos and commercial characteristics in annexation area 'Prop. A Fire Taxes for non-residential development greater than 2,600 sq. ft. in area are building -specific and determined using a formula that accounts for actual square footage and the use of fire restrictive building materials. These parameters are unknown for larger existing non-residential buildings in the annexation area, including 3 golf clubhouses, a supermarket, and a hotel. This analysis, therefore, is conservative as actual Prop, A Fire Tax revenues will be greater than those shown here. From Future Residential Development Land Use: PD Medium Density Residential (4-10 du/ac) No. of acres: 113.3 No. of potential buildout dwelling units: 963 Buildout Phase Phase I rs 1-5) Phase II Yrs 6-10) No. of Dwelling Units built during this phase 481.5 481.5 Total Dwelling Units at phase buildout 481.5 963 Prop. A Fire Tax(per SF dwelling unit) $60 $60 Total Prop. A Fire Tax revenue from future residential development $28,890 $57,780 'Tax rates provided by Willdan Financial Services. 26 of 48 Tl Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax From Future Residential Development Land Use: Medium -High Density Residential (5-8 du/ac) (Riv. Co. designation) No. of acres. 30.8 No. ofpotential buildout dwelling units. 209 Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10 No. of Dwelling Units built during this phase 104.5 104.5 Total Dwelling Units at phase buildout 104.5 209 Prop. A Fire Tax (per SF dwelling unit)' $60 $60 Total Prop. A Fire Tax revenue from future residential development 1 $6,270 $12,540 rax rates provided by Willdan Financial Services. From Future Residential Development Land Use: Mirasera High Density Residential (12 dulac)Buildout No. of acres: 2Z6 No. ofpotential buildout dwelling units: 230 Phase Phase I Yrs 1-5 Phase II Yrs 6-10 No. of Dwelling Units built during this phase 115 115 Total Dwelling Units at phase buildout 115 230 Prop. A Fire Tax (per SF dwelling unit) $60 $60 Total Prop. A Fire Tax revenue from future residential development $6,9001 $13,800 ' Tax rates provided by Willdan Financial Services. From Future Residential Development Land Use: Mirasera MixeTUW Wesidentia (16 dulac)Buildout No. of acres. 10.5 No. of potential buildout dwelling units: 142 Phase Phase I Yrs 1-5 Phase II rs 6-10 No. of Dwelling Units built during this phase 71 71 Total Dwelling Units at phase buildout 71 142 Prop. A Fire Tax (per SF dwelling unit) $45 $45 "Total Prop. A Fire Tax revenue from future residential development $3,1951 $6,390 Tax rates provided by Willdan Financial Services. From Future Residential Development Land Use: Mirasera Very High Density Residential (20-25 du/ac) No. of acres: 66 4 No. of potential buildout dwelling units. 1,411 Buildout Phase Phase I rs 1-5 Phase II Yrs 6-10 No. of Dwelling Units built during this phase 705.5 705.5 Total Dwelling Units at phase buildout 705.5 1411 Prop. A Fire Tax (per SF dwelling unit)' $45 $45 Total Prop. A Fire Tax revenue from future residential development $31,748 $63,495 fax rates provided by Willdan Financial Services. 27 of 48 PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax From Future Commercial Development Land Use: Commercial (includes hotel) No. of acres: 34.4 No. ofpotential squarefeet: 399,954 Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10 Number of acres to be developed during this phase 17.2 17.2 Conversion of acres to number of lots/buildings Average acreage of developed commercial lot in annexation area' 1.3 1.3 Projected number of commercial buildings built during this phase 22 22 Projected number of commercial buildings built at phase buildout 22 45 Calculation of Fire Tax Revenue Prop. A Fire Tax (per commercial buildin) $60 $60 Total Prop. A Fire Tax revenue from future commercial development $1,342 $2,683 'Average acreage of multiple developed commercial lots in annexation area. 'Tax rates provided by Willdan Financial Services. This analysis assumes that all future commercial development will be less than 2,600 sq. ft. and assessed a $60/building fee. Future development that is larger in size will be assessed a higher fee that is based on a formula which considers actual square footage and the use of fire restrictive building materials. These parameters are building -specific and are unknown at this time. From Future Business Park Development Land Use: Business Park No. of acres: 46.8 No. of otential square feet: 448,494 Buildout Phase Phase I rs 1-5 Phase II Yrs 6-10 Number of acres to be developed during this phase 23.4 23.4 Conversion of acres to number of lots/buildings Average acre;a of developed commercial lot in annexation area 1.3 1.3 Projected number of commercial buildings built during this phase 30 30 Projected number of commercial buildings built at phase buildout 30 61 Calculation of Fire Tax Revenue Prop. A Fire Tax(per commercial buildin) $60 $60 Total Prop. A Fire Tax revenue from future commercial development $1,825 $3,650 'Average acreage of multiple developed commercial lots in annexation area. 1 Tax rates provided by Willdan Financial Services. This analysis assumes that all future business park development will be less than 2,600 sq. ft. and assessed a $60/building fee. Future development that is larger in size will be assessed a higher fee that is based on a formula which considers actual square footage and the use of fire restrictive building materials. These parameters are building -specific and are unknown at this time. 28 of 48 TT 'otential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax From Future Industrial Development Land Use: Industrial No. of acres. 26.6 No. of potential square feet: 254,913 Buildout Phase Phase I Yrs 1-5 Phase Il Yrs 6-10 Number of acres to be developed during this phase 13.3 13.3 Conversion of acres to number of lots/buildings Average acreage of developed commercial lot in annexation area 1.3 1.3 Projected number of commercial buildings built during this phase 17 17 Projected number of commercial buildings built at phase buildout 17 35 Calculation of Fire Tax Revenue Prop. A Fire Tax (per commercial buildin) $60 $60 Total Prop. A Fire Tax revenue from future commercial development $1,037 $2,075 'Average acreage of multiple developed commercial lots in annexation area. 2 Tax rates provided by Willdan Financial Services. This analysis assumes that all future industrial development will be less than 2,600 sq. ft. and assessed a $60/building fee. Future development that is larger in size will be assessed a higher fee that is based on a formula which considers actual square footage and the use of fire restrictive building materials. These parameters are building -specific and are unknown at this time. 29 of 48 Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Prop. A Fire Tax Prnn_ A Fire Tax Revenue - Summary Table Buildout Phase Phase I rs 1-5) Phase II (Yrs 6-10) Potential Annual Prop. A Fire Tax Revenue from existing development $305,400 $305,400 ...from future PD Medium Density residential development $28,890 $57,780 ...from future Riv. Co. Medium High Density residential dev. $6,270 $12,540 ...from future Mirasera High Density residential development $6,900 $13,800 ...from future Mirasera Mixed Use residential development $3,195 $6,390 ...from future Mirasera Very High Density residential dev. $31,748 $63,495 ...from future commercial development $1,342 $2,683 ...from future business park development $1,825 $3,650 ...from future industrial development $1,037 $2,075 Total Annual Prop. A Fire Tax Revenue from all development (at phase buildout) $386,607 $467,813 30 of 48 Nod ('nn --firm To: Revannn . Seenarin A Buildout Phase Phase 1 (Yrs 1-5Yrs ) Phase II ( 6-10) New Residential Development Number ofdwelling units constructed during this phase 1478 1478 Avcra a square footage of new dwelling unit 1,500 1500 New Construction Tax rate ( r square foot)r $0.4 S0.40 Total New Construction Tax collected on new residential development $986,5001 $886,500 New Commercial Development Number of square feet constructed during this phase 149,977 149,977 New ConstructionTax ratesquare foot' $0.40 $0.40 Total New Construction Tax collected on new commercial development $59,991 S59,991 New Commercial (Hotel) Development Number of square feet constructed during this phase 50,000 50,000 New Construction Tax rate (per square foot) $0.40 $0.40 Total New Construction Tax collected on new hotel development $20,000 $20,000 New Business Park Development Number of square fed constructed during this phase 224,2471 224,247 New Construction Tax rate (per square footf $0.401 $0.40 Total New Construction Tax collected on new business park development $89,699 S89,699 New Industrial Develop -went Number of square feet constructed during this phase 127,457 127,457 New Construction Tax rate (per square foot)' $0.40 $0.40 Total New Construction Tax collected on new industrial development $50,983 S50,983 Total New Construction Tax Revenue at phasebuildout $1,107,172 $1,107,172 ' Terra Nova estimate based on permitted density and local residential characteristics. ' Palm Desert Building.@ Safety Dept. Page 31 of 48 N PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: City DIF Fees Art in Pnhlir PI.- t .-A Ro _ Ce 4 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: City DI Fees Buildout Phase Phase 1 Phase 11 New Single -Family Residential Development Number of dwelling units constructed during this phase 701 701 Average value (per unit)' $249,123 $249 123 Total value of dwelling units at phase buildout $174 635,223 $174 635,223 11'a of valuation of all new dwelling units' $1,746,352 $1,746,352 0.25 of I%valuation $436,588 S436,588 Total Art in Public Places fees collected on new SF residential development 5436 588 $436,588 New Multi -Family Residential Development Number of dwelling units constructed during this phase 777 777 Average value unit' 5104,425 5104425 Total value of dwelling units at phase buildout $81,086,013 $81,086,013 1 % of valuation of all new dwelling units' 5810 860 $810,860 0.25 of 1 % valuation $202,715 $202,715 Total Art in Public Places fees collected on new MF residential 5202,715 $202,715e Nlmtc m em Number of square feet constructed during this phase 149,977 149,977 Average value uare foot' $73 $73 Total value of commercial de¢ at phase buildout $10 94R 321 $10,948 321 1% of valuation of all new commercial development S 109 483 S 109,483 0.50 of I%valuation $54 742 $54,742 Total Art in Public Places fees collected on new commercial development S54,7421 $54,742 New Hotel Development Number of rooms constructed during this phase 75 75 Averse value roomy $68,512 $68,512 Total value of hotel &v. at phase buildout $5,138,400 $5,138,400 1% of valuation of all new hotel development $51,384 $5 ] 384 0.50 of 1%valuation $25,692 $25 692 Total Art in Public Places fees collected on new hotel development $25,692 S25 692 New Business Park Development Number of . uare fret constructed during this phase 224.247 224,247 Average value (per square foot) $169 $169 Total value of commercial dev. at phase buildout $37,897,743 $37,897,743 1%of valuation of all new commercial development $378,977 5378,977 0.50 of 1% valuation $189,489 $189 489 Total Art in Public Places fees collected on new commercial development $189,4891 $199,489 New Industrial Development Number of square feet constructed during this phase 149,977 149,977 Average value (per square foot)' $73 $73 Total value of commercial dev, at phase buildout $10 949,321 $10 949,321 1% of valuation of all new commercial development $109,483 S 109,483 0.50 of 1% valuation $54,742 $54,742 Total Art in Public Places fccs collected on new commercial development $54,742 S54 742 Total Art is Public Places Revenue from all new development at phase buildout $963,967 $963,967 `.Assumes all dwelling units are in a development and therefore, are not exempt for the first 5100.000 of valuation. ' Based on compilation of huiltfing permit data provided by Palm Desert Building & Safety Dept., October 2011. ' Based on mmparable existing highway -serving hotel in the aimexation area, per Riv Co. Assessor's records, Oct 2011. Page 32 of 48 Low Income Housin¢ Mitigation Fee Revenue - Scenario A Buildout Phase Phase 1 Yrs 1-5 Phase 11 Yrs 6-10 New Commercial Development Numher of: uare feet eonstructcd during this phase 149 977 149,977 Low Income Housing Mitigation Fee rate (pT square foot 51 $1 Total Fees from Commercial Development at phase buildout $149,977 3149,977 New Hotel Development Number of rooms constructed during this phase 75 75 Low Income Housing Mitigation Fee rate (per room) S6201 S620 Total Fees from Hotel Development at phase huddout $46,5001 S46,500 New Business Park Development Number of : uare feet constructed during this phase 224,2471 224,247 Low Income Housing Mitigation Fee rate (per square foot)' $0.-Sol $0.50 Total Fees from Business Park Development at phase buildout 1 $112,1241 S112,124 New Industrial Development Number ofsquare feet constructed during this phase 127,45 127,457 Low income Housing Mitigation Fee rate (per square foot)' SO.33 SO.33 Total Fees from Industrial Dcvelo ment at phase buildout $42,061 $42,061 Total Low Income Housing Mitigation Fees collected at phase buildout $350,661 $350 661 Palm Desert Building & Safety Dept. Child Care Facilities Im pact 'Mitigation Fee Revenue - Scenario A Buildout Phase Phase I Yrs 1-5) Phase 11 Yrs 6-10 New Commercial Development Number of uare feet constructed durin this hase 149,977 149,977 foot SO MO $0.90 Total Fees collected from commercial develo mcnt $134 979 $134,979 New Hotel Development Number of . uare feet constructed dur n this hase 50,000 50,000 foot)' $0.77 $0.77 Total Fees collected from hotel development $39,500 $38500 New Business Park Development Numirer of uarefeet constructed Burin this hase 224,247 224,247 Poop' $1.15 $1.15 Total Fces collected from business park develo ment $257,884 $257,884 New Industrial Development Number of .' uare feet constructed Burin this hase 127,457 127,457 foot) 50.47 SO a7 Total Fees collected from industrial development $59,905 S59 905 Total Child Care Facilities Impact Mitigation Fee Revenue collected from all new development at phase buildout I S491 268 $491,268 Palm Desert Buddmg & SWety D. pl_ Page 33 of 48 TN PO Potential Annexation Fiscal Analysis City of Palm Desert Scenario Ai City DIF Fees Traffic Sienals Fund Revenue - Scenario A TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A; City DIF Fees Buildout Phase Phase I rs 1-5 Phase 11 rs 6.10) New Residential Development Number of dwelling units constructed durin this phase 1478 1478 Traffic Signals Fund fee ( dwellingunit S5 S50 Total Traffic Signal fees collected on new residential development at phase buildout $73 875 $73 875 New Commercial Development Number of square feet constructed during this phase 149,977 149,977 Traffic Signal Fund fee (per 1,000 s uare feet)' $500 S500 Total Traffic Signal Funds collected on new commercial development at phase buildout $74,989 $74 989 New Hotel Development Number of square feet constructed during this phase 50.000 50,000 Traffic Signal Fund fee (,per 1,000 square feet)' $500 S500 Total Traffic Signal Funds collected on new commercial development at phase buildout $25,000 $25,000 New Industrial Development Number of acres constructed during this phase 13.3 13.3 Traffic Signal Fund fee r 1,000square feet' $500 $500 Total Traffic Signal Funds collected on new commercial development at phase buildout $6,650 $6,650 Total Traffic Si al Fund Revenues at phase buildout $180,514 $180,514 ratm uewn raDnc works Dept. Planned Drainaee Fund Revenue - Scenario A Buildout Phase Phase I (Yrs 1-5 Phase II (Yrs 6-10 All New Development Number of acres developed during this phase 17531 175.7 Planned Drainage Fund fee acre $1,0001 $1 000 Total Planned Drainage Fund Revenue at phase buildout 1 $175,7001 $175,700 ratm Mae" r'tmne works uepe Park & Recreation Facilities Fund Revenue - Scenario A Buildout Phase Phase I Yrs1-5 Phase If Yrs6-10 New Residential Development (subdivisions only)' Number ofdwelling units constructed during this phase 1478 1478 Park & Recreation Facilities Fee(step 1 15.88 15.88 Current Value of Residential Land (per acre) $114,887 $114 887 Park & Recreation Facilities Fec (s(2) $1,823.916 $1,823,916 Total Park & Recreation Facilities Fund Revenue at phase buildout $1 823 916 $I 823,916 'This fee applies only to residential subdivisions. For analysis purposes, it is assumed that all acres designated for residential development will be subdivided 'Palm Desert Public Works Dept. ' Average land value of multiple vacant parcels designated for residential development, from Riverside County Assessor's data, October 2011. Page 34 of 48 Costs of General Government - Scenario A From Existiar Residential Development TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use: SP-281 Residential Ne. ofAcres: 792 No. of Evisfing Dwriling Units: 4,985 Buildout Phase Phase I Yrs 1- Phase If (Yrs 6-10 Number of acres developed at phasc buildout 792 792 Number of dwelling units existing at phase buildout 4,985 4,985 Existing Population' 9,000 9,000 Cost of Gcneral Govcrnment (per capita) S282 S282 Total annual cost of General Government at phase buildout 1 $2,538,0001 S2,538,0001 'Estimate provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. From Future Residential Development Lana Use igna on: FLO MMUM VenSily KeMaMfal- du/ac) No. of Acres: 113.3 No, of Buildout Units: 963' Buildout Phase Phase I (Yrs 1- Phase 11 (Yrs 6-10 Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density Permitted (unitslacre) l0 10 Maximum potential units constructed during thisphase' 482 482 Number of total potential units constructed at phase buildout 482 963 Avers c number of persons M household' 2.08 2.0 Total no. of potential residents at phase buildout 1,002 2,003 Calculating Annual Costs of General Government Cost of General Government r capita)' $282 $282 Total annual cost of General Government at phase buildout 1 $282,4431 $564,887 ' Assumes future residential development occurs at 85% of the maximum density permitted. 12010 U.S. Census 'Terra Nova slafrestimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. lFrom Future Residential Development Land Use Designation: Rim Ca Mediam-High Density Residential (5-8 dulac) Na of Acres. 3A8 No. o Buildout Units: 20V Buildout Phase Phase 1 (Yrs 1- Phase 11 Yrs 6-10 Land Use Buildout Data Number of acres developed during hose 15.4 15.4 Maximum density permitted (units/acre) 8R Maximum potential units constructed during this haset l05 105 Number of total potential units constructed at phase buildout 105 209 Avers a number of rsons per household= 2,08 2,08 Total no. ofpotcntial rcsidcnts at phasc buildout 218 436 'Calculating Annual Costs of General Government Cast of General Government(per capita' 1 $282 $282 Total annual cost of General Government at phase buildout 1 $61 425 $122 849 Assumes future residential development occurs at 85%of the maximum density permitted. ' 2010 U.S. Census. 'Terra Nova staff estimate baud on population in City of Palm Desert and City Budget, General Govemment expenditures 2011 2012. Page 35 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs an Use Designation. tra sera Vl-gW Density en dt✓ac) No. ojAcres: 226 No. of Buildout Units: 230r Buildout Phase Phase I rs 1-5 Phase Il rs 6-10 Land Use Buildout Data Number of acres developed during phase 11.3 11.31 Maximum density permitted units/acre 12 12 Maximum potential units constructed during thisphase' 115 115 Number of total potential units constructed at phase buildout 115 231 Average number of persons per household 2.08 2.08 Total no. of potential residents at phase buildout 240 479 lCalculatinz Annual Costs of General Government Cost of General Government (Per capita)' $282 $282 Total annual cost of General Government at phase buildout I S67,6071 $135,214 ' Assumes future residential development occurs at 85% of the maximum density permitted. ' 2010 U.S. Censuu. 'Terra Nova staff estimate baud on population in City of Palm Desert and City Budget, General Government expenditures 2011-2012. Land Use Designation: Mirasera Mixed Use Residential (16 dulac) No. ojAcres: 10.5 No. o Buildout Units: 142' Buildout Phase Phase 1 Yrs 1-5 Phase 11 rs 6-10 Land Use Buildout Data Number of acres developed during phase 5.3 5.3 Maximum density permitted(units/acre) 16 16 Maximum potential units constructed during thisphase' 71 71 Number of total potential units constructed at phase buildout 71 143 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 149 297 Calculating Annual Costs of General Government Cost of General Government capita)` $2821 $282 Total annual cost of General Government at phase buildou 1 $41,8801 $83,761 ' Assumes fume residential development occurs at 95%of the maximum density permitted. '- 2010 U.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, General Government expenditures 2011.2012. Land Use Designation: Mirasera Very High Density Residential (20-25 dWac) No. of Acres: 66.4 No. o Buildout Units: 1,411' Buildout Phase Phase I Yrs 1- Phase 11 rs 6-10 Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density permitted units/acre 25 25 Maximum potential units constructed during thisphase' 706 706 Number of total potential units constructed at phase huildout 706 1,411 Average number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 1,467 2,93 Calculating Annual Costs of General Government Cost of General Government (per capita)' $282 $282 Total annual cost of General Government at phase buildout 1 $413,8181 $827,636 'Assumes future residential development occurs at 75%of the maximum density permitted. Page 38 of 48 From Existing Commercial Development TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land se: Constnercial (includes hotel J Commercial -Tourist) Na ojAcres: 80.0 Na ojExhdngSquare Footage. 570,117 Buildout Phase Phase I Yrs 1-5)(Yrs Phase 11 6-10) Land Use Buildout Data Number of sacs dcvcicpcd at phase buildout 80.01 80. Calculating Annual Costs of General Government (Ci -wide Services) Per acre cost of Gcncral Government $29.80 $29.8 Total cost of General Government at phase buildout $2,384.17 $2,384.17 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Govcmmcnt (Municipal Scrvtces) 1 $0141 $0.24 Total cost of General Government (Municipal Services) at phase Buildout 1 $19.39 $19.39 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Govcmment (Support Services Services $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $5,050.95 $5,050.95 Total Annual Costs of Government Services at Phase Buildout $7,454.52 $7,454.52 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Comrnercial/industrial uses, Table A.2. From Existing Development Land Use: Industrial -Light Na ojAcres. 56.6 Na. efEkisting Square Footage., 542,409 Buildout Phase Phase I (Yrs 1-5) Phase II rs 6.10) Land Use Buildout Data Number of acres developed at phase buildout 56.6 56.6 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Governments 1 $29.80 $29.80 Total cost of Gcneral Govemment at phase buildout I S1,686.801 $1 686.80 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of Cenral Government (Municipal Services)' $0,24 $0.24 Total cost of General Government (Municipal Services) at phase buildout $13.72 $13 72 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Govemmcnt (Support Services Services) $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $3 573.55 $3 573.55 Total Annual Costs of Government Services at Phase Buildout $5,274.07 55,274.U7 Cod factors based on Riverside County Guide General Fund Net Cost Multipliers for CommercimUndustrial uses, Table A.2. Page 37 of 48 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Landd •Use:�-Commercial_. , ofAcm. 31.3 ,Va o Potential Square Footage, 299,954 Buildout Phase Phase I Yrs 1- Phase If Yrs 6-10 Land Use Buildout Data Number of acres developed during this phase 15.71 15.7 Number of acres developed at phase buildout 15,71 31.3 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Govemment 529.80 $29.80 Total cost of General Government at phase buildout 1 $466.401 $932.81 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Municipal Services)' S0.24 $0.24 Total cost of General Government (Municipal Services) at phase buildout 53.79 $7.59 Calculating Annual Costs of General Government (Support Services Per acre cost of General Government (Support Services Services $63.14 S63.1 Total cost of General Governmcnt (Support Services Services) at phase buildout 1 $988.09 $1,976.1 Total Annual Costs of Government Services at Phase Buildout I $1,458.29 52,916.58 Cost factors based on Riverside Comfy Guide General Fund Net Coat Multipliers for Commerrial/Indusfrial tea. "1"able A.2. _ ore Land Use: Commercial Na ojAcrer: 3.1 No. o Potential Square Footage: 90,000 Buildout Phase Phase I Yrs I- Phase 11 rs 6-10 Land Use Buildout Data Number of acres developed during this phase 161 1.6 Number of acres developed at phase buildout 1.61 3.1 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of GenerW Government $29.80 $29.80 Total cost of General Government at phase buildout $46.191 $92.39 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Munici 1 Services)'$0.24 $0Government Total cost of General Government (Municipal Services) at phase buildout 1 $0.38 $0.75 Calculating Annual Costs of General Govern meat (Su pipmort Services) Per acre cost of General Government (Support Services Services $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout $97.86 $195.72 Total Annual Costs of Government Services at Phase Buildout $144.43 $288.86 Cost factnrsbased on Riverside County Guide General Fund Net Coat Multipliers for Commerciallindwtrial uses, Table A.2. L an � .s. .. Bd.. NIF- -- - - -- Na ojAcres: 46.8 Na o Potential Square Fool . 448,491 Buildout Phase Phase I Yrs 1- Phase 11 rs 6-10 Land Use Buildout Data Number of acres developed during this phase 23.4 23.4 Number of acres developed at phase buildout 23.41 46.8 Calculating Annual Costs of General Government (City-wide Services) Per acre cost of General Government $29.80 S29.80 Total cost of General Government at phase buildout S697.371 $ 1394.74 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Government (Municipal Services)' $0.24 Total cost of General Government (Municipal Scrvices) at phase buildout 1 $5.67 $11.35 Calculating Annual Costs of General Government (Su port Services) Per acre cost of General Govemment Su Services Services $63.14 $63.14 Total cost of General Govemment (Support Services Services) at phase buildout $1,477.4 $2,954.81 Total Annual Costs of Government Services at Phase Buildout $2,180.451 S4,360.89 Cost factors based on Riverside County Guide General Fund Net Cost bfultipliers for Commercial/Industrial uses. Table A.2. Page 38 of 48 From Future Industrial Develonment TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Lawd uswn as Na ofAerer 16�6 Na of Petenrlal Square Footage., 254,913 Buildout Phase PhaseI rs 1-5) Phase Il Yrs 6-10 Land Use Buildout Data Number of acres developed during this phase 1 13.31 13.3 Number of acres developed at phase buildout 1 13.31 26A Calculating Annual Costs of General Government (City-wide Services) Per acre cost of Gen" Government' $29,80 $29.80 Total cost of General Government at phase buildout $396.371 S792.74 Calculating Annual Costs of General Government (Municipal Services) Per acre cost of General Govemment tMunicipal Services S0.24 S0.24 Total cost of General Government (Municipal Services) at phase buildout 1 $3.22 $6.45 Calculating Annual Costs of General Government (Support Services) Per acre cost of General Government (Support Services Services) $63.14 $63.14 Total cost of General Government (Support Services Services) at phase buildout S839.72 $1,679.44 Total Annual Costs of Government Services at Phase Buildout S1,239.31 $2,479.63 Cost factorsbased on Riverside County Guide General Fund Net Cost Mi2tipliers for Commercial/Industrial uses, Table A.2. Costs of General Government Summary Table Buildout Phase Phase 1 Phase 11 Residential development Total Annual Govt. Costs frran existing residential development at phase buildout $2,538,000 $2,538,000 ...from future PD Medium Density residential development $282,443 $564,887 ...from future Riv. Co. Medium -High Density resid. dev. $61,425 $122 849 ...-from future Mirasera High Density resididential dev, $61607 $13514 ...from future Mirasera Mixed Use residential development Sol 880 583,761 ...from future Mirasera V Hi Densityresidential dev. OR $827 636 Non -Residential development Total Annual Cost from existing Commercial Development at phase buildout $7,455 S7,455 ...from existing Industrial -Light development $5,274 $5,274 ...from future commercial development S1,458 $2,917 Jrom future commercial -hotel development $144 S28 ...from future business park development $2,180 $4,361 ...from future industrial development S1,239i $2 479 Total Annual Govt. Costs at Phase Buildout I S3,4i3,8671 $4,295,120 Page 39 of 48 Costs of Police Protection - Scenario A From Existine Residential Develooment TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use: SP-281 Resldendal ,%a. ofAeres. 792 Na o Ezeshn Di-Ifing Unite: 4,985 Buildout Phase Phase I Yrs 1- Phase If rs 6-10 Number of acres developed at phase buildout 792 792 Number of dwelling units existing at ase buildout 4 985 4,985 Existing Population' 9 000 90 Cost of Police Protection capita S33 S339 Total annual cost of Police Protection at phase buildout $3,051,00 53,051, tsbmste provided by Paul Brady, Sun City Palm Desert Community Association, October 2011. 'Tern Nova staff estimate based on pnpulation in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. From Future Residential Develonment Land se zmngnaaaw M 11FOlm ve"MaliKOMeNnalBuildout dulac) No. ofAcres: 113.3 No. o Buildout Units: 963' Phase Phase I Yrs 1-5) Phase II Yrs 6-10) Land Use Buildout Data Number of acres developed during phase 56.7 56.7 Maximum density permitted units/acre 10 10 Maximum pmential units constructed during thisphase' 482 482 Number of total potential units constructed at phasc buildout 482 963 Avcra a number of persons per household' 2.08 2.08 Total no. of potential residents at phase buildout 1,002 2,003 Calculating Annual Costs of Police Protection Cost of Police Protection (per capita)'$33 $339 Total annual cost of Police Protection at phase buildout 1 $339,5331 $679 066 'Assumes future residential development occurs at 85% of the maximum density permitted. ' 201011.S. Census. 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. From Future Residential Development Land Use Designation: Rin Co. AfedlarnrHigh Density Residential (5-8 dulac) No. ofAcres: 30.8 No. o Buildout Units: 10V Buildout Phase Phase I rs 1- Phase 11 rs 6-10 Land Use Buildout Data Number of acres develolted during phase 15.4 15.4 Maximum density itted units/acre 8 8 Maximum potential units constructed during thisphase' 105 105 Number of total potential units constructed at pha= buildout 105 209 Average number of persons per household' 2.08 2.08 Total no. offiotcritial residents at phase buildout 218 436 Calculatin Annual Costs of Police Protection Cost of Police Protection (per capita)' S339 Q339Total annual costofPolice Protection st hase buildout $73,940 $147 'Assumes tenure residential development occurs at 95%of the maximum density permitted. ' 2010 U.S. Census. 'Tam Nova staff estimate based on population in City of Palm Dcaert aid City Budget Police Protection expenditures 2o11- 2012. Page 40 of 48 From Future Residential Development TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land se signation: W wasera tg Density es entw dulac) No. ojAcres: 22.6 Na o Baddout Units. 239' Buildout Phase Phase I Yrs 1- Phase 11 rs 1i-10 Land Use Buildout Data Number of acres dcvclopcd during hase 11.3 11.3 Maximum density fitted units/acre 12 12 Maximum potential units constructed during thisphase' 115 115 Number of total potential units constructed at phase buildout 115 231 Avers a number of persons per household' 2.08 2.0 Total no. of potential residents at phasc buildout 240 479 Calculating Annual Costs of Police Protection Cost of Police Protection (per capita)" $3391 S339 Total annual cost of Police Protection at phase buildout I S81,2721 $162,544 'Assumes future residential development occurs at 85%of the maximum density permitted. ' 2010 U S. Census. 'Terre Nova staff estimate baud on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. From Future Residential Development Land Use Designation: Mlrasera Mired Use Residential (16 dulac) Na ojAcres: IO.S Na o Buildout Units: 1421 Buildout Phase Phase I rs 1- Phase 11 rs 610 Land Use Buildout Data Number of acres dcvelopcd during hase 5.3 5.3 Maximum density itted unitslacrc 16 16 Maximum potential units constructed during thisphase' 7l 71 Number of total potcntial units constructed at phase buildout 71 143 Average number of persons pa household 2.08 2.08 Total no. ofpotential residents at phasc buildout 149 297 ICalculating Annual Costs of Police Protection Cost of Police Protection kper capitar i S339 $339 Total annual cost of Police Protection at phase buildout 1 $50,3461 $100,691 'Assumes future residential development occurs at 85%of the maximum density permitted. ' 2010 U.S. Census. ' Tem Nova staff estimate tamed on population in City of Palm Desert and City Budget, Police Protection expenditures 2011- 2012. From Future Residential Development Land G'se Designation: Mirosera Very Nigh Density Residential (20-25 du/a-) No. ofAcres: 66.4 Na o Buildout Units: 1,411' Buildout Phase Phase I (Yra 1- Phase Il rs 6-10 Land Use Buildout Data Number of acres developed during phase 33.2 33.2 Maximum density itted(unitsiacre) 25 25 Maximum potential units constructed during thisphase' 706 706 Number of total potential units constructed at phase buildout 706 1,411 Average: number of persons per household' 2.08 2.08 Total no. ofpotcndal residents at phasc buildout 1,467 2,935 Calculating Annual Costs of Police Protection Cost of Police Protection (per capita)' 1 $339 $33 Total annual cost of Police Protection at phase buildout 1 $497,462 $994,924 'Assumes future residential development occurs at 85%of the maximum density permitted. : 2010 U.S. Census 'Terra Nova staff estimate based on population in City of Palm Desert and City Budget, Police Protection expenditures2011- 2012. Page 41 of 48 From Existint Commercial Develonment TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use. Commercial rincludej NO & c5mmeraw- owris7 :Vo. ojAcrew 80.0 Na ofExisdng Square Footage: 570,117 Buildout Phase Phase I Yrs 1- Phase 11 (Yrs 6-10) Land Use Buildout Data Number of acres developed at phase buildout 80.0 80.0 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection $417.21 S417.21 Total cost of Police Protection at phase buildout 533,376.801 $33 376.90 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.69 $55,69 Total cost of Police Protection (Municipal Services) at phase buildout S4,455.20 S4,455.20 Total Annual Costs of Police Protection at Phase Buildout S37,832.00 $37 832.00 Cost fedora based on Riverside County Guide General Fund Net Cost Multipliers for CommercW/fndustrial uses, Table A.2. From Existing Development Land Use. Indwstrfol- Light Na ojAcres: 56.6 No. of Existing Square Footage, 542,409 Buildout Phase Phase I Yrs 1-5 Phase 11 Yrs 6-10 Land Use Buildout Data Number of acres developed at phase buildout 56.6 56.6 Calculating Annual Costs of Police Protection (Ci -wide Services) Per acre cost of Police Protection' $417.21 $417.21 Total cost of Police Protection at phasc buildout S23,614.0 S23,614.09 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.69 855.E Total cost of Police Protection (Municipal Services) at phase buildout $3,152.05 $3 152.05 Total Annual Cosh of Police Protection at Phase Buildout $26,766.14 $26,766.14 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. Page 42 of 48 Fmm Future Commercial Develonment TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs Land Use.,Commercial Buildout Phase Na ojAcres: 3L3 Phase I Phase 11 Na of Potenda! Square Footage: 299,951 Yrs 1- rs 6-10 Land Use Buildout Data Number of acres developed during this phase 15.71 15.7 Number of acres developed at phase buildout 1 15.71 31.3 Calculating Annual Costs of Police Protection (City-wide Services Per acre cost of Police Protection S417.211 $417.21 Total cost of Police Protection at phase buildout 1 $6,529.341 $13,058.67 Calculating Annual Costs of Police Protection (Muni ci al Services) Per acre cost of Police Protection (Municipal Services) $55.69 S55.69 Total cost of Police Protection (Municipal Services) at phase buildout $871.55 $1,743.10 Total Annual Costs of Police Protection at Phase Buildout $7,400.89 $14,801.77 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for CommerciabIndustrial uses, Table A.2. From Future Hotel Develooment Land Use., Commercial (Hotel)Buildout Na ojAcres: 3.1 No, o PolenBal Square Footage., 90,000 Phase Phase I Yrs 1- Phase 11 Yrs 6-10 Land Use Buildout Data Number of acres developed during this phase 1.61 L Number of acres developed at phase buildout 1 1.61 3.1 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection 1 $417.21 $417.21 Total cost of Police Protection at phase buildout 1 $646.681 $1,293.35 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services) $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $86.32 $172.64 Total Annual Costs of Police Protection at Phase Buildout $733.00 $1,465.99 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercial/Industrial uses, Table A.2. From Future Business Park Develooment Land Use: Business Fork Na ojAcres: 46.8 Na ojPotentlal Square Footage. 448,494 Buildout Phase Phase I (Yrs 1-5) Phase 11 rs 6-10 Land Use Buildout Data Number of acres developed during this phase 23.4 23.4 Number of acres developed at phase buildout 1 23.41 46.8 Calculating Annual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection 1 $417.21 $417.21 Total cost of Police Protection at phase buildout $9,762.711 $19,525,43 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection ( icipal Services)' $55.69 S55.69 Total cost of Police Protection (Municipal Services) at phase buildout S1,303.15 $2,606.29 Total Annual Costs of Police Protection at Phase Buildout $11,065.86 $22 131.72 Cost factors based on Riverside County Guide General Fund Net Cost Multipliers for Commercialindustrial uses, Table A.2. Page 43 of 48 From Future Industrial Develonment TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Government Costs n Use: n ustr a Na ojAcres. 26.6 ,Va of Forendal Square Footage: 254,91.i Buildout Phase Phase 1 Yn 1-5 Phase 11 rs 6-10) Land Use Buildout Data Number of acres developed during this Dhasc 13.31 13.3 Number of acres develo d at phase buildout 13.3 26. CalculatingAnnual Costs of Police Protection (City-wide Services) Per acre cost of Police Protection S4I T221 S417.21 Total cost of Police Protection at phase buildout 55,548.8?1. S 11,097.79 Calculating Annual Costs of Police Protection (Municipal Services) Per acre cost of Police Protection (Municipal Services)' $55.69 $55.69 Total cost of Police Protection (Municipal Services) at phase buildout $740.68 S1,481.35 Total Annual Cosh of Police Protection at Phase Buildout $6,289.57 $12,579.14 Cost factors based on Riverside County Guide General Fond Net Cost Multiplicra for Commercial/Industrial uses, Table A.2. Cosh of Police Protection Summary Table ui out use Phase I Phase II Residential development Total Annual Police Protection Costs from existing residential development at phase buildout 53,051,000 $3 051,000 ...from future PD Medium Density residential development $339 533 S679 066 ....from future Riv. Co. Medium-Mah Density resid. dev. $73,840 S147 680 from future Mirasera High Density resididential dev. $81,272 S162,544 from future Mirasera Mixed Use residential development $50,346 $100,691 ...from future Mirasera Very High nsity residential dev. S497,4621 $994,924 Non -Residential development Total Annual Cost from existing Commercial Development at base buildout $37,832 $37,832 ...from existing Industrial -Light development S26,766 S26,766 ...from future commercial development $7,401 S14,802 ...from future commercial -hotel development S733 $1,466 ...from future business park development $11,066 S22,132 from future industrial development $6:2901 $12 579 Total Annual Police Protection Costs at Phase Buildout $4,137,5751 $5,251,483 Page 44 of 48 TN Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Roadway Maint. Costs Costs of Roadway Maintenance - Scenario A Buildout Phase Phase I (Yrs 1-5) Phase 11 Yrs 6-10) Roadway Data No. of existing public paved road miles in annexation area` 10.51 10.5 No. of future public paved road miles at phase buildout4 Lg.3L 4.5 Total no. of paved road miles at phase buildout 12.81 15.0 Calculation of Roadway Costs Annual os s ot city-wide street maintenance, resurfacing Improvement Projects; $6,091,625 $6,091,625 Number of paved road miles in current Palm Desert limits 159 159 Annual Cost of Roadway Maintenance Per Road Mile $38,312 $38,312 Annual Cost of Roadway Maintenance at Phase Buildout $488,478 $574,680 'Terra Nova estimate based on aerial photography. Does not include private roads inside Sun City which will be privately maintained. s Expenditures for street maintenance & resurfacing, City of Palm Desert Budget, 2011-2012. "Comprehensive Annual Financial Report," City of Palm Desert Finance Dept., June 30,2010, p. 201. ° Estimate based on 3.0 road miles in Mirasera and 1.5 miles elsewhere in annexation area. Page 45 of 48 TN otential Annexation Fiscal Analysis City of Palm Desert Scenario A: Fire, Ambulance Costs Costs of Fire Protection - Scenario A Buildout Phase Phase I Phase II Yrs 1-5 Yrs 6-10) Annual Costs of Operating Fire Station 81 at phase buildout' 1 $1,500,000 $1,500,000 Chief Dorian Cooley, Palm Desert Fire Dept., October LU t L Costs of Ambulance Service - Scenario A Buildout Phase Phase II Phase I Phase I (Yrs 6- Year 1) (Yrs 2-5) 10) Start-up costs for new ambulance service based out o Fire Station 81 (one-time fee) $190,000 $0 $0 Annual Costs of Ambulance Operation $940,944 $940,944 $940,944 Total Annual Costs of Ambulance Service at Phase Buildout 1 $1,130,944 $940,944 $940,944 46 of 48 PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Costs/Revenues Summary Table Total Potential Costs/Revenues Summary Table Scenario A Buildout Phase Phase I Yrs 1-5 Phase II Yrs 6-10 ANNUAL REVENUES General Fund: Property Tax $836,415 $947,279 Property Transfer Tax $112,171 $125,5 79 Local Sales Tax $1,874,090 $2,314,298 Transient Occupancy Tax $544,596 $776,804 Motor Vehicle In -Lieu Fees $38,761 $48,632 Subtotal Annual General Fund Revenue at Phase Buildout $3,406,032 $4,212,592 Restricted Funds: Highway Users Gas Tax $282,195 $354,059 Measure A $15,742 $19,440 Fire Fund - Prop. A Fire Tax $386,607 $467,813 Fire Fund - Structural Fire Tax $1,402,787 $1,588,723 Subtotal Annual Restr. Fund Revenue at Phase Buildout $2,087,331 $2,430,035 Total All Potential Revenues at Phase Buildout $5,493,362 $6,642,628 Interest Earnings: Historic Average Interest Rate on 90-Day Treasury Bills 4.39% 4.39% Anticipated Interest Earned on Revenues $241,159 $291,611 Total Potential Annual Revenue at Phase Buildoutl $5,734,521 $6,934,239 ANNUAL COSTS General Fund: Costs of General Government $3,413,867 $4,295,120 Costs of Police Protection $4,137,575 $5,251,483 Costs of Roadway Maintenance $488,478 $574,680 Subtotal Annual General Fund Costs at Phase Buildout $8,039,9201 $10,121,283 Restricted Funds: Costs of Fire Protection $1,500,000 $1,500,000 Co5ts of Ambulance Service' $940,944 $940,944 Subtotal Annual Restricted Fund Costs at Phase Buildout $2,440,944 $2,440,944 Total Potential Annual Costs at Phase Buildout $10,480,864 $12,562,227 Potential Cashflow at Phase Buildout-$4,746,343 -$5,627,988 Does not include one-time (year 1) start-up ambulance costs of $190,000. Page 47 of 48 PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario A: Costs/Revenues Summary Table CITYDEVELOPER IMPACT FEES REVENUES (One time only) New Construction Tax $1,107,172 $1,107,172 Art in Public Places Fees $963,967 $963,967 Low Income Housing Mitigation Fees $350,661 $350,661 Child Care Program Fees $491,268 $491,268 Traffic Signals Fees $180,514 $180,514 Planned Drainage Fees $175,700 $175,700 Park & Recreation Facilities Fees $1,823,916 $1,823,916 Total Potential Developer Impact Fee Revenues at Phase Buildoutl $5,093,1981 $5,093,198 Page 48 of 48 Terra Nova/City of Palm Desert Fiscal Impact Analysis, Potential Annexation Appendix B Scenario B Detailed Cost and Revenue Tables 45 Property Tax Revenue - Scenario B Frnm Rtictinu Cnnditinnc TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario B: Prop. Tax, Sttue. Fire Tax Existing Conditions (developed parcels are taxed on value of land & structure; vacant parcels are taxed on value of land) Buildout Phase Phase I (Yrs. 1-5) Phase 11 (Yrs. 6-10) Phase III (Yrs 11-15) Phase IV (Yrs 16-20) Calculation of Property Tax Revenue Number of developed acres in annexation area L,944.8 1,944.8 1,944.8 1,944.8 Numbcr of vacant acres (non -developable) in annexation area 303.1 303.1 303.1 303.1 Number of vacant acres (developable) in annexation area 724.6 724.6 724.6 724.6 Total number of acres in annexation area 2972.5 2972.5 2,972.5 2,972.5 Total Value of allparcels' $2,18 t,927,188 $2,181,927,188 $2,181,927,188 $2,181,927,188 (subtract) Value of tax exemptparcels' -$7,187,760 -$7,187,760 -$7,187,760 47,187,760 (subtract) Reduced valuation of non-profit parccW -$51,515,576 -$51,515,576 -$51,515,576 -$51,515,576 Total value of taxable parcels $2,123,223,952 $2,123,223,852 $2,123,223,852 $2,123,223,852 Property Tax Rate 1 % 1 % 1 % 1 % Total Property Tax Collected by County at phase buildout $21,232,239 $21,232,239 $21,232,239 $21.232,239 Percent of Property Tax Allocated to Ci 's General Fund 7% 7% 7% 7% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $1,486,257 $1,486,257 $1,486,257 $1,486,257 Percentage deducted for ERAF Contributions 3.5%1 3.5%1 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $743,128 $743,128 $7431128 $743,128 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% 5.87% 5.87% Property Tax Revenue collected by County $21,232,239 $21,232,239 $21,232,239 $21,232,239 Total Structural Fire Tax Revenue at phase buildout $1,246,332 $1,246332 $1,246,332 $1,246,332 tram Riverside Uounty Assessors records, Oct. 2011. Includes value of land for vacant parcels, and value of land and structures for developed parcels. Tax exempt parcels, as flagged in Riverside County Assessors records, Oct. 2011. Includes 136.68 acres of land, primarily owned by CV W D, CA DOT, County of Riverside, and Sun City Palm Desert Community Association. ' Reductions for non-profit parcels as described by The Berger Foundation, Nov. 2011. Accounts for 96.0 acres of Xavier School (exempt) and 2453 acres of Classic Club Golf Course, maintenance bldg., and clubhouse (reduced rate). Pagel of 76 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario B: Prop, Tax, Struc. Fire Tax From Future Residential Development Land Use Designation: PD Low Density Residential (0-0 dulae) Total No. Acres: 72 No. of Potential Buildout Units: 244' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Phase III (Yrs 11-15) Phase IV (Yrs 16-20) Calculation of Property Tax Revenue Number of acres developed during phase 18.00 18.00 18.00 18.00 Maximum density rmitted (units/acre) 4 4 4 4 Maximum potenfial units constructed during this phase 61 61 61 61 Number of total potential units constructed at buildout 61 122 184 245 Average value per unit' $249,123 $249,123 $249,123 $249,123 Total Value $15,246,328 $30,492,655 $45,738,983 $60,985,310 Property Tax Rate 1% 1% 1% I% Total Property Tax Collected by Count at Phase Buildout $152,463 $304,927 $457,390 $609,853 Percent of Property Tax Allocated to Ci 's General Fund 7.0% 7.0% 7% 7% to ERAF) $10,672 $21,345 $32,017 $42,690 Percentage deducted for ERAF Contributions 3.5%1 3.5% 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $5,336 $10,6#-$16,0091 $21,345 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5V%j 5.97%1 5.97% ,Property Tax Revenue collected by County $152,463 $304,927 $457,3901 $609,853 Total Structural Fire Tax Revenue at phase buildout $8,950 $17,8991 $26,849 $35,798 'Assumes land will be developed at 85% of the maximum density pemritted. '"Inland Empire Quarterly Economic Report," prepared for W RCOG by John Husing, Ph.D., October 2011, Accounts for value of land and structure. Page 2 of 76 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario B: Prop. Tax, Struc. Fite Tax From Future Residential Develonment Land Use Designation: PD Medium Density Residential (4-10 dulae) Total No. Acres: 1133 No. of Potential Buildout Units: 963' Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Phase III (Yrs 11-15) Phase IV (Yrs 16-20) Calculation of Pro rt 'fax Revenue Number of acres developed during phase 28.33 28.33 28.33 28.33 Maximum density rmitted (units/acre) 10 10 10 10 Maximum potential units constructed during this phase 241 241 241 241 Number of total potential units constructed at buildout 241 482 722 963 Average value per unie $249,123 $249,123 $249,123 $249,123 Total Value $59,979,476 $119,958,953 $179,938,429 $239,917,905 Property Tax Rate l% 1% 1% 1% Total Property Tax Collected by County at Phase Buildout $599,795 $1,199,590 $1,799,384 $2,399,179 Percent of Property Tax Allocated to Ci 's General Fund 7.0% 7.0% 7% 7% to ERAF) $41,986 $83,971 $125,957 $167,943 Percentage deducted fof ERAF Contributions 3.5% 3.5% 3.5% 3.5% Total Amount Allocated to CityGeneral Fund at phase buildout $20,993 $41,986 $62,9781 $83,971 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% 5.87% 5.87% Property Tax Revenue collected by County $599,795 $1,199,590 $1,799,3841 $2,399,179 Total Structural Fire Tax Revenue at phase buildout $35,208 $70,416 $105,6241 $140,832 'Assumes land will be developed at 85% of the maximum density permitted ' "Inland Empire Quarterly Economic Report,' prepared for WRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. Page 3 of 76 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario B: Prop. Tax, Struc. Fire Tax F— Fut— Rp Montiul Ilpvelnnmpnt Land Use Designation: Riv. Co. Medium High Density Residential (5- 8 du/ac) Total No. Acres: 39.8 No. of Potential Buildout Units: 27& Buildout Phase Phase I (Yrs.1-5) Phase II (Yrs. 6-10) Phase III (Yrs 11.15) Phase IV (Yrs 16-20) Calculation of Property Tax Revenue Number of acres developed during phase 9.95 9.95 9.95 9.95 Maximum density rmitted (units/acre) 8.0 8.0 8 8 Maximum potential units constructed during this phase 67.7 67.7 67.7 67.7 Number of total potential units constructed at buildout 68 135 203 271 Average value perunit' $249,123 $249,123 $249,123 $249,123 Total Value $16,855,662 $33,711,324 $50,566,997 $67,422,649 Properly Tax Rate 1 % 1 % 1 % I % Total Property Tax Collected by County at Phase Buildout $168,557 $337,113 $505,670 $674,226 Percent of Property Tax Allocated to Ci 's General Fund 7.0% 7.0% 7% 7% to ERAF) $11,799 $23,598 $35,397 $47,196 Percentage deducted for ERAF Contributions 3.5% 3.5% 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $5,8991 $11,799 $17,6981 $23,598 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.97%1 5.87%1 5.87%1 5.97% Property Tax Revenue collected by County $168,5571 $337,113 $505,6701 $674,226 Total Structural Fire Tax Revenue at phase buildout $9,8941 $19,7891 $29,6831 $39,577 `Assumes land will be developed at 85:0 of the maximum density permitted - "Inland Empire Quarterly Economic Repon,- prepared for HRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. Page 4 of 76 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario B: Prop. Tax, Struc. Fire Tax Fmm Futures 12—id—tial ilHv�+lnmm�nf Land Use Designation: Mirasera High Density Residential (12 du/ac) Total No. Acres: 22.6 No. of Potential Buildout Units: 230' Buildout Phase Phase I (Yrs. 1-5) Phase 11 (Yrs- 6-10) Phase III (Yrs 11-15) Phase IV (Yrs 16-20) Calculation of Property Tax Revenue Number of acres developed during phase 5.65 5.65 5.65 5.65 Maximum density permitted (units/acre) 12.0 12.0 12 12 Maximum potential units constructed during this phase 57.6 57.6 57.6 57.6 Number of total potential units constructed at buildout 58 115 173 231 Average value per unit' $249,123 $249,123 $249,123 $249,123 Total Value $14,356,958 $28,713,917 $43,070,875 $57,427,834 Property Tax Rate I% 1% 1% 1% Total Property Tax Collected by County at Phase Buildout $143,570 $287,139 $430,709 $574,278 Percent of Property Tax Allocated to Cit 's General Fund 1067241.0% 2134489.0% 7% 7% Total Amount Allocated to City General Fund at phase buildout (prior to ERAF) $1,532,237,904 $6,128,950370 $30,150 $40,199 Percentage deducted for ERAF Contributions 3.5% 3.5% 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $5,025 $10.050 $15,075 $20,100 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.8756 5.87% 5.87% 5.87% Property Tax Revenue collected by County $143,570 $287,139 $430,709 $574,278 Total Structural Fire Tax Revenue at phase buildout $8,428 $16,855 $25,283 $33,710 'Assumes land will be developed at 85% of the maximum density perrnined. ' "Inland Empire Quarterly Economic Report," prepared for WRCOG by John Husing, Ph.D., October 2011. Accounts for value of land and structure. Page 5 of 76 TN PD Potential Annexation Fiscal Analysis City of Palm Desert Scenario B: Prop. Tax, Struc, Fire Tax Land Use Designation: Mirasera Mined Use Residential (16 dulac) Total No. Acres: 10.5 No. of Potential Buildota Units: 142` Buildout Phase Phase I (Yrs.1-5) Phase 11 (Yrs. 6-10) Phase III (Yrs 11-15) Phase IV (Yrs 16-20) Calculation of Property'ltax Revenue Number of acres developed during phase 2.63 2.63 2.625 2.625 Maximum density rtnitted (unitstacre) 16.0 16.0 16 16 Maximum potential units constructed during this phase 35.7 35.7 35.7 35.7 Number of total potential units constructed at buildout 36 71 107 143 Average value per unit' $104,425 $104,425 $104,425 $104,425 Total Value $3,727,973 $7,455,945 $11,183,918 $14,911,890 Property Tax Rate 1% 1% 1% 1% Total Property Tax Collected by County at Phase Buildout $37,280 $74,559 $111,839 $149.119 Percent of Pro a Tax Allocated to O,, 's General Fund 3.5% 3.5% 7% 7% to ERAF) $1,305 $2,610 $7,829 $10,438 Percentage deducted for ERAF Contributions 3.5% 3.5% 3.5% 3.5% Total Amount Allocated to City General Fund at phase buildout $1,305 $2,610 $3,914 $5,219 Calculation of Structural Fire Tax Revenue Structural Fire Tax Rate 5.87% 5.87% 5.87% 5.87% Property Tax Revenue collected by County $37,280 $74,559 $111,839 $149,119 Total Structural Fire Tax Revenue at phase buildout $2,188 $4377 $6.565 $8,753 'Assumes land will be developed at 85% of the maximum density permitted. ' Baud on compilation of building permit data provided by Palm Desert Building & Safety Dept., Oct 2011. Page 6 of 76 MINUTES REGULAR PALM DESERT CITY COUNCIL MEETING JANUARY 26, 2012 XVI. OLD BUSINESS A. FISCAL;: IMPACT ' ANALYSIS REPORT" REGARDING, POTENTIAL' ANNEXATION BY THE CITY OF PALM DESERT FOR AREAS NORTH OF INTERSTATE 10'. Mayor Pro Tem Kroonen suggested continuing to a further date so that all the parties involved have had an opportunity to review the report. Mayor Pro Tern Kroonen moved to, by Minute Motion, continue this item to the meeting of February 23, 2012. Motion was seconded by Finerty and carried by a 5-0 vote. Mayor Spiegel explained this item was being continued in order to provide Mr. Bernheimer an opportunity to review the Palm Desert Annexation Study. XVII. PUBLIC HEARINGS A. REQUEST FOR APPROVAL OF THE VACATION OF DAISY LANE RIGHTS -OF -WAY AND EXCESS SIDEWALK, AND LANDSCAPE EASEMENTS ALONG SHEPHERD LANE IN TRACT NO. 29469 (Kristi Hanson Architects, Inc., Applicant). Mayor Spiegel stated he believed this item may need to be continued, because many people who live adjacently to Daisy Lane weren't aware of this public hearing and learned about it one or two days ago. He said they were not individually noticed in writing; the only notification made was in the newspaper in the Classified section. He thought it was only fair for these residents to get more information, but since many of them were here this evening, the Council was willing to hear them speak. Mayor Spiegel declared the public hearing omen and invited anyone wishing to address the City Council on this matter to come forward at this time. MR. BILL TAYLOR, President of Terracina HOA, stated about one'/z years ago when KB Homes submitted a request to gate their area, the City sent out information to everyone in the neighborhood, which explained the request and what to expect. The community responded to the Council in opposition and the Council voted it down, which they appreciated. In this case, other than a 2-foot square sign on Shepherd Lane with limited information, no one knew what the real situation is all about. He said typically when people want to install a wall it's not to keep people in, but to keep them out. He personally didn't disagree with the idea of building it, but felt those affected should be notified about why and what is being planned. 25 r- L -A TERRA NOVA PLANNING & RESEARCH, INC. April 18, 2013 Ms. Lauri Aylaian Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 RE: Northern Annexation Fiscal Impact Analysis U Fiscal Impact Analysis , Dear Lauri: & Review of Cathedral City Following your request on Monday, h e researched the issues, and offer the following scope of work and budge p ters for the above referenced work. As we discussed yesterday, there are a nu o options the City can take in this case, and the scope and budget are structured o arce hese options into separate and distinct parts. In 2012, Terra Nova was potential costs and eve t I-10 freeway, an in lu Street), lands in a edr City's northern Sp a of were collectively ide tifi�� The analysis was coN would exceed the of annexation of 1 s b the City of Palm Desert to prepare an analysis of the fated with the potential annexation of lands north of the la ds immediately east of the Ivey Ranch (just west of Cook 's Sphere of Influence to the east of Ivey Ranch, and the fluence, including the existing Sun City project (these lands as Scenario B, and are referred to as such in the text below). and found that the costs associated with the nnexation sues generated by it. The City Council opted to c consideration areas due to the negative fiscal impact. C eel h-n ve 1-''16if-14'4 ► K J The City ofyCathdral City recently completed and released a fiscal impact analysis for its northern Spwhich extends from Rio del Sol on the west to the eastern boundary of the Classicproperty, east of Cook Street. The fiscal impact analysis predicts aZ positive cas to the Cityof Cathedral C' in the short term. The area eAcompassed in the Sphere totals over 9,700 acres. Terra Nova staff has had a conversation with LAFCo staff prior to preparing this scope of 0�� f� �qf work and budget. The results of that conversation are: 04 ( l 0 If Palm Desert were to proceed with annexation of its northern Sphere, LAFCo would likely require the inclusion of the Bermuda Dunes Sphere of Influence area J as well. Since Bermijda Dins is an *eland, anrd nh_ngPc in law have marde it difficult to perpetuate County islands, any annexation effort will likely be required to include Bermuda Dunes. 42635 MELANIE PLACE, SUITE 101, PALM DESERT, CA 92211 (760) 341-4800 lb a Ms. Lauri Aylaian April 18, 2013 Page 2 of 7 If Palm Desert were to pursue an effort to annex lands to the west of its current Sphere, consistent with Scenario B, two issues will arise: o LAFCo has consistently held that Thousand Palms is to be annexed, if it is annexed at all, as a whole. This includes lands from the eastern end of the Classic Club to Rio del Sol on the west. LAFCo will therefore not support a "breaking off' of the lands east of the IveX Ranch, as they consider these lands part of Thousand Palms. o Even if LAFCo were to consider a "breaking off' of part of Thousand Palms, if Palm Desert were to make application to annex the area in Scenario B, recent LTn%nco orated Communities (DUC) located immediately west of Scenario B (please see attached map). DUCs cannot be left out of annexation efforts, and must be included if a request for annexation is made in their vicinity. At a minimum, Ivek Ranch would be included by LAFCo, but it is possible that the other two D Cs would be included, particularly since that would in essence support the concept of keeping Thousand Palms whole. These specific issues assume that Palm Desert would be successful in having its northern Sphere amended — which will require the official removal of the Scenario B lands from Cathedral City's designated Sphere. Understanding of the Project Based on your email of April 15`h, and the discussion above, the City wishes to have Terra Nova complete the following: 0 Review the Cathedral City fiscal impact analysis, and determine where its assumptions and findings differ from Palm Desert's fiscal impact analysis. Please note that the scale of the Cathedral City analysis, including considerably more land than was considered in Palm Desert's analysis has a major bearing on the outcome of the analysis. 0 Update the Palm Desert fiscal impact analysis for Scenarios A and B to current conditions, and expand the analysis to include franchise fees for utilities and services. This task will also include update of the infrastructure analysis, and consideration of the inclusion of a CFD, or similar financial mechanism, to recoup these costs. 0 Add Bermuda Dunes to the fiscal impact analysis, on the assumption that LAFCo will require its inclusion in any annexation effort. Modify analysis to include Ivey Ranch in fiscal analysis, on the assumption that LAFCo will require their inclusion in any annexation effort. In order to accomplish these tasks, we offer the following scopes of work. and budgets. Ms. Lauri Aylaian April 18, 2013 Page 3 of 7 Scope of Work: Review of Cathedral City Fiscal Impact Analysis 0 Comprehensively review the assumptions in the Cathedral City analysis, breaking down assumptions by revenue and cost category. This will include a comparison of levels of service assumed, per capita costs based on Cathedral City's budget, and revenue assumptions based on land use designations. 0 Prepare a letter report, to include comparison tables where appropriate, describing the findings of the review. As necessary, consider where differing assumptions may have impacted findings, and describe same. Consider whether, if needed, changes in assumptions in the Palm Desert analysis would impact the outcome of the original analysis. 0 Provide letter report to City staff for review, and meet with same to review. 0 Amend report as needed based on staff comments, and provide paper and electronic copies for use by City. 0 Attend up to two City Council meetings and represent report to Council. Proposed Budget: Review of Cathedral City Fiscal Impact Analysis Staff Time Amount Consultation and Meetings (4 hours) $ 660.00 Research and Documentation $ 4,680.00 Document Drafting $ 2,320.00 Preparation for and Attendance at 2 City Council Hearings $ 990.00 Exhibit Preparation $ 180.00 Admin. Support $ 270.00 Subtotal $ 9,100.00 Scope of Work: Update Palm Desert Analysis and Add Bermuda Dunes 0 Coordinate with City and County to secure current fiscal year budget, land use maps, General Plan documentation, etc., necessary to characterize the lands being considered for annexation. Both Scenarios will now include Bermuda Dunes. Update base data from local, regional and state sources regarding revenues and costs: tax rates, state in lieu fees, County vs. City share of revenues, etc. 46 • Ms. Lauri Aylaian April 18, 2013 Page 4 of 7 0 Add all land use data for Bermuda Dunes. Model acreage by land use. Where City land use designations have been applied, they will be used. Otherwise, County land use designations will be applied. For existing development, assumptions regarding revenue will be verified by existing data to the greatest extent possible. Should data not be available, assumptions will be made consistent with the "Riverside County Guide" for preparing fiscal impact studies. 0 Update annual per capita estimated revenues from State sources. 0 Update CSA revenues from County data, as applicable. 0 Run fiscal model, test results, and confirm data. 0 Coordinate with Public Works Director regarding infrastructure analysis update. Confirm costs for potential CFD, and develop per capita or household cost based on land use assumptions. This task will include updating for Scenario A and B, and new analysis for Bermuda Dunes. 0 Prepare narrative discussion of assumptions, findings, and net benefits/costs associated with potential annexation of either scenario. 0 Submit draft to City staff for review, and amend as necessary. Provide revised narrative to City both electronically and in hard copy for use in staff reports, etc. 0 Attend two City Council hearings in support of staff presentation. Project Budget: Update Palm Desert Analysis and Add Bermuda Dunes Staff Time Amount Consultation and Meetings (10 hours) $ 1,650.00 Data Collection & Analysis $ 8,400.00 Review of Infrastructure and Calculation of CFD $ 2,600.00 Modeling and Narrative Document Drafting $ 6,300.00 Preparation for and Attendance at 2 City Council Hearings $ 990.00 Exhibit Preparation $ 480.00 Admin. Support $ 360.00 Subtotal $ 20,780.00 Misc. Office: Postage, telephone, FAX, photocopies, County GIS Ms. Lauri Aylaian April 18, 2013 Page 5 of 7 Scope of Work and Budget: Add Ivey Ranch to Fiscal Impact Analysis --- ✓1: D This task can be added to the task above, and included in Scenario B. As the Ivey Ranch is developed, we would assume an average current value for the residential units, and base calculations on that value. Income levels have been calculated by LAFCo. Limited sales tax and similar revenues can be expected from the golf facilities. The cost of this addition would be $3,000.00, if undertaken at the same time as the Update and Bermuda Dunes analysis described above. Cost Summary: Concurrent Execution of Multiple Tasks Should all three scopes of work be undertaken concurrently, the total cost of the project would be $32,830.00. The reduction assumes that meetings, consultations and hearing time would be reduced. Schedule We expect that the fiscal impact analysis can be completed within 45 to 60 days of receiving a notice to proceed. Conclusion I believe that this proposal accurately reflects understanding of what is needed to complete the fiscal impact analysis. Please feel free to contact me if you have any questions. Sincerely, Nicole Sauviat Criste Principal 3/ 006 V ft L-7 r I Ms. Lauri Aylaian April 18, 2013 Page 6 of 7 -A TERRA NOVA PLANNING & RESEARCH, INC 42635 MELANIE PLACE, SUITE 101 PALM DESERT, CA 92211 STANDARD FEE SCHEDULE 2013 Terra Nova invoices its clients on a cost -basis using an hourly billing system. The scope of each planning effort is typically broken down by task and assigned estimated necessary staff time and the applicable hourly rate. Reimbursable expenses are charged on a cost basis, except where otherwise indicated. All payments for services rendered are to be made payable to Terra Nova Planning & Research, Inc. unless otherwise indicated. Clients are invoiced on a monthly basis, and invoices are due and payable upon receipt. A charge of 1.5% per month is added to all invoices over 30 days past due. The current fee schedule is provided below: Terra Nova Staff Hourly Rate Principal Planner $ 165.00 Senior Planner $ 140.00 Associate Planner $ 115.00 Assistant Planner $ 95.00 Graphic Design Specialist $ 60.00 Administrative Assistant $ 45.00 REIMBURSABLES Photo Copies (BW) $ 0.15 ea. Photo Copies (Color) $ 1.00 ea. Telephone Toll Charges Cost FAX Transmittals Cost Reproduction, Special photographic services, document printing, aerial photogrammetry, postage, etc. Cost +15% DISADVANTAGED UNINCORPORATED COMMUNITIES City of Cathedral City- Sphere of Influence Vicinity Map 4 S"b X, A4 <;a q � �9e �� :,i' � r«ti �°. �,. ,�,�� t� �� r'i �� a �''>, s,: ` � sue.. -•�`i �� "` $� . ... �:..... a __.<.: 'a � ..• @.k,..�,a.tiC`=�_..'.:s � i�`;+"k�»Ta e.%wk4 _ r: ... ..»_. .. ` 6�w. a�a ,�,i�','�r,�'.'�:«� W; S Ms. Lauri Aylaian April 18, 2013 Page 7 of 7 LI Aylaian, Lauri From: Aylaian, Lauri Sent: Friday, May 24, 2013 4:52 PM To: 'Nicole Criste' Subject: New Project in SOI Nicole, I am presently reviewing a new (or newly revised?) project that is going through the County for entitlements. Since it's in our sphere of influence, I thought I'd keep you up to speed on what the most likely development will be for the 40 acres at the NW corner of Adams Street and 401h Avenue. The 40-acre parcel is zoned for planned residential (R-4) and Watercourse, Watershed, and Conservation Areas (W-1). This project, which is bounded by Sun City on two sides, the auto mall on the south side, and Adams on the east side, will be 202 age -restricted single family dwellings up to 1,903 SF in size. I met with the engineer and a project rep today, and they told me that the developer intends this community to be "just like" Sun City, except that there is no golf course. It will be gated and have a single clubhouse and communal swimming pool, but no other features of any particular significance. The developer plans to be under construction by the end of this calendar year. They didn't have a projection of absorption rate. Use this info however might be appropriate. Have a good weekend, Lauri A PS: I'm playing phone tag with Patricia Saleigh from Jack Ivey Ranch. Still haven't caught up with her. PPS: Yesterday the Mayor and I met with five representatives of various boards and committees in the Bermuda Dunes area. On behalf of their various organizations, they all expressed eagerness to be annexed into Palm Desert. They would also like to meet with you whenever might be appropriate to assist you in whatever way possible. They indicated that the County has done a fair amount of infrastructure work — particularly for storm water and retention — in the last five or so years, so that the capital burden for bringing up the infrastructure should be less than the $42M estimated in the 2007 report. We'll have to chase this down a little more from the County. Lauri Aylaian Director of Community Development City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 760.346.0611 phone 760776.6417 fax