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CITY OF PALM DESE�T'-- '°M�"��u��'' ��°'-�a�-���-���f��.
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DEPARTMENT OF COMMUNITY DE��/ELOPMENT ��'"'""'"°�"
STAFF REPORT
.,. > �.:.��.:�.��_��.�.�,_s�.�
REQUEST: � CONSIDER FINDINGS OF FISCAL IMPACT REPORT FOR THE
NORTHERN SPHERE OF 1NFLUENCE (EXPANDED) AND
BERMUDA DUNES AREA, AND DIRECT STAFF AS TO FURTHER
ACTIONS, IF ANY, REGARDING POTENTIAL ANNEXATION
SUBMITTED BY
DATE:
Lauri Aylaian, Director of Community Development
September 12, 2013
CONTENTS: Land Use and Fiscal Impacts for the Northern Sphere of Influence
(Expanded) and Bermuda Dunes Areas, prepared by Terra Nova
Planning & Research, dated July 2013
Recommendation
By Minute Motion, continue to a date uncertain any consideration of
annexation of Bermuda Dunes and areas north of the lnterstate 10
Freeway, including Sun City.
Backqround
On three occasions since 2007, the Palm Desert City Council has commissioned studies
of the potential annexation of Bermuda Dunes, the Sun City area, and/or a portion of the
Cathedral City Sphere of Influence (SOI) north of Interstate 10. Most recently, in May
2013, the City Council directed that the studies include an analysis to determine if
creative land uses could make annexation "revenue neutra!" — meaning that the costs of
providing services to the newly-annexed areas would be completely offset by the revenue
generated from taxes in those areas.
This study was prepared during June and July 2013 by Terra Nova Planning & Research,
and was distributed to the City Council and interested parties in late August 2013. The
information will be the subject of a study session with the City Counci! at 2:00 p.m. on
Thursday, September 12, 2013, after which it will come before the Counci) for action later
in the same day. At that time, and tor the reasons presented below, staff will recommend
that the City Council continue any consideration of annexation to a date uncertain.
The attached Land Use and Fisca! Impacts for the Northern Sphere of Influence
(Expanded) and Bermuda Dunes Areas report analyzed two alternatives: what happens if
growth occurs on vacant land according to current land use designations ("As Expected"),
and what happens if all of the vacant land develops in the manner that would be most
Staff Report
Land Use and Fiscal Impact Report
Page 2 of 3
September 12, 2013
advantageous to the Palm Desert General Fund ("Hypothetical")? These two scenarios
are summarized in the following table. Figures are in millions of dollars, rounded to the
nearest $100,000, and are shown for five-year increments to an estimated buildout
condition twenty years from now:
. : , . ; : ` ' r' as...n► . K= j -� " r '�' .. ;• '•'.µ;j} °,.'�t�. .�yti. � �,. :� . . . �� . ;
�. t '"���...��. Y,�- -.. d. �`�.�..
.;� :,s�•...^C�i k. 4,
z � Y ���..
. i�6r.Y ' �. �� � , � �����1�,f,�.��= t
�b � �s�n�� . y*. 4�-, ��-'�y'�.� r.«::' ;,:��,�
� + • ,��.'���. .� , �r+`�� , ��s , , • -� <.?�.. `�•� �,
_ . .. , � . _ �
Bermuda Dunes As
Expected
Ivey Ranch As Expected
Expanded Northem
Sphere As Expected
Total As Exaected
Total �otheticat Land
Uses
-$5.7M
-$0.7M
-$3.OM
-$9.3M
-$5.6M
-$1.OM
-$2.8M
-$9.3M
-$5.7M
-$1.2M
-$2.6
-$9.4M
-$5.8M
-$1.4M
-$2.4M
-$9.6M
-$7.6M
Although it might be tempting to focus o
revenue positive condition at buildout ($2.1
analysis), it would be short-sighted to do
condition, the following would have to occur:
-$4.4M
-$1.1M
$2.1 M
n the end-case scenario wherein there is a
million annually for the hypothetical land use
so. In order to reach this revenue-positive
• Buildout would need to be achieved. This could longer than the estimated 16 to 20
years, and during that time the Palm Desert General Fund would have to support
the newly-annexed areas in amounts up to $9.6 million per year;
Infrastructure would have to be upgraded. There are deficiencies in existing
infrastructure that are estimated to cost $44 million to resolve in the area north of I-
10, and $42 million to resolve in Bermuda Dunes. If assessment districts or
community facilities districts were formed to improve the infrastructure,
assessments would be greater than $2,000 per acre per year for twenty years in
the area north of I-10, and almost $3,500 per acre per year for the same period in
Bermuda Dunes. Importantly, the City can't count on such assessment districts
being formed—and cannot know for certain if voters would support an assessment
until after the area is annexed. Therefore, there is no assurance that capital funds
would be available to improve the infrastructure to Palm Desert standards.
g blanningVaur� aylaian�staN reportslsun ary and bermutla dunes annexauon 9-12-13 tloc
Staff Report
Land Use and Fiscal Impact Report
Page 3 of 3
September 12, 2013
• Market conditions would have to support the hypothetical uses. There may not be
a market for the hypothetical land uses that are necessary to result in the revenue
positive condition at build out. For example, the hypothetical land uses call for 3.3
million square feet of retail space and 900 hotel rooms to be added in vacant
lands. This would increase Palm Desert's retail land uses by approximately 50
percent and its number of hotel rooms by 43 percent. No market studies have
been performed to determine if there is either present or future demand for this
much retail and hotel product in the immediate area. However, it is clear that
simply zoning a piece of land to accommodate a hotel in no way assures that a
hotel will be constructed or successfully operated. Staff believes that development
of the number of hotels and amount retail space proposed in the hypothetical
analysis is not likely.
It is also important to remember that City policy, adopted by resolution in 2008 by the City
Council, is to have one year of operating expenses as General Fund reserve. Current
expenditures for fiscal year 2013/14 total $55.9 million for the General Fund and Fire
Fund, and there is $65.9 million in unrestricted reserves. The difference between these
numbers, $10 million, could potentially be available to draw upon to provide services to
the newly annexed areas. However, it would be depleted early in year two after
annexation, and revenue neutrality would not be achieved for another 15 years -- even in
the most optimistic scenario.
Staff believes that it is imprudent to build a city based upon a series of best-case
scenarios. Achieving revenue neutrality in the areas studied in the attached report counts
on many things that are beyond the City's control "going right." Therefore, staff cautions
against such a gambit and recommends that the City Council continue to a date uncertain
any consideration of annexing the subject areas.
Environmental Review
Accepting the staff recommendation on this item does not constitute a project as
defined by the California Environmental Quality Act (CEQA). Therefore, no
environmental review is required.
Submitted By:
/
Lauri Aylaian, Community Development Director
�roval:
Reviewed:
/ ,�' _.
�ul S. Gibson, Director of Finance
C!'�'Y CItiUNCYL Al�TVI�T
APPROYET �� DFNTF;D
OTHER .L��rI�L'{�._
w � /,(/% � /�i1'� _
MEETING DA'PE ( � � � � - ,�D! �
M. Wohlmuth, City Manager
aylaian�staH reports�sun ciry and bermuda dunes annexation 9-12-13.doc
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ABSEN'h �.
ABSTAINt ���- �
YERIFIED BY: ' C
Ori�iqat on Fil� with Ci erk's Clffice
LAND USE AND FISCAL IMPACTS
FOR THE
NORTHERN SPHERE OF INFLUENGE (EXPANDED)
AND
BERMUDA DUNES AREAS
Prepared for
City of Patm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Prepared by
/ 1
� J Terra Nova Planning & Research, Inc.�
42635 Melanie Place, Suite 101
Palm Desert, CA 92211
July 2013
Terra Nova/City of Palm Desert
l.and l Ise and �iscal Impacts of the Nc�rthern Sphere & Bermuda Dunes Areas
Table of Contents
l. Introduction and Purpose ......................................................................................................3
t[. Summary of Current Conditions ......................................................................................... 5
A. Bermuda Dunes ...............................................................................................................................7
B. Jack Ivey Ranch ............................................................................................................................13
C. Northern Sphere Area ..................................................................................................................15
D. Entire Study Area ......................................................................................................................... [8
11l. Alternative Land Use Scenario ......................................................................................... 21
A. Assumptions .................................................................................................................................. 21
B. Required Land Use Changes ....................................................................................................... 2l
C. Capital Improvement Costs ......................................................................................................... 25
IV. Conclusion ...........................................................................................................................28
List of Tables
TABLEI BERM((DA DUNES LAND USES (VAC.4NT AND DEVELOPED� ..........................................................................5
TABLE 2 C057'S/REVENUES SUMMARY TABLE BERMUDA DUNES - EXISTING DEVELOPMENT� FY 200%/O8� ...........9
TABLE 3$ERMUDA DUNES VACANT ACREAGE DEVELOPMEIYT ASSUMPTIONS AT BUILD OUT ..............................lO
TABLE 4 COSTS/REVENUES SUMMARY TABLE BERMUDA DUNES-FUTURE DEVELOPMENT ..................................11
TABLE S COSTS/REVENUES SUMMARY TABLE BERMUDA DUNES - EXISTING t FUTURE DEVELOPM1IEIYT ...............12
TASLE G.iACK IVEY RANCH LAND USES (VACANTAND DEVELOPED� ......................................................................13
TABLE7 I VEY RANCH COUNTRY CLUB VACANT ACREAGE ......................................................................................13
TABLE 8 COSTS/REVENUES SIIMMARY TABLE IVEY RAIVCH - EXIS111VC + FUTURE DEVELOPMENT .......................14
TAB1,E 91YORTHERN SPHERE AREA - DEYELAPED ACREAGE ...................................................................................15
TABLE lO NORTHERN SPHERE AREA - VACAIYT ACREAGE .......................................................................................16
TABLE 11 COSTS/REVENUES SUh1RtARY TABLE NORT�lBRN SPAERS AREA - EXISTING + FU'IZ1R£ DEVELOPMENT
.............................................................................................................................................................................17
TABLE 1Z COSTS/REVENUFS SUh1MARY TABLE NORTHERN SPHERE AREA + BERMUDA DUNES+ IVEY RANCH ..15
TABLE 13 COS7'S✓REVENUES SUMMARV TABLE HYPOTHETICAL LA.VD USE SCENARIO .........................................Z4
TABLE 14 BERMUDA DUNES 1NFRASTRUCTiJRE IMPROVEMEN7'S* ...........................................................................26
TABLE 15 IVORTHERN SPHERE AREA INFRASTRUCT'URE IMPROVEMENTS ...............................................................27
List of Exhibits
EXf11BIT1: STUDY ARE.A BOi:NDAR1'.... ........................................................................................................................6
EiCHIB1T2: CURRENTLY APPRO�'ED LAIYD USE .........................................................................................................ZO
ExRrBrT 3: HYPOTHETTCAL LAND USE .......................................................................................................................23
APPEIYDIX A: FISCAL IMPACT ANALYSIS METHODOLOGY ........................................28
APPF,NDIX B: DETAILED TABLES (Available at the Planning Department)
2
Ten•a Nova/C'ity of Palm Dcscrt
l,and Use and Fiscal impacts of'thc Northern Sphere & Bermuda Dunes Arcas
1. tntroduction and Purpose
T'his rcport has t�een prepared for the City of Palm Desert, to analyze the land use and fisc:al
implications of tuture annexation ot' la�lds in and adjacent to the City's nortl�ern Sphere of�
Influence. T'he data and assumptions made in the report tie directly to prior work completed for
the project area in the last several years. The purpose of this report is to determine how the land
use pattern in the study area would need to be amended to result in a`revenue neutral' or revenue
positive' cash Flow for the City. This report also addresses the infrastructure improvement
requirements of tl�e study area, and how d�ey could be addressed financia(fy.
The following summary of prior actions and activities is useful in understanding the progression
ofthe analysis, and is provided in chronological order.
Project History
ln 2007, the City considered a feasibility analysis relating to the costs and revenues associated
with the annexation of the community of Bermuda Dunes, which abuts the City at its
northeastern boundary. The analysis considered the costs and revenues associated with the
annexation of these lands. In addition, the Public Works Department completed an analysis of
the potential infrastructure costs of improving roads, drainage facilities and sanitary sewers in the
area, due primarily to the lack of capital improvements provided by the County in the past. The
resu)ts of the analysis were presented to the City Council in October, 2007. Afier considering the
costs associated with both governmental operations and infrastructure improvemenis, the City
tabled further consideration of annexation of the Bermuda Dunes area.
In 2011, the City considered the feasibility of annexation of the northern Sphere of Influence,
located north of the raitroad and Interstate highway rights of way, and asked for analysis of not
only the Sphere area, but azeas west of the Sphere, extending westerly to the eastern boundary of
the Jack Ivey Ranch. Fiscal impaet analyses were prepared for both areas, and presented to the
City Council in ear(y 2012. The Public Works Department also prepared an estimate of
infrastructure improvement costs, including arterial roadways and storm drainage. After
considering the costs and revenues associated with governmental operations and infrastructure
improvements, the City tabled further consideration of either annexation scenario.
Between 2010 and 2012, several laws came into effect that affect ttie manner in which the Local
Agency Formation Commission (LAFCo) considers annexation applications. Two of these laws
have a direct bearing on the City's northern Sphere.
First, LAFCos are now required to include (or add) unincorporated `islands' (defined to be areas
that are surrounded by incorporated cities on the majority of their boundaries) in nearby
annexation requests, if the annexation request would leave the `island' unincorporated. TeRa
Nova staff consulted with LAFCo staff regarding the Bermuda Dunes area, and concluded that
3
'l�crra Nova/City of Palm Descrt
Land Use and f�iscat lmpacts of the Northern Sphere R. Bermuda Dunes Areas
Bermuda Uunes would be considerc;d an island, and would t�e added to a northern Sphere
anncxation rcqucst, if such an applicaiiun were tilcd.
Second, LAFCos are nc�w rc;quired to identify "disadvantagc;d unincorpc�rated communities"
(DUCs), and must include them in annexatiun reyucsts filcd in proximily t<� the DUCs. There are
three DUCs in the community of T'housand 1'aims, with the furthest easterly being the Jack Ivey
Ranch. 6ased on discussion with t,A[�t;o st,alf, "1'erra Nova recommendcd t�� the City that Ivey
Ranch be included in the analysis of any area for potential annexation.
In 2012, LAFCo completed a Sphere of influence amendmcnt for the City of Caihedral City,
which exiended its Sphere from UaVall Drive on the west, to the western end of Palm Desert's
Sphere of lnfluence. The boundary was determined in (arge parl by the commitment made by the
LAFCo Board to keep Thousand Palms as one unit, and not divide it between multiple cities
wl�en the time came for annexation.
In May oi� 2�13, the City of Palm Desert considerec! the previously prepared fiscal impact
analyses, the extension of the Cathedral City Sphere, and the repeated requests of land owners in
the Sun City area, and the Berger Four+dation, and requested further analysis of the area. The
request focused not on an update of the data, but rather on how the annexations could be made
"revenue neutral" or "revenue positive."
This report presents the results of that analysis, and provides information on both (and use
changes necessary to achieve the desired results, and to pay for the capital improvements
required in both areas. It is important to note that no market feasibility analysis was conducted as
part of this task. Therefore, it is not known whether the land uses assigned to the properties in
this report can be supported by market growth.
4
'ferra Nova/City of Palm Desert
l.and Use and Fiscal Impacts of the Northern Sphere & Bermuda Dunes Areas
I1. Summary of Current Conditions
This repurt relies �m previousiy compieted analyses, and additions completed by Terra Nova to
address the scope of work. �'liree geographic areas were studied: Bermuda Dunes, the Jack Ivey
Ranch and immediately adjacent lands to the west, and the area described as Scenario B in
pcevious anllyses, which included the City's Sphere of Influence nortf� of lnterstate 10, and lands
to the west of the Sphere up to the eastern boundary of Jack Ivey Ranch. This area, previously
referred to as "Scenario B," is identified as the Northern Sphere Area in this report. The study
area boundary is sliown in Exhibit 1. In total, tlie study area now encompasses 4,944.4 acres.
For each geographic area, an analysis of the costs and revenues associated with existing
development has been prepared, either from existing sources or, in the case of the Jack Ivey
Ranch area, new analysis was completed as part of this study.
Vacant lands were then considered for future development, based on the County's General Plan
land use designation, adopted Specific Plans in the County, and Palm Desert General Plan land
use designations, as applicable. A cost and revenue analysis was conducted, based on a 20 year
build out (actual build out may take more or less than 20 years). The spreading of devetopment
shows the progression of costs and revenues, and helps to determine whether a particular level of
development is necessary to achieve revenue neutrality.
Finally, the existing develapment and vacant land analyses were combined, to determine the total
costs and revenues for each geographic area, and for the study area as a whole.
To maintain a consistent approach, the analysis methodology was not altered from the 2011
analysis compieted for the City, with one exception. Franchise Tax revenues, which had not been
included in the 2011 analysis, were included in all analyses presented in this report. Franchise
taxes are paid by utility companies for use of the City's right-of-way. Currently, they are
collected from waste, gas, cable, and electric providers and total $2.8 mil(ion annually in General
Fund revenues. Given the City popula[ion of 48,445 (2010 Census), this equates to annual
revenues of $57.79 per capita. This per capita assumption was used for all geographic areas,
assuming that once annexed to the City, the same fees would apply. A description of the analysis
methodology can be found in Appendix A.
5
Terra Nova/City of Palm Desert
L�nd Use and Piscal Impac.�ts of the Northem Sphere & Berniuda Dunes Areas
A. Bermuda Dunes
The community of Bermuda Dunes abuts the C'ily at its northeastern baundary. Bermuda Dunes
is bounded by Washington Street cm thc west, the railroad right of way on the north, the
Jefferson Strecl interchange on thc east, and lhc C:ily of La Quinta on the south (extending as far
south as Fred Waring Drive for the southern boundary of th� Bennuda Dunes golf course).
Bermuda Dunes is primarily a residential community, although the Washington Street corridor
has been developed with commercial office and retaii projects, and some high density residential
projects as well. Business park and industrial lands are partially developed along the raitroad
right af way, as is the Bermuda Dunes Airport.
The Berinuda Dunes Airport is a privately owned facility catering to general aviation. Expansion
of the airport is precluded by surrounding development, although the airport does have remaining
capacity. The Riverside County Airport Land Use Commission, which has jurisdiction over the
airport from a safety and tand use perspective, has prepared a number of plans for the airport,
including its Land Use Plan and a Compatibility Plan. The latter document dictates land use
safety zones that limit the intensity of development based on proximity to the airport, in order to
protect the public in the event of an accident. These regulations also have an impact on the
potential land uses likely to develop adjacent to the airport in the future. The Compatibility Plan
alsa states that oniy small business jets can land at the airport, due to obstruction zone
limitations�. Therefore, although the number of flights may increase, the types of aircrafi using
the airport are unlikely to change, and large jet aircraft will not be able to land at Bermuda Dunes
in the future. These limitations will affect the airport's expansion potential.
According to the Bureau of the Census (2011), there are 7,047 people living in Bermuda Dunes,
and a total of 3,927 housing units, 2,885 of which are occupied.
The land uses in the Bermuda Dunes area are summarized in Table 1, below. As shown in the
Table, Bermuda Dunes is largely developed (86% of lands are developed), and little vacant land
remains for development in the future.
� Riverside County Airport Land Use Compatibitity Plan, prepared by the Riverside County Airport Land Use
Commission, October 2004.
7
0
't'erra Nova/City of� Nalm Deser!
Land Use and Fiscal Impacts of the Northem Sphere &[iermuda Dunes Areas
Table l
Bermuda Dunes Land Uses
(Vacant and Developed)
General
Plan Code Genera! Plan Description Developed Vacant Total
Very Low Density
VLUK Residential (19.9
�:DK Estate Density Residentia] ] 05.8
LDR Low Density Residential 22.&
MDR Medium Density Residential 553.7
HDR High Density Residential 135.5
CR Commercia7 Retail 53.0
CO Commercial Oftice 8.0
CT Commercial Tourist 1.8
L,l Light Industrial 106.6
OS-R Open Space - Recreation 206.8
Grand Total 1,313.9
Note: Acreage does not include 258.8 acres of street ri�ht of way.
14.1
39.8
5.9
78. l
9.9
11.9
4.0
0.3
49.8
0
214.0
134.0
145.6
28.7
63 t .8
145.4
64.9
i 2.0
2.0
156.4
206.8
1,527.8
In 2007, the City contracted with MuniFinancial for the preparation of a fiscal impact analysis
for the Bermuda Dunes community. For purposes of this report, no changes were made to this
analysis. Given the economic slowdown of recent years, the reduction in property values and
City budgefs, the calculations in that report are expected to be representative of current costs and
revenues, even without adjustment for inflation.
The MuniFinancial report inctuded the costs and revenues associated with the annexation of the
Bermuda Dunes area, and determined that operationa! costs would exceed revenues by $5.6
million annually. For projections associated with build out of Bermuda Dunes, it has been
assumed that existing developed Iands would continue in their current use. This results in a
constant-dollar ioss, if the City were to annex the area, of $5.6 million annually through build
out, as shawn in Table 2.
8
'fcrra Nova/City of Palm Desert
Land Use and Fiscal hnpacts of'the Narthern Sphere & Bermuda Dunes Areas
Table 2
Costs/Revenues Summary Table
Bermuda Dunes - existin� development, FY 20117/08�
ANNUAL REVENUES
GenerAl �und:
Property '1'aa
Property Transfer Tax
Sales Tax
Transient Occupancy 'Ca� (trom hotels/motels)
Transient Occupancy Ta� (from timeshares)
Annual Timeshare Fees
Moto�- Vehicle In-Lieu Revenue
Franchise Tax
Miscelianeous Revenue`'
Total AnnuAf Ceneraf Fund Revenue at Phase
Build out:
Restricted Funds:
Highway Users Gas Tax
Measure A Funds'
Prop. A Fire Ta�
Structural Fire Taa
Total Anaual Restricted Fund Reveaue at Phase
Build out:
Totals:
Total Annual Revenues at Phase Build out:
Historic Average Interest Rate, 90-day Treasury Bill°:
Anticipated lnterest on Revenues:
Total Annual Revenues with Interest at Pbase
Bnild out:
ANNUAL COSTS
General Fund:
General Government
Police Protection
Road�vay Maintenance
Total Annual General Fund Costs at Phase
Snild out:
Build out PhAse
Phr�se [ Ph�se 1t Phase Ill Phas� lV
(Yrs 1-5) (Yrs G-l0) (Yrs 11-15) (Yrs 16-20)
$244, I 22
$36,394
$707, I 00
$128.108
n/a
n/a
�154,199
5106,012
5212.787
$244, I 22
�36,394
$707,100
$128.108
n/a
n/a
$154,199
$ I 06,0 I 2
$2I2.787
$244,122
�36,394
$707,100
$128.108
n/a
n/a
$i54,199
$106,012
$2 I 2,787
$244,122
536,394
$707,100
$128.108
n/a
n/a
$154,199
$106,012
5212,787
S 1,588,722
$53,584
n/a
$153,221
$169,619
$3'76,424
$1,965,146
n/a
$379,658
52,344,504
�3,659,922
$ i ,729,459
$1,513,770
S6,903,151
51,588,722 51,588,722 $1,588,722
$53,584 $53,584 $53,584
nJa n/a nla
$153,221 $153,221 5153,221
$169,6 ( 9 $169,619 S 169,619
5376,424 5376,424 5376,424
$1,965,146 a1,965,146 $1,965,146
n/a n!a n/a
$379,658 $379,658 5379,658
S2,344,804 52,344,804 52,344,804
$3,659,922 �3,659,922 53,659,922
$1,729,459 �1,729,459 $1,729,459
$1,513,770 $1,513,770 51,513,77Q
�6,903,151 56,9(l3,151 56,903,151
Restricted Funds:
Fire Protection $1,075,480 $1,075,480 $1,075,480 $1,075,480
Ambulance Services n/a n/a n/a n/a
Totat Annnal Restricted Fund Costs at Phase 51,075,480 �1,075,480 51,075,480 51,075,480
Build out:
Total Annual Costs at Phase Build out': 57,978,631 57,978,631 S7y78,631 S7,978,631
Projected Annnal Caal�}tow at P6ase Bo�d onh -S.S,633,8Z7 -SS,633,827 -55�,633,827 -�.5,633,827
' From Tables I and 2, Er,hibit C, "Bermuda Dunes Anncr.ation Fensibility Report," MuniFinencial, Sept. 3007.
� Includes re��enue from "other" taxes, business licences, grants & subventions, fines & forfeitures, and contributions from private sources-bonds.
' Measure A recenues were not identified by MuniFinancial.
' lnterest rate wes not identified by MuniFinancial_
s Toial annuel costs do not include 51,805,047 in Capital Improvements shown on MuniFinencisl report, Er.hibit C, Teble 2.
9
"!'ciTa NovalCity of Palm Desert
Land Use and Fiscal Impacts of the Northern Sphere & Bermuda Dur�es Areas
ln c�rder to delermine the casts and revenues of vacant lands, build out projections for vacant
lands in Rermud� Duncs were dcvelopc:d by land use category. Thesc assumpfions are
summarized in `Cable 3, belaw. The land usc:s used are those identified in thc Riverside County
Genc;r�l Pian (consiste.nt with the land use assumptians used in 2007).
Tabie 3
Bermuda Dunes Vacant Acreage
Development Assumptions at Build Out
l.and Use Designation
Estate Density Residentiai (2 ac. min.)
Very Low Density Residential (I ac. min.)
l,otiv Density Residential ('/z ac. min.)
Medium Dei�sity Residentia! (2-5 du/ac)
High Density Residentiai (8-14 du/ac)
Commercial Retail
Commerci�l Oftice
Commercial Tourist
Light (ndustrial
Acreage
39.8
14. i
5.9
78.1
9.9
I I .9
4.0
0.3
49.8
Potential Potential Potential
Dwelling Square Hotel Potentia!
llnits� FootAge2 Rooms Population'
l9 SF -- -- 39
t4 SF -- -- 29
10 SF -- -- 20
331 SF -- -- 688
117 SF -- -- 243
-- t 14,040 125 --
-- 38,333 -- --
-- 2.875 -- --
-- 477.243 -- --
Total: 213.8 491 632,491 125 I,019
' Assumes fature residential development will occur at 85% of the ma�imum density permitted. Where minimum
density is i acre or greater, assumes future development will occur at 100% of the permitted density.
SF = single-family dwelling unit. MF = multi-family dwetling unit.
' Assumes future building square footage will cover 22% of the lot, �vith the remainder of the lot available for•
access 1•oads, parking, landscaping, anci other anciJlary uses.
3 Based on Palm Desert average of 2.08 pe�sons/household (2010 U.S. Census).
Based on these build oat assumptions, the fiscal model was completed to determine the potential
costs and revenues associated with build out of vacant iands in Bermuda Dunes. The summary
results of this anaiysis are shown in Table 42. An even development pattern was assumed over a
20 year build out. As shown in Table 4, the build out of the vacant lands in Bermuda Dunes will
resuit in a small annuat negative cash flow. This is primarily associated with the fact that much
of the vacant land in the Bermuda Dunes area is expected to deveiop in non-residential land uses,
which generate more revenue and result in lower costs than residential development.
� Detailed analysis tables for all cost and revenue categories are found in Appendi� B. The Appendix is available
from the P[anning Department in either paper or etectronic format.
10
"('erra Nova/City of Palm Desert
Land Use and f'iscal Impacts o!'the Northern Sphere & Eiermuda Dunes Areas
Table 4
Costs/Revenues Summary Table
Bermuda Dunes - futnre deve{opment
ANNUAL REVENUES
Gener�l Fund:
Property Tax
Property Transfer Ta�
Sales Ta�
Transient Occupancy Tax (from hotels/motels)�
Ti•ansient Occupancy Tax (from timeshares}�
Annual Timeshare Fees�
Motor Vehicle In-Lieu Revenue
Franchise Tax
Total Annual General Fund Revenue at Phase Buiid out:
Restricted Funds:
Highway Users Gas Tax
Measure A Funds
Prop. A Fire Tax
Structural Fire Tax
Total Annual Restricted E'und Revenue s►t Phase Build out:
Total Annual Revenues at Phase Build out:
Historic Average Interest Rate, 90-day Treasury BiU:
Anticipated Interest on Revenues:
Total Annnal Revenues wit6 tuterest at Phase Build out:
ANNUAL COSTS
Build out Phase
Phasc 1 Ph�se II Phsse 111 Phase IV
(Yrs 1-5) �Yrs 6- (Yrs l I- (Yrs 16-
10) l5) 20)
$ I 4,325
$3,474
$85,792
$0
�0
SO
�824
$14,830
$ I 19,245
$5,997
$721
$7,905
$24,025
538,64'1
$157, 892
4.39%
$6,931
S 164,824
$28.649
$3 J07
$171,584
�253,561
$0
$0
� I .647
$29,660
�488,809
$11,994
$1,441
$15,810
�48,049
577,295
$566,104
4.3 9%
�24,852
5590,956
$42,974
$3,940
$2�7,376
�253,561
$0
�0
$2.471
$44,490
5604,813
$17.991
$2,162
$23,715
$72,074
S 115,942
$720,755
4.39%
$31.641
5752,396
$57,304
S4, I 73
$343,168
$253,561
$0
�0
$3,295
$59,230
5720,731
523,989
$2.883
$31,620
596,107
$154,598
$875,330
4.39%
�38,427
S913,756
General Fund:
Genera) Government $73,943 $147,886 5221,535 5295,479
Police Protection $94,844 S 189,687 $284,531 $379,375
Roadway Maintenance $45,917 $91,833 $137,751 $183,668
Total Annaal General Fund Costs at P6ase Build out: 5214,703 5429,407 5643,818 5858,521
Restricted Funds:
Fire Protection
Ambulance Services'
Total Annual Restricted Fund Costs at Phase Build out:
Total Annual Costs at P6s�se Build out:
Projectad Annnal Cashflow at Phase Baild oat:
551,830
0
$S 1,830
5266,533
-5101,710
5103,660 5155,490 $207,320
0 0 0
5103,660 5155,490 $207,320
5533,067 $799,308 51,065,841
$.57,889 -S4b�11 -5152,085
� One new hotel was assumed to occur within the �acant Commercial acreage, totaling 125 rooms.
2 Assumes ambulance services in place.
Finally, the costs and revenues for both existing development and build out conditions were
combined, to determine the total costs and revenues for Bermuda Dunes for both developed and
vacant lands. The total anticipated shortfall at build out, assuming development consistent with
current land use designations, wilf total $5.8 million annua7ly.
m
0
"I'ciTa Nov:+/City of� Paim Uesert
Land Use and Fiscal lmpacts of the Northern Spherc &: E3ermuda Dunes Areas
Tab(e 5
Costs/Revenues Summary Table
Bermuda Dunes - existing + future development
Build out Phase
Phasc 1 Phase II Ph�se II! Phase IV
(Yrs i-S) (Yrs 6-10) (Yrs ! 1-15) (Yrs 16-20)
ANNUAL REVENUES
Gcnera! Fund:
Property Tax
Property Transfer'rax
Sales Ta�
Transient Occupancy Tax (fi•om hotels/motels)
Transient Occupancy Tax (from timeshares)�
Annual Timeshare Fees�
Motor Vehicle ln-Lieu Revenue
Franchise Taz
Miscellaneous Revenue'`
'1'otal Annual General Fund Reveoue at Phase
Buitd out:
Restricted Funds:
Highway Users Gas Tax
Measure A Funds
Prop. A Fire Tax
Structural Fire Tax
Totai Annuat Restricted Fund Revenue at P6ase
Build out:
Total Annual Revenues at Phase Build out:
Historic Average lnterest Rate, 90-day Treasury
Bill':
Aniicipated Inierest on Revenues:
Total Annual Revenues wit6 Interest at Phase
Build out:
ANNUAL COSTS
Genera! Fund:
General Government
Police Protection
Roadway Maintenance
Total Annual Cenera! Fund Costs at Phase Build
out:
$258,447
$39,868
$792.892
$128,108
n/a
n/a
�155,023
$120,842
$2I 2,787
S 1,707,967
$59,581
$721
$161,126
� 193,644
5415,071
$2, l 23,038
n/a
$386,589
52,509,628
$3,733,865
$1,824,303
$1,559,687
$7,117,854
$272.77I
$40,10 I
$878,684
$381,669
n/a
n/a
$155,846
$135,672
$212,787
52,0�7,531
$65,578
$1,441
$169,031
$217,668
$453,719
$2,531,250
n/a
$404,5 I d
52,935,760
$3,807,808
$ ] ,919,146
S l ,605,603
$7,332,558
$287,096
�40,334
�964,476
$3 81,669
n/a
n/a
$156,670
$150,502
5212,787
S2, I93,535
571,575
$2,162
$176,936
$241,693
$492,366
�2,685,901
n/a
$411,299
53,097,200
$3,881,457
$2,013,990
S1,651,S21
$7,546,969
$301,426
�40,567
a 1,050.268
�381,669
n/a
n/a
$157,494
$165,242
$212.787
$2,309,453
$77,573
$2,883
$184,841
$265,726
5531,022
$2,840,476
n/a
�418,085
53,258,560
$3,955,401
52,108,834
$1,697,438
$7,761,672
Restricted Funds:
Fire Protection $1,i27,310 $1,179,140 $1,230,970 $1,282,800
Ambuiance Sei•vices° n/a n/a n/a n/a
Total Annual Restricted Fund Costs at Pf�ase $��127,3t0 51,179,140 51,230,970 $l,282,800
Build out:
Total Annual Costs at Phase Build out: 58,245,1b4 58,511,698 58,777�39 $9,044,472
Projected Annas! Cashflow at Phsse Baikl ont: �5,735,537 -SS,S75,938 �5,680,738 -S5,'185,912
' No timeshare de�elopment is (ocated in Bermuda Dunes or anticipared in the future.
' Includes revenue from "other" taaes, business licenses, grants & svbventions, fines & farfeitures, and contributions from private sources-bonds.
'Interest rates used are diffcrerrt on the existing development report nnd Futun de�elopment repor[.
' Ambulance costs are inciuded in Northern Sphere Area.
�Z
Terra Nova/C'ily of Paim Uesert
Land Use and Fiscal Impacts of the Northern Sphere 8, Bermuda Dunes Areas
B. Jack Ivey Ranch
Or► the western end of thc study area, thc Jack lvey Ranc:h, and vacant lands immediately
adjacent ta it, were added to the boundary. These lands were inciudc;d because. the Ranch is
identified as a DUC by LAFCo, and an annexation application by the City would result in a
requirement to include this DUC within the boundary, because of its adjacency. T'he Ranch is
fully developed, and die vacant lands are propou;d for higher density residential development in
the County's General Ptan. The vacant lands were included to "square off' the annexation area,
and follow parcel lines. The land uses within this area are summarized in Table 6. As shown in
the table, the only remaining vacant lands are designated for residential development in the
iuture.
There are currentty 384 units in this area, and an estimated popuiation of about 770 people.
Table 6
Jack Ivey Ranch Land Uses
(Vacant and Developed)
General Pian
Code
MDR
HDR
OS-R
Crand Total
General Plan Description
Medium Density Residential
High Density Residential
Open Space - Recreation
Developed Vacant TotAl
53.4 2.4 55.8
8.0 62.9 70.9
49.4 49.4
110.9 6.i.3 176.2
Note: AcreaKe dces not include 14.9 acres of sh�eet ri�ht of �vay.
In order to develop a build out scenario for the Ranch, land use assumptions were completed and
are depicted in Table ?.
Table 7
[vey Ranch Country Club
Vac$nt Acreage
Potenrial Potentia)
Dwellin$ Square
Land Use D�signation Acreagc Units �ootage�
Medium Densiry Residential (5-8 du/ac) 2.4 16 SF --
High Density Residential (8-14 du/ac) 62.9 748 SF --
Total: 65.3 764 SF --
' Assumes future residential development will occur at 85% of the maYimum density permitted.
SF = single-faznily dwelling unit. Iv�' = multi-family dwelling unit.
Z No commercial, industrial, or hotel/motel develoQ►nent is anticipated on these � acant parcels.
; Based on Palm Desert a� eraAe of 2.08 persons per household (2010 U.S. Census).
Potential
Hotel Potential
Rooms2 Population3
-- 33
-- ],555
-- 1,588
Using the existing development data, and the build out assumptions shown in Table 7, a cost
revenue model was developed for the area. Its conclusions are shown in Table 8. As shown in
this Table, the build out of the Ranch will result in an operational shortfall af $1.4 million
annually. Immediately following annexation, the City would expect to see a shortfall of about
$72Q,000 annually.
13
"I'en�a Nova/City of f'alm Descrt
i,anci Use and f'iscal lmpacts of the Norihern Sphere & Bermuda Dunes Areas
Table 8
Costs/Revenues Summary Table
[vey Ranc6 - existing + future development
Build out Phase
Pbase 1 Phase tl Phase 111 Ph�se IV
(Yrs t-S) (Yrs 6-10) (Yrs i 1-15) (Yrs 16-20)
ANNUAL REVENUES
Ceneral Fund:
Property '1'ax
Property '1'ransfer "('ax
Sales Tax�
Transient Occupancy Tax (ti•orn hotels/motels)'
Transienl Occupancy "I'a� (from timeshares}'
Annual Timeshare �ees?
Motor Vehicle tn-Lieu Revenue
Franchise Tax
Total Aonual Cenera! Fund Revcnue at Phase
Build out:
Restricted Funds:
Highway l)sers Gas Tax
Measure A Funds"
Prop. A Fire Tax
Strucwra) Fire Tax
Total Annual Restricted Fund Revenue at
Phase Build out:
'iotal Annuat Revenues at Phase Build out:
Histo�yc Average lnlerest Rate, 90-day T'reasu�y
Bill:
Anticipated Interest on Revenues:
Total Annual Revenues with Interest at Phase
Build out:
ANNUAL COSTS
GenerA! Fund:
Genera[ Government
Police Protection
i2oadway Maintenance5
Total Annual Ceneral Fund Costs at Phase
Build out:
$4 I ,469
�8.180
$970
$0
$o
$0
$1.27�
569,100
St20,946
$27,944
$0
$35,550
$69,577
$133,071
$254,067
4.39%
$1l,154
5265,220
$337,191
�405,346
$0
$742,537
$58,141
$8.599
$970
�0
SO
$0
$2,553
$92,084
S 162,347
$37,238
$0
547,010
$97,538
$181,787
$344, I 34
4.39%
$15,107
5359,241
$449,345
�540,170
�0
5989,516
$74,813
$9,018
$970
$0
So
$0
$3,830
$115,068
5203,699
$46,533
$0
$58,47Q
$125,500
$230,503
$434,20 I
4.39%
$19,061
$453,263
5561,500
5674,995
�0
$1,236,495
$91,485
$9,437
$970
$0
$o
SO
$5,107
$138,051
$245,050
$55,827
$0
$69,930
� 1 �3,46I
5279,2,18
$524,269
4.39%
$23,015
5547,284
a673,655
5809,819
SO
S1,483,474
Restricted Fueds:
Fire Protection $242,642 $323,290 $403,938 �484,585
Ambulance Services� $0 $0 $0 a0
Total Annual Restricted Fund Costs at Phase $242,642 S3Z3,29d $403,938 $484,585
Buiid out:
Total Aunual Costs at Phase Baitd out: $985,179 51,312,805 $1,640,432 51,968,059
Projected Annoftl Csshflow st PhAse Bnild oat: -5719,959 -5953.564 -52,187,170 -51,420,775
' Includes eaisting gift shop sales.
� No hotels, motels, or timeshares eaist or are anticipated in iveV Ranch.
' Measure A fw�ds are derived from sales tax and cominercial development which dces not occur in [vey Rench and is tiot anticipated in the
future.
5 Roads in h ey Ranch are pmate and will continue to be pri�ately maintained.
`' Ambulance costs were projected as part of Northem Spliere Area.
14
'fcira Nc�va/City of P�Im Descrt
Land Use and Fiscal Impacts of the Northe�r Sphere & Bermuda Dunes Ares�s
C. Northern Sphere Area
The Northern Sphere Area b�undary is consislent with the area sludic:d in 2011 lhal was then
identified as "Scenario I3," and encompasses lands in the City's Sphere of Inilucnc;e narth af
Interstate 10, as well as lands to the west of the Sphere, and currently in Cathedral City's Sphc:rc
of fntluence. These tands have a widc range of land use designations, as shown in Tables 9 and
I 0.
'1�here are four approved Specific Plans in tt�e Northern Spl�ere Area:
• SP 281 is the Sun City Specific Plan
• SP 343 is the Classic Club Specific Plan
• SP 225 is the Berger Foundation Specific Plan for lands west of Cook
• SP 338 is the Misasera Specific Plan
Table 9
Nortfiern Sphere Area - Developed Acreage
Existing Existing Existing
Dwelling Square Hotel Existin�
Land Use Designation Acreage Units� FootageZ Rooms Popolation
SP-281 Single-Family Residential 792.0 4,985 SF -- -- 9,000
SQ-28 { Golf Course
SP-281 Commercial
SP-281 Commercial (Hotel)
Riv. Co. Commercial Retail
Riv. Co. Commercial (Hotel)
Riv. Co. Comm.lTourist (RV Park)
Riv. Co. Industrial - Light
SP-281 Fire Station
I-10 Corridor
Railroad Corridor
Single-Family Residential
SP-343 Golf Course/Facilities
SP-225 Private School
SP-225 RV Storage
Agriculture
I-10 Corridor
Railroad Corridor
4353 -- -- -- --
29.0 -- 277,912 -- --
2.2 -- 50,000° 72 --
21.1 -- 202.205 -- --
1.4 -- 40,0004 82 --
26.3 -- -- -- --
56.6 -- 542,409 -- --
3.5 -- -- -- --
79.2 -- -- -- --
38.8 -- -- -- --
1.3 1 SF -- -- 2
245.9 -- -- -- --
96.0 -- -- -- --
5.2 -- -- -- --
9.3 -- -- -- --
52.8 -- -- -- --
34.1 -- -- -- --
'1'ot81: I,y3U.0 4,ytib I,IIZ,SZ6 l54 9,UUZ
� 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,
�azking, landscaping, and other ancillary uses.
Includes an estimated 9,000 residents in Sun City (provided by Paul Brady, Sun City Commwiity Assoc., Oct. 2011), and
one additiona) dwelling unit at 2.08 persons/household (2010 U.S. Census).
� Estimate for 72-room and 82-room existing hotels at WashinRton and Vamer.
15
'I'en•a Nova/City of Palm DeseiK
Land Use and Piscal Imp�ct�s of the Noithern Sphere & Bermuda Dunes Areas
Ta b!e 1 Q
Northern Sphere Area - Vacant Acreage
Potentiai Potential
Uwelling Squarc
L�nd l(se Designution Acre�ge llnits� Footage2
Non-Develupable
SP-281 Communitv Associ�tion
Public lltility (IID, CVWD)
Public Agency (County, Statc)
Riv. Co. Upen Spacc/Water
SP-338 Open Space�/Parks/R��ads
SP-225 Regional Circulation
Non-Developable Subtotal:
Developable
PD Medium Density Residential (4-lU du/ac)
Riv. Co. Medium-High Density Resid.(S_8
du/ac)
SP-338 High Density Residential ( I 2 du/ac)
SP-338 Mixed Use Residential (16 du/ac)
SP-338 Veiy High Density Resid. (20-25
du/ac)
SP-281 Commercial
PD Communitv Commercial
PD Industrial - Business Park
PD Industriai - t,ight
SP-338 Commercial Retail
SP-338 Mixed Use Hote!
SP-338 O�ce/Business Park
27I.0 -- --
I 8. I -- --
5.3 -- --
I 0.4 -- --
39.5 -- --
6.4 -- --
350.7
1 13.3 963 SF --
30.8 209 SF --
22.6 230 SF --
10.5 142 MF --
66.4 1,411MF --
3.0 -- 28,750
10.7 -- ] 02,540
28.0 -- 268,330
26.6 -- 254,913
I 7.6 -- i 68,664
3.1 -- 100,000
18.8 -- 180,164
Potential
Notel Potential
Rooms Populations
-- 2,003
-- 434
-- 478
-- 295
-- 2,934
150 --
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 Vi11as (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 Mi�ed Use Retait Village (4.14 du/ac) 36.2 127 MF 346,912 -- 264
SP-343 ladustrial Park 69.6 -- 666,991 -- --
SP-343 Executive Office ] 6.0 -- l 53,331 -- --
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 cecur at 85°0 of the maxinnim densiry }xnnitted. SF = single-family dwelling unit. MF = multi-
family dwelling unit.
' Assumes future building square footage will cover 22°0 of the lot, with the remainder of the lot available for access roeds, parking,
landscaping, and other ancillary uses. Exception is SP-343 Community Commerciat, where the Specific Plan calls for a maximum of 100,000
sq. ft. at build out, which is less than 23°'0 !o! co�erage. Hotel square footage is estimated for one 150-room highway-sening hotel in
Mirasera, and one 350-room resort hotel in SP-343.
' Based on Palm Desert avera�e of 2.08 persons/household (2010 U.S. Census).
The Northern Sphere Area studied in 2411 was not attered fram its original analysis, with the
exception of the addition of Franchise Tax fees, as explained above. The fiscal model was altered
to add Franehise Taxes, and resulted in the follawing costs and revenues, as shown in Table i 1.
16
'ferra Nova/City of Palm Uesert
l.and Use and Fiscal Impacts of the Northern Sphere & Bermuda Dunes Areas
Table I1
Costs/Revenues Summary Tabte
Northern Sphere Area - existin� + future development
BuiWout Phs�se
PhAse 1 Phase II Phase 111 Phase IV
(Yrs I-5) (Yrs 6-10) (Yrs 1 I-lS) (Yrs IG-20)
ANNUAL REVENUES
Gencral Fund:
Property Tax
Propei�ty Transfer Tax
Sales Tax
Transient Occupancy Tax (fi•om hotels/motels}
"I'ransient Occupancy Tax (fi•om timeshares)
Annual Timeshare Fees
Motor Vehicle In-Lieu Fees
Franchise Tax
Totai Annual Gen. Fund Revenue At Phase
Build out:
Restricted Funds:
Highway Users Gas Tax
Measure A Funds
Prop. A Fire Tax
Structural Fire Tax
Total Annual Restricted Revenue At Phase
Build out:
Total Annual Revenues at Phase Buildout:
Historic Average Interest Rate, 90-Day Treasury
Bill:
Anticipated lnterest on Revenues:
Total Annual Revenues w/Interest at Phase
Buiid out:
$828,05 I
$99,321
$2,35I ,230
$699,401
$27,600
$69,OOQ
$35,720
$643,076
$915,581
$1Q0.819
�3.082.812
$ l ,086,4 ! 5
$55,200
$ l 38,000
$42,544
$76�,927
S I ,003,1 I i
�102,317
$3,814,394
$ I ,473,429
$82,800
5207,000
$49,368
$888,777
$1,092,730
$103,815
$4,545,977
S 1,860,443
$ I 10,400
$276,000
$5G, I 92
$1,011,628
ANNUAL COSTS
Gcoeral �nd:
General Government
Police Protection
Roadway Maintenance
Total Annual Generat �nd Costs at Phase
Buiid out:
54,753,399 �b,187,297 S7,b21,196 $9,057,184
$260,057 �309,737 $359,417
$19,750 $25,896 $32,041
$362,3 i 0 $417,360 �472,410
$1,390,525 $1,537,325 $1,684,125
52,032,642 $2,290,318 S2,S47,993
$6,786,041 $8,477,615 $10,169,189
439% 4.39% 4.39%
$297,907 $372,167 �446,427
$409,097
$38,186
$527,460
$1,834,430
52,809,174
�11,866,358
4.39%
�520,933
S7,Q83,948 58,849,783 510,615,61'7 512,387,291
�3,152,797 �3,759,641 �4,366,485 �4,973,329
53,847,211 a4,605,243 $5,363,275 �6,121,307
$508,143 $587,731 5667,327 $746,916
$7,508,151 $8,952,616 $10,397,087 $11,841,553
Restrictecl Fnnds:
Fire Protection $1,615,994
Ambulance Services' $940,944
Total Annua! Restricted Costs at P6ase Build
out: 52,556,938
Total Annual Costs at Phase Build out: S10,065,089
Projected Anaasl Cs�lWw at PLeee B�iW ��1,l41
o��t:
' Does not include one-time (year 1) start-up ambulance costs ofS190,000.
$1,731,582 $1,847,171 $1,962,759
$940,944 $940,944 �940,944
SZ,672,526
511,625,142
�52,'775,359
S2,788,115
513,185,202
-S2,569,S8b
52,903,703
514,745,256
-52,357�64
��
'I'erra Nova/City of Palm Desert
l.and Use and F�iscal Impacts of the Northern Sphere & Bermuda Dunes Areas
As shown in the 7'able, although the net def7cit is reduc:ed as the area builds out, the City can still
expect a negative c;ash flow as a result c�f' annexation of the Nurthern Sphere Area (as originally
slud icc!).
D. Entire Study Area
[n c�rder to dctennine what the costs and revctiues wciuld be of ihe expanded study area, aIl d�ree
geographic areas' costs and revenues wcre combincd. The results of this analysis are shown in
Tabie 12. As sliown in the '�'able, the City can expect an initial shortfall of $9.3 million annuaily,
and a build out sllortfall of $9.6 miliion an��ually if the study area deve[ops according to existing
land nse designations. The single largest contributor is the Bermuda Dunes area, which
represents GO% of the shortfall, while accounting for 3l% of the tand area. This is due to the
concentration of residential development, the relativety smali amount of commercial retai!
development, and the lack of significant potential for hotel development.
]t sliould be noted that histarically the cost of police protection has increased more rapidly -
especially aiier an annexation -- than ali other casts of providing services. This study assumes
that a(I costs stay the same reiative to one aiiother. in the event that annexation is considered
further, the escalation of the cost of police protection should be analyzed in greater depth, using
information obtained from previous annexations.
Table 12
Costs/Revenues Summary Tabte
Northern Sphere Area + Bermuda Dunes + Ivey Ranch
Build 4ut Phase
Phase I
(Yrs 1-5)
ANNUAL REVENUES
General Fund:
Ptoperty Ta�
Property Transfer Tax
Sales Ta�
Transient Occupancy Ta� {from hotels/motels)
Transient Occupancy Ta� (from timesha�•es)
Annual Timeshare Fees
Motor Vehicle In-Lieu Revenue
Franchise Taa
Miscel[aneous Revenue�
Total Annual Ceneral Fund Revenue at Phase
Build oat:
Restricted Funds:
Highway Users Gas Tax
Measure A Funds
Prop. A Fire Tax
Suuctural Fire Ta�:
$1,127,966
$ I 47,369
a3,145,092
�827,509
$27,600
�69,000
$192,020
�833,Q18
$332,032
P6ase II Phase 111 Phase IV
(Yrs 6-10) (Yrs 11-15) (Yrs 16-20)
� 1,246,493
$149,519
$3,962,466
$1,468,084
$55,200
$138,000
$200,944
$993,682
$2 l 2,787
$1,365,020
5151,669
54,779,841
S 1,855,U98
$82,800
$207,000
$209,868
$1,154,34�
$212.787
$1,485,641
5153,819
�5,597,215
52,242,112
� 110,400
5276,000
$218,792
$1,314,921
5212,787
56,701,606 58,427,176
$347,582 $412,554
$20,471 $27,337
$558,986 $633,401
$1,653,746 $1,852,532
18
S10,018,429
$477,526
$34,203
$707.81 b
$2.051,3 I 8
S 11,611,688
$542.497
$41,069
�782.23 l
�2,253,617
'T'erra Nova/City of f'alm Dese�Y
Land Use and Fiscal Impacts of the Northem Sphere d. Bermuda Dunes Areas
'1'otal Annnsl Restricted Fund Revenue At PhAse
Build out:
Total Annual Revenues at Phase Build out:
I listoric Average Interest Rate, 90-day Treasur��
Bi{I':
Anticipated Interest on Revenues:
Total An�ual Revennes with Interest at Phase
Build out:
� ANNUAL COSTS
Gencra! Fund:
General Government
Police Protection
Roadway Maintenance
Total Annual General Nund Costs at Phase Build
out:
52,580,785
$9,282,39 I
n/a
$695,650
S9,978,041
$�,223,853
$6,076,860
$2.067.829
S 15,368,542
52,925,823
$ I { .3 52,999
n/a
$791.785
S12,144,784
�8,016,795
$7,064,560
$2,193,334
$17,274,689
53,270,861
$ I 3 Z89,292
n/a
$876.788
$14,1 G6,080
$8,809,443
�8,052,260
52.318,848
S 19,180,551
S3,G 19,414
$15,23 I , I U2
n/a
$962,033
S 16,193,136
59,602,385
$9,039,960
$2,�t44,354
521,086,699
Restrictecl Funds:
Fire Protection $2,985,946 53.234,012 �3,482,078 $3,730,144
Ambulance Services3 $940,944 5940,944 5940,944 $940,944
Totai Annual Restricted �und Costs at P6ase S3�916,89Q 54,174,956 54,423,022 54,671,088
Build out:
Total Annual Costs at Phase Bnild out: 519,295,432 S21,449,645 $23,603,573 �25,757,787
Projected Annual CasLilow at P6ase Bm7d oat: -59,317,391 -59,304,861 �9,437,493 -59,564,651
' Includes revenue from "otlier" ta�es, business licenses, grants & subventions, fines &: forfeitures, and contributions from µrivate sources-bonds, as
calculated for Bermuda Dunes eaisting development b,y MuniFinancial.
' lnterest rates are different in the eaisling development report for Bermuda Dw�es (prepared by MuniFinancial) and other reports (prepared by Terra
Nova).
' Does not include one-time (year 1) start-up ambulance costs of 3190,000.
19
"1'erra Nova/City of Palm Desert
L.and Use and Fiscal Impacts of the Northern Sphere & Beimuda Dunes Areas
Itl. Alternative Land Use Scenario
`fl�is sc;ction addresses the patential changes that can be app(ied to future development to result
in a`revenue neutral' or `revenue positive' cash flow for the City. Exhibit 2 shows the la��d use
designations in thc sludy arca as they are currently approved.
A. Assumptions
In order to provide the City with a complete picture of the study area's development potential,
Terra Nova was asked to consider changes to the land use pattern in the study area. To that end,
the assumption was made that any land use designation on vacant land could be changcd,
including tl�ose land use designations in any of the four adopted Specific Plans.
The properties selected for change from one land use to another were spread across the entire
study area, and are based on location and size. That is to say, for example, that converting small
lots designated low density residential in the center of the Bermuda Dunes area would be
unrealistic and would probably never materialize. Converting industrial lands on Country Club
Drive to retail commercial, however, could occur. Changes were made to the Bermuda Dunes
area and to the Northern Sphere Area. There are insut�icient lands available in the Ivey Ranch
area to make a significant change in the shortfa(1 in this area.
Several assumptions were made in the selection of properties, in addition to size and location:
• Residential development, particularly higher density residential development, has a
greater impact on costs for the City, due to the rapid increase in population (and their
need for City services).
• Commercial office, business park and industrial development may have a relatively low
demand for services, but are also low revenue producers, since they only generate
property tax for the City.
• Commercial retail development generates sales and use tax, which is a significant
revenue source for ihe City.
• Hotel development generates transient occupancy tax, which is a significant revenue
source for the City.
As a result of these assumptions, properties were identified that had the best potential for revenue
generation, and residential properties were considered for lower densities, in order to reduce the
build out poputation.
B. Required Land Use Changes
A hypothetical land use scenario was developed to reflect the assumptions described above. The
resulting changes in land uses are shown on Exhibit 3. T'he changes assumed for purposes of
analysis included:
r�]
'I'en�a Nov�►/City of Palm Deserl
l,and Use and Fiscal Impacls oCthe Northern Sphere K Bermuda Dunes Areas
•"f'he c;onversion of 4! acres ot� Business Park lands to Commercial Reiail (expansion of
the commercial tands immediately u�uth) on the wcst side ofCook Street in the SP-225.
•"[�c� ccmversion of 962 acres of Light lndustria! lands lo Commercia! Retail along the
narth side of Varner Road, in SP-343 and SI'-338.
• The c;onversion of Very High [�nsity lands tc� Muiium Uensity Residential (5-8 units per
acre) in SP-338.
• The convcrsion c�f ! 13 acres c�f Mc;ciium Dcnsity Residential to Commercial Retait east
and west of SP-338.
• The conversion of 22.6 acres of !{igh Uensity Residential to Resort } lote) in SP-338.
• The cortversion of 49.8 acres of' I.,ight Industrial lands to Commercial Retail on the south
side of Country Club Drive in Bermuda Uunes.
• The conversion of 9.9 acres of High Uensity Residentia! to Low Uensity Residential in
Bermuda Dunes.
These ci�anges result in a recluction in housing units, but most signiticantly, in an increase in
retail square footage to 3.3 million square feet of retai[ space (2 million more than currently
approved), and in a total of 900 hotel rooms (400 more than currently approved). These changes
are necessary to increase the sales tax and transient occupancy tax revenues to the City.
As a result of these changes, the study area would become revenue neutra! when approximately
75% oFthe lands are cleveloped, and would ultimately return a positive cash flow at build out. It
is important to note that in the short term, it is impossible to generate sufficient revenue to create
a revenue neutral environment, primarily because the Bermuda Dunes area generates such a large
deficit currently. Considerable development wi(1 have to occur, particularly retaii development,
in order io generate the required revenues to offset those losses. It is also important to note that
the actual development of these areas may be considerably faster than those assumed in this
study, or may take many more than ZO years. Ultimateiy the market will determine the pace of
development.
It should be noted that historicatly the cost of police protection has increased more rapidly —
especially after an annexation -- than a!1 other costs of providing services. This study assumes
that all costs stay the same relative to one another. In the event that annexation is considered
further, the escalation of the cosi of police protection should be analyzed in greater depth, using
information obtained from previous annexations.
Table l3 summarizes the costs a.r�d revenues associated with the implementation of the
hypothetical land use scenario.
�
"I'cira Nc�va/Citv of' Palm Desert
L,and Use and Fiscal Impacts of the 1Vorthern Sphere d�: E3ermuda Du�es Areas
Tabte 13
Costs/Revenues Summary Table
Hypothetical Land Use Scenario
ANNUAL REVENUES
Generat Fund:
Pr•operty Tax
Property Transfer Tax
Sales Ta�
Transient Occupancy Tax (from hotelslmotels)
Transient Occupancy Tas (from timeshares)
Annual Timeshare Fees
Motor Vehicie !n-Lieu Revenue
Franchise Taz
Miscellaneous Revenue�
Total Annual GenerAl Fund Revenue at Phase Build
out:
Restricted Funds:
Highway Users Gas Tax
Measure A Funds
Prop. A Fire Tax
Structural Fire Ta�
Totai Annuat Restricted Fund Revenue at Phase Build
out:
Total Annual Revenues at Phase Build out:
Historic Average Interest Rate, 9(?-day Treasury Bi112:
Anticipated Interest on Revenues:
Total Aanual Revenpes with Interest at Phase Build
aut:
ANNUAL COSTS
Genera! Fund:
General Government
Police Protection
Roadway Maintenance
Total Annuai Gencrat Fund Costs at Phase Baild out:
Restricted Funds:
Fire Pi•otection
Ambu(ance Services'
Totat Annual Restricted Fund Costs at Pbase Baild out:
Total Anaual Costs at Phase Build out:
Projected Aanua] Casb�aw st Pl�ast Bnild out:
tiuild uut Phase
Phase 1 Phsse I( Phase IIi P6as� IV
(Yrs 1-S) (Yrs 6-t0) (Yrs l t-l5) (Yrs lG-2U)
$1,099,409
$ I 35,408
$4,138,9 I 9
$1.13'7.120
$27,600
$69,000
$190,824
$765,3 78
S2I2.787
$1,189,3 77
S I 36,661
$7,360,3 I 6
$1,833,746
$55,200
$138,000
� l 95,99 t
$858,402
S2 I 2,787
$1,279,346
5137,914
�(0,58I,713
$2,530,371
$82,800
$207,000
$201, I 59
5951,426
S2 i 2.787
$ t ,392,58 I
$139,166
$13,803,109
�3,226,996
$1 I 0,400
$276.000
$206,325
$ I ,444,3G0
S2 t 2.787
$7,776,44_S $11,980,480 516,184,515 $20,411,726
$320,229 $357,847 $395,466 �433,084
$28,827 $55,887 $82,947 $! 10,006
$532,342 $580,114 $627,885 �675,656
$ l ,605,850 $ i ,756,740 $1,907,631 $2,097,543
52,487,248 $2,750,587
$10,2fi3,693 �14,731,067
n/a n/a
�743,964 5951,213
SI1,Q0?,657 515,682,281
56,896,924
55,707,483
�2,067,829
S 14,672,236
$7,362,935
�6,325,806
52,193,334
$15,882,075
$2,975,707
$940,944
$3,916,651
518,588,887
-57,581,230
$3,213,534
$940,944
S4,154,478
$20,036,553
-54,354,273
�3,013,928 53,316,289
519,198,444 $23,728,014
n/a n/a
�1,147,331 $1,346,179
520,345,775 $25,074,194
�7,828,654
$6,944,130
$2,318,848
Sl 7,091,631
$3,451,361
5940,944
54,392,305
S21,483,936
-$1,138,161
58,294,666
�7,562,453
$2,444,354
$18,301,473
�3,689,186
5940,944
$4,630,130
$22,93 t,604
SZ,I42,S90
' Includes revenue from "other" t�es, business licenses, grants & subveruions, �nes 8c for£eitures, and contributions from prirvate sources-bonds, as
calculated for Bermuda Dunes existing de��elopmerrt by MuniFinanciaf.
' Interest rates are different in the existing development report for Bermuda Dunes (prepared by MuniFinancial) and olher reporls (prepared by Terta
Noca).
' Does not include o�e-time (year I) start-up ambulance costs of b19Q,000.
24
'fcrra Nova/City of Palm Uesert
L.and Use and Fiscal Impacts of the Northern Sphere B: Bermuda Dunes Areas
C. Capitat ImQrovement Costs
Also includul in the scope c�f this analysis was how to fund the capitai improvements necessary
in the sludy area. `t'I�e analysis centers on the potential costs of either an assessment district or a
community facilities district to u�ver the costs c�f the improvements. It is important to note that
prior to annexation, the City is unabte to assess the properties in either Bermuda Dunes or the
Northern Spher� Area, bu;ause it has no jurisdiction aver these properties. Further, LAFCo
cannot appr�ve an annexation contingent on the passage of an assessment district to cover capital
improvements. T'I�erefore, tl�e City would be required to process an assessment only after
annexation was complete, and cannot be assured that an assessment would be approved by the
votcrs.
As previousiy dcscribed, the Public Works Department has, in the past, developed estimates of
the costs for public improvements in both the Qermuda Dunes area and the Northern Sphere area.
In the Bermuda Dunes area, infrastructure improvemer►ts include sanitary sewers (the majority of
Bermuda Dunes remains on septic tanks); storm drainage systems; street improvements and
traffic lights. In 2007, the estimated totaf costs of these improvemen�s was $42,151,400. Since
that time, the County has invested approximately $4 million in roadway improvements. For
purposes of this analysis, it was assumed that all these improvements were consistent with the
improvement costs developed by the City's Public Works Department, and thus should be
deducted from the total costs. A 10% cost for first year start up costs and an annual
administration cost have also been added.
For purposes of this analysis, it was assumed that either an assessment district or a community
facilities district could be implemented for Bermuda Dunes. Although either option requires
approval by the affected land owners, if these land owners wish to be annexed, they would be
expected to support the formation of a district. Table 14 shows the likely per acre cost of such an
assessment, based on a total of 1,579.8 acres. This does not include the golf course or the streets
in the Bermuda Dunes area.
25
7'crra Nov�/City c�f F'alm Deserl
l,and Use and Fiscal Impacts af thc Northern Spherc �. Bermuda Duncs Arcas
Table 14
Bermuda Dunes Infrastructure tmprovements*
20 Ycar l.i Ycar Aanaal Aonual
Per Assess- Assess- Payment Payment per
A�gregated Aere ment/ ment/ per acre/ ZO per acre/
Cost ('ost** Acre Acre Year IS Year
Sanitary 5ewers
Stonn Dr�ins
New Street
lmprovements
Traftic Signals
First Year Start Up
Fees
Total
Annuai AdministraUve
Costs
Less 2009 County
Street Improvements
Net Cost of
Improvements
$8,831,900
�22,400.OU0
$8,S 19,500
�2,400,000
54,215,14�
$46,366,540
$316,i3G
�4,000,000
S42,366,540 526,818 S42,S96 539,3Q0 53,096 53,492
*Based on 2007 calculations by the Director of Public Works #*Does not include golf course
In the Northern Sphere area, the Public Works Department estimated infrastructure
improvements to include regional retention; storm drainage systems; and street improvements
and traffic signals. The estimated totat costs of this infrastructure is $44,000,000. All the
improvements are regional in nature, and take into account only arterial roadways and area-wide
flood control measures. None of these costs inciude, for example, the costs of maintenance of
streets within Sun City, which would be expected to remain private, and be maintained by the
homeowners' association. The land area in the Northern Sphere totals 2,744.6 acres, not
including the golf courses or streets in the area. Table 1 S shows the likely assessment for the
Northern Sphere. A 10% cost for first year start up costs and an annual administration cost have
also been added.
2b
'ferra Nava/Cily of Palm Desert
Land Use and Fiscal lmpacts of the Northern Sphere & Bermuda Dunes Areas
Table 1 S
Northern Sphere Area [nfrastructure improvements
Regional Retention
Storm Drains
New Street lmprovements
Trlftic Signals
First Year Start Up Fees
Total
Annual Administration Costs
Per
Aggreg�ted Acre
C'ost ('ost***
'�2,5UO,Q00
$ � Z.000,00u
$28,000,000
$ i ,500,000
$4,400.000
548,400,000
$363,000
$17,635
20 Year
Assessment/
Acre
528,293
iS Year
Assessroent/
Acre
$Z6,125
Aanual
Payment/
20 Year
SZ,064
Apnual
Pgyment/
15 Year
52,328
Ic� both areas, hornes on smaller lots would be assessed the appropriate fraction of the fee, while
parcels of greater than one acre would have an assessment equivalent to their total land area. For
example, in Bermuda Dunes, a one half acre lot would be charged approximately $1,450
annually for 20 years, while a 7,200 square foot (ot would be assessed $Sl2 annually for 20
years; in the Northern Sphere Area, a one half acre lot would be charged approximately $1,032
annually for 20 years, and a 7,200 square foot lot would be assessed $341 annually for 20 years.
The analysis is very preliminary, and would require further study prior to implementa.tion, but
should provide a basis for discussion.
27
'fe�7•a Nc�va/City of P�im Desert
Land Use and I�iscal Impacts of'the Northern Sphere & Bennuda Dunes Areas
1 V. Conclusion
('rcvious analyses prepared for both the Northern Sphcre Area and the E3crmuda Dunes area
demonstrated a fiscal shartfall to the City of Palm Desert if the lands developcd according to the
(and use designations currently assigned to them. Further, the Jack Ivey Ranch is buitt out,
vacant lands adiacent to il are planned for residentia( developmcnl, and buiid out will alsc�
gc;neratc: a shartfall.
`l'his report demonstrates the types and intensity of tand uses that would be required to provide
the C:ity with a revenue neutrai build out scenario. The Hypothetical Scenario allows the City to
see a positive cash flaw when about 75% of the lands are buitt out. However, it is important to
note that two significant factors are unknown about the Hypothetica! Land Use Scenario:
• Whether the high intensity of development could be supported in the marketplace.
• How long it would take for these areas to build out, particularly at the intensity proposed
in the hypothesis.
At the very least, the City ca.n anticipate that if it were to annex these Iands in the immediate
future, it would have to absorb an annual loss of $93 million for the foreseeable future.
2s
"('erra Nova/City of Palm Desert
Land Use and Piscal Impacts of thc; Nortltem Sphere & Bermuda Dunes Areas
APPENDIX A
FiSCAL IMPACT ANALYSIS METHODOLOGY
29
'1'erra Nova/City ot'Palm Desert
l.and Use and Fiscal lmpacts of the Northern Sphere & Bermuda Dunes Areas
APPEIVDIX A: STUDY METHODOLOCY
POTENTIAL REVENUES
Annexation has the polential fo generate revenues to the City of Palm Desert. These revenues
include taxes and fees based �n real estate valucs, consumer spending, and per capita al(ocations
from othcr a�encies, amang others. This analysis focuses on recurring revenues that th� City
wauld expccl to receive on an annual basis. Revenues wiil include monies that will be available
through the Generai Fund, and can be spent for• any aetivities or services allowed under the
General FurTd, and revenues that are restricted for spending on specific, predetermined services.
All revenuc sources are identified as being either restricted fund or General Fund revenues.
A. Ceneral Fund
General Fund revenues include property tax, property transfer tax, sales tax, transient occupancy
tax and motor vehicie in-lieu fees.
Propertv 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, fhe jurisdiction in which d�e 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 Coanty's 1% collectioi� for land
within its original boundaries. However, under current State law, the City receives 7% of the
County's 1% collection on lands annexed after l 978. Property tax revenues go to the City's
Genera! Fund. Should annexation 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 fisca) year 1992, the State
of California required cities and towns to shift a percentage of their properiy tax revenues to a
countywicle ERAF account to fund publie schools. Based on prior annexations into the City of
Palm Desert, the City receives approximately hatf (3.5%) of the 7% of property taac 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 (CaJTrans), 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 C(ub golf course, maintenance building,
and ctubhouse) owned by ihe Berger Foundation.4 Property tax revenue calculations have been
adjusted to account for these cases.
3 Paul Gibson, Director of Finance/City Treasurer, City of Palm Desert, personal communication, October 27, 2011.
4 Based on property tax information provided by Mike Rover, Rover Armstrong, Berger Foundation representative,
personai communication, November 29, 2011.
30
Te��r�► Novu/C'itv of f'alm Deses�t
Land Use and Fiscal lmpacts of lhe Northern Sphere �: E3ermuda Dunes Areas
�'he fiscal analysis assumes that all laxable properties wilhin thc annexatic�n areas are I,axed al a
rat� of i% of vatuation, and the collection rate is 100%. t'uture development in the potential
annexation area will include residential, commercial and yuasi-industrial develc�pment. (n order
ta determine property value, a��d associated pro�x.rty tax generatian for lhis development, a
number of sources were utilized. T'he f'ollowing table describes the average values of new
residential, commercial and industrial development in Palm Descrt.
Table 1
Average Value of New Construction in Palm Desert
Type of Development
Single-family Residentia!
Multi-family Residential
Commercial Lodging
Commercial General/Retail
Office/Protessional
Average Value
$249,123/unit'
$ ] 04,425/unit
$ f 10/sq. ft' or $68,512/room3
$73/sq. fl.
$169/sq. ft.
[ndustrial $54/sy. ft.
Galf Course $40,43 I/acre4
� Source: 2nd quarter 2011 median new home ��alue, "(nland Empire Quarterly Economic
Report:' preptued for WRCOG by John F�using. Ph.D., October 2011. Includes v�lue of land
and structure.
' Based on bui{ding permit data pro��ided by the Palm Desert Building & Safety Department,
Nov. 2011. Includes value of structure only.
' 8ased on comparable existing highway-serving hote! in the anne�ation �rea. per Rir. Co.
Assessor's records, Oct. 201 l.
4 Based on average of multiple developed golf course parcels in annexation area, per Riv. Co.
Assessor's records, Oct. 201 l.
All other values aze based on buildin� permit data provided by the Palm Descrt Building and
Safety Department, November ZOl l. Includes value of structure only.
Prouertv 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 $ l,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.s
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 properly 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 2U11 dollars. The average value of
existing residential units in Sun City is $364,653.6 For existing units outside Sun City, and future
residential units, an average value of $244, l 23 is used (see table above for source). A resale rate
of 1% is assumed for single-family development.
' Assessor's O�ce, County of Riverside, personal communication, November 9, 2011.
6 Riverside County Assessor's parcel data, October 2011.
31
'ferra Nova/Cily of Palm Descrt
t.and Use and f'iscal Impacts of Uie Northern Sphere R. Bertnuda Dunes Areas
As discussed in Section 111, ihis �nalysis assumes no re-sales during the build out timeframe for
commercial and industriat development, as such sales are infrequent and sporadic.
Salcs `f'ax
Sales tax in Riverside County is collected at a rate of 8.75% by the State of California. 7'he table
below dcscribes how sales tax rcve��ues are allocated among public agencics.
Table 2
Components of the 8.75% Sales and Use Tax
Rate J u risd iction
7.25% State of California
I.00% Local (City/County)
O.SO% Riverside County Transportation Commission
Source: "Detailed Description of the Sales and Use Tax Rate," California State Board of
Equalization; and Palm Dese�t Budget 2010/1 !, p. 2-2.
Of the sales tax collected by the State, one percent (1.0%) is altocated to the jurisdiction in which
the sale occurred. The fiscal analysis estimates totai taxable sates that could be generated from
commercia! 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 taxabte sales generatect 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.'
Where taxabte sales are unknown, the analysis uses assumptions to estimate taxable sales. The
anatysis assumes that future retail commercial development wilt 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 (ULl) 2008 "Doiiars and Cents of Shopping Centers"
are applied to the number of square feet dedicated to taxabie sates. All existir►g and future
commercial development in the annexation areas is considered Neighborhood Commercial in
this analysis. The fiscat analysis calculates sales tax generation for Neighborhood Commercial
development, based on the following ULI definition:
•"Nei�hborhood Commercial" developmer�t includes neighborhood scale shopping centers
conveniently located near residential areas, and a variety of smailer commercial centers,
specialty retail shops and personal service businesses. These centers selt merchandise for
daily living, such as food, drugs, and hardware. This type of deveiopment generates an
annual average of $326.13 per square foot in taxable sa(es.
In both scenarios, some lands are designated for "business park" develvpment. It is expected that
thesc lands wi11 develop with a mix of tight industriat and office uses. Although small amounts
of sales tax revenue are likely to be generated by this development, the amount is expecter! to be
� Paul Brady, Sun City Palm Desert Community Association, personal communication, October/November 2011.
32
"('en�a Nava/City nf Palm Desert
Land Use and Fiscal Impacts of the Northern Sphere & Bermuda Uunes Areas
negligibie. As a result, business park and industrial development is assumed to generate no
taxable sales in this analysis.
�'ransient Occupancy 1'ax
Trac�sient Occupancy Tax (TO`I'} is coiiceted from individuats when they occupy a hotel or motet
room. [n Palm Desert, 'i'OT is cotlected at a rate of 9°l0. Potential TO'[' revenues are baserf on the
number of hotel/motel rooms that are or could be constcucted on annexation lands, the average
nightly room rate charged, and the average occupancy rate. There are currently twc� hotets with a
combined total of 1541�ote1 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. ln addition, annualized occupancy has been assumed to be 65%.
Approximately 3 acres are designated for future hotel/motel development in SP-I51, and this
analysis assumes that two ]25-room hotels wilf be constructed on ti�ese parceis in tl�e future, for
a total of 250 hotef rooms. An additional 3.1 acres are designated for hoteVmotel development in
the Mirasera Specific Plan, and this analysis assumes a sing(e hotel/matel wifl contain 150
rooms. Therefore, future buildout of the annexation areas could result i�ti the development of 400
new hotel rooms. Room rates for future deve(opment, 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 T4T revenue oniy during the high-tourism season from January
through April, and only from visitors leasing for fewer than 30 days.8 Given the specific ar�d
limited nature of these parameters, this fscal model does not estimate TOT revenue from RV
parks.
Motor Vehicie 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 FYlO/11, the City of Palm Desert received $167,177 in motor vehicle in-lieu fees.9
The State uses a City population figure of 52,057, which translates to $3.21 per capita annualSy.
8 Paul Gibson, Director of Finance/City Treasurer, City of Palm Desert, personai communication, December 201 l.
9 Compilation ofMota• Vehicle In-Lieu data from State Controller's Office, July 2Q10-June 2011.
33
"t'erra Nova/City of Palm Desert
t,and Use and 1'iscai Impacts of the Northe►n Sphere �; Bermuda Dunes Areas
C)ther Revenuc Sc>uru.s Not Addresseci
- -- ------------------------___,_..._._
The Gcneral Fund inc(udes other revenue sources lhat wiii not be afFcctcd directly by annexalion
or will be one-timc fees, and thercfore, are not addressed in this a�alysis. These include
timeshare mitigation fees, business license laxes, building and grading permit fees, plan check
fecs, and francliise fees. "1'imeshare development is not anticipated in the annexation area, so
revenues from timeshare mitigation tees are not applicable to this project. Business ficense taxes
will incrcase with annexation; iu�wever, these revenues are highly variable and development-
Sp�L'1fIL', and �stimatc:s are not cansidered useful to this analysis. Building/grading permit fees
and plan check Fees are also based on specitic development plans, whic;h are determined at the
time a project is proposed. Many of Palm Desert's develop►nent fees are outdated, and a
comprehensive nexus study should be undertaken to update these fees prior to any significant
annexati�ns. This is to assure that thc General Fund is not called upon to support new
development in annexation arcas.
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. Ansua! Revenues
The following Special Revenue Funds receive recurring revenues on an annual basis.
HiQhwav 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 FY10/1 i, the City of
Palm Desert received $1,216,771 in Gas Tax revenue, or $23.37 per capita annuatly.10
Measure A Funds' �
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 aze distributed by region;
approximately 24% is distributed to the Coachetla 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
focal 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 dwe(ling units and total taxabie sales.
The trickle-down effect is illustrated below.
�� Compilation of Highway Users Tax data from State Controlier's Office, Ju(y 2010-June 2011.
�� Andrea Zureick, Riverside County Transportation Commission, personai communication, November l, 2011.
34
'�'en�a Nova/C ity c�f I'alm Dcsert
Land Use and Fiscal Impacts of the Northern Sphere & Bermuda Dunes Areas
8.75% sales tax
�
0.50% of sales tax
goes to county-wide Measure A f'und
1
24% of county-wide Measure A Fund
goes to Coachella Valley rcgion
1
35% of Coachella Valley portion
goes to local streets and roads
i
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 syuare footage
and takes into account the use of fire-resistive construction materials.''
This ana(ysis estimates future Proposition A Fire Tax fevenues 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.13 With the implementation of ERAF by the
State, the City receives 50% less in Structural Fire Tax than it did pre-ERAF. This reduction is
made in the analysis and shown in the tables in Appendix B. They are remitted to the City's Fire
Fund and restricted for the purpose of providing fire protection and prevention services.
C. Investment Income
The fiscal analysis assumes that the City will receive investment earnings on al) annual revenues.
To project potential investrnent 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
1z Rates provided by Mark Dana. Wiltdan Financial, November 3, 201 l.
� 3"Comprehensive Annual Financial Report," City of Paim Desert Finance Department, June 30, 2010, page 186.
35
"('e��ra Nava/City of' Naim Desert
l.and Use and ('iscal lmpac�s of the Northern Sphere 8: Bermuda Dunes Areas
interest earned on the 90-Uay "1'reasury Bill was 4.39%.14 "11ie tisc;al mode) cafculates investment
income for all annual revenues c;alculaled in this report.
POTENTtAL COSTS
A. Potential Costs to the Ceneral Fund
Annexation of developed and undeveloped acreage north of (-lU will npt only generate
additional revenues, but will aiso generate additional municipal costs. Tl�ere will be expenditures
for general government services, as well as the expansion and/or exte�ision af infrastructure,
utilities, roads and other public services, particularly public safety. The fiscal model projects the
City's costs of providing genera) government services, public safety, and transpartation/roadway
maintenance to lands in the annexation area.
Costs of General Government
Casts af Genera) Government are funded through the City's General Fund. Costs associated with
genera! government include city-wide services, such as emp(oyee salaries and benefits, postage,
printing, travel, eyuipment 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 complianee and animal control, as well as municipal and
support services.
The City's 201 l/I2 Badget 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 wil] not be directly impacted by
annexation.
For residentiat development, this fiscal analysis translates the costs of general government to a
per capita figure. Given the City's 20l 1 population of 49,111, the annual cost of providing
general government services to City residents is approximately �282 per capita. T'his factor is
applied to the projected build out popuiation 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 Governmer►t to commercial and industria(
deveiopment, 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 Frotection
The same method used to calcu[ate 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 Sherif�s Department for a wide range of police
� 4 Average historical interest rate deterntined using data from Table B.3, "Riverside County Guide to Preparing
Fiscal Impacts Reports," Janaary 1995; and "3-Month Treasury Constant Maturity Rates;' from the Federal Reserve
Board of Governors, as provided by The Financiat Forecast Center.
36
T'ei�•a Nova/City of Palm Desert
l.and Usc and Fiscal Impacts of the Narthern Sphere & Bermuda Dunes Areas
services, including patrol, trat�ic management, investigations, school resource programs, crime
prcvention, bike patrol and cc�mmunications.
't'he 2011/12 City f3udget allocates $16,647,638 for police protection services. With a 2011
�pu(ation c�f 49,11 l 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.
[,ike General Government costs, to estimate the costs of providing police protection to
commercial a�td industria! development, this analysis uses factors provided in the Riverside
County Guidc, adjusted for inflation.
it should be notcd that historically the cost of police protection has increased more rapidly —
especially after an annexation -- than all other costs of providing services. This study assumes
that all costs stay the same relative to one another. In the event that annexation is considered
further, the escalation of the cost of police protection should be analyzed in greater depth, using
information obtained from previous annexations.
Costs of Raadway 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 simitar 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' S. These costs are paid through the General Fund, and
include funds from a reserve fund maintained by the Public Works Department for such projects.
Table 3
Annual Road Maintenance Costs,
2002-2011
� Year
� 2002
� 2003
� 2004
� 2005
� 2006
� 2007 �
� 2008 �
� 2009 �
� 2010
�2001 �
10 Year Avera�e {
Costs
$1,610,521
$9,026,890
$3,587,830
$10,216,200
$4,220,000
$6,236,627
$10,437,052
$7,558,700
$5,257,500
$2,764,936
$6,091,b26
With 159 paved public road miles in Palm Desert, this translates to $38,312 per road mile.
� 5 City of Paim Desert Budget calculstions f7r road�vay construction and mainte��ance calculations, January, 2012.
37
'I'erra Nova/City oi� P�Im Dcsert
Land Use and Fiscal fmpacts ofthe Northem Sphere & t3ermucfa Dunes Areas
B. Potential Costs to the Fire Fund
Annexation wiil aiso generate additional ex�enditures for lire and ambulance services. "1'he City
contracts with the Riverside Crninty Fire Department for these services, which are ac�ounted for
in the Fire Fund (rather than the General Fund). 'I'he 20( t/12 City E3udget a1loc;ates $9,207,045
for f'ire I'und expcnditures.
C�sts_of'f�ire Protection Services_-Northern SpliereArea
'The eastern portion of Northern Sphere Area is served by Fire Station 81, as described above.
Upon annexation, the City would assume annual cosis of approximately $1.5 million annually
far the operation of this fire station.
The western portion of the annexation area in the vicinity of the Classic C:lub is currently served
by a combination ot' three fire stations: 1) Station 71 in north Palm Desert, 2) Station 35 in
7'housand Palms, and 3) Station 81 at Sun City (described above). A new fire station is planned
in the north Paim Desert/College Park area, which is expected to direct(y serve this portion of the
annexation area and other areas in narthern Palm Desert.t6 However, no canstruction date has
been set; construction is expected to occur several years in the future.
Because the actual costs of providing fire protection services to the western portion of the
annexation area are unknown at this time, the fiscat 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 build out population of all land.
Costs ofAmbulance 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." This equates to
an average of 74 incidents per year. Fire Deparqnent 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.18 The Fire Department considers this a reasonable
assumption for that portion of 1-10 that would be annexed into Palm Desert. This means that,
each year, amb�lance 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. Accordin�
to the Fire Department, first-year start-up costs for a medic unit tota( approximateiy $190,000.'
16 Ibid.
�� Data provided by Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, Octobet-12.
201 l.
i8 Dorian Cooley, Division Chief, CALFIRE/Riverside County Fire, communication, October 25, 20] l.
19 Dorian Cooley, Division Chief, CALFIREIRiverside CounN Fire, communication, October 13, 2011.
38
TciYa Nova/City of Palm Desert
l.and Use and fiscal Impacts of the Northern Sphere & Bermuda Dunes Areas
'I'his includes the costs c�f a�i ambulance (${40,UUU), medie equipment ($40,000), and incidentals,
such as radios and shoreline ($10,000). Annual operating costs for one ambulance staffed by 6
tirctightcr lI medics arc $940,944.
39
'i'�n-a Nova/City of Palm Uesert
[,and Use and Fiscal Impacts of the Northern Sphere & 8ermuda Dunes Areas
APPENDIX B
COST AND REVEl�1UE TABLES
BERMUDA DUNES
JACK [VERY RANCH
NORTHERN SPHERE AREA
(Available from Planning Department)
40
Legend
aseeec Gr.eLase, 2013
r�
L. J TERRA NOVA°
menial& Raw& Inc
Land Use and Fiscal Impacts far the Northern Sphere of Initneau (Ezp.ndedl and Bermuda Duna Area
Study Area Boundary
Pain Desert, California
LEGEND
t 3 Rcsidcnnal
County Ilagh Dense) Rcstdcnnal
COMMERCIAL
rikaL Colo matat
Hod or Connttaeial Tmuiti
INDUSTRIAL.
- Ru.mea,, Mid:
- 1.tRhR htduatnol
INSTITUTIONAL
- huUUnumal Public IROM)
OPEN SPACE
- Apothure
- 1.o110,01u"
.__] Pfilic PmU
L_._..__i t(++et elndudrs?il ucrts own.1b)
Set Ch1 Conwsaily Arwciatint
Swarm Goo& Is ass,Ui3
ri
L J TERRANOVA°
Puna, t Reams& lac
Laud Use and Hanel lapses for the Northern Sphere of influence (Expanded) and Bermuda Dunes Areas
Currently Approved Land Use
Palm Desert, California
1�
LEGEND
L__J
NUMB
I_ 1
MEI
MIN
41 AC. Business Park
ea Commercial
RESIDENTIAL
Reshknlial
County Iiiph DD.0 ty Residemml
COMMERCIAL.
Commercial
Had m Commis' Tmrnsr
INDI47RIAI.
Daarws Park
LyIW Isthmus'
LVSTITI"nONAL
laminations! Public Facility
OPEN SPM'E
MEM Ayrieuhure
1.111.1 Golf( nurse "
r - 1 Public Pmk
L_] %vier"Includes 271 sere owned by
Sari City ['mrmmairy Assurntirm
Saam: Grade bone, 2013
1
TERRA NOVA
maminp & RascmL Ins
66.4 AC. Very High Density Residential
to Medium Density Residential (S-8! AC)
22.6 AC. High Density
Residential to Resort Hotel
96.2 AC. light Industrial
to Coo mercial
113 AC. Medlars DeeullyLG
Itctlda ial to Commercial
49.8 AC. Light Industrial
(multiple sites)
10 Commercial
Laud Use and Fiscal lmpach for the Northern Sphere of Influence (Eapeaded) and Bermuda Dunes Areas
Hypothetical Land Use
Palm Desert, California
3