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revenues from future growth in Pleasanton, as appropriate. The primary revenue impacts are likely to be property and sales taxes, while business taxes and hotel and motel taxes will also likely be significant. EPS will develop a detailed forecasting methodology for each revenue item based on land use, density, and location criteria of new growth. The forecast will consider historic trends and will reflect a set of city-specific assumptions. For example, property tax from new residential uses will be based on property values by development prototype and location. While lower density residential homes are more valuable on a per-unit basis, higher density residential, particularly along the City's transit corridors, may be more valuable on a per-land acre basis, increasing property tax proceeds to the City. Subtask 3.3: Net Fiscal Balance The net fiscal impact will be based on a comparison of total costs and revenues in constant dollars. EPS will estimate this amount, provide summary tables and graphics, and document the key assumptions and calculations. The magnitude of this net fiscal balance will be one determinant of fiscal performance and will contribute to further policy formation related to balancing and incentivizing specific types of growth in the City. As part of this task, EPS will identify fiscal mitigation measures that would ensure the City's long-term financial sustainability upon buildout. The fiscal results (annual surpluses or deficits) are simply indicators of fiscal performance; they do not mean that the City will automatically have surplus revenues or deficits because the City must have a balanced budget each year. Persistent shortfalls shown in a fiscal analysis may indicate the need to reduce service levels or obtain additional revenues; persistent surpluses will provide the City with resources to reduce liabilities such as deferred maintenance, improve service levels, or build up reserves. As part of this task, EPS will include a qualitative discussion on how fiscal benefits may affect different stakeholders and how these impacts could change over time. Subtask 3.4: Revenue and Expenditure Growth Trends This task will determine the magnitude of potential revenue or cost escalation impacts on the net fiscal balance at buildout. Given that the fiscal impact analysis will be conducted for the City in the future, various revenue and cost escalation factors may have significant implications on the analytical findings due to various rates of growth. Specifically, the fiscal impact analysis will distinguish between various revenue growth rates, cost escalations, and inflation. EPS will review historic growth trends for key revenues and costs and will seek input from City staff about future growth rates for projection purposes. For example, employee benefit costs have been recently escalating at above normal rates given the State's reduction in forecasted Public Employee Retirement System (PERS) investment returns. This could have an impact on cost growth among all major expenditures going forward given that employee costs comprise nearly 80 percent of the General Fund budget. Upon completion of the revenue and expenditure growth forecast, EPS will test the sensitivity of various escalation rates among different revenues and costs to bracket a range of potential outcomes relative to the analytical findings of the fiscal impact 3 U:Flscal Impact Report\Exhfbit A to Contract floc