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Draft Memorandum July 25, 2013 EPSP Fiscal Impact Analysis Page 3 This analysis is based on the mid-term FY2012-13 budget, the most recent budget adopted by the City and assumed as the existing service level "baseline"for the purpose of projecting General Fund revenues and costs. However, it is recognized that recent budget cuts have, in many cases, reduced City service levels below historic and/or optimal service levels. While economic conditions have gradually started to improve after the end of the Great Recession, long-term structural outcomes are uncertain. This memorandum documents actual cost for each department reflected in the most recent budget. In some cases, a current service is below the preferred standard; given the current fiscal situation, it is recognized that the City's current service provision may not be optimal. To the extent that service standards improve above those estimated in this analysis, the City's General Fund expenditures will increase. This analysis utilizes several forecasting approaches to evaluate the General Fund costs and revenues associated with new growth. The primary methodology and factors for each General Fund item are summarized in Table 2 and highlighted below. • Service population. The service population for any given budget item is defined as the universe of individuals that generate impacts and is based on a review of the various population groups—including residents and employees—relative to each of the City's service providers. For each department, the relative impacts of employment and population are compared and used to estimate a total service population. For instance, for general government, an employee is estimated to have a service demand profile equal to about half the service demanded by a typical resident. Other types of City services, such as parks and library, are provided to the extent that they are accessed by the population. For these departments, an employee is only likely to access services during non-work hours and therefore has a significantly lower impact than the residential population. • Case study. A case study approach was used to calculate fiscal impacts for budget items that may not vary directly with service population or for which detailed data is available to make a more precise estimate. For example, the case study approach is used to estimate property and sales tax revenues. • Not estimated. Some budget items were not estimated because certain City revenues and expenditures are either not directly related to growth and development and/or generated on a cost-recovery basis. While EPS had previously conducted interviews and developed a more detailed approach for forecasting costs, these costs are currently being revised by the City. As a result, the average cost approach is generally used in this analysis as a proxy for the actual expenditures that would be triggered by EPSP. These costs may vary based on existing service capacity, negotiated cost increases, and many other department-specific factors. Once the City completes its ongoing interviews with key service providers, the cost estimates in this analysis will be revised. P:U210001121 o90EastPleasanton l Report\FSCag121090rrscal_mml.aocx