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Draft Memorandum July 25, 2013 EPSP Fiscal Impact Analysis Page 4 Key Market and Demographic Assumptions As described above, population and employment are key factors that are expected to drive changes in the City's General Fund costs and revenues. As shown in Table 3, Pleasanton has a population of 73,000 residents and roughly 53,000 jobs with a service population of 106,000. Pleasanton has 26,200 housing units with an average household size of 2.8. Market assumptions in this analysis are based on Economic and Fiscal Impact Analysis for East Pleasanton Specific Plan prepared by EPS in November 2012 as well as other supplemental research presented in the Appendix. Key market assumptions are summarized in Table 4 and demographic assumptions are summarized in Table 5 and are described below: Development Value The fiscal impact analysis considers the potential market value of various development types envisioned by the EPSP, including residential, retail, office, and industrial/flex uses. EPS assumes real estate values that are typical of the Pleasanton real estate market. This analysis relies on value assumptions that are representative of new development projects, seeking to avoid overestimation of building values. Additional valuation considerations were applied in the analysis of higher-density housing and industrial/flex uses, as discussed below. EPS relies on variety of sources to estimate real estate values, including current market data concerning residential and commercial transactions occurring in the City and surrounding areas. In particular, EPS reviewed residential sales data from The Gregory Group and commercial sales data from CoStar Group. EPS also considered real estate values developed as part of continuing work on the Fiscal Impact Analysis of the City of Pleasanton General Plan as well as the EPSP infrastructure feasibility analysis, to ensure basic consistency. Based on guidance from the EPSP team, EPS assumes that the 30 dwelling units per acre product will be rental. The analysis assumes that the affordable units will represent 20 percent of the for-sale units and 15 percent of the rentals with all inclusionary housing accommodated in the 30 dwelling units per acre category. The Specific Plan options call for between 1.1 million and 2.3 million square feet of industrial/flex space. The relative magnitude of this particular use within the overall program makes it critical to the infrastructure feasibility evaluation. To address this notion, the EPS analysis conservatively assumes that infrastructure/flex value is at the lower end of the value spectrum, $95 per square foot (the observed range of value is roughly $95 to $500 per square foot). The assumption of low-value industrial/flex reflects an $8 million soil mitigation cost required to support new industrial/flex development'. This value also reflects uncertainty associated with the specific nature of the industrial/flex space development as well as the probability that such a large amount of industrial/flex space could be developed over a longer-term time horizon. To the extent that certain real estate product types do not generate sufficient economic value to 1 Given that the soil mitigation cost applies predominantly to industrial uses, it is netted out of finished industrial value for the purpose of this analysis, which translates into a lower industrial land value. P:\121000\ID090EastPleasanton\keporflFSCal11L090fisca_mm1.doa