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Pleasanton General Plan Fiscal Impact Analysis Final Report 01/16/14 Residential Uses Single-family detached and condos/townhomes, and elderly attached development is estimated to provide fiscal advantages for the City, while multifamily rental and convalescent housing are likely to result in fiscal shortfalls. The single-family detached product type is similar to the prevailing housing form in the City and generates the highest values. This land use would likely continue attracting higher income households, attracted to Pleasanton by the quality of life and family-friendly environment, and would generate substantial property and sales taxes to the City. Other residential uses are likely to result in lower values and would generate lower General Fund revenues due to lower supportable household income spending and property assessments. Multifamily housing results in fiscal shortfalls due to its likely role as an entry-level housing in the City. As a result, it would likely have lower property values and would accommodate households with lower incomes relative to for-sale residential product types. To the extent that more of a luxury brand orientation and high amenity features could be delivered in rental products in the City, it could attract different types of buyers than those primarily driven by affordability, in turn, reducing potential fiscal shortfalls. For example, household income and associated retail expenditure of a two-worker household located near BART with both members commuting to work in San Francisco is typically much higher than a single worker household with children. Potential impacts of higher density residential housing could also allow existing empty nesters to remain in Pleasanton as they age and downsize. This is especially true if they sell their existing single-family homes, which likely have depressed assessed values due to Proposition 13, to more affluent families. Market orientation and associated impact of multifamily housing will be particularly important as the City is making a shift away from its traditional single-family detached housing base towards higher density product types. This analysis assumes that higher density residential uses will meet a 15 percent affordable housing requirement that increases the fiscal shortfall. However, market-rate multifamily would still result in negative fiscal impacts to the City, though these shortfalls would be negligible. Nonresidential Uses Retail land use generates the highest fiscal benefits to the City's General Fund. This analysis assumes that Pleasanton continues to capture regional retail sales across various categories despite Tri-Valley being a highly competitive retail market area with other cities gradually developing their own retail space to compete for sales. For local-serving retail, EPS utilizes a conservative approach of linking retail growth to future household spending and associated residential uses. This ensures that the City's General Plan fiscal planning is based on internal growth dynamics rather than an assumption that"supply creates demand". An over-emphasis on creating additional retail capacity will not necessarily improve the City's long-term fiscal health if household incomes do not support growth in consumer demand or if new store sales "cannibalize" existing retail areas. To the extent that Pleasanton's retail capture will reduce over time, the revenues generated by its retail space will decrease or new space may be less feasible to build. Economic&Planning Systems, Inc. 55 P:\121000\121062Pleasanton\Report\121062Report_FINALdoc