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ATTACHMENT 3 I. EXECUTIVE SUMMARY INTRODUCTION The purpose of this study is to assess economic impacts resulting from development of new club retail, general retail, and hotel space in the Johnson Drive Economic Development Zone (EDZ) in the Pleasanton, CA. This report also evaluates the potential of the EDZ to result in urban decay, which comprises prolonged physical deterioration resulting from sustained economic impacts. The EDZ is a proposed 40-acre area along Johnson Drive. Implementation of the EDZ would allow the City of Pleasanton to use zoning and land use designations, incentive programs, completed California Environmental Quality Act (CEQA) documentation, and standards and guidelines to streamline the development process and encourage investment. The EDZ site is located in a commercial area with other nearby commercial establishments, industrial uses, and a hotel. Proposed new development includes 189,037 square feet of new general retail space, 148,000 square feet of club retail space, and a 150- or 231-room hotel. This mix of new uses is hereafter defined as the "Project." This study estimates the potential impacts of the Project on existing retailers in the Project's market area, primarily in the form of diverted sales from existing retailers. The study also estimates the potential impacts on existing hotels. The study further estimates the extent to which the opening of the Project and other cumulative retail or hotel projects may or may not contribute to urban decay pursuant to potential store closures attributable to existing retailer sales diversions and hotel closures. The key indicator of urban decay from a CEQA perspective is impacts on the physical environment, which includes existing stores and hotels and commercial real estate conditions, as measured by the current baseline. This is the baseline reflected by existing conditions discussed in this report. The Johnson Drive EDZ new retail and hotel development would occur incrementally. Phase 1 development of 5,000 square feet of general retail space, the 148,000 square feet of club retail space, and the hotel are assumed to be complete and fully operational by 2018. The remaining balance of new general retail space would be developed sometime prior to Full Buildout of the EDZ, which is assumed to occur by 2028. SUMMARY OF FINDINGS Project Sales and Market Area ALH Economics estimates that stabilized sales for the Project would total $172.3 million in Phase I and a total of $241.3 million upon Full Buildout, all in 2015 dollars. Not all Project sales are deemed competitive with the existing retail sales base. Sales components not anticipated to be competitive with the retail sales base include sales made to wholesalers with resale licenses, purchases made by market area consumers recaptured from other regional club retailers, and sales made to consumers from outside the Project's market area. The Project's general retail and club retail spaces are anticipated to draw 80% and 60% of their sales from the market area, respectively. The percentage is lower for the club retail space because market area data for nearby club retail stores suggests demand originates from a large area, with less than 60% sourced from households in the nearby environs. Based largely on locations of Johnson Drive EDZ Urban Decay 1 ALH Urban & Regional Economics