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Fiscal Analysis for the Staples Ranch Development Project October 25, 2007 Page 3 These ongoing/recurring costs of providing services and sources of revenue are the focus of the fiscal analysis. Exclusion of capital costs. Capital costs are the one-time costs that are incurred to buy or improve land, buildings, infrastructure, and major pieces of equipment. They are typically covered by development impact fees or major grants from the state and/or federal govern- ment. In some cases, a City or other public agency will borrow money (in the form of bonds) to pay for a major improvement and then repay that loan with impact fees, revenues from a service that is related to the improvement, special taxes, property tax increments (in the case of redevelopment projects), or other earmarked sources of funds. Expenditures made for the infrastructure and other public improvements needed specifically to serve new development projects - e.g., roads within a project, extensions of water and sewer lines - are paid for by the developers of those projects. These expenditures are developer costs, not public costs, and consequently are not addressed in this study. Focus on the General Fund. The General Fund of a city's budget receives the greatest portion of revenues that are available for discretionary appropriation. It is used to fund the day-to- day operations of the city. Therefore, fiscal analysis focuses on the revenues that accrue to and the costs incurred by this fund. Other funds in the city's budget are "special funds," which collect revenues that are desig- nated for specific uses -which may be capital costs or operating costs -and distribute the money to pay for those uses. To the extent that other funds are linked directly to the General Fund (for example, because money is transferred from those funds to the General Fund or from the General Fund to those funds), however, they may be considered in this analysis. Focus on direct costs and revenues. Fiscal analysis typically considers only the revenue and cost changes that result directly from actions or changes that occur within the city; for exam- ple, new property or sales tax revenues that may be generated by new development, or the cost of new demands for police services. It does not consider the indirect impacts, such as the positive or negative impacts on property values (and, therefore, on property taxes) of new develop- ment that may a$ed the desirability of existing uses. In the case of Staples Ranch, however, the fiscal analysis must consider the shy in sales tax reve- nues from the existing Hendrick auto dealerships to the new location. Hendrick currently owns four dealerships within the City, and the Staples Ranch site is intended to allow for expansion of those dealerships and the addition of others. At least some of the sales taxes generated on the new auto mall site would represent a sh~ from the existing location rather than net new revenues to the City. The scope of work presented below accounts for this sh~, and includes an optional analysis of the fiscal impacts of reuse options for the vacated auto dealership sites within the existing city lim- its. Focus on the impacts of land use change. The fiscal analysis assumes that current levels of service will continue in the future. It thus focuses on the changes in revenues and costs that would result from the proposed land use change alone. Some changes in revenues would result from the contributions from new development that would be located on the site, in the form of property taxes, sales taxes, business licenses etc. As noted above, however, at least some of the revenues from the auto dealers would represent a sh~ in the specific point of sale from the existing Pleasanton dealerships. To the extent that sales may increase, those new revenues would be a result of the land use change.