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Fiscal Analysis for the Staples Ranch Development Project October 25, 2007 Page 5 ^ The characteristics of the continuing care facility: would it be operated by anon-profit or for- profit entity? Would residents have the option to sell their units on the open market (restricted only by the age requirements of the community), or back to the management company, or both, or not at all? (These issues would contribute to our understanding of property tax revenues that would be generated by the development.) ^ What character/mix of uses should be assumed for the commercial development? The MOU allows different amounts of building space, depending on the specific use (retail vs. non- retail) that will be provided. The revenue- and cost-generating characteristics of retail space differ from those of office space, so a set of working assumptions about the distribution of uses should be established. ^ What would be the character of the community park? Different types of parks require differ- entlevels of effort for maintenance, which in turn have different cost implications. ^ What should we assume about the timing and phasing of development? When will the con- struction of each component (auto mall, continuing care, commercial, community park) start and how long will it take? Will some components of the project be built in more than one phase and, of so, how many and how will they be timed? ^ What should we assume about the value of each type of new development (for property tax purposes) ? Scope of the Fiscal Analysis To define the scope of the fiscal analysis, we will discuss assumptions about inflation rates, devel- opment values, and other variables that would affect the estimates of revenues and costs (includ- ing the proportion of property tax revenue from the annexed area that would be allocated to the City of Pleasanton). We will also want to discuss whether the new commercial uses (other than the auto mall) are likely to attract purchases that are currently being made in Pleasanton, and consequently would have a smaller net impact than would be estimated solely based on sales on the project site. If the prob- ability of such a shift is high - e.g., because the population of the market area is not expected to grow enough to provide all of the support needed for the new space - it would be possible to estimate the magnitude ofthe shift and incorporate that estimate in the fiscal analysis. (This task is not currently included in the proposed budget.) We will also discuss and agree on the sensitivity analyses to be conducted. As suggested in the identification of key issues (above), these analyses may be used to test project timing and phasing, partial buildout, and supplemental revenue sources (if necessary). Sensitivity tests based on potential changes in the volume of auto sales would be defined by the results of the informal sur- vey to be conducted in Task 4. Task 2: Review Budget; Formulate Tentative Revenue and Cost Equations We will examine the City of Pleasanton operating budget to identify the array of services provided by the City and to formulate tentative equations that describe revenues and costs that would be associated with each of the uses in the proposed project. Because the project includes residential,