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Fiscal Analysis for the Staples Ranch Development Project October 25, 2007 Page 7 Based on the findings of this survey, we will suggest a range of sales volumes for the auto dealers to be considered in the fiscal analysis. Task 5: Prepare Draft Fiscal Analysis Based on our review of the City's operating budget (Task 2), our meetings with City staff (Tasks 1 and 3), and our survey of auto dealers (Task 4), we will analyze the fiscal impacts of the proposed project. To facilitate the estimate of fiscal results in different indicator years (see Task 1) and the preparation of sensitivity analyses (i.e., to consider the effects of timing, phasing, partial buildout, and changes in the volume of auto sales), we will use aspreadsheet-based fiscal model to project changes in revenues and costs. This model will incorporate the revenue and cost equations for each type of land use derived and tested in Tasks 2 and 3, in combination with the assumptions about timing, inflation, and other variables identified in Task 1. We will use the model to evaluate fiscal impacts in the base case and the alternate (sensitivity) cases. The alternate cases will include an scenario in which Staples Ranch is fully (or partially) developed as proposed but not annexed to the City of Pleasanton. In this case, it is expected that the City would lose some sales tax revenue as auto dealers relocate to the new site. It is possible that some additional sales tax revenues would be lost as well, if other purchases shift from existing locations within the City to the new commercial area that could be located at Staples Ranch. At the same time, costs of providing services to the existing dealership locations could be reduced. The net reductions in revenues and costs associated with the existing sites will depend in large part on the types of uses that replace the auto dealerships and the length of time before they are completed. Task 6: Evaluate the Fiscal Impacts of Redevelopment on the Existing Auto Dealership Sites (Optional Task) If and when the Hendrick dealerships and Mercedes-Benz dealership relocated to Staples Ranch, Pleasanton will be left with two large areas that are unused and would be suitable for redevelop- ment. We understand that the City has an interest in seeing reuse of these sites sooner rather than later, to provide compensation for some fee offsets that it would grant for the new auto mall development. If the City desires, M&A could evaluate the potential fiscal impacts of prototypical development projects on these sites. Such an evaluation would consider (1) the types of uses that might be permitted (either with existing zoning or with a general plan amendment/zone change), (2) the typical development intensity and value of those types of uses, and (3) the typical revenue and cost factors that would be associated with such development. Using the spreadsheet-based model, it would be feasible to conduct a small number of sensitivity tests to establish the likely range of fis- cal outcomes from development of this site. The analysis would be undertaken at a conceptual level, intended to provide order-of-magnitude estimates of the relative fiscal impacts of various development options. (It is expected that more detailed analysis would be conducted, if the City desires it, when specific development proposals are brought forth.)