SP 2004-070 Codorniz - Fiscal Impact Analysis (2004)6-I
SEDWAY GROUP
Real Estate and Urban Economics
CODORNIZ SPECIFIC PLAN
LA QUINTA, CALIFORNIA
FISCAL IMPACT ANALYSIS
Prepared for:
RJT HOMES -CODORNiz. LLC
JUNE 2004
SEDWAY GROUP _
Real Estate and Urban Economics
Wells Fargo Center
355 South Grand Avenue
Suite 1200
June 15, 2004 Los Angeles, CA 90071
T 213 613 3750
F 213 613 3780
Chad Meyer sedway6sedway.com
RJT Home -- Codomiz, LLC
79-700 Avenue 50
La Quinta, CA 92253
Re: Fiscal Impact Analysis — Codorniz Specific Plan
Dear Mr. Meyer:
Sedway Group/CB Richard Ellis Consulting is pleased to submit this fiscal impact analysis of the
Codomiz Specific Plan for your proposed 145 -unit development at the SEC of Jefferson Street and
52"d Avenue in the City of La Quinta.
The attached fiscal impact report demonstrates the one-time and ongoing General Fund fiscal impact
of the proposed residential development as compared to the previously approved commercial
development.
We have also provided as a separate report, a market study for grocery -anchored neighborhood centers
to demonstrate the infeasibility of the current approved Specific Plan 2001-054.
If you have any questions please do not hesitate to call me at 213-613-3751
Sincerely,
Thomas Jirovsky
— Senior Managin
Enclosure
Enclosure
a CB Richard Ellis Company
SEDWAY GROUP
CODOPINIZ FISCAL IMPACT ANALYSIS 1 Real Estate and Urban Economics
FISCAL IMPACT ANALYSIS
INTRODUCTION
RJT Hames-Codorniz, LLC has submitted a proposal to the City of La Quinta to change the zoning
and replace the previously approved Specific Plan 2001-054. As part of the public planning process,
the City has requested a fiscal impact analysis of the Codomiz Specific Plan in the City of La Quinta.
The fiscal impact analysis projects recurring public revenues and costs to the City's General Fund at
full buildout and stabilized occupancy in constant 2004$.
The fiscal analysis is based on current land use planning data, current population, employment FYE
2003 City Financial Report and 2003-04 City Budget.
PROJECT LOCATION
The proposed Project is on approximately 15 acres located in the southwest portion of the City of La
Quinta in the southern Coachella Valley. It is most easily accessed via Jefferson Ave. north of the I-
10 freeway. The subject site is located in the southeast corner of 52`x' 'Street and Jefferson, as shown
on Figure 1 on the following page.
PROJECT DESCRIPTION
For this analysis we prepared an analysis of three alternative development scenarios:
l) Proposed Specific Plan with 145 residential units
2) Existing Specific Plan with 120,700 square foot grocery anchored center
3) General Commercial Zoning with 120,700 square foot of commercial office and pad retail
Residential
A total of 145 single-family residences and duplexes are planned on individual lots. The Project will
provide housing for a projected population of 300 residents assuming 100% of the units are sold to full
time residents.
The housing sales prices are estimated at $290,000 to $350,000 for units ranging from 1,250 square
feet to 1,550 square feet. The average price is estimated at $330,000. As a result, the Project's
assessed valuation at completion is estimated at $47.8 million.
Grocery Anchored Center
The approved Specific Plan 2001-54 for the site calls for a 120,700 square foot shopping center with a
55,000 square foot supermarket, a 17,000 square foot drug store, 23,000 square feet of inline shops
and 2 6,000 s quare f eet o f freestanding p ads. (See separate r eport f or market study a ddressing the
feasibility of the neighborhood center). The estimated assessed value of such a center is estimated
$18,000,000 at stabilized occupancy. This currently approved project would employ approximately
240 full time equivalent employees.
PAGF. 1
CODORNIZ FISCAL IMPACT ANALYSIS
FIGURE 1
Site Map
PAGE 2
AVENUE 50
SEDWAY GROUP
CODORNIZ FISCAL IMPACT ANALYSIS Real Estate and urban Economics
Office/Retail
Based on a market analysis prepared by Sedway Group/CBRE Consulting, there is a major oversupply
of grocery stores within the trade area that will prevent the feasible development of the approved
grocery anchored center within the next decade. Therefore, given the commercial zoning we prepared
an alternative commercial development scenario that is possible within the current zoning. Total
development would likely remain at 121,000 square feet of space, but the primary tenants (up to 80%)
would probably be office and business services such as banking, real estate, insurance etc. Given the
corner location, there would likely be demand for several freestanding fast food pads.
The estimated assessed value of such a center is estimated $18,000,000 at stabilized occupancy. This
alternative project would employ approximately 360 full time equivalent employees.
FISCAL ANALYSIS SUMMARY
The projected annual surplus (deficit) for all three development scenarios are summarized below. As
expected, a successful neighborhood shopping center with a grocery anchor generates the highest
fiscal impact. The proposed 100% residential project is slightly negative, but would yield over
$900,000 in front-end b uilding p ermit and impact f ees. A n office/retail scenario, with 8 0% o ffice
space, also generates a small annual deficit with less upfront impact fees,
Residential Grocery Office/Retail
Annual Surplus (Deficit) $(22,282) $118,187 $(9,547)
One -Time Fees $921,475 $570,539 $570,539
Recurring Revenues & Expenses
The proposed residential development plan generates a modest General Fund deficit assuming a 100%
allocated cost for all general fund categories. At full build -out, the recurring annual revenues to the La
Quinta General Fund are projected at $89,399. Recurring costs calculated on a per resident equivalent
basis, are projected at $111,681, resulting in a projected recurring deficit of $22,282.
General Fund
Annual Fiscal Impact Comparison
At Stabilized Occupancy
Revenues $89,399 $201,542 $73,808
Expenses 111,681 83,355 83,355
Surplus (Deficit) $(22,282) $118,187 ($9,547)
PAGE 3
SEDWAY GROUP I
Real Estate and Urban Economics
CODORNITZ SPECIFIC PLAN
FISCAL IMPACT ANALYSIS
EXHIBIT l
City of La Quinta General Fund Recurring Revenues and Costs
Codornitz Specific Plan
In Constant 2004 Dollars
Residential
Grocery
Commercial
Alternative
Alternative
Alternative
Annual Recurring Revenues
Property tax
$33,495
$12,600
$12,600
Property transfer tax
1,316
0
0
Sales taxes
21,750
180,000
50,000
Transient Occupancy Tax
0
0
0
Motor vehicle in -lieu tax
13,161
0
0
Other Intergovernmental
12,645
0
0
Franchise fees
5,329
4,410
4,410
License & permit fees
0
4,532
6,798
lnterest
0
0
0
Charges for services
1,703
0
Q
Total Recurring Revenues
$89,399
$201,542
$73,808
Annual Recurring Costs
Police
30,332
25,102
25,102
Public Works
17,228
14,258
14,258
Building Department
10,096
8,356
8,356
Fire
14,368
11,891
11,891
Emergency services
208
172
172
Animal Control
2,050
0
0
Planning/Development
5,052
4,181
4,181
Community services
8,909
0
0
General Government
23,436
P 96
19,396
Total Recurring Costs
$111,681
$83,355
$83,355
Annual Surplus(Deficit)
($22,282)
$118,187
($9,547)
Source: City of La Quinta, CB Richard Ellis Consulting
File: N:15harcdlSedwaylProposals & Jobs 20041RJT Homesl[Fiscall .xls]Exhibit 4
SEDWAY GROUP
CODORNIZ FISCAL IMPACT ANALYSIS Real Estate and Urban Economics
The Grocery -anchored center, at 90 percent occupancy, could generate an annual revenues of
$201,542, due primarily to the potential sales taxes, assuming that there would be little or no capture
from existing or future centers in La Quinta. If the grocery store is not developed, the project is likely
to be developed primarily as office space with a moderate amount of retail. Due to the reduced sales
tax, this scenario generates only $73,800 in revenues and results in an annual deficit of $9,547.
See Exhibit 1 for a breakdown of revenue and expenses estimates for each scenario.
One -Time Development Fees
Development impact fees (excluding school fees) are estimated to generate one-time revenues to the
City as shown below.
Development Fee Comparison
Grocery Office[Retail
Permit & Plan Check Fees $572,750 $344,350 $344,350
Impact Fees 348 725 226, t89 226,189
Total Fees $921,475 $570,539 $570,539
LA QU NTA GENERAL FUND SUMMARY
The F Y 2 003 G eneral F and a xpenditures w ere $15.3 in illion, o r a pproximately $ 500 p er f ull t ime
resident. For FY 2004 the budget increased to $18.5 million, or approximately $600 per person.
However, La Quinta has significant seasonal population from hotel visitors and second home owners
that impact cost of city services, as well as significant automobile traffic visiting the City's Highway
t I 1 commercial corridor.
This analysis focuses on the recurring public revenues and costs to the City's General Fund. For this
analysis, we developed cost and r evenue f actors based on the 2003 City Financial Report a nd the
_- 2003-04 City budget using the Dept. of Finance estimated 2004 resident population of 32,522 people,
estimated 7,500 seasonal full time resident equivalents (5,000 second homes/timeshares and 150,000
estimated hotel room nights) and 9,569 employees working in the City (per Claritas): General fund
revenues and expenses were estimated by dividing the 2 003-04 budget c ategory by the number of
normal residents, total resident and visitors or total residents and employees, where appropriate.
See Exhibit 2 for a detailed breakdown by revenue and expense category for FY 02103 and the
projected budget for FY 2003-04.
PAGE 4
SE_DWAY GROUP
Real Estate and Urban Economics
CODORNITZ SPECIFIC PLAN
FISCAL IMPACT ANALYSIS
EXHIBIT 2
City of La Quinta General Fund
Revenues and Expenses
FY 2002103
FY 2003/04
% of
Actual
Sud et
Total
Annual Revenues
Property tax
Inc. Below
$1,381,400
7.5%
Property transfer tax
Inc. Below
487,300
2.6%
Sales taxes
Inc. Below
4,200,000
22.7%
Transient Occupancy tax
Inc. Below
4,055,300
21.9%
Franchise fees
Inc. Below_
597,600
3.2%
Subtotal taxes
11,572,985
10,721,600
Motor vehicle in -lieu tax
1,426,200
1,475,900
8.0%
Other Intergovernmental
2,967,846
2,597,500
14.0%
License & permits
1,982,127
857,500
4.6%
Fees
Inc.
1,404,000
7.6%
Charge For Services
2,302,759
Inc.
Miscellaneous
87,236
0
0.0%
Interest
1,$94.,.30_1
1,471,800
7,9%
Total Revenues
$22,233,456
$18,528,300
100.0%
Annual Casts [Piet of Reimburserrtent
Police
$4,485,189
$5,186,869
28.1%
Public Works
2,311,436
2,946,113
16.0%
Building Department
1,998,832
1,726,532
9.4%
Fire
1,525,113
2,456,950
13.3%
Emergency services
23,159
35,590
0.2%
Animal Control
170,115
229,922
1.2%
Planning/Development
674,450
863,937
4.7%
Community services
991,558
999,142
5.4%
General Government
3.140,576
4,,007,684
21.7%
Total Costs
$15,320,428
$18,452,739
100.0%
Surplus
$6,913,028
$75,561
Source: City of La Quinta
He: NASharedlScdwaylProposals & Jobs 20041RJT 11omesllFisca11.x1sjExhibit 4
SEAWAY GROUP
CODORNIZ FISCAL IMPACT ANALYSIS I Real Estate anti urban Economics
General Fund Recurring Revenues
Projected recurring revenues from the proposed Codorniz Specific Plan to the City of La Quinta
General Fund are calculated as follows:
• Property Taxes -- Assessed value times 1 per cent basic tax rate times 7 percent allocated City
share of the taxes (Source: La Quinta City Report 2003-04)
• Property Transfer Taxes - $0.55 per $1,000 of assessed value and 5 percent turnover each year
• Sales Taxes — 1 per cent of local retail spending estimated at $15,000 per household (60% of
total retail spending potential)
• Motor vehicle license in -lieu fees —Per capita revenue of $48.47 per person.
• County Fire Service Credit - Per capita transfer amount to general fund of $45.51.
• Franchise Fees- Fees based on cable TV and other utility usage. Per capita amount of $18.88.
• Community Service Fees — per capita amount for program fees of $6.27 per person.
Neighborhood Retail Sales Taxes
For the analysis of the grocery anchored neighborhood center, shopping center square footage
breakdown and sales projection were estimated as follows:
Projected Retail Sales
At Stabilized Occupancy
See Exhibit 3 for other revenue assumptions.
PAGE 5
SF
Total Sales
Taxable Sales
Grocery Store
55,000
$22,000,000
$6,000,000
Drug Store
17,000
8,500,000
4,200,000
Shops
24,000
5,800,000
5,800,000
Restaurants
10,000
4,000,000
4,000,000
Bank/Services
10,000
3,000,000
0
Less: Vacancy
(12,100)
(4,300,000)
(2,000000)
Total
121,000
$39,000,000
$18,000,000
See Exhibit 3 for other revenue assumptions.
PAGE 5
_ SEAWAY GROUP
Real Estate and Urban Economics
- CODORNITZ SPECIFIC PLAN
FISCAL IMPACT ANALYSIS
EXHIBIT 3
Recurring Revenue Factors
Factor
Explanation
General Factors
32,522
La Quints total population - - DOF May 2004
9,569
La Quints total employment - Claritas
7_,500
Part time resident equivalents - CBRE Estimate
49,591
La Quinta resident equivalent population (Sum of above)
290
Project population at 2.0 residents per each of'145 dwelling units
Local Taxes
0.01
Property tax rate, total Grocery Commercial
$47,850,000
Total estimated project assessed value $18,000,000 $18,000,000
$478,500
Property taxes at.01 tax rate $180,000 $180,000
7.0%
City of La Quinta GF allocation of property tax
$0.55
Property transfer tax rate of $.55 per $1,000 of valuation
5.0%
Turnover rate
Sales Taxes
$150.00
1% tax rate on local retail spending of $15,000 per household
Revenue from Other Agencies
$45.38
Motor vehicle license in -lieu revenue per resident
Revenue from Other Funds and Programs
$0.00
Other Inter overnmental
$43.60
County Fire Service Credit per capita and employee
Business License
$18.88
Business license fee per employee only
Franchise Fees
$18.38
Franchise fees per capita
Char es for Services
$5.87
Community Service fees per resident
Source: CB Richard Ellis Consulting
File: NASharedlSedwaylProposals & Jobs 20041RJT Homesl[Fiscal l.xls]Exhibit 4
S_E_DWAY GROUP
CODORNIZ FISCAL IMPACT ANALYSIS Real Estate and urban Economics
- General Fund Recurring Costs
To estimate annual General Fund costs associated with the proposed development, an average
allocated cost methodology was used, where the total budgeted amount for each category (Police, Fire,
Public Works etc) is calculated on a per resident, employee and visitor/resident equivalent as
applicable.
Recurring costs of the proposed Codomiz Specific Plan to the City of La Quinta General Fund are
calculated using the following assumptions and cost factors:
• Fire Protection --Annual budget divided by total residents and employees - $51.70 per capita
• Paramedic Services - Annual budget divided by total residents and employees - $0.75 per
capita
_ + Police Protection - Annual budget divided by total residents and employees - $109.15 per
capita
• Public Works -- Annual budget divided by total residents and employees - $62.00 per capita
• Planning & Development — Annual budget divided by total residents and employees - $18.18
per capita
• Building Department — Annual budget for code enforcement and building divided by total
residents and employees - $36.33 per capita.
• Animal Control — Annual budget for animal control divided by total residents - $7.55 per
person.
• Community Services -Annual budget divided by total residents - $32.81 per capita
• General Government Costs — Annual budget divided by total residents and employees - $80.81
per person. (equivalent to 27% of all other costs).
See Exhibit a for detailed cost assumptions.
PAGE 6
-S---EDWAY GROUP
Rel al Estate and Urban Economics
CODORNITZ SPECIFIC PLAN
FISCAL IMPACT ANALYSIS
EXHIBIT 4
Recurring Cost Factors
In Constant 2004 DoiIars
Factor
Explanation
General Factors
32,522
La Quints total population - - DOF May 2004
9,569
La Quinta total employment - Claritas
7,500
Part-time residents
49,591
La Quinta resident equivalent population (Sum of above)
290
Project population at 2.0 residents per each of 145 dwelling units
240
Project Employees - Grocery Center
Police Protection
$104.59
Police protection costs per capita and employee
Fire and Paramedic Services
$49.54
Fire protection per capita and employee
$0.72
Paramedic Services per capita and employee
Public Works Department
$59.41
Net costs per resident equivalent
Building Department
$34.82
Bldg. Code compliance per capita and employee
$7.07
Animal control per capita
Animal Control
$7.07
Costs per capita
Planning & Develapment
$17.42
Net planning costs per capita and employees
Community Services Department
$30.72
Community services administration cost per capita
General Government
$80.81
Costs for City Council, City Manager, City Clerk etc per capita
Source! CB Richard Ellis Consulting
File: N:1SharedlScdwaylProposals & Jobs 20041RJT Homesl[Fiscall.xlslExhibit 4
SEDWAY GROUP_
CODORNIZ FISCAL IMPACT ANALYSIS Rel al Estate and Urban Economics
Development Fees
The City collects development fees to offset the impacts on public infrastructure from new
development. The following fees are collected for these categories:
• Transportation - $1,098 per residential unit or $1.724 psf for commercial
• Civic Center - $366 per detached unit or $0.095 psf for commercial
• Community Center - $97 per detached unit
• Libraries - $225 per detached unit
• Fire Protection - $97 per detached unit or $0.032 psf for commercial
• Parks & Rec - $5.00 per detached unit
• Street Maintenance - $15.00 per residential unit or $0.023 psf for commercial
• Building Permits/Plan Check - $3,950 to $6,000 per housing unit (depending on size) and $2.75 to
$3.00 psf for commercial space. The proposed residential development calls for homes of less
than 1,550 square feet, which would result in average fees of $3,950 per unit according to the City
website.
Comparing the proposed 145 -unit residential project to a 120,700 square foot commercial center, the
total impact fees for the Codorniz are estimated to range from $570,500 for either commercial
development to $921,500 for the residential development.
Source: Development Impact Fee Study January 2002, City of La Quinta Bldg & Safety Depattment Website
PAGE. 7
Transportation
$159,210
$208,087
$208,087
Civic Center
53,070
11,466
11,466
Community Center
14,065
--
--
Libraries
32,625
--
--
Fire Protection
14,065
3,810
3,810
Parks & Recreation
72,790
--
--
Street Maintenance
2,175
2,776
2,776
Park Maintenance
725
Building Permit/Plan Check
572,750
344,350
344,350
Total
$921,475
$570,539
$570,539
Source: Development Impact Fee Study January 2002, City of La Quinta Bldg & Safety Depattment Website
PAGE. 7
SEDWAY GROUP
CODORNIZ FISCAL IMPACT ANALYSIS weal Estate and Urban EConomirs
ASSUMPTIONS AND GENERAL LIMITING CONDITIONS
Sedway Group/CBRE Consulting has made extensive efforts to confirm the accuracy and timeliness of
the information contained in this study. Such information was compiled from a variety of sources,
including interviews with government officials, review of City and County documents, and other third
parties deemed to be reliable. Although we believe all information in this study is correct, it does not
warrant the accuracy of such information and assumes no responsibility for inaccuracies in the
information by third parties. We have no responsibility to update this report for events and
circumstances occurring after the date of this report_ Further, no guarantee is made as to the possible
effect on development of present or future federal, state or local legislation, including any regarding
environmental or ecological matters.
The accompanying projections and analyses are based on estimates and assumptions developed in
connection with the study. In turn, these assumptions, and their relation to the projections, were
developed using currently available economic data and other relevant information. It is the nature of
forecasting, however, that some assumptions may not materialize, and unanticipated events and
circumstances may occur. Therefore, actual results achieved during the projection period will likely
vary from the projections, and some of the variations may be material to the conclusions of the
analysis.
This report may not be used for any purpose other than that for which it is prepared without prior
written consent and approval.
PAGE 8
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