File #: 2013-381
Type: Regular Agenda Item
Body: City Council
On agenda: 12/17/2013
Title: Presentation on Fiscal Impact Analysis of Alameda Point. (Base Reuse 819099)
Attachments: 1. Exhibit 1 - Draft Fiscal Impact Analysis of Alameda Point

Title

Presentation on Fiscal Impact Analysis of Alameda Point. (Base Reuse 819099)

To: Honorable Mayor and Members of the City Council

From: John A. Russo, City Manager

Re: Presentation on Fiscal Impact Analysis of Alameda Point Development

BACKGROUND

The City of Alameda is preparing a comprehensive zoning ordinance amendment, Master Infrastructure Plan (MIP), Town Center and Waterfront Precise Plan, and an environmental impact report (EIR) for Alameda Point for City Council approval in early 2014. These project approvals are intended to facilitate near-term construction at Alameda Point.

The MIP presents a plan for new backbone infrastructure systems at Alameda Point, including new streets, flood and sea-level rise protection, shoreline stabilization, geotechnical mitigations, and wet and dry utilities, for the proposed project contained in the Naval Air Station Alameda Community Reuse Plan, consisting of 1,425 units and 5.5 million square feet of commercial space. The draft MIP was presented to the Planning Board on August 21, 2013 and the City Council on September 17, 2013.

Based on the feedback provided from the Planning Board, City Council and community members at these meetings, City staff revised the MIP and presented the updated version to the Planning Board on November 13, 2013 and the City Council on November 19, 2013. One of the comments on the MIP at the September 17, 2013 meeting was to evaluate the fiscal impacts of the public infrastructure and facilities proposed for Alameda Point on the City's annual budget. This analysis was not available for the November 19, 2013 agenda item on the MIP and, as a result, is being presented to the City Council this evening.

DISCUSSION

City staff retained Willdan Financial Services (Willdan) to prepare a fiscal impact analysis of the Alameda Point development. Based on the proposed development of 1,425 housing units and 5.5 million square feet of commercial, which includes 300,000 square feet of retail development, Willdan estimated the net fiscal impact to the City (i.e., the difference between annual City revenues and expenditures) likely to be generated by the development at buildout (Exhibit 1). Willdan evaluated the impacts to the following City funds: General, Urban Runoff, Gas/Measure B Tax, Sewer Service and Library Funds. This evaluation was conducted in close coordination with the City's Finance, Police, Fire, Public Works, Recreation and Parks and Library Departments.

Based upon the assumptions presented in the fiscal impact analysis report, the development at Alameda Point is expected to generate a net positive impact on the City's General Fund of approximately $3.6 million annually, a net positive impact on the City's Library Fund of $302,000, and a net adverse impact on the City's street-related funds of $1.1 million. When these three fund types are combined, the net fiscal impact is still expected to be positive at $2.8 million annually. The fiscal impacts to the other Funds are anticipated to be neutral. The following provides key considerations:
· This analysis assumes that infrastructure financing districts (IFDs) are not available for Alameda Point based on current State law. If IFD law changes and the City Council elects to create IFDs at Alameda Point, the net fiscal impact to the General Fund is anticipated to be negative due to the City's property tax revenues being used to fund upfront infrastructure costs similar to redevelopment tax increment financing. As a result, these impacts would need to be mitigated through an assessment levied on Alameda Point property owners for municipal service, similar to the assessments in place at Alameda Landing;

· If a major sales tax user is attracted to Alameda Point, it is estimated that the fiscal impacts to the General Fund would be significantly greater, adding approximately $2.4 million in additional net benefit;

· This analysis is estimated based on buildout of Alameda Point. A number of the expenditures (i.e., re-opening of the fire station) and revenues (i.e., property transfer taxes on land and new building sales) are not evenly distributed over time. As the phasing of the disposition and development of Alameda Point becomes clearer, it is recommended that the fiscal impact analysis be updated to evaluate the potential fiscal impacts to the City's annual budget throughout the phasing of development; and

· Lease revenues generated at Alameda Point are currently used, in part, to offset Alameda Point's maintenance and operations costs, including certain City services. As development is implemented and revenue-generating buildings are demolished, it will be crucial that the fiscal impacts of this transition be evaluated carefully on an annual basis.

Next Steps

Staff requests that the City Council and public provide comments on the draft fiscal impact analysis. The feedback provided at the City Council meeting this evening will be incorporated into a final fiscal impact analysis to be provided as an appendix to the MIP, which will be brought before the City Council for approval in early 2014.

FINANCIAL IMPACT

There is no financial impact to the City's General Fund (Fund 001) or Base Reuse Department Revenue Fund (Fund 858) from accepting this report. The report provides a detailed financial analysis of the proposed Alameda Point development, as summarized above.

ENVIRONMENTAL REVIEW

The City Council's review and comments on the draft fiscal impact analysis requires no environmental review at this time as such review and comments are part of a planning and feasibility study for possible future action that the City has not approved, adopted or funded and the Board's review and comments do not legally bind the Board, the City Council or City staff to any possible future action.

RECOMMENDATION

Provide comments on the draft fiscal impact analysis of Alameda Point development.

Respectfully submitted,
Jennifer Ott, Chief Operating Officer - Alameda Point

Financial Impact section reviewed,
Fred Marsh, Finance Director

Exhibit:
1. Draft Fiscal Impact Analysis of Alameda Point Development