The URL can be used to link to this page

Home My WebLink About07-30-14City of San Luis Obispo, Agenda, Planning Commission Any writings or documents provided to a majority of the Planning Commission regarding any item on this agenda will be made available for public inspection in the Community Development, 919 Palm Street, during normal business hours. SAN LUIS OBISPO PLANNING COMMISSION SPECIAL MEETING AGENDA Council Chamber City Hall - 990 Palm Street San Luis Obispo, CA 93401 July 30, 2014 Wednesday 6:00 p.m. CALL TO ORDER/PLEDGE OF ALLEGIANCE ROLL CALL:Commissioners Hemalata Dandekar, Michael Draze, John Fowler, Ronald Malak, William Riggs, Vice-Chairperson Michael Multari, and Chairperson John Larson ACCEPTANCE OF AGENDA:Commissioners or staff may modify the order of items. PUBLIC COMMENT: At this time, people may address the Commission about items not on the agenda. Persons wishing to speak should come forward and state their name and address. Comments are limited to five minutes per person. Items raised at this time are generally referred to staff and, if action by the Commission is necessary, may be scheduled for a future meeting. PUBLIC HEARINGS: NOTE: Any court challenge to the action taken on public hearing items on this agenda may be limited to considering only those issues raised at the public hearing or in written correspondence delivered to the City of San Luis Obispo at, or prior to, the public hearing. Any decision of the Planning Commission is final unless appealed to the City Council within 10 days of the action (Recommendations to the City Council cannot be appealed since they are not a final action.). Any person aggrieved by a decision of the Commission may file an appeal with the City Clerk. Appeal forms are available in the Community Development Department, City Clerk’s office, or on the City’s website (www.slocity.org). The fee for filing an appeal is $273 and must accompany the appeal documentation. If you wish to speak, please give your name and address for the record. Please limit your comments to three minutes; consultant and project presentations limited to six minutes. 1.276 Tank Farm Road.SPA 92-08: Review of amendments to Chapter 8, Public Facilities Financing Plan, of the Airport Area Specific Plan; Chevron, applicant. (Phil Dunsmore) Planning Commission Agenda Page 2 The City of San Luis Obispo is committed to include the disabled in all of its services, programs, and activities. Please contact the City Clerk or staff liaison prior to the meeting if you require assistance. COMMENT AND DISCUSSION: 2.Staff a. Agenda Forecast 3.Commission ADJOURNMENT Presenting Planner: Phil Dunsmore 3/$11,1*&200,66,21$*(1'$5(3257 68%-(&75HYLHZRIWKH3XEOLF)DFLOLWLHV)LQDQFLQJ3ODQ&KDSWHURIWKH$LUSRUW$UHD6SHFLILF 3ODQ 352-(&7$''5(66$LUSRUW$UHD6SHFLILF3ODQ%<3KLO'XQVPRUH6HQLRU3ODQQHU 3KRQH1XPEHU (PDLOSGXQVPRUH#VORFLW\RUJ ),/(180%(563$(5 )520.LP0XUU\'HSXW\'LUHFWRU 5(&200(1'$7,215HFRPPHQGWKH&LW\&RXQFLODGRSWDUHVROXWLRQDSSURYLQJDPHQGPHQWV WR&KDSWHURIWKH$LUSRUW$UHD6SHFLILF3ODQDPHQGLQJWKH3XEOLF)DFLOLWLHV)LQDQFLQJ3ODQ 6,7('$7$ ƉƉůŝĐĂŶƚŚĞǀƌŽŶ ZĞƉƌĞƐĞŶƚĂƚŝǀĞƐ'ŽŽĚǁŝŶŽŶƐƵůƚŝŶŐ ŽŶŝŶŐD͕W͕Ͳ^͕KƉĞŶ^ƉĂĐĞ 'ĞŶĞƌĂůWůĂŶKƉĞŶ^ƉĂĐĞ͕^ĞƌǀŝĐĞƐĂŶĚ DĂŶƵĨĂĐƚƵƌŝŶŐ ^ŝƚĞƌĞĂϭ͕ϱϬϬĐƌĞƐ ŶǀŝƌŽŶŵĞŶƚĂů ^ƚĂƚƵƐ dŚĞ&ŝŶĂů/ZǁĂƐƌĞůĞĂƐĞĚ :ĂŶƵĂƌǇϮŶĚ͘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¶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¶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³JURZWK´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¶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¶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ŽĐĂƚŝŽŶ/ŵƉƌŽǀĞŵĞŶƚƐ WƌĂĚŽZŽĂĚͬ^ŽƵƚŚ,ŝŐƵĞƌĂ ŝŶƚĞƌƐĞĐƚŝŽŶ ĚĚůĂŶĞƐƉĞƌ/Z͕ƚŽƚŚĞĂƉƉƌŽǀĂůŽĨ ƚŚĞWƵďůŝĐtŽƌŬƐŝƌĞĐƚŽƌǆ ǆ dĂŶŬ&Ăƌŵͬ^ŽƵƚŚ,ŝŐƵĞƌĂ ŝŶƚĞƌƐĞĐƚŝŽŶ ĚĚůĂŶĞƐƉĞƌ/Z͕ƚŽƚŚĞĂƉƉƌŽǀĂůŽĨ ƚŚĞWƵďůŝĐtŽƌŬƐŝƌĞĐƚŽƌǆǆ dĂŶŬ&ĂƌŵZŽĂĚͬƌŽĂĚ^ƚƌĞĞƚ ŝŶƚĞƌƐĞĐƚŝŽŶ ĚĚůĂŶĞƐƉĞƌ/Z͕ƚŽƚŚĞĂƉƉƌŽǀĂůŽĨ ƚŚĞWƵďůŝĐtŽƌŬƐŝƌĞĐƚŽƌǆǆ ΎĞƌŽƌŝǀĞͬƌŽĂĚ^ƚƌĞĞƚ ŝŶƚĞƌƐĞĐƚŝŽŶ ^ŝŐŶĂůŝǌĞ͕ŝĨŶĞĐĞƐƐĂƌǇ͕ƚŽƚŚĞ ĂƉƉƌŽǀĂůŽĨƚŚĞWƵďůŝĐtŽƌŬƐ ŝƌĞĐƚŽƌ ǆ dĂŶŬ&Ăƌŵͬ^ĂŶƚĂ&ĞZŽĂĚ ŝŶƚĞƌƐĞĐƚŝŽŶ /ŶƐƚĂůůƌŽƵŶĚĂďŽƵƚĂŶĚĂĚĚůĂŶĞƐƚŽ ƚŚĞ ĂƉƉƌŽǀĂů ŽĨ ƚŚĞ WƵďůŝĐ tŽƌŬƐ ŝƌĞĐƚŽƌ ǆǆǆ dĂŶŬ&Ăƌŵͬͬ^ƵĞůĚŽŝŶƚĞƌƐĞĐƚŝŽŶ ;ŚĞǀƌŽŶŽůůĞĐƚŽƌͿ ^ŝŐŶĂůŝǌĞ͕ŝĨŶĞĐĞƐƐĂƌǇĂŶĚĂĚĚůĂŶĞƐ ĂƐƐŚŽǁŶŝŶ/ZƚŽƚŚĞĂƉƉƌŽǀĂůŽĨ ƚŚĞWƵďůŝĐtŽƌŬƐŝƌĞĐƚŽƌ ǆǆ ΎWƌĂĚŽZŽĂĚͬƌŽĂĚ^ƚƌĞĞƚ ŝŶƚĞƌƐĞĐƚŝŽŶ ^ŝŐŶĂůŝǌĞ͕ ĂĚĚ ůĂŶĞƐ ĂƐ ƐŚŽǁŶ ŝŶ D^WĂŶĚEĚƵĂůůĞĨƚƚƵƌŶůĂŶĞǆǆ ΎƵĐŬůĞǇZŽĂĚͬ^ŽƵƚŚ,ŝŐƵĞƌĂ ^ƚƌĞĞƚŝŶƚĞƌƐĞĐƚŝŽŶ ĚĚůĂŶĞƐƉĞƌ/Z͕ƚŽƚŚĞĂƉƉƌŽǀĂů ŽĨƚŚĞWƵďůŝĐtŽƌŬƐŝƌĞĐƚŽƌǆǆ ^ĂŶƚĂ&ĞZŽĂĚĨƌŽŵdĂŶŬ&ĂƌŵƚŽ WƌĂĚŽZĚ͘ ǆƚĞŶĚŶĞǁƌŽĂĚǁĂǇƚŽŽŵŵĞƌĐŝĂů ŽůůĞĐƚŽƌƐƚĂŶĚĂƌĚƐ ǆ Ύ^ĂŶƚĂ &Ğ ZŽĂĚ ĨƌŽŵ ,ŽŽǀĞƌ ǀĞŶƵĞƚŽdĂŶŬ&Ăƌŵ͘ ZĞĂůŝŐŶŶĞǁƌŽĂĚǁĂǇƚŽ ŽŵŵĞƌĐŝĂůŽůůĞĐƚŽƌƐƚĂŶĚĂƌĚƐ ǆǆ ^ƵĞůĚŽ;tĞƐƚĞƌŶŚĞǀƌŽŶƉƌŽƉĞƌƚǇͿ ďĞƚǁĞĞŶdĂŶŬ&ĂƌŵĂŶĚ,ŝŶĚ ǆƚĞŶĚŶĞǁƌŽĂĚǁĂǇƚŽŽŵŵĞƌĐŝĂů ŽůůĞĐƚŽƌƐƚĂŶĚĂƌĚƐ ǆ dĂŶŬ&ĂƌŵĨƌŽŵ^Ž͘,ŝŐƵĞƌĂƚŽ hŶŽĐĂůŽůůĞĐƚŽƌ͕ĂŶĚĨƌŽŵ^ĂŶƚĂ&Ğ ƚŽƌŽĂĚ^ƚ͘ tŝĚĞŶƚŽƌƚĞƌŝĂůƐƚĂŶĚĂƌĚƐʹϰůĂŶĞƐ ŵŝŶŝŵƵŵ ǆ dĂŶŬ&ĂƌŵĨƌŽŵ^ĂŶƚĂ&ĞƚŽhŶŽĐĂů ŽůůĞĐƚŽƌ tŝĚĞŶƚŽƌƚĞƌŝĂůƐƚĂŶĚĂƌĚƐϮůĂŶĞƐ ŵŝŶŝŵƵŵ͕ƉƌĞƐĞƌǀĞĨŽƌϰ ǆǆ ΎƵĐŬůĞǇZĚ͘ĨƌŽŵsĂĐŚĞůů>ĂŶĞƚŽ ^Ž͘,ŝŐƵĞƌĂ^ƚ͘ ǆƚĞŶĚŶĞǁƌŽĂĚǁĂǇƚŽƌƚĞƌŝĂů ƐƚĂŶĚĂƌĚƐĨŽƌƵŶĚĞǀĞůŽƉĞĚĂƌĞĂƐǆǆ ŝŬĞWĂƚŚƐEĞǁ ůĂƐƐ ϭ DƵůƚŝͲhƐĞ dƌĂŝůƐ͕ ŶĞǁ ĐůĂƐƐϮǆ ǆǆ ΎEĞǁ ZŽĂĚ ŶŽƌƚŚ ŽĨ dĂŶŬ &Ăƌŵ ;ZŽĂĚͿ ǆ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¶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¶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¶VMXULVGLFWLRQRUKDYH DQQH[DWLRQDJUHHPHQWVWKDWPD\UHVXOWLQUHGXFHGLPSDFWIHHUHYHQXH 6WDIIUHYLHZHGWKHSURSRVHGLQIUDVWUXFWXUHEXUGHQIRUWKH$$63WRHQVXUHWKDWFRVWVDUHGLVWULEXWHG IDLUO\DQGVWLOODFKLHYHQHFHVVDU\LQIUDVWUXFWXUH6LQFHWKH&RPPLVVLRQ¶VSUHYLRXVUHYLHZVWDIIKDV UHYLVHGWKHLQIUDVWUXFWXUHSODQLQDQHIIRUWWRUHGXFHWKHEXUGHQRQWKH$$63DQGIDLUO\GLVWULEXWH WKHLPSDFWIHHV2YHUDOOLQIUDVWUXFWXUHFRVWVKDYHEHHQUHGXFHGWRDSSUR[LPDWHO\0LOOLRQIURP WKHSUHYLRXVO\LGHQWLILHG0LOOLRQ7KLVLVDQLQFUHDVHLQFRVWIURPWKHFXUUHQW3))3KRZHYHU GXHWRDQQXDO&3,LQFUHDVHVWKHQHWLPSDFWIHHFKDQJHVDUHOHVVWKDQVLJQLILFDQW PC1 - 7 63$(57DQN)DUP5RDG 3DJH ),*85($$63%XLOGRXW$VVXPSWLRQ'HYHORSPHQW,PSDFW)HHV &XUUHQWO\WKH&LW\XWLOL]HVD³SD\DV\RXJR´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ĂŶĚhƐĞdƌĂŶƐƉŽƌƚĂƚŝŽŶ ĨĞĞƐƉĞƌƐ͘Ĩ͘ ^ƚŽƌŵ ƌĂŝŶĂŐĞ ^ƉĞĐŝĨŝĐWůĂŶ ŽƐƚƐƉĞƌƐ͘Ĩ͘ dKd> ^W ƵƐŝŶĞƐƐWĂƌŬΨϰ͘ϲϬϭŶͬĂ Ψ͘ϬϵϯΨϰ͘ϲϵ ^ĞƌǀŝĐĞŽŵŵĞƌĐŝĂůΨϯ͘ϰϲϰŶͬĂ Ψ͘ϭϯϲΨϯ͘ϲϬ DĂŶƵĨĂĐƚƵƌŝŶŐΨ͘ϲϵŶͬĂ Ψ͘ϭϮϰΨ͘ϴϭ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³GHILFLW´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ĂŶĚhƐĞdƌĂŶƐƉŽƌƚĂƚŝŽŶ ĨĞĞƐƉĞƌƐ͘Ĩ͘ ^ƚŽƌŵ ƌĂŝŶĂŐĞ ^ƉĞĐŝĨŝĐWůĂŶŽƐƚƐ ƉĞƌƐ͘Ĩ͘ dKd> ƵƐŝŶĞƐƐWĂƌŬΨϰ͘ϯϳ Ψ͘ϮϬΨ͘ϬϵϯΨϰ͘ϲϲ ^ĞƌǀŝĐĞŽŵŵĞƌĐŝĂů Ψϯ͘Ϯϵ Ψ͘ϮϴΨ͘ϭϯϲΨϯ͘ϳϭ DĂŶƵĨĂĐƚƵƌŝŶŐΨ͘ϲϱΨ͘ϰϮΨ͘ϭϮϰΨϭ͘ϭϵ PC1 - 9 63$(57DQN)DUP5RDG 3DJH 7DEOH(;,67,1*$1'352326('$LUSRUW$UHD,PSDFW)HH&203$5,621 >ĂŶĚhƐĞƵƌƌĞŶƚ&ĞĞ ^Ƌ&ƚ WƌŽƉŽƐĞĚ&ĞĞ ^Ƌ&ƚ ŝĨĨĞƌĞŶĐĞй,E' ƵƐŝŶĞƐƐWĂƌŬΨϰ͘ϲϵ Ψϰ͘ϲϲ ͲΨ͘Ϭϯ Ͳ͘ϲй ^ĞƌǀŝĐĞŽŵŵĞƌĐŝĂůΨϯ͘ϲϬ Ψϯ͘ϳϭ Ψ͘ϭϭ нϯ͘Ϭϲй DĂŶƵĨĂĐƚƵƌŝŶŐΨ͘ϴϭ Ψϭ͘ϭϵϰ Ψ͘ϯϴϰ нϰϳй 7DEOH3URMHFW6SHFLILF,QIUDVWUXFWXUH&RVWV PC1 - 10 63$(57DQN)DUP5RDG 3DJH 5HWDLQWKHRSWLRQRIHVWDEOLVKLQJ/DQG%DVHG)LQDQFLQJ&)'IRUILQDQFLQJLPSURYHPHQWV LQWKH$$637KH&)'FRXOGEHLPSOHPHQWHGDWDODWHUGDWHXSRQVXSSRUWE\WKHPDMRULW\RIDUHD SURSHUW\RZQHUV7KH&)'ZRXOGWDNHSODFHRIWKH$$63LPSDFWIHHV DQG ZRXOG UHVXOW LQ D SURSHUW\WD[EDVHGXSRQEXLOGLQJDUHD&RQFHSWXDOHVWLPDWHVRIWKHSURSHUW\WD[ZRXOGEHGLIIHUHQW IRUHDFK]RQLQJGLVWULFWEDVHGRQEXLOGLQJDUHDDQGDQRQDQQXDOEDVLVDVIROORZV %XVLQHVV3DUN6HUYLFH&RPPHUFLDO0DQXIDFWXULQJ >ĂŶĚhƐĞ ƵƌƌĞŶƚ&ĞĞ ^Ƌ&ƚ WƌŽƉŽƐĞĚ&ĞĞ ^Ƌ&ƚ ŝĨĨĞƌĞŶĐĞ й ƵƐŝŶĞƐƐWĂƌŬΨϰ͘ϲϵ Ψϰ͘ϲϲ ͲΨ͘Ϭϯ Ͳ͘ϲй ^ĞƌǀŝĐĞŽŵŵĞƌĐŝĂůΨϯ͘ϲϬ Ψϯ͘ϳϭ Ψ͘ϭϭ ϯ͘Ϭϲй DĂŶƵĨĂĐƚƵƌŝŶŐΨ͘ϴϭ Ψϭ͘ϭϵϰ Ψ͘ϯϴϰ ϰϳй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¶VUHFRPPHQGDWLRQ WRDPHQGWKH$$633))37KH&KDPEHU%RDUG¶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ĂŶĚhƐĞdƌĂŶƐƉŽƌƚĂƚŝŽŶ ĨĞĞƐƉĞƌƐ͘Ĩ͘ ^ƚŽƌŵ ƌĂŝŶĂŐĞ ^ƉĞĐŝĨŝĐWůĂŶŽƐƚƐ ƉĞƌƐ͘Ĩ͘ dKd> ƵƐŝŶĞƐƐWĂƌŬΨϱ͘Ϭϱ Ψ͘ϭϲΨ͘ϬϵϯΨϱ͘ϯϬ ^ĞƌǀŝĐĞŽŵŵĞƌĐŝĂů Ψϯ͘ϴϬ Ψ͘ϮϮΨ͘ϭϯϲΨϰ͘ϭϱ DĂŶƵĨĂĐƚƵƌŝŶŐΨ͘ϳϲΨ͘ϯϯΨ͘ϭϮϰΨϭ͘Ϯϭ PC1 - 12 63$(57DQN)DUP5RDG 3DJH IRUZDUGWRWKH&LW\&RXQFLOZLWKRXWWKHILQDQFLQJSODQLQRUGHUWRFRPSOHWHWKHFHUWLILFDWLRQ RIWKH)(,5DQGWRFRPSOHWHWKHDFWLRQRQWKH$$63DPHQGPHQWV $77$&+0(176 $$63&KDSWHU *RRGZLQ&RQVXOWLQJ*URXS'UDIW$$63)LQDQFLQJ3ODQ 5HVROXWLRQUHFRPPHQGLQJWKH&LW\&RXQFLO$PHQG&KDSWHURIWKH$$63 PC1 - 13 ),1$1&,1*_38%/,&)$&,/,7,(6),1$1&,1*(DFK¶OD\HU·RIXQGHUVWDQGLQJLQIRUPVWKHSODQQLQJUHVSRQVH,17(177KLV3XEOLF)DFLOLWLHV)LQDQFLQJ3ODQ´3))3µKDVEHHQSUHSDUHGWRHYDOXDWHWKHDELOLW\RIODQGXVHVSURSRVHGLQWKH&LW\RI6DQ/XLV2ELVSR$LUSRUW$UHD6SHFLILF3ODQWRIXQGUHTXLUHGSXEOLFIDFLOLWLHV7KLVFKDSWHUGHVFULEHVWKHDSSURDFKDQGPDMRUILQGLQJVRIWKH3))3,QVXPPDU\WKLV3))3GRHVWKHIROORZLQJx6XPPDUL]HVWKHSURSRVHGODQGXVHVDQGHVWLPDWHGSKDVLQJDVVXPSWLRQVIRUWKH$LUSRUWDUHDx6XPPDUL]HVWKHSXEOLFIDFLOLWLHVUHTXLUHGWRVHUYHWKH$LUSRUWDUHDx6XPPDUL]HV WKH FRVWV RI UHTXLUHG SXEOLF IDFLOLWLHV DQGDOORFDWHV WKH FRVWV WR WKH SURSRVHG ODQG XVHV EDVHG RQ DEHQHILWUDWLRQDOHx2XWOLQHVWKHSKDVLQJRISXEOLFIDFLOLWLHVQHHGHGWRNHHSSDFHZLWKSURMHFWHGGHYHORSPHQWx&RQVLGHUVDFRPELQDWLRQRILPSDFWIHHVGHEWILQDQFLQJDQGGHYHORSHUFRQWULEXWLRQVWRIXQGSXEOLFIDFLOLWLHVDVWKH\DUHQHHGHGx,GHQWLILHV WKH WRWDO RQHWLPH EXUGHQV LPSDFW IHHV DQGSRWHQWLDODQQXDOEXUGHQVDQQXDOVSHFLDOWD[HVSURSRVHGWREHDVVHVVHGWRIXQGWKHLPSURYHPHQWVx'LVFXVVHV IXWXUH VWHSV DVVRFLDWHG ZLWK LPSOHPHQWDWLRQ DQGDGPLQLVWUDWLRQRIWKHILQDQFLQJSODQ7KH3))3UHSUHVHQWVWKHFXOPLQDWLRQRIDFRRSHUDWLYHSURFHVVWKDWLQYROYHGSXEOLFDQGSULYDWHSDUWLFLSDQWVZLWKLQWHUHVWVLQWKH$LUSRUWDUHDATTACHMENT 1 PC1 - 14 _6$1/8,62%,632$,53257$5($63(&,),&3/$1$VWKH$LUSRUWDQG0DUJDULWDDUHDVGHYHORSWKHWLPLQJDQGPL[RIFRVWVDQGIXQGLQJVRXUFHVPD\FKDQJH7KHDVVXPSWLRQVDQGUHVXOWVLQWKH3))3ZHUHRULJLQDOO\EDVHGRQ\HDUHVWLPDWHVDQGZHUHPRVW UHFHQWO\ PRGLILHG LQ LQ FRQMXQFWLRQ ZLWK WKH &KHYURQUHPHGLDWLRQDQGGHYHORSPHQWSURMHFW,QLWZDVIRXQGWKDWDQWLFLSDWHG GHYHORSPHQW HOLJLEOH WR SURYLGH ILQDQFLQJ IRULQIUDVWUXFWXUHKDGVXEVWDQWLDOO\GHFUHDVHGVLQFH$GGLWLRQDOO\WKHFRVWDQGVFRSHRIUHTXLUHGLQIUDVWUXFWXUHKDVVXEVWDQWLDOO\LQFUHDVHG5HJDUGOHVV RI WKH H[WHQW WR ZKLFK WKH SURSRVHG ILQDQFLQJPHFKDQLVPVDUHXVHGRURWKHUILQDQFLQJPHFKDQLVPVDUHLQWURGXFHGODWHULQWKH$LUSRUWDQG0DUJDULWDDUHDVWKHRYHUDOOEXUGHQKDVEHHQHYDOXDWHG LQ GHWDLO DQG D UDQJH RI ILQDQFLQJ RSWLRQV KDV EHHQFRQWHPSODWHGWRHQVXUHIHDVLELOLW\8OWLPDWHO\WKHPDUNHWSODFHZLOOGHWHUPLQHZKHWKHUWKHLPSDFWIHHVDUHFRPSHWLWLYHDQGZKHWKHUWKHLQIUDVWUXFWXUHVHUYLFHVDQGRWKHUDPHQLWLHVSURYLGHGE\WKH&LW\DUHRIJUHDWHQRXJKEHQHILWWRIRVWHUGHYHORSPHQWLQWKH$LUSRUWDUHDXQGHU&LW\MXULVGLFWLRQ&,7<),1$1&,1*32/,&,(6$VSDUWRIGHYHORSLQJWKHILQDQFLQJVWUDWHJ\HPSOR\HGLQWKLV3))3DUHYLHZRIWKH&LW\·VILQDQFLQJSROLFLHVZDVFRQGXFWHG7KH&LW\·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x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x5HFXUULQJ2 0&RVWV'HEWILQDQFLQJZLOOQRWEHFRQVLGHUHGDSSURSULDWH IRU DQ\ UHFXUULQJ SXUSRVH VXFK DV FXUUHQWRSHUDWLQJDQGPDLQWHQDQFHH[SHQGLWXUHVx&DSLWDO,PSURYHPHQWV&DSLWDO,PSURYHPHQWVZLOOEHILQDQFHGSULPDULO\ WKURXJK XVHU IHHV VHUYLFH FKDUJHV DVVHVVPHQWVVSHFLDOWD[HVRUGHYHORSHUDJUHHPHQWVZKHQEHQHILWVFDQEHVSHFLILFDOO\DWWULEXWHGWRXVHUVRIWKHIDFLOLW\/$1'6(&85('),1$1&,1*32/,&,(6x3XEOLF 3XUSRVH 7KHUH ZLOO EH D FOHDUO\ DUWLFXODWHG SXEOLFSXUSRVHLQIRUPLQJDQDVVHVVPHQWRUVSHFLDOWD[GLVWULFWLQILQDQFLQJSXEOLFLQIUDVWUXFWXUHLPSURYHPHQWV7KLVVKRXOGLQFOXGH D ILQGLQJ E\ WKH &RXQFLO DV WR ZK\ WKLV IRUP RIILQDQFLQJLVSUHIHUUHGWRRWKHUIXQGLQJRSWLRQVVXFKDVLPSDFWIHHV UHLPEXUVHPHQW DJUHHPHQWV RU GLUHFW GHYHORSHUUHVSRQVLELOLW\IRUWKHLPSURYHPHQWVx5HVHUYH)XQG$UHVHUYHIXQGVKRXOGEHHVWDEOLVKHGLQWKHOHVVHUDPRXQWRIWKHPD[LPXPDQQXDOGHEWVHUYLFHRIWKH DQQXDO DYHUDJH GHEW VHUYLFH RU RI WKH ERQGSURFHHGVx9DOXHWR/LHQ5DWLR7KHPLQLPXPYDOXHWROLHQUDWLRVKRXOGJHQHUDOO\EH7KLVPHDQVWKHYDOXHRIWKHSURSHUW\LQWKHGLVWULFWZLWKWKHSXEOLFLPSURYHPHQWVVKRXOGEHDWOHDVWIRXUWLPHVWKHDPRXQWRIWKHVSHFLDOWD[GHEW7KH&LW\PD\FRQVLGHUDOORZLQJDYDOXHWRGHEWUDWLRRIEXWWKH&RXQFLOZRXOGPDNHVSHFLDOILQGLQJVLQWKLVFDVHx&DSLWDO,QWHUHVW'HFLVLRQVWRFDSLWDOL]HLQWHUHVWZLOOEHPDGHRQ D FDVHE\FDVH EDVLV ZLWK WKH LQWHQW WKDW LI DOORZHG LWVKRXOGLPSURYHWKHFUHGLWTXDOLW\RIWKHERQGVDQGUHGXFHERUURZLQJFRVWVEHQHILWLQJERWKFXUUHQWDQGIXWXUHSURSHUW\RZQHUVx0D[LPXP%XUGHQ$QQXDODVVHVVPHQWVRUVSHFLDOWD[HVLQWKHFDVHRI0HOOR5RRVRUVLPLODUGLVWULFWVVKRXOGJHQHUDOO\QRWH[FHHGRIWKHVDOHVSULFHRIWKHSURSHUW\DQGWRWDOSURSHUW\WD[HVVSHFLDODVVHVVPHQWVDQGVSHFLDOWD[SD\PHQWVFROOHFWHGRQWKHWD[UROOVKRXOGJHQHUDOO\QRWH[FHHGx6SHFLDO 7D[HV $VVHVVPHQWV DQG VSHFLDO WD[HV ZLOO EHDSSRUWLRQHG DFFRUGLQJ WR D IRUPXOD WKDW LV FOHDUXQGHUVWDQGDEOH HTXLWDEOH DQG UHDVRQDEO\ UHODWHG WR WKHEHQHILWUHFHLYHGE\RUEXUGHQDWWULEXWHGWRHDFKSDUFHOZLWKUHVSHFWWRLWVILQDQFHGLPSURYHPHQW$Q\DQQXDOHVFDODWLRQIDFWRUVKRXOGJHQHUDOO\QRWH[FHHGx6SHFLDO7D['LVWULFW$GPLQLVWUDWLRQ,QWKHFDVHRI0HOOR5RRVRUVLPLODUVSHFLDOWD[GLVWULFWVWKHWRWDOPD[LPXPDQQXDOWD[VKRXOGQRWEHOHVVWKDQRIWKHDQQXDOGHEWVHUYLFH:KHUHDSSOLFDEOHWKHVH&LW\SROLFLHVKDYHEHHQLQFRUSRUDWHGLQWRWKHILQDQFLQJVWUDWHJ\LQWKLV3))3 /$1'86($668037,216 /$1'86(67KH$LUSRUWDUHDFRPSULVHVRYHUDFUHV]RQHGIRUFRPPHUFLDOLQGXVWULDODQGRSHQVSDFH7DEOHRQWKHIROORZLQJSDJHVKRZVDEUHDNGRZQRIWKHODQGXVHFRPSRQHQWVLQWKH$LUSRUWDUHD7KHHVWLPDWHGQRQUHVLGHQWLDOEXLOGLQJFDSDFLW\LQWKH$LUSRUWDUHDLVDSSUR[LPDWHO\ PLOOLRQ VTXDUH IHHW ,W VKRXOG EH QRWHG WKDWDSSUR[LPDWHO\PLOOLRQVTXDUHIHHWRIWKHQRQUHVLGHQWLDOEXLOGLQJFDSDFLW\LVXQGHUDSUHDQQH[DWLRQDJUHHPHQWRUPD\EHVXEMHFWWRIHHSURJUDPVWKDWDUHRXWVLGHRIWKH&LW\MXULVGLFWLRQ%HFDXVHRIWKLVWKH 0LOOLRQ 6TXDUH IHHW RI GHYHORSPHQW ZLOO FUHDWH D JDS LQ ATTACHMENT 1 PC1 - 16 _6$1/8,62%,632$,53257$5($63(&,),&3/$1LQIUDVWUXFWXUHIXQGLQJ7KLVJDSZLOOQHHGWREHILQDQFHGZLWKJUDQWV&LW\ZLGHVXSSRUW&RXQW\VXSSRUWRURWKHUIXQGLQJVRXUFHV /$1'86($%62537,21(67,0$7(6%DVHGRQKLVWRULFGHYHORSPHQWWUHQGVLQ6DQ/XLV2ELVSRWKH&LW\·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x1HZGHYHORSPHQWPXVWPLWLJDWHLPSDFWVLWFUHDWHVRQSXEOLFIDFLOLWLHV DQG LW LV IXOO\ UHVSRQVLEOH IRU WKH FRVWV RI WKHUHTXLUHGPLWLJDWLRQ7KH&LW\·V*HQHUDO3ODQVWDWHVWKDWWKH&LW\ PD\ FKRRVH WR FRQWULEXWHWR FHUWDLQ IDFLOLWLHV WKDW LWGHHPVZLOOSURYLGHFRPPXQLW\ZLGHEHQHILWVx$VVLJQHGEHQHILWLVEDVHGRQDSURSRUWLRQDOEHQHILWDQDO\VLVXVLQJDOORFDWLRQIDFWRUVWKDWZHUHGHWHUPLQHGHLWKHUE\WKHHQJLQHHUVRU&LW\VWDIIWKDWZRUNHGRQWKHPDVWHUSODQx5RDGZD\LQIUDVWUXFWXUHFRVWVDUHDOORFDWHGWRWKHDUHDVZKLFKEHQHILW IURP WKHVH LPSURYHPHQWV 3UDGR 5RDGLPSURYHPHQWVDSRUWLRQRIWKHFRVWRI3UDGR,QWHUFKDQJHDQGLQWHUVHFWLRQLPSURYHPHQWVDW3UDGRDQG6RXWK+LJXHUDDUH DOORFDWHG WR IXWXUH GHYHORSPHQW LQ WKH 0DUJDULWD $UHDVLQFHWKLVDUHDZLOOEHQHILWIURPWKHVHLPSURYHPHQWVx7DQN )DUP 5RDG %XFNOH\ 5RDG DQG %URDG 6WUHHWLPSURYHPHQWVDUHDOORFDWHGSULPDULO\WRIXWXUHGHYHORSPHQWLQWKH$LUSRUW$UHDVLQFHWKLVDUHDSULPDULO\ZLOOEHQHILWIURPWKHVH URDGZD\ LPSURYHPHQWV KRZHYHU WKHVH URDGZD\V DUHDOVRUHJLRQDOLQQDWXUHDQGZLOOUHTXLUHIXQGLQJIURPRXWVLGHRIWKH$$637DEOH&267$//2&$7,21)$&7256ATTACHMENT 1 PC1 - 18 _6$1/8,62%,632$,53257$5($63(&,),&3/$1x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·VZDWHUWUHDWPHQWSODQWZLOOFRPHIURPWKHFLW\ZLGHZDWHULPSDFWIHH7KHFLW\ZLGHZDWHULPSDFWIHH LV HIIHFWLYH -XO\ SHU µ PHWHU DQG WKH DUHDVSHFLILFZDWHUDGGRQIHHLVSHUµPHWHU7KHFLW\ZLGHZDWHUIHHSD\VIRUZDWHUVXSSOLHVDQGWUHDWPHQWIDFLOLWLHVUHTXLUHGWRVHUYHQHZGHYHORSPHQWDQGDVVXFKPXVWEHSDLGE\GHYHORSPHQWLQDGGLWLRQWRWKH$LUSRUWDUHDVSHFLILFZDWHUDGGRQIHH 7KH ZDWHU LPSDFW IHHV ZLOOEH FROOHFWHG DW EXLOGLQJ SHUPLWLVVXDQFHRUSRVVLEO\DWVRPHRWKHUWLPHDVVSHFLILHGE\WKH&LW\([LVWLQJGHYHORSPHQWUHTXHVWLQJWRWLHLQWRWKH&LW\·VZDWHUV\VWHPZLOOEHUHTXLUHGWRSD\WKH$LUSRUWDUHDVSHFLILFZDWHUDGGRQIHHDQGWKHFLW\ZLGHZDWHULPSDFWIHH :$67(:$7(5)$&,/,7,(67KH FRVW RI WKH $LUSRUW DUHD VSHFLILF SODQ·V SRUWLRQ RI WKH ZDWHUUHFODPDWLRQ IDFLOLW\ XSJUDGH ZLOO EH IXQGHG WKURXJK WKH FLW\ZLGHZDVWHZDWHU LPSDFW IHH 7KH FROOHFWLRQ V\VWHP SLSHV ZKLFK ZLOOFRQQHFW LQGLYLGXDO GHYHORSPHQWV WR WKH EDFNERQH V\VWHP DUH ATTACHMENT 1 PC1 - 20 _6$1/8,62%,632$,53257$5($63(&,),&3/$1FRQVLGHUHG WR EH DQ LQWUDFW LPSURYHPHQW DQG WKHUHIRUH ZLOO EHILQDQFHGE\WKHLQGLYLGXDOGHYHORSHUV'HYHORSPHQWLQWKH$LUSRUWDUHDZLOOEHUHTXLUHGWRSD\WKHFLW\ZLGHZDVWHZDWHULPSDFWIHHZKLFKLVHIIHFWLYH-XO\SHUµPHWHUDQGWKHDUHDVSHFLILFZDVWHZDWHUDGGRQIHHLVSHUµPHWHU5HYHQXH IURP WKH FLW\ZLGH ZDVWHZDWHU IHH ZLOO IXQG FDSDFLW\LPSURYHPHQWV DW WKH ZDWHU UHFODPDWLRQ IDFLOLW\ DQG WKHUHIRUH DOOGHYHORSPHQWLQWKH$LUSRUWDUHDZLOOEHUHTXLUHGWRSD\WKLVIHHLQDGGLWLRQWRWKH$LUSRUWDUHDVSHFLILFZDVWHZDWHUDGGRQIHH7KH&LW\H[SHFWVWKDWWKHH[LVWLQJDQGRUDSSURYHGPLOOLRQVTXDUHIHHWRIEXLOGLQJDUHDLQWKH$LUSRUWDQG0DUJDULWDDUHDVZLOOHYHQWXDOO\WLHLQWRWKH&LW\·VVHZHUV\VWHP$SSUR[LPDWHO\PLOOLRQVTXDUHIHHWRIGHYHORSPHQWKDVDOUHDG\SDLGLQWHULPLPSDFWIHHVWRWKH&LW\7KH&LW\DQWLFLSDWHVWKDWPRVWRIWKHUHPDLQLQJPLOOLRQVTXDUHIHHWRIGHYHORSHGEXLOGLQJVSDFHZLOOWLHLQWRWKHZDVWHZDWHUV\VWHPRYHUD\HDUSHULRG([LVWLQJGHYHORSPHQWUHTXHVWLQJWRWLHLQWRWKH &LW\·V VHZHU V\VWHP ZLOO EH UHTXLUHG WR SD\ WKH $LUSRUW DUHDVSHFLILFZDVWHZDWHUDGGRQIHHDQGWKHFLW\ZLGHZDVWHZDWHULPSDFWIHH 75$163257$7,21)$&,/,7,(65RDGDQGELNHZD\LPSURYHPHQWVUHTXLUHGIRUWKH$LUSRUWDUHDDUHHVWLPDWHGEDVHGRQFRVWVDVVRFLDWHGZLWKLPSURYHPHQWVIRU3UDGR5RDG 7DQN )DUP 5RDG WKH H[WHQVLRQ RI 6XHOGR IRUPHUO\ WKH8QRFDO &ROOHFWRU 6DQWD )H 5RDG ([WHQVLRQ DQG %XFNOH\ 5RDG([WHQVLRQ7UDQVSRUWDWLRQFRVWVLQFOXGHQLQHLQWHUVHFWLRQVWKDWZHUHLGHQWLILHGIRULPSURYHPHQWVWKURXJKWKH&KHYURQ(,5LQ$OVRLQFOXGHGLVWKH$LUSRUW$UHD·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·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· FRVWVDVVRFLDWHG ZLWK SUHSDULQJ WKH VSHFLILF SODQV DQG RWKHU DQDO\VHVWRVXSSRUW GHYHORSPHQW RI WKH $LUSRUW DQG 0DUJDULWD DUHDV 7KHVHFRVWV WRWDO DQG KDYH EHHQ DOORFDWHG WR DOO IXWXUHGHYHORSPHQWLQWKH$LUSRUWDQG0DUJDULWDDUHDVRQDSHUDFUHEDVLV7KHH[LVWLQJGHYHORSPHQWLQWKH$LUSRUWDUHDLVQRWLQFOXGHGLQWKHFRVWDOORFDWLRQ ),1$1&,1*0(7+2'6 0(//25226&20081,7<)$&,/,7,(6$&72)7KH 0HOOR5RRV &RPPXQLW\ )DFLOLWLHV $FW WKH ´$FWµ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x$PRWLRQE\WKHOHJLVODWLYHERG\WKH&LW\&RXQFLOATTACHMENT 1 PC1 - 22 _6$1/8,62%,632$,53257$5($63(&,),&3/$1x$ ZULWWHQ UHTXHVW VLJQHG E\WZRPHPEHUVRIWKH&LW\&RXQFLORUx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´9DOXHµLVFRQVLGHUHGWREHWKHDSSUDLVHGYDOXHRIWKHSURSHUW\LQFOXGLQJHQWLWOHPHQWVDQGLPSURYHPHQWVLQSODFHRQWKHGDWHWKH&)'ERQGVDUHWREHVROG7KHYDOXHRILPSURYHPHQWVWREHFRQVWUXFWHGZLWKERQGSURFHHGVLVLQFOXGHG LQ WKH YDOXH FDOFXODWLRQ ´/LHQµ UHIHUV WR WKH SURSRVHG0HOOR5RRVERQGLVVXHDVZHOODVDQ\RWKHUSXEOLFGHEWVHFXUHGE\WKHSURSHUW\6HQDWH%LOOZKLFKEHFDPHHIIHFWLYH-DQXDU\UHTXLUHVDPLQLPXPYDOXHWROLHQUDWLRRI7KH&LW\·VSROLF\LVEXWPD\DOVRDOORZLQVRPHFDVHV7KHVHFRQGUHVWULFWLRQRQWKHDPRXQWRIILQDQFLQJDYDLODEOHIURPD&)'LVWKHWRWDOHIIHFWLYHWD[UDWH´(75µ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·V DGRSWLRQ RI DUHVROXWLRQRURUGLQDQFH,PSDFWIHHVDUHSDLGE\EXLOGHUVRUGHYHORSHUVW\SLFDOO\DWWKHWLPHDEXLOGLQJSHUPLWLVLVVXHG7KHSXEOLFIDFLOLWLHVIXQGHGE\LPSDFWIHHVPXVW EH VSHFLILFDOO\ LGHQWLILHG DQG WKHUH PXVW EH D UHDVRQDEOHUHODWLRQVKLSRU´QH[XVµ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·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·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·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dministrative Draft JULY 23,2014 ATTACHMENT 2 PC1 - 30 Airport Area Specific Plan San Luis Obispo, California Public Facilities Financing Plan Table of Contents EXECUTIVE SUMMARY ..................................................................................... i 1. INTRODUCTION ................................................................................................ 1 2. PROJECT-SPECIFIC INFRASTRUCTURE AND COST ESTIMATES...................... 4 3. FINANCING STRATEGY:ALL PAY-AS-YOU-GO FUNDING ............................ 7 4. ALTERNATE FINANCING STRATEGY:CFDFUNDING AND NET FEES .........12 5. DESCRIPTION OF FINANCING ALTERNATIVES ..............................................16 6. IMPLEMENTATION PLAN ...............................................................................20 APPENDICES APPENDIX A: PUBLIC FACILITIES FINANCING PLAN TABLES:NO CFDFUNDING APPENDIX B: CFD AND NET BURDEN ANALYSIS TABLES ATTACHMENT 2 PC1 - 31 AASP Public Facilities Financing Plan i July 23, 2014 EXECUTIVE SUMMARY PURPOSE OF REPORT AND PROJECT DESCRIPTION This report is a comprehensive update to the Public Facilities Financing Plan (PFFP) that was prepared for the Airport Area Specific Plan (AASP or Project) in August 2005. The updated PFFP describes the public facilities required to serve future development in the AASP area and identifies the total one-time burdens (impact fees) to be collected from each land use to fund these facilities on a pay-as-you-go basis. In addition, alternative financing mechanisms that may be used to fill potential funding gaps, as well as implementation procedures that must be enacted by the City of San Luis Obispo (City), are described in this PFFP. The AASP is a blueprint for future non-residential development proposed to occur approximately 2.5 miles south of downtown San Luis Obispo, in the City’s designated Urban Reserve. Approximately 5.2 million square feet of business park, service commercial, and manufacturing land uses are anticipated to be developed on approximately 440 acres within the AASP by buildout of the Project. The Project also contains some land uses that are not analyzed in this study, including approximately 145 acres of existing development, 300 acres of agriculture and open space, 292 acres designated for City- or County-owned property associated with the San Luis Obispo County Regional Airport – McChesney Field, and approximately 300 acres planned for roads, setbacks, creeks, and other features within the Project. INFRASTRUCTURE COST ESTIMATES Development of the AASP area will require various transportation and storm drainage improvements. The total cost for these improvements is estimated to be approximately $36.5 million; however, the Project’s share of the total facilities cost amounts to approximately $19.4 million. The remaining $17.1 million is anticipated to be funded by nearby development projects as well as state and federal grants, based on input from the City. The table below summarizes the total cost as well as the net AASP cost by infrastructure category, as provided by the City. TABLE ES-1 INFRASTRUCTURE COST ESTIMATES Improvement Total Cost Net AASP Cost Transportation *$34,530,000 $18,080,000 Storm Drainage $1,960,000 $1,310,000 Total $36,490,000 $19,390,000 * Includes bikeways. ATTACHMENT 2 PC1 - 32 AASP Public Facilities Financing Plan ii July 23, 2014 It is important to note that these infrastructure costs for the AASP are in addition to utility and in-tract improvements; utility and in-tract improvements are not addressed in this report. In-tract improvements are expected to be privately funded by AASP developers, while utility improvements are anticipated to be funded by other financing sources. GROSS INFRASTRUCTURE BURDENS AND PHASED CASH FLOW Gross Infrastructure Burdens Tables ES-2 and ES-3 below present the gross one-time burdens (impact fees) that result after the costs of Project-specific facilities (i.e., net AASP costs) are allocated to the proposed land uses. Based on selected benefit criteria, a fair share cost is identified for each type of land use. In addition to Project-specific burdens, the Project will participate in existing City-wide development impact fee programs for transportation, water, and wastewater facilities. Lastly, the AASP will be subject to other impact fees for inclusionary housing, public art, schools, open space, and entitlement process costs, as calculated in this analysis. These amounts are added to the Project-specific one-time burdens to determine the total gross one-time burdens on each land use. TABLE ES-2 GROSS BURDENS PER ACRE Land Use Project- Specific Burden City-Wide Infrastructure Other Fees Total Gross Burden Business Park $67,600 $171,800 $95,800 $335,200 Service Commercial $38,000 $104,700 $65,900 $208,600 Manufacturing $8,000 $77,500 $33,400 $118,900 TABLE ES-3 GROSS BURDENS PER KSF Land Use Project- Specific Burden City-Wide Infrastructure Other Fees Total Gross Burden Business Park $4,600 $11,600 $6,500 $22,700 Service Commercial $3,600 $9,800 $6,200 $19,600 Manufacturing $1,100 $10,500 $4,500 $16,100 ATTACHMENT 2 PC1 - 33 AASP Public Facilities Financing Plan iii July 23, 2014 The Project spans two zones in the City’s transportation impact fee program. A small area encompassing the south-western corner of the Project is within the Los Osos Valley Road (LOVR) fee area and is subject to LOVR transportation fees. The remainder, which comprises a significant majority of the Project, is subject to the City-wide transportation fee. For purposes of this analysis, the City-wide transportation fees are presented throughout this report unless otherwise indicated. Development impact fees that are specific to backbone infrastructure within the AASP (i.e., Project-specific burdens) are assumed to be the primary source of funding for the Project- specific infrastructure. The gross impact fees calculated in this report reflect the amount required per land use to fund the facilities on a pay-as-you-go basis. Because some facilities will be required before impact fee revenues become available, developer equity or an alternate financing mechanism will likely be required. Fees levied in future years may be used to reimburse developers or other financing sources that have paid to cover more than their fair share of Project costs. Phased Cash Flow With the Project expected to develop in five major phases, the relationship between the timing of infrastructure improvements and absorption of land uses becomes a critical cash flow issue. Often, initial phases need to support a disproportionate amount of the overall infrastructure requirements as certain large scale, and expensive, capital facility items must be built before development can proceed. Table ES-4 presents the total Project-specific costs for each phase of development and compares those costs against anticipated fee revenue assuming only a pay-as- you-go financing strategy. In addition, Table ES-4 summarizes the funding shortfalls and surpluses that result on a phase-by-phase basis. TABLE ES-4 PROJECT-SPECIFIC INFRASTRUCTURE COST AND CASH FLOW BY PHASE PAY-AS-YOU-GO FUNDING STRATEGY (IN MILLIONS)* Land Use Phase 1 Years 1-5 Phase 2 Years 6-10 Phase 3 Years 11-15 Phase 4 Years 16-20 Phase 5 Years 21-25 Total Total Phased Costs $6.2 $7.8 $2.6 $1.5 $1.3 $19.4 Gross Project-Specific Fees $3.9 $3.9 $3.9 $3.9 $3.8 $19.4 Fees Less Costs ($2.3)($3.9)$1.3 $2.4 $2.5 $0.0 Developer Equity/Other Fin. Sources $2.3 $3.9 $0.0 $0.0 $0.0 $6.2 Reimb. for Dev. Equity/Other Fin. Sources $0.0 $0.0 ($1.3)($2.4)($2.5)($6.2) Cumulative Fees Less Costs $0.0 $0.0 $0.0 $0.0 $0.0 * Totals may not sum due to rounding. Approximately 72% of all Project-specific costs are required during Phase 1 and Phase 2, yet only approximately 40% of the total building square footage and corresponding fee revenue will have been constructed by that point in time. Consequently, even though proposed gross Project- ATTACHMENT 2 PC1 - 34 AASP Public Facilities Financing Plan iv July 23, 2014 specific fees are expected to fully fund all required Project-specific infrastructure costs, the front loaded nature of the Project-specific infrastructure results in significant cash flow requirements in the first two phases of Project development. As shown in Table ES-4, development of Phase 1 will require approximately $6.2 million in Project-specific infrastructure costs; however, gross Project-specific fee revenue totals approximately $3.9 million. Comparing costs against available revenue results in a deficit of approximately $2.3 million that will need to be advance funded by private developers or an alternate financing mechanism. During Phase 2, $7.8 million in Project-specific infrastructure costs is incurred, but the estimated gross Project-specific fee revenue of $3.9 million cannot fund all of the Phase 2 costs. The additional shortfall of $3.9 million during Phase 2 pushes the overall shortfall to $6.2 million. Total gross revenues during Phases 3, 4, and 5 available for reimbursement of oversized facilities costs from Phases 1 and 2 bring the oversizing down to zero at buildout of the Project. LAND SECURED DEBT FINANCING ANALYSIS & NET INFRASTRUCTURE BURDENS An alternate funding mechanism that can be used to close funding gaps in a pay-as-you-go financing strategy is a Community Facilities District (CFD). The use of a CFD will limit the initial, one-time burden incurred by the various land uses and will reduce the amount of upfront developer equity required. CFD financing for the Project is evaluated in Chapter 4 of this report. In addition, a description of CFDs and of other financing mechanisms is presented in Chapter 5. A planning level debt financing analysis was conducted to estimate the CFD bonding capacity of the proposed Project. It is estimated that the AASP could support $27.3 million in bonds to fund all required Project-specific infrastructure. After accounting for a reserve fund, two years of funded interest, and various financing costs associated with issuing bonds, $19.4 million of facility costs, or 100% of the total Project-specific infrastructure costs, could be funded through the land-secured financing of a CFD. Table ES-5 below summarizes the total net burdens per acre and per thousand square feet after accounting for debt financing through a CFD. CFD financing is the only difference between the gross burdens shown in Tables ES-2 and ES-3 and the net burdens shown in Tables ES-5 below. TABLE ES-5 NET BURDENS * Land Use Total Net Burden per Acre Total Net Burden per KSF Business Park $267,600 $18,100 Service Commercial $170,600 $16,000 Manufacturing $110,900 $15,000 * Includes existing City-wide and other fees; all Project-specific costs are CFD-funded. ATTACHMENT 2 PC1 - 35 AASP Public Facilities Financing Plan v July 23, 2014 Table ES-6 compares phased costs against projected revenues for each phase assuming a financing strategy that utilizes CFD financing only. CFD bonds are anticipated to fund all $19.4 million in Project-specific costs and, therefore, reduce the amount to be funded through the proposed AASP fee program from $19.4 million to zero. In addition, the total amount of gap funding required throughout development of the Project decreases from $6.2 million, as shown in Table ES-4, to $4.9 million in Table ES-6. Furthermore, the cumulative deficit through the early two phases of development under the CFD financing strategy is approximately $2.3 million, which is more than 60% lower than the anticipated deficit of $6.2 million under an exclusively pay-as-you-go funding strategy. TABLE ES-6 PROJECT-SPECIFIC INFRASTRUCTURE COST AND CASH FLOW BY PHASE CFD FUNDING STRATEGY (IN MILLIONS)* Land Use Phase 1 Years 1-5 Phase 2 Years 6-10 Phase 3 Years 11-15 Phase 4 Years 16-20 Phase 5 Years 21-25 Total Total Phased Costs $6.2 $7.8 $2.6 $1.5 $1.3 $19.4 Revenues CFD Bond Proceeds**$3.9 $7.8 $0.0 $7.7 $0.0 $19.4 Net Project-Specific Fees $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Subtotal $3.9 $7.8 $0.0 $7.7 $0.0 $19.4 Revenues Less Costs ($2.3)$0.0 ($2.6)$6.2 ($1.3)$0.0 Developer Equity/Other Financing Sources $2.3 $0.0 $2.6 $0.0 $0.0 $4.9 Reimb. for Financing Sources $0.0 $0.0 $0.0 ($4.9)$0.0 ($4.9) Cumulative Revenues Less Costs $0.0 $0.0 $0.0 $1.3 $0.0 * Totals may not sum due to rounding. ** Assumes bonds supported by Phases 2 & 3 are issued during Phase 2, and bonds supported by Phases 4 & 5 are issued during Phase 4. ATTACHMENT 2 PC1 - 36 AASP Public Facilities Financing Plan 1 July 23, 2014 Chapter 1 INTRODUCTION OBJECTIVE Goodwin Consulting Group prepared a Public Facilities Financing Plan (PFFP) for the Airport Area Specific Plan (AASP or Project) and the Margarita Area Specific Plan (MASP) in August 2005. Since then, land use assumptions have been revised due to development that has occurred in the AASP area and zoning changes in the AASP that have recently been proposed. In addition, a new set of infrastructure requirements and cost estimates has been prepared for the AASP. The 2005 PFFP incorporated both the AASP and the MASP because development in these areas was expected to occur somewhat concurrently. Since the AASP and MASP areas are now at different stages in the entitlement process, it was deemed appropriate to prepare an updated financing plan for the AASP only. This comprehensive update to the 2005 PFFP analyzes the public facilities burden that must be carried by the land uses proposed in the AASP and presents a base and an alternate financing strategy to fund that burden. The base case financing strategy presumes only pay-as-you-go funding will be used to finance Project-specific infrastructure needs, while the alternate financing strategy assumes only CFD funding will be used to finance Project-specific infrastructure costs. The overall public facilities burden for the Project consists of infrastructure and related costs necessary to serve the Project plus development impact fees that would be imposed on the Project for other City-wide capital improvements. The burden does not include utility and in- tract improvements for the AASP; it is expected that these costs will be funded by other financing sources or privately by AASP developers. In summary, this PFFP does the following: x Summarizes the proposed land uses in the AASP x Describes transportation and storm drainage improvements required to serve future development in the AASP area x Presents the costs of required transportation and storm drainage improvements and allocates the costs to the proposed land uses based on benefit x Identifies total gross one-time burdens (impact fees) assuming only a pay-as-you-go funding strategy x Presents an alternate financing strategy that relies on CFD funding for all Project-specific infrastructure costs x Determines tax-exempt bonding capacity of the Project based on marketable tax rates for land-secured financing ATTACHMENT 2 PC1 - 37 AASP Public Facilities Financing Plan 2 July 23, 2014 x Identifies total net one-time burdens (impact fees) and land-secured financing annual special tax rates x Summarizes long-term financing mechanisms most viable for this Project x Summarizes the implementation measures that must be enacted by the City PROJECT DESCRIPTION The City of San Luis Obispo, California, is located approximately eight miles from the Pacific Ocean and is midway between San Francisco and Los Angeles at the junction of Highway 101 and scenic Highway 1. The Airport Area Specific Plan lies approximately 2.5 miles south of downtown San Luis Obispo, in the City’s designated Urban Reserve. The Margarita Area Specific Plan and the South Street Hills open space areas bound the AASP to the north, while urban development in the incorporated areas along South Higuera Street and Broad Street borders the areas to the west and east, respectively. The agricultural lands of the Edna Valley are located to the south and southeast of the AASP. A location map is shown below. FIGURE A MAP OF AASP ATTACHMENT 2 PC1 - 38 AASP Public Facilities Financing Plan 3 July 23, 2014 The Airport Area Specific Plan encompasses approximately 1,500 acres of land. At buildout, approximately 5.2 million square feet of non-residential land uses are expected to develop on a total of 440 acres. Of these 440 acres, approximately 194 acres are designated for business park development, 145 acres are designated for service commercial development, and the remaining 101 acres are anticipated to be developed as manufacturing land uses. The Project also contains some land uses that are not analyzed in this study, including 145 acres of existing development, 300 acres of agriculture and open space, 292 acres designated for City- or County-owned property associated with the San Luis Obispo County Regional Airport – McChesney Field, and approximately 300 acres planned for roads, setbacks, creeks, and other features; these acres are not evaluated in the analysis because they are not subject to AASP development impact fees. Land use assumptions for the Project are provided in Table A-1 of Appendix A. PROJECT ABSORPTION AND PHASING Development of the Project area is anticipated to span a 25-year period. During this timeframe, it is expected that development will occur in five major phases. Each phase is anticipated to develop over a 5-year period. A summary of the amount of development anticipated in each phase is shown in Table A-2 of Appendix A. With the Project expected to develop in five major phases, the relationship between the timing of infrastructure improvements and absorption of land uses becomes a critical issue. Often, initial phases of development must support a disproportionate amount of the overall infrastructure requirements as certain large scale, and expensive, capital facility items are needed upfront. The infrastructure cash flows presented in Chapters 3 and 4 address the relationship between absorption and facility needs. ATTACHMENT 2 PC1 - 39 AASP Public Facilities Financing Plan 4 July 23, 2014 Chapter 2 PROJECT-SPECIFIC INFRASTRUCTURE AND COST ESTIMATES There are numerous types of costs incurred during the construction of any development project. This PFFP focuses on the costs of Project-specific transportation and storm drainage improvements, which are described below. While other improvements will be required for the Project area, such as utilities and in-tract infrastructure that benefit just a particular area or parcel, only Project-specific transportation and storm drainage improvements are analyzed in this PFFP. Language from the Airport Area Specific Plan, which describes in detail the various improvements proposed to meet the needs of the community, is provided below to describe the transportation and storm drainage infrastructure needs. The City provided preliminary cost estimates for the infrastructure, which are summarized below. The total cost of transportation and storm drainage improvements required for the Project is estimated to be $36.5 million, with the Project’s share totaling $19.4 million. According to the City, the remaining $17.1 million is anticipated to be funded by nearby development projects as well as state and federal grants. The costs for infrastructure components within the AASP are presented in Table A-3 of Appendix A. A summary of the total and net infrastructure costs to serve AASP development is presented in Table 2-1 below. TABLE 2-1 INFRASTRUCTURE COST ESTIMATES Improvement Total Cost Net AASP Cost Transportation *$34,530,000 $18,080,000 Storm Drainage $1,960,000 $1,310,000 Total $36,490,000 $19,390,000 * Includes bikeways. The following is a list of transportation and storm drainage improvements included in the AASP development cost estimates: x Tank Farm Road x Santa Fe Road x Unocal/Chevron Collector Road x Broad Street x Prado Road x Buckley Road x Various Bikeways ATTACHMENT 2 PC1 - 40 AASP Public Facilities Financing Plan 5 July 23, 2014 Project-specific improvements, cost estimates, and infrastructure phasing have been provided by the City and are summarized in the remainder of this chapter. PROJECT-SPECIFIC INFRASTRUCTURE Transportation and Bicycle Trail Improvements The circulation plan for the Project is designed to utilize the existing roadway system as much as possible, with the addition of arterials, collectors, and local streets as needed to serve individual development areas. The system also includes bicycle trails for non-vehicular circulation to connect various planning sub-areas to each other and to the rest of San Luis Obispo. The total cost for transportation and bicycle trail improvements is estimated to be approximately $34.5 million, with approximately $18.1 million attributable to the Project. Costs include street improvements (curbs and gutters, sidewalks, asphalt paving, slurry seal, striping, street lights, signal lights, and street signs), bikeways, demolition and grading, landscaping, erosion controls, design and engineering, and construction management. Storm Drainage Improvements The following proposed improvements and development requirements comprise the Storm Drain Master Plan for the AASP: x Acacia Creek Bridge at Tank Farm Road: Use a precast arch culvert with a simple widening of the culverts x East Branch San Luis Obispo Creek Bridge at Santa Fe Road: Use a precast arch culvert with a simple widening of the culverts x Tank Farm Creek culvert facilities at Tank Farm Road: Use a precast arch culvert with a simple widening of the culverts x Require projects to conform to the City’s Flood Damage Prevention Guidelines for proposed development within the AASP x Require projects to conform to the City’s Waterways Management Plan, Drainage Design Manual, for proposed development within the AASP These proposed improvements, along with implementation of existing City-wide ordinances and requirements, are expected to provide 100-year flood protection and provide for environmental enhancement of stream corridors. The proposed storm water drainage system for the Project includes a series of storm drainage pipelines, curb inlets, filtration units, headwalls, erosion controls, design and engineering, and construction management. The total cost for storm drainage improvements is estimated to be approximately $2.0 million, with approximately $1.3 million attributable to the Project. ATTACHMENT 2 PC1 - 41 AASP Public Facilities Financing Plan 6 July 23, 2014 PROJECT-SPECIFIC INFRASTRUCTURE PHASING The phasing of Project-specific infrastructure required to support development in the Project is a crucial element of the PFFP. In general, a majority of the infrastructure costs are anticipated to be needed to serve development within Phases 1 and 2, with the highest cost occurring in Phase 2. The phasing table below summarizes the net cost for each Project-specific infrastructure category by phase, as shown in Table A-4 of Appendix A. TABLE 2-2 PROJECT-SPECIFIC COSTS BY PHASE (IN MILLIONS) Improvement Phase 1 Years 1-5 Phase 2 Years 6-10 Phase 3 Years 11-15 Phase 4 Years 16-20 Phase 5 Years 21-25 Total Transportation *$5.7 $7.5 $2.3 $1.3 $1.2 $18.1 Storm Drainage $0.5 $0.3 $0.3 $0.3 $0.0 $1.3 Total $6.2 $7.8 $2.6 $1.5 $1.2 $19.4 * Includes bikeways. Initial funding for Project-specific infrastructure is limited because a significant portion of the contributing development is expected to develop in later phases; therefore, initial developers or an alternative funding source may be required to advance fund Project-specific facilities in order to allow development to proceed. In such cases, it may be necessary for this oversizing to be reimbursed from development occurring in later phases. The infrastructure cash flows presented in Chapters 3 and 4 address the relationship between absorption and phased facility needs. ATTACHMENT 2 PC1 - 42 AASP Public Facilities Financing Plan 7 July 23, 2014 Chapter 3 FINANCING STRATEGY: ALL PAY-AS-YOU-GO FUNDING DEVELOPMENT IMPACT FEES Assembly Bill 1600 (herein “AB 1600”), which was enacted by the State of California in 1987, created Section 66000 et seq. of the Government Code. In order to establish, increase, or impose a fee as a condition of approval of a development project, AB 1600 (also known as the Mitigation Fee Act) requires a public agency to specifically identify the public facilities funded by the impact fees, and determine how there is a reasonable relationship, or “nexus,” between the type of development project and the need for the facilities, the cost of the facilities, and the need to impose a fee. Development impact fees are monetary exactions (as opposed to taxes or special assessments) that are charged by local agencies in conjunction with approval of a development project. The fees are paid by builders or developers, typically at the time a building permit is issued. Impact fees are levied for the purpose of defraying all or a portion of the costs of a public facility, improvement, or amenity that benefits the project. The collection of impact fees does not require formation of a special district; an impact fee program is implemented by a public agency’s adoption of a resolution or ordinance. Impact fees will be an important component of this PFFP. A fee ordinance must be adopted by the City and the City’s existing public facilities fee program must be updated prior to development of the Airport Area Specific Plan; the fee program may also be updated and revised as part of future development phases. Because fees are collected as development occurs and some of the facilities identified in this report are expected to be in place prior to development or early in the buildout of the AASP, fees will likely be levied in future years to reimburse developers that have paid to cover more than their fair share of project costs prior to the availability of fee revenues. Proposed Airport Area Specific Plan Fee Program The Project’s infrastructure costs of $19.4 million are allocated among land uses within the Project using factors (benefit units) that relate the amount of benefit a land use will derive from a given capital facility to that of other land uses, such as daily trips and storm water runoff. Dividing these total burdens by the quantity of land use produces a cost per acre for non- residential development. For both transportation and storm drainage facilities, a cost per square foot is calculated first and then is translated to a cost per acre using the appropriate floor-to-area ratio (FAR). Table A-5 in Appendix A summarizes the benefit unit assumptions for each capital facility category. The detailed cost allocation calculations for transportation and storm drainage improvements are presented in Table A-6 and Table A-7 of Appendix A, respectively. ATTACHMENT 2 PC1 - 43 AASP Public Facilities Financing Plan 8 July 23, 2014 The total Project-specific infrastructure burdens are summarized in Table A-8 of Appendix A and in Table 3-1 below. These gross Project-specific infrastructure burdens assume that all Project-specific costs are funded through impact fees in a pay-as-you-go system. No additional financing sources are assumed under the entirely pay-as-you-go financing strategy. TABLE 3-1 GROSS PROJECT-SPECIFIC INFRASTRUCTURE BURDENS Land Use Gross Project-Specific Burden per Acre Gross Project-Specific Burden per KSF Business Park $67,600 $4,600 Service Commercial $38,000 $3,600 Manufacturing $8,000 $1,100 Existing Fee Programs In addition to the Project-specific infrastructure burdens, development in the Project area will also participate in other fee programs that fund additional facilities impacted by new development. The major additional fee categories applicable to the Project are the City-wide development impact fees (transportation, water, and wastewater), other fees (inclusionary housing fee, public art in-lieu fee, and school mitigation fee), and other AASP fees (open space fee and entitlement process reimbursement fee). The total existing development impact fees per land use category are shown in Table A-9 of Appendix A. The City transportation impact fee pays for City-wide transportation facility costs, and is charged to new development on a per-square foot basis. The current fee applicable to a majority of the Project area, which is not within the Los Osos Valley Road (LOVR) fee area, is $7.05, $3.82, and $2.04 per business park, service commercial, and manufacturing square foot, respectively. However, the city-wide transportation impact fees included in this analysis reflect a 5.5% increase to the current rates to account for additional costs anticipated to be included in the City- wide transportation impact fee program. An estimated fee per acre is calculated using the appropriate FAR from Table A-1 of Appendix A. The City water and wastewater impact fees also pay for public facility costs throughout the City, and are charged to new development based on meter size. For both water and wastewater, this PFFP assumes an average of 2 connections per acre and a 1" meter size. The current City-wide water fee and Tank Farm area wastewater fee for a 1" meter are $18,317 and $12,510, respectively. It is important to note that these fees are estimates; the service sizes and related fees could vary based on the needs and sizes of specific developments within the Project. Non-residential developments greater than 2,500 square feet are required to build two affordable dwelling units per acre, or pay an in-lieu inclusionary housing fee equal to 5% of total construction costs. For purposes of this PFFP, construction costs are assumed to be $100, $90, and $60 per business park, service commercial, and manufacturing square foot, respectively. In ATTACHMENT 2 PC1 - 44 AASP Public Facilities Financing Plan 9 July 23, 2014 addition, all non-residential developments are required to propose public art to be placed in a public place on, or in the vicinity of, the development project site, or pay an in-lieu fee equal to 0.5% of that portion of the total construction costs in excess of $100,000 for each building permit. The Project will also be subject to a school mitigation fee to fund school impacts related to future development in the AASP. The current non-residential fee is $0.42 per building square foot. Lastly, the City will collect fees for open space and reimbursement of costs related to the Project’s entitlement process. These two fees combined range from approximately $5,900 per acre for manufacturing uses to $8,700 per acre for service commercial uses. A breakdown of the existing City-wide and other fees are presented in Table A-9 of Appendix A, which are added together to show the total existing burden by land use on a per-acre and per- square foot basis. Tables 3-2 and 3-3 below summarize the existing burdens for each land use category on a per-acre and per 1,000 square feet basis. TABLE 3-2 CITY-WIDE AND OTHER FEE BURDENS PER ACRE Land Use City-Wide Infrastructure Other Fees Other AASP Fees Total Gross Burden Business Park $171,800 $87,700 $8,200 $267,700 Service Commercial $104,700 $57,300 $8,700 $170,700 Manufacturing $77,500 $27,500 $5,900 $110,900 TABLE 3-3 CITY-WIDE AND OTHER FEE BURDENS PER KSF Land Use City-Wide Infrastructure Other Fees Other AASP Fees Total Gross Burden Business Park $11,600 $5,900 $600 $18,100 Service Commercial $9,800 $5,400 $800 $16,000 Manufacturing $10,500 $3,700 $800 $15,000 Total Gross Burdens (Excludes Potential CFD Financing) Development impact fees that are specific to the AASP (i.e., Project-specific burdens) are assumed to be the primary source of funding for the Project-specific infrastructure. The gross impact fees calculated in this report, as presented in Table A-10 of Appendix A and summarized in Table 3-4 below, reflect the amount required per land use to fund the facilities on an entirely pay-as-you-go basis. ATTACHMENT 2 PC1 - 45 AASP Public Facilities Financing Plan 10 July 23, 2014 TABLE 3-4 TOTAL GROSS BURDENS (PROPOSED PROJECT-SPECIFIC FEES AND EXISTING FEES) Land Use Gross Burden per Acre Gross Burden per KSF Business Park $335,200 $22,700 Service Commercial $208,600 $19,600 Manufacturing $118,900 $16,100 Because some facilities will be required before impact fee revenues become available, developer equity or an alternative financing mechanism will likely be required. Fees levied in future years may be used to reimburse developers or other financing sources that have paid to cover more than their fair share of project costs, as described in the following section. GROSS PROJECT-SPECIFIC INFRASTRUCTURE CASH FLOW With the Project expected to develop in five major phases, the relationship between the timing of infrastructure improvements and absorption of land uses becomes a critical cash flow issue. Often, initial phases need to support a disproportionate amount of the overall infrastructure requirements as certain large scale, and expensive, capital facility items must be built before development can proceed. Table 3-5 presents the total Project-specific costs for each phase of development and summarizes the funding shortfalls and surpluses that result on a phase-by-phase basis assuming only a pay-as-you-go funding strategy. TABLE 3-5 GROSS PROJECT-SPECIFIC INFRASTRUCTURE COST AND CASH FLOW BY PHASE (IN MILLIONS)* Land Use Phase 1 Years 1-5 Phase 2 Years 6-10 Phase 3 Years 11-15 Phase 4 Years 16-20 Phase 5 Years 21-25 Total Total Phased Costs $6.2 $7.8 $2.6 $1.5 $1.3 $19.4 Gross Project-Specific Fees $3.9 $3.9 $3.9 $3.9 $3.8 $19.4 Fees Less Costs ($2.3)($3.9)$1.3 $2.4 $2.5 $0.0 Developer Equity/Other Fin. Sources $2.3 $3.9 $0.0 $0.0 $0.0 $6.2 Reimb. for Dev. Equity/Other Fin. Sources $0.0 $0.0 ($1.3)($2.4)($2.5)($6.2) Cumulative Fees Less Costs $0.0 $0.0 $0.0 $0.0 $0.0 * Totals may not sum due to rounding. ATTACHMENT 2 PC1 - 46 AASP Public Facilities Financing Plan 11 July 23, 2014 Approximately 72% of all Project-specific costs are required during Phase 1 and Phase 2, yet only approximately 40% of the total building square footage and corresponding Project-specific fees will have been constructed and collected by that point in time. Consequently, even though proposed gross Project-specific fees are expected to fully fund all required infrastructure costs, the front loaded nature of the Project-specific infrastructure results in significant cash flow requirements in the first two phases of Project development. As shown in Table A-11 of Appendix A and Table 3-5 above, development of Phase 1 will require approximately $6.2 million in Project-specific infrastructure costs; however, gross Project-specific fee revenues total approximately $3.9 million. Comparing costs against available revenue results in a deficit of over $2.3 million that will need to be advance funded by private developers or an alternative financing mechanism. During Phase 2, $7.8 million in Project-specific infrastructure costs is incurred, but the estimated gross Project-specific fee revenue of $3.9 million cannot fund all of the Phase 2 costs. The additional shortfall of $3.9 million during Phase 2 pushes the overall shortfall to $6.2 million. Total gross revenues during Phases 3, 4, and 5 available for reimbursement of oversized facilities costs from Phases 1 and 2 bring the net oversizing down to zero at buildout of the Project. ATTACHMENT 2 PC1 - 47 AASP Public Facilities Financing Plan 12 July 23, 2014 Chapter 4 ALTERNATE FINANCING STRATEGY: CFD FUNDING & NET FEES COMMUNITY FACILITIES DISTRICT Other types of financing mechanisms besides impact fees may be needed to close funding gaps that occur because fee revenues may not accrue quickly enough to pay for large pieces of infrastructure. To ensure that funding keeps pace with infrastructure requirements, the formation of a Community Facilities District (CFD) is recommended. The use of a CFD will limit the initial, one-time burden incurred by the various land uses and will reduce the amount of upfront developer equity required. CFDs are specific areas with defined geographic boundaries, and an annual special tax is collected from property within those boundaries to pay debt service on bonds issued through the CFD to fund infrastructure. CFDs are described in more detail with other financing mechanisms in Chapter 5. There are two limitations on the amount of financing available from a CFD, the first being the value-to-lien-ratio. “Value” is considered to be the appraised value of the property, including entitlements and improvements in place on the date the CFD bonds are to be sold. The value of improvements to be constructed with bond proceeds is included in the value calculation. “Lien” refers to the proposed bond issue, as well as any other public financing debt secured by the property. Senate Bill 1464, which became effective January 1993, requires a minimum value-to- lien ratio of 3-to-1. The second restriction on the amount of financing available from a CFD is the total effective tax rate (ETR) paid by a homeowner or property owner in the CFD. The ETR consists of the basic one percent ad valorem property tax levy mandated by Proposition 13, plus overrides from voter-approved bonded indebtedness and non-ad valorem taxes, assessments, and parcel charges (expressed as a percentage of market value). Market value can be determined based on input from local developers, a market consultant, local realtors, or an appraiser. There is no legal limit, but a maximum ETR of 2.00% of market value has developed as a standard in many areas throughout the State, although it tends to be closer to 1.80% on average for residential development and even lower for non-residential land uses. It is thought that ETRs higher than these amounts may lead to market resistance by prospective homebuyers or commercial and industrial tenants, or potential “taxpayer revolts” by overburdened homeowners. The maximum supportable ETR for a given project should also consider the maximum tax rates in competing projects in the area and, based on the strength of the real estate market, the demand for new development in general. A planning-level estimate of land-secured financing capacity was conducted for each land use in the AASP to determine the percentage of infrastructure costs that can be funded by bonds issued through a CFD, with the debt service on those bonds supported by annual CFD special taxes. ATTACHMENT 2 PC1 - 48 AASP Public Facilities Financing Plan 13 July 23, 2014 Special Tax Rates for Infrastructure To begin the debt financing analysis, an estimated infrastructure CFD special tax per non- residential square foot was derived to fund all $19.4 million in Project-specific infrastructure costs. The resulting annual burden, or total ETR, equals 1.22% of value. Table B-1 in Appendix B shows the assumptions used for this calculation. First, developed value assumptions for each land use were determined based on various research performed regarding new non-residential development in the San Luis Obispo area. Second, with the assistance of the San Luis Obispo County Tax Collector’s Office, the existing ad valorem taxes were determined for properties in the AASP. The total ad valorem taxes levied as a percentage of value, including the one percent ad valorem property tax levy mandated by Proposition 13 plus overrides from voter-approved bonded indebtedness, is 1.0022%. Next, annual special taxes and assessments were determined for the land uses in the Project. Currently, there are no special taxes or assessments levied on properties in the Project area, and this PFFP does not assume any other special taxes or assessments for the AASP except for an infrastructure special tax. Based on an annual burden of 1.22% of value, which is the amount required to fund all Project-specific costs, the additional amount that can be levied for infrastructure is $0.48, $0.38, and $0.21 per business park, service commercial, and manufacturing square foot, respectively. Note that if the City does decide to form a special district for the AASP to fund the Project’s annual maintenance expenses, such as an LLD or services CFD, the amount of the special tax available for infrastructure could be lower or the resulting total annual burden may increase. Bonding Capacity The infrastructure special tax rates discussed above are used to determine the potential bonding capacity of the Project. The debt financing analysis is also based on the following factors: x special taxes escalate 2% a year x debt service coverage ratio of 110%, interest rate of 7.0%, and a bond term of 30 years x issuance costs of 5%, reserve funds of 10%, and capitalized interest of 14% (two years) of gross bond proceeds Based on all of the assumptions mentioned above, a total bonding capacity of approximately $27.3 million is achieved. Of that capacity, $19.4 million can be used to fund construction costs within the Project area after accounting for issuance costs, a reserve fund, and capitalized interest. The bonding capacity is a preliminary estimate; any initial bond issue will be constrained by the appraised value of the land in the CFD and market interest rates at the time bonds are sold. The bonding capacity, construction proceeds, and assumptions are presented in Table B-2 of Appendix B. In addition, a summary of the bonding capacity analysis by phase is presented in Table B-3 of Appendix B. As shown in Table B-4 of Appendix B, the CFD construction proceeds of $19.4 million are sufficient to fund all Project-specific infrastructure costs. If the actual amount funded through the CFD is less than anticipated, additional financing mechanisms may be needed. A discussion of financing mechanisms available to fund public facilities is provided in Chapter 5. ATTACHMENT 2 PC1 - 49 AASP Public Facilities Financing Plan 14 July 23, 2014 NET INFRASTRUCTURE BURDEN (INCLUDES POTENTIAL CFD FINANCING) CFD debt financing is assumed to fund all of the required infrastructure for the Project and, therefore, would reduce the amount of the one-time burden, which is generally incurred when a building permit is issued. As shown on the right side of Table B-4 of Appendix B, the burdens would be reduced by the amount of infrastructure supported by the CFD. The table below summarizes the total net costs after accounting for tax-exempt debt financing. TABLE 4-1 TOTAL NET BURDENS* Land Use Total Net Burden per Acre Total Net Burden per KSF Business Park $267,600 $18,100 Service Commercial $170,600 $16,000 Manufacturing $110,900 $15,000 * Includes existing City-wide and other fees; all Project-specific costs are CFD-funded. CFD AND PROJECT-SPECIFIC INFRASTRUCTURE CASH FLOW As discussed in Chapter 3, the relationship between the timing of infrastructure improvements and absorption of land uses becomes a critical cash flow issue. One way to lessen the extent of this cash flow issue is through CFD financing. Table B-5 in Appendix B and Table 4-2 below compare phased costs against projected revenues for each phase assuming a CFD financing strategy. Allowing facilities to be funded by CFD bonds reduces the amount of gap funding required throughout the Project to $4.9 million, compared to a $6.2 million shortfall assuming an exclusively pay-as-you-go financing strategy. Furthermore, the cumulative deficit through Phase 2 under the CFD financing strategy is approximately $2.3 million, which is more than 60% lower than the anticipated deficit of $6.2 million under an entirely pay-as-you-go funding strategy. ATTACHMENT 2 PC1 - 50 AASP Public Facilities Financing Plan 15 July 23, 2014 TABLE 4-2 PROJECT-SPECIFIC INFRASTRUCTURE COST AND CASH FLOW BY PHASE (IN MILLIONS)* Land Use Phase 1 Years 1-5 Phase 2 Years 6-10 Phase 3 Years 11-15 Phase 4 Years 16-20 Phase 5 Years 21-25 Total Total Phased Costs $6.2 $7.8 $2.6 $1.5 $1.3 $19.4 Revenues CFD Bond Proceeds**$3.9 $7.8 $0.0 $7.7 $0.0 $19.4 Net Project-Specific Fees $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Subtotal $3.9 $7.8 $0.0 $7.7 $0.0 $19.4 Revenues Less Costs ($2.3)$0.0 ($2.6)$6.2 ($1.3)$0.0 Developer Equity/Other Financing Sources $2.3 $0.0 $2.6 $0.0 $0.0 $4.9 Reimb for Financing Sources $0.0 $0.0 $0.0 ($4.9)$0.0 ($4.9) Cumulative Revenues Less Costs $0.0 $0.0 $0.0 $1.3 $0.0 * Totals may not sum due to rounding. ** Assumes bonds supported by Phases 2 & 3 are issued during Phase 2, and bonds supported by Phases 4 & 5 are issued during Phase 4. ATTACHMENT 2 PC1 - 51 AASP Public Facilities Financing Plan 16 July 23, 2014 Chapter 5 DESCRIPTION OF FINANCING ALTERNATIVES The development impact fees calculated in this report reflect the amount required per land use to fund facilities on a pay-as-you-go basis. However, it is anticipated that some facilities will be required before fee revenues are available, causing funding gaps. Viable financing mechanisms that are available to fund these gaps, including a Community Facilities District as was mentioned in Chapter 4, are discussed in this section. DEVELOPER EQUITY When other funding mechanisms are deemed infeasible, inapplicable, or are otherwise undesired, the solution is often developer equity. As shown in Table A-11 of Appendix A, an exclusively pay-as-you-go financing strategy results in approximately a $6.2 million shortfall by the end of Phase 2. Although total gross revenues during Phases 3, 4, and 5 available for reimbursement of oversized facilities costs from Phases 1 and 2 bring the net oversizing down to zero at buildout of the Project as illustrated in Chapter 3, the timing of infrastructure needs relative to the availability of fee revenues will likely require developer equity or other sources of private financing to fund the $6.2 million shortfall. Although a financing strategy that includes CFD financing reduces the amount of the funding gap, it does not completely eliminate it. As shown in Table B-5 of Appendix B, all $19.4 million of the Project’s total infrastructure cost can be funded by a CFD. Due to the timing of infrastructure needs relative to the availability of CFD funding, developer equity or other sources of private financing may be required to fund approximately $4.9 million in interim shortfalls through Phase 3. COMMUNITY FACILITIES DISTRICT The Mello-Roos Community Facilities Act (the “Act”) [Section 53311 et seq. of the Government Code] was enacted by the California State Legislature in 1982 to provide an alternate means of financing public infrastructure and services subsequent to the passage of Proposition 13 in 1978. The Act complies with Proposition 13, as well as the more-recently passed Proposition 218, and permits cities, counties, and special districts to create defined areas within their jurisdiction and, by a two-thirds vote within the defined area, impose special taxes to pay for the public improvements and services needed to serve that area. The Act defines the area subject to a special tax as a Community Facilities District. A CFD may provide for the purchase, construction, expansion, or rehabilitation of any real or other tangible property with an estimated useful life of at least five years. A CFD may also finance the costs of planning, design, engineering, and consultants involved in the construction of improvements or formation of the CFD. The facilities financed by the CFD do not have to be physically located within the CFD. The facilities that can be financed by a CFD include, but are not limited to, the following: ATTACHMENT 2 PC1 - 52 AASP Public Facilities Financing Plan 17 July 23, 2014 x Roads, water and sewer lines, flood control channels x Parks, parkways, and open-space facilities x School sites, structures, furnishings, and equipment x Libraries x Child care facilities x Utility improvements (limited to five percent of bond proceeds if improvements are to be taken over by a non-publicly owned utility agency) x Any other governmental facilities which the legislative body creating the CFD is authorized by law to contribute revenue to, construct, own, or operate A CFD may also pay for public services, including the following: x Street maintenance x Police protection x Fire protection x Recreation program services x Library services x Park and open space maintenance x Flood and storm protection services x Removal or cleanup of hazardous substances x Sandstorm protection x Seismic retrofitting x School facilities maintenance A CFD may only finance the services mentioned above to the extent that they are in addition to those provided in the area before the CFD was created and may not supplant services already available within that area. Formation of a CFD authorizes a public agency to levy a special tax on all taxable property within the CFD in the manner prescribed in the formation documents. Property owned by or irrevocably offered to a public agency may be exempted from the special tax. Mello-Roos special taxes are collected at the same time and in the same manner as property taxes, unless otherwise specified by the agency. Special tax revenues may be used to pay debt service on bonds sold or may also be used to pay directly for facilities and public services. Mello-Roos bonds can be short- or long-term obligations. Typically, long-term bonds have either a twenty-five or thirty year maturity. Short-term notes or bonds can be issued to provide interim funding; these obligations are then retired when another source of revenue becomes available. Due to the flexibility associated with Community Facilities Districts and the wide range of facilities that can be funded by the Act, it is recommended that CFD bonds be used to fund facilities within the AASP area if land-secured financing is implemented. Developers will want to ensure that special tax levels are competitive with other areas of the City and with surrounding jurisdictions. The City will want to ensure that special taxes are collected and bonds repaid in a timely manner as promised to bond investors. ATTACHMENT 2 PC1 - 53 AASP Public Facilities Financing Plan 18 July 23, 2014 ASSESSMENT DISTRICT Implementing a Special Assessment District (AD) involves using the Municipal Improvements Act of 1913 to initiate proceedings for the formation of an AD and the Improvement Bond Act of 1915 to issue bonds. These Acts provide mechanisms for issuers to construct or acquire public improvements, to apportion the costs through liens against the properties in a designated area which directly benefit from the improvements (the district), and to finance the costs through the issuance of tax-exempt bonds. Public works improvements are eligible for AD financing to the extent that properties within the district receive a special, measurable, local, and direct benefit from such improvements. Traditionally, improvements to be financed using an AD include, but are not limited to, streets and roads, water, sewer, local drainage facilities, utility lines, and landscaping. Other types of public improvements which have a “regional” significance (e.g., major roads, bridges, flood control facilities) are only partially eligible, based on the proportion of benefit from the improvements that can be assigned to parcels within the AD. Typically, items of general benefit to a community, such as schools, fire stations, and parks, have not been eligible for AD financing. The formation of an AD is initiated through either a petition submitted by sixty percent of the landowners in a proposed AD, or through the adoption of a Resolution of Determination and the preliminary approval of an investigative report by the City Council. The City then adopts a Resolution of Intention that designates the boundaries of the proposed AD, describes the proposed improvements, orders the issuance of bonds, and declares the City’s intention to levy the assessments. This resolution must include an engineer’s report that includes the proposed assessment diagram, which is used to determine the assessment levied against each property. Pursuant to Proposition 218, each landowner must be sent a notice of public hearing and a ballot that identifies the amount of assessment assigned to his/her parcel. The owner is directed to return the ballot indicating their support or opposition to the assessment. At the public hearing, the agency must determine if a majority protest exists. If ballots submitted in opposition to the assessment exceed the ballots submitted in favor, the agency must abandon the assessment proceedings. In determining whether a majority protest exists, the ballots are weighted based on the amount of assessment assigned to each parcel. Subsequent to the confirmation of assessments, a thirty-day cash payment is established during which any property owner can pre- pay the assessment. After this thirty-day period, bonds may be sold for all unpaid assessments in the newly-formed AD. Each parcel of property within an AD is assessed a portion of the costs of the public improvements and services to be financed by the AD based on the proportion of benefit received by that parcel. Assessment liens are levied at the time of formation of the AD and installment payments are collected along with property taxes on a semi-annual basis. Limitations on the timing and amount of financing available through an AD are similar to the limitations for CFDs, as discussed above. A minimum 3-to-1 value-to-lien ratio is usually required, and a reserve fund must be established to provide for timely debt service payments, regardless of delinquencies. It may be feasible to estimate the total ETR based on the anticipated ATTACHMENT 2 PC1 - 54 AASP Public Facilities Financing Plan 19 July 23, 2014 land uses for each parcel. However, because the assessment becomes a fixed amount on that parcel, if the land uses ultimately developed are different than anticipated, the actual ETR could be much higher than expected as a percentage of market value. CITY COPS Certificates of Participation (“COPs”) provide long-term financing for public improvements via a lease or installment sales structure. COPs permit the acquisition or construction of specific equipment, land, or facilities through the incurrence of debt, and do not require a local election. Although the structure of COPs can sound complicated, it is actually an efficient and straightforward method of securing tax-exempt financing for public facilities by taking advantage of an available stream of revenues. The principal parties to a COPs financing include a public agency, a non-profit corporation, and a trustee. The non-profit corporation may be formed specifically to construct necessary improvements, the funds for which are generated from the proceeds of the COPs sale. The nonprofit corporation may also be an existing agency, such as a joint powers authority or an economic development corporation. However, the actual responsibilities for construction are generally delegated to the public agency. The non-profit corporation then leases or sells the land and facilities back to the public agency in return for lease or installment sales payments. The investors who purchase COPs receive a specified portion of the public agency’s payments as payment of the principal and interest due on their COPs. The certificates are secured by the public agency’s pledge to cover its lease or installment sales payments. The trustee is responsible for accepting these payments and then disbursing them to the certificate holders. The issuance of COPs does not require the formation of a special district and is authorized by approval of a resolution by the governing body. COPs are secured by the covenant of the public agency to make annual appropriations in an amount sufficient to service the certificates. The appropriations may come from the general fund or from a designated special fund, such as an enterprise fund for sewer and water services. If the facility being financed by the COPs is revenue-producing, those revenues may be used to make lease payments. COPs are not secured by the full faith and credit, or taxing power, of the public agency. The revenue potential of COPs is limited by the availability of revenues which may be appropriated each year to make lease payments. Since the passage of the Gann Amendment in 1979, annual appropriations of government agencies have been limited to prior year appropriations adjusted for changes in the cost of living and population. In a period of declining transfer payments from the Federal and State levels to local governments, the availability of funds is further limited. The City might have the option to issue COPs in the event that a stream of revenues is available to secure lease payments and lump-sum funding is needed for facilities. Since the City would pledge its general fund to secure lease payments, the COPs will likely carry a lower interest rate than that of land-secured bonds. ATTACHMENT 2 PC1 - 55 AASP Public Facilities Financing Plan 20 July 23, 2014 Chapter 6 IMPLEMENTATION PLAN The Airport Area Specific Plan and this PFFP are based on assumptions of land use, facility demands, facility standards and design, and cost estimates. Since the Specific Plan is subject to updates and revisions in future years as development applications are submitted and processed, the PFFP must be revised to reflect such changes. The ongoing implementation of the PFFP will be parallel to the continued monitoring of the Specific Plan, and will require the same degree of time and effort to keep it current and useful. In this manner, the PFFP will guide the preparation of subsequent plans and the overall funding of community infrastructure required to serve the Project. Following is a summary of many of the tasks associated with implementation of the PFFP. UPDATES AND REVISIONS As noted above, changes may occur in AASP facility plans, land use plans, or cost estimates. If, and when, these items are revised, there will be a corresponding change in the fair share cost allocation to each land use in the AASP area. More specifically, land use and facility changes will result in revisions to the benefit analysis and corresponding cost allocations. To the extent some projects in the AASP will have been developed and will have paid their fair share as defined at the time they were built, revisions will apply only to future new development. If facility costs are determined to be higher than estimated in the PFFP, the City will need to increase fees in future years and/or call on developers to fund the extra expenses that relate to CFD financing through the provisions of an acquisition agreement. As the City will adopt new ordinances or update existing ordinances on an ongoing basis, fees will be adjusted based on actual costs realized after construction bids have been received for public facilities. If actual costs are higher than expected, again, the City will have to increase fees and/or rely on the terms of an acquisition agreement to avoid a financing deficit in future years. ADOPTION OF FEE PROGRAMS Prior to commencement of development within the Project, the City will need to adopt a fee ordinance or resolution implementing an AASP fee program for each type of capital facility. The initial ordinance will reflect fees based on information available at that time. Fees will be adjusted annually or on a more frequent basis to reflect actual costs and current cost estimates. Pursuant to section 66006 of the Government Code, the City will establish a separate AASP capital facility account and a unique fund for each type of public facility for which fees are collected. Establishment of this account will prevent commingling of the Project fees with other City revenues and funds. Interest income earned by fee revenues in this account will be deposited in the account and applied to facility construction costs. Within one hundred eighty (180) days after the close of each fiscal year, the City will make information pertaining to the ATTACHMENT 2 PC1 - 56 AASP Public Facilities Financing Plan 21 July 23, 2014 account [as required by Section 66006 (b)(1)] available to the public and will review this information at a regularly scheduled public hearing. In order to maximize the efficiency of the capital improvements program and minimize debt issuance costs, the City may borrow money from one fund within the Project account to pay for facilities financed by another fund within the account. This borrowing will occur when one type of facility is needed immediately, while another type is not needed for a number of years. The City will monitor such borrowing on an ongoing basis and will repay funds from which fee revenues were borrowed in a timely manner and in an amount equal to the original amount borrowed plus the interest that would have accrued had the money not been borrowed from the fund. FEE CREDITS AND REIMBURSEMENTS Often, developers are expected to advance-fund or construct certain backbone infrastructure and community facilities required to serve the Project. The improvements that are advance funded may be improvements anticipated to be funded through the existing City fees, the proposed Project-specific fee program, or CFD bond proceeds. If a developer is required to advance-fund or provide shortfall funding for improvements, the developer may be entitled to fee credits or reimbursements from future development. Fee credit and/or reimbursement programs for existing and proposed fee programs will require agreement among the developers, the City, and any other applicable agencies who will be administering the fee programs. The policies and procedures for providing fee credits and reimbursements will be established in the implementing documents for the proposed Project-specific fee program and should be consistent with the development agreement, if applicable, between the City and the applicant. FORMATION OF FINANCING DISTRICTS If a developer requests formation of a Mello-Roos CFD and the City concurs with that request, the City must form a financing team made up of experts in the various fields associated with implementation of such districts, including bond counsel, bond underwriter, and special tax consultant. The City and the designated financing team will be responsible for forming the district, issuing bonds to pay for required facilities, and levying special taxes to ensure timely repayment of bonds. ATTACHMENT 2 PC1 - 57 APPENDIX A PUBLIC FACILITIES FINANCING PLAN TABLES (NO CFDFUNDING) ATTACHMENT 2 PC1 - 58 Table A-1 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Land Use Assumptions Residential Units Estimated Land Use Designations Acres per Acre Dwelling Units Medium Density (Existing Mobile Homes)6.7 4.8 32 Total Residential Property 6.7 32 Estimated Non-Residential Building Land Use Designations Acres F.A.R. Square Feet Undeveloped Land 1 Business Park 193.5 0.34 2,864,993 Service Commercial 144.9 0.24 1,545,374 Manufacturing 101.3 0.17 747,642 Subtotal 439.7 5,158,009 Developed Land 145.2 0.28 1,786,745 Total Non-Residential Property 584.9 6,944,754 Other Land Use Designations Acres Agriculture 76.1 Conservation / Open Space 223.8 Government 292.5 Total Other Property 592.4 Total AASP Acreage 2 1,184.0 1 The total potential square footage (and associated acreage) includes approximately 1.38 million square feet of development on properties currently under pre-annexation agreements and properties outside of the City’s jurisdiction with alternative fee programs. Since these properties may not be required to pay their fair share of infrastructure costs, the difference will need to be funded by other funding sources (e.g., grants, additional City contributions, etc.). 2 Excludes acreage associated with roads, setbacks, creeks, and other features. Sources: City of San Luis Obispo; Goodwin Consulting Group, Inc. 7/23/2014 ATTACHMENT 2 PC1 - 59 Table A-2 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Land Use Summary by Phase Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Land Use Years 1-5 Years 6-10 Years 11-15 Year 16-20 Years 21-25 Total Non-Residential Development (Bldg SF) Business Park 572,999 572,999 572,999 572,999 572,999 2,864,993 Service Commercial 309,075 309,075 309,075 309,075 309,075 1,545,374 Manufacturing 149,528 149,528 149,528 149,528 149,528 747,642 Total Non-Residential Bldg SF 1,031,602 1,031,602 1,031,602 1,031,602 1,031,602 5,158,009 Non-Residential Development (Acres) Business Park 38.7 38.7 38.7 38.7 38.7 193.5 Service Commercial 29.0 29.0 29.0 29.0 29.0 144.9 Manufacturing 20.3 20.3 20.3 20.3 20.3 101.3 Total Non-Residential Acres 87.9 87.9 87.9 87.9 87.9 439.7 Sources: City of San Luis Obispo; Goodwin Consulting Group, Inc.7/23/2014 ATTACHMENT 2 PC1 - 60 Table A-3 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan AASP Project-Specific Infrastructure Costs by Phase Total % Allocated Net Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Infrastructure Type (Project Number and Description)Cost to AASP AASP Cost 1 Years 1-5 Years 6-10 Years 11-15 Years 16-20 Years 21-25 Total Transportation 1) Tank Farm Road/Higuera Intersection Improvements $1,310,000 100% $1,310,000 $0 $0 $1,310,000 $0 $0 $1,310,000 2) Tank Farm Road - Higuera to Chevron Collector $562,550 100% $562,550 $0 $562,550 $0 $0 $0 $562,550 3.1)Tank Farm Road Widening - Chevron Collector to Santa Fe 2 $5,641,557 100% $5,641,557 $2,395,576 $958,999 $1,033,996 $1,252,986 $0 $5,641,557 3.2)Tank Farm Road Widening - Chevron Collector to Santa Fe 2 $1,252,986 0% $0 $0 $0 $0 $0 $0 $0 4) Tank Farm Road - Santa Fe to Broad Street $1,799,887 100% $1,799,887 $1,799,887 $0 $0 $0 $0 $1,799,887 5) Tank Farm Road/Broad Street Intersection Improvements $1,078,868 100% $1,078,868 $0 $1,078,868 $0 $0 $0 $1,078,868 6)Santa Fe Road North of Tank Farm Road Widening 3 $2,178,525 33% $726,175 $496,667 $229,508 $0 $0 $0 $726,175 7)Santa Fe Road South of Tank Farm Road Widening 3 $2,412,430 50% $1,206,215 $0 $0 $0 $0 $1,206,215 $1,206,215 8) Santa Fe Road - Hoover to Buckley $4,950,000 0% $0 $0 $0 $0 $0 $0 $0 9) Unocal/Chevron Collector Road - S/O Tank Farm Road $563,500 100% $563,500 $0 $563,500 $0 $0 $0 $563,500 10) Broad/Prado Road Intersection Improvements $590,000 0% $0 $0 $0 $0 $0 $0 $0 11) Broad Street - Fuller Bridge Widening $300,000 0% $0 $0 $0 $0 $0 $0 $0 12) Prado Road/Higuera Intersection Improvements $1,640,000 100% $1,640,000 $0 $1,640,000 $0 $0 $0 $1,640,000 13) Buckley Road Extension - Higuera to Vachell $6,700,000 0% $0 $0 $0 $0 $0 $0 $0 Subtotal $30,980,302 $14,528,752 $4,692,130 $5,033,425 $2,343,996 $1,252,986 $1,206,215 $14,528,752 Storm Drainage 3.1)Tank Farm Road - Chevron Collector to Santa Fe 3 $1,110,454 100% $1,110,454 $322,851 $255,905 $255,944 $275,754 $0 $1,110,454 3.2)Tank Farm Road - Chevron Collector to Santa Fe 3 $275,754 0% $0 $0 $0 $0 $0 $0 $0 6)Santa Fe Road North of Tank Farm Road 3 $509,450 33% $169,817 $169,817 $0 $0 $0 $0 $169,817 7)Santa Fe Road South of Tank Farm Road 3 $65,190 50% $32,595 $0 $0 $0 $0 $32,595 $32,595 Subtotal $1,960,849 $1,312,866 $492,668 $255,905 $255,944 $275,754 $32,595 $1,312,866 Bikeways TFR Class I $1,000,000 100% $1,000,000 $1,000,000 $1,000,000 Chevron Internal Class I Facility - S/O Tank Farm $934,000 100% $934,000 $0 $934,000 $0 $0 $0 $934,000 Tank Farm Road - Second Class I W idened Sidewalk $180,000 100% $180,000 $50,400 $129,600 $0 $0 $0 $180,000 Avila Ranch - Class I from Buckley to Chevron $815,000 100% $815,000 $0 $815,000 $0 $0 $0 $815,000 Buckley Road - Class I from Avila Ranch to Esperanza $620,500 100% $620,500 $0 $620,500 $0 $0 $0 $620,500 Subtotal $3,549,500 $3,549,500 $1,050,400 $2,499,100$0$0$0$3,549,500 Grand Total $36,490,651 $19,391,118 $6,235,198 $7,788,430 $2,599,940 $1,528,740 $1,238,810 $19,391,118 1 Excludes costs that are anticipated to be funded by grants, included in the City's Transportation Impact Fee program, or surrounding development projects. 2 Includes soft costs and various bridge improvements. 3 Includes soft costs. Sources: City of San Luis Obispo; Goodwin Consulting Group, Inc.7/23/2014 ATTACHMENT 2 PC1 - 61 Table A-4 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Summary of Infrastructure Costs Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Total Item Years 1-5 Years 6-10 Years 11-15 Years 16-20 Years 21-25 Cost Transportation 1 $5,742,530 $7,532,525 $2,343,996 $1,252,986 $1,206,215 $18,078,252 Storm Drainage $492,668 $255,905 $255,944 $275,754 $32,595 $1,312,866 Total $6,235,198 $7,788,430 $2,599,940 $1,528,740 $1,238,810 $19,391,118 1 Includes bikeways. Source: Goodwin Consulting Group, Inc.7/23/2014 ATTACHMENT 2 PC1 - 62 Table A-5 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Capital Facility Benefit Units Capital Facility: Benefit Land Use Unit: Business Park 13.48 per ksf 0.80 per acre Service Commercial 10.15 per ksf 0.80 per acre Manufacturing 2.02 per ksf 0.85 per acre 1 Includes bikeways. Sources: City of San Luis Obispo; SLO Creek Drainage Design Manual, Table 4-1; Goodwin Consulting Group, Inc. 7/23/2014 Coefficient Runoff Weekday Trips Average Transportation 1 Storm Drainage ATTACHMENT 2 PC1 - 63 Table A-6 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Cost Allocation Table Transportation Building Average Total Cost per Square Weekday Weekday Percent Total Building Cost per Land Use Acres Feet Trip Rate Trips Allocation Costs Square Foot Acre Cost $18,078,252 Land Use per KSF Business Park 193.5 2,864,993 13.48 38,620 69.19% $12,508,697 $4.37 $64,644 Service Commercial 144.9 1,545,374 10.15 15,686 28.10% $5,080,403 $3.29 $35,061 Manufacturing 101.3 747,642 2.02 1,510 2.71% $489,152 $0.65 $4,829 Total 439.7 5,158,009 55,816 100.00% $18,078,252 Source: Goodwin Consulting Group, Inc.7/23/2014 ATTACHMENT 2 PC1 - 64 Table A-7 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Cost Allocation Table Storm Drainage Building Total Cost per Square Runoff Runoff Percent Total Building Cost per Land Use Acres Feet Coefficient Coefficients Allocation Costs Square Foot Acre Cost $1,312,866 Land Use per Acre Business Park 193.5 2,864,993 0.80 155 43.38% $569,555 $0.20 $2,943 Service Commercial 144.9 1,545,374 0.80 116 32.49% $426,504 $0.28 $2,943 Manufacturing 101.3 747,642 0.85 86 24.13% $316,806 $0.42 $3,127 Total 439.7 5,158,009 357 100.00% $1,312,866 Source: Goodwin Consulting Group, Inc.7/23/2014 ATTACHMENT 2 PC1 - 65 Table A-8 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Project-Specific Cost Allocation Summary Capital Total Cost Total Facility:Transportation 1 Storm Drainage 2 Allocation Facility Costs Benefit Average Runoff Unit: Weekday Trips Coefficient Capital Costs:$18,078,252 $1,312,866 $19,391,118 Land Use Business Park $4.37 $0.20 $4.56 $13,078,253 Service Commercial $3.29 $0.28 $3.56 $5,506,907 Manufacturing $0.65 $0.42 $1.08 $805,958 Total $19,391,118 Land Use Business Park $64,644 $2,943 $67,588 $13,078,253 Service Commercial $35,061 $2,943 $38,005 $5,506,907 Manufacturing $4,829 $3,127 $7,956 $805,958 Total $19,391,118 1 Transportation costs are allocated to each land use category using benefit units based on building square footage; therefore, fair-share costs associated with future development should be based on the cost per building square foot estimates presented in this table. 2 Storm drainage costs are allocated to each land use category using benefit units based on acreage; therefore, fair-share costs associated with future development should be based on the cost per acre estimates presented in this table. Source: Goodwin Consulting Group, Inc.7/23/2014 Cost per Building Square Foot Cost per Acre ATTACHMENT 2 PC1 - 66 Table A-9 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan City-Wide and Other Fees Total Total Water Wastewater Inclusionary Public Art San Luis AASP Entitlement City-Wide & City-Wide & Impact Impact Housing In-Lieu Coastal Unified Open Space Process Other Fees Other Fees Land Use Non-LOVR 2 LOVR 2 Fee 3 Fee 3 Fee 4 Fee 5 School District 6 In-Lieu Fee Reimbursement 7 Non-LOVR LOVR Business Park $7.44 $14.14 $2.47 $1.69 $5.00 $0.50 $0.42 $0.47 $0.09 $18.08 $24.78 Service Commercial $4.03 $12.62 $3.43 $2.35 $4.50 $0.45 $0.42 $0.69 $0.12 $16.00 $24.58 Manufacturing $2.15 $6.36 $4.96 $3.39 $3.00 $0.30 $0.42 $0.63 $0.17 $15.02 $19.24 Business Park $110,140 $209,346 $36,634 $25,020 $74,031 $7,403 $6,219 $6,914 $1,279 $267,640 $366,846 Service Commercial $43,026 $134,548 $36,634 $25,020 $47,993 $4,799 $4,479 $7,380 $1,279 $170,611 $262,133 Manufacturing $15,853 $46,936 $36,634 $25,020 $22,141 $2,214 $3,100 $4,642 $1,279 $110,884 $141,967 1 These impact fee amounts do not include any Airport Area Add-On fees. 2 Development not within the Los Osos Valley Road ("LOVR") area will be subject to City-wide fees of $7.05, $3.82, and $2.04 per square foot of business park, service commercial, and manufacturing, respectively. Development within the LOVR area will be subject to the LOVR Area Base and Sub Area Add-On fees, which total $13.40, $11.96 and $6.03 per square foot of business park, service commercial, and manufacturing, respectively. Rates for business park uses are assumed to equal rates for office uses. However, City-wide transportation impact fees (TIF) shown in this table include a 5.5% increase to the current rates to reflect additional costs anticipated to be included in the City-wide TIF program. The fee per acre is calculated using the appropriate FAR from Table 1. 3 Assumes an average of 2 connections per acre and a 1" meter size. Assumes the draft wastewater fees for the Buckley area apply since a majority of future development within the AASP area outside of the Chevron development project falls within the Buckley catchment area. The City-wide water fee and Tank Farm area wastewater fee for a 1" meter are $18,317 and $12,510, respectively. The service sizes and related fees could vary based on the needs and sizes of specific developments. 4 Non-residential developments greater than 2,500 square feet are required to build two affordable dwelling units per acre, or pay an in-lieu fee equal to 5% of total construction costs. For purposes of this analysis, construction costs are assumed to be $100, $90, and $60 per business park, service commercial, and manufacturing square foot, respectively. 5 Non-residential developments are required to propose public art to be placed in a public place on or in the vicinity of the development project site, or pay an in-lieu fee equal to 0.5% of that portion of the total construction costs in excess of $100,000 for each building permit. For purposes of this analysis, construction costs are assumed to be $100, $90, and $60 per business park, service commercial, and manufacturing square foot, respectively, and the 0.5% is applied to the total construction costs. 6 The current non-residential fee is $0.42 per building square foot. 7 Entitlement process costs of approximately $560K are spread equally on a per acre basis. Sources: City of San Luis Obispo; Chevron Land Development; Goodwin Consulting Group, Inc.7/23/2014 per Acre per Building Square Foot City-Wide Development Impact Fees 1 Impact Fee Transportation Other Fees Other AASP Fees ATTACHMENT 2 PC1 - 67 Table A-10 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Total Project-Specific Costs plus Other Fees Non-LOVR Area 1 Total Project- City-Wide Gross Fees Land Use Specific Infrastructure Other per Acre Business Park $67,588 $171,794 $95,846 $335,228 Service Commercial $38,005 $104,680 $65,931 $208,616 Manufacturing $7,956 $77,507 $33,377 $118,840 Total Total $19,391,118 LOVR Area 1 Total Project- City-Wide Gross Fees Land Use Specific Infrastructure Other per Acre Business Park $67,588 $271,000 $95,846 $434,434 Service Commercial $38,005 $196,202 $65,931 $300,137 Manufacturing $7,956 $108,590 $33,377 $149,923 Total Total $19,391,118 1 The AASP is subject to two fee areas in the City's Transportation Impact Fee program. A small area encompassing the south-western corner of the AASP is included in the LOVR fee area and is subject to the LOVR transportation fees. The remainder of the AASP is subject to the city-wide transportation fees. Source: Goodwin Consulting Group, Inc.7/23/2014 Cost per Acre Cost per Acre ATTACHMENT 2 PC1 - 68 Table A-11 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Cash Flow By Phase - Project-Specific Infrastructure Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Years 1-5 Years 6-10 Years 11-15 Years 16-20 Years 21-25 Total Total Phased Costs $6,235,198 $7,788,430 $2,599,940 $1,528,740 $1,238,810 $19,391,118 Revenues Gross Project-Specific Fees $3,878,224 $3,878,224 $3,878,224 $3,878,224 $3,878,224 $19,391,118 Subtotal $3,878,224 $3,878,224 $3,878,224 $3,878,224 $3,878,224 $19,391,118 Revenues Less Costs ($2,356,974) ($3,910,206) $1,278,284 $2,349,484 $2,639,414 $0 Developer Equity/Other Financing Sources $2,356,974 $3,910,206 $0 $0 $0 $6,267,181 Reimbursement for Developer/Other Financing Sources $0 $0 ($1,278,284) ($2,349,484) ($2,639,414)($6,267,181) Cumulative Revenues Less Costs $0 $0 $0 $0 $0 Source: Goodwin Consulting Group, Inc.7/23/2014 ATTACHMENT 2 PC1 - 69 APPENDIX B CFD AND NET BURDEN ANALYSIS TABLES ATTACHMENT 2 PC1 - 70 Table B-1 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Annual Burden Analysis % of Total Service Developed Business Park Commercial Manufacturing Value Square Foot Square Foot Square Foot Developed Value $225 $175 $100 Ad Valorem General Tax 1.0000%$2.25 $1.75 $1.00 State Water Project 0.0029%$0.01 $0.01 $0.00 Subtotal Ad Valorem Taxes 1.0029%$2.26 $1.76 $1.00 Special Taxes and Assessments Proposed Infrastructure CFD Special Tax 1 $0.48 $0.38 $0.21 Subtotal Special Taxes and Assessments $0.48 $0.38 $0.21 Total Annual Burden $2.74 $2.13 $1.22 Total Annual Burden as % of Value 1.22%1.22%1.22% 1 Amount required to fund all project-specific costs. Sources: San Luis Obispo County Tax Collector's Office; Goodwin Consulting Group, Inc. 7/23/2014 ATTACHMENT 2 PC1 - 71 Table B-2 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan CFD Debt Financing Analysis Project Buildout Service Bonding Capacity Business Park Commercial Manufacturing Total Special Tax Revenue Total Building Square Feet 2,864,993 1,545,374 747,642 5,158,009 Maximum Annual Special Tax per Building Square Foot $0.48 $0.38 $0.21 Annual Special Tax Revenue $1,384,794 $580,966 $160,610 $2,126,370 Less Debt Service Coverage 9.1% $125,890 $52,815 $14,601 $193,306 Less Annual Administration 1.0% $13,848 $5,810 $1,606 $21,264 Remaining for Debt Service $1,245,056 $522,341 $144,403 $1,911,800 CFD Financing Total Bond Size 1 $17,786,515 $7,462,018 $2,062,901 $27,311,433 Term (Years)30 Less Estimated Issuance Costs 5.0% $889,326 $373,101 $103,145 $1,365,572 Less Bond Reserve Fund 10.0% $1,778,651 $746,202 $206,290 $2,731,143 Less Capitalized Interest for 24 Months 14.0% $2,490,112 $1,044,683 $288,806 $3,823,601 Construction Proceeds $12,628,425 $5,298,033 $1,464,659 $19,391,118 1 Assumes a 2% annual escalation rate is applied to special taxes and debt service, and assumes a 7.0% interest rate. Source: Goodwin Consulting Group, Inc.7/23/2014 ATTACHMENT 2 PC1 - 72 Table B-3 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan CFD Debt Financing Analysis Summary by Phase Land Use Business Park Service Commercial Manufacturing Total Total Bonding Capacity Phase 1 Phase 2 Phase 3 Phases 2 & 3 Phase 4 Phase 5 Phases 4 & 5 Total Special Tax Revenue Annual Special Tax Revenue $425,274 $425,274 $425,274 $850,548 $425,274 $425,274 $850,548 $2,126,370 Less Debt Service Coverage 9.1% $38,661 $38,661 $38,661 $77,323 $38,661 $38,661 $77,323 $193,306 Less Annual Administration 1.0% $4,253 $4,253 $4,253 $8,505 $4,253 $4,253 $8,505 $21,264 Remaining for Debt Service $382,360 $382,360 $382,360 $764,720 $382,360 $382,360 $764,720 $1,911,800 CFD Financing Total Bond Size 1 $5,462,287 $5,462,287 $5,462,287 $10,924,573 $5,462,287 $5,462,287 $10,924,573 $27,311,433 Term (Years)30 Less Estimated Issuance Costs 5.0% $273,114 $273,114 $273,114 $546,229 $273,114 $273,114 $546,229 $1,365,572 Less Bond Reserve Fund 10.0% $546,229 $546,229 $546,229 $1,092,457 $546,229 $546,229 $1,092,457 $2,731,143 Less Capitalized Interest for 24 Months 14.0% $764,720 $764,720 $764,720 $1,529,440 $764,720 $764,720 $1,529,440 $3,823,601 Construction Proceeds $3,878,224 $3,878,224 $3,878,224 $7,756,447 $3,878,224 $3,878,224 $7,756,447 $19,391,118 Cumulative Construction Proceeds $3,878,224 $11,634,671 $19,391,118 1 Assumes a 2% annual escalation rate is applied to special taxes and debt service, and assumes a 7.0% interest rate. Source: Goodwin Consulting Group, Inc.7/23/2014 $0.21 Maximum Annual Special Tax per Square Foot $0.48 $0.38 ATTACHMENT 2 PC1 - 73 Table B-4 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Total Project-Specific Costs plus Other Fees Assuming CFD Financing Non-LOVR Area 1 Project-Specific Net Project- Total Infrastructure Specific Total Project- City-Wide Gross Fees Supported Costs After Net Fees Land Use Specific Infrastructure Other per Acre by CFD 2 CFD per Acre (A)(B)(C)(D = A+B+C)(E)(F = A-E) (G = B+C+F) Business Park $67,588 $171,794 $95,846 $335,228 $67,588 $0 $267,640 Service Commercial $38,005 $104,680 $65,931 $208,616 $38,005 $0 $170,611 Manufacturing $7,956 $77,507 $33,377 $118,840 $7,956 $0 $110,884 Total Total $19,391,118 3 $19,391,118 $0 CFD Funding ($19,391,118)4 Infrastructure Supported by Fees $0 LOVR Area 1 Project-Specific Net Project- Total Infrastructure Specific Total Project- City-Wide Gross Fees Supported Costs After Net Fees Land Use Specific Infrastructure Other per Acre by CFD 2 CFD per Acre (A)(B)(C)(D = A+B+C)(E)(F = A-E) (G = B+C+F) Business Park $67,588 $271,000 $95,846 $434,434 $67,588 $0 $366,846 Service Commercial $38,005 $196,202 $65,931 $300,137 $38,005 $0 $262,133 Manufacturing $7,956 $108,590 $33,377 $149,923 $7,956 $0 $141,967 Total Total $19,391,118 3 $19,391,118 $0 CFD Funding ($19,391,118)4 Infrastructure Supported by Fees $0 1 The AASP is subject to two fee areas in the City's Transportation Impact Fee program. A small area encompassing the south-western corner of the AASP is included in the LOVR fee area and is subject to the LOVR transportation fees. The remainder of the AASP is subject to the city-wide transportation fees. 2 Assumes CFD debt financing capacity is limited by a burden-to-value ratio of 1.22%. Refer to Table B-1. 3 Equals the total amount of project-specific facility costs or fees paid by the project. 4 Equals the total amount of infrastructure that could be supported by a CFD. Source: Goodwin Consulting Group, Inc.7/23/2014 Cost per Acre Cost per Acre per Acre per Acre ATTACHMENT 2 PC1 - 74 Table B-5 City of San Luis Obispo Airport Area Specific Plan Public Facilities Financing Plan Cash Flow By Phase Assuming CFD Financing - Project-Specific Infrastructure Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Years 1-5 Years 6-10 Years 11-15 Years 16-20 Years 21-25 Total Total Phased Costs $6,235,198 $7,788,430 $2,599,940 $1,528,740 $1,238,810 $19,391,118 Revenues CFD Bond Proceeds 1 $3,878,224 $7,756,447 $0 $7,756,447 $0 $19,391,118 Net Project-Specific Fees $0 $0 $0 $0 $0 $0 Subtotal $3,878,224 $7,756,447 $0 $7,756,447 $0 $19,391,118 Revenues Less Costs ($2,356,974) ($31,983) ($2,599,940) $6,227,707 ($1,238,810)$0 Developer Equity/Other Financing Sources $2,356,974 $31,983 $2,599,940 $0 ($0)$4,988,897 Reimbursement for Developer/Other Financing Sources $0 $0 $0 ($4,988,897)$0 ($4,988,897) Cumulative Revenues Less Costs $0 $0 $0 $1,238,810 $0 1 From Table B-3. Assumes bonds supported by Phases 2 & 3 are issued during Phase 2, and bonds supported by Phases 4 & 5 are issued during Phase 4. Source: Goodwin Consulting Group, Inc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