HomeMy WebLinkAboutGP UPDATE FISCAL ANALYSIS PAPERSGP UPDATE FISCAL
ANALYSIS PAPERS
TOURISM AND
LODGING ISSUE PAPER
NEWPORT BEACH GENERAL PLAN
UPDATE
November 9, 2004
Prepared for
City of Newport Beach
Prepared by
Applied Development Economics
2029 University Avenue • Berkeley, California 94704 • (510) 548-5912
1029 J Street, Suite 310 • Sacramento, California 95814 • (916) 441-0323
www.adeusa.com
In Association with
EIP Associates
Urban Crossroads
CONTENTS
1. Introduction..........................................................................1
2. Tourism Market.................................................................... 3
3. Newport Beach Lodging........................................................ 8
4. Tourism and Lodging Impacts ............................................. 23
5. Conclusion: Further Questions ............................................ 29
TABLES
1 Estimated Newport Beach Visitors 2003................................. 4
2 Purpose of Visit by Newport Beach Visitors ........................... 4
3 Attractions Visited by Newport Beach Visitors ....................... 5
4 Newport Beach Visitor Spending by Major
Spending Category, 2003................................................... 6
5 Visitor Spending at Newport Beach Retail Stores
2003................................................................................... 7
6-Sutmnary of Orange County Hotels and Motels,
2004.................................................................................10
7 Hotels and Motels in Newport Beach...................................11
8 Average Annual Occupancy Rate Newport Beach
and Coastal/South Orange County Hotels and
Motels 1998 To 2003.......................................................14
9 Average Monthly Occupancy Rate Newport Beach
and Coastal/South Orange County Hotels and
Motels, 2003 To 2004......................................................16
10 California Bed & Breakfast Inns Summary of
Statistical Data.................................................................19
11 Travel Park Monthly and Annual Occupancy
Trends California, 2003....................................................21
12 Summer Time ADT Comparison.......................................25
13 Peak Summer Time Daily Volume Variation ......................26
14 Trip Rates........................................................................... 27
J
1. INTRODUCTION
With its attractive beaches and extensive harbor and
marina facilities, Newport Beach has been a prime
visitor destination for many years. The General Plan
Update process recognized early on the need to
address issues related to the costs and benefits of
visitor trade, particularly related to the lodging
industry. This paper presents a summary of
information and public opinions generated to date
regarding tourism and hotel development in the City,
and provides a framework for further discussion of
potential land use and circulation policies in the
General Plan as well as economic development
strategies for the City.
In the Visioning Process, the City identified its vision
for 2025 along several dimensions including
community character, growth and development,
healthy natural environment and others. The theme
of balancing visitor -serving amenities and activities
with local residents' desired character of the
community is prevalent through much of the Vision
Statement. The Community Character section states
in part, "[t]he successful balancing of the needs of
residents, businesses and visitors has been
accomplished with the recognition that Newport
Beach is primarily a residential community." Under
the heading of Recreation Opportunities, the vision
says, "Newport Beach attracts visitors with its harbor,
beaches, restaurants and shopping. We are a
residential and recreational seaside community willing
and eager to share its natural resources with visitors
without diminishing these irreplaceable assets in order
to share them." The vision for Boating and
Waterways acknowledges that, "[w]e are recognized as
a premier recreational boating harbor," but
emphasizes the low density, non -intrusive character
of on -shore development in the lower bay and the
unencumbered shoreline in the upper bay.
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The various public input opportunities during the
Visioning Process elicited a variety of statements
from the public about their interest in supporting
tourism in Newport Beach and the desired
characteristics of future lodging developments and
other visitor attractions. Most participants in the
process favored tourism, but were generally not
receptive to extensive new hotel development. There
was modest support for additional tourism amenities
such as public restrooms, shuttle busses, and parking,
although a majority of both residents and businesses
opposed adding more retail shops and restaurants to
serve visitors.
If new hotels are to be built, residents of the City
were more interested in small scale projects, while
business participants favored larger hotels. Most
people agreed that the Airport Area and Newport
Center would be better locations for future new
hotels, than would areas like Mariner's Mile, Lido
Marina Village, or Newport Dunes.
Finally, the City has established a set of Guiding
Principles for the General Plan Update process,
among which is the statement that, "[t]he General
Plan shall support the careful expansion of visitor -
serving businesses and facilities, including hotels and
meeting facilities."
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2. TOURISM MARKET
Newport Beach is one of California's most popular
visitor destinations, and the impact that visitors make
on the local economy is significant. The city functions
as both an overnight destination with its own
amenities and visitor attractions, and as a daytrip
destination, sometimes as part of an itinerary that
includes other Southern California destinations, but
mainly as a single -day outing for much of the
Southern California population.
VISITOR TRENDS
According to a 2001 study done by CIC Research,
Newport Beach has approximately 7.2 million visitors
annually. Of these visits, about one million of them
involved an overnight stay, while the remaining 6.2
million visitors were day visitors. The overall
downturn in tourism and the impact of 9/11 was not
accounted for in that CIC study. Using more recent
lodging occupancy data as an indicator of overnight
visits, it appears that the number of overnight visitors
has declined to approximately 870,000. The day
visitor market was not as severely impacted by 9/11
(and possibly temporarily increased), so our analysis
does not assume any changes to those patterns. This
reduces the current estimate of annual visitors to
about 7.1 million (Table 1). As discussed later in this
report, hotel occupancy trends have been steadily
rising since 2001 and will likely be restored to pre-
9/11 levels in the next couple years.
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TABLE 1
Estimated Newport Beach Visitors
2003
2003 Totals
Total Visitors 7,058,440
OvemightVisitors 869,440
Day Visitors 6,189,000
Source: ADE, data from CIC Research and
Smith Travcl Researdi
PURPOSE OF VISITS
In general, visitor trips to Newport Beach were for
Pleasure or vacationing (59%). Visits with friends and
relatives accounted for about 20 percent of Newport
Beach trips. Shopping, business, conventions/
meetings, and special events were the other primary
reasons for visiting Newport Beach (Table 2).
TABLE 2
Purpose Of Visit
By Newport Beach Visitors
Percentage of
Visitors
Pleasure/Vacadon 59.2%
Visit friends/relatives 19.7%
Shopping
7.8%
Business
6.2%
Convention/Meeting
3.8%
Special event
2.1%
Personal reasons
0.8%
Spouse/friend business
0.3%
Other
0.2%
Source ADE, data from CIC Research
The most popular attractions that visitors to Newport
Beach visited at some point during their itinerary were
the beaches, which over 64 percent of visitors visited
during their trips (Table 3). Other popular attractions
include restaurants, Fashion Island, Disneyland,
Balboa Peninsula/Island, and other shopping areas in
Newport Beach. Each of these attractions were
visited by at least 30 percent of Newport Beach's
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overnight and day trip visitors. Out of a total of about
7.1 million annual overnight and day trip visitors, this
means that each of those attractions accounted for
more than 2 million visits from Newport Beach
visitors.
TABLE 3
Attractions Visited
By Newport Beach Visitors
Attractions Visited Percentage
orintendtoVisit of Visitors
Beaches 63.Sa/a
Dining In Newport Beach
42.7%
Fashion Island
40.7%
Disneyland
38.8%
Balboa Pavilion/Island/Pier
39.0%
Beach area strolling
29.6a/c
Shopping in Newport Beach
24.4%
South Coast Plaza
16.3%
Universal Studios
15.5%
Hollywood
12.6a/a
Sunbathing at Newport Beach
11.4%
Knotes Berry Farm
10.1%
San Diego Zoo
9.7%
Sea World
8.3%
Harbor area sightseeing 7.8%
The Block at Orange 6.6%
Surfing at Newport Beach 6.5%
Soume: ADE, data from CIC Research
SPENDING PATTERNS
Overall, the direct spending by Newport Beach
visitors totals approximately $852 million annually
(Table 4). Overnight visitors account for $584 million
in direct spending, while day visitors directly
contribute about $268 million to the local economy.
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TABLE 4
Newport Beach Visitor Spending
By Major Spending Category, 2003
Spending Category
Overnight
Daytrip
Total
Lodging
$301,310,828
$0
$301,310,828
Meals
$93,339,715
$83,268,863
$176,608,578
Shopping
$111,337,245
$100,547,022
$211,884,267
Visitor Attractions
$26,705,501
$32,545,906
$59,251,407
Transportation
$30,413,584
$39,337,597
$69,751,181
Misc. And Convenience
$20,777,186
$9,271,514
$30,048,700
Other Spending
$143,485
$2,542,329
$2,685,814
Total
$584,027,544 $267,513,231
$851,540,775
Source ADE, Data Prom CIC Research And Smith Travel Research
About $301 million of the total visitor spending goes
towards overnight accommodations, which include
hotels and motels, as well as vacation rentals and
other types of lodging. Another $419 million in visitor
spending goes to Newport Beach retail stores. Given
that Newport Beach's annual retail sales totals about
$1.5 billion, the impact of the visitor market on the
local economy is significant.
The distribution of the retail spending shows that the
largest magnets for visitor spending in Newport
Beach are the local restaurants (Table 5). These eating
establishments annually attract about $177 million.
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TABLE 5
Visitor Spending At Newport Beach Retail Stores
2003
Retail Group Visitor Spending
Total $418,541,546
Apparel Store Group $42,825,058
Women'sApparel $22,895,630
Men's Apparel $10,105,758
Familygothing $6,530,089
Shoe Stores $3,293,581
General Merchandise Group $101,821,637
Department & Dry Goods $94,433,911
Drug & Proprietary Stores $7,326,565
Specialty Retail Group $74,625,298
Gifts & Novelties $9,352,943
Sporting Goods $10,533,707
Florists $2,286,283
Photographic Equipment $811,165
Records & Music $834,333
Books & Stationery $5,511,658
Jewelry $10,425,267
Misc. Specialty Retail $34,869,942
Food, Eating and Drinking Group $199,269,552
Grocery Stores $19,252,793
Specialty Food Stores $1,163,468
Liquor Stores $2,244,713
Eating Places $176,608,578
Source ADE, data from State Board of Equalization, CIC
Research, and Smith Travel Research.
Local -department stores attract an additional $94
million in visitor spending. Other major sources of
visitor spending include apparel stores and various
specialty retail stores.
Within Newport Beach, Fashion Island accounts for
the largest proportion of visitor spending. Fashion
Island accounts for $157 million of visitor spending.
Given the high amount of visitor spending that goes
to Newport Beach department stores, this pattern is
not surprising.
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3. NEWPORT BEACH LODGING
Newport Beach has a diverse and far reaching lodging
market that serves a variety of customers. The lodging
market consists of all types of transient
accommodations, including private residences. The
lodging market for Newport Beach can be separated
into four major groupings, hotel/motel
establishments, bed and breakfast facilities, travel
parks and vacation rentals.
Hotel/motel establishments have a wide range of
facilities, rooms, amenities, and price ranges. At
the lower priced end of the market, economy
hotels and motels simply provide a room with a
private bathroom and basic amenities such as a
TV, phone, and closet space. The middle market
hotels typically have better appointed rooms with
more amenities, while luxury resort hotels
typically add conference facilities, restaurants, and
resort amenities. As discussed further below, this
market in Newport beach is further segmented
into budget/economy hotels, middle market
hotels, and luxury hotels and resorts. The
Newport Beach market tends to cater much more
heavily to the latter segment.
■ Bed and breakfast establishments are different
from hotels and motels in that they often more
closely resemble a private residence. This means
that the rooms are not always private or separated
from the rest of the facility like they typically are
in a hotel or motel. Throughout California, the
majority of B&B owners live on the premises with
very little absentee ownership. Often, B&B rooms
have shared restrooms and/or a common dining
area. In addition, they typically accommodate no
more than 20 rooms in a single facility. As noted
below, B&B's can also occupy small scale
commercial buildings, such as the Doryman's Inn
in Newport Beach. This model may more
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applicable to Newport Beach than residences
converted to lodging, of which there are currently
none in the City.
■ Travel parks primarily serve recreational vehicles,
and mostly offer a space and utility hookups with
no permanent structures used for overnight
accommodations. Some travel parks provide
recreational facilities, meeting rooms, and limited
retail services.
■ Use of residential properties for seasonal rentals
(summer weekly/winter monthly) is allowed in
Newport Beach through the Short Term Lodging
Permit procedures. These types of visitor
accommodations are generally located within
residential neighborhoods with a strong beach
orientation. The highest concentration of seasonal
rentals occurs on the Balboa Peninsula and in
West Newport, although they can be found in all
of the beach and bay residential areas. This
segment of the market is not analyzed extensively
in this paper, but some observations about both
beneficial and adverse impacts of vacation rentals
are included in Section 4 below.
HOTEL/MOTEL MARKET
Hotels and motels constitute the largest segment of
the lodging market. In general, these facilities offer
rooms with a wide range of accompanying amenities
and locational options.
LOCAL SETTING
Orange County constitutes one of the largest hotel
lodging markets in the country, with a total of nearly
438 hotel and motel establishments, comprising over
53,600 guest rooms.' This works out to an average of
122 rooms per location. The largest portion of this
lodging is located in Anaheim, which has 137
I Snuth Travel Research; does not include bed & breakfast inns.
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establishments and over 19,500 guest rooms, with an
average of 142 rooms per establishment (Table 6).
TABLE 6
Summary Of Orange County Hotels And Motels, 2004
city
Hotels and
Rooms
Rooms
Motels
per Hotel
Newport Beach, CA
15
2,787
186
Anaheim, CA
137
19,518
142
Santa Ana, CA
33
3,719
113
Costa Mesa, CA
29
3,643
126
Irvine, CA
13
3,258
251
Garden Grove, CA
19
3,008
158
Buena Park, CA
26
2,649
102
Orange, CA
16
1,741
109
Dana Point, CA
10
1,716
172
Huntington Beach, CA
15
1,663
111
Fullerton, CA
11
1,280
116
Laguna Beach, CA
20
1,206
60
Other Orange County Cities
94
7,563
80
Source: ADE, data from Smith Travel Research
Excluding timeshare resorts and bed & breakfast inns,
Newport Beach has a total of 15 hotels and motels
with a total of nearly 2,800 guest rooms (Table 7)? In
addition, there are approximately 625 residential units
used as vacation rentals. In Newport Beach, the
lodging facilities tend to be larger and have more
rooms that do motels/hotels in other communities in
the county except for Irvine.
a The information in Appendix A includes a timeshare project, a bed and breakfast inn and a
residential unit with two rooms that are not included in the figures in Table 7.
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TABLE 7
Hotels and Motels in Newport Beach
Hotel Facility
Opeaniing te
Rooms
Market Segment
Balboa Inn
Jun 1929
34
Luxury/Resort
Portofino Beach Hotel
Jun 1930
15
Luxury/Resort
Newport Channel Inn
FTPr1962
30
Economy
Best Western Bay Shores Inn
Jun 1963
25
Midmarket
Hyatt Regency Newport Beach
Jun 1963
403
Luxury/Resort
Best Western Newport Beach Inn
Jun 1970
49
Mldmarket
Radisson Newport Beach
Jun 1974
335
Luxury/Resort
Marriott Newport Bch Hotel &Tennis qb
Apr 1975
532
Luxury/Resort
Little Inn By The Bay
Jun 1976
30
Economy
Sutton Place Hotel
Jun 1983
435
Luxury/Resort
Four Seasons Newport Beach
Jun1986
295
Luxury/Resort
Marriott Newport Beach Suites
Jun1988
254
Luxury/Resort
Holiday Inn Express Hotel Newport Beach
I Jun 1990
54
Mldmarket
Balboa Bay Club
lan 2003
132
Luxury/Resort
Extended Stay America
Mar 2001
164
Mldmarket
Oranoe County Almort
Source. ADE, data from Smith Travel Research, Newport Beach Conference & visitors
Bumau, and AAA.
RECENT ORANGE COUNTY HOTEYMOTEL
TRENDS
Since 1990, Newport Beach has added three new
hotels, comprising 350 guest rooms. Two of these
were in the mid -market segment while one was in the
luxury/resort class. This represents a 14 percent
increase in the room inventory during that time. By
comparison, Orange County as a whole added over
12,400 rooms during that period, an increase of 30
percent.
HOTEL/MOTEL MARKET SEGMENTS
In general, the hotel market fits into one of three
general classifications: budget/economy, midscale,
and luxury. These classifications are typically defined
based on room rates, level of service, amenities, and
other on -site offerings.
Budget/Economy Hotels
The first market segment that is represented in the
Newport Beach lodging market area is
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Budget/Economy Hotels. These hotels are generally
room -only hotels with little public space, no bars, and
few amenities. These hotels generally serve budget
tourists and highway travelers passing through a
community on their way to another destination.
Overhead costs are kept extremely low as the profit
margin for these establishments is very narrow, it is
typically a highly competitive market segment, and
requires high turn over of rooms and cost savings.
Average room rates for these hotels are generally
under $75 per night in 2004. However, Newport
Beach's low supply and high year-round lodging
demand means that hotels and motels with limited
amenities can seasonally charge $100 or more per
night? Newport Beach currently only has two
lodging facilities that serve the budget market.
Middle -Market Hotels
Newport Beach also has a limited number of middle -
market hotels. Middle -market hotels generally have
more amenities than budget hotels, such as
restaurants, spas/jacuzzis, meeting rooms, and
business services. Four facilities comprising a total of
nearly 300 guest rooms fit this description, two of
which have been added since 1990.
Luxury Hotels and Resorts
Luxury hotels and resorts comprise the vast majority
of the lodging market in Newport Beach. Newport
Beach has clearly concentrated on the high end of the
lodging market. Luxury hotels generally provide high
quality service, extensive room and shared amenities,
and are often destination places due to their unique
and sophisticated character. Within this category,
Newport Beach facilities range from small boutique
hotels such as the Portofino and the Balboa Inn to
large full service resorts such as the Four Seasons
Hotel, which also cater heavily to the business travel
market.
3 "Rack rate" information derived from price ranges listed in AAA Tourbook and hotel websites.
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OCCUPANCY AND REVENUE
As noted earlier, the supply of hotel rooms in
Newport Beach has not grown much since 1990,
while the rest of Orange County's lodging supply
grew more than twice as fast. In recent years,
Newport Beach's occupancy rates have mirrored
those of the other coastal communities and south
Orange County! Because of the relatively slow
growth in the lodging supply, this indicates that
Newport Beach's share of the overall lodging market
in the region has decreased. Despite growth in the
room supply elsewhere in the regional hotel market,
Newport Beach has consistently captured significantly
higher room rates than the rest of the County,
although the trend recently has been closing the gap.
In 1998, the occupancy rate in Newport Beach was 69
percent and grew to 75 percent by 2000 (Table 8) s
However, the annual occupancy rate by 2002 had
declined to 63 percent. This is due to a combination
of factors. First, the regional economy went through a
sustained economic downturn beginning in 2000.
This decreased both the amount of disposable income
available to leisure travelers, and the travel budgets
available to business travelers. This is important given
that the Newport Beach hotel market depends on
both overnight visitors and business travel. In
addition, the national and international tourism
markets went into sharp decline after the terrorist
attacks of September 11, 2001 and the ensuing
national travel reduction. This exacerbated the
negative trends for overnight travel that had already
begun earlier in the year.
4 The area encompassing the coastal communities and south Orange County includes all of the beach
communities between Huntington Beach and San Clemente, and all of the cities along the I-5/405
corridor south of and including Costa Mesa, Santa Ana, and Irvine.
5 Data from Smith Travel Research, the occupancy rates are calculated from a sample of reporting
hotels. In Newport Beach, this sample represents approximately 2,413 of the 2,787 total rooms in the
city. For the Coastal/South Orange County area, the sample covers 14,126 of the 18,510 hotel rooms
in the area. Some hotels did not report data for every month during the sample period between
January 1998 and August 2004.
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TABLE 8
Average Annual Occupancy Rate
Newport Beach And Coastal/South Orange County Hotels And Motels
1998 To 2003
Occupancy Rate (%)
Room Rate
Year
Newport Coastal/ South
Newport
Coastal/ South
Beach Orange County
Beach
Orange County
1998
68.5 66.4
$137.13
$89.66
1999
70.8 69.0
$141.47
$91.22
2000
74.5 72.7
$148.18
$96.47
2001
62.6 66.6
$149.14
$99.45
2002
64.2 64.0
$134.45
$98.76
2003
66.0 67.4
$127.41
$102.33
2004 YID (thru August)
70.5 72.8
$132.54
$108.06
Source: ADE, data from Smith Travel Research
Notes: Daily room rates based on a sample of lodging establishments reporting data.
The area encompassing the coastal communities and south Orange County includes
all of the beach communities between Huntington Beach and San Clemente, and all
of the cities along the I-5/405 corridor south of and including Costa Mesa and Irvine.
In 2003, the occupancy rate in Newport Beach
recovered to 66 percent and the year-to-date
occupancy rate through August 2004 was 71 percent
(although this is not comparable to the prior full
years' data due to the seasonality of the tourism
market).
Similarly, the occupancy rates for Coastal/South
Orange County increased from 66 percent to 73
percent between 1998 and 2000. Although this area
did not decline nearly as severely in 2001 as Newport
Beach did, by 2002 the Coastal/South Orange County
occupancy rate of 64 percent was identical to the rate
in Newport Beach.
Despite the decline in occupancy rates, the average
room rate consistently increased between 1998 and
2001, from $137 to $149 per night. However, during
2002 and 2003, Newport Beach's average room rates
steadily decreased to $127. While still higher than the
County average, it is showing an opposite trend. The
year-to-date average room rate shows a slight
recovery to about $133 through August 2004,
although, again, this subject to the seasonality in the
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market and is not strictly comparable to the annual
averages for prior years.
During this same period, the Coastal/South Orange
County did not show any annual decline in the
average room rate. Between 1998 and 2003, the room
rate increased from $90 to $102, with only one minor
year-to-year decrease in the average room rate. Very
clearly, Newport Beach's overnight lodging market
felt the post-9/11 travel impact more severely than
the Coastal/South Orange County area did, although
occupancy rates appear to be recovering. It is also
possible Newport Beach is experiencing more
competition recently in the South Coast market. With
the completion of the St. Regis, the Montage Resort
and the Hyatt Regency in Huntington Beach in the
past few years, older facilities in Newport Beach do
not compare as well to these newer properties.
On a seasonal basis, the occupancy in Newport Beach
generally peaks in July and August, with the lowest
average occupancy in December (Table 9). The peak
month in 2003 was July with an occupancy rate of
nearly 81 percent. The low occupancy point was the
52 percent rate in December. By comparison, the
occupancy for the Coastal/South Orange County area
in 2003 ranged from a peak of 81 percent (August) to
a low of 59 percent (December).
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TABLE 9
Average Monthly Occupancy Rate
Newport Beach And Coastal/South Orange
County Hotels And Motels, 2003 To 2004
Month
Average Monthly Occupancy
Rate (%)
Coastal/
Newport South Orange
Beach County
Jan 2003
62.7
60.7
Feb 2003
64.0
64.0
Mar 2003
63.0
63.5
Apr2003
62.8
63.4
May 2003
62.0
66.1
Jun 2003
71.1
71.0
Ju12003
80.7
79.5
Aug 2003
80.1
80.9
Sep 2003
64.9
65.3
Oct 2003
68.7
68.7
Nov 2003
59.5
65.2
Dec 2003
52.0
59.5
Source: ADE, data from Smith Travel Research
Notes: Daily room rates based on a sample of lodging
establishments reporting data.
The area encompassing the coastal communities and
south Orange County includes all of the beach
communities between Huntington Beach and San
Clemente, and all of the cities along the I-5/405
corridor south of and including Costa Mesa and
Irvine.
SITE CHARACTERISTICS
The site development requirements for a typical
economy/budget or midmarket hotel are about 2.5
acres of land needed for a 60-room facility. The
indoor space will be about 15,000 to 25,000 square
feet. Development requirements for luxury resorts
and higher end properties vary considerably
depending on the types of on -site amenities provided.
GENERAL POTENTIAL FOR NEW
HOTEL/MOTEL DEVELOPMENT
Typical rules of thumb for new hotel development
require an average annual occupancy of between 60
and 70 percent in order for a project to break even.
Judging by these standards, Newport Beach is about
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where it should be in terms of its hotel room supply.
This would also indicate at least some potential for
new lodging, provided that the market continues to
recover to pre-9/11 levels. The decline in room rates
over the last two years indicates that the support for
expanded lodging in Newport Beach might still need
more time to recover.
BED & BREAKFAST INN MARKET
The bed & breakfast (B&B) lodging market generally
serves a more upscale market than budget and
midmarket hotel options. Rather than physical
amenities such as recreation and conference facilities,
B&Bs typically offer highly personalized service and
location amenities such as a historic neighborhood,
unique architecture, or a natural setting.
LOCAL SETTING
The California Association of Bed & Breakfast Inns
(CABBI) identified a total of four lodging
establishments in Orange County that are considered
B&Bs*
&Bs 'None of these facilities are located in
Newport Beach. However, one establishment in
Newport Beach, the 11-room Doryman's Inn,
classifies itself as a bed & breakfast establishment. It
is important to note that this is not a residential -type
establishment; rather, it occupies a two-story
commercial building. While some residential
properties in Newport Beach may be suitable for
B&B operations, previous discussions of this type of
facility have snagged over the issue of parking
requirements and the inability of residential
neighborhoods in Newport Beach to absorb the
parking needs of transient lodging facilities. The
Doryman's, located in a commercial district near the
waterfront, likely does not experience this constraint
as much.
6 This total is separate from hotels and motels.
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GENERAL CHARACTERISTICS
The aspects that distinguish a B&B from a typical
hotel or motel are the high level of involvement by
the owners, and the small scale of typical B&B
operations. In California, about 68 percent of B&B
owners live on the premises, with an additional 12
percent that reside within one -mile.? Because of this
high degree of involvement by ownership, B&Bs
typically maintain a small employee staff with an
average of less than four full-time equivalent
employees.'
On average, a California B&B inn generates about
$232,300 of annual revenue. By contrast, an average
Newport Beach hotel/motel generates about $6
million of annual room revenue.' It should be noted
that B&B inns average eight guest rooms throughout
California (Table 10). In contrast, Newport Beach
hotels average 186 guest rooms. Clearly, a B&B
establishment represents a smaller scale operation
than even a budget/economy motel, and one that
generates higher revenue per room on average.
OCCUPANCY AND REVENUE
The annual occupancy rate of California B&B
establishments averages about 44 percent, which is
well below the typical break even benchmark for
hotel and motel developments. However, the average
daily room rate for a B&B is about $164. In Orange
County, the range of posted room rates averages
between $120 and $450, while the Doryman's Inn
advertises room rates that range between $150 and
$250 for the fall season (and higher in the summer)."
This means that the room rates in Orange County and
7 Professional Association of Innkeepers International (PAII), Indaspy Stu y of0peratiau , Marketing, aad
Fivanas— Ca#fonda Repaa; 2002
8 California average is 6.3 employees working 145-total hours per week.
9 Calculated from PAII and Smith Travel Research occupancy and room rate data.
to The room rate range reflects a weighted average of the low and high room rate range for all of the
B&B facilities in Orange County. It does not reflect discount programs or the seasonality of the rate
ranges.
Applied Development Economics 78
Newport Beach are well within the normal room rates
across the state.
TABLE 10
California Bed & Breakfast Inns
Summary Of Statistical Data
OCCUPANCYTREND
Occupancy (California) 44%
Room Rate (Califomia) 164
SITE CHARACTERISTICS
Average Number of Rooms Per Facility
8
(California)
Average B8d3 Lot Size (Acres)
6.5
Average B&B Floor Area (Sq,Ft.)
7,200
Inns Occupying Less than One Acre
58%
Inns Originally Built as B&B Facilities
18%
OWNERSHIP INVOLVEMENT
Inn Owners Living On Premises
68%
Inn Owners Living Within One Mile
12%
Average Weekly Hours Worked by
78
Owners
Source: ADE, data from Professional Association of
Innkeepers International, Industry Study- 2002
California Report
SITE CHARACTERISTICS
In California, an average B&B is 6.5 acres with 7,200
square feet of total building space to accommodate
eight guest rooms, common areas, and owner's
residences." However, it should be noted that 58
percent of B&Bs sit on parcels of less than one acre,
and only 18 percent of the B&B buildings were
originally built as B&Bs. This illustrates the wide
range of characteristics for B8cBs given that many of
them are located on large rural estates, and most of
them represent reuse of an existing building not
originally constructed for guest lodging.
GENERAL POTENTIAL FOR NEW BED &
BREAKFAST INNS
The B&B option is an especially attractive and
appropriate option for Newport Beach because it is
ti PAII.
Applied Development Economics 19
currently a significantly underrepresented lodging
segment. Newport Beach has focused its lodging
market on large-scale resort developments, yet the
B&B market represents a comparable high end
lodging use that adds another option for upscale
overnight visitors.
In addition, because B&B inns typically do not
require large scale development, they are more
compatible that other types of lodging with sensitive
coastal areas such as Balboa Village, Balboa Island, or
Corona del Mar. Depending on the layout, existing
residences can be potentially converted or renovated
into B&B lodging. However, a more potent
opportunity may be in small scale commercial -type
buildings such as in Balboa Village, where the facility
can be integrated with ground floor retail shops and
other forms of mixed use buildings and
developments. This could provide a very attractive
visitor experience while maintaining a small scale, low
profile envelope for the lodging facilities.
TRAVELPARKS
Travel parks are different from other types of lodging
in that they generally cater to the recreational vehicle
(IM traveler and campers, and as such, they do not
typically offer rooms and related amenities. However,
they often offer a wide range of outdoor recreation
opportunities, and some travel parks provide meeting
facilities, business services, and retail stores on the
premises.
GENERAL CHARACTERISTICS
Travel parks differ from other forms of lodging in
that they often provide long-term occupancies. These
long-term occupancies range from seasonal travelers
who follow the warm weather during winter months,
to local residents who use travel parks in the same
way as more permanent mobile home parks." Some
12It should be noted that the City does not receive TOT tax on stays that are longer than 30 days.
Applied Development Economics 20
travel parks serve as destinations in their own right,
with outdoor recreation and natural site amenities,
while others are mainly stopovers for long-distance
travelers.
LOCAL SETTING
Newport Beach has one travel park, the Newport
Dunes Waterfront Resort" The park has 394 spaces
with full utility hookups. The park is located on a 100-
acre site with a private beach fronting the Back Bay.
The site also has 12 cottages and has a full
complement of recreational facilities, as well as
meeting rooms, on -site concessions, and a restaurant.
OCCUPANCY AND REVENUE
Throughout California, the average occupancy rate
for travel parks is 62 percent, with an average daily
revenue of $32 (Table 11)."
TABLE 11
Travel Park Monthly And
Annual Occupancy Trends
California, 2003
Occupancy
January 57.2%
February 58.4%
Mardi 57.2%
April 56.2%
May 58.3%
June 62.3%
July 73.7%
August 74.4%
September 60.2%
October 62.5%
November 59.9%
December 56.5%
2003 Average 61.5%
Average Daily Rate $32
Source. ADB, data from California
Travel Parks Association
13 Newport Beach Conference and Visitors Bureau.
14 California Travel Parks Association (CTPA).
Applied Development Economics 27
The Newport Dunes, however, charges rates that are
more than double this level, even during the winter
season. This is somewhat lower than the average daily
room revenue for hotels and motels, and the posted
rack rates for B&B establishments.
GENERAL POTENTIAL FOR TRAVEL PARKS
Aside from providing utility hookups, the level of
investment needed to maintain and operate a travel
park is generally lower than with other forms of
lodging. For example, a travel park might not require
additional construction of permanent buildings.
However, Newport Dunes serves the market well
because it fronts along a public beach and offers a
wide array of activities beyond just utility hookups
and space for RVs. While; there may be some
expansion potential for this facility, the amount of
land required and the generally lower overnight rates
for travel parks may make it difficult for such a
development to be replicated elsewhere in the
community.
Applied Development Economics 22
4. TOURISM AND LODGING IMPACTS
This section summarizes key economic and traffic
issues associated with tourism and lodging.
FISCAL IMPACT
From an economic standpoint, visitors bring
substantial income to Newport Beach, as described
above. Retail and lodging spending alone generated
about $4.8 million in sales taxes and $8.3 million in
Transient Occupancy Tax (TOT) for the City budget
in 2001, about 13 percent of total City revenues.
Visitors generate other revenues as well, including
indirect business license and property taxes, revenues
from use of public property, and others.
The Fiscal Impact Report prepared for the General
Plan update analyzed the comprehensive revenues
and cost impact on local government by visitors to
Newport Beach (ADE, Inc. Jan.2004). Overall visitors
generate about $21.6 million per year in revenues
against $16.7 million in service costs. The service
costs include $4.9 million in police services, $2.7
million for beach lifeguards included in the fire
department budget, as well as other emergency
medical calls made by the fire department. The net
positive fiscal impact of visitor business activity in
Newport Beach, then, is about $4.9 million per year,
not counting the net fiscal benefit of the marine and
boating industry. These are revenues that contribute
toward City services provided to residents and
businesses in the community.
Applied Development Economics 23
TRAFFIC IMPACTS
The effect of tourism on traffic conditions in the City
of Newport Beach is evident in the seasonal variation
of traffic. The peak traffic on key roadways that
provide access to the primary visitor destination (the
beaches) occurs during the peak season for tourism
cited in subsequent sections of this paper.
Peak season daily traffic volumes were collected for
select locations (primarily in coastal areas) within the
City of Newport Beach. Daily traffic volume counts
were collected over a one week period in August of
2003 for each selected roadway segment. This time
period historically reflects the peak of the (summer)
peak. These volumes are therefore higher than the
volumes experienced during the earlier or later parts
of the summer season. For each roadway segment
selected for summertime counts, the summertime
typical weekday average (Tuesday through Thursday)
volume was compared to the shoulder season count
volume at the same location. Table 12 contains the
results of this analysis.
The only decrease in peak season volume from
shoulder season conditions occurs on MacArthur
Boulevard north of San Joaquin Hills Road. Shoulder
season data for this location was collected in early
November of 2001. All other segments increase for
summer conditions by at least 1.3% and as much as
58.02%. The only locations with volume increases of
more than 25 percent are on Newport Boulevard
south of Coast Highway and Balboa Boulevard east
of 20th Street on the Peninsula. The increases at these
two locations both exceed 50%.
Review of the data clearly indicates that Newport
Boulevard is the most heavily impacted access route
to the beach for summertime traffic. Jamboree Road
and MacArthur Boulevard appear to be the least
affected routes, with increases in traffic of between 5
and 10 percent. Newport Coast Drive experiences a
higher percentage increase in summertime traffic, but
Applied Development Economics 24
TABLE 12
Summer Time Average ADT Comparison
Summertime
Road Name
Road Segment
Traffic Change
SuperlorAv.
n/o Coast Hw.
21.49%
Newport BI.
s/o Coast Hw.
54.34%
Jamboree Rd.
n/o Coast Hw.
1.30%
MacArthur St.
n/o San Joaquin Hllls Rd.
-24.17%
MacArthur St.
n/o Coast Hw.
6.63%
NewportCoast Dr.
n/o Coast Hw.
22.70%
Balboa St.
s/o Coast Hw.
9.80%
Coast Hw.
a/c Dover Dr.
8.020/0
Coast Hw.
e/o Newport Coast Dr
14.61%
Coast Hw.
e/o Santa Ana River
3.60%
Balboa St.
e/o 20th St.
58.02%
TOTAL
10,500/0
n/o = north of, etc.
the magnitude of the increase (approximately 3,400
vehicles per day) is very similar to the increase on
MacArthur Boulevard north of Coast Highway. The
traffic increases along Coast Highway itself are also
less than the increases on routes leading to the beach,
suggesting that people are primarily oriented towards
traveling to the beach/coast, rather than along it.
For one special case (Newport Boulevard in front of
City Hall), daily traffic volume data was collected
every day for three weeks. Daily volumes range from
approximately 35,000 to 50,000 vehicles per day with
definite peaking trends on weekend days. Table 13
provides analysis of daily traffic volume patterns over
the three weeks collected on Newport Boulevard in
front of City Hall.
The average summer mid -week weekday volume is
approximately 40,600 vehicles perday (vpd). The
Monday summer time volume is very near this same
volume, but traffic is more evenly spread throughout
the day. Saturday has the highest average volume
with 48,144 vpd. The average Friday summer time
Applied Development Economics 25
volume (45,732 vpd) is approximately 2,500 vpd
greater than the average Sunday summer time volume
(43,292 vpd).
TABLE 13
Peak Summertime Daily'Volume Variation
Newport Boulevard at City Hall
DAY AVERAGE
Sunday
43,292
Monday
40,779
Tuesday
40,083
Wednesday
39,964
Thursday
41,775
Friday
45,732
Saturday
48,144
Average of Monday and Friday
43,256
Average Typical Weekday (Tu•Th)
40,461
Average Weekend Day
45,718
Typical Shoulder Season Weekday
36,000
Table 13 also presents the typical shoulder season
weekday volume (36,000 vpd). The volumes on
summer time weekdays (40,600 to 43, 250 vpd) reflect
approximately a 10 to 201/6 increase over typical
shoulder season weekday traffic volumes (36,000
vehicles per day).
For typical shoulder season weekday traffic, it is
projected that fourteen study area intersection analysis
locations will experience Level of Service `E' or
worse the for Currently Adopted General Plan
buildout conditions. At least seven of the fourteen
locations can be considered coastal locations. With
the summer time weekday coastal traffic increase over
shoulder season typical weekday conditions, as
described, an increase in traffic congestion can be
expected. Tourism traffic tends to build from mid-
morning to evening and compounds congestion
primarily in the PM peak period. Of the seven coastal
Applied Development Economics 26
locations, four intersections are projected to -have
Level of Service "E" or worse for the shoulder
season, and can be expected to experience increased
congestion.
Another measure of the potential traffic related to
encouraging tourism is the amount of traffic
generated by tourist serving uses, particularly hotels.
The trip generation rates for. hotels are based on the
type of hotel. Table 14 summarizes the trip rates for
the various types of hotels and other uses for which
data is available.
As shown on Table 14, resort hotels tend to generate
less traffic than any other type of hotel.
TABLE 14
Trip Rates
AM PM
PEAK PEAK
HOTELTYPE UNITS HOUR HOUR DAILY
Hotel (General)
Rooms
0.56
0.58
8.17
All Suites Hotel
Occupied Rooms
0.48
0.55
6.24
Business Hotel
Occupied Rooms
0.68
0.62
7.27
Motel
Occupied Rooms
0.64
0.58
9.11
Resort Hotel
Occupied Rooms
0.37
0.49
N/A
Single Family Residential
Dwelling Units
0.75
1.01
9.57
Commercial
Thousand Square Feet
1.03
3.75
42.94
Office (100 tsf rate)
Thousand Square Feet
1.88. _
_1.90
13.34
Source: Urban Crossroads
ISSUES TO CONSIDER RELATIVE TO
SEASONAL RENTALS
Vacation rentals generate substantial TOT revenues
as well as property taxes and other revenues. In 2001,
total City revenues from these units were estimated at
about $1.7 million (ADE 2004). There are also costs
for City services such as police and fire protection,
among others. Higher concentrations of seasonal
rentals generally occur in areas with lower owner
Applied Development Economics 27
occupancy rates. While these rentals do provide an
additional alternative for visitors to consider when
visiting Newport Beach during the summer months,
there are some implications the presence of seasonal
rentals creates not common in other residential areas.
One is the number of people occupying seasonal
rentals can be quite high, resulting in parking
problems. There can also be increased noise
complaints coming from gatherings and parties,
resulting in higher police and code enforcement
actions in the area. There can also be issues related to
property maintenance. These factors can result in a
neighborhood being less desirable for owner
occupancy, which is an established City goal in the
beach -oriented residential areas.
Applied Development Economics 28
5. CONCLUSION: FURTHER QUESTIONS
This paper is intended to provide background
information to facilitate further discussion of
appropriate policies related to tourism and hotel
development in Newport Beach. The City may be
expected to see continued market interest in new
lodging developments as well as other visitor -serving
amenities and business projects. Clearly, this sector
provides fiscal and other economic benefits to the
City, while also creating traffic and demands for City
services.
The following questions can serve as a discussion
guide for the GPAC in their consideration of this
issue.
1. With the information presented here, would
GPAC answer the survey questions differently
than did those surveyed in 2002?
2. What is meant in the Guiding Principles by
"careful" expansion of visitor -serving
businesses and facilities?
3. Where, if anywhere, would new hotel
development be acceptable? What kind and at
what scale?
4. Should the City encourage hotel development
in any area?
5. Is there a concern with vacation rentals in
residential neighborhoods?
6. Should the City encourage more retail stores
and restaurants to attract visitors?
7. Should the City provide more public
amenities for visitors (e.g. restrooms, boating
facilities)?
Applied Development Economics 29
FISCAL IMPACT ANALYSIS
AND MODEL
NEWPORT BEACH
GENERAL PLAN UPDATE
January 2004
Prepared for the
City of Newport Beach
Prepared by
Applied Development Economics, Inc.
2029 University Avenue, Berkeley, CA 94704 (510) 548-5912
1029 J Street, Suite 310, Sacramento. CA 95814
CONTENTS
INTRODUCTION....................................................................................................................................I
APPROACHTO THE ANALYSIS.......................................................................................................2
ExistingLand Uses.......................................................................................................................3
BudgetOverview..........................................................................................................................4
BudgetAdjustments.......................................................................................................5
Revenueand Cost Calculations by Land Use...........................................................................7
MajorRevenues...............................................................................................................7
OtherRevenues.............................................................................................................12
MajorCost Categories..................................................................................................13
CapitalImprovement Program...................................................................................18
PerCapita Costs and Revenues...................................................................................19
ANALYSIS OF FISCAL IMPACTS BY LAND USE TYPE.........................................................21
CitywideSummary ......................................................................................................................21
Revenues..................................................................................................... 21
Costs........................................................................................................... 22
Hospitality and Visitor Sector...................................................................................................26
MarineIndustry...........................................................................................................................27
PRELIMINARY ANALYSIS OF NEWPORT COAST FISCAL IMPACTS 33
Introduction............................................................................................................ 33
ProjectDescription..................................................................................................34
Fire Protection Services ................................
Police Services .............................
Summary of Fiscal Impact .......................
GENERAL PLAN BULLDOUT....................................
..................................... 35
................................................ 35
.......................... 36
.......................................... 41
APPENDIX
Appendix A: Land Use Definitions by SIC and NAICS......................................................45
Appendix B: Distribution of Use of Property Revenues By Land Use .............................47
LIST OF TABLES
1. Land Use Descriptions..........................................................................................................................4
2.2002-03 Budget Revenues Included in Fiscal Analysis.....................................................................6
3.2002-03 Budget Expenditures Included in Fiscal Analysis..............................................................7
4. Assessed Value and Property Tax Estimates by Land Use..............................................................8
5. Sales Tax Revenues by Land Use.........................................................................................................9
6. Transient Occupancy Tax by Lodging Type....................................................................................11
7. Business License Revenue by Land Use...........................................................................................12
8. Police Department Budget 2002-2003..............................................................................................14
9. Police Department Cost Analysis......................................................................................................15
10. Analysis of Summer Peak Demand for Police Services...............................................................16
11.2002-03 CIP Expenditures Included in Fiscal Analysis...............................................................19
12. Unit Costs and Revenues..................................................................................................................20
13. Summary of Fiscal Analysis..............................................................................................................24
14. Retail Employment and Fiscal Impacts...........................................................................26
15. Fiscal Impact of Visitors to Newport Beach.................................................................................28
16. Newport Coast Development: Year 2000 and 2025.........................................................23
17. Newport Coast Impact Year 2000.................................................................................. 37
18. Newport Coast Impact at Full Buildout.......................................................................... 39
19 Growth Rates, 2002 — Buildout....................................................................................... 41
20 Fiscal Impact of Existing General Plan Buildout..............................................................43
LIST OF FIGURES
1. Sales Tax Revenue by Land Use Type............................................................................... 22
2. Gross Revenues by Land Use...........................................................................................22
3. Economic and Fiscal Relationships in Newport Beach......................................................27
INTRODUCTION
This report discusses how various land uses and business types contribute to the
revenues and costs for city government. The focus of this discussion is on the
existing land use mix in Newport Beach, although it also includes an analysis of the
future buildout of the existing General Plan. As the General Plan update process
moves forward, a similar analysis will be conducted to determine the potential fiscal
impact of future land use altematives.
It is important to recognize that the point of this analysis is to understand how the
mix of land uses in Newport Beach contributes to the revenues needed for municipal
services for both residents as well as businesses. For purposes of the General Plan,
the goal of the fiscal analysis is to identify the best mix of land uses to balance the
revenues generated with the cost for municipal services in the City. Therefore, the
fiscal "performance" of individual land uses should be viewed from an overall
citywide perspective.
The report is written to provide a detailed explanation of the methodology,
assumptions, and data sources used to estimate fiscal impacts for each land use. This
analysis is intended to serve as a planning tool for decision makers in the General
Plan update process. Based on this analysis, ADE will develop an interactive
software program for the City to use in estimating fiscal impacts, not only for
General Plan land uses, but also for individual development projects that may be
proposed in the future.
APPLIED DEVELOPMENT ECONOMICS
APPROACH TO THE ANALYSIS
City government uses a variety of revenue sources to fund the operation of local
services and the construction of public facilities. Some of these revenue sources are
more affected by the land use mix in the City than are others. For example, property
taxes and sales taxes are directly related to the type of property and the business mix
in the City. On the other hand, the City's federal entitlement of Community
Development Block Grant funds is affected by the population size of the City but is
otherwise not a function of the land use mix in the City.
Also, because Newport Beach is a Charter City (as opposed to a "General Law" city)
the Newport Beach City Council has the ability to set certain tax rates and fees, such
as the business license tax rate or building permit fees. However, the Council has
only limited authority to set other tax rates, such as the property tax or the sales tax,
or to apply additional taxes or fees, without the consent of a simple majority or a
supermajority of electors responding in an election. In considering the effect of
existing and future land uses on the City budget, it is important to sort out the types
of revenue and costs that are most pertinent.
In general, it is most important to isolate the effect of development on revenues
which the City has less ability to raise, such as general taxes, than on direct charges
for services which can be increased to meet rising costs as necessary. Consequently,
the analysis is focused more on services funded by general tax revenues, such as the
property tax and the sales tax among others, than on services funded by direct
charges such as the water and sewer enterprise funds, building permit and plan check
fees, or other fees charged directly to customers at City Hall. At this point, our
assumption is that fees charged for specific services are adequate to cover the costs
of those services. t
At this stage in the process, the fiscal analysis addresses the effect of land use,
including related population and business activity, on municipal operating costs and
revenues. In the present report, such costs are primarily estimated on an average
basis with only a brief discussion of the marginal costs to serve future development.
As we move forward with a projection of the effects of potential future land uses, it
1 A more in-depth study of City operations would be necessary to verify this assumption. However, if
it is not the case, it is within the authority of the City Council to adjust the fee schedules.
APPLIED DEVELOPMENT ECONOMICS PAGE 2
will be important to consider the existing capacity in the city's service system and
determine whether or not the incremental, or marginal, cost of serving new
development is the same as the average cost of serving existing development. That
analysis will likely depend to some degree on the location of the proposed new
development in addition to the type of land use.
This chapter begins with an overview of land uses in Newport Beach, followed by a
discussion of the City budget to help clarify some of the distinctions between costs
and revenues raised above.
EXISTING LAND USES
Newport Beach's physical setting encompasses about 25 square miles of land, of
which approximately three-quarters is developed into a mix of residential (70 percent
of developed land) and non-residential (30 percent of developed land) uses. The
remaining one quarter of undeveloped land, including the City s coastal beaches, is
primarily used for recreation and open space'.
Currently, the City is estimated to have about 36,600 dwelling units. Approximately
40 percent of housing units are single-family units and 60 percent are multi -family
units. The average assessed valuation for existing housing is $625,000 for single-
family units ($814,000 in Newport Coast) and $431,000 for multi -family units. In
2001, the median price of "for sale" housing in Newport Beach was $718,400.3
While residential development is treated as a single land -use category for purposes of
this fiscal analysis, non-residential uses were split into seven distinct categories:
office, retail, light industrial, lodging, marine -related, service commercial, and
institutional. Newport Beach businesses were segmented into one of these categories
based on their standard industrial classification (SIC) code through an analysis of the
City's business license records. Appendix A shows the detailed SIC code definitions
for each category, and a general description of the business types included in each
category is provided in Table 1 below.
Y Nmpxt&4Ar. Current Conikkm, FuamCboi=, November 2001, p. 26.
Ibid. p. 28.
APPLIED DEVELOPMENT ECONOMICS PAGE 3
TABLE 1
Land Use Descriptions
Land Use Category
Description
All retail stores (including auto dealerships) and eating and drinking places,
Retail
except those that are included in one of the categories below
Business and professional services, financial institutions, health care services,
Office
etc.
Construction contractors, wholesale distributors, manufacturing,
Industrial
transportation, public utilities, etc.
Primarily includes personal services (e.g. beauty salons, dry cleaners), repair
Service Commercial
services, entertainment e.. movie theaters , and recreation e.. health clubs
Lodging
Hotels, motels, B&Bs, vacation rentals, etc.
Institutional
Schools, churches, social services, membership organizations, etc.
Several detailed business types that would otherwise fall within one of the
categories above, but which have a direct relationship with activity along the
Marine
Newport Beach coast. Examples include yacht building and maintenance,
boat dealers and repair services, marinas, equipment manufacturers for
marine vessels, sport fishing outfitters, etc.
The most significant component of this category is the beaches, which attract
Public
most of the visitors to Newport Beach.
BUDGET OVERVIEW
The total budgeted expenditures according to the 2002-2003 budget for the City of
Newport Beach are $158.9 million, of which $34.5 million are for Capital
Improvement Projects. Estimated General Fund expenditures for the current fiscal
year are $94.5 million, while revenues are estimated at $95.5 million (Table 2). The
top three revenue categories — property tax ($36.8 million), sales tax ($19.8 million),
and transient occupancy tax ($8.3 million) — account for nearly seventy percent of
total General Fund revenues. On the expenditure side, Police ($30.6 million), Fire
($20.1 million), and Public Works ($20.3 million) account for three-quarters of all
service costs (Table 3). The General Fund also includes about $4 million of
appropriations for projects within the City's Capital Improvement Program (CIP),
excluding rebudgets.4
In addition to the General Fund, three other major funds are of importance for the
fiscal analysis. The first is the Tidelands Fund (also known as the Fide and
Submerged Lands Fund'), which collects revenue from the use of public property
4 Rebudgeted funds for CIP projects appear in Table 3 as adjustments to expenditures, since the fiscal
analysis is intended to match revenues from the current fiscal year with current year expenditures.
APPLIED DEVELOPMENT ECONOMICS PAGE 4
that the State of California designates as "tidelands" (i.e. land once underwater or
currently below the mean high tide line). The Tidelands Fund has total 2002-03
revenues of about $6.5 million and expenditures of $3 million, including CIp projects
but excluding transfers to the General Fund. The Tidelands Fund provides about
$3.4 million to the General Fund in 2003-03 to pay for Tidelands -qualified city
services in the coastal area.
The second fund is the Gas Tax, which is funded from the State based on primarily
population in each city. According to State law, these funds must be accounted for
separately and used exclusively for repair, construction, and maintenance of the
street and highway system. Newport Beach has a total of 2002-03 Gas Tax revenues
of approximately $1.5 million.
Finally, the Measure M Fund is funded in part from the county sales tax for
transportation programs and in part from competitive grants from the countywide
pool of Measure M funds. Measure M revenues for 2002-03 are approximately $2.2
million. Of these, however, only the annual "turn back" revenues are included in the
fiscal analysis as net revenues.
Both the Gas Tax and Measure M funds are used exclusively for projects within the
City's CIp.
Budget Adjustments
Some adjustments were made to the original budget figures, as shown in tables 2 and
3, in order to account for budget items that are not annually recurring. On the
revenue side, these include intergovernmental grants (e.g. `competitive' Measure M
funds), fees for zoning and building activities, and construction -related permits. On
the cost side, the value of development —related fees and permits are deducted from
the budgets of the planning and building departments? These adjustments are made
for development -related costs and revenues because they typically occur at the
building, planning and construction phase and do not represent an ongoing cost of
government services once the buildings are completed.
5 Adjustment include the following budget accounts: Intergovernmental: 4824.4827,4858, 4862, 4893,
4896-4898; Charges for service: 5000-5004, 5007, 5023; Licenses and permits: 4610, 4612, 4614, 4616,
4618, 4622.
APPLIED DEVELOPMENT ECONOMICS PAGE 5
The total estimated General Fund Budget after adjustments (i.e. net revenue) is
approximately $92.3 million for 2002-03, with another $9.2 million of revenue in the
Tidelands, Gas Tax, and Measure M Funds, for total revenues of $101.5 million.
Adjusted General Fund Expenditures are $96.2 million, plus $5.3 million in
expenditures within the other three funds included in the analysis. The overall budget
figure upon which this analysis is based is approximately $101 million.
TABLE 2
2002.03 Budget Revenues Included In Fiscal Analysis
REVENUE ADJUSTMENTS
NET BASIS
General Fund
Property Tax
$36,880,101
$36,880,101
Sales Tax
19,841,351
19,8411,351
Transient Occupancy Tax
8,298,000 - s
8 298 060
Franchlses
2,390,000
2,390,000;
Business Licenses
2,365,000
2,365,000
Motor Vehicle -in -Lieu 1,700,000 1,700,000
Charges for Service
9,515,855 1,048,300 _
8,467,5551
Fines, Forfeitures, Penalties _
3,125,250
3,125,250
LicenseslPermits
1,819,860
1,446,200
373,660
Use of,Property
5,284,288s�"
—
�� 5,284,288
I Revenue_
175,000
555,4351
_Other
Interest Income
_73_0,435
1,500,000
1,500,000
General Fund Subtotal
95,440,267
3,095,674
92,344,593
-
— -�--
--i
Charges for Service
33,500
33,500
Use of Money and Property
5,359,492
5,359,492
State Gas Tax Fund—
1,457,000
1>457,000
jMeasure M,Fund
Subtotal Other Funds
10,209,072
1,110,580 8,047,492
Source: ADE, Inc., based on City of Newport Beach, Fisnd3rar2002.03 Budget Detail.
APPLIED DEVELOPMENT ECONOMICS PAGE 6
TABLE 3
2002.03 Budget Expenditures Included In Fiscal Analysis
NET
General Government $9,368,986 $9,368,986
Police 30,132,466 30,132,466
.......... _..
_Public Works a
20,389z515
____ _
20,389;515
Community Development
4,747,238
2,494,500
2,252,738
Community Services
8,293,665
8,293,665
CIP • Streets
2,366,000
1,061,000
1,309,i)00;
Other ClP Pro Ct
4,766,265
1,873,115
2 893,150;
_
General Fund Subtotal
101,596,546
8,127,868
96,167,931
TIDELANDS FUND
1,466,442
TAX FUND
Subtotal Other Funds 7,436,793 2,122,699
Source: ADE, Inc., based on City of Newport Beach, Fixd)wr2002.03 Bt*Derail.
[a] Includes public Works, General Services andUnlities.
REVENUE AND COST CALCULATIONS BY LAND USE
Major Revenues
The major revenue categories of property tax, sales tax, transient occupancy tax
(TOT) and business license tax were allocated among the various land uses based on
actual 2001 data provided by the City Revenue Division. Each of these revenues and
how they were distributed across land uses is described below.
Property Tax
In general, the City receives about 17 cents of every property tax dollar paid by
property owners within the city's boundaries. The distribution of property tax
revenue across the various land uses was based on an analysis of assessed valuation
(AV) data obtained from the Orange County Assessor. This data set includes over
29,000 records with detailed parcel information such as owner name and address, site
address, valuation, and a set of land use codes used by the Orange County Assessor.
The analysis involved sorting the data by land use and, in some cases, site address in
order to calculate the total assessed valuation by land use and then the local share of
APPLIED DEVELOPMENT ECONOMICS PAGE 7
the property tax revenue. 6 The results of this analysis are summarized in the table
below:
TABLE 4
Assessed Valuation And Property Tax Estimates By Land Use
Assessed
Property Tax
1% of
Land Use Category
g ry
Valuation
Estimate
Total
(millions)
(millions)
Residential
15,740
29.31
79.5%
Office
1,697
3.16
8.6%
Service Commercial
761'-
1.42
3.8go
{ Light Industrial
690_
Marine Industry
282
0.52
1.4%
Lodging
236
0.44
n
1.2%
_
Institutional_
206
038
1:0%
Retail
192
0.36
1.0% 1
Total
19,803
36.88
_ 100%
Source: ADE, Inc, based on data provided by the City of Newport Beach Revenue Division.
Significantly, residential properties — which account for about 70 percent of
developed )and in Newport Beach - generate nearly eighty percent of the property
tax for the City. At under 10 percent of property tax revenue, office development is a
distant second.
Sales Tax
The city receives one cent of every dollar spent within the city's boundaries on
taxable products. Taxable transactions occur not only at retail stores, but at a wide
variety of commercial locations throughout the city. For example, many taxable
business -to -business transactions, in which products are sold to end users rather than
to entities with resale permits, occur at office and light industrial locations. Examples
of non -retail businesses that generate sales tax revenue in Newport Beach include
parts manufacturers for marine vessels, food processing equipment distributors,
landscaping product wholesalers, medical equipment suppliers, and software
developers.
In addition, many service commercial businesses generate sales tax by carrying
products related to their service, such as beauty salons that sell shampoos and
cosmetics. This category also includes auto rental firms. Large hotels also have
6 For properties within Newport Beach, the City receives approximately 17 percent of the one percent
property tax levy.
APPLIED DEVELOPMENT ECONOMICS PAGE 8
ancillary retail shops and food services that generate sales tax revenue. The marine
category includes a number of sales tax generating businesses that are both retail and
industrial in nature, including sales of new and used boats, marine fuels, and
manufacturing and sales of boat parts. Finally, sales tax revenue that is attributed to
the residential category is the result of taxable sales that occur at home -based
businesses in Newport Beach!
The sales tax revenue that accrues to the city was distributed across the various land
uses through an analysis of 2001 sales tax data provided by the Revenue Division!
TABLE 5
Sales Tax Revenue By Land Use
Estimated Sales
% of
Land Use Category
Tax Revenue
Total
(1,000s)
Retail
13,922,674
70.2%
Office
1,938,437
9.8%
_
Commerclai
_ z: 1,438,043
7.2%
1Service
Marine Industry
Light Industrial
892,789
4.5%
Lodging
3.0%
t Residential ��
_594,391
_� 76,329—'0.4°/0
9lnstitutional
0
0.0%
Total
19,841,351
100%
Source: ADE, Inc., based on data provided by the City of Newport Beach Revenue Division.
Table 5 displays the results of the analysis of this important revenue source. Over 70
percent of Newport Beach's sales tax revenue is derived from retail establishments,
and nearly 10 percent are from taxable transactions at office -based businesses. The
remaining 20 percent is divided into the other categories as shown.
7 Sales taxes are distributed to cities based on the location of the point of sale, not the residency of the
buyer. Thus, Newport Beach gets a portion of all the sales generated by Fashion Island and other
retail businesses in the City, whether or not the customers are Newport Beach residents. Conversely,
if residents shop outside the City, Newport Beach receives none of that sales tax. For this reason,
residential uses generate sales tax revenue indirectly, through resident spending at Newport Beach
businesses, as well as directly, through taxable sales at home -based businesses.
9 Annual audit report of Newport Beach sales tax prepared by NIBIA. All Newport Beach businesses
that generate sales tax are assigned a State Board of Equalization (BOE) business code, which was the
primary basis for the sales tax analysis. The data was cross-referenced with the other primary data
sourced used in the fiscal analysis for consistency.
APPLIED DEVELOPMENT ECONOMICS PAGE 9
It is important to note that the figures in Table 5 reflect the direct impact of each
type of business, and not the indirect impact of their employees. For example, in the
office category, the figures include only the actual sales taxes generated by office -
based businesses. In addition, office employees spend money at retail establishments,
which could be considered an indirect benefit of office development in Newport
Beach. However, the analysis treats this revenue as the direct impact of the retail
businesses, not the office businesses.
Transient Occupancy Tax (TOT)
The TOT, also known as the Hotel Bed Tax, accrues to the City at the rate of 9
percent of room charges (with an additional 1 percent going to the Newport Beach
Conference and Visitors Bureau). The City separates TOT into two land use
categories: lodging and residential. Newport Beach has several major hotels such as
the Four Seasons and the Hyatt Newporter, as well as numerous smaller inns and
motels. Altogether, these lodging facilities provide a total of about 2,600 guestrooms.
In addition, there are approximately 625 seasonal vacation rental properties that also
generate TOT if they are rented for less than a month at a time. s
A detailed analysis of the City's 2001 TOT revenue is shown in Table 6 below. For
the current 2002-03 budget year, the City's is expecting this revenue source to decline
somewhat and has projected revenues of about $7.45 million in TOT from hotels
and motels/inns, plus $840,000 from vacation rentals.
Business Licenses
Total annual business license revenue is approximately $2.4 million according to the
2002-03 budget. Nearly half the business license revenues are derived from
residential -based businesses and out of town businesses.10 Business license revenue
from home -based businesses is about $358,000 (15 percent of the total), while out-
of-town businesses generate about $685,000 (29 percent). Revenues from out-of-
town businesses and in -town residential businesses are of particular benefit to the
9 Jmportantly, "timeshare" units, many of which already exist or are planned for development in the
Newport Coast area, are not subject to TOT unless the timeshare operator rents the unit(s) on a
nightly basis.
tU "Out of town" businesses are those that provide services in Newport Beach but have no permanent
physical or mailing address in the City
APPLIED DEVELOPMENT ECONOMICS PAGE 10
City because such businesses do not carry the same service costs that are associated
with commercial locations within the City.
The total amount of business license tax revenue from all commercial land uses
within Newport Beach is approximately $1.7 million. These revenues were
distributed among the various land uses based on SIC code. The full results of the
analysis of the City's business license tax revenues are displayed in Table 7 below.
TABLE 6
2001 Transient Occupancy Tax By Lodging Type
Name Address Numberof 2001TOT
Rooms Amount
Newport Classic Inn
2300 Coast Hwy W
50
Newport Beach Inn/Best Western 6208 Coast Hwy W
46 _
�..-.
Newport Channel Inn
6030'W Coast Hwy _a_______
_ 30
-_- - _ _--J
Bay Shores Inn
1800 Balboa Blvd
24
Little Inn by the Bay
2627 Newport Blvd.
18
TF
PortZn Beac Hotel
_
2306 Ocean Fmnt Way
r
15
[Dotyman's Oceanfront Inn
2102 Ocean Front West --
,10.._„-
Marriott Su tes
500 Bayview Circle
250
Balboa Bay Club
1221 W Coast Hwy av�
_m 123
_ Major Hotels
Marriott Hotel & Tennis
900 Newport Center Dr.
570
The Sutton Place
4500 Macarthur Blvd.
435
1H- -- • -- -�---
iHyatiNewporter
�-11 __._ ._ -- - -
1107JamboreeR�. _
- 5-----
405
RadissonHotel
4545MacatthnrBlyd.._
_ 335_ —w_w____
Four Seasons
690 Newport Center
295
Subtotal
2,040
$ 6,588,259
Vacation Rentals
625 Units
$958,771
Grand Total
2,640 rooms;
$9,333,450
625 vac. rentals
Source: ADE, Inc., based on data provided bythe City of Newport Beach Revenue Division.
APPLIED DEVELOPMENT ECONOMICS
PAGE 11
TABLE 7
Business License Revenue By Land Use
No. of
Business
Land Use Category
Active
License Tax
% of Total
Businesses
Revenue
Office
4,055
742,200
30.9%
Retail
1,145
240,299
10.0%
FService Commercial
953
210,064
8.7%�
�,Llghtlndustrial�
630512668_
4.7%
Marine Industry
100
26,993
1.1%
Institutional
85
18,417
0.8%
Lod IgLod ng
39
10,595 0.49%
Subtotal�„._.
A .6%,1
Residen_tial•based
3,388
357,507
14.9%
Out-of-town
4,174
684,641
28.5%
i Total
14,607
$2.4 Million
_ 100% 1
Source: ADE, Inc., based on data provided by the City of Newport Beach
Revenue Division.
Other Revenues
All of the other recurring general fund revenues included in Table 13 were calculated
based on employment and population factors, with the following exceptions:
❑ Franchise fees were estimated on a per capita basis (not including visitors,
however), with the additional assumption that 60 percent of these revenues are
generated by business uses and the remainder by residents." This split reflects
the typical distribution of utility usage for a city like Newport Beach.
❑ Revenues categorized under "Use of Money or Property" in both the General
Fund and the Tidelands Fund were categorized based on the nature of the
activity associated with the revenue. A table summarizing each of these revenues
is provided in Appendix B. City parking lot revenues were allocated to both
public and commercial land uses based on the business types located in the
11 Franchise fees are paid to the city by private companies that have contracts with the City to provide
services such as gas, electricity, cable W and solid waste disposal. The company that provides towing
services for the Police Department also pays a franchise fee; however, these fees are included in the
Lkwses andPemrits category. The 60/40 split between non-residential and residential uses is based on
analysis of franchise revenues in other California communities in lieu of specific data pertaining to
Newport Beach.
APPLIED DEVELOPMENT ECONOMICS PAGE 12
vicinity of each lot, as well as their proximity to visitor -serving public areas such
as the beaches.
❑ The Marine category also included an estimate of property tax revenue derived
from boats that are moored in Newport Beach marinas. According to data
provided by the Revenue Division, there are 3,535 boats from which the City
currently receives unsecured property tax revenue. The total assessed valuation
of these vessels is approximately $133 million.
❑ Interest income was estimated at a rate of 1.6% of all other revenues, based on
the ratio of total interest income to all other revenues for the current budget
year.
Major Cost Categories
In general, costs were calculated on a per capita basis as described in the next
section, with the following exceptions or refinements:
General Government
The General Government category, with a total budget amount of approximately
$9.4 million, was allocated among the various land uses in proportion to each land'
use's share of all other expenditures. The underlying assumption of this approach is
that general government services are essentially administrative overhead and a direct
function of the costs of services provided by the City's various departments.
Fire and Lifeguards
Eighty percent of Fire Department costs (less the $2.7 million cost for lifeguards,
which was wholly ascribed to public uses) were distributed on a per -capita basis; the
remaining 20 percent of fire costs were allocated among the various land uses in
proportion to their assessed valuation. This approach is based on information
provided by the NBFD that indicates that, aside from the lifeguarding function, 80
percent of their activity is associated with responding to EMS calls and 20 percent is
for fire fighting and prevention.
Police
The Police Department is organized into four divisions, in addition to the office of
the Chief of Police: Traffic, Patrol, Detective and Support Services (Table 8). In
order to estimate the distribution of police activities by land use category, we
reviewed police records on the types of services provided both citywide and by
APPLIED DEVELOPMENT ECONOMICS PAGE
reporting district. Most of the Police Department reporting districts contain a mix of
land uses. Therefore, in order to isolate the services provided to specific types of
development, it was necessary to use a modified per -capita approach. Table 9
summarizes this analysis.
TABLE 8
Police Department Budget
2003.2003
Division
Budget
Police Chief
$1,387,010
Traffic Division
$3,769,036
Patrol Division
$12,106,233
Detective Division
$5,295,066
Support Services
$7,582,531
Total
$30,139,876
Source: ADE, Inc, based on City of Newport Beach, Fival yrar2002.03 Brulgt LWaiL
In the left hand column of Table 9, the resident population, the average visitor
population, and the number of employees by business type are presented. The
employment figures are further allocated to visitor -serving and non -visitor serving
business activity. The total average "daytime population" in Newport Beach is
151,732, including all of these resident, visitor and worker groups.12 Of the total
daytime population, residents comprise about 50 percent, visitors (on average) are 13
percent, workers serving visitors are four percent and the remaining workers are 33
percent.
An important consideration in Newport Beach is the extent to which police services
are related to visitor activity and visitor -serving businesses. As shown in Table 9,
visitors represent 13 percent of the daytime population on an average basis, but
visitorship peaks heavily in the stammer months. The change in demand for police
services during the summer months may be expected to indicate the effect of visitors
on police services overall. Table 10 shows five main types of police activity. calls for
service, citations, crimes, arrests, and traffic accidents. The table shows the monthly
average for each type of activity for the September to May (non peak) period and the
June to August (peak) period. In every case, there is a measurable peak during the
summer months. For example, calls for service are 28 percent higher during the
12 In actuality, some Newport Beach residents commute out of the city to work, but for the purposes
of standard fiscal impact methodology, the term "daytime" population includes all residents.
APPLIED DEVELOPMENT ECONOMICS PAGE 14
summer months while other citations are more than doubled. This peak effect, when
measured against the annual service load, represents about 7 percent of total police
activity (and more than 30% of non -vehicle code citations)."
TABLE 9
Police Department Cost Analysis
Per Capita
Per Cap
Traffic
Patrol
Detective
Land Use
Factors
Share
Division
Division
Division
Other
Total Percent
Residential Pop.
75,662
48.4%
$1,753,58
$5,939,54
$2,445,04
$4,295,384$14,433,55
47.9%
Visitors
19,671
12.6%
216,564
995,136
580,341
759,260
2,551,30
8.5%
Employees
Visitor Serving
5,45
3.5%
161,216
823,471
480,205
620,652
2,085,54
6.9%
Retail
3,31
2.1%
719,180
419,410
523,930
1,760,53
5.8%
Lodging
2,13
1.4%
_98,013
63,203�
104,291
60,795
96,723
325,012
1.1%
Non-Vlsitor Serving
55,423
35.5%
-1637,63 4,348,09
1,789,48
_3,294.235
11,CLk 0_, .
, 36.7%1
Office
30,802
19.7%
910,134
1,631,29
671,252
1,361,164
4,573,84
15.2%
Retail
7,74_
5.0%
228,698
1,822,77
750,352
1,187,088
3,988,90
13.2%
�5.6°/4
industrial
11,332
7.3°k
334,837
600,151
246,953
500,776
1,682,71
Service Commercial
_ 3,03T
1.9%
89096_
160.948
_ 66227
134296
451,267
_ 1.5%
Marine
1,15
0.7%
34,039
61,011
25,105
50,908
171,063
0.6%
Institutional
1,35
40,126
71,921rR29,594
60,011
201,652_
0.7%
%ial Emp-.._
loyment
60,87
_0.9%0
_ 39.0%
1,798;84
�5,171,56
2,269,68
3,914,887
13,154,99
7
156,212�100.0"/0
$3,769,03$12,106,23
$5,295,06_ $8,969,541$30,139,87 -_
100_0%
Total Visitor -Serving
25,127
16.1%
$377,78
$1,818,60
$1,060,54
$1,379,912
$4,636,84
15.4%
Residential
46.5%
49.1%
46.2%
47.9%
47.9%
'Visitor -Serving
10.00/0
15.0%
20.0%
15.4%
_
15.4%
Total 100.0 100.0 100.0 100.0% 100.0
Source: Applied Development Economics, Inc.
Although not nearly in similar numbers, many visitors do come to Newport Beach
during off-peak seasons. Business travelers alone represent 21 percent of total
visitors to the city. Assuming their trips are more evenly distributed throughout the
year, it is likely that visitors represent at least 6-8 percent of the average daytime
population during non -peak months. Thus, the impact of visitors appears to
represent about 13-15 percent of total police services." This is about the same as the
13 This calculation measures the additional incremental service load during the three summer months
against what the service load would be for 12 months if there were no peak.
14 With the exception of lifeguards, neither the Police Department nor the Fire Department add staff
during summer months to handle peak service demands. Existing staff are redistributed to activities
APPLIED DEVELOPMENT ECONOMICS PAGE 15
per capita share that visitors, plus visitor -serving employment, represent of the
daytime population.
TABLE 10
Analysis Of Summer Peak Demand For Police Services
Monthly Averages
Calls for
Veh. Code
Other
Total
Part 1 and Part
Total
Time Period
Service
Citations
Citations
Citations
2 Crimes la]
Arrests
Accidents
Sep -May
4,25
1,59
278
5,61
538
306
117
Jun -Aug
5,43
1,85
674
7,20
739
431
150
Peak Effect
27.8%
16.3%
142.3%
28.4%
37.4%
40.7%
28.5%
Peak as Percent of Annual
6.9%
4.1%
31.4%
7.1%
9.3%
10.4%
7.2%
Source: ADE, Inc, based on data provided by Newport Beach Police Department.
fa] As defined by the FBI, Part 1 crimes are the 8 most serious crimes (homicide, forcible rape, robbery,
aggravated assault, burglary, larceny -theft, auto theft, and arson). Part 2 crimes are all other lesser offenses such
as forgery, fraud, embezzlement' vandalism, prostitution, etc.
The following sections address the cost estimates for each division.
Traffic Division: The Traffic Division includes the parking enforcement, animal
control, accident investigations and other moving vehicle violations. (The Patrol
Division also issues vehicle code citations and responds to traffic related incidents).
Based on the distribution of labor costs for parking enforcement, this function is
estimated to require 21 percent of the Traffic Division budget. Parking enforcement
records indicate that about 53 percent of this activity occurs in residential
neighborhoods and 47 percent in commercial areas, and the parking enforcement
costs have been attributed in this analysis accordingly. (Parking meter revenue is
attributed solely to business and public uses since few meters exist in residential
neighborhoods). All animal control costs are attributed to residential land uses, about
11 percent of the Division budget.
The remaining budget for the Traffic Division is distributed on the basis of
estimated traffic generation in the City. Based on the land use mix in the City and the
trip generation rates used in the General Plan Update traffic model, it is estimated
that approximately 36 percent of all vehicle trips in the City are generated by
that require more attention during the summer. Therefore, the annual averages are suitable indicators
of cost impacts on these departments.
APPLIED DEVELOPMENT ECONOMICS
PAGE 16
residential uses, and 64 percent by business and public land uses.15 This is clearly an
approximate split. There is some overlap between trips from residents to retail stores
and employment centers and these figures do not account for through -traffic that is
unrelated to land use in Newport Beach. However, the 36/64 percent split provides
a reasonable basis for allocating the $2.56 million in non -parking and animal control
enforcement costs for the Traffic Division. In the calculations, visitors were limited
to 10 percent of total cost for this division, to reflect the lower effect on vehicle
citations, as shown in Table 10.
Patrol Division: This is the largest division and is responsible for maintaining beat
patrols as well as responding to traffic incidents, enforcing traffic laws and
responding to most other incidents or calls for service. The costs for this division
have generally been allocated on a straight per capita basis, with one exception. Retail
businesses on average tend to generate more police activity than do other kinds of
businesses. Certain kinds of retail, such as restaurants and bars, generate a
disproportionate amount of alcohol -related incidents. Retail shopping centers create
more opportunity for burglary and theft. The effect of this activity can be seen in
comparing the crime statistics for the Newport Center area and the Airport area.
Both areas have approximately the same total employment, but the Newport Center
area has three times as many retail employees and a corresponding 20 percent
reduction in other kinds of jobs. Yet the Newport Center area registers twice as
many crimes and three times as many arrests as does the Airport Area. On a per -
employee basis, the disparity between retail and other kinds of business activity is
even greater. Therefore, in the analysis in Table 9, retail businesses are given a
weighting of three times the per capita cost compared to other businesses.
Overall, 49 percent of the cost of the division activities is distributed to residences,
15 percent to visitor -serving uses and 36 percent to other business and public uses.
Looking at the land area distribution in the City, 52 percent of the area is devoted to
residential uses, with 22 percent in business uses and 26 percent in open space. The
per capita allocation fairly well represents the geographic coverage of the patrol
function of this division.
Detective Division: This division is primarily responsible for investigating non -
traffic related crimes that occur in the City and also performs a number of crime
15 Trip generation rates were provided by Urban Crossroads, Inc., per a City of Newport Beach study.
ADE prepared the estimates of the distribution of total trips.
APPLIED DEVELOPMENT ECONOMICS
PAGE 17
prevention and proactive criminal pursuit activities. In terms of the activities shown
in Table 10, this division is most involved with investigation of the Part 1 and Part 2
crimes, as well as following up on arrests. Both of these activities show substantial
increases during the summer peak months. Based on the peak effect figures in Table
10 and the additional visitor activity during non -peak months, 20 percent of the.costs
for this division have been allocated to visitor -serving uses, 46 percent to residences
and 34 percent to other businesses. As with the Patrol Division costs, retail
businesses are assigned a weighting of three compared to other businesses in the per
capita cost calculations.
Support Activities: The office of the Police Chief includes a number of functions
such as community relations, legal affairs and crime prevention. The Support
Services Division includes communications, records, fleet maintenance, personnel
and a variety of other functions. All of these services and activities represent about
30 percent of the total Police Department budget, or 42.4 percent above the budgets
of the other three divisions. The allocation of costs for this division has been treated
as an overhead function based on the distribution of costs for the other divisions.
Summary: As shown in Table 9, the total police cost allocation by land use works
out to about 47 percent for residential, nearly 25 percent for visitor serving uses and
less than one-third for other business uses.
Capital Improvement Program
In addition to providing services, the City also incurs annual `capital outlay' costs
associated with the provision of public improvements, on -going projects, and
maintenance programs. The Capital Improvement Program (CIP) serves as a plan for
meeting the City's long-term capital needs as well as ongoing maintenance activities.
Projects in the CIP include the construction, repair, and maintenance of arterial
highways and local streets; storm drains; bay and beach improvements; park and
facility improvements; water and wastewater system improvements; and planning
programs. The FY 2002-03 CIP, including rebudgets of revenue from prior years,
totals $34.5 million and consists of over 150 projects.16 Funding for these projects
comes from a variety of sources, including the General Fund, enterprise funds, grant
programs such as CDBG, State subventions, etc.
15 City of Newport Beach Capital Improvement Program, pg. I-17.
APPLIED DEVELOPMENT ECONOMICS PAGE 16
As shown in Table I l below, the four funds that are included in the fiscal analysis
contribute a total of approximately $13 million to the 2002-03 CIP. However, since
the fiscal analysis is intended to match revenues from the current fiscal year with
current year's costs (and then distribute these costs and revenues by land use), funds
that were rebudgeted from 2001-02 have been subtracted from the CEP
appropriations as shown, resulting in approximately $7.9 million in net CIP
expenditures for the current fiscal year.
TABLE 11
2002.03 CIP Expenditures Included In Fiscal Analysis
Total CIP
Rebudget
Net
Appropriation
Amount
Appropriation
General Fund - Streets
2,366,000
1,061,000
1,305,000
General Fund - Other
4,766,265
1,873,115
2,893,150
Tidelands Fund
1,466,442
400,785
1,065,657
Gas Tax Fund
2,274,721
716,334
1,558,387
Measure M Fund
2,061,605
1,005,580
1,056,025
Total
12,935,033
5,056,814
7,878,219
Source: ADE, Inc., based on City of Newport Beach, Fisad Year 2002-03 CapId h4=uW9AW=
These CIP expenditures that relate directly to traffic/circulation improvements -
including the street projects under the general fund and all of the Gas Tax and
Measure M projects - were distributed across the various land uses on the basis of
trip generation data cited in the discussion above regarding police costs for the
Traffic Division. For the Tidelands Fund, those CIP expenditures that related
directly to beach and other public uses (e.g. lifeguard towers replacement or pier
repair) were attributed to the `public' category, while costs relating directly to boating
activity (e.g. Balboa Yacht Basin Facilities) were attributed to the Marine' category.
The remaining Tidelands Fund CIP expenditures, as well as CIP spending under the
General Fund that does not relate to traffic/circulation, was distributed across land
uses on a per capita basis, as described in the discussion below.
Per Capita Costs And Revenues
In cases where specific information about the land use origin of certain revenues or
costs could not be determined, we developed unit cost and revenue factors to apply
to each land use. Unless otherwise indicated, the per capita factors shown in Table
12 are based on the three population segments which generate revenues (via
spending on goods and services, payment of fees and fines, etc.) while
simultaneously exerting demand for City services: residents, employees, and visitors.
As described above in the police cost analysis, these groups comprise a total
APPLIED DEVELOPMENT ECONOMICS PAGE 19
constituency of approximately 156,000 persons. This estimate is based on the current
population of approximately 76,000, plus a citywide employment estimate of 60,879,
and an average of 19,671 daily visitors to Newport Beach."
TABLE 12
Unit Costs And Revenues
UNIT REVENUES Per Capita UNIT COSTS Per Capita
Other Intergovernmental
Charges for Service
Fines, Penalties, and Forfeitures
Licenses and Permits
Other Revenue
Gas Tax Fund*
Measure M Fund*
Source: ADE, Inc.
*Based on residential population only.
$22.47 Public Works $59.98
$10.01 Community Development $14.42
$54.21 Community Services* $109.61
$20.01
$2.39
$3.56
$19.26
17 According to the U.S. Census Bureau, the City of Newport Beach had a population of 70,032 in
2000. The Resource Allocation Plan indicates a January 1, 2002 population of 75,662, which includes
newly annexed Newport Coast and is the figure used in this analysis. The employment figures come
from the California Employment Development Department (EDD), adjusted to include an estimate
of self-employment (excluding home -based businesses) . The average daily visitors is based on
estimates obtained from a 2001 study prepared for the Newport Beach Conference and Visitors
Bureau, which indicates that there are 7.2 million visitors to Newport Beach annually.
APPLIED DEVELOPMENT ECONOMICS PAGE 20
ANALYSIS OF FISCAL IMPACTS BY LAND USE TYPE
CITYWIDE SUMMARY
Based on the current land use mix in the city of Newport Beach as described above,
Table 13 shows the full results of the fiscal impact analysis, which are summarized
below. This analysis represents the average, existing cost of services for existing land
uses. The incremental cost to serve new development in Newport Beach may be
different.
Revenues
❑ Xesidential land uses generate about 80 percent of property tax revenues.
❑ Seventy percent of sales taxes, the second largest city revenue, are generated by
retail uses. Table 14 provides a detailed summary of the fiscal impacts of the
retail category. Eating and drinking places (i.e. restaurants) generate the most
sales tax revenue (over $3 million per year) among the various retail categories
shown in Table 14. However, due primarily to the high employment associated
with restaurants and the number of police incidents associated with some of
these establishments, the net fiscal impact of eating and drinking places is slightly
negative. Besides restaurants, the top retail categories in terms of the sales tax
revenue produced are automobile dealerships, grocery stores, and department
stores. Together, these three categories account for almost half of all the sales
taxes, and all three also result in a significant fiscal benefit to the City."
❑ The remaining 30 percent of the City's sales tax revenues are generated by
taxable transactions at Newport Beach businesses as follows: office (10% of sales
tax revenues); service commercial (70/6); boat and marine equipment sales (50/o);
light industrial (40/6); hotels (30/6); and home -based businesses (less than 1%)
(Figure 1).
❑ The transient occupancy tax equals about eight percent of revenues in the
analysis and is primarily generated by lodging facilities in Newport Beach (i.e.
18 Approximately 65% of the net revenues from the retail land use category is derived from auto
dealerships, grocery stores, and department stores (Table 14).
APPLIED DEVELOPMENT ECONOMICS PAGE 21
hotels and motels). However, residential properties which are leased as vacation
rentals (of less than 31 days) also generate significant TOT revenue (nearly $1
million annually).
❑ Residential uses generate 40 percent of franchise fees and 100 percent of the
motor vehicle in lieu subvention from the state.
❑ Other revenues are generated approximately in proportion to the population and
employment supported by each land use.
❑ Overall, residential land uses create about 44 percent of the revenues. Retail uses
generate 18 percent followed by office uses at 11 percent and lodging at 8.7
percent (Figure 2).
FIGURE I
Sales Tax Revenue by Land Use Type
No eb
IIpM,iMu.trbl5 Home-0..1 Bu.ln.
4%� <S%
Bo.[&M.dm EqulPmanx
5%
Servke eommertbl
1%
RMM '
)0%
l..v.�blq
Savo. Wi
FIGURE 2
Gross Revenues by Land Use
H.mrb Bwn...
Costs
❑ Residential uses require about 48 percent of both police and fire department
services, which constitute the largest expenditures for the City (followed closely
by street and facility maintenance performed by the public works department).
❑ Retail businesses require about one -fifth of total police services, while public
land uses, mainly the beaches serving visitors, require about 8 percent. Lodging
facilities are estimated to require just one percent of total police services.
❑ The beaches and other visitor -serving public land uses require about 21 percent
of fire department costs, primarily because of the City's lifeguard services.
Net Impact
❑ In total, residential uses require about 51 percent of municipal services, while
generating slightly less than half the revenue needed to operate city government.
APPLIED DEVELOPMENT ECONOMICS PAGE 22
This results in an annual net cost for residential uses of about $6.0 million per
year for Newport Beach. This is normal for most cities in California, and in fact
is probably much worse in many other communities that do not enjoy the higher
housing values found in Newport Beach.
❑ The lodging sector generates the largest net revenue, at $7.8 million, followed by
the retail sector at about $7.1 million.
❑ The marine industry, including boat sales and manufacturing, generates about
$2.7 million in net revenue, followed by service commercial uses at $1.8 million.
❑ Industrial and institutional uses essentially break even, contributing very modest
net revenues.
❑ Office uses currently generate a negative impact (-$6.6 million) due to their high
employment, which adds to municipal costs. However, these uses, along with
industrial uses, also create jobs and income that contribute significantly to the
city's economic base, as discussed in more detail below.
❑ Public land uses also reflect a negative impact due to the lack of direct revenues.
However, this should be viewed in the context of the overall visitor impact as
discussed below and summarized in Table 15.
As mentioned at the outset, the key point in this analysis is to identify how the mix
of land uses in the City provides a balance of revenues to fund services for residents
and businesses alike. Although the analysis indicates that residential, office, and
public uses create a negative fiscal impact for the City, this one-dimensional view
does not tell the whole story. Land uses within the City are linked economically and
do not function in isolation of each other. In a broad sense, the city economy is
driven by land uses that draw dollars into the community by selling goods and
services to the outside world (see Figure 3). This includes hospitality and retail
businesses that serve tourists, but office and industrial businesses generate an even
larger share of the City's "economic base." These businesses create jobs and incomes
for people living in Newport Beach who in turn buy retail goods locally. As Figure 3
illustrates, while retail and visitor -serving businesses generate net tax revenue to help
provide services to other land uses, particularly residential, those land uses ultimately
generate the tax dollars by patronizing Newport Beach businesses. The primary goal,
again, is to maintain a well-balanced land use mix that can support the level of
services desired by residents and businesses alike. The following discussion focuses
on•certain prominent economic sectors in Newport Beach.
APPLIED DEVELOPMENT ECONOMICS PAGE 23
TABLE 13
Summary Of Fiscal Analysis
Service
REVENUES Total Residential Office Retail Industrial Lodging Marine Commercial Institutional Public
GENERALFUND
Property Tax
$36,879,169
$29,311,725 $3,160,525
$357,210 $1,284,735
$439,521
$524,860
Sales Tax
$19,841,351
$76,329 $1,938,437 $13,922,674
$892,789
$594,391
$978,688
TrenskMOccupancy Tax'
$8,299,000
$840,000 -- T-�O---'TO
_ $0 $7,458p00
--$0
_ Frandilse Fees
_$2,348,673
$9963,881 $900,307 �,$260,559
$33.591
_�
_§27,487
Business Licenses
$2,377,807
$357,507 $742,200
$240,299
$112,668
$10,585
$26,993
Motor Vehicle -in -Lieu
$1,700,000
$1,700,000 $o
$0
$0
$0
$0
_
OUIerinkrgOYemmenSal'$1,570,200
$764,28D 382,501
110,700
$14,271
$20,906
$11;678
Chargesfor Service
,$8501,375e=
4;137,967 $2,070,939y
1599,353
-$772-68-
�13,191
63,227
Fines, Penalties, and Forfeitures
$3,137,732
$1,527,263 $764,353
$221,212
$28,519
$41,777
$23,336
Licenses and Permits
$375,152
$182,602 $91,387
$26,448
$3,410
$4,995
$2,790
-- - ' Use of Property
$5,284,288
_
$1,027,072_ -$907,215
$675,556
_
$154,480 -'
$53,747
_
$991,056
Other Revenue
1732,653
i $271,43 3 $135�845 _139.315
$5.068 -
$7425
179,147
Interestlneor
$1,420,786
$646,898 $166,497
$258,591
$40,970
$137,435
$44,466
$1,416,413 $384,180 $0
$111,126
SUBTOTAL GENERAL FUND $92,467,187 $41,806,956$10,760,206 $16,711,917 $2,647,770 $8,881,972$2,873,728
TIDELANDS FUND
$3,806,520
$658,296
$3,673,555
)icenses,Permits, and Fees-'------61,153,000 $0
0 $510,000-
$0- - $0 633,000
- $0
$0
0
ChargesforService_ _l 33,500 o®®
�0$D
S0 nSeo
_.�
;'D
_d
Use of Money and Property $5,359,4922 $2,285,528
$0 $106,514
$0 $0 $997,896
$61,800
$110,000
$1,797,754
STATEGASTAXFUND $1,472,496 $1,472,496
$0 $0
$0 $0 $0
$0
$0
MEASURE-M FUND
_ _
__$0
1 SIIRTOTAI ATIMPF11Nr1R t071R4RR t47A7A41
t11779R k14RR.SS4
ti Q4 t4S-R4R ki 774 RR7
k14Ri77
tllnnnn
k1707744
TOTAL REVENUE
APPLIED DEVELOPMENT ECONOMICS PAGE 24
TABLE 13 (continued)
Summary Of Fiscal Analysis
Service
EXPENDITURES Total Residential Office Retail Industrial Lodoino Marine Commercial Institutional Public
General Government
Police
_--'Fire
Public Works
Community Development
Community Services
F, - CIP.Sheets
.__ - Olherg1PProfects
$4,993,431 $1,602,600 $959,110
$9,882,582
$1,091,878m
$57,630
$220,233
$64,607
$1,133,327
;171,063
$451,267
$201,652
$2,551,301
:167,958
' ' 685,295 -m
171,375
,593,190,
;152,247
$724;997
$177,013
$2,564,080
$16,821
$80,101 �.
$19,557
$283,293
$0
$0
$0
$0
'$8,4i3 -
--_ $42709----
8,413-
$16,825
02 873
V5,.117
363,828
_$21603„
i595,735
$2,306,830
�.
$667,734
$11,505,850
TIDELANDS FUND
Harbor Resources Division
#1,282136-
-- $D
0 '$0
$0
$0 riii2,138'�'�
$0
_
=" $0
__ $0
011 and Gas
53588,7
1,882
_,�.._» 0
�.`_-�_....� _I_._.u__
$ ___
_,..$�-_..,__
v_ .0.._...-...___
D�..
SIA
CIP
_
$1,065,656
$404,741
..._
$189,094 $54,726
$7,055
$10,335 $40,773
$27,491
$6,712
$324,728
STATEGASTAXFUND
$1,558,388
$280,510
$345,590 $779,585
$20,093
$42,194 $10,046
$50,231
$10,046
$20,093
MEASURE M FUND
$1,056,384
$190,084
$234,185 $528,637
$13,615
$28,593 $6,808
$34,039
$6,808
$13,615
SUBTO�TA(. OTHERFUNDS
$5,314,453
_
$875,335
$766,669 $1,362,948_
'$40,763
$61,122$1,339,765
$111,761
_
$26�586
$710,323,
$301,546,6
$51,530,068
$17,497628$11,635,577 $2,491,895$1,129,936$1,935,500
$2,418,591
$691,300
$12,216,171
TOTALEXPENDRURES
9�
_
NET(COSTgREVENUE
$139,026
($5,960,471) ($6,620,186) $6,544,894
$209,870$7,788,005$2,661,815
$1,539,701
$76,996($6,744,865)
APPLIED DEVELOPMENT ECONOMICS PAGE 25
TABLE 14
Retail Employment And Fiscal Impacts
Np1CS
Description
Enugpercent
Em Is
`,,ales Tax
Revenue
percent
Other
Revenue
Costs
Net
Revenue
percent
4411
Automobile Dealers
613
5.5%
2,345,749
16.8%
219,505
619,895
1,945,359
29.0%
4412
Other Motor Vehicle Dealers
207
1.6%
616,017
4.4%
74,170
209,461
480,726
7.2%
442
Furniture and Home Furnishings Stores
235
2.1%
520,694
3.7%3.7%
44,258
237,950
367,002
5.5%
4431
Electronics and Appliance Stores
148
1.3%
174,080
1.3%
53,159
150,123
77,116
1.20/b
n7
0.6%
59.919
0.4%
23,867
67,402
16,385
0.2%
4442 Lawn 8 Garden Equipment and Supplies Stores
25 0.2%
164,727 1.2%
9,041
25,531
148,237 2.2%
4451Grocery Stares
786 7.1%
1,828,051 13.1%
281,343
794,528
1,314,856 19.6%
4452
Spedalty Food Stores
99
0.9 /a
aY,baa
a.D7°
a2,vo7
ivu,v°c
, i
...• 1.
4453
Beer, Wine, and Liquor Stores
24
0.2%
68,566
0.5%
8,679
24,510
52,735
0.8%
4461
Health and Personal Care Stores
419
3.8%
314,269
2.3%
150,074
423,816
40,526
0.6%
4471
Gasoline Stations
115
1.0%
500,011
3.6%
41,225
116,422
424,814
6.3%
4481
Clothing Stores
574
5.2%
700,350
5.0%
205,402
580,067
325,685
4.9%
4482
Shoe Stores
21
0.2%
58,350
0.4%
7,594
21,446
44,498
0.7%
44a3
lewelrv. Luaoaae. and Leather Goods Stores
130
1.2%
184,697
1.3%
46,649
131,741
99,606
1.5%
4512
Book, Periodical, and Music Stores
88
0.8%
112,427
0.8%
31,461
88,848
55,040
0.8%
4521
Department Stores and Other General Merchandise
1,295
11.7%
1,989,761
14.3%
463,601
1,309,235
1,144,126
17.1%
4531
FWsts
59
0.5%
40,SO4
0.3%
20,974
59,232
2,246
0.0%
4532
Ofte,SURp ie$, Statlonary, and Gltt Stores
144
1.3%
_ 104,900
0.8%
51,712
146,038
10,574
0.2%
4533
Used Merchandise Stores
24
0.2%
26,120
0.2%
8,679
24,510
10,289
0.2%
4539
Other Miscellaneous Retailers
194
1.0%
655,425
4.6%
69,412
196,023
528,814
8.0%
722
Eating and Drinking Places
5,772
$2.2%
3,226,259
23.2%
2,067,038
58,37,432
-544,105
•8.1%
Total 1 11,057 100.0-/.l 13,922,674100.0% 3,959,774 11182625 6,699,823100.00/u
Source: California Economic Development Department, California Board of Equalization, and Applied Development Economics
APPLIED DEVELOPMENT ECONOMICS PAGE 26
Figure 3
Economic and Fiscal Relationships in Newport Beach
e rurans. cl. 0.
=ra W
praaur.wic_„�,�,
purchase Newport Beach
products and services
v Net Tax Ddlars
Worker earnings for Services
from husfnesses
outside Newport Beach
Iobsh I �Net rax Dalar:�,
Income 11 for Services
Regional Visitor
Shopping Spending
lobs b
Income
Income
Weal
purchases
Jobs & Net Tax Dollars
Income for Services Net Tax Dollars
!or Services
Businessto Business
local Transactions
purchases —� and Visitor Spending
APPLIED DEVELOPMENT ECONOMICS PAGE 27
TABLE 15
Fiscal Impact Of Visitors In Newport Beach
REVENUES Total Residential Office Retail Industrial Lodging Marine Commercial Institutional Public
GENERALFUND
Property Tax $1,273,612 $726,928 $ $107,163 $ $439,521 $0 $ $ $
Celee Tar 4771194 S S S4.176.80 $ $594391 $0 $ $ $
Business Licenses $89,078
vmm n,ao, yv.muum,,,,
Fines, Penalties, and Forfeitures
$
$
SUBTOTAL GENERAL FUND $19,619,045 $1,648,86 $ $5,485,77
ANDS FUND
O Perinnfits, Ond' ees $520,000
$
$ $8,881,972 $121,923 $52,16 $ $3,428,35
APPLIED DEVELOPMENT ECONOMICS PAGE 28
TABLE 15 (continued)
Fiscal Impact Of Visitors In Newport Beach
Office Retail Industrial
Public
-- -.. --. G tl CLA nQ
DEVELOPMENT ECONOMICS PAGE 29
HOSPITALITY AND VISITOR SECTOR
According to a recent report presented by the Newport Beach Conference and
Visitors Bureau, the city attracts about 7.18 million visitors per year, of which 81
percent are here on leisure trips.19 Of this number, 86 percent are day visitors, 7
percent stay in local hotels and the balance stay in private homes. About 64% of the
visitors reported visiting the beaches during their stay. This would amount to about
4.6 million visitors, or an annual average of 12,500 per day. During the peak summer
season, this average figure climbs to 100,000. Non -beach goers likely include many
business travelers and other SouthernCalifornia residents coming to Newport Beach
to shop.
From an economic standpoint, visitors bring substantial income to Newport Beach.
Visitors spend an estimated $1 billion in the city each year, of which about $449
million are retail purchases and $83 million are lodging expenses. These two
categories of spending alone generated about $4.8 million in sales taxes and $8.3
million in Transient Occupancy Tax (TOT) for the City budget in 2001. Visitors
generate other revenues as well, including indirect business license and property
taxes, revenues from use of public property, and others. Table 15 summarizes the
comprehensive revenues and cost impact on local government by visitors to
Newport Beach. Overall visitors generate about $21.6 million per year against $16.7
million in service costs. The service costs include $4.9 million in police services, $2.7
million for beach lifeguards included in the fire department budget, as well as other
emergency medical calls made by the fire department. The net positive fiscal impact
of visitor business activity in Newport Beach, then is about $4.9 million per year, not
counting the net fiscal benefit of the marine industry, discussed below. These are
revenues that contribute toward City services provided to residents and businesses in
the community.
19 CIC Research, Inc. profile of Visitors to Nmprnt Beads FY2001. November 16, 2001. For purposes of
the study, visitors were defined as persons who lived outside of Newport Beach and were not in the
City for purposes of daily employment. About 18 percent of the survey respondents live in Orange or
Los Angeles counties. An additional 15 percent live in Riverside or San Bernardino counties. Overall,
about 8 percent listed shopping as the main purpose of their trip to Newport Beach. Although this is
not broken down by place of origin, it is likely that many of the visitors from elsewhere in Southern
California come to Newport Beach solely for shopping and would not be considered "tourists" in the
commonly understood meaning of that term.
APPLIED DEVELOPMENT ECONOMICS
PAGE 30
MARINE INDUSTRY
As noted above, marine industries in Newport Beach, which include marina slip
rentals, boat sales, chartered vessels for events and sport fishing, boat repair, and
boat maintenance and manufacturing, account for over 1,000 jobs and generate
nearly $2.7 million in net revenues This positive fiscal result is largely due to property
tax derived from boats moored in Newport Beach marinas, sales tax generation
among boat dealers and other marina -related businesses, a marine charter fee, and
lease income from coastal property owned by the State of California but that the City
operates as the State's trustee.
For purposes of the fiscal analysis we have included the City's Harbor Resources
Division in the costs associated with this industry. However, as noted above, there is
significant overlap between the marine industry and the hospitality industry.
The marine industries that manufacture, sell, and service the boats have undergone a
significant transformation in the past twenty years. There are issues today about the
continued viability of the marine industry in Newport Beach that should be
recognized in the general plan update process.
Twenty years ago, there were five to six major boat manufacturers in Southern
California, and a number of smaller outfits. Since that time, all of the major
manufacturers have left California, mostly to Florida. While a few of the smaller
manufacturers remain, others have moved inland to Riverside County. This has
largely been due to increased environmental regulation in California affecting
fiberglass manufacturing processes, as well as real estate price inflation in coastal
communities.
There has been a consolidation among boat supply and servicing companies as well.
As costs have risen, fewer firms are now serving the demand for specialty boat parts,
and boat repair and servicing. Those that do not have to be on the water have
moved to inland locations. Some have found locations in the West Newport
industrial areas, but many have gone further inland to the Costa Mesa, Huntington
Beach, and Long Beach industrial areas, as well as locations in Riverside and San
Diego counties and Mexico.
Those businesses still in the industry report very strong demand for their goods and
services. Although the total number of slips in Southern California is not growing
dramatically, there is a lot of "move up" sales activity as existing boaters purchase
larger and more expensive boats that require a greater level of support and servicing.
APPLIED DEVELOPMENT ECONOMICS PAGE 31
Businesses throughout the industry have expressed concern about the real estate
pressure on their locations near the water. This is an issue that continues to affect
businesses leasing space, particularly in the Cannery and Mariner's Mile areas of
town. As noted above, many businesses have moved inland and service boats in the
harbor from more remote locations. If this issue reduces the availability of boat
services in Newport Beach sufficiently, it may cause the consumer market in boats to
shift as well to other locations. Currently, the city realizes significant sales and
property tax revenues from boats and related industries.
The indirect benefit of the boating industry could also be improved by increasing
access for visiting boats to dock and launch facilities in Newport Harbor. This issue
is complicated by the fact that over 90% of the harbor frontage is in private
ownership. This leaves little opportunity for the City to increase the availability of
public facilities. However, if private entrepreneurs could add to the available
facilities, it would help increase the capture of visitor spending in Newport Beach on
restaurants and other retail goods and services.
APPLIED DEVELOPMENT ECONOMICS
PAGE 32
PRELIMINARY ANALYSIS OF NEWPORT COAST FISCAL
IMPACTS
INTRODUCTION
This chapter demonstrates how the fiscal model can be used to analyze future
development in the City by presenting an example of existing and projected
development in the Newport Coast area.
The analysis primarily illustrates the distinction between marginal service costs and
average service costs, which will be important in considering the impacts of future
development in other areas of the City as well. Marginal costs represent the actual
incremental costs of providing services to a new proposed development. In contrast, an
average cost approach would treat the proposed development the same as existing
development in the City and assume that the costs to serve it are similar on a per capita
basis as the costs to serve all other development in the City. The analysis in the previous
chapter is done on an average cost basis, because the intent is to show the levels of cost
the City incurs to provide for the existing residents and businesses.
The true marginal costs, on the other hand, can be either higher or lower than the
average depending on the levels of available service capacity. This can be most easily
illustrated with fire services, as the Newport Coast analysis shows. If the existing fire
stations in the City can serve a proposed development, then the incremental cost of
providing service is likely to be lower than the average since existing facilities, equipment
and manpower can be used. If a new station is needed, then the marginal cost of that is
likely to be higher than the average unless the development is so large that it supports
the need for a fire station all by itself.
As the City considers future development options in the General Plan Update process,
the location of the development and the status of existing services at those locations will
play a role in the fiscal impact analysis.
PROJECT DESCRIPTION
The land use data for the analysis is taken from the traffic model database for the year
2000 and the projection for the year 2025. The fiscal analysis evaluates the year 2000 as
APPLIED DEVELOPMENT ECONOMICS PAGE 33
the existing land use case and the year 2025 as full buildout of the area. As shown in
Table 16, buildout is about double the development levels in the year 2000. The traffic
model tracks non-residential development in terms of three employment categories:
retail, services and other. It was necessary for us to make assumptions about the more
specific business types this would entail in Newport Coast, as shown in the table.
The assessed value estimates for both scenarios are based on residential unit values of
$815,000 for single-family units and $600,000 for the condominiums. These values are
based on a review of property tax data in the Newport Coast area, and are higher than
the values obtained for the City of Newport Beach as a whole.
TABLE 16
Newport Coast Development: Year 2000 and 2025
Land Use
Units
Year 2000
Population
Assessed Value
Units
Year 2025
Population Assessed Value
RESIDENTIAL
Single Family
1,264
3,001
$1,030,160,000
3,063
7,378
$2,496,345,000
Condominium
1,136
2,697
$681,600,000
1,763
4,223
$1,057,800,000
Apartment
0
0
$0
0
0
$0
High Density
0
0
$0
0
0
$0
Total Residential
2,400
5,699
$1,711,760,000
4,826
11,602
$3,554,145,000
NON-RESIDENTIAL
Sq. Ft.
15,000
Employment
50
$1,995,000
Sq. Ft.
45,000
Employment
150
$5,985,000
Office
Retail
68,600
196
$6,311,200
68,600
196
$6,311,200
Industrial
0
0
$0
0
0
$0
Lodging
150,000
250
$15,600,000
297,600
496
$30,950,400
Marine
0
0
$0
0
0
$0
Service Commercial
835,000
835
$100,200,000
1,329,000
1,329
$159,480,000
Institutional
100,000
100
$7,200,000
150,000
150
$10,800,000
Total Non -Residential
1,168,600
1,431
$131,306,200
1,890,200
2,321
$213,526,600
COST ANALYSIS
At the time of the annexation, City departments made estimates of expected service
costs, both for the initial development levels and for ultimate buildout. In some cases the
full service cost for buildout was funded initially, and in other cases the costs were
deferred until further development occurs. This situation raises the opportunity to
consider both the marginal cost of the initial annexation and the average cost of serving
the area at full buildout.
APPLIED DEVELOPMENT ECONOMICS PAUt,14
Fire Protection Services
Newport Coast has an existing fire station, designated No. 8 by the City, which was in
Place at the time of annexation. At that time, the City estimated the cost of operating the
station at $1.39 million per year?' This is less than the average cost of operating other
stations in Newport Beach, estimated at about $2 million, but more than the incremental
per capita cost of adding the amount of development in Newport Coast in 2000. Since
the City assumed operation of the station, we have shown $1.39 million as the cost of
fire protection services in 2000 in Table 17.
As Newport Coast develops further, the City's plan is to move the existing Station No. 5
in Corona del Mar further south to obtain better response times to Newport Coast as
well as CdM. Thus, at buildout the City will serve Newport Coast from two stations.
However, based on the amount of development at buildout and the fact that Station No.
8 would also serve development west of Newport Coast, the net cost effect would be
approximately equal to the cost of one full station. This is estimated by the fiscal model
at nearly $1.9 million (Table 18), not including the cost of moving Station No. 5.
Therefore, the marginal cost of the initial annexation -at $1.39 million -was higher than
the average per capita cost would have been but, conversely, the marginal cost of
completing buildout of the area -at $487,000-is much less than the average cost.
Police Services
In the case of police services, part of the departmental expansion needed to serve full
buildout of the Newport Coast area was made at the time of annexation, and part was
deferred until a later time. Specifically, the detective division received the entire
complement of personnel needed to serve full development of the area2% while the
patrol and traffic divisions received an incremental increase that reflected immediate
service demands at the time of annexation.'
In estimating the costs of service, the full detective division cost -estimated at 25 percent
of the total police services cost -was included in Table 17, along with the incremental
cost of the traffic and patrol division as estimated by the fiscal model. This results in a
20 Terry, Ulaszews4 Fiscal/Information Services Manager, Newport Beach Fire and Marine Department.
21 Captain Tim Newman, Detective Division Commander, Newport Beach Police Department
22 Captain Paul Henisey, Traffic and Patrol Division Commander, Newport Beach Police Department.
APPLIED DEVELOPMENT ECONOMICS PAGE 35
slightly higher cost for police services in Table 17, reflecting the year 2000, than would
be commensurate with the amount of development alone. As with the fire services, the
net increase at full buildout is accordingly less than it would be otherwise, estimated at
$944,000 compared to nearly $1.7 million to serve about the same amount of
development currently.
SUMMARY OF FISCAL IMPACT
Overall, the analysis suggests that the year 2000 development generates about $800,000
per year in net revenues, while doubling the development to achieve full buildout would
add another $1.9 million per year. Because the marginal costs of the annexation were
higher than the average cost, the second half of buildout of the area generates 40 percent
more in net revenue for the City than does the first half. Overall, Newport Coast does
very well for the City-includine the residential land uses at buildout-primarily because of
the higher property vale
privately maintained re(
APPLIED DEVELOPMENT E
TABLE 17
Newport Coast Impact Year 2000
Service
Revenues
Total Residential
Office
Retail
Industrial
Lodging Marine Commercia Institutional Public
1
GENERAL FUND
PropertyTax
3,133,213
2,909,992
3,392
10,729
0
26,520
0
170,340
12,240
$0
SalesTax
'614,643
5,737
3,146
243,408
_ -
0_ 68,478
_0
2 3;873 - 0-0
Transient OxupangTax
1,031,060
0
0
0
0
1,031,060
0
0
0
0
Franchbe Fees
OS OB _ 718
, ,
1 6
609
0
5,879
U
_ 19,635 -
_ _ 2_;352 0
d� BuslnessLicenses
55,498
0
1,939
7,601
0
9,696
D
32,383
3,878
0
s
Other lnlergovemmenlal
71,264
56,961
500
1,959
0
2,499
0�
8,346
1,000
0
ChartiesforServ(ce
- 385,837
308,396-
2,.06
0;607
0
1"3,529
D
,1 7
,412"
0 -'
Fines, Penalties, and Forfeitures
142,407
113,824
999
3,915
0
4,993
0
16,678
1,997
0
�ndPennits
' i7,026
- 1 609
1.19
46&
_ _0
_-5970
- 11994
_ _ -" 2.39
_
UseofProperly
240,786
192,459
1,689
w6,619
0
8,443
0
28,200
3,377
0
OtherRevenUe
- 25,309
20,229
177
_ 696
- ' 0
887
0
2;9
355
0
interestlncome
112
90
1
3
0
4
0
13
2
0
SUBTOTAL GENERAL FUND
5,950,442
3,820,934
15,843
290,614
0
1,172,585
0
619,614
30,851
0
TIDELANDS FUND
Licenses, Permits, and Fees
0
0
0
0
0
0
=
0
0'
0
-
-'_� 6
0__0
" 0
0
° Charges forServlce
0
0
0'
. "0-
_
-- - -
"
"
Use of Money and Property
0
0
0
0
0
0
0
0
0
0
GAS T
0.
MEASURE M
4,680
43705
,
3
, 503
0
1,917
0
6,404
767
0
SUBTOTAL OTHER FUNDS
191,742
153,257
1,345
5,271
0
6,723
0
22,456
2,689
0
TOTAL REVENUE
6,142,184
Y974,192
17,188
295,885
0
1,1/9,309
0
642,070
33,540
0
APPLIED DEVELOPMENT ECONOMICS PAGE 37
TABLE 17 (continued)
Newport Coast Impact Year 2000
Expenditures Total Residential Office Retail Industrial Lodging Marine Commercia Institutional Public
2,270 16,810 0 11,080 0
Fire
- - PUb IC' OrkS '- 929,079 , _ > - j-- - - ,- -
Communitv Development 102,649 82,047 720 2,822 0 3,599. _.. 0 12,022 1,440 0
CIP Streets
SUBTOTAL GENERAL FUND 5,272,719 4,412;536
TIDELANDS FUND
11,413 0 4,071 0
0 137,439 0 448,132 56,120 0
Harbor Resources
0
0
0
0
0
0
0
0
0
0
Oil and Gas
0
0
0
0
0
0
0
0
0
0
CIP
0
0
0
0
0
0
0
0
0
0
GAS TAX
40,495
10,456
561
13,629
0
4,861
0
10,265
723
0
MEASURE M
27,448
7,085
380
9,242
0
3,294
0
6,956
490
0
SUBTOTAL OTHER FUNDS
67,943
17,541
941
22,871
0
8,155
0
17,221
1,213
0
TOTAL EXPENDITURES
5,340,662
4,430,077
30,728
211,577
0
145,594
0
465,353
57,333
0
NET (COST)IREVENUE
801,522
(455,886)
(13,540)
84,308
0
1,033,715
0
176,717
(23,793)
$0
APPLIED DEVELOPMENT ECONOMICS PAGE 38
TABLE18
Newport Coast Impact at Full Buildout
Revenues Total
Residential Office Retail Industrial
Lodging Marine
Service
Commercial
Institutional Public
GENERALFUND
Property Tax 6,405,042
6,042,047 10,175 10,729 0
52,616 0
271,116
18,360 $0
---- Saes Tax '868,120
,679 9,439: 2 3, 8 _ _ 0-
135,861 0
467,734
- 0 0'
„
Transient Occunancv Tax 1,031,060
0 0 0 0
1,031,060 0
0
0 0
Rncinacs I ir.nsae 90.014 0 5.817 7.601 0 19,236 0 51,542 5,817 0
SUBTOTAL GENERAL FUND
10,744,957
8,020,380
48,274
295,178
0
1,332,456
0
1,001,667
47,001
0
TIDELANDS FUND
Licenses, Permits, and Fees
0
0
0
0
0
0
0
0
0
0
t Charges for Service -
0
0
D
0
0
0-
0
0
0=
0
Use of Money and Property
0
0
0
0
0
0
0
0
0
0
GAS TAX
88,97
88,97.1
0
0
0_
6_76
0
0.
0
MEASUREM
106,771
88,971
1,150
1,503
0
3,804
0
10,192
1,150
0
SUBTOTAL OTHER FUNDS
195,742
177,942
1,150
1,503
0
3,804
0
10,192
1,150
0
TOTAL REVENUE
10,940,699
8,198,322
49,424
296,682
0
1,336,260
0
1,011,859
48,152
0
APPLIED DEVELOPMENT ECONOMICS PAGE 39
TABLE 18 (continued)
Newport Coast Impact at Full Buildout
Expenditures Total Residential Office Retail Industrial Lodging Marine Commercial Institutional Public
I:FNFRAI FI INr)
TIDELANDS FUND
Harbor Resources
0
0
0
0
0
0
0
0
0
0
Oil and Gas
0
0
0
0
0
0
0
0
0
0
CIP
0
0
0
0
0
0
0
0
0
0
GAS TAX
63,664
21,285
1,683
13,629
0
9,644
0
16,338
1,084
0
MEASUREM
43,148
14,424
1,140
9,242
0
6,536
0
11,071
735
0
SUBTOTAL OTHER FUNDS
106,812
35,709
2,823
22,871
0
16,180
0
27,409
1,819
0
Tr1TA1 FXPFNr1R11RFS
8.986.792
7.746.047
73,858
202,926
0
249,214
0
639,892
74,854
0
0
APPLIED DEVELOPMENT ECONOMICS PAGE 40
GENERAL PLAN BUILDOUT
Buildout of the existing General Plan would maintain an overall positive fiscal balance for
the City, in terms of annual operating costs and revenues. As summarized in the Table 19,
the City's housing units, population and total employment would all grow about 16 percent.
However, within these broad averages are some important variations.
TABLE 19
Growth Rates
2002 • Buildout
VARIABLE PERCENT
GROWTH
Occupied Single -Family Dwelling Units 3%
Occupied Multi -Family Dwelling Units 25%
Total Occupied Dwelling Units 16%
Group.Quatters opuladom 0%------ttt'
Pouldtion
[Em . pl6yed, Residents _--_-. �...� 16%
Retail Employees 24%
Service Employees 16%
Other Employees 10%
Totaf Employees 169/a ,
Elementary/High School'Students 1%
Iodging�Rooms 19%.
Future residential growth is projected to focus heavily on multi -family development, which
will tend to shift the tax base to slightly lower cost housing. However, as noted in the
analysis of Newport Coast, housing prices for all types of units in -Newport Beach are rapidly
reaching levels that can generate sufficient property tax to support public services. For the
buildout analysis we assumed a modest 5 to 10 percent real growth in housing prices, which
had a marked positive effect on the net cost of residential uses as shown in Table 20.
Within the employment figures, the btfddout projection shows higher growth for retail and
lodging employment, at 24 percent and 19 percent, respectively. As discussed in the earlier
section of this report, these two business sectors are particularly strong net revenue
generators. Along with the growth in hotels rooms and regional population, we have
assumed a 20 percent growth in visitors to Newport Beach over the 20 to 25 years time
period needed to achieve buildout. The increased visitors add sales tax and transient
occupancy tax (TOT) to the City's revenues but would also increase costs for police
protection and emergency response among others. We have not assumed, however, a
rH�c 4 i
APPLIED DEVELOPMENT ECONOMICS
commensurate increase in the marine industry or the number of boats moored in Newport
Harbor. The general plan buildout projection does not include additional marina berths, and
as discussed earlier, some elements of the marine industry are under pressure from rising real
estate prices and may not be able to expand readily in Newport Beach.
As shown in Table 20, the individual land uses perform about the same as in the existing
land use scenario earlier, but the total net revenue is higher as a percent of revenue due to
the increased proportion of sales tax, TOT tax and property tax from residential units. The
analysis also includes the assumption that City would see increased revenues from the use of
public property, as uses on these sites intensify to serve the increased resident and visitor
population.
It should further be noted that this analysis only addresses the annual costs of providing
services and does not include any capital costs or improvements to public facilities needed to
support the growth in the buildout projection. Due to the long time frame (20-25 years) to
achieve buildout, we have not attempted to estimate the marginal costs of expanding or
upgrading city facilities. As these costs are identified through subsequent analysis in the
General Plan Update process, a discussion of financing for public improvements will be
included in the fiscal analysis.
APPLIED DEVEL(
TABLE 20
Fiscal Impact of Existing General Plan Buildout
REVENUES Total Residential Office Retail Industrial Lodging Marine Commercial Institutional Public
GENERALFUND
PropertyTax $43,839,479 35,821,978 $3,333,991 $367,962 $1,195,363 $493,736 #524,860 $1,676,490 #425,599 $0
ant OccupancyTa* $10,132,21 965,755 $u ;u ; Ru 4v,199,•n9_-
Ftanchise'Fees_$2,85012-1:108;18_ 3, �L085,324 31&9219_$3d,185 tfi0,480.- .$27-�22 176569-
Business Licenses $2,789,70 414,409 $894,726 294,123 $114,664 $13,010 $27,224 $283,371
_ charges for Service
`Fines, Penalties, and Forieftures
Licenses and Permits
$471,618
SUBTOTAL GENERALFUND 110,325,42 50,252,481 $12,469,141 $20,293,555 $2,581,142$10,929,272 $3,044,688 $4,884,017 $752,392 $4,407,847
APPLIED DEVELOPMENT ECONOMICS PAGE 43
TABLE 20 (continued)
Fiscal Impact of Existing General Plan Buildout
EXPENDITURES Total Residential Office Retail Industrial Lodging Marine Commercial Instgutional Public
GENERALFUND
General Government 11,055,740 5,805,709 $1,924,851 $1,172,953 $247,800 $115,570 $57,630 $293,585 $77,651 $1,359,992
2,671,510
. -A en�enw }oen nnn
113,534,925 58,889,002
SUBTOTAL GENERAL FUND
STATE GAS TAX FUND
6
$802,898 13,607,020
0
$66,984 $7,180 $12,703 $40,773 $37,085 $8,136
954,203 $20,449 $51,860 $10,D46 $67,760 $12,177
$1,935,500 -
APPLIED DEVELOPMENT ECONOMICS PAGE 44
APPENDIX A
LAND USE DEFINITIONS BY SIC AND NAICS
SIC DESCRIPTION NAICS DESCRIPTION
INDUSTRIAL
01 thm 09
Agriculture, Forestry, and Fishing
11
Agriculture, Forestry, Fishing
15 thm 17
Construction
21
Ming
20 thm 39
Manufacturing
22
Utilities
40 thm 49
TCPU
23
Construction
50 — 51
Wholesale
31-33
Manufacturing
42
Wholesale Trade
48.49
Trans and Warehousing
RETAIL
52
Building Materials and Garden Supplies
44-45
Retail Trade
53
General Merchandise Stores
722
Food Service& Drinking Places
54
Food Stores
55
Amomobile Dealers and Service Stations
56
Apparel and Accessory Stores
57
Furniture and Home Furnishings Stores
58
Eating and Drinking Places
59
Miscellaneous Retail
OFFICE
60
Depository Institutions
52
Finance and Insurance
61
NondepositoryInstitutions
53
Real Estate
62
security and Commodity Brokers
54
Professional, Scientific,& Technical Services
63
Insurance Carvers
621-623
Health Care
64
Insurance Agents, Brokers, and Service
51
Information
65
Real Estate
561Administrative
and Support Services
67
Holding and Investment Companies
73
Business Services
80
Health Services
81
• Legal Services
'
87
Engineering and Management Services
SERVICE COMMERCIAL
72
Personal Services
81
Other Services
75
Auto Repair, Services, and Parking
71
Arts, Entertainment, and Recreation
76
Miscellaneous Repair Services
51213
Motion Picture & Video Exhibition
78
Motion Pictures
79
Amusement&Recreation Services
INSTITUTIONAL
82 Educational Services 61 Educational Services
83 Social Services 624 Social Assistance
84 Museums, Botanical, Zoological Gardens
86 Memberships Organizations
91 thru 97 PublicAdminiRra*ion
APPLIED DEVELOPMENT ECONOMICS PAGE 45
LAND USE DEFINITIONS BY SIC AND NAICS
SIC
DESCRIPTION
NAICS DESCRIPTION
MARINE
2394
Mfg Of Canvas &Related Products
441222 Boat Dealers, New and Used
2499
Miscellaneous Wood Products Mfg
713930 Marinas
3663
Mfg Of Radio & TV Communications Equip
334220 Marine Radio Comm Equip Mfg
3731
Ship Building & Repairing
336612 Boat yards (i.e. boat mfg facilities)
3732
Boat Building&Repairing
811490 Boat, Pleasure, Repair & Maint Services
3993
Mfg Of Signs & Advertising Specialties
713990 Boating Clubs w/o Marinas
4422
Coastwise Transportation • Water
4469
Miscellaneous Water Transportation Services
4489
Water Passenger Transportation
4491
Marine Cargo Handling
4492
Towing & Tugboat Service
4493
Marinas
4499
Yacht Maintenance
5063
Electrical Apparatus & Equipment
5091
Sporting&Recreation Goods & Supplies
5099
Miscellaneous Durable Goods Wholesalers
5146
Fish & Seafood
5551
Boat Dealers
7699
Miscellaneous Repair Services
LODGING
7011 Hotels & Motels 721 Accommodation
GOVERNMENT
NA Not irrdudedasm"hiBus LicFile NA Inchiaeso* Cityoj
dassifrgl & a uax
M
APPLIED DEVELOPMENT ECONOMICS PAGE 46
APPENDIX B
DISTRIBUTION OF `USE OF PROPERTY' REVENUES BY LAND
USE
GENERALFUND
Properties
Residen Office
Retail
Light Ind.
Lodging Marine
Service
Inst.
Public Total
Visitor -Serving
0 0
667,556
0
53 747 120,636
51,353
0
1,547,54 2,490,23
W.J. Carden Telescopes
2,00
2,00
Temp. Slip rentals
1,50
1,50
Galley caf6
20,000
20,000
Orange Co. Dock
40,000
40,000
Garages
36,096 36,096
Pay Telephones
25,000 25,000
CDM Concession
90,000 90,000
Misc. Concessions
2,60 2,60
Parking Meter Income
344,249
28,573 41,751
26,236
767,5671,208,37
City Parking Lots
303,307
25174 36,785
23,116
676,278 1,064,66
Non -Visitor -Serving
1027 07 407,215
8,000
154,480
0871,020
0
91,268
235,600 2,794,05
Beacon Bay
650,000
650,000
Balboa Yacht Basin
806,520
806,520
Basin Marine Shipyard
60,000
60,000
Electricity
10,000 10,000
Heritage Yacht Brok.
8,000
8,00
Balboa Yacht Club
4,50
4,50
Apartments
27,072
27,072
Intercity Bus Shelters
60,000 60,000
City facility Fees
55,000 55,000
OASIS
108,000 108,000
Library facility
2,00 2,00
Parking Meter Income
216,481
82,124
48,520
347,124
City Parking Lots
190,734
72,357
42,749
305,840
Marinapark
350,000
350,000
APPLIED DEVELOPMENT ECONOMICS PAGE 47
TIDELANDS FUND
Properties
Res Office Retail Light Ind.
Lodging Marine
Service Inst.
Pub. Total
Visitor -Serving
0 0 98,900 0
0 37,410
61,800 0
990,704 1,188,81
W.J. Carden Telescopes
1,80
1,80
Temp. Slip rentals
1,410
1,41
Galley caf6
20,000
20,000
Garages
40,704 40,704
Orange Co. Dock
36,000
36,000
Balboa Island Ferry
60,000
60,000
Balboa Pier Conc.
50,000
50,000
Newport Pier Conc.
25,000
25,000
Harbor Bait Barae
3,900
3,90
ranee. �eywu
Beacon Bay 650,000
Balboa Yacht Basin
Basin Marine Shipyard
Electricity
Bayside Yacht Sales
Apartments 30,528
Balboa Bay Club 1,605,00
Petroleum Royalty
Sale of aas
APPLIED DEVELOPMENT ECONOMICS
7,
TABLE 15
Fiscal Impact Of Visitors In Newport Beach
REVENUES
Total Residential
Office
Retail
Industrial Lodging
Marine Commercial Institutional
Public
GENERALFUND
Property Tax
$1,273,612
$726,928
$
$107,163
$
$439,521
$0
$
$
$
Sales Tax
$4,771,193
$
$
$4,176,80
$
$594,391_
$0
$
$
$
_
Transient Occupancy Tax--E8,298,000
$840,000
-.8
- -3
�-"- 57,458,00
_
SO"
_
S-
$
_
J _,„ Franchise Fees
_ $816048 __
V 88�m
S_
_ _ 578;16
__A_.
_ 5
$0
E -
w S
_ $
Business Licenses
$89,078
$
S
$72,09
S
$10,58
$0
$
$
$6,40
Motor Vehicle -in -Lieu
$0
$
$
$
$
$
$0
$
$
$
�.e ___�.._..__.—em _-_
Otherfrdergovemmental �
5250,791
$
$
_
E33,21
- �$
$20,90
$0
$
5
$ 9T 6,675
_,_„__ C„_,___harqesfor Service
i 9-665
$3383
_
- $
AIJ7,806 _ $
$113,191
$0
_ S
$
$1,064.83�
Fines, Penalties, and Forfeitures
$513,643
$12,48
$
$66,36
$
$41,77
$0
$
$
$393,015
Licenses and Permits
$59,919
$
$
$7,93
$
$4,99
$0
$
$
$46,99
_
Useof Property—
$2,490,233a
S
S 5667356
S
$5374
$120036
51,35
�aS
$1,597
Other Revenue
— $�87
21
$
$1179
_ $
$7.42
�$0
$
$--
$6984
Interest Income
$303,574
$25,51
$
$84,88
$
$137,435
$1,887
$80
$
$53,04
SUBTOTAL GENERAL. FUND
$19,619.045
$1,648,86
$
$5,495,77
$
$8,881,972
$121,923
$52;16
$
$3,428,35
TIDELANDS FUND
Licenses,Permits, and Fees
$520,000
$
$520,000
5''m'�
3-"-
—$0
$ -
S
$
Chargesfor$ery e
53,500
$
_ 4$
b ,J $
33,500
$
$
E
Use of Money and Property
$1,188,814
$
$
$98,90
$
$37,410
$61,80
$
$990,704
STATEGR"S1%XFUND .._._.�....
..-S72,01 --
-----5
---- -$
- - --5-
- -S
_.�_-.gp
S .�'e'
S
$9
TOTALREVENUE $21,649,919 $1,660,87 $ $6,357,28 $ $8,917,92 $192,833 $113,960 S $4,419,06
APPLIED DEVELOPMENT ECONOMICS PAGE 28
TABLE 15 (continued)
Fiscal Impact Of Visitors In Newport Beach
Service
EXPENDITURES Total Residential Office Retail Industrial Lodaina Marine Commercial Institutional Public
GM¢rxlGovemmenf
E7¢90,71T
$66,30 --
�$-
S291,782
-- — 5
' $99,30 -'--S
' ' s
SO
S T E1,133,322
— Ponce
54,9?5,517
$288.671m
S
$1760.533
$_
$_325,012 _
S$0_
-
$
MS5130j
Fire
$5,309,182
$137,045
$
$331,139
$
$247,801
$
$0
$
$4,593,19
Public Works
$3,351,071
$81,46
$
$437,965
$
$272,558
$
$0
$
$2,564,08
F-- Community D'8veloptmen
M 370,243
—S9,00
S
— R7,8'-i3
M S
$30,11 --$
$0
—
$283,2931
IL— __.CGlnmanfy.§ervices
$,369 w
$68136
S
$0
_. $
_. 5 .�.„,....5
$0 .....___...�
$
$i
CIP•streets
$261,056
$13,05
$
$195,848
$
$35,33
$
$0
$
$16,82
Other CIP Projects
$11,56
$
$62,188
$
$38,67
$__
$0
$
$363,828
-'_ SUBTOTALGENEHAL FUND
$15,61%097
_
$650,857
_
$
f2,864,255
$
- 5974787�"E
_
$0
$
$11,125,197
41DEwxnsFurlD
_�
_�_
__
Harbor Resources Division
$0
$
$
$0
$
$
$
$0�
$
$
Oil and Gas
$351,887
$
$
$0
$
$
$
$0
$
$351,887
-_-.«-
_
�316418
--- -E
_
Sf0}3
S - —
- $0 -
—__--$`_ E324J28
STATEGASTAXFUND
5311J46
$I5.,58
$
$233875
5_
$4119
S
$0
3$.2609'
MEASURE FUND
$211,611
$10,56
$
$158,843
$
$28,59
$
$0
$
$13,61
SUBTOTAL OTHER FUNDS
$1229,814
$29,23
$
$409,136
$
$8112
$
$0
$
$710323
APPLIED DEVELOPMENT ECONOMICS PAGE 29
HOSPITALITY AND VISITOR SECTOR
According to a recent report presented by the Newport Beach Conference and
Visitors Bureau, the city attracts about 7.18 million visitors per year, of which 81
percent are here on leisure trips." Of this number, 86 percent are day visitors, 7
percent stay in local hotels and the balance stay in private homes. About 64% of the
visitors reported visiting the beaches during their stay. This would amount to about
4.6 million visitors, or an annual average of 12,500 per day. During the peak summer
season, this average figure climbs to 100,000. Non -beach goers likely include many
business travelers and other Southern California residents coming to Newport Beach
to shop.
From an economic standpoint, visitors bring substantial income to Newport Beach.
Visitors spend an estimated $1 billion in the city each year, of which about $449
million are retail purchases and $83 million are lodging expenses. These two
categories of spending alone generated about $4.8 million in sales taxes and $8.3
million in Transient Occupancy Tax (TOT) for the City budget in 2001. Visitors
generate other revenues as well, including indirect business license and property
taxes, revenues from use of public property, and others. Table 15 summarizes the
comprehensive revenues and cost impact on local government by visitors to
Newport Beach. Overall visitors generate about $21.6 million per year against $16.7
million in service costs. The service costs include $4.9 million in police services, $2.7
million for beach lifeguards included in the fire department budget, as well as other
emergency medical calls made by the fire department. The net positive fiscal impact
of visitor business activity in Newport Beach, then is about $4.9 million per year, not
counting the net fiscal benefit of the marine industry, discussed below. These are
revenues that contribute toward City services provided to residents and businesses in
the community.
19 CIC Research, Inc. Profile of Visitors to Newpo)t 1iPidj FY2001. November 16, 2001. For purposes of
the study, visitors were defined as persons who lived outside of Newport Beach and were not in the
City for purposes of daily employment. About 18 percent of the survey respondents live in Orange or
Los Angeles counties. An additional 15 percent live in Riverside or San Bernardino counties. Overall,
about 8 percent listed shopping as the main purpose of their trip to Newport Beach. Although this is
not broken down by place of origin, it is likely that many of the visitors from elsewhere in Southern
California come to Newport Beach solely for shopping and would not be considered "tourists" in the
commonly understood meaning of that term.
APPLIED DEVELOPMENT ECONOMICS PAGE 30
MARINE INDUSTRY
As noted above, marine industries in Newport Beach, which include marina slip
rentals, boat sales, chartered vessels for events and sport fishing, boat repair, and
boat maintenance and manufacturing, account for over 1,000 jobs and generate
nearly $2.7 million in net revenues This positive fiscal result is largely due to property
tax derived from boats moored in Newport Beach marinas, sales tax generation
among boat dealers and other marina -related businesses, a marine charter fee, and
lease income from coastal property owned by the State of California but that the City
operates as the State's trustee.
For purposes of the fiscal analysis we have included the Citys Harbor Resources
Division in the costs associated with this industry. However, as noted above, there is
significant overlap between the marine industry and the hospitality industry.
The marine industries that manufacture, sell, and service the boats have undergone a
significant transformation in the past twenty years. There are issues today about the
continued viability of the marine industry in Newport Beach that should be
recognized in the general plan update process.
Twenty years ago, there were five to six major boat manufacturers in Southern
California, and a number of smaller outfits. Since that time, all of the major
manufacturers have left California, mostly to Florida. While a few of the smaller
manufacturers remain, others have moved inland to Riverside County. This has
largely been due to increased environmental regulation in California affecting
fiberglass manufacturing processes, as well as real estate price inflation in coastal
communities.
There has been a consolidation among boat supply and servicing companies as well.
As costs have risen, fewer firms are now serving the demand for specialty boat parts,
and boat repair and servicing. Those that do not have to be on the water have
moved to inland locations. Some have found locations in the West Newport
industrial areas, but many have gone further inland to the Costa Mesa, Huntington
Beach, and Long Beach industrial areas, as well as locations in Riverside and San
Diego counties and Mexico.
Those businesses still in the industry report very strong demand for their goods and
services. Although the total number of slips in Southern California is not growing
dramatically, there is a lot of "move up" sales activity as existing boaters purchase
larger and more expensive boats that require a greater level of support and servicing.
APPLIED DEVELOPMENT ECONOMICS PAGE
Businesses throughout the industry have expressed concern about the real estate
pressure on their locations near the water. This is an issue that continues to affect
businesses leasing space, particularly in the Cannery and Mariner's Mile areas of
town. As noted above, many businesses have moved inland and service boats in the
harbor from more remote locations. If this issue reduces the availability of boat
services in Newport Beach sufficiently, it may cause the consumer market in boats to
shift as well to other locations. Currently, the city realizes significant sales and
property tax revenues from boats and related industries.
The indirect benefit of the boating industry could also be improved by increasing
access for visiting boats to dock and launch facilities in Newport Harbor. This issue
is complicated by the fact that over 90% of the harbor frontage is in private
ownership. This leaves little opportunity for the City to increase the availability of
public facilities. However, if private entrepreneurs could add to the available
facilities, it would help increase the capture of visitor spending in Newport Beach on
restaurants and other retail goods and services.
APPLIEL
PRELIMINARY ANALYSIS OF NEWPORT COAST FISCAL
IMPACTS
INTRODUCTION
This chapter demonstrates how the fiscal model can be used to analyze future
development in the City by presenting an example of existing and projected
development in the Newport Coast area.
The analysis primarily illustrates the distinction between marginal service costs and
average service costs, which will be important in considering the impacts of future
development in other areas of the City as well. Marginal costs represent the actual
incremental costs of providing services to a new proposed development. In contrast, an
average cost approach would treat the proposed development the same as existing
development in the City and assume that the costs to serve it are similar on a per capita
basis as the costs to serve all other development in the City. The analysis in the previous
chapter is done on an average cost basis, because the intent is to show the levels of cost
the City incurs to provide for the existing residents and businesses.
The true marginal costs, on the other hand, can be either higher or lower than the
average depending on the levels of available service capacity. This can be most easily
illustrated with fire services, as the Newport Coast analysis shows. If the existing fire
stations in the City can serve a proposed development, then the incremental cost of
providing service is likely to be lower than the average since existing facilities, equipment
and manpower can be used. If a new station is needed, then the marginal cost of that is
likely to be higher than the average unless the development is so large that it supports
the need for a fire station all by itself.
As the City considers future development options in the General Plan Update process,
the location of the development and the status of existing services at those locations will
play a role in the fiscal impact analysis.
PROJECT DESCRIPTION
The land use data for the analysis is taken from the traffic model database for the year
2000 and the projection for the year 2025. The fiscal analysis evaluates the year 2000 as
DEVELOPMENT ECONOMICS
PAGE 33
the existing land use case and the year 2025 as full buildout of the area. As shown in
Table 16, buildout is about double the development levels in the year 2000. The traffic
model tracks non-residential development in terms of three employment categories:
retail, services and other. It was necessary for us to make assumptions about the more
specific business types this would entail in Newport Coast, as shown in the table.
The assessed value estimates for both scenarios are based on residential unit values of
$815,000 for single-family units and $600,000 for the condominiums. These values are
based on a review of property tax data in the Newport Coast area, and are higher than
the values obtained for the City of Newport Beach as a whole.
TABLE 16
Newport Coast Development: Year 2000 and 2025
Year2000
Year2025
Land Use Units Population Assessed Value Units Population Assessed Value
RESIDENTIAL
Single Family
1,264
3,001
$1,030,160,000
Condominium
1,136
2,697
$681,600,000
Apartment
0
0
$0
High Density
0
0
$0
Total Residential
2,400
5,699
$1,711,760,000
NON-RESIDENTIAL
Sq. R.
Employment
Office
15,000
50
$1,995,000
Retail
68,600
196
$6,311,200
Industrial
0
0
$0
Lodging
150,000
250
$15,600,000
3,063
7,378
$2,496,345,000
1,763
4,223
$1,057,800,000
0
0
$0
0
0
$0
4,826
11,601
$3,554,145,000
Sq. Ft.
Employment
45,000
150
$5,985,000
68,600
196
$6,311,200
0
0
$0
297,600
496
$30,950,400
Manne
0
0
$0 0
0
$0
Service Commercial
835,000
835
$100,200,000 1,329,000
1,329
$159,480,000
Institutional
100,000
100
$7,200,000 150,000
150
$10,800,000
Total Non -Residential
1,168,600
1,431
$131,306,200 1,890,200
2,321
$213,526,600
COST ANALYSIS
At the time of the annexation, City departments made estimates of expected service
costs, both for the initial development levels and for ultimate buildout. In some cases the
full service cost for buildout was funded initially, and in other cases the costs were
deferred until further development occurs. This situation raises the opportunity to
consider both the marginal cost of the initial annexation and the average cost of serving
the area at full buildout.
APPLIED DEVELOPMENT ECONOMICS PAGE 34
Fire Protection Services
Newport Coast has an existing fire station, designated No. 8 by the City, which was in
place at the time of annexation. At that time, the City estimated the cost of operating the
station at $1.39 million per year ' This is less than the average cost of operating other
stations in Newport Beach, estimated at about $2 million, but more than the incremental
per capita cost of adding the amount of development in Newport Coast in 2000. Since
the City assumed operation of the station, we have shown $1.39 million as the cost of
fire protection services in 2000 in Table 17.
As Newport Coast develops further, the City's plan is to move the existing Station No. 5
in Corona del Mar further south to obtain better response times to Newport Coast as
well as CdM. Thus, at buildout the City will serve Newport Coast from two stations.
However, based on the amount of development at buildout and the fact that Station No.
8 would also serve development west of Newport Coast, the net cost effect would be
approximately equal to the cost of one full station. This is estimated by the fiscal model
at nearly $1.9 million (fable 18), not including the cost of moving Station No. 5.
Therefore, the marginal cost of the initial annexation -at $1.39 million -was higher than
the average per capita cost would have been but, conversely, the marginal cost of
completing buildout of the area -at $487,000-is much less than the average cost.
Police Services
In the case of police services, part of the departmental expansion needed to serve full
buildout of the Newport Coast area was made at the time of annexation, and part was
deferred until a later time. Specifically, the detective division received the entire
complement of personnel needed to serve full development of the are21, while the
patrol and traffic divisions received an incremental increase that reflected immediate
service demands at the time of annexation.22
In estimating the costs of service, the full detective division cost -estimated at 25 percent
of the total police services cost -was included in Table 17, along with the incremental
cost of the traffic and patrol division as estimated by the fiscal model. This results in a
20 Terry, UlaszewsK Fiscal/Information Services Manager, Newport Beach Fire and Marine Department.
21 Captain Tim Newman, Detective Division Commander, Newport Beach Police Department
22 Captain Paul Henisey, Traffic and Patrol Division Commander, Newport Beach Police Department.
APPLIED DEVELOPMENT ECONOMICS PAGE 35
slightly higher cost for police services in Table 17, reflecting the year 2000, than would
be commensurate with the amount of development alone. As with the fire services, the
net increase at full buildout is accordingly less than it would be otherwise, estimated at
$944,000 compared to nearly $1.7 million to serve about the same amount of
development currently.
SUMMARY OF FISCAL IMPACT
Overall, the analysis suggests that the year 2000 development generates about $800,000
per year in net revenues, while doubling the development to achieve full buildout would
add another $1.9 million per year. Because the marginal costs of the annexation were
higher than the average cost, the second half of buildout of the area generates 40 percent
more in net revenue for the City than does the first half. Overall, Newport Coast does
very well for the City —including the residential land uses at buildout—primarily because of
the higher property values obtained in the area. Also, the fact that many of the streets are
privately maintained reduces the City's costs.
APPLIED DEVELOPMENT ECONOMICS 'PAGE 36
TABLE 17
Newport Coast Impact Year 2000
Revenues Total Residential Office Retail Industrial Lodging Marine Commercia Institutional Public
PropertyTax
3,133,213
2,909,992
3,392
10,729
0
26,520
0
170,340
12,240 $0
�� - SalesTa_zm614,643
5,737
3,-146
243,408-'-0
88,478
0 `
293,873
T_ransientOccupancyTax
1,031,060
0
0
0
0
1,031,060
�0
0
0 0
Fees
105,508
>
1,176
'� tl4,609
0 '�
5879
0
^ 19,635
2,352 0'� i
BusinesFranchise
s Licenses
55,498
_71,857
0
1,939
7,601
0
9,696
0�
32,383
a 3,878 0
_ ---_ s-- - - Mi;i- Vehide-in-Lieu
127-,780
127,780-
-- 0--
- _.O
O -_
U
Other Intergovernmental
71,264
56,961
500
1,959
0
2,499
0
8,346
1,000 0
Cha%esforService
385,837_^308,396
2,706
�10,607 _'0�T13,529
0
45,167
p' 5,412 0
Fines, Penalties, and Forfeitures
142,407
113,824
999
3,915
0
4,993
0
16,678
1,997 0
�-----�t.icensesandPermifs
_ 17,026
�� 13,609
�119
Use of Property
240,786
192,459
1,689
6,619
0
8,443
0
28,200
3,377 0
J
_ Interest Income
112µ�
90
1
3
m 0
4
0 ...�.s_
13
2 0
SUBTOTAL GENERAL FUND
5,950,442
3,820,934
15,843
290,614
0
1,172,585
0
619,614
30,851 0
TIDELANDS FUND
Licenses, Permits, and Fees
0
0
0
0
0
0
0
0
0 0
=--66ge----rvlce
_ -�0-
D
s
TO
Use of Money__ and Property
0
0
0
0
0
0
0�
0 0
GASTAX _�
137,062
- 109,552
961
3,768
0
-_4,806
_ 0"1_6Los,
1,922- 0
_
MEASURE M
_ 54,680
43,705
383
1,503
0
s 1,917
0
6,404
767 0
SUBTOTAL OTHER FUNDS
191,742
153,257
1,345
51271
0
6,723
0
22,456
2,689 0
TOTAL REVENUE
APPLIED DEVELOPMENT ECONOMICS PAGE37
TABLE 17 (continued)
Newport Coast Impact Year 2000
Service
Expenditures Total Residential Office Retail Industrial Lodging Marine Commercia Institutional Public
Fire
1,369,628
1,120,245
7,752
27,979
0
34,834
0
160,654
18,164 0
_92_9,079_
742,605 �,51 25,541 _._..__..�0
32,578
M 0
1%809
13,031 0
Community Development
102,649
82,047
720
2,822
0
3,599
0
12,022
1,440 0
h Services-
624,667 2
624,667
0 0_
0
0
0
Og�
0 0 1
_-Community
_�
Streets
33,911
8,756
470
11,413
0
--
4,071
_ 0�
8,596
605 0
_CIP
_e._____ OihefClPePraiecis
131,831
1D5,371
925
3,624
0
4,623
05,439�a�'1,849
0
SUBTOTAL GENERAL FUND
5,272,719
4,412,536
29,787
u�
188,706
0
137,439
0
448,132
56,120 0
TIDELANDS FUND
Harbor Resources
0
0
0
0
0
0
0
0
0 0
Oil and Gas
0
0
0
0
0
0
0
0
0 0
CIP
0
0
0
0
0
0
0
0
0 0
GAS TAX
40,495
10,456
561
13,629
0
4,861
0
10,265
723 0
MEASURE M
27,448
7,085
380
9,242
0
3,294
0
6,956
490 0
SUBTOTAL OTHER FUNDS
67,943
17,541
941
22,871
0
8,155
0
17,221
1,213 0
TOTAL EXPENDITURES
5,340,662
4,430,077
30,728
211,577
0
145,594
0
465,353
57,333 0
NET (COST)IREVENUE
801,522
(455,886)
(13,540)
84,308
0
1,033,715
0
176,717
(23,793) $0
APPLIED DEVELOPMENT ECONOMICS
PAGE 38
TABLE 18
Newport Coast Impact at Full Buildout
Revenues Total Residential Office Retail Industrial Lodging Marine commercial Institutional Public
GENERALFUND
Property Tax
Transient Occupancy Tax
_Charged
Fines, Penalties, and I
-'�"T�Licenses ai
6,405,042
6,042,047
10,175
10,729
0
52,616
0
271,116
18,360 $0
868,$0
-- 11,679
9,439 _
24733,408
0
- 35,861 }
0
467,734 _�
0 0
_'
1,031,060
0
rn 0
0
0
1,031,060
v 0
0
0 0
200,860
_ 146,281
3,527
1f,664
0
�0
'�'_ 31,252
90,014
0
5,817
7,601
0�
19,236
51,542
5,817 0
260,122
-,- 260,122
-_0
- 0-
0
- - _ _ 0
0
0T,
139,154
115,955
1,499-1,959
0
�4,958 J�0
�`
13,284
_ 1,499 0
0 N 16,751
Interest Income 166,262 124,103 747i 4,567� 0 20,618
SUBTOTAL GENERAL FUND 10,744,957 8,020,380 48,274 295,178 0 1,332,456
TIDELANDS FUND
0 1
0
1,001,667 47,001 0
Licenses, Perils, and Fees
0
0
0
0
0
0
0
0
0 0
Charges for Service
0
0
0
0
0_
n.r 0
0
0-
0 _.Ej
Use of Money and Property
0
0 0
0
0 .�
0
..
0
0 w._._
0 0
GASTAX -= 4Y {--'
88,971
88,971
.0--
0---6-
-- 0
0
T 0
0 101
MEASURE M
106,771
_
88,971
1,150 _
1,503
0
3,804
0
10,192
1,150 0
SUBTOTAL OTHER FUNDS
195,742
177,942
1,150
1,503
0
3,804
0
10,192
1,150 0
TOTAL REVENUE
10,940,699
8,198,322
49,424
296,682
0
1,336,260
0
1,011,859
48,152 0
APPLIED DEVELOPMENT ECONOMICS PAGE 39
TABLE 18 (continued)
Newport Coast Impact at Full Buildout
Expenditures
Total
Residential
Office
Retail Industrial
Lodging
Marine
Service
Commercial
Institutional
Public
GENERALFUND
General Government
872,951
761,787
6,810
16,810
0
21,982
0
58,497
7,065
0
Police_
2,556,081
2,190,467
22,271
100,516T�
0
74,288
'^0
146,778
21'761
0 '�
Rre
1,853,958
1,575,365
16,065
19,328
0
47,741
0
176,637
18,822
0
�_LL T_l�_�PUblicWorks�1,814,17TS,Si1,F17
19,547_
25,5414.r_.w_.0
64,634
1_73,182~'�
19,547�0 j
Community Development
200,440
167,023�
2,160
2,822
0
7,141
_0_
0
19,134
2,160
0
CommunityServices
1,271,640
1,271,640�
0�
"- 0
0
�'- 2
a _ 0
- 0
0
-
CIP Streets
53,312
17,824
1,409
11,413
0
8,076
0
13,682�
908
0
I vim., P OtherClP_Projects _
'g214,505
2,774
3�,624�g
0_
9,171
0
' 24,573
SUBTOTAL GENERAL FUND
�25_7;421
8,879,980
7,710,338
71,035�180,055
0
_ 233,034
0
612,483
73,036
0
TIDELANDS FUND
Harbor Resources
0
0
0
0
0
0
0
0
0
0
Oil and Gas
0
0
0
0
0
0
0
0
0
0
CIP
0
0
0
0
0
0
0
0
0
0
GASTAX
63,664
21,285
1,683
13,629
0
9,644
0
16,338
1,084
0
MEASURE M
43,148
14,424
1,140
9,242
0
6,536
0
11,071
735
0
SUBTOTAL OTHER FUNDS
106,812
35,709
2,823
22,871
0
16,180
0
27,409
1,819
0
APPLIED DEVELOPMENT ECONOMICS PAGE40
GENERAL PLAN BUILDOUT
Buildout of the existing General Plan would maintain an overall positive fiscal balance for
the City, in terms of annual operating costs and revenues. As summarized in the Table 19,
the City's housing units, population and total employment would all grow about 16 percent.
However, within these broad averages are some important variations.
TABLE 19
Growth Rates
2002 • Buildout
VARIABLE PERCENT
GROWTH
Occupied Single -Family Dwelling Units 3%
Occupied'Multi-Famlly Dwelling Units 25%
Total Occupied Dwelling Units 16%
Group quarters Population _ 0"/0
Population 16%
1 Employed Residents _ y 16%
Retail Employees 24%
Service Employees 16%
Other Employees 10%
p Total Employees
Elementary/High School Students
Lodging Rooms
Future residential growth is projected to focus heavily on multi -family development, which
will tend to shift the tax base to slightly lower cost housing. However, as noted in the
analysis of Newport Coast, housing prices for all types of units in Newport Beach are rapidly
reaching levels that can generate sufficient property tax to support public services. For the
buildout analysis we assumed a modest 5 to 10 percent real growth in housing prices, which
had a marked positive effect on the net cost of residential uses as shown in Table 20.
Within the employment figures, the buildout projection shows higher growth for retail and
lodging employment, at 24 percent and 19 percent, respectively. As discussed in the earlier
section of this report, these two business sectors are particularly strong net revenue
generators. Along with the growth in hotels rooms and regional population, we have
assumed a 20 percent growth in visitors to Newport Beach over the 20 to 25 years time
period needed to achieve buildout. The increased visitors add sales tax and transient
occupancy tax (TOT) to the City's revenues but would also increase costs for police
protection and emergency response among others. We have not assumed, however, a
APPLIED DEVELOPMENT ECONOMICS PAGE 41
commensurate increase in the marine industry or the number of boats moored in Newport
Harbor. The general plan buildout projection does not include additional marina berths, and
as discussed earlier, some elements of the marine industry are under pressure from rising real
estate prices and may not be able to expand readily in Newport Beach.
As shown in Table 20, the individual land uses perform about the same as in the existing
land use scenario earlier, but the total net revenue is higher as a percent of revenue due to
the increased proportion of sales tax, TOT tax and property tax from residential units. The
analysis also includes the assumption that City would see increased revenues from the use of
public property, as uses on these sites intensify to serve the increased resident and visitor
population.
It should further be noted that this analysis only addresses the annual costs of providing
services and does not include any capital costs or improvements to public facilities needed to
support the growth in the buildout projection. Due to the long time frame (20-25 years) to
achieve buildout, we have not attempted to estimate the marginal costs of expanding or
upgrading city facilities. As these costs are identified through subsequent analysis in the
General Plan Update process, a discussion of financing for public improvements will be
included in the fiscal analysis.
APPLIED DEVELOPMENT ECONOMICS PAGE 42
TABLE 20
Fiscal Impact of Existing General Plan Buildout
Service
REVENUES
Total Residential
Office
Retail
Industrial
Lodging
Marine Commercial Institutional Public
GENERALFUND
Property Tax $43,839,479
35,821,978
$3,333,991
$367,462
$1,195,363
$493,736
$524,860
$1,676,490
$425,599 $0
Sales Tax
$23,932,38
88,480
$2,336,795
16,940,997
$908,606
$730,552
$987,067
$1,939,884
$0 $0
TransientOccupancylax`
$10,732,2F�
965,756
_ $6 - ---
'- $0
�- ^' ;0 59,166456
$0 -
- --$U
- _ $0 $g
Franchise Fees__,850,12
1,308,183�1,0824318,921,186
360480
�$27,722
$176569
$35,736$0
Business Licenses
$2,789,70
414,409
$894,726
294,123
$114,664
$13,010
$27,224
$283,371
$22,32.3 $14,956
Motor Vehicle•in•Lieu
1,970,61
1_,970,618
$0_
$0
$0
$0
$0
$0
$0 $0
Ofhelntergovemmenial
_
4 1,854,78
878,700's$961,107
_
$135,496'
__
$14,524
_
25,695�' 11,778"-
_
5,017 -�
_
$16,45T $236,01Q
ChargesforService
$Y0,042,17
4,757,459
k2,495,527 73,3601
_ 8637e,__,_`139,120
63�768
$406,155
89102 $1,z77,803
Fines, Penalties, and Forfeitures
3,706,41
1,755,908
921,431
$270,761
$29,024
$51,347
$23,536
$149,906
$32,886 $471,618
Licenses and Permits
443,14
209,939
$32,373
$3,470
$6,139
$2,814
$17,923
$3,932 $56,387
_
Use of Property
_
6;234,56-�
1,191,404
_ _$110,168 _
�
_,369 $897,689
_
_ $157,570
-64,496--$1,149,625
_$56,488
- $105;871 $2;199,049
Other Revenue
_ 833`72
Y_ 312,069
163761 .,®46i127
158
_ 912679�183ba642
��$5,84583,818
Interest Income
1,696,11
777,579
$192,941
$314,011
$39,939
169,113
$47,112
$75,573
$11,642 $68,205
SUBTOTAL GENERAL FUND
110,325,42
50,252,481 $12,469,141
$20,293,555
$2,581,142$10,929,272
$3,044,688
$4,884,017
$752,392 $4,407,847
TIDELANDS FUND
Licenses, -Permmds, and Fees Y
1,274,89
T -' 6
$0
_ $636,474
'- � $9
r-"J-0"$636,420
-' $0
'--16 -'- $0
Charges for Service
$33J78
0
0
30_
$0
33,767_
v,�;,0,._._____$00
_
Use of Money and Property
6,248,79
2,651,212
$0
._ _
$132,077
$0
�_£0
$0
$1,157,559
$67,980
$127,600 $2,112,361
STATEGASTAXFUND
1,689,51
1,689,515
$0
$0
$0
$0
$0
$0
$0 $0
.1MM UREMFUND -'- ----@1,453,44
5,307
$141,3292
1,030,647
_
TOTAL REVENUE $121,025,85 54,598,516$12,610,469 22,092,753 $2,636,094$10,973,455 $4,934,152 $5,069,321 $879,992 $6,250,208
APPLIED DEVELOPMENT ECONOMICS PAGE 43
TABLE 20 (continued)
Fiscal Impact of Existing General Plan Buildout
Service
EXPENDITURES
Total
Residential Office Retail
Industrial
Lodging
Marine
Commercial
Institutional
Public
GENERALFUND
General Government
11,055,740
5,805,709 $1,924,851 $1,172,951
$247,800
$115,570
$57,630
$293,585
$77,651
$1,359,992
Police
35,480,007
16,731,187 $5,513,794 $7,037,249
$399,465
$171,063
$608,748
$244,418
$3,061,561
1-- Fire
25,526,657
_
�12,116,949 $4,780,764 $1,342,316
_$_1,712,522
$261,906
$247,442
$137,938
_
-$892,556
$201,93
$5;511,836
Public Works
24,179,820
11,455,760 $6,011,531 $1,766,479
$189,355
$334,995
$3S2,247
$978,003
$214,553
$3;076,8
Community Development
2,671,510
1,265,691 $664,185 195,170
$20,921
37,012
$16,821
$108,055
$23,705
$339,951
SUBTOTAL GENERAL FUND
TIDELANDS FUND
Harbor Resources Division
Oil and Gas
STATEGASTAXFUND
1,876,969
325,164
$416,610
954,203 $20,449 $51,860 $10,046
$67,760
$12,177
$18,701
MEASURE M FUND
1,272,348
220,343
$282,311
647,046 $13,856 $35,143 $6,808
$45,918
$8,252
$12,672
'gU-BT TALOTTIERFUNDS
-6-113,302--"1,014677
9-B875
1,668,232 $41,485 99,705 1,339,765
$150,763
_ ;78,564
$843,23{
TOTAL- EXPENDITURES
119,648,227
59,903,679
21,023,871
14,232,104 $2,517,980$1,325,150 $1,935,500
$3,228,226
$831,462
-14;650,254
APPLIED DEVELOPMENT ECONOMICS PAGE 44
APPENDIX A
LAND USE DEFINITIONS BY SIC AND NAICS
SIC DESCRIPTION
NAICS
DESCRIPTION
INDUSTRIAL
01 thin 09 Agriculture, Forestry, and Fishing
11
Agriculture, Forestry, Fishing
15 thru 17 Construction
21
Mining
20 thru 39 Manufacturing
22
Utilities
40 thru 49 TCPU
23
Construction
50 — 51 Wholesale
31-33
Manufacturing
42
Wholesale Trade
48.49
Trans and Warehousing
RETAIL
52 Building Materials and Garden Supplies
53 General Merchandise Stores
54 Food Stores
55 Automobile Dealers and Service Stations
56 Apparel and Accessory Stores
57 Furniture and Home Furnishings Stores
58 Eating and Drinking Places
59 Miscellaneous Retail
OFFICE
60 Depository Institutions
61 NondepositoryInstitutions
62 Security and Commodity Brokers
63 Insurance Carriers
64 Insurance Agents, Brokers, and Service
65 Real Estate
67 Holding and Investment Companies
73 Business Services
80 Health Services
• 81 • Legal Services
87 Engineering and Management Services
SERVICE COMMERCIAL
72 Personal Services
75 Auto Repair, Services, and Parking
76 Miscellaneous Repair Services
78 Motion Pictures
79 Amusement& Recreation Services
INSTITUTIONAL
82
Educational Services
83
Social Services
84
Museums, Botanical, Zoological Gardens
86
Memberships Organizations
91 thru 97 Public Administration
44.45 Retail Trade
722 Food Service & Drinking Places
52 Finance and Insurance
53 Real Estate
54 Professional, Scientific, &Technical Services
621.623 health Care
51 Information
561 Administrative and Support Services
81 Other Services
71 Arts, Entertainment, and Recreation
51213 Motion Picture & Video Exhibition
61 Educational Services
624 Social Assistance
APPLIED DEVELOPMENT ECONOMICS PAGE
LAND USE DEFINITIONS BY SIC AND NAICS
SIC DESCRIPTION NAICS DESCRIPTION
MARINE
2394
Mfg Of Canvas &Related Products
441222
Boat Dealers, New and Used
2499
Miscellaneous Wood Products Mfg
713930
Marinas
3663
Mfg Of Radio & TV Communications Equip
334220
Marine Radio Comm Equip Mfg
3731
Ship Building &Repairing
336612
Boat yards (Le. boat mfg facilities)
3732
Boat Building &Repairing
811490
Boat, Pleasure, Repair & Maint Services
3993
Mfg Of Signs & Advertising Specialties
713990
Boating Clubs w/o Marinas
4422
Coastwise Transportation - Water
4469
Miscellaneous Water Transportation Services
4489
Water Passenger Transportation
4491
Marine Cargo Handling
4492
Towing&Tugboat Service
4493
Marinas
4499
Yacht Maintenance
5063
Electrical Apparatus & Equipment
5091
Sporting &Recreation Goods & Supplies
5099
Miscellaneous Durable Goods Wholesalers
5146
Fish & Seafood
5551
Boat Dealers
7699
Miscellaneous Repair Services
LODGING
7011
Hotels & Motels
721
Accommodation
GOVERNMENT
NA
Not bmWd as cau ry in Bra LicFik
NA
I"cftules °"ly Cuy ofNempont Bead d pvtne
dassi�al toaumeVofdiJ nwNAICSta
APPLIED DEVELOPMENT EGOI
APPENDIX B
DISTRIBUTION OF `USE OF PROPERTY' REVENUES BY LAND
USE
GENERALFUND
Properties Residen Office
Retail Light Ind. Lodging Marine Service
Inst. Public
Total
Visitor•Serving 0 0
667,556 0 53,747 120,636 51353
0 1,547,54
2,490,23
W.J. Carden Telescopes
2,00
2,00
Temp. Slip rentals
1,50
1,50
Galley cafe
20,000
20,000
Orange Co. Dock
40,000
40,000
Garages
36,096
36,096
I h
25 000
25,000
Pay Te ep ones ,
CDM Concession 90,000 90,000
Misc. Concessions 2,60 2,60
Parking Meter Income 344,249 28,573 41,751 26,236 767,567 1,208,37
City Parkinn Lots 303,307 25,174 36,785 23,116 676,278 1,064,66
Beacon Bay 650,000
650,000
Balboa Yacht Basin 806,520
806,520
Basin Marine Shipyard 60,000
60,000
Electricity
10,000
10,000
Heritage Yacht Brok. 8,000
8,00
Balboa Yacht Club 4,50
4,50
Apartments 27,072
27,072
Intercity Bus Shelters
60,000
60,000
City facility Fees
55,000
55,000
OASIS
108,000
108,000
Library facility
2,00
2,00
Parking Meter Income 216,481 82,124
48,520
347,124
City Parking Lots 190,734 72,357
42,749
305,840
Marinapark 350000
350,000
APPLIED DEVELOPMENT ECONOMICS PAGE 47
TIDELANDS FUND
Properties Res Office Retail Light Ind. Lodging Marine Service Inst. Pub. Total
Visitor -Serving 0 0 98,900 0 0 37,410 61,800 0 990,704 1,188,81
W.J. Carden Telescopes
1,80
1,80
Temp. Slip rentals
1,410
1,41
Galley caf6
20,000
20,000
Garages
40,704
40,704
Orange Co. Dock
36,000
36,000
Balboa Island Ferry
60,000
60,000
Balboa Pier Conc.
50,000
50,000
Newport Pier Conc.
25,000
25,000
Harbor Bait Barge
3,900
3,90
Balboa Parking Lot
950,000
950,000
Non -Visitor -Serving 2,285,52
0 7,614 0
0 960,486
0 110,000 807,050
4,170,67
Amer. Legion
110,000
110,000
Beacon Bay 650,000
650,000
Balboa Yacht Basin
900,486
900,486
Basin Marine Shipyard
60,000
60,000
Electricity
7,05
7,05
Bayside Yacht Sales
7,614
7,61
Apartments 30,528 30,528
Balboa Bay Club 1,605,00 1,605,00
Petroleum Royalty 750,000 750,000
Sale of gas 50,000 50,000
APPLIED DEVELOPMENT ECONOMICS PAGE 48
FISCAL IMPACT ANALYSIS
AND MODEL
NEWPORT BEACH
GENERAL PLAN UPDATE
May 2003
Prepared for the
City of Newport Beach
Prepared by
Applied Development Economics, Inc.
2029 University Avenue, Berkeley, CA 94704 (510) 548-5912
1029 J Street, Suite 310, Sacramento. CA 95814
CONTENTS
INTRODUCTION....................................................................................................................................1
APPROACH TO THE ANALYSIS ......................... .... .......... ....... ..... .... .... ........ ..............I
...... I ..... I .... ...2
Existing Land Uses.......................................................................................................................3
BudgetOverview..........................................................................................................................4
Budget Adjustments......................................................................................................5
Revenue and Cost Calculations by Land Use...........................................................................7
MajorRevenues...............................................................................................................7
Other Revenues.............................................................................................................12
MajorCost Categories..................................................................................................13
Capital Improvement Program...................................................................................18
PerCapita Costs and Revenues...................................................................................19
ANALYSIS OF FISCAL IMPACTS BY LAND USE TYPE.........................................................21
Citywide Summary......................................................................................................................21
Revenues.....................................................................................................
21
Costs
22
..........................................................................................................
Hospitality and Visitor Sector...................................................................................................26
Marine Industry ...........................................................................................................................27
PRELIMINARY ANALYSIS OF NEWPORT COAST FISCAL IMPACTS 33
Introduction............................................................................................................33
Project Description..................................................................................................34
FireProtection Services................................................................................35
Police Services.............................................................................................35
Summary of Fiscal Impact........................................................................................36
GENERALPLAN BUILDOUT.........................................................................................41
APPENDIX
Appendix A: Land Use Definitions by SIC and NAICS....................................................45
Appendix B: Distribution of Use of Property Revenues By Land Use .............................47
LIST OF TABLES
1. Land Use Descriptions..........................................................................................................................4
2.2002-03 Budget Revenues Included in Fiscal Analysis.....................................................................6
3. 2002-03 Budget Expenditures Included in Fiscal Analysis..............................................................7
4. Assessed Value and Property Tax Estimates by Land Use..............................................................8
5. Sales Tax Revenues by Land Use.........................................................................................................9
6. Transient Occupancy Tax by Lodging Type.................................................................. ..................
11
7. Business License Revenue by Land Use...........................................................................................12
8. Police Department Budget 2002-2003..............................................................................................14
9. Police Department Cost Analysis......................................................................................................15
10. Analysis of Summer Peak Demand for Police Services...............................................................16
11.2002-03 CIP Expenditures Included in Fiscal Analysis...............................................................19
12. Unit Costs and Revenues..................................................................................................................20
13. Summary of Fiscal Analysis..............................................................................................................24
14. Retail Employment and Fiscal Impacts...........................................................................26
15. Fiscal Impact of Visitors to Newport Beach.................................................................................28
16. Newport Coast Development: Year 2000 and 2025.........................................................23
17. Newport Coast Impact Year 2000..................................................................................
37
18. Newport Coast Impact at Full Buildout..........................................................................39
19 Growth Rates, 2002 — Buildout.......................................................................................41
20 Fiscal Impact of Existing General Plan Buildout..............................................................43
LIST OF FIGURES
1. Sales Tax Revenue by Land Use Type...............................................................................22
2. Gross Revenues by Land Use...........................................................................................22
3. Economic and Fiscal Relationships in Newport Beach......................................................27
INTRODUCTION
This report discusses how various land uses and business types contribute to the
revenues and costs for city government. The focus of this discussion is on the
existing land use mix in Newport Beach, although it also includes an analysis of the
future buildout of the existing General Plan. As the General Plan update process
moves forward, a similar analysis will be conducted to determine the potential fiscal
impact of future land use alternatives.
It is important to recognize that the point of this analysis is to understand how the
mix of land uses in Newport Beach contributes to the revenues needed for municipal
services for both residents as well as businesses. For purposes of the General Plan,
the goal of the fiscal analysis is to identify the best mix of land uses to balance the
revenues generated with the cost for municipal services in the City. Therefore, the
fiscal "performance" of individual land uses should be viewed from an overall
citywide perspective.
The report is written to provide a detailed explanation of the methodology,
assumptions, and data sources used to estimate fiscal impacts for each land use. This
analysis is intended to serve as a planning tool for decision makers in the General
Plan update process. Based on this analysis, ADE will develop an interactive
software program for the City to use in estimating fiscal impacts, not only for
General Plan land uses, but also for individual development projects that may be
proposed in the future.
APPLIED DEVELOPMENT ECONOMICS PAGE 1
APPROACH TO THE ANALYSIS
City government uses a variety of revenue sources to fund the operation of local
services and the construction of public facilities. Some of these revenue sources are
more affected by the land use mix in the City than are others. For example, property
taxes and sales taxes are directly related to the type of property and the business mix
in the City. On the other hand, the City's federal entitlement of Community
Development Block Grant funds is affected by the population size of the City but is
otherwise not a function of the land use mix in the City.
Also, because Newport Beach is a Charter City (as opposed to a "General Law" city)
the Newport Beach City Council has the ability to set certain tax rates and fees, such
as the business license tax rate or building permit fees. However, the Council has
only limited authority to set other tax rates, such as the property tax or the sales tax,
or to apply additional taxes or fees, without the consent of a simple majority or a
supermajority of electors responding in an election. In considering the effect of
existing and future land uses on the City budget, it is important to sort out the types
of revenue and costs that are most pertinent.
In general, it is most important to isolate the effect of development on revenues
which the City has less ability to raise, such as general taxes, than on direct charges
for services which can be increased to meet rising costs as necessary. Consequently,
the analysis is focused more on services funded by general tax revenues, such as the
property tax and the sales tax among others, than on services funded by direct
charges such as the water and sewer enterprise funds, building permit and plan check
fees, or other fees charged directly to customers at City Hall. At this point, our
assumption is that fees charged for specific services are adequate to cover the costs
of those services.'
At this stage in the process, the fiscal analysis addresses the effect of land use,
including related population and'business activity, on municipal operating costs and
revenues. In the present report, such costs are primarily estimated on an average
basis with only a brief discussion of the marginal costs to serve future development.
As we move forward with a projection of the effects of potential future land uses, it
' A more in-depth study of City operations would be necessary to verify this assumption. However, if
it is not the case, it is within the authority of the City Council to adjust the fee schedules.
APPLIED DEVELOPMENT ECONOMICS
PAGE 2
will be important to consider the existing capacity in the city's service system and
determine whether ornot the incremental, or marginal, cost of serving new
development is the same as the average cost of serving existing development. That
analysis will likely depend to some degree on the location of the proposed new
development in addition to the type of land use.
This chapter begins with an overview of land uses in Newport Beach, followed by a
discussion of the City budget to help clarify some of the distinctions between costs
and revenues raised above.
EXISTING LAND USES
Newport Beach's physical setting encompasses about 25 square miles of land, of
which approximately three-quarters is developed into a mix of residential (70 percent
of developed land) and non-residential (30 percent of developed land) uses. The
remaining one quarter of undeveloped land, including the City's coastal beaches, is
primarily used for recreation and open space s.
Currently, the City is estimated to have about 36,600 dwelling units. Approximately
40 percent of housing units are single-family units and 60 percent are multi -family
units. The average assessed valuation for existing housing is $625,000 for single-
family units ($814,000 in Newport Coast) and $431,000 for multi -family units. In
2001) the median price of "for sale" housing in Newport Beach was $718,400. D
While residential development is treated as a single land -use category for purposes of
this fiscal analysis, non-residential uses were split into seven distinct categories:
office, retail, light industrial, lodging, marine -related, service commercial, and
institutional. Newport Beach businesses were segmented into one of these categories
based on their standard industrial classification (SIC) code through an analysis of the
City's business license records. Appendix A shows the detailed SIC code definitions
for each category, and a general description of the business types included in each
category is provided in Table 1 below.
z Neapon&vk CmwtCr W", hium Clxibff, November 2001, p. 26.
n Ibid. p. 28.
APPLIED DEVELOPMENT ECONOMICS PAGE 3
TABLE 1
Land Use Descriptions
Land Use Category
Description
All retail stores (including auto dealerships) and eating and drinking places,
Retail
except those that are included in one of the categories below
Business and professional services, financial institutions, health care services,
Office
etc.
Construction contractors, wholesale distributors, manufacturing,
Industrial
transportation, public utilities, etc.
Primarily includes personal services (e.g. beauty salons, dry cleaners), repair
Service Commercial
services, entertainment e.. movie theaters), and recreation e.. health clubs
Lodging
Hotels, motels, B&Bs, vacation rentals, etc.
Institutional
Schools, churches, social services, membership or anizations, etc.
Several detailed business types that would otherwise fall within one of the
categories above, but which have a direct relationship with activity along the
Marine
Newport Beach coast. Examples include yacht building and maintenance,
boat dealers and repair services, marinas, equipment manufacturers for
marine vessels, sport fishing outfitters, etc.
The most significant component of this category is the beaches, which attract
Public
most of the visitors to Newport Beach.
BUDGET OVERVIEW
The total budgeted expenditures according to the 2002-2003 budget for the City of
Newport Beach are $158.9 million, of which $34.5 million are for Capital
Improvement Projects. Estimated General Fund expenditures for the current fiscal
year are $94.5 million, while revenues are estimated at $95.5 million (Table 2). The
top three revenue categories — property tax ($36.8 million), sales tax ($19.8 million),
and transient occupancy tax ($8.3 million) — account for nearly seventy percent of
total General Fund revenues. On the expenditure side, Police ($30.6 million), Fire
($20.1 million), and Public Works ($20.3 million) account for three-quarters of all
service costs (Table 3). The General Fund also includes about $4 million of
appropriations for projects within the City's Capital Improvement Program (CIP),
excluding rebudgets."
In addition to the General Fund, three other major funds are of importance for the
fiscal analysis. The first is the Tidelands Fund (also known as the 'ride and
Submerged Lands Fund'), which collects revenue from the use of public property
4 Rebudgeted funds for CIP projects appear in Table 3 as adjustments to expenditures, since the fiscal
analysis is intended to match revenues from the current fiscal year with current year expenditures.
APPLIED DEVELOPMENT ECONOMICS
PAGE 4
that the State of California designates as "tidelands" (i.e. land once underwater or
currently below the mean high tide line). The Tidelands Fund has total 2002-03
revenues of about $6.5 million and expenditures of $3 million, including CIP projects
but excluding transfers to the General Fund. The Tidelands Fund provides about
$3.4 million to the General Fund in 2003-03 to pay for Tidelands -qualified city
services in the coastal area.
The second fund is the Gas Tax, which is funded from the State based on primarily
population in each city. According to State law, these funds must be accounted for
separately and used exclusively for repair, construction, and maintenance of the
street and highway system. Newport Beach has a total of 2002-03 Gas Tax revenues
of approximately $1.5 million.
Finally, the Measure M Fund is funded in part from the county sales tax for
transportation programs and in part from competitive grants from the countywide
pool of Measure M funds. Measure M revenues for 2002-03 are approximately $2.2
million. Of these, however, only the annual "turn back" revenues are included in the
fiscal analysis as net revenues.
Both the Gas Tax and Measure M funds are used exclusively for projects within the
Civ/s CIP.
Budget Adjustments
Some adjustments were made to the original budget figures, as shown in tables 2 and
3, in order to account for budget items that are not annually recurring. On the
revenue side, these include intergovernmental grants (e.g. `competitive' Measure M
funds), fees for zoning and building activities, and construction -related permits. On
the cost side, the value of development —related fees and permits are deducted from
the budgets of the planning and building departments.' These adjustments are made
for development -related costs and revenues because they typically occur at the
building, planning and construction phase and do not represent an ongoing cost of
government services once the buildings are completed.
S Adjustment include the following budget accounts: Intergovernmental: 4824-4827,4858, 4862, 4893,
4$96.4898; Charges for service: 5000.5004, 5007, 5023; Licenses and permits: 4610, 4612, 4614, 4616,
4618,4622.
APPLIED DEVELOPMENT ECONOMICS PAGE 5
The total estimated General Fund Budget after adjustments (i.e. net revenue) is
approximately $92.3 million for 2002-03, with another $9.2 million of revenue in the
Tidelands, Gas Tax, and Measure M Funds, for total revenues of $101.5 million.
Adjusted General Fund Expenditures are $96.2 million, plus $5.3 million in
expenditures within the other three funds included in the analysis. The overall budget
figure upon which this analysis is based is approximately $101 million.
TABLE 2
2002.03 Budget Revenues Included In Fiscal Analysis
REVENUE
ADJUSTMENTS
NET BASIS
General Fund
Property Tax
$36,880,101
$36,880,101
Sales Tax
19,841,351
19,841,351
Transient Occupancy Tax
8;298,000
8,298,000
Franchises
2;340;000
%S90,'000
Business Licenses
2,365,000
2,365,000
Motor Vehicle -in -Lieu
1,700,000
1,700,000
ptherintergovernmental
1,990,127
426,174,
11563;953
ChargbstforService
%51;5;855}
1,,048;300
.8,467l555
Fines, Forfeitures, Penalties
3,125,250
3,125,250
Licenses/Permits
1,819,860
1,446,200
373,660
Use of Property
5,284, 88:
5,284;288'
OthenRevenue
730;435
175,00o
555;435
Interest Income
1,50o,o00
1,500,000
General Fund Subtotal
95,440,267
3,095,674
92,344,593
TidelandvFund
LicenseslPermitslFees
1,153,900
1,153;000
Charges for Service
33,500
33,500
Use of Money and Property
5,359,492
5,359,492
State Gas Tax Fund
1,457,000-
1,457,000
MeasuwWFund
2,20%580
1;005,580
1,200,000
Subtotal Other Funds
10,209,072
1,110,580
8,047,492
Source: ADE, Inc., based on City of Newport Beach, Ksad yrrrr 2002-03 BudgerDmz d.
APPLIED DEVELOPMENT ECONOMICS PAGE 6
TABLE 3
2002.03 Budget Expenditures Included in Fiscal Analysis
General Government
$9,368,986
$9,368,986
Police
30,132,466
30,132,466
Fire
21,525,002
21,525,002
Public Works [aj
20,389,515
20,389,515
Community Development
4,747,238
2,494,500
2,252,738
Community Services
8,293,665
8,293,665
CIP • Streets
2,366,000
1,061,000
1,305,000
Other CIP Projects
4,766,265
1,873,115
2,895,150
General Fund Subtotal
101,596,546
8,127,868
96,167,931
TIDELANDS FUND
Harbor Resources
1,282,138
1,282,138
Oil and Gas
351,887
351,887
CIP Projects
1,466,442
400,785
1,065,657
GASTAXPUND
2,274,121
716,354
1,558,387
MEASUREMFUND
2,061,605
1,005,580
1,056,025
Subtotal Other Funds
7,436,793
2,122,699
5,514,094
TOTAL
109,033,339
10,250;567
101,482,025
Source: ADE, Inc, based on Cityof Newlwtt Beach, FLzd)w2002.03 &d6etD&d.
[al includes Public Works, General Services and thilides.
REVENUE AND COST CALCULATIONS BY LAND USE
Major Revenues
The major revenue categories of property tax, sales tax, transient occupancy tax
(rO'I ) and business license tax were allocated among the various land uses based on
actual 2001 data provided by the CityRevenue Division. Each of these revenues and
how they were distributed across land uses is described below.
Property Tax
In general, the City receives about 17 cents of every property tax dollar paid by
property owners within the city's boundaries. The distribution of property tax
revenue across the various land uses was based on an analysis of assessed valuation
(AV) data obtained from the Orange County Assessor. This data set includes over
29,000 records with detailed parcel information such as owner name and address, site
address, valuation, and a set of land use codes used by the Orange County Assessor.
The analysis involved sorting the data by land use and, in some cases, site address in
order to calculate the total assessed valuation by land use and then the local share of
APPLIED DEVELOPMENT ECONOMICS PAGE
the property tax revenue. 6 The results of this analysis are summarized in the table
below:
TABLE 4
Assessed Valuation And Property Tax Estimates By Land Use
Assessed
Property Tax
% of
Land Use Category
g ry
Valuation
Estimate
Total
(millions)
(millions)
Residential
15,740
29.31
79.5%
Office
1,697
3.16
8.6%
Service Commercial.
761
1,A2
31%
Ligh8lndusfri'a&
690
1.2&
3.5%
Marine Industry
282
0.52
1.4%
Lodging
236
0.44
1.2%
Institddcndl
206
0.38•
1i0%
Retail
192
0:36
1.0%
Total
19,803
36.88
100%
Source: ADE, Inc., based on data provided by the City of Newport Beach Revenue Division.
Significantly, residential properties — which account for about 70 percent of
developed land in Newport Beach - generate nearly eighty percent of the property
tax for the City. At under 10 percent of property tax revenue, office development is a
distant second.
Sales Tax
The city receives one cent of every dollar spent within the city s boundaries on
taxable products. Taxable transactions occur not only at retail stores, but at a wide
variety of commercial locations throughout the city. For example, many taxable
business -to -business transactions, in which products are sold to end users rather than
to entities with resale permits, occur at office and light industrial locations. Examples
of non -retail businesses that generate sales tax revenue in Newport Beach include
parts manufacturers for marine vessels, food processing equipment distributors,
landscaping product wholesalers, medical equipment suppliers, and software
developers.
In addition, many service commercial businesses generate sales tax by carrying
products related to their service, such as beauty salons that sell shampoos and
cosmetics. This category also includes auto rental firms. Large hotels also have
6 For properties within Newport Beach, the City receives approximately 17 percent of the one percent
property tax levy.
DEVELOPMENT ECONOMICS PAGE 8
ancillary retail shops and food services that generate sales tax revenue. The marine
category includes a number of sales tax generating businesses that are both retail and
industrial in nature, including sales of new and used boats, marine fuels, and
manufacturing and sales of boat parts. Finally, sales tax revenue that is attributed to
the residential category is the result of taxable sales that occur at home -based
businesses in Newport Beach!
The sales tax revenue that accrues to the city was distributed across the various land
uses through an analysis of 2001 sales tax data provided by the Revenue Division!
TABLE 5
Sales Tax Revenue By Land Use
Estimated Sales
%of
Land Use Category
Tax Revenue
Total
(t,000s1
Retail
13,922,674
70.2%
Wes
1,938,437
9.8%
Service Commercial
1,439,043
7.2%
Marine industry
978,688
4.9%
Light Industrial
892,789
4.5%
Lodging
594,391
3.0%
Residential
76,329
0.4%
Institutional
0
0.0%
Total
19,841,351
100%
Source: AM Ina, based on data provided by the City of Newpon Beads Revenue Division.
Table 5 displays the results of the analysis of this important revenue source. Over 70
percent of Newport Beach's sales tax revenue is derived from retail establishments,
and nearly 10 percent are from taxable transactions at office -based businesses. The
remaining 20 percent is divided into the other categories as shown.
7 Sales taxes are distributed to cities based on the location of the point of sale, not the residency of the
buyer. Thus, Newport Beach gets a portion of all the sales generated by Fashion Island and other
retail businesses in the City, whether or not the customers are Newport Beach residents. Conversely,
if residents shop outside the City, Newport Beach receives none of that sales tax. For this reason,
residential uses generate sales tax revenue indirectly, through resident spending at Newport Beach
businesses, as well as directly, through taxable sales at home -based businesses.
B Annual audit report of Newport Beach sales tax prepared byNMIA. All Newport Beach businesses
that generate sales tax are assigned a State Board of Equalization (BOB) business code, which was the
primary basis for the sales tax analysis. The data was cross-referenced with the other primary data
sourced used in the fiscal analysis for consistency.
APPLIED DEVELOPMENT ECONOMICS PAGE 9
It is important to note that the figures in Table 5 reflect the direct impact of each
type of business, and not the indirect impact of their employees. For example, in the
office category, the figures include only the actual sales taxes generated by office -
based businesses. In addition, office employees spend money at retail establishments,
which could be considered an indirect benefit of office development in Newport
Beach. However, the analysis treats this revenue as the direct impact of the retail
businesses, not the office businesses.
Transient Occupancy Tax (TOT)
The TOT, also known as the Hotel Bed Tax, accrues to the City at the rate of 9
percent of room charges (with an additional 1 percent going to the Newport Beach
Conference and Visitors Bureau). The City separates TOT into two land use
categories: lodging and residential. Newport Beach has several major hotels such as
the Four Seasons and the Hyatt Newporter, as well as numerous smaller inns and
motels. Altogether, these lodging facilities provide a total of about 2,600 guestrooms.
In addition, there are approximately 625 seasonal vacation rental properties that also
generate TOT if they are rented for less than a month at a time.'
A detailed analysis of the Cit/ s 2001 TOT revenue is shown in Table 6 below. For
the current 2002-03 budget year, the City's is expecting this revenue source to decline
somewhat and has projected revenues of about $7.45 million in TOT from hotels
and motels/inns, plus $840,000 from vacation rentals.
Business Licenses
Total annual business license revenue is approximately $2.4 million according to the
2002-03 budget. Nearly half the business license revenues are derived from
residential -based businesses and out of town businesses.10 Business license revenue
from home -based businesses is about $358,000 (15 percent of the total), while out-
of-town businesses generate about $685,000 (29 percent). Revenues from out-of-
town businesses and in -town residential businesses are of particular benefit to the
9 Importantly, "timeshare" units, many of which already exist or are planned for development in the
Newport Coast area, are not subject to TOT unless the timeshare operator rents the unit(s) on a
nightly basis.
10 "Out of town" businesses are those that provide services in Newport Beach but have no permanent
physical or mailing address in the City
APPLIED DEVELOPMENT ECONOMICS PAGE 10
City because such businesses do not carry the same service costs that are associated
With commercial locations within the City.
The total amount of business license tax revenue from all commercial land uses
Within Newport Beach is approximately $1.7 million. These revenues were
distributed among the various land uses based on SIC code. The full results of the
analysis of the City's business license tax revenues are displayed in Table 7 below.
TABLE 6
2001 Transient Occupancy Tax By Lodging Type
u.».. Add.,.. Numberof 2001TOT
Newport Beach Inn/Best Western
6208 Coast Hwy W
46
Balboainn
105 Main St., Balboa CA
34
Newport Channel Inn
6030 W Coast Hwy
30
Bay Shores Inn
1800 Balboa Blvd.
24
Little Inn by the Bay
2627 Newport Blvd,
18
Portofino Beach Hotel
2306 Ocean Front Way
15
Doryman's Oceanfront Inn
2102 Ocean Front West
10
Marriott Suites
500 Bayview Circle
250
Balboa Bay Club
1221 W Coast Hwy
123
Subtotal
600 $1,786,420
Major Hotels
Marriott Hotel 8c Tennis
900 Newport Center Dr.
576
The Sutton Place
4500 Macarthur Blvd
435
Hyatt Newporter
1107 Jamboree Rd.
405
ItadissonHotel
4545 MAcarthur Blvd
535
Four Seasons
690 Newport Center
295
Subtotal
2,040 $ 6,588,259
t;rana rotas z,twu rooms; 'N7px1"rou
625 vac. rentals
Source: ADE, Inc., based on data provided by the City of Newport BeachRevenue Division.
APPLIED DEVELOPMENT ECONOMICS PAGE 11
TABLE 7
Business License Revenue By Land Use
No. of
Business
Land Use Category
Active
License Tax
% of Total
Businesses
Revenue
Office
4,055
742,200
30.9%
Retail
1,145
240,299
10.0%
Service Commercial
553
2,10,064'
8.7%
Light Industrial
630
112;668
4:7%
Marine Industry
100
26,993
1.1%
Institutional
85
18,417
0.8%
Lodging
39,
10;585
6A
Subtotal
7,l)45 '
1,718,733
56.60/,'
Residential -based
3,388
357,507
14.9%
Out-of-town
4,174
684,641
28.5%
Total
14;607
$2.4 WioA
100%
Source: ADE, Inc., based on data provided by the City of Newport Beach
Revenue Division.
Other Revenues
All of the other recurring general fund revenues included in Table 13 were calculated
based on employment and population factors, with the following exceptions:
o Franchise fees were estimated on a per capita basis (not including visitors,
however), with the additional assumption that 60 percent of these revenues are
generated by business uses and the remainder by residents." This split reflects
the typical distribution of utility usage for a city like Newport Beach.
❑ Revenues categorized under "Use of Money or Property" in both the General
Fund and the Tidelands Fund were categorized based on the nature of the
activity associated with the revenue. A table summarizing each of these revenues
is provided in Appendix B. City parking lot revenues were allocated to both
public and commercial land uses based on the business types located in the
"Franchise fees are paid to the city by private companies that have contracts with the City to provide
services such as gas, electricity, cable TV and solid waste disposal. The company that provides towing
services for the Police Department also pays a franchise fee; however, these fees are included in the
Licenses and Permits category. The 60/40 split between non-residential and residential uses is based on
analysis of franchise revenues in other California communities in lieu of specific data pertaining to
Newport Beach.
APPLIED DEVELOPMENT ECONOMICS PAGE 12
-,ricuuty of each lot, as well as their proximity to visitor -serving public areas such
as the beaches.
❑ The Marine category also included an estimate of property tax revenue derived
from boats that are moored in Newport Beach marinas. According to data
provided by the Revenue Division, there are 3,535 boats from which the City
currently receives unsecured property tax revenue. The total assessed valuation
of these vessels is approximately $133 million.
❑ Interest income was estimated at irate of 1.6% of all other revenues, based on
the ratio of total interest income to all other revenues for the current budget
year.
Major Cost Categories
In general, costs were calculated on a per capita basis as described in the next
section, with the following exceptions or refinements:
General Government
The General Government category, with a total budget amount of approximately
$9.4 million, was allocated among the various land uses in proportion to each land
use's share of all other expenditures. The underlying assumption of this approach is
that general government services are essentially administrative overhead and a direct
function of the costs of services provided by the City's various departments.
Fire and Lifeguards
Eighty percent of Fire Department costs (less the $2.7 million cost for lifeguards,
which was wholly ascribed to public uses) were distributed on a per -capita basis, the
remaining 20 percent of fire costs were allocated among the various land uses in
proportion to their assessed valuation. This approach is based on information
provided by the NBFD that indicates that, aside from the lifeguarding function, 80
percent of their activity is associated with responding to EMS calls and 20 percent is
for fire fighting and prevention.
Police
The Police Department is organized into four divisions, in addition to the office of
the Chief of Police: Traffic, Patrol, Detective and Support Services (Table 8). In
order to estimate the distribution of police activities by land use category, we
reviewed police records on the types of services provided both citywide and by
APPLIED DEVELOPMENT ECONOMICS PAGE 13
reporting district. Most of the Police Department reporting districts contain a mix of
land uses. Therefore, in order to isolate the services provided to specific types of
development, it was necessary to use a modified per -capita approach. Table 9
summarizes this analysis.
TABLE 8
Police Department Budget
2003.2003
Division
Budget
Police Chief
$1,387,010
Traffic Division
$3,769,036
Patrol Division
$12,106,233
Detective Division
$5,295,066
Support Services
$7,582,531
Total
$30,139,876
Source: ADE, Inc., based on City of Newport Beach, Fisad yarn 2002.03 BraigerDcvaiL
In the left hand column of Table 9, the resident population, the average visitor
population, and the number of employees by business type are presented. The
employment figures are further allocated to visitor -serving and non -visitor serving
business activity. The total average "daytime population" in Newport Beach is
151,732, including all of these resident, visitor and worker groups.12 Of the total
daytime population, residents comprise about 50 percent, visitors (on average) are 13
percent, workers serving visitors are four percent and the remaining workers are 33
percent.
An important consideration in Newport Beach is the extent to which police services
are related to visitor activity and visitor -serving businesses. As shown in Table 9,
visitors represent 13 percent of the daytime population on an average basis, but
visitorship peaks heavily in the summer months. The change in demand for police
services during the summer months may be expected to indicate the effect of visitors
on police services overall. Table 10 shows five main types of police activity: calls for
service, citations, crimes, arrests, and traffic accidents. The table shows the monthly
average for each type of activity for the September to May (non peak) period and,the
June to August (peak) period. In every case, there is a measurable peak during the
summer months. For example, calls for service are 28 percent higher during the
12 In actuality, some Newport Beach residents commute out of the city to work, but for the purposes
of standard fiscal impact methodology, the term "daytime" population includes all residents.
APPLIED DEVELOPMENT ECONOMICS PAGE 14
summer months while other citations are more than doubled. This peak effect, when
measured against the annual service load, represents about 7 percent of total police
activity (and more than 30% of non -vehicle code citations)."
TABLE 9
Police Department Cost Analysis
Per Capita Per Cap Trafflc Patrol
Residential Pop.
75,662
48.4%
$1,753,582
$5,939,544
$2,445,043
$4,295,384$14,433,553
47.9%
Visitors
19,671
12.6%
216,564
995,136
580,341
759,260
2,551,301
8.5%
Employees
Visitor Serving
5,456
3.5%
161,216
823,471
480,205
620,652
2,085,545
6.9%
Retail
3,317
2.1%
98,013
719,180
419,410
523,930
1,760,533
5.8%
Lodging
2,139
1.4%
63,203
104,291
60,795
96,723
325,012
1.1%
Non-VlsltorServing
55,423
35.5%
1,637,630
4,348,096
1,789,484
3,294,235
11,069,445
36.7%
Office
30,802
19.7%
910,134
1,631,296
671,252
1,361,164
4,573,846
15.2%
Retail
7,740
5.0%
228,698
1,822,770
750,352
1,187,088
3,988,908
13.2%
Industria4
11,332
7.3%
334,837
600,151
246,953
500,770
1,682,710
5.6%
Service Commercial
3,039
1.9%
89,796
160,948
66,227
134,296
451,267
1.5%
Marine
1,152
0.7%
34,039
61,011
25,105
50,908
171,063
0.6%
Institutional
1,358
0.9%
40,126
71,921
29,594
60,011
201,652
0.7%
Total Employment
60,879
39.0%
1,7980846
5,171,567
2,269,689
3,914,887
13,154,990
0
Total
156,212
100.0%
$3,769,036
$12,106,233
$5,295,066
$8,969,541$30,139,879
100.0%
Total Visitor -Serving
25,127
16.1%
$377,780
$1,818,607
$1,060,546
$1,379,912
$4,636,846
15.4%
Residential
46.5%
49.1%
46.2%
47.9%
47.9%
Visitor -Serving
10.0%
15.0%
20.0%
15.4%
15.4%
Business (non-Vis.)
43.5%
35.9%
33.9%
36.7%
36.7%
Total
100.0%
100.0%
100.0%
100.0%
100.0%
Source: Applied Development Economics, Inc.
Although not nearly in similar numbers, many visitors do come to Newport Beach
during off-peak seasons. Business travelers alone represent 21 percent of total
visitors to the city. Assuming their trips are more evenly distributed throughout the
year, it is likely that visitors represent at least 6-8 percent of the average daytime
population during non -peak months. Thus, the impact of visitors appears to
represent about 13-15 percent of total police services." This is about the same as the
n This calculation measures the additional incremental service load during the three summer months
against what the service load would be for 12 months if there were no peak.
14 With the exception of lifeguards, neither the Police Department nor the Fire Department add staff
during summer months to handle peak service demands. Existing staff are redistributed to activities
APPLIED DEVELOPMENT ECONOMICS PAGE 15
per capita share that visitors, plus visitor -serving employment, represent of the
daytime population.
TABLE 10
Analysis Of Summer Peak Demand For Police Services
Monthly Averages
Calls for
Veh. Code
Other
Total
Part 1 and Part
Total
Time Period
Service
Citations
Citations
Citations
2 Crimes [a]
Arrests
Accidents
Sep -May
4,253
1,595
278
5,612
538
306
117
Jun -Aug
5,433
1,854
674
7,208
739
431
150
Peak Effect
27.8%
16.3%
142.3%
28.4%
37.4%
40.70/6
28.5%
Peak as Percent of Annual
6.9%
4.1%
31.4%
7.1%
9.3%
10.4%
7.2%
Source: ADE, Inc., based on data provided by Newport Beach Police Department
[a] As defined by the FBI, Part 1 crimes are the 8 most serious crimes (homicide, forcible rape, robbery,
aggravated assault, burglary, larceny -theft, auto theft, and arson). Part 2 crimes are all other lesser offenses such
as forgery, fraud, embezzlement, vandalism, prostitution, etc.
The following sections address the cost estimates for each division.
Traffic Division: The Traffic Division includes the parking enforcement, animal
control, accident investigations and other moving vehicle violations. (The Patrol
Division also issues vehicle code citations and responds to traffic related incidents).
Based on the distribution of labor costs for parking enforcement, this function is
estimated to require 21 percent of the Traffic Division budget. Parking enforcement
records indicate that about 53 percent of this activity occurs in residential
neighborhoods and 47 percent in commercial areas, and the parking enforcement
costs have been attributed in this analysis accordingly. (parking meter revenue is
attributed solely to business and public uses since few meters exist in residential
neighborhoods). All animal control costs are attributed to residential land uses, about
11 percent of the Division budget.
The remaining budget for the Traffic Division is distributed on the basis of
estimated traffic generation in the City. Based on the land use mix in the City and the
trip generation rates used in the General Plan Update traffic model, it is estimated
that approximately 36 percent of all vehicle trips in the City are generated by
that require more attention during the summer. Therefore, the annual averages are suitable indicators
of cost impacts on these departments.
APPLIED DEVELOPMENT ECONOMICS PAGE
residential uses, and 64 percent by business and public land uses.15 This is clearly an
approximate split. There is some overlap between trips from residents to retail stores
and employment centers and these figures do not account for through -traffic that is
unrelated to land use in Newport Beach. However, the 36/64 percent split provides
a reasonable basis for allocating the $2.56 million in non -parking and animal control
enforcement costs for the Traffic Division. In the calculations, visitors were limited
to 10 percent of total cost for this division, to reflect the lower effect on vehicle
citations, as shown in Table 10.
Patrol Division: This is the largest division and is responsible for maintaining beat
patrols as well as responding to traffic incidents, enforcing traffic laws and
responding to most other incidents or calls for service. The costs for this division
have generally been allocated on a straight per capita basis, with one exception. Retail
businesses on average tend to generate more police activity than do other kinds of
businesses. Certain kinds of retail, such as restaurants and bars, generate a
disproportionate amount of alcohol -related incidents. Retail shopping centers create
more opportunity for burglary and theft. The effect of this activity can be seen in
comparing the crime statistics for the Newport Center area and the Airport area.
Both areas have approximately the same total employment, but the Newport Center
area has three tines as many retail employees and a corresponding 20 percent
reduction in other kinds of jobs. Yet the Newport Center area registers twice as
many crimes and three times as many arrests as does the Airport Area. On a per -
employee basis, the disparity between retail and other kinds of business activity is
even greater. Therefore, in the analysis in Table 9, retail businesses are given a
weighting of three tines the per capita cost compared to other businesses.
Overall, 49 percent of the cost of the division activities is distributed to residences,
15 percent to visitor -serving uses and 36 percent to other business and public uses.
Looking at the land area distribution in the City, 52 percent of the area is devoted to
residential uses, with 22 percent in business uses and 26 percent in open space. The
per capita allocation fairly well represents the geographic coverage of the patrol
function of this division.
Detective Division: This division is primarily responsible for investigating non -
traffic related crimes that occur in the City and also performs a number of crime
1s Trip generation rates were provided by Urban Crossroads, Inc., per a City of Neapott Beach study.
ADE prepared the estimates of the distribution of total trips.
APPLIED DEVELOPMENT ECONOMICS PAGE 17
prevention and proactive criminal pursuit activities. In terms of the activities shown
in Table 10, this division is most involved with investigation of the Part 1 and Part 2
crimes, as well as following up on arrests. Both of these activities show substantial
increases during the summer peak months. Based on the peak effect figures in Table
10 and the additional visitor activity during non -peak months, 20 percent of the costs
for this division have been allocated to visitor -serving uses, 46 percent to residences
and 34 percent to other businesses. As with the Patrol Division costs, retail
businesses are assigned a weighting of three compared to other businesses in the per
capita cost calculations.
Support Activities: The office of the Police Chief includes a number of functions
such as community relations, legal affairs and crime prevention. The Support
Services Division includes communications, records, fleet maintenance, personnel
and a variety of other functions. All of these services and activities represent about
30 percent of the total Police Department budget, or 42.4 percent above the budgets
of the other three divisions. The allocation of costs for this division has been treated
as an overhead function based on the distribution of costs for the other divisions.
Summary: As shown in Table 9, the total police cost allocation by land use works
out to about 47 percent for residential, nearly 25 percent for visitor serving uses and
less than one-third for other business uses.
Capital Improvement Program
In addition to providing services, the City also incurs annual `capital outlay' costs
associated with the provision of public improvements, on -going projects, and
maintenance programs. The Capital Improvement Program (CIP) serves as a plan for
meeting the City's long-term capital needs as well as ongoing maintenance activities.
Projects in the CIP include the construction, repair, and maintenance of arterial
highways and local streets; storm drains; bay and beach improvements; park and
facility improvements; water and wastewater system improvements; and planning
programs. The FY 2002-03 CIP, including rebudgets of revenue from prior years,
totals $34.5 million and consists of over 150 projects.16 Funding for these projects
comes from a variety of sources, including the General Fund, enterprise funds, grant
programs such as CDBG, State subventions, etc.
16 City of Newport Beach Capital Improvement Program, pg. I-17.
DEVELOPMENT ECONOMICS PAGE 18
As shown in Table 11 below, the four funds that are included in the fiscal analysis
contribute a total of approximately $13 million to the 2002-03 CIP. However, since
the fiscal analysis is intended to match revenues from the current fiscal year with
current year's costs (and then distribute these costs and revenues by land use), funds
that were rebudgeted from 2001-02 have been subtracted from the CIP
appropriations as shown, resulting in approximately $7.9 million in net CIP
expenditures for the current fiscal year.
TABLE 11
2002.03 GIP Expenditures Included In Fiscal Analysis
Total CIP
Rebudget
Net
Appropriation
Amount
Appropratlon
General Fund • Streets
2,366,000
1,061,000
1,305,000
General Fund - Other
4,766,265
1,873,115
2,893,150
Tidelands Fund
1,466,442
400,785
1,065,657
Gas Tax Fund
2,274,721
716,334
1,558,387
Measure M Fund
2,061,605
1,005,580
1,056,025
Total
12,935,033
5,056,814
7,878,219
Source! ADE, Inc., based on City of Newport Beach, RsodYarr2002.03 GrpiW k p mw;t Augnm.
These CIP expenditures that relate directly to traffic/circulation improvements —
including the street projects under the general fund and all of the Gas Tax and
Measure M projects - were distributed across the various land uses on the basis of
trip generation data cited in the discussion above regarding police costs for the
Traffic Division. For the Tidelands Fund, those CT expenditures that related
directly to beach and other public uses (e.g. lifeguard towers replacement or pier
repair) were attributed to the `Public' category, while costs relating directly to boating
activity (e.g. Balboa Yacht Basin Facilities) were attributed to the `Marine' category.
The remaining Tidelands Fund CIP expenditures, as well as CIP spending -under the
General Fund that does not relate to traffic/circulation, was distributed across land
uses on a per capita basis, as described in the discussion below.
Per Capita Costs And Revenues
In cases where specific information about the land use origin of certain revenues or
costs could not be determined, we developed unit cost and revenue factors to apply
to each land use. Unless otherwise indicated, the per capita factors shown in Table
12 are based on the three population segments which generate revenues (via
spending on goods and services, payment of fees and fines, etc) while
simultaneously exerting demand for City services: residents, employees, and visitors.
As described above in the police cost analysis, these groups comprise a total
APPLIED DEVELOPMENT ECONOMICS PAGE 19
constituency of approximately 156,000 persons. This estimate is based on the current
population of approximately 76,000, plus a citywide employment estimate of 60,879,
and an average of 19,671 daily visitors to Newport Beach."
TABLE12
Unit Costs And Revenues
UNIT REVENUES
Per Capita UNIT COSTS
Per Capita
Motor Vehicle -in -Lieu
$22.47 Public Works
$59.98
Other Intergovernmental
$10.01 Community Development
$14.42
Charges for Service
$54.21 Community Services*
$109.61
Fines, Penalties, and Forfeitures
$20.01
Licenses and Permits
$2.39
Other Revenue
$3.56
Gas Tax Fund*
$19.26
Measure M Fund*
$15.86
Source: ADE, Inc.
'Based on residential population only.
17 According to the U.S. Census Bureau, the City of Newport Beach had a population of 70,032 in
2000. The Resource Allocation Plan indicates a January 1, 2002 population of 75,662, which includes
newly annexed Newport Coast and is the figure used in this analysis. The employment figures come
from the California Employment Development Department (EDD), adjusted to include an estimate
of self-employment (excluding home -based businesses) . The average daily visitors is based on
estimates obtained from a 2001 study prepared for the Newport Beach Conference and Visitors
Bureau, which indicates that there are 7.2 million visitors to Newport Beach annually.
APPLIED DEVELOPMENT ECONOMICS PAGE 20
ANALYSIS OF FISCAL IMPACTS BY LAND USE TYPE
CITYWIDE SUMMARY
Based on the current land use mix in the city of Newport Beach as described above,
Table 13 shows the full results of the fiscal impact analysis, which are summarized
below. This analysis represents the average, existing cost of services for existing land
uses. The incremental cost to serve new development in Newport Beach may be
different.
Revenues
❑ Residential land uses generate about 80 percent of property tax revenues.
❑ Seventy percent of sales taxes, the second largest city revenue, are generated by
retail uses. Table 14 provides a detailed summary of the fiscal impacts of the
retail category. Bating and drinking places (i.e. restaurants) generate the most
sales tax revenue (over $3 million per year) among the various retail categories
shown in Table 14. However, due primarily to the high employment associated
with restaurants and the number of police incidents associated with some of
these establishments, the net fiscal impact of eating and drinking places is slightly
negative. Besides restaurants, the top retail categories in terms of the sales tax
revenue produced are automobile dealerships, grocery stores, and department
stores. Together, these three categories account for almost half of all the sales
taxes, and all three also result in a significant fiscal benefit to the City."
❑ The remaining 30 percent of the City's sales tax revenues are generated by
taxable transactions at Newport Beach businesses as follows., office (10% of sales
tax revenues); service commercial (70/6); boat and marine equipment sales (50/6);
light industrial (40/o); hotels (3e/a); and home -based businesses (less than 10/6)
(Figure 1).
❑ The transient occupancy tax equals about eight percent of revenues in the
analysis and is primarily generated by lodging facilities in Newport Beach (i.e.
is Approximately 65% of the net revenues from the retail land use category is derived from auto
dealerships, grocery stores, and department stores (Table 14).
APPLIED DEVELOPMENT ECONOMICS PAGE2'
hotels and motels). However, residential properties which are leased as vacation
rentals (of less than 31 days) also generate significant TOT revenue (nearly $1
million annually).
o Residential uses generate 40 percent of franchise fees and 100 percent of the
motor vehicle in lieu subvention from the state.
❑ Other revenues are generated approximately in proportion to the population and
employment supported by each land use.
❑ Overall, residential land uses create about 44 percent of the revenues. Retail uses
generate 18 percent followed by office uses at 9.5 percent and lodging at 8.7
percent (Figure 2).
FIGURE 1
Sales Tax Revenue by Land Use Type
HoteV<
U9MI.NwM613 Nomtrba.ed au.liwv
4%� n%
awt®MiHM EqulpmeM
servlw Commcmlal
Bkap ,
)d11
'1wPbbda)
FIGURE 2
Gross Revenues by Land Use
Homtba.ed LwNW
<L%
Mdu.MY
4%
Swk�Gmme.4%
Mad.
b% ,',p/ddantlal'
ftwIc
s%
oma "
10%
Costs
❑ Residential uses require about 48 percent of both police and fire department
services, which constitute the largest expenditures for the City (followed closely
by street and facility maintenance performed by the public works department).
❑ Retail businesses require about one -fifth of total police services, while public
land uses, mainly the beaches serving visitors, require about 8 percent. Lodging
facilities are estimated to require just one percent of total police services.
❑ The beaches and other visitor -serving public land uses require about 21 percent
of fire department costs, primarily because of the City s lifeguard services.
Net Impact
❑ In total, residential uses require about 51 percent of municipal services, while
generating slightly less than half the revenue needed to operate city government.
APPLIED DEVELOPMENT ECONOMICS PAGE 22
This results in an annual net cost for residential uses of about $6.7 million per
year for Newport Beach. This is normal for most cities in California, and in fact
is probably much worse in many other communities that do not enjoy the higher
housing values found in Newport Beach.
❑ The lodging sector generates the largest net revenue, at $7.8 million, followed by
the retail sector at about $7.1 million.
❑ The marine industry, including boat sales and manufacturing, generates about
$2.7 million in net revenue, followed by service commercial uses at $1.8 million.
❑ Institutional uses essentially break even, contributing very modest net revenues.
❑ Industrial and office uses currently generate a negative impact (-$1.5 million and
-$5.1 million, respectively) due to their high employment, which adds to
municipal costs. However, these uses also create jobs and income that contribute
significantly to the city's economic base, as discussed in more detail below.
❑ Public land uses also reflect a negative impact due to the lack of direct revenues.
However, this should be viewed in the context of the overall visitor impact as
discussed below and summarized in Table 15.
As mentioned at the outset, the key point in this analysis is to identify how the mix
of land uses in the City provides a balance of revenues to fund services for residents
and businesses alike. Although the analysis indicates that residential, office, and
industrial uses create a negative fiscal impact for the City, this one-dimensional view
does not tell the whole story. Land uses within the City are linked economically and
do not function in isolation of each other. In a broad sense, the city economy is
driven by land uses that draw dollars into the community by selling goods and
services to the outside world (see Figure 3). This includes hospitality and retail
businesses that serve tourists, but office and industrial businesses generate an even
larger share of the City's "economic base." These businesses create jobs and incomes
for people living in Newport Beach who in turn buy retail goods locally. As Figure 3
illustrates, while retail and visitor -serving businesses generate net tax revenue to help
provide services to other land uses, particularly residential, those land uses ultimately
generate the tax dollars by patronizing Newport Beach businesses. The primary goal,
again, is to maintain a well-balanced land use mix that can support the level of
services desired by residents and businesses alike. The following discussion focuses
on certain prominent economic sectors in Newport Beach.
APPLIED DEVELOPMENT ECONOMICS PAGE 23
TABLE 13
Summary Of Fiscal Analysis
Service
REVENUES Total Residential Office Retail Industrial Lodging Marine Commercial Institutional Public
GFNFRASFUND
Properly Tax
Sales Tax
Transient Occupancy Tax
Franchise Fees
Business Licenses
Motor Vehicie•in•Lieu
Other Intergovernmental
Charges for Service
Fines, Penalties, and
Forfeitures
Licenses and Permits
Use of Property
Other Revenue
Interest Income
SUBTOTAL GENERAL FUND
TIDELANDS FUND
Llcenses,vermItt dnd'Feei;
ChargesforServica
Use of Money and Property
STATE GAS TAX FUND
MEASURE M FUND
36,879,169
29,311,725 3,160,525
357,210
1,284,735
439,521
524,860
1,416,413
384,180
0
19,841,351
76,329
1,938,43713,922,674
892,789
594,391
978,688
1,438,043
0
0
8,298,0000
840,000
• -0
1 0
- 0,
7;458,C0!
"" O'
'0'
0
0
2,347,625
963,878
723,649
239,587
266,229'
0:
"27;065
95313,
31;904
0
2,377,807
357,507
742,200
240,299
112,668
10,585
26,993
210,064
18,417
12,807
1,700,000
1,700,000
0
0
0
0
0
0
0
0
1,570493
763;778
307,762
101,895
113,225
21,372'
111;510
40;536
13,569'
196,545
8,501,340
4,135,248
1,666,287
551,678
613,024
115;7.13
62;319-
219,470
73,,463
1,064,136
3,137,719
1,526,259
615,002
203,616
226,258
42,708
23,001
81,003
27,114
392,757
375,151
182,482
73,531
24,345
27,052
5,106
2,750
9,685
3,242
46,959
5,284,288
1,027,072
407;215
675,556
154,480,
53;747,
991;056,
51;353'
91;268.
1,832,541
73g,651
271,254
109;30L
36jiN3
40;212
'7,5*
17,9,088;
14;396
4;819,
.69,803
1,420,769
646,827
153,141
257,015
58,634
137,501
44,436
56,207
10,184
56,824
92,466,063
41,802,359 9,897,050 16,610,063
3,789,305
8,886,234 2,871,767
3,632,494
658,160
3,672,373
1;153;000
.. 0 ,
, ,d'
:520,000
�0
0 „633;00d.
0
0
0
33,500
0
'0•
- 0
•0
'0. " 33;500-
0
0
'0
5,359,492
2,285,528
0
106,514
0
6' 997,896
61,800
110,000
1,797,754
1,472,496
1,472,496
0
0
0
0 0
0
0
0
1,200,000
4,616
117;736
842,040
53,996"
35,949 , 5919,1
" 86,972,
0
110,000
•0
9,218,488
3J62,640
1'17.,236
1,468,554
., 53,996c
'35,949 "p,723;587 "
„ 148,7i2 -
- 3J97,754
11,684,551
45,565,00010,014,287 18,078,617
3,843,301 8,922,183 4,595,353
3,781,257
768,160
5,470,127
APPLIED DEVELOPMENT ECONOMICS PAGE 24
TABLE 13 (continued)
Summary Of Fiscal Analysis
Service
OenersiGovemment
9,375,524
4,992,066
1,398,235
935,033
515,871
100,576
57,172
17%015
64,582
1,132,973
Police
30,139,845
14,433,553
4,573,846
5,749,441
1,682,710
325,012
171,063
451,267
201,652
2551,301
Fire
21,582,766
10,317,648
3,297,912
1,010,002
1,226,195
252,191
166.345
540,136
171,299
4,591,952
PublloWorke
20,389,453
9,876,089
4,012,349
1,328,418
1,416,136
279.632
350,063
528,475
176,897
2,562,396
Community Development
2,252,731
1,091,161
443,305
146XO
163,091
30,785
16,580
58,399
19,544
283,107
Community Servkes
8,293,639
8,293,639
0
0
0
0
0
0
0
0
CIP- Streets
1,305,000
475,020
224,460
506,340
13,050
27,405
6,525
32,62S
6,525
13,050
OtherCIPProlects
2,893,141
1,40058
569,328
188,495
209,455
39,536
21,291
Y4,987
25,101
363,599
SUBTOTAL GENERAL FUND
96,232,099
50,880,533
14,519,435
9,873,499
5,286,508
1,054,233
589,040
1,864,894
665,590
11,498,367
TIDELANDS FUND
Harbor Resources Division
1,282,138
0
0
0
0
0
1,282,139
0
0
0
oil and Gas
351,887
0
0
0
0
0
0
0
0
351,887
CIP
1,065,655
404,495
152,146
50,373
55,974
10,566
40,690
20,039
6,708
524,664
STATEGASTAXFUND
1,558,388
56703
268,043
604,654
15,584
32,726
7,792
38,960
7,792
15,584
MEASURE M FUND
1,056,024
384,393
181,636
409,737
10,560
22,177
5,280
26,401
5,280
10,560
SUBTOTAL OTHER FUNDS
5,314,092
1,356,141
6D1,825
1,064,764
92,118
65,469
1,335,900
85,400
19,760
702,695
TOTAL EXPENDITURES
101,546,191
52,236,674
15,122,260
10,938,263
5,968,626
1,119,701
1,924,940
1,950,294
685,370
12,201,063
APPLIED DEVELOPMENT ECONOMICS PAGE 25
TABLE 14
Retail Employment And Fiscal Impacts
NAICS
Description
No. of percent
Em Is
Sales Tax percent
Revenue
Other
Revenue
Costs
Net percent
Revenue
4411
Automobile Dealers
613
5.5%
2,345,749
16.8%
219,505
619,895
1,945,359
29.0%
4412
Other Motor Vehicle Dealers
207
1.8%
616,017
4.4%
74,170
209,461
480,726
7.2%
442'
Furniture•and Home Fdrnishings Stores ,
A `362`002
5.5%
235 2:L°/d
3.7°�
k 84,758
T. 2 _
_
»148.�.._
1.3%
.�620,694'
174,080
1.3%u
53,159
150,123
_
y4431 Electronics and Appliance Stores
77,116
1.2%
4441
Building Material and Supplies Dealers
67
0.6%
59,919
0.4%
23,867
67,402
16,3B5
0.2%
4442
tawny&Garden Equlpment,nd5UPplles Stores �.
,25 »�
0,2%,
164,727
1.2°/u
9/0411
25;531m
1481237
2.2%
4451
Grocety,Stores
-786
7Y%
1,828;051
1,11%
281;343
794;528
1,31q;d66
d9:6°d
4452
Specialty Food Stores
99 �A0.9%
_.
69,680
0.5%
35,439
100,082
5,037
0.1%
4453
Beer, Wine, and Liquor Stores
24
0.2%
68,566
0.5%
8,679
24,510
52,735
0.8%
4461
., .,.......a....
•HealUt and,PersonaCCareStores -
, 40[526
Ot6Mo
4Y9 3,8%
314,269 ,2,3%
150,074
423;816
g471
Gasolineaations
115
1.0%
SOO,b11'
�3:6%
_41,225'
116;422
,'424;814 ;,
6.3 °%d
4481
Clothing Stores
574
6.2%..�
700,350
5.0%
205,402
580,067
325,685
4.9%
4482
Shoe Stores
21
0.2%
58,350
0.4%
7,594
21,446
44,498
0.7%
448$
Jewelry, Luggage tand'LealherGobds Stores
130'
4.2%
84,(97
4,3%
46, 449
131,741
-99;606
"W1S%
4511 •
Spor8pg,Goods,.Hobby,, andMusicakI�nshument Stores•
I 89�
�0:8%
185,618
1.3%'
31,823
_ ',89,869
; _ 128;571
ii9°i°
88
6.8%
112,427
0.8%
.. 31,461
88,848
55,040
0.8%
4512 Book, Periodical, and Music Stores y
4521
Department Stores and Other General Merchandise
1,295
11.7%
1,989,761
14.3%
463,601
1,309,235
1,144,126
17.1%
4531
Florists-' „ n •�
,t 59•�,;
0.5%
:40j504 -
.0.3°J'
•20}974
" 59,232
-•'7,296
"'0,0^/a
g532
Office Supplles, Stationary, and.GiR Stores' _ _ _
' 1.333%
104;900
'0.8%
51,712
146;038
10;574
0.2%
4533
Used Merchandise Stores
�s144
24
0.2010
26,120
0.2%
8,679
24,510
10,289
0.2%
4539
Other Miscellaneous Retailers
194
1.0%
655,425
4.6%
69,412
196,023
528,814
8.0%
722
_ Eabng and Drinking,Places_, �•
�� 5,772:,
52,2%
"3;46,259 �
23.2%,
2;00,1038
58,37;432
=544L135
_71i' °/6
Total
11,057 100.0%
13,922,674100.0%
3,959,774
111826251
6,699,823 100.0%
Source: California Economic Development Department, California Board of Equalization, and Applied Development Economics
APPLIED DEVELOPMENT ECONOMICS PAGE 26
Figure 3
Economic and Fiscal Relationships in Newport beach
' -
ON i� w0 I ' i
MYKhneNawya4�aatN
yroduNtaM aaWkaa
It Net Tax DODars
Wm-boreaminys ►
-Public BrAches
from�busineiies Other
outside Newport Beachindustries
xw R N.tT.k ooN.n�
mtome lorlarYka
$* s s�
low N
Belch
into"»
Households Into"
Local
rurth..u)QWe 1 Naktak DOOM
I" I ro's«rkoe lWyakoaws
Iwswvku
4-1 swinooll to e61910"1
rotck�aw —► �`"' anaVlMlorsPWANO
APPLIED DEVELOPMENT ECONOMICS PAGE27
TABLE 15
Fiscal Impact Of Visitors In Newport Beach
REVENUES Total Residential Office Retail Industrial Lodging Marine Commercial Institutional Public
GFNFRALFUNO
Property Tax
Sales Tax
Transient Occupancy Tax
Franchise Fees
Business Licenses
Motor Vehicle -in -Lieu
Other Intergovernmental
Charges for Service
Fines, PenalUes,and
Forfeitures
Licenses and Permits
Use of property
Other Revenue
Interest Income
SUBTOTAL GENERAL FUND
TIDELANDS FUND
Licenses, Permits, and Fees
Charges for Service
Use of Money and Property
STATEGASTAXTUND
MEASURE M FUND
1,273,612
726,928
0
107,163
0 439,521
0
0
0
0
4,771,193
0
0
4,176,902
0 594,391
0
0
0
0
8,298,000
840,000
0
0
Or11458,000•
0
0
0
0
79,757
7,881
0
71;876
0 0
0
0
0
0
89,078
0
0
72,090
0 10,585
0
0
0
6,403
0
0
0
0
0 0
0
0
0
0
248,486
0
0
30;568
0 21;372
.0
0
0
196,,545
079;163
33;810
0
165;503
'0• 1"15,71" .•
" 10
0
0
1,064,136
509,029
12,479
0
61,085
0 42,708
0
0
0
392,757
5%368
0
0
7,303
0 5,106
0
0
0
46,959
2,490,233
0
0
667,55$;
4. 5Y3' -
f20,036;
51,353
0.
1;59r•5'41
90,467
2,218
"0
10,856
10' Vo"
. "' 0.
.0
0
'69,803
303,149
25,513
0
84,411
0 137,501
1,887
807
0
53,030
19,591,535
1,648,829
0
5,455,215
0 8,886,234
121,923
52,160
0
3,427,175
520,000
0
0
520;000
0 0
0
0'
0
0
33,500
0
0
.0 • .
'0,. 0;
33;500,,
61
0
0
1,188,814
0
0
98,900
0 0
37,410
61,800
0
990,704
12,015
P.,"0
;
,b' '. :0, ,
', t0 ,,
0,
0
,. 0
288,561
_
0
052,6
12-0,
. 35,949- "
: ',' 0.
0
0
0
TOTAL REVENUE er,bu,Yiv 1,bbV,BYY V O,JJdb,/</ v bsk,ta./ vc,wJ a
APPLIED DEVELOPMENT ECONOMICS PAGE 28
TABLE 15 (continued)
Fiscal Impact W Visitors In Newport Beach
EXPENDITURES
Total
Residential
Office
Retell
Industrial Lodging
Marine
Service
Commercial
Institutional
Public
GENERALFUND
GeneralGoYemment
1,584,400
66,292
0
284,559
0
100,576
0
0
0
1,132,973
Polk#
4,926,517
288,671
0
1,76D,533
0
325.012
0
0
0
2,551,301
Flrs
5,286,946
137,0D6
0
305,701
0
252,287
0
0
0
4,591,952
Pubk Works
3,320.967
81,414
0
398,525
0
278,632
0
0
0
2,562,396
CommunNyDev*Wat
366,917
81995
0
44,031
0
30,785
0
0
0
283,107
CommunHyServk#s
68,369
68,369
0
0
0
0
0
0
0
0
CIP•Strae6
204,129
11,772
0
151,902
0
27,405
0
0
0
13,050
oft CIPPM*h
11,552
0
56,548
0
39,536
0
0
0
363,589
SUATOTALGENERALFUND
15,553,117
650,747
0
2,103,349
0
98"1
0
0
0
11,121,729
TIDELANDSFUND
HarborResoumnDiviskn
0
0
0
0
0
0
0
0
0
0
ON and Gas
351,887
0
0
0
0
0
0
0
0
351,887
CIP
353,429
3,087
0
15,112
0
101566
0
0
0
324,664
STATEGASTAXFUND
243,763
14,057
0
181,396
0
32,726
0
0
0
15,584
MEASUREMFUND
165,184
9,526
0
122,921
0
22,177
0
0
0
10,560
SUBTOTAL OTHER FUNDS
1.114.263
26,670
0
319.429
0
6SA69
0
0
0
702.695
APPLIED DEVELOPMENT ECONOMICS PAGE 29
HOSPITALITY AND VISITOR SECTOR
According to a recent report presented by the Newport Beach Conference and
Visitors Bureau, the city attracts about 7.18 million visitors per year, of which 81
percent are here on leisure trips." Of this number, 86 percent are day visitors, 7
percent stay in local hotels and the balance stay in private homes. About 64% of the
visitors reported visiting the beaches during their stay. This would amount to about
4.6 million visitors, or an annual average of 12,500 per day. During the peak summer
season, this average figure climbs to 100,000. Non -beach goers likely include many
business travelers and other Southern California residents coming to Newport Beach
to shop.
From an economic standpoint, visitors bring substantial income to Newport Beach.
Visitors spend an estimated $1 billion in the city each year, of which about $449
million are retail purchases and $83 million are lodging expenses. These two
categories of spending alone generated about $4.8 million in sales taxes and $8.3
million in Transient Occupancy Tax (TOT) for the City budget in 2001. Visitors
generate other revenues as well, including indirect business license and property
taxes, revenues from use of public property, and others. Table 15 summarizes the
comprehensive revenues and cost impact on local government by visitors to
Newport Beach. Overall visitors generate about $21.6 million per year against $16.7
million in service costs. The service costs include $4.9 million in police services, $2.7
million for beach lifeguards included in the fire department budget, as well as other
emergency medical calls made by the fire department. The net positive fiscal impact
of visitor business activity in Newport Beach, then is about $4.9 million per year, not
counting the net fiscal benefit of the marine industry, discussed below. These are
revenues that contribute toward City services provided to residents and businesses in
the community.
19 CIC Research, Inc. l3a of V:sitm to NeuµM Beads FY2001. November 16, 2001. For purposes of
the study, visitors were defined as persons who lived outside of Newport Beach and were not in the
City for purposes of daily employment. About 18 percent of the survey respondents live in Orange or
Los Angeles counties. An additional 15 percent live in Riverside or San Bernardino counties. Overall,
about 8 percent listed shopping as the main purpose of their trip to Newport Beach. Although this is
not broken down by place of origin, it is likely that many of the visitors from elsewhere in Southern
California come to Newport Beach solely for shopping and would not be considered 'tourists" in the
commonly understood meaning of that term.
APPLIED DEVELOPMENT ECONOMICS PAGE 30
MARINE INDUSTRY
As noted above, marine industries in Newport Beach, which include marina slip
rentals, boat sales, chartered vessels for events and sport fishing, boat repair, and
boat maintenance and manufacturing, account for over 1,000 jobs and generate
nearly $2.7 million in net revenues This positive fiscal result is largely due to property
tax derived from boats moored in Newport Beach marinas, sales tax generation
among boat dealers and other marina -related businesses, a marine chatter fee, and
lease income from coastal property owned by the State of California but that the City
operates as the State's trustee.
For purposes of the fiscal analysis we have included the City's Harbor Resources
Division in the costs associated with this industry. However, as noted above, there is
significant overlap between the marine industry and the hospitality industry.
The marine industries that manufacture, sell, and service the boats have undergone a
significant transformation in the past twentyyears. There are issues today about the
continued viability of the marine industry in Newport Beach that should be
recognized in the general plan update process.
Twentyyears ago, there were five to six major boat manufacturers in Southern
California, and a number of smaller outfits. Since that time, all of the major
manufacturers have left California, mostly to Florida. While a few of the smaller
manufacturers remain, others have moved inland to Riverside County. This has
largely been due to increased environmental regulation in California affecting
fiberglass manufacturing processes, as well as real estate price inflation in coastal
commumnes.
There has been a consolidation among boat supply and servicing companies as well.
As costs have risen, fewer firms are now serving the demand for specialty boat parts,
and boat repair and servicing. Those that do not have to be on the water have
moved to inland locations. Some have found locations in the West Newport
industrial areas, but many have gone further inland to the Costa Mesa, Huntington
Beach, and Long Beach industrial areas, as well as locations in Riverside and San
Diego counties and Mexico.
Those businesses still in the industry report very strong demand for their goods and
services. Although the total number of slips in Southern California is not growing
dramatically, there is a lot of "move up" sales activity as existing boaters purchase
larger and more expensive boats that require a greater level of support and servicing.
APPLIED DEVELOPMENT ECONOMICS PAGE 31
Businesses throughout the industry have expressed concern about the real estate
pressure on their locations near the water. This is an issue that continues to affect
businesses leasing space, particularly in the Cannery and Mariner's Mile areas of
town. As noted above, many businesses have moved inland and service boats in the
harbor from more remote locations. If this issue reduces the availability of boat
services in Newport Beach sufficiently, it may cause the consumer market in *boats to
shift as well to other locations. Currently, the city realizes significant sales and
property tax revenues from boats and related industries.
The indirect benefit of the boating industry could also be improved by increasing
access for visiting boats to dock and launch facilities in Newport Harbor. This issue
is complicated by the fact that over 90% of the harbor frontage is in private
ownership. This leaves little opportunity for the City to increase the availability of
public facilities. However, if private entrepreneurs could add to the available
facilities, it would help increase the capture of visitor spending in Newport Beach on
restaurants and other retail goods and services.
APPLIED DEVELOPMENT ECONOMICS PAGE 32
PRELIMINARY ANALYSIS OF NEWPORT COAST FISCAL
IMPACTS
INTRODUCTION
This chapter demonstrates how the fiscal model can be used to analyze future
development in the City by presentingan example of existing and projected
development in the Newport Coast area.
The analysis primarily illustrates the distinction between marginal service costs and
average service costs, which will be important in considering the impacts of future
development in other areas of the City as well. Marginal costs represent the actual
incremental costs of providing services to a new proposed development. In contrast, an
average cost approach would treat the proposed development the same as existing
development in the City and assume that the costs to serve it are similar on a per capita
basis as the costs to serve all other development in the City. The analysis in the previous
chapter is done on an average cost basis, because the intent is to show the levels of cost
the City incurs to provide for the existing residents and businesses.
The true marginal costs, on the other hand, can be either higher or lower than the
average depending on the levels of available service capacity. This can be most easily
illustrated with fire services, as the Newport Coast analysis shows. If the existing fire
stations in the City can serve a proposed development, then the incremental cost of
providing service is likely to be lower than the average since existing facilities, equipment
and manpower can be used. If a new station is needed, then the marginal cost of that is
likely to be higher than the average unless the development is so large that it supports
the need for a fire station all by itself.
As the City considers future development options in the General plan Update process,
the location of the development and the status of existing services at those locations will
play a role in the fiscal impact analysis.
PROJECT DESCRIPTION
The land use data for the analysis is taken from the traffic model database for the year
2000 and the projection for the year 2025. The fiscal analysis evaluates the year 2000 as
APPLIED DEVELOPMENT ECONOMICS PAGE 33
the existing land use case and the year 2025 as full buildout of the area. As shown in
Table 16, bddout is about double the development levels in the year 2000. The traffic
model tracks non-residential development in terms of three employment categories:
retail, services and other. It was necessary for us to make assumptions about the more
specific business types this would entail in Newport Coast, as shown in the table.
The assessed value estimates for both scenarios are based on residential unit values of
$815,000 for single-family units and $600,000 for the condominiums. These values are
based on a review of property tax data in the Newport Coast area, and are higher than
the values obtained for the City of Newport Beach as a whole.
TABLE 16
Newport Coast Development: Year 2000 and 2025
Land Use
Units
Year 2000
Population
Assessed Value
Units
Year2025
Population Assessed Value
RESIDENTIAL
Single Family
1,264
3,001
$1,030,160,000
3,063
7,378
$2,496,345,000
Condominium
1,136
2,697
$681,600,000
1,763
4,223
$1,057,800,000
Apartment
0
0
$0
0
0
$0
High Density
0
0
$0
0
0
$0
Total Residential
2,400
5,699
$1,711,760,000
4,826
11,601
$3,554,145,000
NON-RESIDENTIAL
Sq. Ft.
Employment
Sq. Ft.
Employment
Office
15,000
50
$1,995,000
45,000
150
$5,985,000
Retail
68,600
196
$6,311,200
68,600
196
$6,311,200
Industrial
0
0
$0
0
0
$0
Lodging
150,000
250
$15,600,000
297,600
496
$30,950,400
Marine
0
0
$0
0
0
$0
Service Commercial
835,000
835
$100,200,000
1,329,000
1,329
$159,480,000
Institutional
100,000
100
$7,200,000
150,000
150
$10,800,000
Total Non -Residential
1,168,600
1,431
$131,306,200 1,890,200
2,321
$213,526,600
COST ANALYSIS
At the time of the annexation, City departments made estimates of expected service
costs, both for the initial development levels and for ultimate buildout. In some cases the
full service cost for buildout was funded initially, and in other cases the costs were
deferred until further development occurs. This situation raises the opportunity to
consider both the marginal cost of the initial annexation and the average cost of serving
the area at full buildout.
APPLIED DEVELOPMENT ECONOMICS PAGE 34
Fire Protection Services
Newport Coast has an existing fire station, designated No. 8 by the City, which was in
place at the time of annexation. At that time, the City estimated the cost of operating the
station at $1.39 million per year!' This is less than the average cost of operating other
stations in Newport Beach, estimated at about $2 million, but more than the incremental
per capita cost of adding the amount of development in Newport Coast in 2000. Since
the City assumed operation of the station, we have shown $1,39 million as the cost of
fire protection services in 2000 in Table 17.
As Newport Coast develops further, the City's plan is to move the existing Station No. 5
in Corona del Mar further south to obtain better response times to Newport Coast as
well as CdK Thus, at buildout the Citywill serve Newport Coast from two stations.
However, based on the amount of development at buildout and the fact that Station No.
8 would also serve development west of Newport Coast, the net cost effect would be
approximately equal to the cost of one full station. This is estimated by the fiscal model
at nearly $1.9 million (Table 18), not including the cost of moving Station No. 5.
Therefore, the marginal cost of the initial annexation —at $1.39 million —was higher than
the average per capita cost would have been but, conversely, the marginal cost of
completing buildout of the area —at $487,000—is much less than the average cost.
Police Services
In the case of police services, part of the departmental expansion needed to serve full
buildout of the Newport Coast area was made at the time of annexation, and part was
deferred until a later time. Specifically, the detective division received the entire
complement of personnel needed to serve full development of the area", while the
patrol and traffic divisions received an incremental increase that reflected immediate
service demands at the time of annexation!'
In estimating the costs of service, the full detective division cost —estimated at 25 percent
of the total police services cost —was included in Table 17, along with the incremental
cost of the traffic and patrol division as estimated by the fiscal model. This results in a
20 Terry, Ulmmsiti, Fiscal/Information Services Manager, Newport Beach Fire and Marine Department.
21 Captain Tim Newman, Detective Division Commander, Newport Beach Police Department
22 Captain Paul Henisey, Traffic and Patrol Division Commander, Newport Beach Police Department.
APPLIED DEVELOPMENT ECONOMICS PAGE 35
slightly higher cost for police services in Table 17, reflecting the year 2000, than would
be commensurate with the amount of development alone. As with the fire services, the
net increase at full buildout is accordingly less than it would be otherwise, estimated at
$944,000 compared to nearly $1.7 million to serve about the same amount of
development currently.
SUMMARY OF FISCAL IMPACT
Overall, the analysis suggests that the year 2000 development generates about $770,000
per year in net revenues, while doubling the development to achieve full buildout would
add another $1.1 million per year. Because the marginal costs of the annexation were
higher than the average cost, the second half of buildout of the area generates 40 percent
more in net revenue for the City than does the first half. Overall, Newport Coast does
very well for the City —including the residential land uses at buildout—primarily because of
the higher property values obtained in the area.
APf
TABLE 17
Newport Coast Impact Year 2000
Revenues Total Residential Office Retail Industrial Lodging Marine C onworew Institutional Public
GENERALFUND
Property Tax
Sales Tan
Transient Occupancy Tax
Franchise Fees
Business Licenses
Motor Vehicle -In -Lieu
Otherintergovemmental
Charges forService
Fines, Penalties, and Forfeitures
licenses and Permits
Use of Property
Other Revenue
tnterestlncome
SUSTOTALGENERAL FUND
TIDELANDS FUND
Licenses, Pemits, and Fees
Charges forService
Use otMoney and Propedy
GAS TAX
MEASURE M
SUBTOTAL OTHER FUNDS
$3,133,213
S2,909,992
S3,392
$10,729
$0
$26,520
$0
S170,340
512,240
SO
72DIM
5,749
3,147
246,798
0
69,471
0
395,119
0
0
1,046,003
0
0
0
0
1,046,003
0
0
0
0
105,712
72,005
1,178
4;617
0
5,889
0
19,668
2,355
0
55,591
0
1,942
7,614
0
9,712
0
32,438
3,885
0
128,042
128,042
0
0
0
0
0
0
0
0
71,381
57,054
501
1,%Z
0
Z503
0
9,360
1,001
0
386,471
308,903
2,710
1%624
0
13,551
0
45,262
5,421
0
147,641
114,012
1,000
3,921
0
5,002
0
16,705
21001
0
17,054
13,631
120
469
0
598
0
1,997
239
0
24LI83
192,775
1,691
6,630
0
8,457
0
28,246
3,383
0
25,351
20,263
178
697
0
889
0
2,%9
356
0
112
90
1
3
0
4
0
13
2
0
6,073,036
3,822,516
15,859
294,%5
0
1,188,598
0
721,117
30,882
0
0
0
0
0
0
0
0
0
0 0
0
0
0
0
0
0
0
0
0 0
0
0
0
0
0
0
0
0
0 0
137,343
109,777
963
3,776
0
4,816
0
16,085
1,926 0
54,770
43,777
384
1,506
0
1,920
0
6,414
768 0
192,112
153,554
1,347
5,291
0
6,736
0
22,499
2,695 0
APPLIED DEVELOPMENT ECONOMICS PAGE37
TABLE 17 (continued)
Newport Coast Impact Year 2000
Expenditures
Total
Residential
Office
Retail
Industrial
Lodging
Marine
ou"'ue
commercial
Institutional
Public
GENERALFUND
General Government
452,745
375,990
2,272
16,979
0
11,153
0
41,590
4,761
0
Police
1,688,017
1;368,598
11,137
101,916
0
47,331
0
142,330
16,705
0
Fire
1,390,000
1,124,915
7,764
28,033
0
34,891
0
176,110
18,287
0
Public Works
036,607
743,827
6;526
25;583
6
32,631
'6
108,988
13,052
0
Community Development
102,818
82,182
721
2,827
0
3,605
6
12,042
1,442
0
Community'Services
6-14,667
624,667
0
0
0
0_
0
0
0
0
CIP Streets
57,765
35,778
364
8,976
0
3,203
0
8,964
480
0
OtherqjP Projects
132;648
105,545
926
3,630
0
4,630
O.
15,465
1,852
0
SUBTOTAL GENERAL FUND
5,378,668
4,461,500
29,711
187,943
0
137,444
0
505,489
56,581
0
TIDELANDS FUND
Harbor Resources
0
0
0
0
0
0
0
0
0
0
Oil and Gas
0
0
0
0
0
0
0
0
0
0
CIP
0
0
0
0
0
0
0
0
0
0
GAS TAX
68,981
42,725
435
10,718
0
3,825
0
10,705
574
0
MEASURE M
46,745
28,952
295
7,263
0
2,592
0
7,254
389
0
SUBTOTAL OTHER FUNDS
115,726
71,677
730
17,981
0
6,417
0
17,959
963
0
TOTAL EXPENDITURES
5,494,394
4,533,177
30,441
205,925
0
143,861
0
523,447
57,543
0
NET(COST)IREVENUE $770,754 ($557,107) ($13,234) $93,421 $0 $1,051,473 $0 $220,169 ($23,967) $0
APPLIED DEVELOPMENT ECONOMICS PAGE 38
TABLE 18
Newport Coast Impact at Full Buildout
Revenues
Total
Residerdial
Office
Retail
Industrial
Lodging
Marine
SwkeCommerciat
Institutional
Public
GENERALFUND
Property Tax
$6,405.042
$6,042,047
$10,175
$10,729
$0
$52,616
$0
$27I,116
$18,360
$0
Sates Tax
1,034,648
11,703
9,440
246,798
0
137,830
0
629,,878
0
O
Transient Occupancy Tax
1,046,003
0
0
0
0
1,046,00-1
0
0
0
0
Franchise Fees
201,251
146,580
3,533
4,617
0
11,683
0
31,304
3,533
0
Business Licenses
90,165
0
5,827
7,614
0
19,268
0
51,628
5,827
0
Motor Vehide a4Aeu
260.655
260,655
0
0
0
0
0
0
0
0
Other Intergovernmental
139,383
116,146
11502
1,962
0
4,%6
0
13,306
1,502
0
ChaigesforSerwice
754,648
628,837
8,131
10,624
0
26,886
0
72,039
8,131
0
Fines, Penalties, and Forfeitures
278,530
232,095
3,001
31921
0
9,923
0
26,589
31001
0
Licenses and Permits
33,301
27,750
359
469
0
1,186
0
31179
359
0
Use ofRoperty
470,948
392.434
5,074
6,630
0
16,778
0
44,957
5,074
0
Other Revenue
49,502
4I,249
$33
697
0
1,764
0
4,725
533
0
Interestlnoane
169,175
124,154
748
4,622
0
20,886
0
18,038
728
0
SUBTOTAL GENERAL FUND
10,933,252
8,023,650
48,322
298,693
0
1,349,739
0
1,165,759
47,048
0
TIDELANDS FUND
Licenses, Permits, and Fees
0
0
0
0
0
0
0
0
0
0
Chagesfor Service
0
0
0
0
0
0
0
0
0
0
Use of Money and Pmperty
0
0
0
0
0
0
0
0
0
0
GAS TAX
89,117
89,117
0
0
0
0
0
0
0
0
MEASURE M
106,947
89,117
L152
1,506
0
3,810
0
10,209
1,152
0
SUBTOTALOTNERFUNDS
1*064
178,7M
1,152
I506
0
3,310
0
ig209
1,152
0
TOTALREVENUE
11,129,316
8,701 W
49,475
300,199
0
1,353,599
0
1,175,%9
48,200
0
APPLIED DEVELOPMENT ECONOMICS PAGE39
TABLE 18 (continued)
Newport Coast Impact at
Full Buildout
Expenditures
Total
Residential
Office
Retail
Industrial
Lodging
Marine
Service
Institutional
Public
Commercial
GENERAL FUND
General Government
884,666
765,406
6,817
16,979
0
22,127
0
66,196
7,142
0
Police
2,632,223
2,213,048
22,274
101,916
0
.75,365
0
197.,346
22,274
0
Fire
1,877,786
1,581,931
16,089
19,365
0
47,820
0
193,632
18,949
0
Public Works
1,817;161
1,514,214
19,579
26,583
0
64,740
0
173,467
19,579
0
Community Development
200,769
167,298
2,163
2,827
0
7,153
0
19,166
2,163
0
Community Services
1,271,640
1,271,640
0
0
0
0
0
0
0
0
CIP Streets
104,245
72,833
1,093
8,976
0
6,355
0
14,267
721
0
,Other,CIP Projects
257,844
214,858
2,778
3,630
0,
9,186
0
24,61,4
2,778
0
SUBTOTAL GENERAL FUND
9,046,335
7,801,228
70,793
179,275
0
232,746
0
688,687
73,605
0
TIDELANDS FUND
Harbor Resources
0
0
0
0
0
0
0
0
0
0
Oil and Gas
0
0
0
0
0
0
0
0
0
0
CIP
0
0
0
0
0
0
0
0
0
0
GAS TAX
124,486
86,975
1,305
10,718
0
7,589
0
17,038
861
0
MEASURE
84,357
58,938
885
7,263
0
5,142
0
11,546
583
0
SUBTOTAL OTHER FUNDS
208,842
145,913
2,190
17,981
0
12,731
0
28,583
1,444
0
APPLIED DEVELOPMENT ECONOMICS PAGE 40
GENERAL PLAN BUILDOUT
Buildout of the existing General Plan would maintain an overall positive fiscal balance for
the City, in terms of annual operating costs and revenues. As summarized in the Table 19,
the City's housing units, population and total employment would all grow about 16 percent.
However, within these broad averages are some important variations.
TABLE 19
Growth Rates
2002 • Buildout
VARIABLE PERCENT
GROWTH
Occupied Single -Family Dwelling Units 3%
Occupied Muld-Family Dwelling Units 25%
Total Occupied Dwelling Units 16%
Group QuartersTopulation 0%
Population 16%
Employed Residents 16%
Retail Employees
24%
Service Employees
16%
Other Employees
10%
Total Employees 16%
Elementary/High Sdrool Students 1%
Lodging Rooms 19%
Future residential growth is projected to focus heavily on multi -family development, which
will tend to shift the tax base to slightly lower cost housing. However, as noted in the
analysis of Newport Coast, housing prices for all types of units in Newport Beach are rapidly
reaching levels that can generate sufficient property tax to support public services. For the
buildout analysis we assumed a modest 5 to 10 percent real growth in housing prices, which
had a marked positive effect on the net cost of residential uses as shown in Table 20.
Within the employment figures, the buildout projection shows higher growth for retail and
lodging employment, at 24 percent and 19 percent, respectively. As discussed in the earlier
section of this report, these two business sectors are particularly strong net revenue
generators. Along with the growth in hotels rooms and regional population, we have
assumed a 20 percent growth in visitors to Newport Beach over the 20 to 25 years time
period needed to achieve buildout. The increased visitors add sales tax and transient
occupancy tax (TOT) to the City's revenues but would also increase costs for police
protection and emergency response among others. We have not assumed, however, a
APPLIED DEVELOPMENT ECONOMICS PAGE41
commensurate increase in the marine industry or the number of boats moored in Newport
Harbor. The general plan buildout projection does not include additional marina berths, and
as discussed earlier, some elements of the marine industry are under pressure from rising real
estate prices and may not be able to expand readily in Newport Beach.
As shown in Table 20, the individual land uses perform about the same as in the existing
land use scenario earlier, but the total net revenue is higher as a percent of revenue due to
the increased proportion of sales tax, TOT tax and property tax from residential units. The
analysis also includes the assumption that Citywould see increased revenues from the use of
public property, as uses on these sites intensify to serve the increased resident and visitor
population.
It should further be noted that this analysis only addresses the annual costs of providing
services and does not include any capital costs or improvements to public facilities needed to
support the growth in the buildout projection. Due to the long time frame (20-25 years) to
achieve buildout, we have not attempted to estimate the marginal costs of expanding or
upgrading city facilities. As these costs are identified through subsequent analysis in the
General Plan Update process, a discussion of financing for public improvements will be
included in the fiscal analysis.
APPLIED DEVELOPMENT ECONOMICS PAGE 42
TABLE 20
Fiscal Impact of Existing General Plan Buiidout
REVENUES TOW R*0&ntlal Office Rafail hWustrial Lodg'vig Marine Commercial Institutional Puhlic
GENERALFUNO
Propertyiax
44,455,553
35,821,978 3,768}67
444,014
1,286,946
524,349
524,960
1,631,708
453,332
0
Sales Tax
23,850,491
89,479 2,312,702 17,I25,217
910,645
709,108
978,688
1,775,652
0
0
TmnsiwoccupamTax
9,%3,150
965,756
0
0
0
8,897,394
0
0
0
0
Franchiw Fan
27T1,920
1,108,179
863,368
297.781
271,554
59,952
27,C65
114,376
37,647
0
Business Licenses
2,752,379
414,408
885,501
29%665
II4,921
12,628
26,993
25ZC77
21,732
14 %0
MotorVehicN4O•13au
1,970,612
1,970,612
0
0
0
0
0
R
0
0
Ottwk Wvemmanfal
IX4,956
S78,123
367,184
126,644
115,490
25,497
IU10
48,643
I6,011
235,655
CtwVuforService
9,88000
4754,333
1,988.006
U%676
625,284
138,045
6Z319
263,364
86,687
1,276,964
Fhws, Pwmlfles, and Fori&hm
3,646,813
1,754,754
733744
253,073
230783
K951
23,001
97,204
31,995
471,309
Licemas and Pernik
436,019
209,801
87,728
30,259
27,593
6,092
W50
11,622
3,825
56,350
Use ofPropuly
6,2I4,562
1,191,4C4
472,369
837,689
157,570
644%
1,149,63
*489
IC5,871
2,199,049
OtIwrRavenue
823,130
311A"
M4C5
44977
41,016
9,055
174,08E
17,276
5,686
83,763
htlewst Inconw
1,694,369
777,497
187,460
316,596
59A37
164,986
46,928
66,299
11,988
68,176
SUBTOTAL GEUERALFUND
110,212,634
=47,18811791,933
20,460,590
3,84123810,662,553
3,032,828
4,284,709
774.775
4,406,027
TIDELANDS FUND
Lfomu%Psrmit:,wAFees
1,279,303
0
0
646,303
0
0
633,OW
0
0
0
ChmmlorSetvke
33,-,W
D
0
0
0
0
33„90a
0
0
0
Use ofMoM and Propatty
6,248790
2,651,212
0
132,077
0
0
I,IV,559
67,980
127,600
2,I12,361
STATEGASTAXFUND
1,699,510
1,689XO
0
0
0
0
0
0
0
0
MFAWWMFUND
1,453,263
5,307
139,872
1,046,i64
55,076
42,587
59,191
IW67
0
0
SUBWTALOTNERFUNDS
10,704,366,
4,146,030
13%X2
1,824,944
$5,076
42,887
1,8831750
172 i47
127,600
2,112,36I
TOTALREVENUE
120,917,000
54,593,2181I,93I704 22,285,534
3,S96,31410,7Cs,440
4916,078
4,457,r5%
902,375
6,51USS
APPLIEDDEVELOPMENTECONOMICS PAGE43
TABLE 20 (continued)
Fiscal Impact of Existing General Plan Buildout
EXPENDITURES
Total
Residential
Office
Retail
Industrial
Lodging
Marine
Commercial
Institutional
Public
GENERALFUND
General Government
10,977,855
5,804,127
1,666,611
1,161,960
525,374
113,698
57,172
213,326
76,019
1,359,568
Police
35,450,255
16,731,187
5,456,944
7,145,927
1,716,364
387,739
171,063
541,520
237,949
3,061,561
Fire
25,300,159
12,113,389
3;920,645
1,264,891
1,243,536
245,531
166,345
635,014
200,466
5,510,342
PUbIic;W6ft
23,792,259
11,448,233
4;787,035
1;65$079
1,505,659
332,408
150,063
634,170
209,738
3,074,875
Community Development
2,628,691
1,264,859
528,896
182,420
166,353
36,726
16,580
70,066
23,062
339,728
Community Services
9,613,878
9,613,878
0
0
0
0
0
0
0
0
¢I,P_:Str09
.1,562,800
550,637
267,798
629;325
13,311
32,694
6,525
39,150
7,700
15,660
Other CIPProjects
3,375,979
1,624,436
679,252
234,278
213,644
47,167
21,293
89,985
29,619
436,306
SUBTOTAL GENERAL FUND
112,701,876
59,150,747
17,307,180
12,269,880
5,384,240
1,195,962
589,040
2,223,233
783553
13,798,041
0
TIDELANDS FUND
yartiorResourcesDivision
1,282,138
0
0
0
0
0
1,282;138
0
0
0
aji-d:( s
•422;264
- 0
0
- '0
6
0
6-
0
0
422,264
CIP
1,244,962
468,885
181,521
62,608
57,094
12,605
40,690
24,047
7,915
389,597
STATEGASTAXFUND
1,866,244
657,552
319,796
751,519
15,896
39,042
7,792
46,752
9,195
18,701
MEASURE MFUND
1,264,639
445,583
216,705
509,258
10,771
26,457
5,280
31,681
6,230
12,672
0BTOTAL'6TAE(2-FUNDS:. , _:
"6,080,248-
-_ 1;572,021
'718,022.
1;323;385
83�60
7,8;104
1,335,900
102,481
23,340
843,234
ITOTAL'-EXPENDRDRE§ �.,
�118;782,124,
.6V,722,768
Y8,025;'202'1.3',5934265
5,468,001_
1,274,066
'1,924,940
2,325j13
806,89,3
14,641,275
APPLIED DEVELOPMENT ECONOMICS PAGE 44
APPENDIX A
LAND USE DEFINITIONS BY SIC AND NAICS
SIC DESCRIPTION
NAICS
DESCRIPTION
INDUSTRIAL
01 t6u 09 Agriculture, Foresuy, and Fishing
11
Agriculture, Forestry, Fishing
15 tiro 17 Construction
21
M ning
20 thru 39 Manufacturing
22
Utilities
40 thou 49 TCPU
23
Construction
50 — 51 Wholesale
3143
Manufaanting
42
WholesaleTrade
48-49
Trans and Warehousing
RETAIL
52
BuddingMaterialsand Garden Supplies
44-45
RetailTrade
53
General Merchaudise Stores
722
Food Service& Drinking Places
54
FoodStores
55
Automobile Dealers and Service Stations
56
Apparel and Accessory Stores
57
Furniture and Home Furnishings Stores
58
Eating and Dri"SPlaces
59
MiscellweousRema
OFFICE
60
Depository Institutions
52
Finance and Insurance
61
Nondepositoty Institutions
53
Real Estate
62
Security and Commodity Brokers
54
Professional, Scientific, b: Technical Services
63
Insurance Carriers
621.623
HealthCare
64
Insurance Agents, Brokers, and Service
51
Infonuation
65
Real Estate
561
Administrative and Support Services
67
Holding and Investment Companies
73
Business Services
80
RealthServices
81
Legal Services
87
Engineering and Management Services
SERVICE COMMERCIAL
72
Personal Services
81
Other Services
75
Auto Repair, Senices, and Parking
71
Arts, Entertainment, andRecreation
76
Miscellaneous Repair Services
51213
Motion Picture be Video Exhibition
78
ModonPictures
79
Amusement &Recreation Services
INSTITUTIONAL
82 Educational Services 61 Educational Services
83 Social Services 624 Social Assistance
84 Museums, Botanical, Zoological Gardens
86 Memberships Oiganizations
91thru97 Public Administration
APPLIED DEVELOPMENT ECONOMICS PAGE45
LAND USE DEFINITIONS BY SIC AND NAICS
SIC DESCRIPTION NAICS DESCRIPTION
MARINE
2394 Mfg Of Canvas & Related Products
2499 Miscellaneous Wood Products Mfg
3663 Mfg Of Radio& TV Communications Equip
3731 Slip Building & Repairing
3732 Boat Building & Repairing
3993 Mfg Of Signs & Advertising Specialties
4422 Coastwise Transportation • Water
4469 Miscellaneous Water Transportation Services
4489 Water Passenger Transportation
4491 Marine Cargo Handling
4492 Towing&Tugboat Service
4493 Marinas
4499 Yacht Maintenance
5063 Electrical Apparatus & Equipment
5091 Sporting & Recreation Goods & Supplies
5099 Miscellaneous Durable Goods Wholesalers
5146 Fish & Seafood
5551 Boat Dealers
7699 Miscellaneous Repair Services
LODGING
7011 Hotels & Motels
NA
GOVERNMENT
Not bx6idnixorttbnryinBus L'
APPLIED DEVELOPMENT ECON(
441222
Boat Dealers, New and Used
713930
Marinas
334220
Marine Radio Comm Equip Mfg
336612
Boat yards (Le. boat mfg facilities)
811490
Boat, Pleasure, Repair & Maint Services
713990
Boating Clubs w/o Marinas
721 Accommodation
APPENDIX B
DISTRIBUTION OF `USE OF PROPERTY' REVENUES BY LAND
USE
GENERALFUND
Public
W.J. Carden Telescopes
2,000
z+wu
Temp. Slip rentals
1,500
1,500
Galley caf6
20,000
20,000
Orange Co. Dock
40,000
40,000
Garages
36,096 36,096
Pay Telephones
25,000 25,000
CDM Concession
90,000 90,000
Misc. Concessions
2,600 2,600
Parking Meter Income
344,249 28,573 41,751 26,236
767,5671,208,376
Citv Parklna Lots
303,307 25,174 36,785 23,116
676,278 1,064,660
Beacon Bay 650,000
°"',`
Balboa Yacht Basin 806,520
806,520
Basin Madne Shipyard 60,000
60,000
Electricity
10,000
10,000
Heritage Yacht Brok, 8,000
8,000
Balboa Yacht Club 4,500
4,500
Apartments 27,072
27,072
Intercity Bus Shelters
60,000
60,000
City facility Fees
55,000
55,000
OASIS
108,000
108,000
Library facility
2,000
2,000
Parking Motor Income 216,481 82,124
48,520
347,124
City Parking Lots 190,734 72,357
42,749
305,840
Marinaoark 350000
350,000
APPLIED DEVELOPMENT ECONOMICS PAGE 47
TIDELANDS FUND
Properties
Res Office Retail Light Ind.
Lodging Marine
Service
Inst. Pub. Total
Visitor -Serving
0 0 98,900 0
0 37,410
61,800
0 990,704 1,188,814
W.J. Carden Telescopes
1,800
1,800
Temp. Slip rentals
1,410
1,410
Galley caf6
20,000
20,000
Garages
40,704 40,704
Orange Co. Dock
36,000
36,000
Balboa Island Ferry
60,000
60,000
Balboa Pier Cone.
50,000
50,000
Newport Pier Cone.
25,000
25,000
Harbor Bait Barge
3,900
3,900
Non -Visitor -Serving 2,285,528 0 7,614 0 0 960,486 0 110,000 807,050 4,170,678
Amer. Legion 110,000 110,000
Beacon Bay 650,000 650,000
Balboa Yacht Basin 900,486 900,486
Basin Marine Shipyard 60,000 60,000
Electricity 7,050 7,050
Bayside Yacht Sales 7,614 7,614
Apar'-+- 3n 59u 30,528
Balk
Petr
Sale
ing
Fiscal Analysis
Of The
General Plan Alternatives
May 12, 2005
Prepared for
City of Newport Beach
Prepared by
Applied Development Economics
2029 University Avenue • Berkeley, California 94704 • (510) 548-5912
1029 J Street, Suite 310 • Sacramento, California 95814 • (916) 441-0323
www.adeusa.0M
CONTENTS
IntroductionAnd Summary...............................................................1
Fiscal Impact Of The Alternatives....................................................5
Citywide Alternatives.....................................................................5
Fiscal Impact Of Subarea Options..............................................8
AirportBusiness Area...................................................................8
BalboaVillage
.................................................................................9
BanningRanch
...............................................................................9
CanneryVillage.............................................................................12
CoronaDel Mar..........................................................................13
LidoIsle
........................................................................................13
LidoVillage..................................................................................15
MarinersMile...............................................................................15
McfaddenSquare .........................................................................16
NewportCenter/Fashion Island..............................................18
OldNewport Blvd......................................................................18
West.Newport Highway And Adjoining Residential.............19
WestNewport Industrial...........................................................19
ANote On Residential Assessed Values .......................................
22
TABLES
1 Fiscal Impact of General Plan Alternatives..................................6
2 Detailed Alternatives Analysis........................................................7
3 Fiscal Impact For Airport Business Area..................................11
4 Fiscal Impact For Balboa Village................................................11
5 Fiscal Impact For Banning Ranch..............................................11
6 Estimated Land and Development Values at Banning
Ranch............................................................................................12
7 Fiscal Impact For Cannery Village.............................................14
8 Fiscal Impact For Corona Del Mar............................................14
9 Fiscal Impact For Lido Isle..........................................................14
10 Fiscal Impact For Lido Village..................................................17
11 Fiscal Impact For Mariners Mile...............................................17
12 Fiscal Impact For McFadden Square.......................................17
13 Fiscal Impact For Newport Center/Fashion Island..............20
14 Fiscal Impact For Old Newport Boulevard ............................20
15 Fiscal Impact For West Newport Highway and Adjoining
16 Fiscal Impact For West Newport Industrial ...........................21
FIGURES
1 Economic and Fiscal Relationships in Newport Beach .............2
2 Overall Cost Revenue Impact of Existing Lind Uses
($Mmons).......................................................................................3
3 Impact of Existing Visitors ($Millions):........................................3
4 GPACAltematives byI.anduse....................................................4
INTRODUCTION AND SUMMARY
The fiscal analysis of the General Plan Alternatives is based
on the model described in the report entitled Fisad Irlpact
Am jsis andMag dated January2004. The report described
the methodology used to develop the fiscal model and
presents a fiscal analysis of existing land uses in Newport
Beach, as well as analyses of future growth both. at Newport
Coast and for the.city as a whole based on the existing
General Plan.
The present report analyzes several citywide alternatives
identified through analysis of trip generation rates for each
development option identified by the GPAC in geographic
subareas of the City. The analysis evaluates the new
development that would occur in each General Plan
alternative. The.report also presents a fiscal analysis of every
option for each study area. However, from a fiscal
perspective, the planning goal is to achieve a positive fiscal
result citywide, not necessarily in each subarea. This requires
a balance of land uses across the city, and each neighborhood
or commercial district will provide only a piece of the total
land use mix. Therefore, the results from the individual
subareas should be viewed as "building blocks", for use in
creating citywide development alternatives that make fiscal
sense.
The City -would not likely -want all future growth to be
concentrated in one type of land use or another, because
individual land uses depend on each other from an economic
standpoint, as illustrated in Figure 1 below. For example, by
themselves, residential and office uses sometimes create a
negative fiscal impact,,yet theyprovide the income and living
environment necessaryto support the retail uses that provide
more of the fiscal benefit for the City.
City of Newport Beach
Figure 1
Economic and Fiscal Relationships in Newport Beach
Purchase Newport Beach
products and services
♦ Net Tax Dollars
for Services
Jobs & I 1 Net Tax Dollars
Income for Services
iVisitor
Spending
Income
Laval
Purchases
& Net Tax Dollars
Income for Services
Local
Purchases
Jobs &
Income
Net Tax Dollars
for Services
FJ Business to Business
Transactions
and Visitor Spending
In general, the individual land uses generate similar impacts as
demonstrated in the earlier analysis of general plan buildout
for the City (Figure 2). Office and industrial uses typically do
not generate enough propertytax to offset the cost of
services for those uses. However, retail, lodging and service
commercial uses show a positive fiscal benefit, primarily due
to sales taxes they generate as well as Transient Occupancy
Tax (TOT) revenues from overnight stays. Public uses tend
to require more in service costs than they generate in tax
revenues. Figure 3 shows the net benefit of land uses serving
primarily visitors.
Average -priced housing creates a negative fiscal impact while
higher -priced units tend to pay for themselves in terms of
their cost/revenue balance for the City.' As shown in Figure
2, the total existing residential housing stock in Newport
Beach is estimated to create a negative fiscal impact of $7.7
million annually, due in pan to the fact that assessed values
tend to degrade in relation to market values over time. The
types of housing included in the General Plan Alternatives,
1 In this context, "average prices" range from the low $400,000's for townhouses to the low $600,000's for
single family units, while "higher prices" range from $600,000 for townhomes to $800,000 for single family
units.
City of Newport Beach
combined with current market trends, result in higher
property tax revenues than is typically generated bvthe
current housing stock This leads to a positive fiscal outcome
for most of the residential scenarios analyzed in this report
(see Figure 4) (more discussion of residential values is
provided at the end of this report).
FIGURE 2
Overall Cost -Revenue Impact of Existing Land Uses
($ Millions)
Public -$6.9
TOTAL = $0.1 Million
Institutional $0.07
= Service Commercial $1.9
Marine $2.4
Industrial -$1.6
Office -$5.4
Residential Sm
-$7.7
FIGURE 3
Impact of Existing Visitors
($ Millions)
TOTAL = $4.7 Million
Public
-$7.5
Institutional $0
Service Commercial $0.1
Marine $0.2
Lodging $7.8
Industrial $0
Retail $3.1
VlZesidetial
$0.7
City of Newport Beach 3
Figure 4
SPAC Alternatives by Land Use
12.00
^ 10.00
12.00)
.00 ■TrueMlnimum
.00 ■Aks Minimum
.00 [i Alts Maximum
.00
♦ 00
OF
qp
C4 y of Newport Beach
FISCAL IMPACT OF THE ALTERNATIVES
CITYWIDE ALTERNATIVES
The fiscal performance of the alternatives and the various
options for the sub -areas is a function largely of their land use
combination and the amount of new development of each
type. Three citywide alternatives were assembled, representing
low and high levels of traffic generation. These same
alternatives have been evaluated here from a fiscal standpoint;
but perhaps not surprisingly, the results are the reverse of the
traffic analysis. The maximum trip generation alternative
generates the best fiscal benefit. While the two minimum
traffic generation alternatives still generate positive fiscal
results, they have lower net revenues (Table 1).
The outcome for the minimum alternatives could be
significantly affected by the cost of purchasing Banning
Ranch for open space, if the cost were borne by the City of
Newport Beach. As discussed below in the section on
Banning Ranch, the cost of the land could require bond
payments as high as $10.3 million annually. This would cause
both of the minimum alternatives to show a negative fiscal
impact. However, it is possible this transaction could be
undertaken by other groups or agencies, or perhaps with the
aid of state or federal funds. For these reasons, the land
purchase has not been included in the figures in Table 1, but
it must be recognized that the cost of the open space option
at Banning Ranch could be substantial.
A number of the individual options for many of the subareas
do show a negative fiscal impact, as discussed in more detail
in the next section. Table 2 provides some perspective for
this discussion by presenting the individual options that
comprise the citywide alternatives. The table indicates the
percent contribution of each area to the grand total for each
alternative, and demonstrates that although some of the areas
have negative fiscal impacts, the magnitude of the impact is
minimal.
City of Newport Beach
ALTERNATIVES Total
True Minimum $317,104
p6
Subarea Only $10,321,718
Residential
TABLE 1
Fiscal Impact of General Plan Alternatives
Off -ice
Retail Industrial Lodging
$985,111 ($726,305) $860,417
Service
Marine Commercial Institutional
$97,038 $9,659,692 $674,832
Public
$179,556 ($1,244,653) ($163,970)
City of Newport Beach
0
TABLE 2
Detailed Alternatives Analysis
Subarea
Subarea
Only
Only
True Options
Options
Minimum Minimum
Maximum
AIRPORT BUSINESS AREA
General Plan Growth -2.1%
GPAC Alternatives Growth
Option 2
52.8%
Option 3
34.2%
BALBOA VILLAGE
GPAC Alternatives Growth
Option 3
-25.4% -0.1%
Option 4
-1.8%
BANNING RANCH
GPAC Alternatives Growth
Option 1--Open Space
-1.0% 0.1%
Option 2-Taylor Woodrow
6.8%
CANNERY VILLAGE
TAZ 1449/CANNERY VILLAGE WEST
General Plan Growth
-0.2%
GPAC Alternatives Growth
0.8% 0.4%
TAZ 1454/CANNERY VILLAGE EAST
GPAC Alternatives Growth
Option 1
0.6%
Option 2
-26.1% -1.6%
CORONA DEL MAR
GPAC Alternatives Growth
Option 1
1.5%
Option 2
47.6% 2.8%
LIDO ISLE
General Plan Growth
0.6%
GPAC Alternatives Growth
Option I -No change
0.0% 0.0%
LIDO VILLAGE
TAZ 1452
General Plan Growth
0.2%
GPAC Alternatives Growth
Option 2
13.0%
Option 3-mixed use
1.8%
TAZ 1453
General Plan Growth
-9.0%
GPAC Alternatives Growth
Option 1
0.4%
Option 2
0.8%
MARINERS MILE
TOTAL PLANNING AREA
General Plan Growth
32.8%
GPAC Alternatives Growth
Option 2
17.9% 9.2%
MCFADDEN SQUARE
TAZ 1450
General Plan Growth
3.4%
GPAC Altematives Growth
9.1% 4.7%
TAZ 1451
General Plan Growth
4.5%
GPAC Alternatives Growth
19.6% 10.1%
NEWPORT CENTER/FASHION ISLAND
General Plan Growth
272.6%
GPAC Alternatives Growth
Option 1
38.1%
Option 2
8.1%
City of Newport Beach
YI
TABLE 2
Detailed Alternatives Analysis (continued)
Subarea subarea
Only Only
True Options Options
Minimum Minimum Maximum
OLD NEWPORT BOULEVARD
TAZ 1432
General Plan Growth
23.6%
GPAC Alternatives Growth
1
1.0%
oon
ption 2
3.0%
WEST NEWPORT HIGHWAY
Block A
Option 2 (spec needs housing)
0.0%
Option 4 (panting lot)
0.9% 0.1%
Black B (no charge, est. exist dus)
0.0% 0.0% 0.0%
Block C
Option i (vertical mixed use)
-4.9%
Option 4 (limit rti, hsg, & hotel)
10BA% 6.4%
Non -Study Area
35.4% 2.1% 1A%
WEST NEWPORT INDUSTRIAL
GPAC Alternatives Growth
Option 2 (total TAZ)
-15.4%
option 3 (total TAZ)
-365.6% -21.8%
TOTAL*
100.0% 100.0% 100.0%
*Not&. Totals do not add due to rounding
FISCAL IMPACT OF SUBAREA OPTIONS
An analysis was run for every land use option in each subarea
in the General Plan alternatives analysis. The analysis
addresses onlythe incremental land use change, and does not
account for existing land uses that would remain in place for
each alternative. VMe the options within each subarea may
be mutually exclusive, the fiscal results for the options maybe
added to those for options in other subareas to create results
for any combination of subareas throughout the City. A brief
discussion of each subarea is provided below.
AIRPORT BUSINESS AREA
According to the existing General Plan Growth Scenario, the
Airport Business area would add primarilycommercial and
office development, with little change in the number of hotel
rooms. This scenario produces a negative fiscal effect,
primarily due to the amount of office space in relation to
other land uses ('Table 3).
CHyofNewport Beach
Under the GPAC alternatives, Option 1 would see
substantially more office development, but also significant
growth in lodging. New retail development would be similar
to the existing General Plan. This option'produces a very
strong $3.2 million in annual net revenues.
Option 2 introduces mixed use residential and commercial
development, with less office space and lodging than in
Option 1. It performs very well, with $2.8 million in annual
net revenue. Option 3 expands the mixed use development
over Option 2, and provides much less office space, but the
same amount of hotel development as in Option 2. It has the
best fiscal impact of the GPAC options in this area, with $3.5
million in annual net revenues.
BALBOA VILLAGE
There are five options in this area in addition to the existing
General Plan (Table 4). Under the General Plan Growth
Scenario, the area would see growth in condominiums and
single-family units in lieu of some existing single farnayunits.
There would also be a small amount of new retail and office
development. Overall, this scenario creates a negative fiscal
impact of about $93,000 per year.
The first three GPAC alternatives show very similar
residential development patterns as the General Plan
alternative, but with slightly varying amounts of commercial
or office space. Their fiscal effects are very similar to the
General Plan, ranging from negative $80,000 to negative
$93,500.Options 4 and 5 include mixed use development,
featuring residential over retail space. Option 5 also includes
new hotel space, not included in any of the other options.
The hotel development creates a positive fiscal impact for
Option 5, while Option 4 remains slightly negative.
BANNING RANCH
In the General Plan Growth Scenario, the Banning Ranch
Area is slated to have 2,496 multi -family units, in addition to
225 single-family units. There would be commercial
development to support the residential uses, as well as
industrial and office uses in portions of the site adjacent to
the existing West Newport industrial area. It is anticipated
City of Newport Beach
that this site would support higher than average residential
values, and the General Plan scenario produces a modest
positive fiscal impact of about $27,000 per year.
The GPAC options range from devoting the entire site to
open space (Option 1) to various levels of residential and
commercial uses substantially below the amount allowed by
the existing General Plan (Options 2 and 3), with no office or
industrial space. These middle option are variations on the
previouslyproposed Taylor Woodrow project, and both
create a healthyfiscal benefit of nearly $600,000 to $700,000
per year (Table 5). Option 4 would include a resort on a
smaller portion of the site, with relatively little housing and
no industrial or office space. However, the lodging
development would create a $1.7 million net fiscal benefit,
which is the best result of all the scenarios for Banning
Ranch.
'Ilse open space option would entail significant cost to
purchase and maintain the land at Banning Ranch. The value
of the land is dependent upon the development options
available to it. For this analysis, we have taken the approach
of estimating the total value of the various land use options
included in the alternatives analysis and then setting the land
value at 25 percent of total value for each option (Table 6).
The development permitted under the existing General Plan
is the most intensive of the options, and would result in a
total development value of over $1.7 billion. Options 2 and 3
reduce this value somewhat. Option 4, a small scale resort
development, represents the lowest overall value project,
primarily because it uses only a small portion of the site. We
have taken the average of these alternatives to represent the
potential value of a project at Banning Ranch. This results in
a potential land value of $226 million. If the communitywere
to approve a 30•year bond measure to finance this purchase,
the annual debt service would be about $10.3 million.
City of Newport Beech 10
TABLE 3
Fiscal Impact For Airport Business Area
Service
AIRPORT BUSINESS AREA Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
General Plan Growth ($6 656) t0 ($189 853) $84 777 ($18 959) .s65,292 $0 $45 196 ($8,943) 15,835
lninu+.i!+'; ':I{N6i°-� astsH�ndnsn'iPPnns s.a._e s stIl Pi "s s su iip ssa jai. s,-}'tlij4{lt!}{` k%ss,d' s6tiPiIII IIItII(III(js( 6i; Ii�?t�'".,z!.L;I+y iid�s'?7Et(ihls>
......,.__°.._. m fix' ,.suu{t t!t.3 ._. „� ,,s,m a�3 sl im,. ,.,,,,,...........i ..,, i3!6»v
O tion1 j k{(j $3291377 $0
. t l _m,lp"I!13�11i lillt tli1A,,?I!'� 4"a I� �!{l°,r 3. :etal.{
(s,700,211)
ri�+ s�#'i`}
$187,982
uN
$42868) $3,832,850 iW-$0
r3v .-.s
$122,339 8940 99r776
.—.,!i�t "li -. (t 4i(W: �#I ` v �..
Option 3
$3,525,627 $340,968
($39 044)
$163 033 $223,432 $2,984,052 $0
$28,616 ($88,402) ($87,029)
TABLE 4
Fiscal Impact For Balboa
Service
BALBOA VILLAGE Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
General Plan Growth (193,184) ($71 746) ($36 041) $5 768 $D $0 2 702
.s 1 ..,...._� P.�i0 $<r6s „13t o3s +$.n0t $,
st uIa Ms} t.
option 1
t'itN9 psi���,�;,!� `, s,jjots s Isis iPd"i t
���� � rCr WRR, .rz"s, t�s3 ,„,,.al€, ..
92 186 69 212
,i�}::y, ti!1 y I(� s
aft ''�§W l"...."`_,(,
36 041 4 530
>li i''"
Fi;iilti ., `' ... ..:..,_
0 0 0 5,880
t- iniiUU s
.».a...., � tfil i. f!"�s.M.,.»..._...., ..»..
D 2r657
..., e'..
Option 3 ($80433� ($71 746) ($20 145) $5,768
dial tau sEwu u.�yni ns ita € + s ! : S n;
a.f"Siir
$0 $0 $0 $3 948 $0 $1 742
vx.,
Option 5 $1,868,324
($41,132) $12,452 $46 416
$0 $1,928,057 $0 ($1,387)
$0 ($76,082)
TABLE 5
Fiscal Impact For Banning Ranch
Service
BANNING RANCH Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
General Plan Growth
$27 147 $163 680 S$124 393) $15,392
($72 200) $0
$0 $221I27D $0 $22 397
µ;y=li !L `. t 'u tJ,!II!i tiI!(�iEi"A F Ijk S t7 t it!4{? S� {If (� Y9F �� }!}ij.r[({t _�y (1�t t!J9I11t J i1i i��ii tl�� Il s_kk"r ?dti�'!to .I
�L"ea. �etli�N[i ': :. .:.:
�- —�— .,.
, s31, IttL _..., .., .. tee: + �sl l,l —�
...{�Illu ail. .?..{tii`lt9R:�t`..,...
,.
Opbon 1 Open S ace
�.,Ent'.R!IFfl(ifl8f
($3 124�0 $D $0
$D
$0 $0 ($3 346)
$221
[OOdCnVv`
its ii..�S2,i3
s�
i
,t
I
,,'k^.T3ylii . - ni
:i'irnttW111,1ltPRisr
111
Otion 3Ta ed
odrow"Rs
$591ii,3,7ai5!
$469,6s91
$Di€
$0 �,($13,655)
h"s,e I
5WvaOis
+ 'L.
.
pt-
I a:
City of Newport Beach 11
As discussed in the Introduction, other options maybe
possible for purchasing the land, some of which may not
require anyinvestment from the Guy of Newport Beach
itself, Therefore, the land purchase has been kept separate
from the fiscal impact of the onsite land uses in Table 5.
TABLE 6
Estimated Land and Development Values at Banning Ranch
LAND USE
DEVELOPMENT OPTIONS
Ganaral Plan
Option 2
Option 3
Option 4
RESIDENTIAL
Single Family
$202,500,000
$787,500,000
$392,400,000
$0
Multi -Family
$1,38%400,000
$487,275,000
$142,675,000
$26,00%000
Subtotal Residential
$1,590,900,000
$1,274,775,000
$535,075,000
$26,000,000
NUN -RESIDENTIAL
ofte
$33,431,918
$0
$0
$0
Retail
$1,859,526
$2,789,289
$1,301,668
$929,763
Indushial
$108,976,964
$0
$0
$0
Lodging
$0
$5,997,505
$5,997,503
$10,951,277
Service Commerdai
$1205,592
$3,593,977
$1,677,189
$1,197,992
AVERAGE AMONG THE OPTIONS
"Based on a30year bond® 5%.
Sousse: ADE.,Inc.
CANNERY VILLAGE
The east and west villages have been addressed separately in
the analysis (Table 7).
CANNERY VILLAGE WEST (TAZ 1449)
Under the enlisting General Plan, this area would see a small
amount of condominium development and some commercial
growth. This scenario has a minor negative fiscal impact. The
GPAC alternative would include mixed -use development
with residential over commercial space, and increase the
intensity of development over the existing General Plan. All
of the land uses in this option are fiscallypositive, totaling
about $45,000 in net revenue per year.
CHyofNewporiBeach 12
CANNERY VILLAGE EAST (TAZ 1454)
The existing General Plan would allow additional
condominium development along with a small amount of
retail, office and waterfront industrial development in this
area. The industrial uses contribute to negative fiscal impact,
although if the future development includes boat sales along
with repair, it could actually be a positive fiscal benefit.
The GPAC Option 1 would have mixed use development at
greater intensities, while Option 2 focuses mainly on multi-
family residential development, in place of some of the
existing commercial space in the area. The mixed use
development in Option 1 creates a positive fiscal impact,
while the mix of land uses in Option 2 is negative.
CORONA DEL MAR
According to the General Plan Growth Scenario, the Corona
del Mar area will add some single family residential
development, with supporting commercial and professional
office space. The single fare lyunits create a positive fiscal
effect, and the scenario as a whole produces more than
$129,000 per year in net revenue (Table 8).
Options 1 and 2 introduce mixed -use space, along with the
new single family units. These options have even higher fiscal
benefits due to the higher intensity of residential
development.
LIDO ISLE
The existing General Plan would allow additional,growth in
single family units. In addition to this option, the GPAC also
defined an alternative that would keep development as it
currently exists in the area. The existing General Plan
development scenario would increase property values in the
area and have a positive fiscal benefit of about $64,000 per
year, which would not be realized with the alternative (Table
9).
City of Newport Beach 13
TABLE 7
Fiscal Impact For Can
Service
CANNERY VILLAGE Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
TAZ 1449/CANNERY VILLAGE WEST
n 11 , , , " - , pill itilc
Alternatives Growth $42,519 $20,228 $10,876 $10,153 $0 $0 $0 $592 $0 $669
TAZ 1454/CANNERY VILLAGE EAST
1111ZO UM',. MEN!,
$Um iIIM L
GPAC Alternatives Growth
11 , , � -
E ------ III I I I I S.KA IIII I 11! 111 i 0 R $ 3 —LM 14 1111 M%, Q ZEN R. 2 6 i
ji T� VA�- A AM,
RIINU, �' �0 9 �2""', , I I� .1, 11 11 Y7 -1-
Option 2 ($82,669) ($8,619) $49,612 ($58,996) ($39,144) $0 $0 ($19,275) $0 ($6,247)
TABLE 8
Fiscal Impact For Corona Del Mar
Service
CORONA DEL MAR Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
..........
N,
NSUM MIMP . .. ............ ....
-0=�Mlyb —rlm .. .. .... .................... .
7 -,Mffiftai 0 It
GPAC Alternatives Growth
IINI 010
015 -t-ltli
sa "W-
1,11111 5-3, 5000*11, -�W
Option 2 $151,051 $103,760 $43,485 $7,767 $0 ..$o $0 ($4,483) $0 $522
TABLE 9
Fiscal Impact For Lido Isle
Service
LIDO ISLE
Total Housing Office
Retail Industrial
Lodging Marine Commercial
Institutional Public
General Plan Growth
W,569 $63,271 $o
$0 $0
$o $0 $0
$0 $1,298
0-
SM
r
itil
--tit'NI INIIII: L,
I I T tv N
Option 1--No change to existing uses
$0 $0 $0
$0 $0
$0 $0 $0
$0 $0
City of Newport Beach 14
LIDO VILLAGE
The north and south sections of this subarea have been
addressed separately in the analysis (Table 9).
LIDO VILLAGE NORTH (TAZ 1452)
In the northern portion of Lido Village, little growth would
occur in the General Plan Scenario and there is little fiscal
effect. Under the GPAC alternatives, both Option 1 and
Option 3 would include mixed use development, with
residential over commercial space. Option 2 focuses more on
retail and visitor accommodation, although Option 1 also
includes new hotel space. Due to the hotel space, Options 1
and 2 return a substantial $1.3 million annual fiscal benefit,
while the Option 3 fiscal impact is a much more modest
$95,000 per year (Table 10).
LIDO VILLAGE SOUTH (TAZ 1453)
The existing General Plan for this area would allow some new
office development and a small amount of new commercial
space. The office space contributes to an overall negative
fiscal impact by this scenario of more than $28,000 per year.
Under the GPAC alternatives, Option 1 would increase the
retail development potential -and reduce office space, while
Option 2 would have mixed use residential and retail space
and no new office space. While both of these options are
positive fiscally, Option 2 performs much better at $78,000
per year in net revenues (Table 10).
MARINERS MILE
In the General Plan Growth Scenario, the Mariners Mile
project area is projected to include additional office space,
and a small amount of hotel development. This scenario
would result in a positive fiscal impact of about $103,000 per
year (Table 11).
The GPAC options would add mixed use development,
substantially increasing the amount of housing development
in the area, along with the same increase in lodging as in the
existing General Plan. In addition, Option 2 would focus on
marine uses in -lieu of some of the other non-residential land
City of Newport Beach 15
uses. This would boost the fiscal benefit of the option to
more than $950,000 peryear, up from $305,000 per year
under Option 1.
MCFADDEN SQUARE
The east and west portions of this subarea have been
addressed separately in the analysis (Table 12).
MCFADDEN SQUARE EAST (TAZ 1 450)
The existing General Plan would permit some increase in
single family attached housing in this area, along with a small
amount of commercial development. This land use mix
produces a smallfiscal benefit of about $10,000 peryear. The
GPAC alternatives would include mixed use development
with residential over office space. There would also be
additional'lodging development, which substantiallyincreases
the fiscal benefit by$483,000 per year (Table 12).
MCFADDEN SQUARE WEST (TAZ 1451)
Inthis area, the existing General Plan would also allow some
single-family detached units along with townhouse or duplex
developments. As with the east side of this area, this mix
produces a modest positive fiscal benefit ($14,000 per year).
The GPAC alternative would focus on lodging development
with some supporting commercial space, creating net positive
revenues of over $1 million annually:
ClfyOtNewporf Beach 16
TABLE 10 '
Fiscal Impact For Lido Village
Service
LIDO VILLAGE Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
TABLE it
Fiscal Impact For Mariners Mile
Service
MARINERS MILE Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
MCFADDEN SQUARE Total
$483,564
TABLE 12
Fiscal Impact For McFadden Square
Service
Housing Office Retail Industrial Lodging
$20,724 ($34,509) $17,422 $4,999 $483,568
Marine Commercial Institutional Public
$0 $7,169 $0 ($15,808)
City of Newport Beach 17
NEWPORT CENTER/FASHION ISLAND
The existing General Plan would allow some increases in
nearly all of the existing land uses including commercial,
office and hotels. There would be no increase in residential
development, however. This scenario creates a fiscal benefit
of more than $860,000 per year (Table 13).
The GPAC alternatives would have varying amounts of new
development in the non-residential land use categories, along
with potentially substantial increases in multi -family
residential development. Option 1 would have significantly
more hotel development than would either the existing
General Plan or the other GPAC options, and would also
significantly increase the amount of retail development in the
area. This combination of land uses creates the best fiscal
benefit in the area, at $3.9 million per year ('Table 13). Option
2 significantly increases the amount of office space that
would be permitted, which reduces the fiscal benefit of this
scenario to $428,000.Option 3 has the same office and hotel
growth as the existing general Plan, but increases retail
development over Option 2, thus resulting in a midrange
fiscal benefit for this area of $921,000 per year. Also, this
option has more housing than the others, and given the
anticipated rnarlset segments for the housing this increases the
fiscal benefit of the option.
OLD NEWPORT BLVD.
The existing General Plan option increases single family
attached units along with some commercial and office space.
This scenario would have a positive fiscal impact of about
$74,000 per year (Table 14). The GPAC options focus on
mixed use residential and commercial development, along
with a small amount of additional lodging. In addition,
Option 1 includes increased medical offices in the area.
However, with the lodging and an increased component of
retail development, Option 1 has a solid fiscal benefit of
about $99,000 per year. Option 2 performs much better
without the office space, despite having slightly less retail
development. It produces about $161,000 per year. Option 3
deletes the lodging and has a fiscal benefit of only $18,000
per )par.
City ofNeWportBeach 18
WEST NEWPORT HIGHWAY AND
ADJOINING RESIDENTIAL
The existing General Plan would see very little additional
development in this area and a modest fiscal benefit. The
GPAC Option 1 adds mixed use residential and commercial
development, with some reduction in the existing lodging
rooms in the area. This results in a negative fiscal impact•of
more than $500,000 per year. Option 2 concentrates on
adding some housing and more lodging to the area, and has
the best fiscal benefit, at about $1.2 million annually. Option
3 adds more commercial and open space but also results in a
reduction of lodging, and a resulting negative fiscal impact.
Option 4 provides limited additional retail, residential and
hotel development, with a positive fiscal impact of more than
$340,000 per year.
WEST NEWPORT INDUSTRIAL
This area features growth in industrial and office uses and
expansion of the hospital. The hospital is certainly major
community resource, and in manyways is likelyan economic
engine in terms of fostering related medical office
development and possibly medical equipment sales. However,
because it is operated by non-profit religious group, the City
receives very little property tax from the hospital. The
available revenues do not cover the estimated city services
costs. This greatly influences the outcome of all the
development scenarios in this area. The potential impact of
the hospital expansion is approximately negative $1 million
annually.
In addition to the hospital project, the three GPAC options
in this area include progressively larger components of multi-
family housing development. Option 1 also includes
substantial industrial development along with a moderate
amount of office space, creating a negative $1.3 million
annual fiscal impact (Table 16). Option 2 includes some
commercial development and a very large medical office
component, but reduces the amount of industrial
development compared to Option 1.Option 2 has the worst
fiscal impact of the three, at negative $1.5 million. Option 3
includes the most housing development of the three and
actually reduces some of the existing industrial space to make
room for the housing and new office development. This
option has the best fiscal result, at negative $1.1 million.
City of Newport Beach 19
TABLE 13
Fiscal Impact For Newport Center/Fashion Island
service
NEWPORT CENTER/FASHION ISLAND Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
01. �—ffillg �'W,jj- "I sa,Hb :, 111
" �17-1111 WMMI All,
15 " �,— 6K
M .1
10 Owl) 41 *Q616 Mr MIAMkOA
GPAC Alternatives Growth
47
q 380 040 11M 14390r; P NO d0w "M'Ai WMU AD
ib 00094--,
TABLE 14
Fiscal Impact For Old Newport Boulevard
Service
OLD NEWPORT BOULEVARD
Total Housing Office Retail Industrial Lodging
Marine
Commercial Institutional Public
4WO&A"M
"a, 55'7117,aw
MEDIUM—
AMAW
GPAC Alternatives Grow—th
=V ",, I� "jjj..M,
= MI wi"
11
C)ntion 2
161IS2 (48.09S) S? 330 22.068 132 141488
0
(675) 0 (7,096)
City of Newport Beach 20
TABLE 15
Fiscal Impact For West Newport Highway and Adjoining Residential
Service
WEST NEWPORT HIGHWAY ANDAD30INING RESIDENTIAL Total Housing office Retail Industrial Lodging Marine Commercal Institutional Public
GPAC Alternatives Change (estimated)
Option 4 (parldng lot)
Block B (no change, esL erdst dus)
$2,866 $3,080 $0 $0 $0 $0 $0 $0 $0 ($215)
Option 2 (dus & hotel 1262151 352 0 $15,610 0 $1,301,9170 (3 043) $0 52 684
ODtion3(Doml—w1otconsold) (i554S42) 33388 $6 S2J06 3D (4566846-5 $6 t3191 kn 423trrai
Option 4 (limit rd, hsg, & hotel) $342,926 $352 $0 $1,189 $0 $357,562 $0 ($1,485) $0 ($14,692)
Non Study Area $112,156 $109,170 $2 986
TABLE 16
Fiscal Impact For West Newport Industrial
Service
WEST NEWPORT INDUSTRIAL Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
5
GPAC Altematives Growth
City ofNewport Beach 21
A NOTE ON RESIDENTIAL ASSESSEYVALUES
When we analyzed new home prices for the fiscal impact of
Newport Coast in 2002 and 2003, single fatnilyprices
averaged $815,000 and townhouses averaged about $600,000.
Our analysis of existing land uses in Newport Beach showed
that there was very little new mull famityproduct, and most
of the assessed values of existing apartment units have
declined substantially relative to market conditions. Our fiscal
analysis indicated that existing residential units generally did
not pay their wayfor Cityservices because the propertytaxes
on existing assessed values werenot sufficient. However, new
homes such as those in Newport Coast were valued high
enough to create a positive fiscal impact. For the alternative
analysis in this report, the following assumptions have been
made about unit values.
r Single family: $900,000
r Condominium: $650,000
■ Mixed Use apartments: $344,000
■ Other apartments: $275,000
The land use alternatives have been defined in terms of broad
land use categories. In order to prepare the fiscal analysis, we
have made additional more detailed assumptions about the
unit types and values. In the Airport area, Banning Ranch and
Newport Center, 75 percent of the multiefamilyunits would
be condominiums. In other areas, the ownership share would
be 50 percent. For mixed use residential, 75 percent would be
condominiums ($650,000) and the other 25 percent are
valued at $344,000.
CRY of Newport Beath 22
PLANNING DEPARTMENT
CITY HALL
3300 NEWPORT BOULEVARD
P. 0. BOX 1768
NEWPORT BEACH, CALIFORNIA
92658-8915
Memorandum
To: Planning Commissioners
From: Gregg B. Ramirez, Senior Planner
(949) 644-3219
aramirez(a)city. newport-beach.ca.us
CC:
Date: May 27, 2005
Re: Fiscal Analysis of the General Plan Alternatives
Attached is the revised presentation given at the May 24, 2005 City Council meeting. Please
let me know if you have any questions or comments.
Thank You
Newport Beach
Fiscal Analysis
of the
General Plan
Alternatives
May 2005
Introduction
The Fiscal Analysis is ...
;; Based on the fiscal model developed earlier in the process.
Does not account for inflation — the analysis is intended to
compare the land use mixes in the options within a
common framework.
The fiscal analysis is not a market analysis.
" Does not address infrastructure needs at this time.
Overall Cost -Revenue Impact
Public -$6.7
($ Millions)
TOTAL = $0.1 Million
Institutional $0.08
Service Commercial $1.8
Marine $2.4
Lodging $7.8
Industrial -$1.5
Retail $7.1
Office -$5.0
Residential -$6.7
a` SEW PqRr
19
Impact of Visitors
($ Millions)
Public -$7.4
TOTAL = $4.9 Million
Institutional $0
Service Commercial $0.1
Marine $0.2
Industrial $0
Retail $3.2
Office $0
L 1 Residential $0.9
Lodging $7.8
Economic and Fiscal Relationships in Newport
Beach
REST OF THE WORLD'S ECONOMY
Purchase Newport Beach
products and services
Purchase Newport Beach
products and services
+ Net Tax Dollars
/ Worker earnings for Services
from businesses
outside Newport Beach
Income
Jobs & Net Tax Dollars
Income for Services
ars
Visitor
Spending
Jobs &
Income
Net Tax Dollars
for Services
Business to Business
Transactions
and Visitor Spending
Economic and Fiscal Relationships in Newport
/ Worker earnings
from businesses
outside Newport Beach
$$
Income
Beach
$ REST OF THE WORLD'S ECONOMY
I Purchase Newport Beach
products and services
Re ;---I
Shc
Jobs &
Income
i�00
Net Tax Dollars
for Services
ars
$ P' urchase Newport Beach
products and services
Net Tax Dollars
for Services
Visitor
Spending
lobs &
Income
Net Tax Dollars
for Services
Business to Business
Transactions
and Visitor Spending
$12.0
$8.0
v $6.0
C
$4.0
C
$2.0
LW
$0.0
Citywide Alternatives
($ Millions)
True Minimum Alts Minimum Alts Maximum
The result is partly from differences in total
development and partly land use mix.
°WaoR, Citywide Alternatives
US
by Major Land Use
$12.00
$10.00
$8.00
$6.00
z
$4.00
$2.00
$0.00
($ 2.00)`a��
■ True Minimum
■ Ms Minimum
O Alts Maximum
Lodging drives the outcome: $1.5 mil in True Min.,
$6.0 mil. in Alts Min., and $9.6 mil. in Alts Max.
Q�E Citywide Alternatives
by Major Subarea
W.
W. NEWPORT HWY
OLD NEWPORT BLVD.
NEINPORT CTR.
MC ADDEN SQ.
MARINERS MILE
LIDO VIL.
CO . DEL MAR
CANNERY VIL.
BALBOA VIL.
($2,000) ($1,000) $0 $1,000 $2,000 $3,000
Annual Contribution to Alternative (000's)
' , True Minimum
$4,000
a
Citywide Alternatives
by Major Subarea
W.
W. NEWPORT HWY
PORT CTR.
MC ADDEN SQ.
MAR NERS MILE
CO . DEL MAR
CA NNERY W
LBOA W
AIR T AREA
($2,000) ($1,000) $0 $1,000 $2,000 $3,000
Annual Contribution to Alternative (000's)
.„ Subareas Only Minimum
$4,000
�qr= Citywide Alternatives
by Major Subarea
($2,000) ($1,000) $0 $1,000 $2,000 $3,000
Annual Contribution to Alternative (000's)
'% Subareas Only Maximum
$4,000
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r
n
��Itp0.N
Subarea Options: Airport Area
($500) $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Annual Net Revenue (000's)
:0 Existing GP focuses on office development.
Options add mixed use and lodging.
Option 3 has less office.
4 dEw�Rr
O 9
:_= = Subarea Options: Balboa Village
Existing GPM
Option 10
Option 2❑
Option 3❑
Option
Option 57
($1,000) $0 $1,000 $2,000 $3,000 $4,000
Annual Net Revenues (000's)
Existing GP is mainly multi family residential.
Options 4 and 5 have mixed use but only Option 5
has lodging.
EwvpRr
6
t1 cc�roa„. Subarea Options: Banning Ranch
Existing GP
Option 1
Option 2
Option 3
Option 4
($1,000)
$0 $1,000
$2,000 $3,000 $4,000
Annual Net Revenues (000's)
Existing GP has office and industrial along with
housing.
C�, Option 4 is the resort.
Subarea Options: Cannery Village
C�4 FOPM�' West
■ Existing GP
■ GPAC Alternative
($1,000) $0 $1,000 $2,000 $3,000 $4,000
Annual Net Revenues (000's)
c° Alternative has mixed use at higher intensity
than Existing GP.
° Subarea Options: Cannery Village
West
1
($10)
$0 $10 $20 $30 $40
Annual Net Revenues (000's)
$50
■ Existing GP
■ GPAC Alternative
Alternative has mixed use at higher intensity
than Existing GP.
; Subarea Options: Cannery Village
East
($1,000) $0 $1,000 $2,000
Annual Net Revenues (000's)
$3,000 $4,000
Option 1 includes mixed use while Option 2 is
mainly multi -family development.
4= Subarea Options: Cannery Village
East
($100) ($50)
$0 $50 $100
Annual Net Revenues (000's)
,% Option 1 includes mixed use while Option 2 is
mainly multi -family development.
0144 Subarea Options: Corona del Mar
Existing GP
Option 1
Option 2
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Annual Net Revenues (000's)
Options add mixed use to increased single
family units.
o e
Subarea Options: Corona del Mar
Existing GP
Option 1
Option 2
$0 $50 $100 $150
Annual Net Revenues (000's)
=` Options add mixed use to increased single
family units.
$200
Subarea Options: Lido Isle
1
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Annual Net Revenues(000's)
Existing GP allows further development on
existing lots,
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b
C�4roaa`•
ubarea Options: Lido Village North
Existing GP
Option 1
Option 2
Option 3
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Annual Net Revnues (000's)
Options 1 and 2 focus on lodging and
commercial, while Option 3 has mixed use.
ubarea Options: Lido Village South
General Plan
Growth
Option 1
Option 2
($1,000) $0 $1,000 $2,000
Annual Net Revenues (000's)
$3,000 $4,000
Existing GP adds office and commercial.
Option 1 has increased retail and office while Option
2 has mixed use with no office.
> a
ac,t;foR� ubarea Options: Lido Village South
($40) ($20) $0 $20 $40 $60
Annual Net Revenues (000's)
$80 $100
c: Existing GP adds office and commercial.
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2 has mixed use with no office.
Subarea Options: Mariners Mile
Existing GP
Option 1
Option 2
$0 $500
$1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Annual Net Revenues (000's)
4' Option 1 includes mixed use.
Ac Option 2 also adds marine uses.
ubarea Options: McFadden Square
East
1
$0 $1,000 $2,000 $3,000
Annual Net Revenue (000's)
■ Existing GP
■ GPAC Alternatives
Existing GP adds housing.
Alternative adds mixed use with lodging.
ubarea Options: McFadden Square
WestUPS
i
$0 $1,000 $2,000 $3,000
Annual Net Revenues (000's)
■ Existing GP
■ GPAC Alternatives
Existing GP would add some housing.
Alternative adds lodging and commercial.
Subarea Options: Newport
oi3
Center/Fashion Island
Existing GP
Option i
Option 2
Option 3
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Annual Net Revenues (000's)
Option 1 includes more retail and lodging.
Option 2 has more office.
:> Option 3 has more retail than Option 2
ubarea Options: Old Newport Blvd.
Existing GP
Option 1
Option 2
Option 3
$0 $1,000 $2,000 $3,000 $4,000
Annual Net Revenues (000's)
:% Existing GP adds housing.
Option 1 emphasizes medical
adds lodging.
Option 3 deletes the lodging.
offices while Option 2
ubarea Options: Old Newport Blvd.
NZLI'oa,""
i5cisting GP
Option 1
Option 2
Option 3
$0 $50 $100 $150
Annual Net Revenues (000's)
$200
Existing GP adds housing.
Option 1 emphasizes medical offices while Option 2
adds lodging.
Option 3 deletes the lodging.
subarea Options: West Newport Hwy
Block V
($1,000) $0 $1,000 $2,000 $3,000 $4,000
Annual Net Revenue (000's)
Option 2 includes housing and lodging.
Options 1 and 3 reduce lodging.
cr Option 4 reduces the amount of housing and lodging.
Subarea Options: West Newport
Industrial
($4,000) ($3,500) ($3,000) ($2,500) ($2,000) ($1,500) ($1,000) ($500)
Annual Net Revenues (000's)
Option 1 focuses in industrial.
Option 2 emphasizes office.
Option 3 adds housing.
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