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G PAC_2005_05_02
May 2, 2005
7:00-9:00 p.m.
7:00 I.
CITY OF NEWPORT BEACH
GENERAL PLAN ADVISORY COMMITTEE
AGENDA
Call to Order
OASIS Senior Center
5t" and Marguerite
7:05 II. Fiscal Analysis of the General Plan Alternatives
8:45 III.
• 8:50 IV
•
Discussion of Future Agenda Items
Public Comments
Public Comments are invited on items generally considered to be within
,the subject matter jurisdiction of this Committee -- Speakers are asked to
limit comments to 5 minutes. Before speaking, please state your name and
city of residence for the record.
*Reports are available on line at www.nbvision2025.com
Fiscal Analysis
Of The
General Plan Alternatives
April 27, 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.com
C�
• CONTENTS
n
LJ
•
Introduction And Summary
1
Fiscal Impact Of The Alternatives....................................................4
Citywide Alternatives.....................................................................4
Fiscal Impact Of Subarea Options...........
Airport Business Area ................................
Balboa Village ..............................................
Banning Ranch ..............................
Cannery Village ..............................
Corona Del Mar ............................
LidoIsle ..........................................
Lido Village ....................................
Mariners Mile .................................
...................................7
................................... 7
................................... 8
................................... 8
................................11
................................12
................................12
................................14
................................14
McfaddenSquare......................................................................... 15
Newport Center/Fashion Island..............................................17
OldNewport Blvd......................................................................17
West Newport Highway And Adjoining Residential. ............ 18
West Newport Industrial........................................................... 18
A Note On Residential Assessed Values ....................................... 21
•
i�
INTRODUCTION AND SUMMARY
The fiscal analysis of the General Plan Alternatives is based
on the model described in the report entitled FiscalIvipact
Analysis and Model, dated January 2004. 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 they provide the income and living
environment necessary to 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
7111
Purchase Newport Beach
_ products and services
r' Net Tax Dollars
t Worker -earnings for Services
x from businesses Other basic
outside Newport Beach
Jobs&� I Net Tox Dollers�Industrial
Inwma for Services
-Public Beaches
Regional Visitor
Shopping Spending
Newport
Beach Jobs &
Households Income
Income
Loral
Purchases
Jobs & Net lax Dollars
LIncome for Services Net Tax Dollars
— Retail and for Services
Service Business to Business
Local �— Transactions
Purchases —� 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 property tax 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 part 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,
• I 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 fiom $600,000 for townhomes to $800,000 for single family
units.
City of Newport Beach
combined with current market trends, result in higher
property tax revenues than is typically generated by the
• current housing stock. This leads to a positive fiscal outcome
for most of the residential scenarios analyzed in this report
(more discussion of residential values is provided at the end
of this report).
•
•
FIGURE 2
Overall Cost -Revenue Impact of Existing Land Uses
($ Millions)
TOTAL = $0.1 Million
Public -$6.9
Industrial -$1.6
Office
Residential I
-$7.7
Institutional $0.07
Service Commercial $1.9
Marine $2.4
FIGURE 3
Impact of Existing Visitors
($ Millions)
TOTAL = $4.7 Million
Public
-$7.5 Institutional $0
Service Commercial $0.1
Marine $0.2
Lodging $7.6
Industrial $0
Retail $3.1
r
ntial $0.7
City of Newport Beach
3
•
•
FISCAL IMPACT OF THE ALTERNATIVES
CITYWIDE ALTERNATIVES
The fiscal performance of the alternatives and the various
options for the sub -%teas 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 of 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
TABLE 1
Fiscal Impact of General Plan Alternatives
Service
ALTERNATIVES Total Residential Office Retail Industrial Lodging Marine Commercial Institutional Public
�Subareaonly $5,325,466. $232,327 _($M,,973) $383,142 $1,762 $5,'91%656$674,832 $174,318 ($1,160,055) ($65,54,1
�•0 13ons.Minirnum
Subarea Only $10,321,718 $985,111 ($726,305) $860,417 $97,038 $9,659,692 $674,832 $179,556 ($1,244,653) ($163,970)
City of Newport Beach 5
•
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%
Ophon 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 1-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 Alternatives 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
G',
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
Option 1
1.0%
Option 2
3.0%
WEST NEWPORT HIGHWAY
Block A
2 (spec needs housing)
0.0%Option
Option 4 (parking lot) 0.9%
0.1%
_
Block B (no change, est. exist dug) 0.0%
0.0%
0.0%
Block C
0
Option 1 (vertical mixed use)
-4.9%
Option 4 (limit rti, hsg, & hotel)
108.1%
6.4%
Non -Study Area
35.4%
2.1%
1.1%
WEST NEWPORT INDUSTRIAL
GPAC Alternatives Growth
Option 2 (total TAZ)
-15.4%
Option 3 (total TAZ)
-365.6%
-21.8%
TOTAL*
100,00/0
100.00/0
100.0%
*Note: 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 only the incremental land use change, and does not
account for existing land uses that would remain in place for
each alternative. While the options within each subarea may
be mutually exclusive, the fiscal results for the options may be
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 primarily commercial 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).
City of Newport 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 family units.
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 ate 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 21496 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 Newpod 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
previously proposed Taylor Woodrow project, and both
create a healthy fiscal 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.
The 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 community were
to approve a 30-year bond measure to finance this purchase,
the annual debt service would be about $10.3 million.
City of Newport Beach
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) $0 ($189 853) $84,777 ($18,959) 1654292 $0 $45,196
tG($8,943 15,635
PACAitemativessGrowth
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 Village
Service
BALBOA VILLAGE Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
General Plan Growth ($93,184 $71,746) ($36,041) $5,768 $0 $0 $0 $6,133 $0 $2,702
GPAC Alternatives Growth
0 tion 3
0 433)
71746,
$20 14S) $5 768
0 0
0
3,948
0 17Q
aOotion 4
18 9q
($25:467)
$�ut
Option 5
$1,868,324
($41,132)
$12,452 $46,416
$0 $1,928 057
$0
($1387)
$0 ($76 082)
TABLE 5
Fiscal Impact For Banning Ranch
Service
BANNING RANCH Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
City of Newport Beach 10
As discussed in the Introduction, other options may be
• possible for purchasing the land, some of which may not
require any investment from the City 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
General Plan
DEVELOPMENT OPTIONS
Option 2 Option 3
Option 4
RESIDENTIAL
Single Family
$202,500,000
$787,500,000
$392,400,000
$0
Multi -Family
$1,388,400,000
$487,275,000
$142,675,000
$26,000,000
Subtotal Residential
$1,590,900,000
$1,274,775,000
$535,075,000
$26,000,000
NON-RESIDENTIAL
Office
$33,431,918
$0
$0
$0
Retail
$1,859,526
$2,789,289
$1,301,668
$929,763
Industrial
$108,976,964
$0
$0
$0
Lodging
$0
$5,997,503
$5,997,503
$20,951,277
Service Commercial
$12,395,592
$3,593,977
$1,677,189
$1,197,992
Subtotal Non -Residential
$156,664,000
$12,380,768
$8,976,360
$23,079,032
ESTIMATED LAND VALUE $436,891,000 $321,788,942 $136,012,840 $12,269,758
• AVERAGE AMONG THE OPTIONS $226,740,635
ANNUAL COST* $10,316,699
*13ased on a 30 year bond @ 5%
Source: 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 existing 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 fiscally positive, totaling
about $45,000 in net revenue per year.
City of Newport Beach 11
• CANNERY VILLAGE EAST (TAZ 1 454)
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 a 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 die
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 family units 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 12
TABLE 7
Fiscal Impact For Cannery Village
Service
CANNERY VILLAGE Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
Alternatives Growth $42,519 $20,228 $10,876 $10,153 $0 $0 $0 $592 $0 $669
TAZ 1454/CANNERY VILLAGE EAST
GPAC Alternatives Growth
Optio�,i $66,861 ,$31836 $49,612 6367 ("t3" 9144)- $0 $0
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
I-General-Plan-Grdwilt
$129,552--_$86,603.
I$34902)
$54,370-. $0 - $0 $0
$15W _-- - to t OS
GPAC Alternatives Growth
0 do
152 88 $108,866
1622
11 Q 0 Q
12 437 6
Option
$151,051 $103,760
$43,485
$7,767 $0 $0 $0
($4483) $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 $64,569 $63,271 $0 $0 $0 $0 0 $0 $0 $1,298
GPACAItematives.Growth - - - " - -
Option 1-No change to ebsting uses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
City of Newport Beach 13
• 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 14
•
C]
•
uses. This would boost the fiscal benefit of the option to
more than $950,000 per year, 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 1450)
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 small fiscal benefit of about $10,000 per year. The
GPAC alternatives would include mixed use development
with residential over office space. There would also be
additional lodging development, which substantially increases
the fiscal benefit by $483,000 per year (Table 12).
MCFADDEN SQUARE WEST (TAZ 1451)
In this 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.
TABLE SO
Fiscal Impact For Lido Village
Service
LIDO VILLAGE Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
TABLE 11
Fiscal Impact For Mariners Mile
Service
MARINERS MILE Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
TABLE 12
Fiscal Impact For McFadden Square
MCFADDEN SQUARE
Total
Housing
Office
Retail
Industrial
Lodging
Service
Marine Commercial Institutional
Public
TAZ 1450
6" t- la Growth -
f088f
5I60
0
- 99
0
0 - 2
to
2
GPAC Altematives Growth
TAZ 1451
$483,564
$20,724
($34,509)
$17,422
$4,999
$483,568
$0 $7,169
$0
($15,808)
GeneraLPlan Growth
4223
9"
1 113
-t8.499
to
0
10 7
11010
50
GPAC Altematives Growth _
$1,045,852.
$229
$888
2,642
$0
$0
_ $0_ _ $1,361
$0
($41,274)
City of Newport Beach 16
• 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 mid -range
fiscal benefit for this area of $927,000 per year. Also, this
option has more housing than the others, and given the
anticipated market 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 year.
City of Newport Beach 17
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 a major
community resource, and in many ways is lilcely an economic
engine in terms of fostering related medical office
development and possibly medical equipment sales. However,
because it is operated by a 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 18
TABLE 13
Fiscal Impact For Newport Center/Fashion Island
Service
NEWPORT CENTER/FASHION ISLAND
Total
Housing
Office
Retail
Industrial Lodging
Marine Commercial Institutional
Public
laneral. Plan Growth
864,583
0
23'Of5
- 49 635
0 724,743
-O 36 082 410b
18 76f
GPAC Altematives Growth
93i,206
SiS29
1i&438)
-264;744
"6 3'839.177
0 68599 - 5 672
'738
Option 2
428,956
7,184
(489.715)
93.818
0 724,743
0 89.723 (4.101)
7.304
TABLE 14
Fiscal Impact For Old Newport Boulevard
Service
OLD NEWPORT BOULEVARD Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
laenera i-Plan Growth 74 836 - 53 47 - 6 400) 11,66Z 13 42 0 983 0 4 58
City of Newport Beach 19
i • •
TABLE 15
Fiscal Impact For West Newport Highway and Adjoining Residential
Service
WEST NEWPORT HIGHWAY AND ADJOINING RESIDENTIAL Total Housing Office Retail Industrial Lodging Marine Commercial Institutional Public
Gene -P a Gro 7 634 _($511 t0 t6.056 t0 $O 11.264 0 6
GPAC Alternatives Change (estimated)
Block A
[Option of l res 66 7-19 0- $0-- 0 0 0 50
Option 4 (parking lot)
Block B (no change, est. exist dus)
Block C
$2,866 $3,080 $0 $0 $0 $0 $0 $0 $0 ($215)
IOotioo CyArt al mtmd use)
MSQ3 762) $45,396
$0 57,681.41;0 E 8$5 6.806)
$0 t4,439
- 50 525,528]
0 tion 2 (dus & hotel)
11,262,151
$352
$0 $15,610 $0 $1,301,917
$0 ($3,043)
$0 ($52,684
0 tian_3.(rnmlWflot- onsdid)
Option 4 (limit rd, hsg, & hotel)
$342,926
$352
$0 $1,189 $0 $357 562
$0 ($1485)
$0 ($14 692)
TABLE 16
Fiscal Impact For West Newport Industrial
Service
WEST NEWPORT INDUSTRIAL
Total Housing
Office Retail Industrial Lodging
Marine Commercial Institutional Public
- 1 67- 2 8 930
1 0 - 0 225 74 0
$0, - -21 89..- (1.070,3,131. 92.9781
GPAC Alternatives Growth
gn on1 -
-FI,389 910) - (18 430)
(185 2711 Q (225 $0
Q 17.070 Q 313 2 8 -
City of Newport Beach 20
• A NOTE ON RESIDENTIAL ASSESSED VALUES
When we analyzed new home prices for the fiscal impact of
Newport Coast in 2002 and 2003, single family prices
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 multi family product, and most
of the assessed values of existing apartment units have
declined substantially relative to market conditions. Out fiscal
analysis indicated that existing residential units generally did
not pay their way for City services because the property taxes
on existing assessed values were not 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.
■ Single family: $900,000
• ■ 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 multi -family units 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.
City of Newpod Beach 21
NEWPORTBEACH GENERAL PLAN UPDATE
AIR QUALITY IMPACT MATRIX
(April 19, 2005)
The following table shows the percent increase or decrease in air pollutant generation under each land use alternative when compared
to the City's currently adopted General Plan. Specific air pollutants modeled include reactive organic gases (ROG), nitrogen oxide
(NOx), particulate matter (Plvl), and carbon monoxide (CO).
PERCENT CHANGE IN AIR POLLUTANTS =
COMPARED TO ADOPTED GENERAL_ PLAN
Air Pollutants % chan e
ROG NOx PM CO
Airport Business Area
Option 1-Increase in commercial and office uses
70
75
75
75
Option 2-Slight increase in housing
78
74
73
73
Option 3-Significant increase in housing
109
85
83
83
Balboa Village
Option 1-Reuse of existing commercial to residential uses
1
0
0
0
Option 2-Reuse of existing commercial to residential uses
0
0
0
0
Option 3-Water-related commercial uses
-9.
-1
-J.
-1
Option 4-Mixed-use
24
15
14
15
Option 5-Mixed-use with visitor serving accommodations
16
8
7
7
Banning Ranch
Option 1-Open Space
-100
-1
-100
-99
Option 2-Taylor Woodrow
-29
1 -25
-27
-27
Option 3-Taylor Woodrow Reduced
-62
1 -60
-61
-61
Option 4-Resort
86
$3
-84
-84
Cannery Village
Option 1-Block A -Mixed use
72
48
47
47
Option 2-Block A- New residential
3550
59
43
3247
Option 3-Block B-Mixed use
455
105
80
5905
Corona Del Mar
Option 1-Mixed-use with commercial and residential uses
2
1
1
1.
Option 2-Intensifying commercial nodes with residential uses
4
8
-9
-9
April 19, 2005
PE12CENT CHANGE IN Alit POLLIYTANTS-- . ' fff�
-COMPARED TO ADOPTED GENERAL PLAN _
Air Pollutants % chan e
ROG NOx PM CO
Lido Isle
Option 1--No change from existing conditions 1
0
0
0
0
Option 2-Continuation of the existing General Plan
22
22
21
22
Lido Village
Option 1--Mixed use with visitor accommodations
69
42
38
39
Option 2-Retail with visitor accommodations
45
44
44
43
Option 3-Mixed use
33
24
22
22
Option 4-Block &retail infill; Block C-residential
24
16
15
16
Option 5-Block El -retail infill; Block C-mixed use, retail/residential
26
22
24
24
Mariners Mile
Option 1--No change from existing conditions
0
0
0
0
Option 2-Conversion of 40 % of existing uses to commercial -marine related uses
17
13
13
13
McFadden Square
Option 1-Block A -overlay lodging
83
75
75
1 75
Option 2-Black B-mixed use, residential/office
38
38
41
1 38
Newport Center/Fashion Island
Option 1-increase in residential, commercial, medical office, and addition of City Hall
19
16
16
16
Option 2-Increase in commercial
1
5
5
5
Option 3-Increase in residential
9
5
5
5
Old Newport Boulevard
Option 1-13lock A -medical office & retail; Block B-vertical mixed use of commercial & residential
61
68
68
67
Option 2-Block A -vertical mixed use; Block B-intensification of residential uses
31
23
22
22
Option 3-Block A -vertical mixed use of commercial & residential ; Block B-affordable housing
39
29
28
28
West Newport Hwy &Adjoining Residential
Option 1-Alternative 5
27
24
1 24
23
Option 2-Alternative 16
15
19
1 20
20
West Newport Industrial
Option 1--No change from existing conditions
0
0
0
0
Option 2-Intensification of medical uses with additional commercial and residential uses
13
16
16
16
Option 3-Expansion of existing mobile home uses
2
A.
-1
1 4
April 19, 2005
i
•
•
Newport Beach Land Use Alternatives
Environmental Impact Matrix
(Revised May 2, 2005)
Area
Electricity
Solid Waste
Wastewater
Water
Students3
(Elementary School)
Students3
(Middle School)
Students3
(High School)
Subarea
Demand
(KWh / Day)
Change
From
Existing
Demand
(lbs/day)
% Change
From
Existing
Demand
(gp()
% Change
From
Existing
Demand
(gpd)
% Change
From
Existing
Demand
(Number of
Students) I
% Change
From Existing
-Demand
(Number of
Students)
% Change
From Existing
Demand
(Number of
Students)
%Change
From Existing
Airport Business Area
I
I
I
I_
I
I
I
I
I
Existing Use
244,457
_
84,371
_ _
1,412,315
_
1,568,360
_ _
0
0
0
ExistingGP
267,428
9%
94,169
12%
1,531,799
8%
1,701,010
8%
0
N/A
0
N/A
0
N/A
Option 1
305,809
25%
107.324
27%
1,822,926
29%
2.204,471
41%
0
N/A 1
0
N/A
0
N/A
Option 21
309,110
26%
113:612
SO
2,064,858
46% 1
2,363,872
51% I
384
N/A 1
47
N/A 1
68
N/A
Option 32
347,341
42%
132,032
56%
2,933,583
108%
3,400,219 I
117%
1,180
N/A
118
N/A
185
N/A
Balboa
Village
Existing Use
29,844
21,255
_
528,940
587,599
_ _ _
230
82
86
Existing GP
33,721
130/6
22,673
7%
558,266
6%
620,187 1
69/. 1
213
_
-7%
70 1
_ _
-15%
75
-13%
Option 1
33,708
130/6
22,672 1
7%
560,034
6%
622152
6% 1
214
-7% 1
71
-13% 1
76
-12%
Option 2
33,656
13%
22,630
6%
558,776
6%
620,,754
6%
T 213
-7%
70
-150/
75
-13%
Option 3
32,667
9%
22,377
5%
552,414
4%
613,691
4%
213
-7% 1
70
-15%
75
-13%
Option 4
39,533
32%
26,021
22%
543,267
3%
707,600
20%
209
-9%
69
-16%
73
-15%
Option 5
34,666
i6%
24,058
13% 1
577,327
9%
714,347
22%
209
-9%
69
-16% I
73 1
-15%
Banning Ranch
I
I
1_
I
1
I
ExistingUse
216
_
90
_ _
2,982
_
3,318
_
2
0
0
Existing GP
59,396
N/A
29,533
N/A
684,864
N/A
761,763
N/A
481
_ _ _ __
N/A
48
_ _ _
N/A
73
_
N/A
Option 1
216
N/A
90
N/A
8,482
N/A
3,374
N/A
2
N/A
0 I
N/A
0
N/A
Option 2
82,257
N/A
41,358
1 N/A
550,070
N/A
605,286
N/A
361
N/A
96
N/A
105
N/A
Option 3
67,273
N/A
32,177
N/A
286,559
N/A
1 312,408
N/A
182
N/A
48
1 NO
53
N/A
10ption 4
184,985
N/A
1 81,778
I N/A
1 69,822
I N/A
I 71,638
I N/A
16
N/A 1
1
N/A
1 2 I
N/A
Cannery Village
I
I
I
I
Existing Land Use - TZ 1449
4,705
3,070
50,482
56,061
10
4
4
General Plan Buildout
4,956
5%
3,255
6%
54,134
7%
60,117
7%
10
_
-5%
4
_
-5%
4
-5%
Option 1
7,979
70%
4,821
1 57%
54,401
8%
105,896
89%
42
323%
6
42%
8
90%
Existing Land Use - TZ 1454
13,484
_
6,607
_
82,589
_ _
91,711
12
5
_
5
General Plan Buildout
14,403
7%
8,719
32%
139,466
69%
154,871
69%
27
130%
11
_ _
126%
11
126%
Option 1
16,006
19%
9,228
40%
52,124
-37%
155,835
70%
70
499%
4
-15%
8
70%
Option 2
4,314
-68%
1 3,205
-51%
66,894
I -19%
1 74,298
-19%
1 15
29%
1 6
1 25%
1 6
25%
Corona Del Mar
I
I
I
I
I
I
I
Existing Use
63,973
_ _
46,913
1,179,603
1,310,263
_
704
289
290
75,978
19%
54,823
17%
1,337,650
13%
1,485,786
13%
780
11%
322
-- --11%
322
-11 %
Option 1
77,198
21%
55,250
1 18%
1,367,525
16%
1,519,050
16%
811
15%
324
12%
326
13%
0ption2
70,960
11%
I 52,328
12%
1 1,346,055
14%
1,495,275
14/
I 828
18%
325
12%
328
I 13%
Lido Isle
I
I
I
LI
Existin Use
14,197
_
_ _ _
11,113
336,688
_
374,007
206
84
84
Existin GP
18,005
27%
14,133
27%
428,078
27%
475,524
27%
264
_
29%
108
29%
109
29%
Option 1
14,197
0%
11,113
0%
336,666
0%
374,007
0%
206
0%
84
0%
84
0%
Option 2
18,005
27%
14,133
I 27%
1 428,078
27%
475,524
27%
I 264
29%
I 108
I 29%
109
29%
Lido Village
I
I
I
I
I
I
I
I
Existing Land Use - TAZ 1452
8,390
_ _
4,358
_
48,340
53,661
__
1
_
0
0
{_
General Plan Buildout
8,262
-2%
4,389
1%
44,146
-9%
49,002
-9%
1
N/A
0
_
WA
0
N/A
Option 1
13,644
63%
6,872
58%
120,556
149%
134,060
150%
42
N/A
2
N/A
5
N/A
Option 2
10,258
22%
5,587
28%
69,888
45%
77,675
45%
0
N/A
0
N/A
0
WA
O lion 3
11,910
42%
6,773
55%
103,896
115%
115,502
115%
53
N/A
3
1 N/A
6
N/A
ExistingLand Use -TAZ1453
6,800
_
3,448
34,660
38,473
0
0
General Plan Buildout
9,325
37%
4,236
23%
46,996
36%
52,166
36%
0
N/A
0
N/A
0
_
N/A
O lion 4
7,087
4%
4,093
19%
51,456
48%
57,185
I 49%
20
N/A
1
N/A
Option 5
7,287
7%
4,475
30%
44,794
29%
49,756
I 29%
10
N/A
1
WA
1
N/A
CV me M6 SaWn9ak mylSeNngs\iemp°rerylnlemet R.IOWUIZ mrtmme°W Im Mabv.rJs
Page 1 05/02/2005
C
•
•
Area
Electricity
Solid Waste
Wastewater
'
Water
Students3
(Elementary School)
Students3
(Middle School)
Students3
(High School)
Subarea
-
Demand
(KW h / Day)
01
Change
From
Existing
Demand
(lbs/day)
% Change
From
Existing
Demand
(gpd)
% Change
From
Existing
Demand
(gpd)
% Change
From
Existing
Demand
(Number of
Students)
% Change
From Existing
Demand
(Number of
Students)
% Change
From Existing
Demand
(Number of
Students)
% Change
From Ex sting
Mariner's Mile
Existin Use
51,463
15,060
_
571,878
1 635,008
_
114
35
37
Existin GP
64,488
25%
17,350
15%
651,372
14%
1 723,265
14%
116
_
1% 1
35
_
2%
37
__
2%
O tion 1
76,824
49%
25,088
67%
680,052
19%
1 898,021
41%
233
104%
42
22%
51
40%
Option 2
76,824
49%
25,088
67%
680,052
19%
898,021
41%
233
104%
42
22%
51
40%
McFadden
Square
Existing Land Use - TAZ 1450
5,144
2,815
4,087
9,170
3,602
3,909
4,497
_
45,273
_
50,284
6
2
2
General Plan Buildout
6,285
22%
45%
82,537
82% 1
91,673
_
82 /0
16 1
_ _ _ _ _
153 /0
6
_
°
163 /0
6
°
161/
O tion 1
13,611
165%
226%
112,310
148% 1
155,782
210%
39
496%
8
217%
9 1
268%
6cistm Land Use - TAZ 1451
4,926
_
_
67,739
75,244
17
6
7
General Plan Buildout
5,462
11%
9%
71,805
6%
79,759
6%
17
2%
7
2%
7
_
2%
(Option
2
9,336
1 90%
25%
96,514
42%
- 107,266
43%
1 17
2%
7
2%
7 I
2%
Newport Center / Fashion Island
I
I
I
I
I
I
I I
I
I
I
ExistingUse
200,069
79,715
_
1,375,645
1,527,694
84
ExistingGP
215,855
8%
202,627
154%
1,480,683
8%
1,647,232
8%
84
0%
19
0%
22
0%
Option 1
255,446
28%
104,647
31%
1,895,538
38%
12,105,682
38%
159
90%
134
595%
134
516%
Option 2
244,075
22%
95,097
19%
1,653,881
20%
1,836,677
20%
77
-8%
52
169 0
52
139%
Option3
234,752
17%
96,655
21°/0
1,738,225
26%
1,930,912
26%
172
106%
147
664%
147
578%
Old Newport Boulevard
II
I_
ExistingUse
11§6
7,110
_ _
_
176,540
196,091
1 298,146
392,424
365,547
1 372,131
79
32
1
32
Existing GP
16,874
48%
1 10,520
49%
268,414
1 52%
52%
88
_ _
1 12%
1 36
_
11%
I 36
11%
Option 1
25,875
127%
15,146
115%
353,202
1 100%
100%
136
73%
38
18%
41
1 27%
Option 2
18,474
62%
12,889
83%
328,991
86%
86%
136
73%
41
27%
43
34%
Option 3
19,803
740
13,943
1 98%
334,859
1 90%
90%
1 157
98%
39
22%
43
34%
West Newport Highway & Adjoining Residential
I
I
II
Existing Use
12,931
1 8,640
_
253,706
281,964
285,460
243,545
247,725
226,125
226,125
237,282
327,801
243,462
242,202
247,4811
_ _
161
49
52
Existing GP
13,489
0%
1 9,017
0%
256,855
0%
0%
161
_
00'
49
_
0%
52
0%
Block A- Option 1
10,737
-20%
7,089
-21%
219,162
-15%
-15%
150
-7%
48
-3%
50
-4%
Block A -Option 2
11,008
-18%
7,202
-20%
20 19
-13%
-13%
153
-5%
48
-301
50
I -3%
Block A - Option 3
9,604
-29%
6,618
-27%
1 203,506
-21%
-21%
137
-14%
47
-5%
49
-7%
Block A- Option 4
13,317
-1%
7,515
-17%
203,506
-21%
-21%
137
-14%
47
-5%
49
-7%
Block B
10,205
-240/
6,932
-23%
213,540
-17%
-17%
145
-10%
48
Block C - Option 1
18,177
351/
8,846
-2%
220,960
-14%
15%
197
22%
50
2%
55
7%
Block C - Option 2
10,731
-20%
7,0,
-21%
219,087
-15%
-15%
150
-7%
48
-3%
-
-4%
Block C - Option 3
12,283
-9%
6,618
-27%
217,990
-15%
-15%
137
-14%
47
-5%
49
-7%
I Block C - Option 4
11,401
-15%
1 7,087
-21%
222,708
I -13%
-13%
1 150
1 -7%
48
I -3%
50
-40%
West Newport Industrial
I
I
II
I
I
I
I
I
Existing Use
87,490
59,324
712,348
_
1 792,419
446
36
60
Existing GP
125,591
44%
82,266
39%
854,770
20%
950,811
20%
474
_
6%
36
2%
63
4%
Option 1
123,525
41%
81,692
38%
843,290
18%
938,068
18%
474
1 6%
36
2%
1 63
40%
Option 2
134,868
54°/n
128,845
117 0
980,11
38%
1,089.984
38%
503
13%
38
7%
66
10%
Option 3
104,905
20%
67,548
14%
926,393
30%
1,030,333
30%
563
26%
42
17%
73
22%
Sources:
1. 800% of the additional 2,104 multi -family residential units is assumed to be high-rise residential. A different student generation rate of 0.068 students/unit is used to calculate total demand.
2. 80% of the additional 6,633 multi -family residential units is assumed to be high-rise residential. A different student generation rate of 0.068 students/unit is used to calculate total demand.
3. Newport -Mesa United School District, persnal communication, April 2005.
C\p menm atM&Mn9n myAocal S dng XTemp°mry Intemet FiiesLLlW.eEm memal Impact Ma=a
Page 2 05/02/2005
Lektorich, Debbie
From: Philip Arst [philiparst@cox.net]
Sent: Monday, May 02, 2005 11:03 AM
To: Wood, Sharon; Bromberg, Steven; Nancy Gardner; Phillip Lugar; Lektorich, Debbie
.Cc: Allan Beek
Subject: Comments on Fiscal Analysis of General Plan Alternatives
LJ
Fiscal Impact
=omments 5-2.doc..
The enclosed letter is herewith submitted to the GPUC and GPAC
Committees. Please distribute to them at today's meeting.
It Is demonstrated that the Fiscal Analysis of General Plan Alternatives
has some severe problems that have resulted in an overly optimistic
portrayal of the General Plan Alternatives financials. For example, the
impacts of inflationary increases in the cost of city services during
the life of the proposed General Plan Alternatives vs. the Prop 13
restrictions on property tax revenues is not included. Additionally,
the required inclusion of 20% affordable housing at an average unit cost
of $290,000 will further impact residential DU financials.
There are also significant unanswered questions about the revenue
projections of commercial properties based upon the year 2025 span of
the General Plan Update and the use of year 2005 expense levels.
Many of these issues were previously worked out with a City Council
Finance Committee and some subsequent city studies have correctly
taken the Prop 13/Inflation issue into account.
Philip Arst
2601 Lighthouse Lane
Corona del Mar, CA 92625
(949) 721-1272
• Mayor Steve Bromberg
Chairman GPUC May 2, 2005
Ref; Fiscal Analysis of the General Plan Alternatives 4/27/05 by Advanced Development Economics
Executive Summary
The referenced fiscal analysis seriously understates the negative fiscal impacts of residential and
commercial properties by not including the factors of annual inflation of city service costs (4.25%
CPI1) vs. the Proposition 13 restrictions on city property tax revenues (20/o/year.) Over time this
dichotomy puts all but the highest priced residential housing into a negative fiscal impact status.
Additionally the requirement that 20% of new residential housing developments must be affordable
lowers the average property tax returns from even this high-priced housing but not the costs. The net
result is an overly optimistic fiscal projection, particularly for residential housing.
The projected revenues from commercial properties are unexplained. Are market factors included in
the projections or are they simply based upon full occupancy in year 2025? There are a large number
of unused commercially designated land uses in 2005 because the market is not there and Newport
Beach, particularly Mariners Mile, is inconvenient for shopper automobile access. Does the study
project full occupancy of a greater amount of commercial land uses in 2025 despite considerably
greater traffic congestion? As these projections for 2025 are based upon year 2005 city expenses the
above optimism in property revenues could rise to extreme levels if not documented and explained.
The Fiscal Analysis was not issued in time to provide for a meaningful review and getting these
questions answered. Overall, the entire Fiscal Analysis needs to be redone to provide a minimum 30-
year picture of revenues and expenses and more realistic market projections in order to define the
apparent substantial negative fiscal impact of the proposed General Plan Alternatives.
The following comments and questions apply to the referenced Fiscal Analysis:
1, The Fiscal Analysis' costs are based on only a one-year period for the year 2005. This does not
provide a true picture of the fiscal situation in the city because of the disparity in annual
increases of city revenues based upon the property tax rate (maximum of 2% per year) and the
annual increases in city costs based upon the CPI (4.25% per year.) As residential properties
turn over at an estimated average of ten6 years and office and industrial properties for a much
longer estimated average of 20 years, the financial results will be considerably lower than those
shown by the referenced study.
For example: Costs of services by the city for residential properties will increase approximately
52% over the average holding period of ten years vs. a 22% increase in property tax revenues.
Costs of service by the city for commercial, office and industrial properties will increase
approximately 130%•over the estimated average holding period of twenty years vs. a 48%
increase in property tax revenues.
2. There is no data to support the contention in the section "A Note on Residential Assessed
Values" that "new homes (based up the listed assumptions ranging from $275,000 to $900,000)
were valued high enough to create a positive fiscal impact."
While there is no recent data on the costs of service on different classes of housing, an old
• report 3 contained in a previous City of Irvine General Plan demonstrated that the costs of city
services per resident were generally the same except that the negative fiscal impact of each
multi -family DU was 40% less than that for Rural/Estate type SF housing. However, since
there are many more DU's in a multifamily development, its negative fiscal impact is
considerably greater that an equivalent use of city land area by SF Estate type DU's. The
referenced Fiscal Analysis needs to be updated to include this divergence over time. It should
include a calculation of the sales price of a dwelling unit needed to produce a positive fiscal
. impact over an eleven year average holding period to provide a true picture of the costs of
supporting the different classes of dwelling units.
3. An additional factor that will further produce a substantial negative fiscal impact from
residential housing is the city's obligation to build approximately 1500 affordable housing,
units plus the requirement that 20% of all additional housing units built under the General Plan
Update must be affordable. The average cost of these affordable units is approximately
$290,0005. Therefore a SF DU projected at a $900,000 selling price will actually average
$778,000 property tax valuation when its affordable housing component is included. These will
certainly cause a substantial negative fiscal impact that will further add to the net negative
fiscal impact of residential housing units as a whole.
4. There is no proven market demand to demonstrate that the substantial revenues forecast for
retail, lodging and service commercial will actually occur. Currently the situation in Newport
Beach is that the hotel occupancy rate is reportedly in the 60-70% range and that many current
commercial land uses have not been developed due to a lack of market demand. Given that
Newport Beach does not have good freeway access as compared to South Coast Plaza and the
already heavily congested Pacific Coast Highway area will be swamped with the proposed
buildup of mixed uses, it is highly unlikely that a large number of people will drive into
Newportto support the projected commercial use options. These rosy projections need to be
explained or scaled back considerably.
5. The financial potentials for proposed retail and lodging land uses are for the year 2025 that I
understand is the time period for projections for the General Plan Update. These projections
should be shown instead as a rate of buildup in order for the city to balance negative fiscal
impact development such as the mixed use and multi -family residential uses projected. As is
stated in item 3 above, it is highly unlikely that all commercial uses will be filled to the 100%
level and the projections in the Fiscal Analysis need explanation in order to ascertain the true
fiscal results of these developments.
6. The Mariner's Mile forecasts in Table 11 for Option 2 shows a substantial positive impact due
to added Marine uses not reflected in the current GP or other options. Moorings and boat sales
for additional boats do not mean that they are necessarily sold in Newport Beach. Also most
large boats are registered in Mexico to avoid sales taxes. If we can't fill out our current
commercial entitlements now that leads to the conclusion that the market will not support the
grandiose projections for 2025 in the most congested section of the city.
Thank you for your consideration of these comments.
Sincerely,
CC: GPUC
Philip L. Arst GPAC
1. U.S. Bureau of Labor Statistics 50 year average for LA/Orange/Riverside Counties
2. Traffic Model December 2003 prepared by Urban Crossroads
3. City of Irvine General Plan contained in Report "Economic Analysis of Office Buildings"
by Philip L. Arst (www.newnortgreenliaht.com, Project Study Data section, #3
4. Newport Beach General Plan — Housing Element
5. Inclusionary Housing In -Lieu Fee Study dated September 22, 2004 by Economic & Planning Systems
6. Consultant Stan Hoffman City Finance Committee approved projections for Newport Coast annexation 1/14/98
It
GENERAL PLAN ADVISORY COMMITTEE
• Monday, May 2, 2005
Roger Alford
Ronald Baers
Patrick Bartolic
Phillip Bettencourt
Carol Boice
Elizabeth Bonn
Gus Chabre
John Corrough
Lila Crespin
Laura Dietz
Grace Dove
Nancy Gardner
Gordon Glass
Louise Greeley
Ledge Hale
Bob Hendrickson
Tom Hyans
Mike Ishikawa
Kim Jansma
Mike Johnson
Bill Kelly
Donald Krotee
Lucille Kuehn
Philip Lugar
William Lusk
Barbara Lyon
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Marie Marston
Jim Navai
Catherine O'Hara
Charles Remley
Larry Root
John Saunders
Hall Seely
Jan Vandersloot
Tom Webber
Ron Yeo
Raymond Zartler
2
• GENERAL PLAN AVISORY COMMITTEE
Monday, May 2, 2005
PUBLIC SIGN -IN
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• GENERAL PLAN ANISORY COMMITTEE
Monday, May 2, 2005
PUBLIC SIGN -IN
NAME ADDRESS/PHONE E-MAIL ADDRESS
CITY OF NEWPORT BEACH
GENERAL PLAN ADVISORY COMMITTEE
Minutes of the General Plan Advisory Committee Meeting held on Monday,
May 2, 2005, at the OASIS Senior Center.
Members Present:
Roger Alford
Patrick Bartolic
Phillip Bettencourt
Carol Boice
Elizabeth Bonn
Gus Chabre
John Corrough
Lila Crespin
Laura Dietz
Grace Dove
Members Absent:
Nancy Gardner
Gordon Glass
Louise Greeley
Ledge Hale
Bob Hendrickson
Mike Ishikawa
Kim Jansma
Mike Johnson
Donald Krotee
Lucille Kuehn
Phillip Lugar
Marie Marston
Jim Navai
Charles Remley
Larry Root
John Saunders
Hall Seely
Jan Vandersloot
Tom Webber
Raymond Zartler
Ronald Baers William Lusk Ron Yeo
Tom Hyans (sick leave) Barbara Lyon
Bill Kelly Catherine O'Hara (sick leave)
Staff Present:
Sharon Wood, Assistant City Manager
Debbie Lektorich, Executive Assistant
Woodie Tescher, EIP Consultant
Doug Svensson, Applied Development Economics
Members of the Public Present:
Phil Arst
Allan Beek
I. Call to Order
Kelly Hillman
Carol Hoffman
Nancy Gardner called the meeting to order.
E
Dolly Shaw
• II. Fiscal Analysis of the General Plan Alternatives
Doug Svensson reviewed the Fiscal Analysis report provided with the agenda packets.
Gordon Glass asked if the study included the Council revisions adding residential into
the airport area because in previous charts the residential shows as a fiscal negative.
Mr. Svensson indicated that the additional units were included and added that because
the residential would be'mixed with commercial uses, it becomes a fiscal positive.
Charles Remley asked about Table 12 and pointed out that the total doesn't equal the
parts. Mr. Svensson explained that while manually transferring the numbers, some of
the lodging didn't get into the table.
Lucille Kuehn asked about the possibility of the dissolution of Prop. 13 in the future and
if that was taken into consideration. Mr. Svensson said it was not accounted for.
John Saunders asked if it would be appropriate to discuss how the City spends money
and the requirement of 20% affordable housing. Sharon Wood pointed out that the
20% for affordable housing is included in the housing element of the general plan and
we would be looking at all the elements.
Phillip Bettencourt commented on Banning Ranch and indicated he understood that the
cost for acquisition is not included in the study because this is a service analysis,
however there isn't any debt service expense for park development either. He asked if
• that would be seen as part of the acquisition costs. Mr. Svensson indicated it would not
be included and he didn't have an estimate at this time. Mr. Bettencourt also
commented that the economic viability for the resort option at Banning Ranch is worth
taking a closer look at because the location is much different than the Montage resort in
Laguna Beach, which is what it is being compared to during discussions.
Ms. Kuehn asked about the level of income required for affordable housing . Ms. Wood
indicated there are three income levels: moderate income is 120% of the County
median, low income is 80% of the median and very low income is 50% of the median.
Patrick Bartolic asked if the numbers in Figure 2 for residential uses were driven by
actual costs or if a percentage was used to calculate the result. Mr. Swensson
explained that the analysis of existing land uses were taken from the current City
budget and actual service demands.
Mr. Glass asked how we would balance the results from the visioning process where the
residents indicated their least popular uses were tourism/lodging and the fact that these
type uses are where the money is fiscally. Ms. Wood indicated that would happen
when developing the preferred land use plan; it may be found that part of the City
would be more acceptable for these uses than others.
Laura Dietz asked what element of municipal service costs are going to increase, stay
• the same or decrease in the next few years. Ms. Wood indicated that would get into
the inflation question and we are not addressing inflation during this analysis.
061
• Gus Chabre asked how the increases in property values were accounted for. Mr.
Svensson indicated that once the preferred land use plan was approved they would go
back to the model and try to project the increases; that is the reason some of the
residential is showing as a positive fiscal benefit.
Jan Vandersloot thought the $800,000 for single family units is probably higher and the
negative impact of $7.7 million is too low. Mr. Svensson explained that the minus $7.7
million is the actual deficit on existing assessed value. When houses are sold they get a
lot more than the assessor is charging today. The figures also include the 20%
affordable units; they were trying to capture a very broad range of product in the
tables.
Mr. Glass pointed out that residential real estate is cyclical and questioned how much
longer can the current trends continue. Mr. Svensson indicated he could not predict,
however they are trying for a snap shot of development and stay conservative when
trying to look at buildout.
Mike Johnson asked if the City Hall project was considered in this report. Mr. Svensson
indicated it was not included.
Jim Navai asked about long term liability issues/costs facing the City were considered.
Ms. Wood indicated that the City's budget includes costs for insurance, risk
management and liability.
Mr. Bartolic asked what are the actual gross revenues generated by residential and for
the biggest hospitality/lodging generator. Mr. Swensson said the estimate for
residential uses generated $45 million or about 45% in revenue; however that use
generates about $51 million in costs. He added that total lodging is approximately $9
million in revenue and costs are much less.
Don Krotee asked if marine uses provided a positive or negative income. Mr. Swensson
thought they might have a neutral impact.
Carol Hoffman, Newport Beach, asked if any differentiation had been made between
gated and non -gated communities with respect to costs. Mr. Svensson indicated the
analysis did take into account private streets and neighborhoods and they made
adjustments to various costs.
III. Discussion of Future Agenda Items
Mr. Tescher provided replacement charts from the Environmental Summary last week.
Mr. Glass asked about adding the large amount of residential units in the airport area
without services. Ms. Gardner indicated the Airport Area Subcommittee had discussed
adding a market and other services to that area along with the residential. Mr. Tescher
added that when the group makes land use recommendations, you can add that
residential is contingent upon adding the supporting services.
3
Mr. Bartolic asked about data for the Westcliff/Dover Shores area. Ms. Wood indicated
that area was not one of the special study areas.
Mr. Krotee asked how staff would deal with CEQA when shoulder season data was used
instead of worst case. Mr. Tescher indicated that as long as supporting data was
presented there is no problem with it. Ms. Wood added that shoulder season data has
always been used. Ms. Kuehn asked for a definition of shoulder season. Ms. Wood
stated it was spring and fall.
Mike Johnson asked about new legislation regarding affordable housing. Ms. Wood
indicated the latest requires more density bonuses for affordable/workforce housing
developments.
Mr. Bartolic asked if water use would become a problem with the larger buildout
ortinns. Mr. Tescher indicated it is a biq issue here and statewide.
M
pi
P
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0