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Home My WebLink AboutS25 - General Plan Update Fiscal Analysis• CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. S25 October 24, 2006 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Sharon Wood, Assistant City Manager 949 -644 -3222, swood @city.newport- beach.ca.us SUBJECT: Results of Final Fiscal Impact Analysis of General Plan Update Receive and file. DISCUSSION: The work program for the General Plan update included a run of the fiscal impact model with the land use plan approved by the City Council. This work is now complete, and this report summarizes the results. A memorandum from Applied Development Economics with greater detail is attached. Fiscal analysis was done on the three land use alternatives developed by the General Plan Advisory Committee (GPAC) in April 2005. That analysis showed that all the alternatives would have a positive fiscal impact on the City, i.e., the land uses would generate more revenue than the cost to provide municipal services to them, as shown below. True Minimum $ 317,104 Subarea Only Minimum $ 5,325,466 Subarea Only Maximum $10,321,718 With the exception of the True Minimum, these land use alternatives would have produced better fiscal results than the existing General Plan, with net revenue of $1,377,628. The land use plan adopted by the City Council on July 25, 2006 would result in net revenue to the City of $2,167,911. This is an improvement over the existing General • Plan, although less fiscally beneficial than two of the alternatives that were studied ....... ...... . .............. Results of Final Fiscal Impact analysis of General Plan Update October 24, 2006 Page 2 0 during the update process. Those alternatives included more general commercial development than the adopted General Plan allows. Public Notice: This item was noticed by posting of the City Council agenda. Submitted by: Sharon Wood Assistant City Manager Attachment: Memorandum from AIDE • • A APPLIED DEVELOPMENT • ECONOMICS MEMORANDUM To: Sharon Wood, City of Newport Beach From: Doug Svensson, AICP Copy: Date: October 19, 2006 Re: Fiscal Analysis of Adopted General Plan We have completed the fiscal analysis of the adopted General Plan, using the same fiscal model and methodology developed to analyzed all of the land use alternatives considered in the General Plan update process. At full buildout, the incremental new development permitted under the plan would generate net revenue over costs of about $2.1 million per • year. For comparison purposes, this result is better than both the previous General Plan and the "True Minimum" alternative studied previously, but is less beneficial than the sub -area only options.' As shown in the table below, retail and lodging are the primary tax generators for the City, although single family residential development also provides a fiscal benefit for the City due to the high assessed values that increase property taxes for the City. The following section highlights fiscal impacts in each sub area. Airport Area. This area is slated to see an increase in residential development and retail development, both of which would be net tax generators for the City. At the same time, land use changes in this area would see a reduction in office and industrial space, which would further improve the net fiscal benefit of this area for the City, as these land uses often require more in costs for services than they generate in tax revenues. Balboa Village. The fiscal model suggests that the transition in Balboa Village to replace some low density housing and general commercial with mixed use development would create a small negative fiscal impact for the City. This may be overstated, however, because the model assigns current market value to the units that are replaced while in reality the assessed values of those units are likely to be well below current market levels. However, the net loss of retail in this area would have a negative fiscal impact. Balboa Peninsula. There is.substantial emphasis on new mixed use development in this area. The net change in residential and retail development would generally be positive fiscally, but the main benefit is the replacement of office and industrial uses that generate • 1 ADE Inc., Ru Analynr oftbe GeneralPlanAkernativer, May 12, 2005. Applied Development Economics Page 1 APPLIED DEVELOPMENT ECONOMICS • high costs for City service currently without out much contribution to the tax base. These land use changes result in most of the fiscal gain for the City in this area. Banning Ranch. The land use mix for Banning Ranch features very good fiscal performers for the City, including a balance of low density and multi - family housing along with retail and lodging. Corona de /Mar. The increased single family units in this area along with added retail and reduced office space provides a sound fiscal balance for the City. Mariners Mile. This area benefits from the transition from existing office and general commercial uses to mixed use residential and commercial development. The addition of more lodging also improves the fiscal benefit to the City. Newport Center /Fashion Island. This area has the potential to provide the largest net revenue for the City through expansion of retail development and lodging. Old Newport B". Most of the land use changes planned for this area do not yield net revenue for the City, but the addition of more lodging to the area results in an overall net gain in tax revenue. West Newport Highway. The retail growth in this area results in a sales tax benefit for the City, while other planned land use changes have a small fiscal effect. • West Newport Mesa. This area supports Hoag. Hospital and related medical office space. As discussed in previous fiscal reports for the General Plan update, the hospital is a community resource and an "economic engine" in many ways, but does not add directly to the fiscal balance of the City since it is exempt from property taxes. Conclusion The new development supported by the adopted General Plan would generate sufficient tax revenues Citywide to pay for additional public services needed to support the development. While certain types of land uses and certain areas of the City may require more in services than they generate in revenues, the General Plan enhances the tax base in other areas to maintain the fiscal health of the community. 11 Applied Development Economics Page 2 � � 0 § ■ a B � 2$ _]| §B� 02 L §§ �lu � ILIL 2 t\\7Lrlw \ ,Qa6y_ }\e n�Cz �K }\�§ ts kk /KfC4C' i K § §mkgQl2�& 9\7) °OGEE °( 9 §� § C4 & ® ®S kk /KfC4C' i K § §mkgQl2�& 9\7) °OGEE °( & ® ®S k % }\ } k /@§ #��& °k `\«k§K \%k§( \`��k�} m § § I ! U2 /fI` 42;| a.■ IZ k�!lllkzmf ;27