Fiscal and Economic Impacts Analysis Vallco Town Center Specific

Transcription

Fiscal and Economic Impacts Analysis
Vallco Town Center Specific Plan
Cupertino, CA
Prepared for:
Vallco Property Owner LLC
Prepared by:
Keyser Marston Associates, Inc.
May 12, 2016
Table of Contents
Page
I.
EXECUTIVE SUMMARY ..................................................................................................... 1
A. Fiscal Impacts and Community Benefits ........................................................................ 2
B. Economic Impacts .......................................................................................................... 9
II.
INTRODUCTION ................................................................................................................ 11
A. Land Use Overview ...................................................................................................... 11
B. Methodology ................................................................................................................. 16
C. Tasks ............................................................................................................................ 19
III.
FISCAL IMPACTS.............................................................................................................. 20
A. Net Annual General Fund Impact ................................................................................. 20
B. Additional Indirect Benefits to City General Fund......................................................... 24
C. Construction-Related “One-Time” Revenues to the City of Cupertino ......................... 24
D. Annual Operating and Capital Facility Cost Impacts on Affected School Districts ....... 25
E. Local Property Tax Revenues to Service Districts ....................................................... 27
IV.
ECONOMIC IMPACTS ...................................................................................................... 29
A. Recurring Annual Economic Impacts ........................................................................... 29
B. “One-Time” Economic Impacts During Construction – $3.4 Billion Countywide .......... 33
V.
METHODOLOGY AND ASSUMPTIONS ........................................................................... 35
A. Fiscal Impacts .............................................................................................................. 35
B. Economic Impacts ........................................................................................................ 42
VI.
LIMITING CONDITIONS .................................................................................................... 46
VII. ADDENDUM: IMPACTS OF ADDITIONAL RESIDENTIAL DEVELOPMENT ................... 47
A. Fiscal Impacts .............................................................................................................. 47
B. Economic Impacts ........................................................................................................ 50
VIII. ANALYTICAL TABLES ...................................................................................................... 52
LIST OF TABLES
Fiscal Impacts
Table A-1
Table A-2
Table A-3
Table A-4
Table A-5
Table A-6
Table A-7
Table A-8
Table A-9
Table A-10
Table A-11
Table A-12
Table A-13
Table A-14
Table A-15
Table A-16
Table A-17
Table A-18
Table A-19
Table A-20
Table A-21
Table A-22
Table A-23
Estimated Annual Fiscal Impact on the City of Cupertino General Fund
Estimated Annual Incremental City Revenue by Plan Area
Estimated Annual City Revenue Generated by Baseline
Annual City of Cupertino Service Expenditures: Plan Area vs. Baseline
CUSD and FUHSD Facility Impact Fees and Development Costs
Operating and Bond Repayment Impacts on FUHSD
Operating and Bond Repayment Impacts on CUSD
Plan Area Land Use Summary
Plan Area Demographics
Baseline Demographics
Net New Assessed Value
Baseline Assessed Values: Secured and Unsecured Rolls
Detail on Baseline Assessed Property Values: Secured Roll
Detail on Baseline Assessed Property Values: Unsecured Roll
Baseline Business License Tax Revenues
Property Tax Allocation Factors - TRA 013-301, FY 2015/16
Estimated Household Income of Plan Area Residents
City of Cupertino Demographic Data (2015)
City of Cupertino Revenue Source Assumptions 2015/16
City of Cupertino Service Expenditure Assumptions 2015/16
City of Cupertino General Fund Revenue Sources FY 2015/16
City of Cupertino General Fund Budget Expenditures FY 2015/16
Property Tax Accruing to Other Jurisdictions
53
55
58
59
60
61
62
64
65
66
67
68
69
70
71
72
73
74
75
80
82
84
85
Economic Impacts
Table B-1
Table B-2
Table B-3
Table B-4
Table B-5
Table B-6
Table B-7
Table B-8
Table B-9
Table B-10
Table B-11
Table B-12
Summary of Economic Impacts
Estimated Direct and Indirect Economic Impacts (City)
Estimated Direct and Indirect Economic Impacts (County)
Direct Economic Impact Assumptions (Operations)
Baseline Economic Activity
Direct Economic Impact Assumptions (Construction)
Plan Area Budget and Direct Economic Impacts During Construction
Household Spending Assumptions
IMPLAN Sector Shares of Final Demand by Economic Activity
Calculation of IMPLAN Industry Shares of Retail Store Economic Activity
Calculation of IMPLAN Industry Shares of Restaurant Economic Activity
Calculation of IMPLAN Industry Shares of Office Tenant Economic
Activity
88
90
92
94
96
97
98
99
100
102
103
104
I.
EXECUTIVE SUMMARY
This report provides an evaluation of the fiscal and economic impacts to be generated by the
Vallco Town Center Specific Plan Initiative (Initiative). The Initiative envisions the redevelopment
of a 58-acre planning area (Plan Area) in the City of Cupertino (City) into a vibrant mixed-use
“town center.” This analysis is one of a range of analyses being prepared to assist in the
decision-making and approval process for the Initiative, including the Vallco Town Center
Specific Plan (Specific Plan). The analysis addresses net fiscal impacts to the City, Fremont
Union High School District (FUHSD), and Cupertino Union School District (CUSD), as well as
local economic impacts resulting from the construction and operations of projects proposed or
anticipated within the Plan Area. Economic impacts include direct, on-site jobs, output, and
compensation, as well as indirect/induced impacts generated within the City and Santa Clara
County (County) as a result of expenditures by firms, employees, and residents within the Plan
Area.
The Plan Area is comprised of three separately owned properties: Town Center/Community Park
(51 acres), Block 13 (2 acres), Block 14 (5 acres):
1. Town Center/Community Park (Town Center) is currently the site of the aging,
1,207,774 million square foot Vallco Shopping Mall (the Mall). The Specific Plan would
authorize revitalizing the Mall property into a new Town Center consistent with and
conforming to Cupertino’s General Plan. The Town Center/Community Park would
include approximately 640,000 square feet of commercial area, including family-friendly
entertainment, retail, sports and recreation uses. A residential component with 389 1
apartments for multi-generational living with a minimum of 80 senior apartments is
proposed in this area. Also proposed are approximately two million square feet of office
space including one hundred thousand square feet specifically dedicated to incubator,
startups, and emerging Silicon Valley companies. The Town Center/Community Park
would also support public, residential, hotel, and office amenity areas. At least 50,000
square feet would be dedicated to public/civic uses, including a high school Innovation
Center and a Mobility Hub. Additionally, the Town Center/Community Park would include
a publicly accessible, approximately 30-acre landscaped Community Park and Nature
Area above the buildings.
2. Block 13 is currently a parking lot. A 148-room business class hotel was recently
approved by the City of Cupertino for the development on the property.
1
This unit count may be increased upon approval of a Conditional Use Permit subject to direct appeal to
the City Council, to allow transfer of development allocation between planning areas, consistent with the
General Plan. This report assumes the development of 389 residential units. An addendum (Section VII)
summarizes fiscal impacts if residential development is increased.
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3. Block 14 is also currently a parking lot and has been identified as a possible suitable
location for the development of a 191-room hotel and supporting commercial uses.
Given that the Block 13 hotel project has been previously approved, the focus of the following
fiscal and economic impact analysis is the Town Center/Community Park and the development
of Block 14 as a hotel with supporting commercial uses, and not including the economic and
fiscal impacts of the hotel project on Block 13.
The analysis reflects the incremental change between the magnitude of anticipated future
impacts to be generated by projects within the Plan Area and the baseline condition. Projections
and estimates are based on currently available project information and average City service
costs derived from publicly available information from the City of Cupertino. Findings of the
analysis are summarized below.
A. Fiscal Impacts and Community Benefits
1. Direct Annual Fiscal Impacts to the City of Cupertino – $5.3 Million
Upon build-out, the Plan Area will annually generate approximately $6.6 million of additional tax
revenues ongoing to the City of Cupertino. The largest revenue components are transient
occupancy taxes, sales taxes, and property taxes. After taking into account the annual cost of
providing municipal services ($1.3 million), the Plan Area is anticipated to annually generate a
$5.3 million net fiscal surplus to the City.
Direct Annual GF Revenues and Expenditures
Amount
Upon Buildout
General Fund Revenues
General Fund Expenditures
Annual General Fund Fiscal Surplus
$millions
$6.6
($1.3)
$5.3
2. Annual Indirect Tax Revenues to the City of Cupertino – $128,000
The Plan Area’s approximately 1,053 net new residents and 8,264 net new employees, along
with hotel visitors, will generate additional indirect sales tax through an estimated $12.8 million
in annual taxable purchase at businesses located elsewhere in Cupertino. Through the off-site
spending of residents, workers, and visitors, the Plan Area is estimated to indirectly generate
approximately $128,000 in additional annual sales tax revenues to the City’s General Fund.
Page 2
Indirect Annual GF Revenues Upon Buildout
Amount
% Total
Sales Tax: Resident Spending
$41,000
32.0%
Sales Tax: Employee Spending
$56,000
43.8%
Sales Tax: Visitor Spending
$31,000
24.2%
$128,000
100.0%
Annual Indirect GF Revenues
3. “One Time” Construction-Related Revenues to the City of Cupertino – $14.7 Million
The City of Cupertino will receive approximately $14.7 million in one-time tax revenues from the
development and construction of the Plan Area. The use of these tax revenues is not restricted
and the taxes are in addition to building permit and impact fee revenues that will also be
generated by the Plan Area, including an estimated $50 million in affordable housing impact fee
revenues.
One-Time, Construction-Related GF Revenues
Amount
% of Total
$millions
Use Tax from Construction Materials
Construction Tax
Property Transfer Tax (Land Acquisition)
One-Time General Fund Revenue
$5.8
$8.7
$0.2
39%
60%
1%
$14.7
100%
4. FUHSD and CUSD Facility Impact Fees and Development Costs
According to Schoolhouse Services, the Plan Area is anticipated to add 19 students to FUHSD
and 87 students to CUSD. The cost to build facilities to accommodate these new students is
estimated to be $1.3 million for FUHSD and $2.7 million for CUSD. 2 In comparison, the Plan
Area will generate approximately $900,000 in state-mandated building impact fee revenue to
FUHSD and $1.4 million in fee revenue to CUSD.
The Town Center is designed to create a net positive impact on the already world-class schools
in Cupertino. This will be achieved through a variety of uses and amenities that will represent a
total financial contribution of approximately $55 million to local schools, in addition to the
payment of all legally required development fees. Although amenities must be agreed to by the
school districts, amenities for FUHSD are expected to include building a new 10,000 square
foot, turn-key High School Innovation Center as well as a 5,000 square foot adult education
center within the Town Center. Extraordinary contributions to CUSD are expected to include:
2
Based on the analysis, "Enrollment and Fiscal Impact Analysis for the Hills at Vallco," prepared by Schoolhouse
Services for the City of Cupertino (February 2016) (Schoolhouse Services Report). The Schoolhouse Services
Report analyzed 800 residential units, whereas the subject analysis assumes 389 residential units (see Table A-5).
Page 3
•
•
•
Construction of a new 700 student elementary school at the former Nan Allan
Elementary School site
Replacement of all portable classrooms at Collins Elementary School with permanent
classrooms
Improvement and expanded utilization of athletic and recreation facilities at the Nan
Allan/Collins Elementary School location.
Extraordinary benefits to both districts are estimated to off-set 100% of the capital impacts to be
generated by the Plan Area and create additional capacity for the districts that exceeds the
needs of the Plan Area. After accounting for extraordinary benefits, the net capital facility
surplus to the district will approximate $31.5 million to FUHSD and $21.7 million to CUSD.
Capital Facility Revenues and Costs 3
FUHSD
CUSD
$millions
$millions
Facility Development Costs
Value of Developer-Funded Capital Facilities
and Extraordinary Benefits
Facility Impact Fee Revenue (Approximate)
($1.3)
($2.7)
$32.0
$23.0
$0.9
$1.4
Net Capital Facility Surplus
$31.5
$21.7
5. Annual Operating Impacts to FUHSD and CUSD
As a result of the projected increase in the student population, the Plan Area is estimated to
generate approximately $217,000 of additional operating expense to FUHSD. 4 The Plan Area
will also generate approximately $3.2 million of additional property tax revenue annually to
FUHSD, equivalent to 3% of existing general purpose property tax revenues received by the
district. In addition, the Town Center Property Owner has volunteered to make in-lieu payments
equivalent to the FUHSD parcel tax for each non-senior residential unit, estimated to be
approximately $30,000 per year. Property tax and in-lieu parcel tax revenues are therefore
estimated to exceed incremental operating costs by approximately $3.0 million per year.
Unlike FUHSD, CUSD is a “revenue limit” school district, which means that its revenues and
budget are driven by the per student “revenue limit” established by the State of California rather
than the actual amount of property taxes generated within the district. Therefore, the Plan Area
will generate neither additional operating expense nor property tax revenue to CUSD. However,
as with FUHSD, the Property Owner has volunteered to pay the equivalent applicable parcel tax
for each non-senior residential unit, estimated to be approximately $77,000 per year.
3
4
Separate agreements will be completed in coordination and cooperation with the school districts.
Schoolhouse Services Report.
Page 4
Annual Operating Impacts
FUHSD
CUSD
$millions
$millions
Additional Property Tax Revenue
Additional Operation Costs
Parcel Tax In-Lieu Payment **
$3.2
$0.2
$0.0
*
*
$0.1
Net Annual Operating Surplus
$3.0
$0.1
* CUSD is a "revenue limit" school district. As a "revenue limit" district, additional local property
tax revenues do not increase or decrease the total amount of revenues received by the school
district. Therefore, the Plan Area impact is anticipated to be neutral, with the exception of in-lieu
parcel tax payments.
‘** In-lieu parcel tax payment estimated to be $30,000/year to FUHSD and $77,000/year to
CUSD.
The Plan Area will also generate property tax revenue dedicated to the repayment of
outstanding bonds issued by FUHSD and CUSD. The use of these additional tax revenues is
restricted to bond debt service, but will accelerate the repayment of the bonds. These property
tax revenues are estimated to amount to approximately $1 million to both FUHSD and CUSD,
representing between 4% and 5% of the respective property taxes currently collected for debt
service in each district.
Additional Bond Debt Service Revenue*
Cupertino Unified School District (CUSD)
Fremont Unified High School District (FUHSD)
Amount
$0.99 Million
$1.00 Million
* These revenues are not available for operating expenses. See text above.
6. Recurring Annual New Property Tax Revenues to Local Public Agencies
The Plan Area is anticipated to generate approximately $19 million of property tax revenue to fund
community services. Approximately $9 million will be allocated to the City of Cupertino and the
local school districts. The remaining $10 million in local property tax revenue will be distributed to
and other local service/taxing agencies public, including the Santa Clara County Library, the
Central Fire Protection District and Santa Clara County.
Annual Property Taxes
Amount
$millions
Property Taxes to All Local Agencies
$19.0
City of Cupertino
$1.1
Cupertino Union Elementary*
$4.7
Fremont Union High
$3.2
Net Taxes to Other Jurisdictions
$10.0
Including FUHSD
$13.2
* CUSD is a "revenue limit" school district. As a "revenue limit" district, additional
local property tax revenues do not increase the total amount of revenues received
by the school. See discussion above.
Page 5
7. Community Benefits
In addition to generating a fiscal surplus to the City of Cupertino General Fund, the Plan Area
will provide extraordinary community benefits, including open space, civic space and mobility
improvements. Community benefits summarized in the table below are anticipated to include
approximately:
•
•
•
Community Benefit Improvements –$404 million
Community Benefit Uses – $97 million
Community Benefit Direct Financial Contributions – $49 million
Estimates of community benefits were provided by the Town Center Property Owner. Values of
community benefit improvements reflect construction costs, values of community benefit uses
reflect the net present value of the leasehold interest of contributed facilities and values of direct
financial contributions reflect estimated contributions as of May 2016. The estimates below are
inclusive of community benefits provided to local schools, used in calculating the net capital
facility surplus to the school districts on page 5 of this report.
Community Benefits
COMMUNITY BENEFIT IMPROVEMENTS1
Green Roof Structure and Landscape
Rooftop Children's Play Space
Rooftop Banquet Hall 2
Rooftop Community Building
Amphitheater over Wolfe Road
Recycled Water, first segment (Hamptons to Perimeter Rd. Tunnel)
Recycled Water, second segment (Perimeter Rd. Tunnel to SC Blvd)
Town Center Square
Public Transit Center
Public Bike and Pedestrian Trails along Perimeter Road
Nan Allan Elementary School Construction - CUSD
Collins Elementary School Improvements - CUSD
Nan Allan/Collins Athletic Fields Renovation/Expansion - CUSD
Subtotal
COMMUNITY BENEFIT USES2
FUHSD Innovation Center (10 ksf)
FUHSD Adult Education Center (Up to 5 ksf)
Local Non-Profit Organization Space (At least 5 ksf)
Modernized Ice Skating Facility (approximately 30 ksf)
Incubator / Emerging Office Tenant Leases (at least 100k sf)
Senior Housing
Subtotal
Amount
$millions
$319.0
$3.3
$5.5
$5.5
$33.0
$5.5
$3.3
$3.3
$1.7
$1.7
$17.6
$3.3
$1.1
$403.7
$22.5
$9.5
$9.5
$22.7
$12.0
$20.5
$96.7
Page 6
COMMUNITY BENEFIT DIRECT FINANCIAL CONTRIBUTIONS
Yosemite Experience Endowment - CUSD
I-280 Bicycle Trail Contribution - City of Cupertino
Parcel Tax Equivalent Contributions - FUHSD & CUSD (20-year estimate)
Free Community Shuttle Funding (20-year estimate)
Subtotal
TOTAL COMMUNITY BENEFITS
$1.0
$6.0
$2.2
$40.0
$49.2
$549.60
Source of Community Benefits and Impact Fees: Town Center Property Owner
Totals may not add due to rounding.
1
Values based on construction cost of improvements.
2
A portion will be public and a portion will be private.
3
Values reflect the net present value of the rent subsidy provided to beneficiaries, up to 34 years.
8.
Private Investment in Public-Serving Improvements
The Town Center Property owner has committed to numerous private investments in publicserving improvements, including traffic improvements and upgrades to area-serving
infrastructure. The private investments in public-serving infrastructure improvements are
estimated to total $52 million, according to cost information provided by the Town Center
property owner.
Private Investment in Public Serving Improvements
PRIVATE INVESTMENT IN PUBLIC-SERVING IMPROVEMENTS
Traffic Improvements (excluding Lawrence Expressway)
Traffic Improvements (for Lawrence Expressway)
Sewer System Upsizing
PG&E Upgrades
Offsite Bicycle Connectivity Upgrades
Privacy Improvements along Portal property line 1
Public Art - City of Cupertino
Total
Amount
$millions
$33.6
TBD
$8.8
$5.5
$0.1
$4.4
$0.1
$52.3
Source: Town Center Property Owner
1
Green roof extension and landscape.
Page 7
9.
Summary of Plan Area Benefits
The following table summarizes fiscal and community benefits, as well as other public-serving
private investments to be generated or provided by the Plan Area. Further explanation of the
following benefits can be found throughout this report, as referenced in the far-right column of
the table.
Summary of Plan Area Benefits
Amount
Ref.
$millions
COMMUNITY BENEFIT IMPROVEMENTS1
Green Roof Structure and Landscape
Rooftop Children's Play Space
Rooftop Banquet Hall 2
Rooftop Community Building
Amphitheater over Wolfe Road
Recycled Water, first segment (Hamptons to Perimeter Rd. Tunnel)
Recycled Water, second segment (Perimeter Rd. Tunnel to SC Blvd)
Town Center Square
Public Transit Center
Public Bike and Pedestrian Trails along Perimeter Road
Nan Allan Elementary School Construction - CUSD
Collins Elementary School Improvements - CUSD
Nan Allan/Collins Athletic Fields Renovation/Expansion - CUSD
Subtotal
Page 6
$319.0
$3.3
$5.5
$5.5
$33.0
$5.5
$3.3
$3.3
$1.7
$1.7
$17.6
$3.3
$1.1
$403.7
COMMUNITY BENEFIT USES2
FUHSD Innovation Center (10 ksf)
FUHSD Adult Education Center (Up to 5 ksf)
Local Non-Profit Organization Space (At least 5 ksf)
Modernized Ice Skating Facility (approximately 30 ksf)
Incubator / Emerging Office Tenant Leases (at least 100k sf)
Senior Housing
Subtotal
$22.5
$9.5
$9.5
$22.7
$12.0
$20.5
$96.7
COMMUNITY BENEFIT DIRECT FINANCIAL CONTRIBUTIONS
Yosemite Experience Endowment - CUSD
I-280 Bicycle Trail Contribution - City of Cupertino
Parcel Tax Equivalent Contributions - FUHSD & CUSD (20-year estimate)
Free Community Shuttle Funding (20-year estimate)
Subtotal
$1.0
$6.0
$2.2
$40.0
$49.2
TOTAL COMMUNITY BENEFITS
PRIVATE INVESTMENT IN PUBLIC-SERVING IMPROVEMENTS
Traffic Improvements (excluding Lawrence Expressway)
Traffic Improvements (for Lawrence Expressway)
Sewer System Upsizing
PG&E Upgrades
Offsite Bicycle Connectivity Upgrades
Page 6
Page 6
$549.60
Page 7
$33.6
TBD
$8.8
$5.5
$0.1
Page 8
Privacy Improvements along Portal property line 4
Public Art - City of Cupertino
Subtotal
$4.4
$0.1
$52.3
TOTAL INCLUDING PUBLIC-SERVING PRIVATE INVESTMENT
$601.9
NEW REVENUES TO LOCAL PUBLIC AGENCIES (ONE-TIME)
Development Impact Fee - CUSD
Development Impact Fee - FUHSD
New Fiscal Benefits - City of Cupertino (construction taxes)
Affordable Housing Fee - City of Cupertino
Subtotal
$1.4
$0.9
$14.7
$50.0
$66.9
GRAND TOTAL, INCLUDING ONE-TIME FISCAL BENEFITS
NEW REVENUES TO LOCAL PUBLIC AGENCIES (ANNUAL RECURRING)
New Tax Revenue Fiscal Benefit - City of Cupertino1
New Property Tax Revenue
FUHSD
Foothill-DeAnza Community College
Central Fire Protection District
Santa Clara County Library
Regional Open Space District
Other Local Jurisdictions
Subtotal
Page 3
$668.8
$5.3
Page 20
$3.2
$1.2
$2.9
$0.5
$0.3
$5.2
$18.5
Page 5
Page 28
Source of Fiscal Benefits: Keyser Marston Associates
Source of Community Benefits and Impact Fees: Town Center Property Owner
1
Fiscal benefit to Cupertino is displayed net of General Fund service costs. All other benefits are shown without
accounting for additional service costs.
B. Economic Impacts
1. Annual Recurring Economic Impacts Upon Build-Out – $2.7 Billion Countywide
Once operations have stabilized, the Plan Area is anticipated to directly generate an additional
8,264 permanent, full-time equivalent jobs, approximately $1.1 billion in additional annual
employee compensation, and $1.8 billion in additional annual economic output above current
economic conditions. These direct economic impacts reflect the output, employment, and
salaries of retail and office tenants, building services contractors and the hotel within the Plan
Area.
Indirect and induced impacts are generated from expenditures on goods and services by on-site
businesses, employees and residents. These expenditures cycle through the economy and
enhance economic activity throughout the City and the County at-large. The economic analysis
tool, IMPLAN, is used to estimate indirect and induced effects. In total, the Plan Area is
expected to add approximately 11,682 jobs to the City and 14,343 jobs to the County.
Page 9
Approximately $2.3 billion in economic output will be generated by the Plan Area for businesses
in the City; including businesses throughout the County, approximately $2.7 billion will be
generated.
Annual Economic Impacts
During Operations
Ongoing Jobs
Employee Compensation ($Billions)
Industry Output ($Billions)
Direct
On-Site
8,264
$1.1
$1.8
Total Impact
City
11,682
$1.3
$2.3
Total Impact
County
14,343
$1.5
$2.7
2. “One-Time” Economic Impacts During Construction Period – $3.4 Billion Countywide
The construction of the Plan Area will generate a tremendous number of high-quality, high-wage
construction and professional services jobs. Approximately 12,555 jobs (expressed in job-years,
or one year of one job) will be created over the development period. Including indirect and
induced impacts, the construction of the Plan Area will generate approximately 15,947 jobs in
the City and 18,845 jobs in the County. Development of the Plan Area will support $1.4 billion of
payroll expenditures in the City and $1.6 billion in the County, as well as $3.4 billion in output
countywide.
One-Time Economic Impacts
During Construction
Employment (Job Years)
Employee Compensation ($billions)
Industry Output ($billions)
Direct
On-Site*
12,555
$1.2
$2.4
Total Impact
City
15,947
$1.4
$3.0
Total Impact
County
18,845
$1.6
$3.4
* Direct effects include direct jobs located at the project site or the City. Total county impact includes additional
direct professional services jobs performed outside Cupertino but within the County. See report text for details.
Page 10
II. INTRODUCTION
The Vallco Town Center Specific Plan Area is a 58-acre planning area (Plan Area) in the City of
Cupertino (City) envisioned as a mixed-use “town center.” The City of Cupertino’s General Plan,
Community Vision 2015-2040, as amended (General Plan) calls for the preparation of a specific
plan for the Vallco Shopping District Special Area (Specific Plan) to determine land uses and
infrastructure requirements within the Plan Area. To inform parties involved with the preparation
and adoption of the Specific Plan, Keyser Marston Associates, Inc. (KMA) has been retained to
evaluate the fiscal and economic impacts generated by land uses envisioned for the Plan Area,
including:

The direct, indirect, and induced economic activity (jobs, economic output, and salaries)
within the City of Cupertino and Santa Clara County (County), both during construction
and upon completion of the Plan Area;

The recurring net annual fiscal impacts on the City of Cupertino, Cupertino Union School
District (CUSD), and the Fremont Union High School District (FUHSD); and

Construction-related tax and fee revenues to be received by the City of Cupertino.
A. Land Use Overview
The approximately 58-acre Plan Area is located at the intersection of North Wolfe Road and
Stevens Creek Boulevard in the City of Cupertino, south of Interstate 280 (I-280) and the North
Wolfe Road/I-280 interchange (see Map). The Plan Area is comprised of multiple parcels
totaling approximately 58 acres across three separately owned properties: Town
Center/Community Park (51 acres), Block 13 (2 acres), and Block 14 (5 acres). Land uses for
each of the properties are summarized as follows:
1) Town Center/Community Park (Town Center) consists of an approximately 51-acre
site currently developed as the Vallco Shopping Mall (Mall). For years, the 1.2 million sq.
ft. regional Mall has suffered from low occupancy rates and sub-par sales volumes
relative to competing Valley Fair and Stanford Shopping Centers. The Specific Plan
would authorize revitalizing the Mall property into a new Town Center consistent with
and conforming to Cupertino’s General Plan. Land uses would include office, retail,
entertainment, residential, education, civic, fitness, and parking, all arranged around two
activated Town Squares and a 30-acre Community Park and Nature Area (green roof).
More specifically, the Initiative proposes the following uses:

389 rental apartment units, of which the greater of 80 units or 20% of the total
would be senior age-restricted units

640,000 square feet of commercial area, including
- 600,000 sq. ft. of community and regional retail, entertainment, and
personal services
- 40,000 sq. ft. of fitness uses
Page 11

50,000 to 100,000 square feet of public/civic space

2,000,000 square feet of office space including 100,000 square feet specifically
dedicated to emerging technologies

33 acres of public open spaces, including
- 30-acre Community Park and Nature Area
- Two Town Squares totaling 3 acres

120,000 square feet of services, facility management, and loading uses

Approximately 9,060 subterranean, surface and structured parking spaces.
It is contemplated that the residential buildings will be above ground floor retail space.
The Class A office buildings will serve multiple tenants. Parking will primarily be located
in subterranean garages, with limited above-grade structured parking. The project aims
to achieve the highest level of certification from a globally recognized environmental
sustainability certification program, such as LEED Platinum certification or its
equivalency.
While a detailed phasing plan has not been completed, development of the Town
Center/Community Park is contemplated to occur in a single phase over five years.
Construction is expected to begin with the redesign and relocation of the existing movie
theater, bowling alley, and ice rink uses, along with new retail uses. Construction of the
office and residential mixed-use components is expected to occur last.
2) Block 13, is currently a parking lot. An application to develop a 148-room hotel on the
property was recently approved by the City of Cupertino. Construction is anticipated to
commence in 2016.
3) Block 14, also currently a parking lot, has been identified as a suitable location for a
191-room hotel. With no active development plans on file, timing for the property’s
eventual development is still uncertain.
Given that the hotel project at Block 13 is approved, incremental and baseline impacts deriving
from Block 13 are excluded from this fiscal and economic impact analysis. Therefore, the focus
of the subject analysis is Town Center/Community Park plus Block 14.
Page 12
Land Use Overview: Vallco Town Center Specific Plan
Vallco District Specific Plan
Town Center/
Community Park
Residential Units
Market Rate Apartments
Senior Housing Units
Block 14
du
309
80
389
du
-
du
-
sf
2,000,000
640,000
50,000100,000
sf
-
sf
-
-
-
120,000
-
-
2,810,0002,860,000*
-
-
keys
-
keys
148
keys
-
-
-
191
acres
acres
acres
30
3
33
-
-
9,060 (approx.)
156
TBD
51
2
5
Commercial and Civic GBA
Office
Commercial
Public/Civic*
Loading, Services & Facility
Management
Hotel Rooms
Hotel 1 (Approved)
Hotel 2 (No Active
Development Plans)
Public Amenities
Community Park and Nature
Area Acres
Town Square Acres
Parking Spaces
Block 13
(excluded)
Site Acres
Source: Vallco Town Center Specific Plan Environmental Assessment, April 2016.
* The mid-point of potential Public/Civic space (75,000 sq. ft.) was used for modeling fiscal impacts. See Appendix
Table A-8.
Page 13
Figure 1 – Vallco Town Center Specific Plan Site Context
Source: Notice of Preparation of Draft EIR, October 2015.
Page 14
Figure 2 –Town Center/Community Park Conceptual Site Plan
Source: Rafael Vinoly Architects, March 2016.
Figure 3 – Town Center/Community Park Conceptual Site Plan Perspective
Source: Rafael Vinoly Architects, March 2016.
Page 15
B. Methodology
The following fiscal and economic impacts are addressed in the analysis:
Fiscal Impacts




Net Annual Direct General Fund Impact
- Annual Direct General Fund Revenues
- Annual Direct General Fund Expenditures
Annual Indirect General Fund Revenues
Annual Operating and Capital Facility Cost Impacts on Affected School Districts
- Net Annual Operating Cost Impacts on Cupertino Union School District (CUSD) and
Fremont Union High School District (FUHSD)
- Net Capital Facility Cost Impacts on Cupertino Union School District (CUSD) and
Fremont Union High School District (FUHSD)
One-Time, Construction-Related Revenues to the City of Cupertino General Fund
Economic Impacts


Recurring Annual Economic Impacts Within City of Cupertino and Santa Clara County
- Jobs
- Employee Compensation
- Output
“One-Time” Jobs, Compensation, and Output Generated During Construction
1. Fiscal Impacts
The fiscal impact analysis, presented in Section III of the report, focuses on the one-time and
on-going impacts on the City’s General Fund. Projections are static estimates of annual impacts
upon stabilization of projects within the Plan Area, based on both marginal estimating sources,
such as assessed values and per square foot retail sales information, and on average revenue
and cost factors derived from the City’s adopted FY 2015-16 budget. Estimates are in 2015
dollars.
Data sources include the Plan Area applicants, the City of Cupertino’s Finance Department, the
adopted City of Cupertino FY 2015-16 Budget, the City of Cupertino Municipal Code, State
Department of Finance, State Controller’s Office, U.S. Census Bureau, and the State Board of
Equalization, among others.
The cost estimates for providing municipal services are based on an extrapolation of current
City per capita service costs to the Plan Area’s anticipated population and employment count.
Page 16
This analysis reflects the assumption that the cost of developing public infrastructure and
facilities needed by the Plan Area will either be funded privately and/or from impact fees to be
paid by the developers. Therefore, neither the capital cost of public facilities nor impact fee
revenues have been included in the analysis.
While most new infrastructure required in the Plan Area will be maintained by private or other
public entities, it is anticipated that local government agencies would be responsible for
maintaining a new recycled water line and a new traffic signal at Wolfe Street. Maintenance cost
estimates for these items are not initially available, and are not included in this report.
In addition to net General Fund revenue, the analysis assesses the operating and facility
impacts of the Plan Area on local school districts based on an extrapolation of the school
enrollment generation, operating cost, and facility cost data contained in the “Enrollment and
Fiscal Impact Analysis for the Hills at Vallco,” prepared by Schoolhouse Services (February
2016).
2. Economic Impacts
The economic impact analysis presented in Section IV of the report provides estimates of the
annual recurring direct, indirect and induced economic impacts to be generated by projects
within the Plan Area upon stabilization and the one-time impacts generated during the Plan
Area’s construction. Direct impacts include economic output, compensation and employment of
construction and professional services contractors during the development and construction
phase, and office and retail tenants, services contractors and the hotel during operations. Direct
impacts are based on: a preliminary construction budget, the Plan Area land use summary,
information regarding employment densities and sales performance at similar mixed use
projects, and Bureau of Labor Statistics (BLS) and Bureau of Economic Analysis (BEA) data on
the proportional relationships between jobs, employee compensation, and output by industry
within the County.
Indirect and induced impacts (multiplier effects) are generated from expenditures by on-site
firms on materials, supplies, and services, and from consumer spending by on-site residents
and employees. These expenditures cycle through the economy and enhance economic activity
throughout the City and the County at-large. The economic analysis tool, IMPLAN, is used to
quantify these impacts. Industry-specific IMPLAN multipliers for the City and the County are
applied to direct impacts to determine total economic impacts within each respective economic
region.
3. Plan Area Baseline
The impact analysis reflects the difference between the anticipated fiscal impacts upon
completion of the Plan Area and fiscal impacts under the baseline condition. A portion of the
Plan Area is currently improved with the 1.2 million square foot Mall, which will be demolished
Page 17
and revitalized with the proposed Town Center/Community Park. For years, the Mall has
suffered from historically low occupancy rates and sub-par sales volumes relative to competing
Valley Fair and Stanford Shopping Center. Evidence of difficulties include: ownership changed
four times over the past 16 years; investment was impeded by the multi-party ownership of the
center; the center was foreclosed upon in 2008; and the first floor was boarded up and the
entire center was reportedly 18% vacant at the time that it was acquired by the current property
owner in 2014/15 (though based on interviews with current ownership KMA understands much
of the 82% occupancy not related to the department stores was made possible due to deferred
or waived rent). Since the acquisition, both Macy’s and Sears have closed and J.C. Penney has
announced its closure. The entertainment tenants, including movie theater, bowling alley, and
ice rink are reportedly successful and such venues will be incorporated into the Town
Center/Community Park. City tax revenues from the Mall have declined over time in tandem
with the increasing vacancy rate.
For purposes of this analysis, revenues and expenditures generated in 2014 have been
assumed to represent the baseline from which to measure the net revenues of proposed land
uses within the Plan Area. Based on information from the City of Cupertino, the Mall generated
approximately $976,000 of City sales tax revenue in 2014 and $117,000 in property tax revenue
was generated within the Plan Area (including Block 14). Other baseline revenues and
expenditures have been estimated based on an assumed occupancy rate of 82%. Baseline
economic impacts have been similarly estimated assuming an assumed 82% occupancy rate for
the existing Mall and sales volumes consistent with $976,000 of City sales tax revenue.
However, because Mall ownership has not required all tenants to pay full rent, which is highly
atypical in the market, it should be noted the baseline sales tax revenue used for purposes of
this assessment may not be a reliable indication of future sales tax revenues should the
proposed project not move forward and the Mall remain in its existing state.
Page 18
Baseline Condition of Plan Area
The Mall
Gross Building Area (GBA)
Retail
Parking
Table A-13
Table A-10
Table A-13
1,202,675
898,000
304,675
Assumed Occupancy Rate
Occupied Sq. Ft.
Estimated Total Employees
Table A-10
82%
736,000
1,109
Taxable Sales
Table A-19
Entire Plan Area*
Combined Assessed Value
Secured
Unsecured
Fiscal Impacts
Annual General Fund Revenues
Annual General Fund Expenditures
Net General Fund Impact
Table A-10
$
97,600,000
Table A-12
$157,741,957
$37,684,518
$195,426,475
Table A-1
$1,216,000
$(127,000)
$1,089,000
* Excluding Block 13.
C. Tasks
To complete this assignment, KMA has undertaken the following work tasks:







Established baseline economic conditions in the Plan Area;
Established cost and revenue parameters, based on City of Cupertino’s 2015/16
Adopted Budget and estimated the incremental public costs and revenues of
proposed land uses;
Compared incremental costs and revenues to determine net fiscal impact;
Estimated the construction-period fiscal impacts to the City;
Estimated the capital and on-going fiscal impacts to the school districts that will
serve Plan Area;
Estimated direct construction and operating period economic impacts to the City
and County (jobs, compensation, and economic output) based on the proposed
land uses and other factors;
Estimated the indirect and induced construction and operating period economic
impacts using the IMPLAN economic analysis tool.
Page 19
III. FISCAL IMPACTS
A. Net Annual General Fund Impact – $5.3 Million Annually to Cupertino
The Plan Area is anticipated to annually generate approximately $5.3 million of net positive cash
flow to the City of Cupertino upon build out. This estimate reflects the incremental difference in
General Fund revenues with the completion of the land uses designated for the Plan Area in
comparison with the baseline condition. It is based on currently available project information and
average City service costs.
Annual General Fund Revenues and Expenditures
To Be Generated by Plan Area
Revenue/ Expenditures
Gross Project General Fund Revenues
Less (Baseline Revenues)
Net Project Revenues
Plan Area*
$7.8
($1.2)
$6.6
Gross Project GF Expenditures
Less (Baseline Municipal Expenditures)
Net Project Expenditures
($1.5)
$0.1
($1.3)
$millions
Annual Net General Fund Revenue
*Excluding previously approved hotel project at Block 13.
Figures rounded.
Millions
Revenues vs. Expenditures
$5.3
Net GF Revenues
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$6.6 M
$5.3 M
$2.00
$1.00
$0.00
-$1.00
-$1.3 M
-$2.00
Revenues
Expenditures
Net
Page 20
1. On-Going Annual General Fund Revenues
Upon build out, the Plan Area is anticipated to generate approximately $6.6 million of additional
annual revenues to the City of Cupertino. The largest source of City revenue is the Transient
Occupancy Tax, representing annual revenue of approximately $2.4 million, or 37% of the total.
The estimate of Transient Occupancy Taxes is based on a preliminary assessment of hotel
room rates, provided by HVS. Sales taxes follow as the second-largest revenue source,
estimated to total $2.0 million, or 30% of the total. Sales taxes generated by retailers are
estimated based on taxable sales of $460 per square foot, which reflects comparable projects
such as Santana Row, Stanford Shopping Center, and Valley Fair Mall. Taxable sales at Town
Center may exceed this estimate depending on the retail tenant mix. For example, in-line
specialty tenants are reported to exceed $1,000 per square foot in gross sales (taxable and
non-taxable) at Valley Fair and Stanford shopping malls.
Assessed valuation drives property tax revenues, the third largest source of City revenue, with
$1.1 million or 17% of the total. The impact analysis reflects the difference between anticipated
future assessed values and baseline assessed values in the Plan Area. The anticipated future
assessed secured value of the Plan Area has been provided by the Town Center/Community
Park applicant, while assumptions for unsecured values have been established by KMA based
on the experiences of similar projects. The fourth largest revenue source, property tax in-lieu of
motor vehicle license fees, is also tied to assessed values. It is anticipated that the City would
receive $625,000 annually in property tax in-lieu of MVLF revenues, or 9% of the total.
Remaining revenue sources are primarily based on per capita revenue data from the City of
Cupertino’s 2015-2016 adopted budget. These sources are anticipated to generate
approximately $450,000 of annual revenue, or 7% of total revenues, and are comprised of:
utility user taxes; franchise fees, business license fees, fines, forfeitures and other fees, and
Gas Tax revenues.
Revenue sources in the table below reflect the difference between anticipated revenues upon
completion of the Plan Area and revenues generated under the baseline condition.
Page 21
Annual General Fund Revenues
Revenue Source
Transient Occupancy Tax
Sales and Use Tax
Property Taxes
Property Tax In-Lieu of MVLF
Utility User Tax
Franchise Fees
Business License Tax
Fines, Forfeitures and Other Fees
Gas Tax
Total General Fund Revenues
Amount
% Total
$2,447,000
$2,002,000
$1,101,000
$625,000
$167,000
$151,000
$91,000
$32,000
$12,000
36.9%
30.2%
16.6%
9.4%
2.5%
2.3%
1.4%
0.5%
0.2%
$6,628,000
100.0%
Composition of Annual General Fund Revenues
to be Generated by the Plan Area
Property Tax InLieu of MVLF
9.4%
Others
6.8%
Transient
Occupancy Tax
36.9%
Property
Taxes
16.6%
Sales and Use
Tax
30.2%
2. On-Going Annual General Fund Expenditures
The annual additional cost to Cupertino to provide services to the Plan Area is expected to
approximate $1.3 million. The largest single department expense is $502,000 for Public Works
department costs to maintain streets and other public facilities. The second largest expense is
incurred for Law Enforcement, in the amount of $326,000, followed by transfers out of the
General Fund, supporting storm water management, pavement maintenance, recreation
programs, and other service funds, with expenditures of $217,000.
Page 22
All costs reflect the difference between anticipated costs upon completion of the Plan Area and
costs sustained by the General Fund under the baseline condition. Costs are estimated based
on an average per capita cost approach in this initial evaluation. Per capita law enforcement
costs are derived from KMA’s 2013 study of the Apple Campus 2, which relies on an estimate of
service requirements provided by the Santa Clara County Sheriff’s Office. All other per capita
costs are derived from the City of Cupertino’s 2015-2016 Budget. As discussed under
Methodology and Assumptions (Section V), costs to maintain new infrastructure required by the
Plan Area, such as new sewer lines, are not included in the analysis.
Annual General Fund Expenditures
Expenditures by Department
Amount
% Total
Public Works
Law Enforcement
Transfers Out
Recreation Services
Administration
Administrative Services
Councils and Commissions
Public Affairs
$502,000
$326,000
$217,000
$171,000
$64,000
$33,000
$10,000
$6,000
37.8%
24.5%
16.3%
12.9%
4.8%
2.5%
0.8%
0.5%
$1,329,000
100.0%
Total GF Expenditures
Composition of Annual General Fund Expenditures to be Generated by the Plan Area
Others
8.5%
Recreation
Services
12.9%
Public Works
37.8%
Transfers Out
16.3%
Law
Enforcement
24.5%
Page 23
B. Additional Indirect Benefits to City General Fund – $128,000
While the Plan Area’s retail component is sizable, employees, residents and hotel visitors of the
Plan Area are likely to dedicate a portion of their disposable incomes to retail purchases made
elsewhere in Cupertino. Through $12.8 million in such purchases, the Plan Area is estimated to
indirectly generate an additional $128,000 in sales tax revenues to the City’s General Fund on
an annual basis.
Annual Indirect General Fund Revenues to be Generated by the Plan Area
Indirect Revenues
Amount
% Total
$41,000
$56,000
$31,000
32%
44%
24%
$128,000
100%
Total Indirect GF Revenues
C. Construction-Related “One-Time” Revenues to the City of Cupertino – $14.7 Million
During construction, projects within the Plan Area are anticipated to generate approximately
$14.7 million in one-time fiscal revenues to the City of Cupertino. The use of these tax revenues
is not restricted and the taxes are in addition to building permit and impact fee revenues that will
also be generated by the projects. Revenues derive from the City’s share of use tax revenues
generated from the sale of construction materials, the City’s construction tax, and property
transfer tax revenues generated from the acquisition of the properties. Use tax revenues are
estimated based on a preliminary development budget, with the assumption that Cupertino is
designated as the point of sale by the general and sub-contractors for 50% of the materials
purchased for construction (See Methodology and Assumptions, Section V).
Estimated One-Time General Fund Revenues
Revenue Source
Amount
% of Total
$millions
Construction Tax
Property Transfer Tax
$5.8
$8.7
$0.2
39.2%
59.5%
1.3%
$14.7
100.0%
Page 24
Composition of One-Time General Fund Revenues to be Generated by the Plan Area’s
Construction
Property
Transfer Tax
1.3%
Use Tax/
Constr.
Materials
39.2%
Construction
Tax
59.5%
D. Annual Operating and Capital Facility Cost Impacts on Affected School Districts
1. Annual Operating Impacts on Fremont Union High School District (FUHSD)
Based on the “Enrollment and Fiscal Impact Analysis for the Hills at Vallco,” prepared by
Schoolhouse Services (February 2016), it has been estimated that the Plan Area will generate
19 new high school students and over $200,000 of additional operating expense to FUHSD.
Given that FUHSD is a “basic aid” school district, its revenues are driven by property taxes
generated within the district rather than the per student “revenue limit” established by the State
of California. The Plan Area will annually generate approximately $3.2 million of additional
property tax revenue for FUHSD. In addition, the Town Center Property Owner has volunteered
to make in-lieu payments equivalent to the FUHSD parcel tax for each non-senior residential
unit, estimated to total approximately $30,000 per year. Annual property tax and in-lieu parcel
tax revenues are estimated to exceed incremental operating costs associated with serving the
additional students by approximately $3 million
Annual Operating Impacts: FUHSD
Amount
$millions
Additional property tax revenue
Parcel tax in-lieu payment
Additional operating costs
$3,169,000
$30,000
-$217,000
Net annual operating surplus
$2,982,000
Page 25
In addition, the Plan Area will annually generate $997,000 of additional property tax revenue
dedicated to the repayment of outstanding FUHSD bonds. Projected debt service revenue
represents an approximately 4% increase over existing property tax revenue received by the
district The use of these additional tax revenues is restricted to bond debt service, but will
accelerate the repayment of the bonds.
2. Capital Facility Cost Impacts on Fremont Union High School District (FUHSD)
Based on the analysis of school impacts referenced above, current enrollment exceeds the
capacity of the district’s facilities and the cost of building new adequate facilities approximates
$69,600 per student. The cost to build facilities for the 19 new students generated by the Plan
Area is estimated to total $1.3 million. In comparison, the Plan Area will generate approximately
$900,000 of building impact fee revenue.
To address the needs of the school district, the implementation of the Specific Plan will include
the building of a new 10,000 square foot, turn-key High School Innovation Center as well as a
5,000 square foot adult education center within the Town Center/Community Park for use by
FUHSD. The Town Center Property Owner estimates the value of these facilities to be $32
million, based on the net present value of the two 34-year charitable leases. These contributions
will off-set 100% of the capital impacts to be generated by the Plan Area and create an
additional capacity for the districts that exceeds the needs of the Plan Area, resulting in a net
capital facility surplus of approximately $31.5 million.
Capital Facility Revenue and Costs: FUHSD
Amount
$millions
Value of Developer Funded Facilities
Facility Impact Fee Revenue
($1.3)
$32.0
$0.9
$31.5
3. Annual Operating Impacts on Cupertino Union School District (CUSD)
Based on the analysis of school impacts referenced above, it has been estimated that the Plan
Area will generate 87 elementary and middle-school students. Unlike FUHSD, CUSD is a
“revenue limit” school district, which means that its revenues and budget are driven by the per
student “revenue limit” established by the state of California rather than the actual amount of
property taxes generated within the district. Therefore, the Plan Area will generate neither
additional operating expense nor property tax revenue to CUSD. However, as with FUHSD, the
Property Owner has volunteered to pay the equivalent applicable parcel tax for each non-senior
residential unit, estimated to be approximately $77,000 per year.
Page 26
In addition, the Plan Area will annually generate approximately $986,000 of additional property
tax revenue dedicated to the repayment of outstanding CUSD bonds. The use of these
additional tax revenues is restricted to bond debt service, but will accelerate the repayment of
the bonds. Projected debt service revenue represents an approximately 5% increase over
existing property tax revenue received by the district
4. Capital Facility Cost Impacts on Cupertino Union School District (CUSD)
Based on the analysis of school impacts referenced above, current enrollment exceeds the
capacity of the district’s facilities and the cost of building new adequate facilities approximates
$30,700 per student. The cost to build facilities for the 87 new elementary and middle school
students generated by the Plan Area is estimated to total $2.7 million. In comparison, the Plan
Area will generate approximately $1.4 million of building impact fee revenue.
To address the needs of the school district, the Town Center/Community Park will also make
substantial contributions to high quality education facilities and programs, including
extraordinary contributions to CUSD that are currently estimated at $23 million. Extraordinary
contributions to CUSD are expected to include construction of a new 700 student elementary
school at the former Nan Allen Elementary School site, replacement of all portable classrooms
at Collins Elementary School with permanent classrooms, and improvement and expanded
utilization of athletic and recreation facilities at the Nan Allen/Collins Elementary School
location, as well as the establishment of an endowment to support the district’s Yosemite
Experience program. These contributions will off-set 100% of the capital impacts to be
generated by the Plan Area and create an additional capacity for the districts that exceeds the
needs of the Plan Area. The net capital facility surplus to the CUSD is estimated to total $21.7
million.
Capital Facility Revenue and Costs: CUSD
Amount
$millions
Value of Developer-Funded Facilities
Facility Impact Fee Revenue
($2.7)
$23.0
$1.4
Net Capital Facility Cost Deficit
$21.7
E. Local Property Tax Revenues to Service Districts – $10 Million
State law determines the allocation of property tax revenues to taxing agencies. The recipients
of annual property tax revenues generated by the Plan Area include the following:

School districts (approx. 41%);

City of Cupertino (approx. 6%);

Fire protection district (approx. 15%);
Page 27

Santa Clara County (approx. 14%);

Community college district (approx. 6%);

County library (approx. 3%)
The remaining local public agencies that receive a portion of property tax revenues include the
Education Revenue Augmentation Fund, the Santa Clara County Library, water districts, the
Mid-peninsula Regional Open Space District and the Bay Area Air Quality Management District.
For purposes of this analysis, it is assumed that the incremental assessed value of properties
located in the Plan Area will reach $1.9 billion upon build-out. The additional assessed valuation
will yield an additional $19 million in property tax revenue every year to be funded by the Plan
Area. Approximately $9 million will be allocated to the City of Cupertino and the local school
districts. The remaining $10 million in local property tax revenue will be distributed to the public
aforementioned public agencies, as follows:

Fire protection district: $2.9 million;

Community college district: $1.2 million;

County library: $500,000
The County and other local districts, such as the open space and water districts will also receive
their proportionate share of additional property tax revenues from projects within the Plan Area.
Annual Property Taxes
Amount
$millions
Property Taxes to All Local Agencies
$19.0
City of Cupertino
$1.1
Cupertino Union Elementary*
$4.7
Fremont Union High
$3.2
Net Taxes to Other Jurisdictions
$1.2
$2.9
$0.5
Regional Open Space District
$0.3
Other Local Jurisdictions
$5.2
$10.0
Figures rounded.
* CUSD is a "revenue limit" school district. As a "revenue limit" district, additional
local property tax revenues do not increase the total amount of revenues received
by the school. See discussion above.
Page 28
IV. ECONOMIC IMPACTS
A. Recurring Annual Economic Impacts
Total economic impacts generated by the Plan Area once operations have stabilized are
summarized in the table below for both the City and the County, including direct, indirect, and
induced impacts. Direct economic impacts reflect the anticipated increase in output,
employment, and salaries of retail and office tenants, contract services and the hotel over the
baseline condition in the Plan Area. Indirect and induced impacts are generated from net new
expenditures of directly impacted firms on goods and services in the larger region, as well as
from consumer spending by new on-site residents and employees. In the table below, “Gross
Impacts” reflect all economic activity supported by the Plan Area. “Incremental Impacts” reflect
the difference between economic activity generated by the Plan Area and the baseline
condition. Net employment, compensation and output impacts are reviewed in greater detail in
the sections that follow.
Estimated Recurring Economic Impacts of Plan Area
Upon Build-Out
Annual Recurring Economic Impacts
Plan Area
Incremental Impact
Ongoing Jobs
Employee Compensation ($millions)
Industry Output ($millions)
Direct
On-Site
Total Impact
City
Total Impact
County
8,264
$1,058
$1,769
11,682
$1,276
$2,332
14,343
$1,476
$2,749
Baseline Impact
Ongoing Jobs
1,109
$36
$63
1,231
$44
$85
1,318
$49
$99
Gross Impact
Ongoing Jobs
9,373
$1,094
$1,831
12,913
$1,319
$2,417
15,661
$1,526
$2,847
Source: IMPLAN Group LLC 2014
Page 29
1. Employment – 14,343 Jobs Countywide
The Plan Area is anticipated to add approximately 8,264 direct jobs, including 7,610 office and
building services jobs, 511 retail jobs and 143 hotel jobs. The distribution of office employment
by industry is assumed to reflect the existing composition of selected office-using industries in
Santa Clara County. Including indirect and induced jobs, it is estimated that the Plan Area will
generate approximately 11,682 net new jobs Citywide and 14,343 annual jobs Countywide.
Estimated Recurring Employment Impacts
Upon Build-Out
On-Going Impacts by Category
Direct
Employment
Total Emp.
City
Total Emp.
County
Retail
Office (Incl. Building Services)
Residential (Household Spending)
Hotel
511
7,610
143
640
10,816
49
177
718
13,277
150
198
Total Employment Impact
8,264
11,682
14,343
Annual Employment Impacts During Operations
16,000
14,343
14,000
11,682
12,000
10,000
8,264
8,000
6,000
4,000
2,000
0
Direct Impact
Total Impact: Cupertino
Total Impact: County
Page 30
2. Employee Compensation – $1.5 Billion Countywide
Direct annual employee compensation in the Plan Area is projected to increase by nearly $1.1
billion over the baseline condition, with average annual employee compensation of $139,000 for
office employees, $37,000 for building services employees, $31,000 for retail employees, and
$53,000 for hotel employees, based on salary and benefits data from the BLS for Santa Clara
County. Including indirect and induced effects, total compensation generated by the Plan Area
totals nearly $1.3 billion Citywide and $1.5 billion Countywide. Employee compensation
translates directly into investment in local communities through expenditures on retail goods,
housing, services, and entertainment.
Estimated Recurring Employee Compensation Impacts
During Operations
Direct
Compensation
Total Comp.
City
Total Comp.
County
$millions
$millions
$15.6
$1,034.5
N/A
$7.6
$24.5
$1,239.2
$2.5
$9.7
$29.7
$1,426.6
$8.9
$11.2
Total Payroll Impact
$1,057.6
$1,275.9
$1,476.4
Millions
$millions
Retail
Hotel
1,600
1,400
1,200
Annual Employee Compensation Impacts During
Operations
$1,476
$1,276
$1,058
1,000
800
600
400
200
0
Direct Impact
Page 31
3. Output – $2.7 Billion Countywide
Upon build-out, the increase in direct economic output of tenants and contractors in the Plan
Area is estimated to approximate $1.8 billion over the baseline condition. 5 Office-using tenants
are anticipated to account for the vast majority of industry output in the Plan Area. Including
indirect and induced multiplier effects, the Plan Area is anticipated to generate a total of $2.3
billion in additional output for businesses throughout the City and $2.7 billion for businesses
throughout the County.
Estimated Recurring Output Impacts
During Operations
Direct
Output
Total Output
City
Total Output
County
$millions
$millions
$millions
$113.5
$1,634.7
$0.0
$20.4
$138.1
$2,163.6
$4.7
$25.9
$151.5
$2,552.9
$14.8
$29.4
Total Employment Impact
$1,768.6
$2,332.3
$2,748.6
Millions
Retail
Hotel
$3,000
Annual Output Impacts During Operations
$2,749
$2,500
$2,332
$2,000
$1,769
$1,500
$1,000
$500
$0
Direct Impact
5
Consistent with the reporting methodology of the BEA, retail output is expressed in terms of gross margin (sales
minus the cost of goods sold) as opposed to gross sales.
Page 32
B. “One-Time” Economic Impacts During Construction – $3.4 Billion Countywide
Direct and indirect costs to develop the Plan Area are estimated to total approximately $2.5
billion (excluding land and financing), according to a preliminary development budget provided
by the Town Center/Community Park applicant (February 2016). The vast majority of
development costs will be spent within the City, resulting in $2.4 billion in direct industry output
within the City. Including indirect and induced impacts of the Plan Area’s build-out, output during
construction is estimated to total $3.0 billion across the City and $3.4 billion across the County.
The construction of the Plan Area will generate a tremendous number of high-quality, high-wage
construction jobs. Approximately 12,555 direct jobs (expressed in job-years, or one year of one
job) will be created over the construction period. Including indirect and induced impacts, the
construction of the Plan Area will generate approximately 15,947 jobs in the City and 18,845
jobs in the County. Based on average total compensation for construction workers in Santa
Clara County, construction employee compensation will total $1.2 billion during the construction
period. Including indirect and induced jobs, construction of the Plan Area will support $1.4 billion
of payroll expenditures in the City and $1.6 billion in the County.
Estimated One-Time Economic Benefits during Construction Period
Economic Impacts
During Construction
Direct
On-Site*
12,555
$1,207
$2,414
Total Impact
City
15,947
$1,412
$2,967
Total Impact
County
18,845
$1,633
$3,440
* Direct effects include direct jobs located at the site. Total county impact includes additional direct jobs located offsite.
Direct and Total Construction Period Employment
Within Cupertino and County
Direct Impact
20,000
Total Impact
18,845
15,947
15,000
12,555
12,783
10,000
5,000
0
Cupertino
County
Page 33
Direct impacts during construction consist of jobs and output to be generated by construction
and professional services firms. All construction jobs occur on-site and in turn, within the City
and the County. KMA conservatively assumes that 10% of the professional services budget is
performed by firms within the City and 50% by firms within the County. For this reason, the
direct impacts in the County are shown to be greater than direct impacts within the City.
Construction Period Employment Impacts by Industry
Employment Category
Direct Impact
City
County
Total Impact
City
County
Construction
Professional Services
12,498
57
12,498
285
15,866
81
18,356
489
Total Construction Impact
12,555
12,783
15,947
18,845
Page 34
V. METHODOLOGY AND ASSUMPTIONS
A. Fiscal Impacts
The fiscal impact analysis includes a projection of annual recurring and one-time fiscal revenues
and expenses that the Plan Area will generate to the City of Cupertino General Fund upon
buildout, as well as one-time revenues generated during construction. General Fund revenues
and expenditures are the focus of the fiscal analysis because this is the major source of
discretionary spending for key city services, including public works, law enforcement, and
administrative services. The analysis evaluates the major revenue and cost elements, including
Transient Occupancy taxes, sales and use taxes, property taxes, utility user taxes, property
taxes in-lieu of motor vehicle fees, and public works and law enforcement costs. Projections are
static estimates based on both marginal estimating sources, such as assessed values and per
capita retail spending information, and on average revenue and cost factors derived from the
City’s adopted FY 2015-16 budget. Estimates are in 2015 dollars.
In addition to impacts on the General Fund, the analysis assesses the operating and facility
impacts of the Plan Area on local school districts based on an extrapolation of the school
enrollment generation, operating cost, and facility cost data contained in “Enrollment and Fiscal
Impact Analysis for the Hills at Vallco” (2016), prepared by Schoolhouse Services.
Both components of the fiscal analysis are presented in attached supporting tables A-1 through
A-20. City of Cupertino budget information is summarized in Tables A-21 and A-22. The key
assumptions of the analysis and methodologies used to calculate the revenue and expenditure
impacts are summarized below.
1. Common Assumptions

Plan Area Land Uses – Land use assumptions reflect the Land Use Summary presented
in the draft Environmental Analysis and are outlined in Table A-8 in the appendix. Given
that the Block 13 hotel project has been previously approved, the focus of the following
fiscal and economic impact analysis is the Town Center/Community Park and the Block
14 hotel use.

Baseline Condition: The impact analysis reflects the difference between the anticipated
fiscal impacts upon completion of the Plan Area and fiscal impacts under the baseline
condition. The baseline is derived from Plan Area data for the year 2014, when the
existing Mall is reported to have sustained an occupancy rate of 82%. Baseline
demographics are shown in Table A-10. Baseline assessed values are summarized in
Table A-11.
Page 35

Inflation of Revenue and Expenses – The analysis is a static analysis of existing
conditions and conditions upon build-out of the Plan Area. Revenues and expenses are
presented in 2015 dollars.

Continuity of Legal and Institutional Constraints – The cost and revenue experience
of the City of Cupertino is based on the adopted FY 2015-16 budget. The projections
assume that revenue sources will remain constant.

Rounding – In some cases the calculated summations presented in the analytical tables
do not precisely match the summations presented in the body of the report. These
differences are due to rounding.

Population – The State Department of Finance estimates the City of Cupertino’s 2015
population at 59,756. The population of Town Center/Community Park residents is
estimated based on the average Cupertino household size of 2.84 and vacancy rate of
4.7% for rental units per the U.S. Census 2010-2014 5-Year Estimates (Tables A-9 and
A-18). It is possible that the actual residential population may be less than the Census
estimate given that the majority of proposed residential units are studios and 1-bedroom
apartments.

Employment – U.S. Census 2013 Longitudinal-Employer Household Dynamics
Program puts the 2013 employment base in Cupertino at 33,133 jobs. Employment
densities by land use have been established for the Plan Area based on the experiences
of similar projects (Tables A-9 and A-18).

Resident Equivalents – The estimates of Franchise Fees, Utility User Taxes, Fines,
Forfeitures, and Other Fees and of most service costs use a modified per capita
measure known as “resident equivalents.” This approach combines residents and
employees to form a single service population. The resident equivalents approach
weights an employee as 0.33 of a resident, such that three employees are viewed as
having the same impact as one resident (Table A-9).
2. General Fund Revenue Assumptions

Sources of City Tax Revenue – The City revenue sources that have been evaluated
and included in the projection are as follows:
- on-going Transient Occupancy Tax revenues;
- on-going City property tax revenues;
- on-going City sales tax revenues;
- on-going City property taxes in-lieu of motor vehicle fees;
- on-going Utility User Tax, Franchise Fees, and Business License Tax revenues;
- on-going Fines, Forfeitures, and Other Fee revenues;
- on-going Gas Tax revenues;
- one-time City construction tax revenues; and
Page 36
-
one-time City use tax revenues.

Assessed Property Value – The FY 2014/15 baseline assessed secured and
unsecured value of the property is provided on Table A-11. The anticipated future
assessed secured value of the Plan Area has been provided by the Town
Center/Community Park applicant, while assumptions for unsecured values have been
established by KMA based on the experiences of similar projects. The impact analysis
reflects the difference between the projected and baseline assessed values.

City of Cupertino Property Tax Revenues – The City of Cupertino receives 5.80% of
the base 1% property tax levy on the property (Table A-2).

City of Cupertino Property Tax In-Lieu of Vehicle License Fees – Property Tax InLieu of Vehicle License Fees have been estimated in accordance with SB 1096, based
on data from the California State Controller’s Office and current and projected assessed
property values (Table A-2).

Direct City of Cupertino Sales Tax Revenues – The City of Cupertino receives 1% of
taxable sales. The sales volume estimates in this analysis rely on sales per square foot
factors presented in Table A-19. Factors are based on information provided by the Town
Center/Community Park applicant, the reported taxable sales volumes of retail
businesses at Santana Row, Valley Fair, and Stanford Shopping Center in 2014, and inhouse data on the sales volumes of entertainment, office and hotel uses. The analysis
reflects the difference between projected and baseline sales tax revenues (Table A-2).
Based on information from the City of Cupertino, sales at the existing Mall generated
approximately $976,000 of City sales tax revenue in 2014.

City of Cupertino Business License Taxes – Cupertino business taxes are levied at a
rate of $130 per year per business plus a factor of $0.004 to $.035 per square foot of
usable building area, depending on the size of the business. Multi-family residential
developments must pay $170 for the first four units and $12 per additional unit. Business
license taxes for the Plan Area are estimated by applying the City’s Municipal code to
the development program (Table A-19). The analysis measures the net increase in
business license taxes over the amount that is generated by the existing Mall (Table A15).

City of Cupertino Franchise Fees, Utility User Tax, and Fines/Forfeitures – The
incremental increase in these General Fund revenue sources is estimated based on an
extrapolation of the 2015 per resident equivalent amounts generated by the City’s
residents and employment base. Combined, these funds receive approximately $91.82
of revenue per resident equivalent (Tables A-2 and A-19).
Page 37

City of Cupertino Property Transfer Taxes – Besides the initial acquisition (see
Construction Impacts, below), no property transfer tax revenues are included under the
assumption that there will be no for-sale residential units and the current property
owners retain ownership of the Plan Area parcels for the foreseeable future (Table A19).

Gas Tax Fund – Gas Tax revenues are anticipated to be proportionate to projected FY
2015-16 revenues and the City’s current population (Tables A-2 and A-19).

City of Cupertino Transient Occupancy Tax (TOT) – TOT revenues are based on a
preliminary assessment of the average daily rate and stabilized occupancy to be
achieved by the 191-room hotel envisioned for Block 14 provided by HVS Global
Hospitality Services (HVS). According to HVS, the potential hotel would generate
approximately $107,000 in annual revenue per room, assuming an average daily rate of
$375 and stabilized occupancy of 78%. The TOT rate in Cupertino is 12%, resulting in
annual TOT revenues per room of approximately $12,800 (Tables A-2 and A-19).

Service Charges - Fee-for-service revenues, such as building permit revenues, are
excluded from the revenue analysis. They are instead subtracted from service costs.
3. General Fund Expenditure Assumptions

City Administration, Public Affairs, Recreation, Public Works and On-Going
Transfers Service Costs – Net service costs for City administration, recreation, public
works, and on-going transfers to service funds are estimated based on the City’s
adopted FY 2015-16 budget per resident equivalent or per resident. An adjustment
factor is applied to account for the portion of the City’s budget that increases with
additional population or employment. The remaining expenditures are assumed to be
fixed costs of operation that will not increase as a result of variations in development
(Table A-20).

Law Enforcement Costs – The City of Cupertino contracts with Santa Clara County for
law enforcement services. Due to their significant impacts, law enforcement costs are
often estimated by the departments or calculated based on call data for a community.
Since specific estimates are not initially available, these costs have been estimated
based on the law enforcement costs per resident equivalent used in the 2013 fiscal
impact study of the Apple Campus 2 in Cupertino, also prepared by KMA. The Apple
Campus study relies on an estimate provided by the Santa Clara County Sheriff’s office
that one deputy is required for every 10,000 new employees, at an average cost of
$282,276. Incorporating more specific cost estimates could alter the analysis results
(Table A-20).
Page 38

Infrastructure Maintenance Costs – The per resident equivalent cost estimate for
Public Works reflects maintenance costs for the City’s street and park infrastructure due
to additional wear and tear on existing facilities caused by incremental population and
employment. Costs related to the maintenance of new public infrastructure to be built in
support of Plan Area land uses have not been provided, and are not included in this
report. While most new infrastructure required in the Plan Area will be maintained by
private or other public entities, it is currently anticipated that the City would be
responsible for maintaining a new recycled water line and a new traffic signal at Wolfe
Street. Maintenance cost estimates for these items are not initially available but could
have an impact on the findings of this analysis (Table A-20).

Fire Protection Costs – Fire protection services are provided by the Santa Clara Fire
Department and funded through property tax revenue received directly by the
Department.
4. One-Time Construction Revenues

City of Cupertino Construction Use Tax Revenues – KMA estimated construction use
tax revenues based on development costs provided by the Town Center/Community
Park applicant, and typical relationships between “hard” and “soft” development costs
and material and labor costs. The revenue estimate reflects the assumption that
Cupertino is designated as the point of sale by the general and sub-contractors for 50%
of the materials purchased for the construction of the Plan Area (Table A-2 and Table A19).

City of Cupertino Construction Tax Revenues – In accordance with adopted
Ordinance #1224, Municipal Code Section 3.32.030, the City collects an excise tax for
any building in the City. Pursuant to the fee schedule adopted in September 2015, the
City collects $687.10 per residential unit, $2.97 per commercial square foot, and $231.31
per hotel room (Table A-2 and Table A-19).

Property Transfer Tax – The City receives $0.55 per every $1,000 of assessed value of
properties upon sale. KMA has estimated the property transfer taxes generated from the
initial acquisition of the parcels comprising the Plan Area. The secured 2015/2016
assessed values of $316 million and $30 million are used as the basis for calculating
one-time property transfer taxes from the initial sales of the Town Center and Block 14
properties, respectively (Table A-2 and Table A-19).
5. Indirect Fiscal Benefits

Indirect City of Cupertino Sales Tax Revenues – Tax revenues generated from retail
spending elsewhere in Cupertino by the Plan Area’s residents, employees, and hotel
visitors are treated as indirect revenues (Table A-2). Employee expenditures are
Page 39
estimated based on suburban worker spending at restaurants as reported in ICSC’s
“Office-Worker Retail Spending in a Digital Age.” Retail and building service employees
are assumed to spend in the same range as clerical office workers. Resident
expenditures are implied from the household incomes of Plan Area residents and
consumer expenditure data published by BLS (Tables A-17 and A-19). Hotel visitor
spending is based on county-level data from Dean Runyan Associates (Table A-19).
Expenditure estimates are reduced to account for non-taxable sales, expenditures that
occur outside Cupertino, as well as sales assumed to take place in the Plan Area
(Tables A-2 and A-19).
6. School Impacts

Fremont Union High School District Operating Impacts – The assessment of
additional students to be generated by the Plan Area and the impact on operating costs
to serve the additional students reflects an extrapolation of data contained in the
“Enrollment and Fiscal Impact Analysis for the Hills at Vallco” prepared by Schoolhouse
Services in February 2016 for the City of Cupertino. The Schoolhouse Report estimates
that each new residential unit will, on average, generate .06 new high school students.
The report also indicates that the district is a basic aide district and that its current
operating budget approximates $11,700 per student. In accordance with information
from the County Controller’s office, FUHSD receives 16.68% of the base 1% property
tax levy and .0525% of assessed valuation for debt service on existing bonds. In
addition, the Town Center Property Owner has volunteered to make in-lieu payments
equivalent to the FUHSD parcel tax of $98 per parcel for each non-senior residential unit
(Table A-5 and A-6).

Cupertino Union School District Operating Impacts – The assessment of additional
students to be generated by the Plan Area and the impact on operating costs to serve
the additional students reflects an extrapolation of data contained in the “Enrollment and
Fiscal Impact Analysis for the Hills at Vallco,” prepared by Schoolhouse Services in
February 2016 for the City of Cupertino. The Schoolhouse Report estimates that each
new residential unit will, on average, generate .19 new elementary school students and
.09 new middle-school students. The report also indicates that the district is a “revenue
limit”, which means that the school’s operating budget is not impacted by additional
property tax revenues generated within the district. This analysis reflects the assumption
that CUSD remains a “revenue limit” school district. It is possible, however, that property
tax revenues generated throughout the district will over time increase to a level such that
CUSD becomes a “basic aid” school district. As a point of information, if CUSD were
currently a “basic aid” district, then the amount of property tax that the district would
receive from the Plan Area would exceed the district’s current level of operating costs
associated with the Plan Area’s students, resulting in a net operating surplus. In
accordance with information from the County Controller’s office, CUSD receives .0519%
Page 40
of assessed valuation for debt service on existing bonds. In addition, the Town Center
Property Owner has volunteered to make in-lieu payments equivalent to the FUHSD
parcel tax of $250 per parcel for each non-senior residential unit (Table A-5 and A-7).
6
7

Fremont Union High School District Capital Facility Impacts – The assessment of
impacts on the need for additional capital facilities and the cost to build those facilities
reflects an extrapolation of data contained in the “Enrollment and Fiscal Impact Analysis
for the Hills at Vallco,” prepared by Schoolhouse Services in February 2016 for the City
of Cupertino. The Schoolhouse Report indicates that the district’s enrollment is projected
to exceed capacity over the next five years, and that the facility expansion cost per
student is $69,900. The Report also indicates that FUHSD receives 40% of school
facility impact fees pursuant to an agreement between FUHSD and CUSD. Pursuant to
FUHSD’s 2014/15 schedule of impact fees, fee credits can be provided for demolished
square footage. This analysis assumes that fees are applied to only net new square
footage. Given that there is currently 1,202,675 square feet of building area 6 in the Plan
Area, the impact fees are assumed to be levied on only the net new square footage of
commercial/office space and the total square footage of the new residential units. The
value of the “Innovation Center” and adult education center included in the Initiative is
based the net present value of the two 34-year charitable leases, estimated by the Town
Center Property Owner (Table A-5).

Cupertino Union School District Capital Facility Impacts – The assessment of
impacts on the need for additional capital facilities and the cost to build those facilities
reflects an extrapolation of data contained in the “Enrollment and Fiscal Impact Analysis
for the Hills at Vallco,” prepared by Schoolhouse Services in February 2016 for the City
of Cupertino. The Schoolhouse Report indicates that that the district’s current
elementary school enrollment exceeds capacity, and that the facility expansion cost per
elementary student is $28,780. Due to the recent expansion of Lawson Middle School,
the report indicates that the district is capable of accommodating middle school students
generated by the Town Center. The facility cost of $32,640 per middle school student
reflects the Plan Area’s share of the middle school expansion cost. The Report also
indicates that CUSD receives 60% of school facility impact fees pursuant to an
agreement between FUHSD and CUSD. This analysis assumes that fees are applied to
only net new square footage. Given that there is currently 1,202,675 square feet of
building area 7 in the Plan Area, the impact fees are assumed to be levied on only the net
new square footage of commercial/office space and the total square footage of the new
residential units as required by school district policy The developer’s extraordinary
contributions to school district facilities are based on information provided by the Town
Center Property Owner (Table A-5).
Building area excludes square footage of parking structures.
Building area excludes square footage of parking structures.
Page 41
B. Economic Impacts
The economic impact analysis includes an assessment of direct, indirect, and induced economic
impacts from the ongoing operations and the construction of the Plan Area. The analysis
evaluates the impact on the city of Cupertino and the County of Santa Clara. Direct impacts
include the number of net new office, retail, hotel and building service employees in the Plan
Area and their compensation. Indirect and induced impacts (multiplier effects) are generated by
on-site businesses and their expenditures on materials, parts, and services, as well as by
employee and resident expenditures. Indirect/induced jobs, employee compensation, and output
are evaluated using the IMPLAN economic analysis tool. All impacts reflect the difference
between anticipated future economic activity of the Plan Area build-out and baseline sales,
employment, and payroll.
The analysis of economic impacts is presented in attached supporting tables B-1 through B-12.
The key assumptions of the analysis and methodologies used to calculate economic impacts
are reviewed below.
1. Industry Classification
Estimates of economic impacts are derived from county-level economic data pertaining to
worker compensation, output per employee, and expenditure patterns specific to particular
industries. Given that the exact tenant mix of Plan Area land uses is still unknown, it is
necessary to establish a prototypical industry mix of tenants and contractors in order to apply
appropriate estimating factors:

Office Tenants Industry Classification: The industry composition of office tenants is
determined based on an analysis of shares of 2015 industry employment and 2012-2015
employment growth for selected office-using industries in Santa Clara County. Half of
direct office employment at the Plan Area is apportioned based on shares of existing
employment; the other half is assigned based on shares of recent growth (Table B-9 and
B-12).

Building Services Industry Classification: The industry composition of building
services contractors is apportioned to janitorial, maintenance and protective service
industries based on KMA’s experience with similar projects (Table B-12).

Retail Industry Classification: Retail categories have been selected by KMA to best
reflect the preliminary Town Center development program. Final demand for these
selected retailers is apportioned according to each category’s share of existing sales in
the County, as reported by the California BOE (Table B-9 and B-10).

Entertainment Industry Classification: The Town Center/Community Park plans to
retain special amenities and entertainment venues such as a multiplex movie theater, ice
Page 42
skating rink, bowling alley, and fitness center, the industry mix for entertainment uses is
assumed to be the same as the existing shopping center (Table B-9).

Restaurant Industry Classification: The increase in final demand generated by the
Plan Area is apportioned to limited service, full-service, and other food/beverage
establishments according to each category’s share of existing sales in the County, as
reported by the California BOE (Table B-9 and B-11).

Hotel Industry Classification: Final demand generated by hotel land uses is
apportioned to the corresponding hotel industry classification within the IMPLAN model
(Table B-9).

Construction Industry Classification: The increase in final demand generated by the
Plan Area’s construction is allocated to the residential construction, commercial
construction and professional services sectors in accordance with a preliminary
construction budget. Final demand for professional services is assigned to the
Architecture and Engineering sector (Table B-6 and B-9).
2. Direct Impacts

Direct On-going Employment – Direct employment reflects the incremental difference
between projected and baseline employment in the Plan Area site. Projected
employment is estimated based on KMA’s experience with similar mixed-use projects
(Table B-4). Baseline employment is assumed to be 1,109, consistent with the fiscal
impact analysis, which includes retail, restaurant and entertainment employees at the
existing shopping Mall (Table B-4).

Direct On-Going Employee Compensation – Direct employee compensation reflects
the difference between projected and baseline compensation in the Plan Area site. Both
current and anticipated employee compensation reflect 2015 averages for selected
retail, hotel and office-using industries, as derived from 2013 IMPLAN data for Santa
Clara County, adjusted to 2015 to account for inflation (Tables B-4 and B-5).

Direct On-Going Output – Direct output reflects the difference between projected and
baseline output in the Plan Area. For office tenants, the hotel and ancillary services,
anticipated direct output is calculated by applying typical ratios of output to jobs (derived
from 2013 IMPLAN data for Santa Clara County) to the projected number of employees
in the Plan Area. Output for retail, restaurants, and entertainment is estimated based on
the sales performance of similar projects including Santana Row, Stanford Shopping
Center, and Valley Fair Shopping Center. For retail stores, gross sales are converted to
gross margin—the method used by the BEA to report retail output—based on conversion
factors contained in the IMPLAN model (Tables B-4 and B-5).
Page 43

Direct Construction Output, Employment and Salaries – Direct output during
construction is equivalent to the hard cost construction budget (for construction
industries) and the non-construction soft cost budget (for professional services). Only a
portion of professional services contracts are assumed to be performed within the City
and County. Direct construction-period employment and compensation are estimated
based on ratios of output to jobs and compensation per job derived from 2013 IMPLAN
data for Santa Clara County (Tables B-6 and B-7).
3. Indirect and Induced Impacts
In addition to the employment and payroll generated directly by the operations of firms in the
Plan Area, the Plan Area will create indirect and induced jobs and employee compensation.
Indirect impacts result from company purchases of goods and services from other local
industries, and the local purchases of these industries in turn. Induced impacts are produced by
the consumer spending of employees and residents. The IMPLAN economic analysis tool is
used to quantify these impacts.

Indirect Impacts – Indirect impacts result from company purchases of goods and
services from other local industries, and the local purchases of these industries in turn,
until the local supply chain is exhausted. For each industry directly impacted by the Plan
Area, industry-specific multipliers derived from IMPLAN are applied to determine the
indirect employment, output, and wages of local firms in their supply chain. IMPLAN
multipliers differ for the City and County based on the likelihood that industry demand
will be met within each respective region.

Induced Impacts – IMPLAN multipliers are applied to direct and indirect employee
compensation, as well as the household incomes of residents of the Plan Area, to
determine the induced employment, output, and wages generated by household
expenditures. Household incomes of residents are estimated based on asking rents for
newly constructed apartments in Cupertino (Table A-15). Household incomes are then
adjusted to account for household expenditures that occur outside the City and the
County, as well as expenditures occurring at the Plan Area site, before applying IMPLAN
spending multipliers (Table B-8).

Static analysis: The economic impacts analysis is a static analysis that assumes
production and regional supply functions underlying economic multipliers remain
constant over time. Output and wages are presented in 2015 dollars.
4. IMPLAN Model Background
The IMPLAN model is an economic analysis software package commercially available through
the IMPLAN Group LLC. IMPLAN was originally developed by the U.S. Forest Service, the
Federal Emergency Management Agency, and the U.S. Department of the Interior Bureau of
Land Management. It has been in use since 1979 and refined over time. IMPLAN has become a
Page 44
widely-used tool for analyzing economic impacts of a broad range of applications, from major
construction projects to natural resource programs.
IMPLAN is based on an input-output accounting of commodity flows within an economy from
producers to intermediate and final consumers. The model establishes a matrix of supply chain
relationships between industries and also between households and the producers of household
goods and services. Assumptions about the portion of inputs or supplies for a given industry
likely to be met by local suppliers, and the portion supplied from outside the region or study
area, are derived internally within the model using data on the industrial structure of the region.
The output or result of the model is driven by tracking how changes in purchases for final use
(final demand) filter through the supply chain. Industries that produce goods and services for
final demand or consumption must purchase inputs from other producers, which in turn,
purchase goods and services. The model tracks these relationships through the economy to the
point where leakages from the region stop the cycle. This allows the user to identify how a
change in demand for one industry will affect over 500 other industry sectors within a given
geographic region. The projected response of an economy to a change in final demand can be
viewed in terms of economic output, employment, or employee compensation.
Data sets are available by state, by county and by zip code, so the model can be tailored to the
specific economic conditions of the region being analyzed. This analysis utilizes the zip code
data set for the City of Cupertino and the county data set for the County.
The jobs counted in the IMPLAN model cover all jobs, full and part time, similar to the U.S.
Census and reporting agencies. Employee compensation includes all employer costs for
employees, including non-wage benefits such as health insurance.
Page 45
VI. LIMITING CONDITIONS
1. The analysis contained in this document is based, in part, on data provided by third parties
and published data sources. While Keyser Marston Associates, Inc. (KMA) believes that the
sources consulted are reliable, we cannot guarantee their accuracy.
2. A projection of economic and fiscal impacts is inherently based on judgment. The
projections contained herein are based on the best information available at the time that this
document was prepared. Actual impacts are likely to vary from the estimates contained in
this report.
3. The analysis assumes that the economy will continue to grow at a moderate rate.
4. Revenue and expense projections are based on the best project-specific and fiscal data
available at this time as well as experience with comparable projects. Material changes to
costs, development program, or project performance may render the conclusions contained
herein invalid.
5. Revenue estimates are based on the assumption that sufficient market support exists for the
proposed uses and that the Plan Area will achieve industry standard productivity levels.
6. It is assumed that all applicable laws and governmental regulations in place as of the date of
this document will remain unchanged throughout the projection period. In the event that this
does not hold true, for example, if any tax rates change, the analysis would need to be
revised.
7. KMA is not liable for the accuracy of any abstracts, excerpts or summaries of this report that
are not prepared by KMA.
Page 46
VII. ADDENDUM: IMPACTS OF ADDITIONAL RESIDENTIAL DEVELOPMENT
The attached addendum provides an evaluation of the fiscal and economic impacts to be
generated by the Vallco Town Center Specific Plan Area, in the event the number of residential
units is increased through approval of a Conditional Use Permit. Because more units than 389
may be permitted under the General Plan and the City’s General Plan Environmental Impact
Report studied 800 units within the Vallco Shopping District Special Area, the Plan Area
Alternative is assumed to include up to 800 residential units, including 160 senior housing units. 8
The Alternative represents an increase of 411 residential units versus the base case.
Vallco District Specific Plan
Plan Area
Base Case
Residential Units
Market Rate Apartments
Senior Housing Units
Plan Area
Alternative
du
309
80
389
du
640
160
800
A. Fiscal Impacts
1. Direct Annual Fiscal Impacts to the City of Cupertino – $5.3 Million
Upon build-out, the Plan Area Alternative would annually generate approximately $7.0 million of
additional tax revenues to the City of Cupertino, relative to the existing condition. The largest
revenue components are transient occupancy taxes, sales taxes, and property taxes. The
annual cost of providing municipal services is estimated to be $1.7 million. While municipal
revenue and expenditure projections differ from the base case, the net fiscal impact of the Plan
Area alternative is estimated to be roughly equivalent, with a $5.3 million net fiscal surplus to the
City.
Direct Annual GF Revenues and Expenditures
Upon Buildout
General Fund Revenues
General Fund Expenditures
Annual General Fund Fiscal Surplus
Amount
$millions
$7.0
($1.7)
$5.3
8
The Vallco Town Center Specific Plan Initiative requires that the greater of 80 units or 20% of the Town
Center’s total residential units be senior apartments.
Page 47
2. Annual Indirect Tax Revenues to the City of Cupertino – $172,000
The Plan Area Alternative’s approximately 2,165 net new residents and 8,264 net new
employees, along with hotel visitors, would generate additional indirect sales tax through an
estimated $17.2 million in annual taxable purchase at businesses located elsewhere in
Cupertino. Through the off-site spending of residents, workers, and visitors, the Plan Area
Alternative is estimated to indirectly generate approximately $172,000 in additional annual sales
tax revenues to the City’s General Fund.
Indirect Annual GF Revenues Upon Buildout
Amount
% Total
$85,000
49.4%
$56,000
32.6%
$31,000
18.0%
$172,000
100.0%
Annual Indirect GF Revenues
3. “One Time” Construction-Related Revenues to the City of Cupertino – $15 Million
The City of Cupertino would receive approximately $15.0 million in one-time tax revenues from
the development and construction of the Plan Area Alternative. The use of these tax revenues is
not restricted and the taxes are in addition to building permit and impact fee revenues that
would also be generated by the Plan Area Alternative.
One-Time, Construction-Related GF Revenues
Amount
% of Total
$millions
Construction Tax
Property Transfer Tax (Land Acquisition)
$5.8
$9.0
$0.2
38%
60%
1%
$15.0
100%
4. FUHSD and CUSD Facility Impact Fees and Development Costs
The Plan Area Alternative is anticipated to add 38 students to FUHSD and 180 students to
CUSD. The cost to build facilities to accommodate these new students is estimated to be $2.6
million for FUHSD and $5.5 million for CUSD. 9 In comparison, the Plan Area Alternative would
generate approximately $1.5 million in building impact fee revenue to FUHSD and $2.2 million in
fee revenue to CUSD.
9
Based on the analysis, "Enrollment and Fiscal Impact Analysis for the Hills at Vallco," prepared by Schoolhouse
Services (February 2016).
Page 48
The Town Center is intended to create a net positive impact on the already world-class schools
in Cupertino. This will be achieved through a variety of uses and amenities that must represent
a total financial contribution of approximately $55 million, in addition to the payment of all legally
required development fees. Although amenities must be agreed to by the school districts,
amenities for FUHSD are expected to include building a new 10,000 square foot, turn-key High
School Innovation Center and a 5,000 square foot adult education center within the Town
Center. Examples of the extraordinary contributions to CUSD are still being developed, but may
include construction of a new 700 student elementary school at the former Nan Allen
Elementary School site, replacement of all portable classrooms at Collins Elementary School
with permanent classrooms, and improvement and expanded utilization of athletic and
recreation facilities at the Nan Allen/Collins Elementary School location, among other benefits.
These extraordinary benefits are estimated to off-set 100% of the capital impacts to be
generated by the Plan Area Alternative and create additional capacity for the districts that
exceeds the needs of the Plan Area Alternative. The construction of the 10,000 square foot
“Innovation Center” and 5,000 square foot adult education center would exceed the space
requirements of the 38 new high school students to be generated by the Plan Area Alternative
and result in a net capital facility surplus of approximately $30.8 million. After accounting for
extraordinary benefits to CUSD, the net capital facility surplus to the district would approximate
$19.7 million.
Capital Facility Revenues and Costs
FUHSD
CUSD
$millions
$millions
Value of Developer-Funded Capital Facilities
and Extraordinary Benefits
Facility Impact Fee Revenue (Approximate)
($2.6)
($5.5)
$32.0
$23.0
$1.5
$2.2
$30.8
$19.7
5. Annual Operating Impacts to FUHSD and CUSD
As a result of the projected increase in the student population, the Plan Area Alternative is
estimated to generate approximately $449,000 of additional operating expense to FUHSD. 10
The Plan Area Alternative would also generate approximately $3.6 million of additional property
tax revenue annually to FUHSD, equivalent to 4% of existing general purpose property tax
revenues received by the district. In addition, the Town Center Property Owner has volunteered
to make in-lieu payments equivalent to the FUHSD parcel tax for each non-senior residential
unit, estimated to be approximately $63,000 per year. Property tax revenues are therefore
estimated to exceed incremental operating costs by approximately $3.3 million per year.
10
Ibid.
Page 49
Unlike FUHSD, CUSD is a “revenue limit” school district, which means that its revenues and
budget are driven by the per student “revenue limit” established by the State of California rather
than the actual amount of property taxes generated within the district. Therefore, the Plan Area
will generate neither additional operating expense nor property tax revenue to CUSD. However,
as with FUHSD, the Town Center Property Owner has volunteered to pay the equivalent
applicable parcel tax for each non-senior residential unit, estimated to be approximately
$160,000 per year.
Annual Operating Impacts
FUHSD
CUSD
Additional Property Tax Revenue
Additional Operation Costs
Parcel Tax In-Lieu Payment
$3,642,000
($449,000)
$63,000
*
*
$160,000
Net Annual Operating Surplus
$3,256,000
$160,000
* CUSD is a "revenue limit" school district. As a "revenue limit" district, additional local property
tax revenues do not increase the total amount of revenues received by the school. Therefore,
the Plan Area Alternative impact is anticipated to be neutral. See text above.
The Plan Area Alternative would also generate property tax revenue dedicated to the repayment
of outstanding bonds issued by FUHSD and CUSD. The use of these additional tax revenues is
restricted to bond debt service, but would accelerate the repayment of the bonds. These
property tax revenues are estimated to amount to approximately $1.1 million to both FUHSD
and CUSD, representing between 5% and 6% and of the respective property taxes currently
collected for debt service in each district.
Additional Bond Debt Service Revenue*
Amount
$millions
Cupertino Unified School District (CUSD)
Fremont Unified High School District (FUHSD)
$1.13
$1.15
* These revenues are not available for operating expenses. See text above.
B. Economic Impacts
1.
Annual Recurring Economic Impacts Upon Build-Out – $2.8 Billion Countywide
Once operations have stabilized, the Plan Area Alternative is anticipated to directly generate an
additional 8,264 permanent, full-time equivalent jobs, approximately $1.1 billion in additional
annual employee compensation, and $1.8 billion in additional annual economic output above
current economic conditions. These direct economic impacts reflect the output, employment,
and salaries of retail and office tenants, building services contractors and the hotel within the
Plan Area Alternative.
Page 50
Indirect and induced impacts are generated from expenditures on goods and services by on-site
businesses, employees and residents. These expenditures cycle through the economy and
enhance economic activity throughout the City and the County at-large. The economic analysis
tool, IMPLAN, is used to estimate indirect and induced effects. In total, the Plan Area Alternative
is expected to add approximately 11,734 jobs to the City and 14,502 jobs to the County.
Approximately $2.3 billion in economic output would be generated by the Plan Area Alternative
for businesses in the City; including businesses throughout the County, approximately $2.8
billion would be generated.
Annual Economic Impacts
During Operations
Ongoing Jobs
Direct
On-Site
8,264
$1.1
$1.8
Total Impact
City
11,734
$1.3
$2.3
Total Impact
County
14,502
$1.5
$2.8
2. “One-Time” Economic Impacts During Construction Period – $3.8 Billion Countywide
The construction of the Plan Area Alternative would generate a tremendous number of highquality, high-wage construction and professional services jobs. Approximately 13,555 jobs
(expressed in job-years, or one year of one job) would be created over the development period.
Including indirect and induced impacts, the construction of the Plan Area Alternative would
generate approximately 17,432 jobs in the City and 20,811 jobs in the County. Development of
the Plan Area Alternative would support $1.5 billion of payroll expenditures in the City and $1.8
billion in the County.
One-Time Economic Impacts
During Construction
Direct
On-Site*
13,555
$1.3
$2.6
Total Impact
City
17,432
$1.5
$3.2
Total Impact
County
20,811
$1.8
$3.8
* Direct effects include direct jobs located at the project site or the City. Total county impact includes additional
direct professional services jobs performed outside Cupertino but within the County. See report text for details.
Page 51
VIII. ANALYTICAL TABLES
The analysis of fiscal impacts is presented in the attached supporting Tables A-1 through A-23.
The analysis of economic impacts is presented in Tables B-1 through B-12.
Fiscal Impacts
Table A-1
Table A-2
Table A-3
Table A-4
Table A-5
Table A-6
Table A-7
Table A-8
Table A-9
Table A-10
Table A-11
Table A-12
Table A-13
Table A-14
Table A-15
Table A-16
Table A-17
Table A-18
Table A-19
Table A-20
Table A-21
Table A-22
Table A-23
Estimated Annual Fiscal Impact on the City of Cupertino General Fund
Estimated Annual Incremental City Revenue by Plan Area
Estimated Annual City Revenue Generated by Baseline
Annual City of Cupertino Service Expenditures: Plan Area vs. Baseline
Operating and Bond Repayment Impacts on FUHSD
Operating and Bond Repayment Impacts on CUSD
Baseline Demographics
Baseline Assessed Values: Secured and Unsecured Rolls
Detail on Baseline Assessed Property Values: Secured Roll
Detail on Baseline Assessed Property Values: Unsecured Roll
Baseline Business License Tax Revenues
City of Cupertino General Fund Revenue Sources FY 2015/16
City of Cupertino General Fund Budget Expenditures FY 2015/16
53
55
58
59
60
61
62
64
65
66
67
68
69
70
71
72
73
74
75
80
82
84
85
Economic Impacts
Table B-1
Table B-2
Table B-3
Table B-4
Table B-5
Table B-6
Table B-7
Table B-8
Table B-9
Table B-10
Table B-11
Table B-12
Estimated Direct and Indirect Economic Impacts (City)
Estimated Direct and Indirect Economic Impacts (County)
Direct Economic Impact Assumptions (Operations)
Calculation of IMPLAN Industry Shares of Office Tenant Economic
Activity
88
90
92
94
96
97
98
99
100
102
103
104
Page 52
Table A-1
Summary of Estimated Annual Fiscal Impact on the City of Cupertino General Fund
Cupertino, CA
Summary of
Net Impact
Plan Area 1, 2
% Total
5/12/2016
Existing Condition
Plan Area 2
% Total
Gross Impact
Plan Area 2
% Total
Annual Direct General Fund Revenues 3
Sales and Use Tax
Property Taxes
Utility User Tax
Franchise Fees
Fines, Forfeitures and Other Fees
Gas Tax
$2,447,000
$2,002,000
$1,101,000
$625,000
$167,000
$151,000
$91,000
$32,000
$12,000
36.9%
30.2%
16.6%
9.4%
2.5%
2.3%
1.4%
0.5%
0.2%
$0
$976,000
$117,000
$66,000
$16,000
$14,000
$20,000
$3,000
$0
0.0%
80.5%
9.7%
5.4%
1.3%
1.2%
1.7%
0.2%
0.0%
$2,447,000
$2,978,000
$1,218,000
$691,000
$183,000
$165,000
$111,000
$35,000
$12,000
31.2%
38.0%
15.5%
8.8%
2.3%
2.1%
1.4%
0.4%
0.2%
Total Direct GF Revenues
$6,628,000
100.0%
$1,212,000
100.0%
$7,840,000
100.0%
$502,000
$326,000
$217,000
$171,000
$64,000
$33,000
$10,000
$6,000
$0
37.8%
24.5%
16.3%
12.9%
4.8%
2.5%
0.8%
0.5%
0.0%
$48,000
$31,000
$21,000
$16,000
$6,000
$3,000
$1,000
$1,000
$0
37.8%
24.4%
16.5%
12.6%
4.7%
2.4%
0.8%
0.8%
0.0%
$550,000
$357,000
$238,000
$187,000
$70,000
$36,000
$11,000
$7,000
$0
37.8%
24.5%
16.3%
12.8%
4.8%
2.5%
0.8%
0.5%
0.0%
Total GF Expenditures
$1,329,000
100.0%
$127,000
100.0%
$1,456,000
100.0%
Net Annual Direct GF Revenue
$5,299,000
Annual General Fund Expenditures 4
Public Works5
Law Enforcement
Transfers Out
Recreation Services
Administration
Councils and Commissions
Public Affairs
Community Development
Prepared by Keyser Marston Associates Inc.
$1,085,000
$6,384,000
05/12/2016
53
Table A-1
Summary of Estimated Annual Fiscal Impact on the City of Cupertino General Fund
Cupertino, CA
Summary of
Net Impact
Plan Area 1, 2
% Total
5/12/2016
Existing Condition
Plan Area 2
% Total
Gross Impact
Plan Area 2
% Total
Additional Annual Indirect
General Fund Revenues 3
Total Indirect GF Revenues
Net Annual Dir. and Indir. GF Rev.
$41,000
$56,000
$31,000
32.0%
43.8%
24.2%
$0
$4,000
$0
0.0%
100.0%
0.0%
$41,000
$60,000
$31,000
31.1%
45.5%
23.5%
$128,000
100.0%
$4,000
100.0%
$132,000
100.0%
$5,427,000
$1,089,000
$6,516,000
One-Time General Fund Revenues
from Construction 3
Use Tax/ Constr. Materials
Construction Tax
$5,752,000
$8,731,000
$190,000
39.2%
59.5%
1.3%
$0
$0
$0
0.0%
0.0%
0.0%
$5,752,000
$8,731,000
$190,000
39.2%
59.5%
1.3%
Total Construction Impacts
$14,673,000
100.0%
$0
0.0%
$14,673,000
100.0%
1
2
3
4
5
Figures rounded to thousands.
Revenues and expenditures net of impacts generated by existing facilities.
Excluding Block 13 (containing previously approved hotel project).
See Tables A-2, A-3 and A-19.
See Tables A-4 and A-20.
Excludes costs of maintaining new infrastructure, pending information from the applicant.
05/12/2016
54
Table A-2
Estimated Annual Incremental City Revenue Generated by Plan Area
Cupertino, CA
5/12/2016
Specific
Plan
Estimating Factor 1
Revenue Source
Measure
Net New Assessed Values 2
Net New Assessed Value ($1,000s)
Net New Residential Assessed Value ($1,000s)
Net New Commercial Assessed Value ($1,000s)
$1,899,223
$268,410
$1,630,813
Development Program 3
Commercial Square Feet
Retail & Restaurants
Entertainment
Fitness
Office
Hotel Rooms
Residential Units
2,835,000
460,000
180,000
40,000
2,000,000
191
389
Project Demographics 4
New New Resident Equivalents
Net New Residents
Households
Net New Workers
Office Workers
All Other
3,808
1,053
371
8,264
7,360
904
Construction Costs 1
Construction Budget- Hard Costs ($1,000s)
Materials (60% of hard costs) ($1,000s)
$1,917,300
$1,150,380
$345,069,400
AV at Sale (FY15/16)
General Fund
Property Taxes
Residential
Commercial
Sales and Use Tax
Retail/Restaurant Taxable Sales
Entertainment Taxable Sales
Fitness Taxable Sales
Office Taxable Sales
Hotel Taxable Sales
5.80% share of
$0.33 /$1,000 AV
1% prop. tax
$1,100,785
$625,101
$0.55 /$1,000 AV
$0.55 /$1,000 AV
0% per year
0% per year
$0
$0
$0
$460
$30
$20
$40
$6,000
per sf
per sf
per sf
per sf
per rm
1.00%
1.00%
1.00%
1.00%
1.00%
Total Sales Tax Revenues
Less (Existing Vallco Sales Tax)5
sales tax
sales tax
sales tax
sales tax
sales tax
$2,116,000
$54,000
$8,000
$800,000
$11,460
$2,978,000
($975,585)
$2,002,415
05/12/2016
55
Table A-2
Cupertino, CA
Specific
Plan
Estimating Factor 1
Revenue Source
Base Tax
Retail/Rest.
Entertainment
Fitness
Office
Residential
Hotel
5/12/2016
3,800
60,000
40,000
10,900
389
191
Per sf/du fee
Retail Store/Restaurant
Entertainment
Fitness
Office
Residential
Hotel
15%
15%
15%
15%
sf per bus
sf per bus
sf per bus
sf per bus
rms/project
rms per bus
circulation
circulation
circulation
circulation
$130
$130
$130
$130
$170
$75
$0.032
$0.026
$0.026
$0.028
$11.85
$5.00
per bus
per bus
per bus
per bus
first 4 units
per bus
$15,737
$390
$130
$23,853
$170
$75
$40,355
per usable sf
per usable sf
per usable sf
per usable sf
per add'l du
per rm
$12,590
$4,039
$898
$47,702
$4,562
$955
$70,746
Total Business License Tax
$111,101
Less (Estimated Existing Business License Tax)6
Franchise Fees
Utility User Tax
Fines, Forfeitures, and Other Fees7
Gas Tax
($20,000)
$91,101
$39.55 per res eq
$43.79 per res eq
$8.49 per res eq
$11.71 per res
12% tax
$106,763 rev/ rm
Net Annual Recurring Direct General Fund Revenue
$150,598
$166,734
$32,322
$12,335
$2,446,997
$6,628,388
Indirect Revenue
Sales Tax - Indirect Spending
Non-Project Spending by Residents/Workers/Visitors
Residents
$11,149 per hh
Retail/Building Services Workers
$332 per emp
Office Workers
$733 per emp
Hotel Visitors
$16,320 per rm
Net Annual Recurring Indirect General Fund Revenue
Indirect and Direct Annual Recurring General Fund Revenue
05/12/2016
1.00%
1.00%
1.00%
1.00%
sales tax
sales tax
sales tax
sales tax
$41,339
$3,002
$53,933
$31,171
$129,446
$6,757,834
56
Table A-2
Cupertino, CA
Specific
Plan
Estimating Factor 1
Revenue Source
5/12/2016
One-time General Fund Revenue from Construction
Use Tax/ Constr. Materials8
50% of materials
1.00% tax
Construction Tax
Residential
Commercial
Hotel
$687.10 per du
$2.97 per sf
$231.31 per rm
$0.55 /$1,000 AV at sale
Total One-Time Impacts from Construction
1
2
3
4
5
See Table A-19.
See Table A-11.
See Table A-8.
See Table A-9.
Source: City of Cupertino.
$5,751,901
$267,282
$8,419,950
$44,180
$8,731,412
$189,788
$14,673,101
6
7
8
Table A-15.
Includes Fines & Forfeitures and Animal
License Fees.
Use tax revenues from Block 14 included under
Town Cntr.
05/12/2016
57
Table A-3
Estimated Annual "Baseline" City Revenue Generated by Plan Area Properties
Cupertino, CA
Existing
Condition
Estimating Factor 1
Revenue Source
5/12/2016
Measure
Existing Assessed Value ($1,000s)
2
$201,677
Development Program 3
Commercial Square Feet
Retail & Restaurants
Entertainment
898,000
690,000
208,000
Project Demographics 4
Resident Equivalents
Existing Workers
366
1,109
General Fund
Property Taxes
Existing Sales and Use Tax5
Business License Tax6
Franchise Fees
Utility User Tax
Fines, Forfeitures, and Other Fees7
5.80% share of
$0.33 /$1,000 AV
1% prop. tax
$39.55 per res eq
$43.79 per res eq
$8.49 per res eq
Net Annual Recurring General Fund Revenue
$116,891
$66,379
$975,585
$20,000
$14,473
$16,024
$3,106
$1,212,459
Indirect Revenue
Sales Tax - Indirect Spending
$332 per emp
1.00% sales tax
Indirect and Direct Annual Recurring General Fund Revenue
1
2
3
4
See Table A-19.
See Table A-11.
See Table A-8.
See Table A-9.
5
6
7
$3,683
$1,216,142
City of Cupertino.
Table A-15.
Includes Fines & Forfeitures and Animal
License Fees.
05/12/2016
58
Table A-4
Annual Incremental City of Cupertino Service Expenditures Generated by Plan Area
In Comparison With Service Costs of Existing Vallco Mall
Cupertino, CA
5/12/2016
Specific
Plan
net new
1,053
8,264
3,808
3,808
General Fund
net new/existing residents 1
net new/existing employees 1
net new/existing resident equivs 1
adjusted resident equivs
Estimating Factors
2015
Council and Commissions
Existing
Vallco Mall
existing
0
1,109
366
366
2
$2.61 /res eq
$9,940
$955
Administration
$16.66 /res eq
$63,446
$6,097
Law Enforcement
$85.54 /res eq
$325,729
$31,304
Public Affairs
$1.49 /res eq
$5,660
$544
$8.80 /res eq
$33,517
$3,221
$44.95 /res eq
$171,175
$16,451
$0.00 /res eq
$0
$0
Public Works 3
$131.81 /res eq
$501,921
$48,237
Transfers Out
$56.95 /res eq
$216,883
$20,843
$1,328,271
$127,653
Recreation Services
Total General Fund Expenditures
1
2
3
See Table A-9.
See Table A-20.
Excludes costs of maintaining new infrastructure.
05/12/2016
59
Table A-5
Cupertino, CA
5/12/2016
Impact Fee Revenue
Residential
Units
SF
Impact Fees
1,000 sf/du
1
$3.36 /sf
389
389,000
$1,307,040
Non-Residential
Gross SF
Less Existing GBA
Net New GBA
Impact Fees
1
$0.54 /sf
2,835,000
(1,202,675)
1,632,325
$881,456
Lodging
Net New GBA
Impact Fees
Total Impact Fees (Plan Area)2
Share to CUSD
Share to FUHSD
1
$0.46 /sf
60%
40%
1
1
133,700
$61,502
$2,249,998
$1,349,999
$899,999
Capital Facility Development Costs
CUSD
Elementary Students
Middle School Students
Elementary Facility Costs
Middle Schl. Faciity Costs
Total, CUSD
3
0.19 students/unit
3
0.09 students/unit
4
$29,780 /student
4
$32,640 /student
59
28
$1,757,020
$913,920
$2,670,940
High School Students
Facility Costs, FUHSD
Total School Facility Costs
3
0.06 students/unit
5
$69,600 /student
19
$1,322,400
$3,993,340
FUHSD
Developer-Funded Facilities
CUSD
estimated developer contribution6
FUHSD
estimated developer contribution6
05/12/2016
$23,000,000
$31,966,000
60
Table A-5
Cupertino, CA
5/12/2016
Page 2 of 2
School Impact Fee Revenue Versus Facility Development Costs
CUSD
Impact Fee Revenues
School Facility Development Costs
Deficit
$1,350,000
$23,000,000
($2,671,000)
$21,679,000
FUHSD
Impact Fee Revenues
School Facility Development Costs
Deficit
$900,000
$31,966,000
($1,322,000)
$31,544,000
1
Source: "Enrollment and Fiscal Impact Analysis for the Hills at Vallco." February 2016. Prepared by
Schoolhouse Services.
2 'Excluding Block 13 (containing previously approved hotel project).
3
Source: "Enrollment and Fiscal Impact Analysis for the Hills at Vallco." February 2016. Prepared by
Schoolhouse Services.
Grades K - 5: .19 students per non-senior unit;
Grades 6 - 8: .09 students per non-senior unit;
Grades 9 - 12: .06 students per non-senior unit.
4
Ibid. CUSD costs reflect facility costs of $408 per square foot and space requirements of 80 square
feet for middle school students and 73 square feet per student for elementary school students.
5
Ibid. CUSD costs reflect facility costs of $733 per square foot and space requirements of 95 square
feet for high school students.
6
Estimated provided by project sponsor based on construction cost or leasehold value of school
facilities funded by project.
7 Vallco Town Center Specific Plan Preliminary Administrative Draft, January 2016.
8
'Source: "School Enrolllment and Fiscal Impact Analysis, General Plan Alternatives." June 2014.
Prepared by Schoolhouse Services.
05/12/2016
61
Table A-6
Operating and Bond Repayment Impacts on Fremont Union High School District
Cupertino, CA
Additional Annual Operating Revenues
Property Taxes
Additional AV ($000)1
Town Center/Community Park
Block 14
Additional FUHSD Property Taxes
Other Revenue
Parcel Tax In-Lieu2
Additional Annual Operating Expenses
Additional Students
Operating Costs Per Student3
Additional Operating Expense
$1,830,983
$68,240
$1,899,223
16.68% share of
$98 /parcel
1% prop. tax
309 units
19
$11,700
$216,918
1
$3,168,500
$30,300
$216,900
Net Annual FUHSD Operating Surplus
General Obligation Bonds Tax Levy
1998 bond
2008 bond
2014 bond
Additional Bond Debt Service Rev.4
5/12/2016
$2,981,900
Tax Rate
0.0165% of incremental AV
0.0525%
Revenue
$313,000
$285,000
$399,000
$997,000
$997,000
Table A-11.
2
3
4
The developer has committed to pay the district parcel tax for market rate apartments as though they were individual parcels.
Source: "Enrollment and Fiscal Impact Analysis for the Hills at Vallco." February 2016. Prepared by Schoolhouse Services.
The tax revenue must be used to pay debt service on the outstanding bonds or accelerate the repayment of the bonds.
These revenues are not available for operating expenses.
05/12/2016
62
Table A-7
Operating and Bond Repayment Impacts on Cupertino Union School District
Cupertino, CA
5/12/2016
Additional Annual Operating Revenues
1
Property Taxes
Other Revenue
2
Parcel Tax In-Lieu
$0
$250 /parcel
309 units
$77,300
Additional Annual Operating Expenses1
$0
Net Annual CUSD Operating Surplus
General Obligation Bonds Tax Levy
1995 Bond
2001 Bond
2012 Bond
Additional Bond Debt Service Rev.3
$77,300
Tax Rate
0.0519%
$266,000
$232,000
$488,000
$986,000
$986,000
1
CUSD is a "revenue limit" school district. A revenue limit school district is a district whose local property tax revenues are less than
the state calculated "revenue limit" amount and the state back-fills the difference. At this point in time, local property taxes provide
approximately 55% of the district's operating budget and the State funds 12% of the operating budget. The district's revenue limit is
currently approximately $8,167 per student. As a "revenue limit" district, additional local property tax revenues do not increase the
total amount of revenues received by the school. The school will continue to receive a per capita "revenue limit" amount that is
annually set by the state. Therefore the additional property tax revenues generated by the Specific Plan will not have an impact on
the district's total operating budget.
2
The developer has committed to pay the district parcel tax for market rate apartments as though they were individual parcels.
3
The tax revenue must be used to pay debt service on the outstanding bonds or accelerate the repayment of the bonds. These
revenues are not available for operating expenses.
05/12/2016
63
Table A-8
Cupertino, CA
5/12/2016
Town Center/
Comm. Park
Land Use
Residential Units
avg unit size
Block 13
(Excluded)1
Num. Units
Block 14
Num. Units
Num. Units
389
0
0
Sq. Ft.
Sq. Ft.
Sq. Ft.
180,000
150,000
270,000
40,000
640,000
0
0
0
0
0
0
0
0
0
0
2,000,000
0
0
75,000
0
0
120,000
0
309
80
Market
Senior
1,000
Total Units
Commercial, Civic, Support Sq. Ft.
Retail, Entertainment and Services
Entertainment
Restaurants
Shops
Fitness
Office
Civic/ Community Benefit
1
Facility Management
Total Commercial, Civic, and Support
Hotel Rooms
2,835,000
0
0
Num. Rooms
Num. Rooms
Num. Rooms
0
0
148
0
0
191
Hyatt House Hotel (Approved)
Full Service Hotel (Potential)
Total Rooms
Public Amentities
0
148
191
Acres
Acres
Acres
30
0
0
3
0
0
33
0
0
Spaces
Spaces
Spaces
9,060
156
TBD
Community Park and Nature Reserve
Town Center Squares
Total Public Amenities
Parking
Site Acres
Dwelling Units per Acre
Residential Bldg. Height
Office Bldg. Height
Hotel Building Height
0
51
35.00
4-7 stories over retail
Up to 6 stories
n/a
2.12
n/a
n/a
n/a
5 stories
5.16
n/a
n/a
n/a
TBD
Source: Vallco Town Center Specific Plan Environmental Assessment, April 2016.
1
May range from 50,000 to 100,000.
05/12/2016
64
Table A-9
Cupertino, CA
5/12/2016
Town Center/
Comm. Park
Demographic Measure
Block 14
Residential Population
Rental Apartments
2.84 per HH
1
1
1,053
0
1,053
0
vacant2
vacant2
vacant2
vacant2
180
40
690
710
1,620
(1,109)
511
0
0
0
0
0
0
0
2
8% vacant
7,360
250
7,610
0
0
0
0
143
8,121
143
1,053
2,707
0
48
3,760
48
59
28
19
105
0
0
0
0
371
0
4.7% vacant
Net New Employment
Retail
Entertainment
Fitness
Restaurants
Shops
1,000
1,000
200
350
sf / empl 2
sf / empl 2
sf / empl 2
sf / empl 2
0%
0%
8%
8%
Less (Existing Employment)3
Net New Retail Employment
Office
Office Tenants
Building Services
2
250 sf / empl
2
8,000 sf / empl
2
0.75 emp/room
Hotel
Net New Resident Equivalents
Residents
Employees
Net New Students
Elementary, K-5
Middle, 6-8
High School
Total
Net New Households
1.00 per resident
0.33 per empl
0.19
0.09
0.06
0.34
4
per unit
per unit 4
per unit 4
per unit 4
1,053 HHs
Units 4
309
309
309
309
2.84 per HH
1
1
Selected Housing Characteristics for Cupertino (Rental Units). U.S. Census 2010-2014 American Community Survey 5Year Estimates.
2
KMA estimate based on past experience.
Table A-10.
"School Enrollment and Fiscal Impact Analysis, General Plan Alternatives", February 2016. Prepared by Schoolhouse
Services. Factors apply to non-senior apartment units.
3
4
05/12/2016
65
Table A-10
Existing Employment at Vallco Mall
Cupertino, CA
5/12/2016
Vallco
Mall
Existing Demographics
I. Existing Retail Employment (Base for Per Capita Revenue Estimates)
1
208,000 sf
5
0% vacant
6
1,000 sf / empl
208
2
80,000 sf
5
23% vacant
6
200 sf / empl
306
Department Stores
3
496,000 sf
5
23% vacant
7
1,100 sf / empl
345
In-Line Shops
2
114,000 sf
5
23% vacant
6
350 sf / empl
249
Total Retail SF
4
898,000 sf
18% vacant
Entertainment/Fitness
Restaurants
1,109
II. Existing Resident Equivalents
1
2
3
4
5
6
7
1,109 emp
0.33 per empl
366
Based on square footage of movie theater, gym, ice rink, and bowling alley.
KMA assumption based on total size of project.
Square footage of Macy's, JC Penney, and Sears.
Santa Clara County property assessor data, excluding parking. Table A-13.
Entertainment/fitness uses assumed to be fully occupied. Remaining occupancy rates adjusted to reflect
average occupancy rate of 82% reported for 2009-2014.
KMA estimate of employment density based on past experience.
Based on employment density of Macy's and Sears at time of closure as reported in state layoff notices.
Adjusted upward by 20% to account for employees not reflected in layoff notice.
05/12/2016
66
Table A-11
Estimated Net New Assessed Value
Cupertino, CA
5/12/2016
Town Center/
Comm. Park
Secured Values
Residential
Rental apartments
Non-Residential
Retail, Entertainment, Svcs.
unit value, inc. land
$690,000 /du
1
$268,410,000
$0
$268,410,000
$0
$390,400,000
$0
$610 psf
$1,220,000,000
$0
$360,000 /rm
$0
$68,760,000
$1,610,400,000
$68,760,000
$1,878,810,000
($157,742,000)
$68,760,000
($6,250,247)
con. costs + land
$610 psf
Office
Hotel
Block 14
Total Secured Assessed Value
Less (Existing AV) 2
Net New Secured Assessed Value
1
$1,721,068,000
$62,509,753
Unsecured Values
Retail/Entertainment, Fitness
unsecured AV
$100 psf 3
$22,000,000
$0
$8,100,000
$0
Retail/Stores
$30 psf
3
Retail/Restaurants
$50 psf
3
$7,500,000
$0
Office
$55 psf
4
$110,000,000
$0
$30,000 /rm
4
$0
$5,730,000
Hotel
Total Unsecured Roll
Less (Existing AV) 2
$147,600,000
($37,684,518)
$5,730,000
$0
Net New Unsecured Assessed Value
$109,915,482
$5,730,000
Total Assssed Value
$2,026,410,000
$74,490,000
Residential
Commercial
$1,830,983,482
$268,410,000
$1,562,573,482
$68,239,753
$0
$68,239,753
Total Assessed Value
1
Valuation estimates reflect the assumption that the assessed value is based on the sum of land and hard
construction costs. Town Center property estimates provided by Sand Hill Property Co. Block 14 estimates
based on assessor records and Marshall and Swift construction costs for a full-service hotel.
2
3
Table A-12.
Based on lower range of unsecured asssed values of selected tables at existing Vallco Mall. See table A14.
4
Lower range of KMA's review of unsecured assessed values at nearby projects in Silicon Valley.
05/12/2016
67
Table A-12
Baseline Assessed Secured and Unsecured Property Values
Cupertino, CA
5/12/2016
Existing Facilities
FY 2014-2015
APN
1
Owner/Use
I. Town Center/Community Park Project
316-20-080
Sears Roebuck And Co
316-20-081
316-20-082
316-20-094
JC Penney Properties Inc
316-20-095
316-20-099
Vallco Shopping Mall LLC
316-20-100
316-20-101
316-20-103
(Lease Parcel Only) AMC
316-20-104
316-20-105
316-20-106
316-20-107
Total, Town Center/Comm. Park
II. Block 14
316-20-088
Wolfe Properties LLC
III. Block 13 (Excluded)4
316-20-092
Cupertino Property Devel. LLC
IV. Total Baseline (Included)
Secured
Taxable Value2
Unsecured
Taxable Value3
Combined
Taxable Value
$29,071,525
$16,557,577
$1,284,910
$14,451,745
$6,215,185
$3,151,816
$18,260,478
$10,684,900
$17,903,198
$3,184,565
$6,918,162
$7,397,697
$22,660,199
$157,741,957
$17,278,899
$10,250
$1,270,699
$37,684,518
$46,350,424
$16,557,577
$1,291,764
$17,711,077
$6,215,185
$3,482,889
$28,585,350
$15,744,180
$17,903,198
$3,327,824
$6,918,162
$7,407,947
$23,930,898
$195,426,475
$6,250,247
$0
$6,250,247
$6,429,042
$0
$6,429,042
$163,992,204
$37,684,518
$201,676,722
$6,854
$3,259,332
$331,073
$10,324,872
$5,059,280
$143,259
Source: RealQuest, County Assessor Office
1
APNs and acreages reflect current data from the County Assessor's office and reflect the property for purposes of calculating
assessed value.
2
See Table A-13 for detail.
3
Includes retail tenants. In certain cases, the designated APN does not reflect the exact location of retail tenants within the
project. For example, the situs of unsecured property owned by AMC is assigned to APN 316-20-100.
4 Block 13 (containing previously approved hotel project) excluded from fiscal impact anlaysis.
05/12/2016
68
Table A-13
Detail on Baseline Assessed Secured Property Values
Cupertino, CA
5/12/2016
Existing Facilities
FY 2014/15
APN1
Owner/Use
I. Town Center/ Community Park Project
316-20-080
316-20-081
316-20-082
316-20-094
316-20-095
316-20-099
316-20-100
316-20-101
316-20-103
(Lease Parcel Only) AMC
316-20-104
316-20-105
316-20-106
316-20-107
Total, Town Center/Comm. Park
Net Parking 2
II. Block 14
316-20-088
Wolfe Properties LLC
III. Block 13 (Excluded)3
316-20-092
Cupertino Property Devel. LLC
Land SF
Building SF
540,580
190,793
0
434,293
118,048
39,204
146,797
199,529
0
47,045
29,621
140,699
287,383
2,173,992
49.9
264,629
95,613
15,556
202,360
0
10,330
88,869
176,962
81,065
8,960
49,553
0
208,778
1,202,675
Acres
1,437,069
898,284
224,770
0
$6,250,247
92,347
0
$6,429,042
IV. Total Baseline (Included)
Land
$2,456,116
$9,572,021
$147,820
$3,698,818
$6,215,185
$2,064,076
$7,724,230
$843,297
$1,419,644
$2,476,954
$1,552,637
$7,397,697
$14,184,238
$59,752,733
Secured Tax Value
Improvement
Total
$24,443,590
$6,985,556
$1,137,090
$10,752,927
$0
$1,087,740
$10,536,248
$9,841,603
$16,483,554
$707,611
$5,365,525
$0
$8,475,961
$95,817,405
Taxable
$26,899,706
$16,557,577
$1,284,910
$14,451,745
$6,215,185
$3,151,816
$18,260,478
$10,684,900
$17,903,198
$3,184,565
$6,918,162
$7,397,697
$22,660,199
$155,570,138
$29,071,525
$16,557,577
$1,284,910
$14,451,745
$6,215,185
$3,151,816
$18,260,478
$10,684,900
$17,903,198
$3,184,565
$6,918,162
$7,397,697
$22,660,199
$157,741,957
0
$6,250,247
$6,250,247
0
$6,429,042
$6,429,042
$161,820,385
$163,992,204
$95,817,405
Source: RealQuest
1
APNs and acreages reflect current data from the County Assessor's office and reflect the property for purposes of calculating assessed value. The acreages do not coincide
precisely with the site area that the City will be using for purposes of calculating density. The City's calculation of site acreage is 51.424 acres, which includes portions of the
perimeter road.
2
Excluding parking garage structures totaling 471,281 square feet.
3 Block 13 (containing previously approved hotel project) excluded from fiscal impact analysis.
05/12/2016
69
Table A-14
Detail on Existing Assessed Unsecured Property Values
Cupertino, CA
5/12/2016
Existing Facilities
FY 14/15 and 15/16
Sample
Size
Estimated
Sq Ft
Unsecured Values
FY 15/16
FY 14/15
Unsecured Values PSF
FY 15/16
FY 14/15
Select Retail Tenants1
Entertainment
Retail Stores
In-line retail 2
Department Store
Restaurant
Total Sample
Total Existing Project 3
4
7
4
3
8
208,000
506,898
11,350
495,548
65,297
$20,039,224
$6,428,592
$409,202
$6,019,390
$5,099,250
$21,879,430
$7,210,214
$385,427
$6,824,787
$5,584,832
$96
$13
$36
$12
$78
$105
$14
$34
$14
$86
26
780,195
$31,567,066
$34,674,476
$40
$44
1,202,675
$32,666,586
$37,684,518
$27
$31
Source: County Assessor Office, news reports, retailer websites.
1
KMA categorized a sample of contributors to unsecured AV and relied on news reports and retailer websites to determine their
square footage.
2
In-line retailer category includes four formula retailers. Square footage based on average store sizes.
3
Reflects gross building area area (inclusive of parking) and all unsecured assessed values, as reported in table A-12.
05/12/2016
70
Table A-15
Estimated Business License Tax Revenues Generated by Existing Facilities
Cupertino, CA
5/12/2016
Tenants of Existing Facilities
Entertainment/
Department
Other Retail/
Fitness
Stores
Restaurants
Measure
Number of Businesses1
Total Sq Ft2
2015 Occupancy (Estimated) 3
Number of Businesses Adjusted4
Occupied Sq Ft
Circulation Factor 5
Net Occupied Sq Ft
Per Active Business4
4
208,000
100%
4
208,000
15%
176,800
44,000
4
496,000
77%
3
379,807
15%
322,836
105,000
47
194,000
77%
36
148,553
15%
126,270
4,000
$130
$0.026
$130
$0.017
$130
$0.035
$520
$4,668
$5,188
$398
$5,644
$6,042
$4,679
$4,415
$9,094
Fee Rates 6
Base Fee Per Business
Add'l Fee Per Usable Sq Ft
Estimated License Fees
Business Fee
PSF Fee
Estimated Existing Business License Tax Contribution
$20,000
Source: County Assessor Office, Vallco Shopping Center website, Cupertino Municipal Code
1
Reported on Vallco Shopping Center website.
2
Based on reported square feet for entertainment and department store uses. Remaining retail/restaurant
uses implied from total existing square footage. (See Table A-10.)
3
Entertainment uses assumed to be fully occupied. Remaining occupancy rates adjusted to reflect average
occupancy rate of 82% reported for 2009-2014.
4
Assumes reduction in occupancy results in a proportional reduction in number of businesses.
KMA assumption. Business tax applied to usable building area.
6
Chapter 5.04 of Cupertino Municipal Code. See Table A-19.
5
05/12/2016
71
Table A-16
Cupertino, CA
5/12/2016
FY 2015/2016
Jursidiction
Santa Clara County
City of Cupertino
Cupertino Union Elementatry
Fremont Union High
County School Service
Midpeninsula Regional Open Space District
Santa Clara Valley Water District North Central Zone
Bay Area Air Quality Management District
Santa Clara County Importation Water-Misc. District
Santa Clara Valley Water District West Zone 4
Total
Pre ERAF and TEA
Allocation Factor
Post ERAF and
TEA Allocation
Factor
0.23950633
0.04304213
0.02236005
0.24703511
0.16683011
0.06368559
0.03107356
0.15091263
0.01556970
0.00966858
0.00178511
0.00184979
0.00531209
0.00136921
1.00000000
0.13667897
0.02562499
0.05795973
0.24703511
0.16683011
0.06368559
0.03107356
0.15208881
0.01556970
0.00906782
0.00164091
0.00184979
0.00488819
0.00125999
0.91525328
Source: Santa Clara County Controller-Treasurer
05/12/2016
72
Table A-17
Cupertino, CA
5/12/2016
Housing Expenditure Factor
Housing Units
Market Rate
BMR
Senior Housing
Weighted Average
Units 1
309
0
80
Avg. Rent 2
$
3,500
$
2,000
$
1,600
389
HH Income
$
140,000
$
80,650
$
63,650
$
3
4
5
124,300
Source: Project Description and HCD 2015 State Income Limits for Santa Clara County.
1
2
3
4
5
Unit mix indicated in Notice of Preparation of a Draft Environmental Impact report.
Market rents based on review of asking rents for 2-br apartments in Cupertino. BMR and senior housing
rents implied at 30% of HH income.
Assumes 30% of income spent on housing.
Average of State-Determined income limits for 3- and 4-person HHs in Santa Clara County.
Average of State-Determined income limits for 1- and 2-person HHs in Santa Clara County.
05/12/2016
73
Table A-18
Cupertino, CA
Demographic Measure
Population 1
Employment 2
Day and Nighttime Population 3
5/12/2016
0.33 per employee
2015
59,756
33,133
92,889
70,800
1
E-1 Population Estimates for Cities, Counties, and the State — January 1, 2015
2
U.S. Census Bureau. 2015. OnTheMap Application. Longitudinal-Employer
Household Dynamics Program. 2013 data extrapolated to 2015 using average
ann. growth rate for 2002-2013.
Total population plus total employment.
3
05/12/2016
74
Table A-19
Cupertino, CA
5/12/2016
Direct General Fund Revenues
Property Tax
Sales Tax
I. Retail/Restaurant Space
1
1.00% property tax assessment
2
5.80% City share of property tax allocation post-ERAF
3, 4
$3,135,617 property tax based revenues 2004-05
3, 4
$9,526,841,379 2004-05 gross AV
$0.33 per $1,000 in AV growth
5
1.00% of taxable sales
6
$500 taxable sales PSF
7
8% vacancy
$460 net taxable sales PSF
II. Entertainment Retail
8
7
0% vacancy
III. Office Space
9
IV. Fitness
10
7
0% vacancy
V. Hotel
VI. Existing Sales Tax Revenue
11
$6,000 taxable sales per room
12
$975,585 Existing Taxable Sales at Vallco Mall
Utility Users Tax
13
$3,100,000 citywide revenues in FY 2015/16
14
70,800 resident equivalents
$43.79 per resident equivalent
Franchise Fees
15
$2,800,000 citywide revenues in FY 2015/16
7
15
$0.55 City transfer tax rate per $1,000 AV
7
0% estimated annual ownership residential turnover
7
0% estimated annual commercial turnover
Charges for Services
13
$0 citywide revenues in FY 2015/16
14
Fines and Forfeitures
13
$550,000 citywide revenues in FY 2015/16
14
05/12/2016
75
Table A-19
Cupertino, CA
Gas Tax
Other License Fees (Animal License)
5/12/2016
13
14
59,756 residents
$11.71 per resident
13
14
59,756 residents
$0.72 per resident
Direct General Fund Revenues Continued
I. Multifamily Residential
7
1 development
16
$170 first four units
16
$12 per additional unit
II. Commercial
16
$130 per business
7
15% circulation factor
3,500
$0.035
8%
3,800
$0.032
sf per business for retail/restaurant 7
per sf for businesses < 5,000 sf 16
vacancy 7
sf per business after vacancy adjustment
per sf after vacancy adjustment
B. Office
10,000
$0.031
8%
10,900
$0.028
sf per business for office 7
per sf for businesses 5k - 25k sf 16
vacancy 7
sf per business after vacancy adjustment
sf fee after vacancy adjustment
C. Entertainment
60,000
$0.026
0%
60,000
$0.026
sf per business for entertainment 17
per sf for businesses 25k - 75k 16
vacancy
net sf per business after vacancy adjustment
per sf fee after vacancy adjustment
D. Fitness
40,000
$0.026
0%
40,000
$0.026
sf per business for fitness 7
per sf for businesses 25k - 75k 16
vacancy
net sf per business after vacancy adjustment
per sf fee after vacancy adjustment
A. Retail/Restaurant
E. Hotel
IV. Existing Business License Taxes
16
$75 per business
16
$5 per room
18
$20,000 Estimated for existing mall tenants
05/12/2016
76
Table A-19
Cupertino, CA
5/12/2016
Direct General Fund Revenues Continued
$375
78%
$106,763
12%
$12,812
Stabilized average daily rate 19
Stabilized occupancy 19
Revenue / room
of room revenues 20
per room
Indirect General Fund Revenues
Sales Tax from Indirect Sales
I. Resident Retail Spending
II. Retail/Other Employee Spending
including Building Services
III. Office Employee Retail Spending
IV. Hotel Visitor Retail Spending
5
1% of taxable sales
$124,300
21%
70%
40%
$11,149
estimated household income 21
income spent on taxable sales 22
Cupertino caputure rate 23
Cupertino spending within the project 7
annual other Cupertino spending per household
$678
70%
30%
$332
annual spending per employee 24
Cupertino capture 23
employee Cupertino spending within the project 7
annual other Cupertino spending per employee
$1,495
70%
30%
$733
annual spending per employee 24
employee Cupertino spending within the project 7
annual other Cupertino spending per employee
$125
70%
30%
$22,320
-$6,000
$16,320
taxable sales in Santa Clara Co. / room night 25
hotel visitor spending at Vallco7
annual other Cupertino visitor spending generated /rm.
less direct hotel sales
05/12/2016
77
Table A-19
Cupertino, CA
5/12/2016
One-Time General Fund Impacts During Construction
Construction Tax Revenue
I. Residential
II. Office and Retail
III. Hotel
Construction Use Tax Revenues
I. Specific Plan
I. Town Center/Community Park
II. Block 14
1
2
26
$687.10 per unit
26
$2.97 per sf
26
$231.31 per rm
5
1% City Use Tax Rate
$1,917,300,340
60%
50%
$575,190,102
Estimated hard costs 27
Estimated materials cost 7
Estimated share with Cupertino as point of sale 28
Estimated Materials Purchases Subject to Use Tax
$0.55
$315,500,000
$173,525
$29,569,400
$16,263
City transfer tax rate per $1,000 AV 15
Taxable value of Town Center property FY15/16 30
Transfer Tax Due
taxable value of Block 14 property FY15/16 30
Transfer Tax Due
As established by Proposition 13 (1978), excluding voter-approvated debt rates.
Property Tax Allocation Factor for Tax Rate Area 013-301, FY 2015/16. Santa Clara County Controller-Treasurer. See Table A-16.
3
Per SB 1096, growth of property tax in lieu of VLF is proportional to growth in AV since 2004/05. Before 2004/05, VLF was distributed
in proportion to population.
4
VLF distribution in 2004/05 per the California State Controller's Office.
The City of Cupertino receives 1% of the total 8.75% sales tax collected on taxable sales, per the City of Cupertino Adopted Budget
Fiscal Year 2015-16.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Based on taxable sales for Valley Fair Shopping Mall ($506 per square foot), Santana Row ($467 per square foot), and Stanford
Shopping Center ($464 per square foot), derived from City of Palo Alto Sales Tax Digest Q4 2014, City of Palo Alto Office of the City
Auditor, June 2015.
KMA assumption.
Based on average revenue per screen and share of total revenue attributable to concessions as reported in 2014 10-k financial
reports of Cinemark and AMC Entertainment.
Per Elections Code 9212 Report on Initiative Amending Cupertino's General Plan, prepared by Seifel Consultling (2016), taxable B-toB sales range from $37 to $53 per square foot in Cupertino (excluding Apple). KMA's analysis of State Board of Equalization data
suggests that the countywide average is lower, at approximately $30 per square foot.
Based on reported sales performance of café at Bay Club. Assumes sales would be similar at a smaller fitness facility.
California State BOE and HVS Hotel Market Update (2015). Reduced by 25% to account for limited commercial offer at property.
City of Cupertino sales tax data.
See Table A-19.
See Table A-16.
Chapter 3.04 of City of Cupertino Municipal Code.
Chapter 5.04 of Cupertino Municipal Code.
Assumes 180,000 sf entertainment uses will consist of three existing entertainment tenants.
Table A-15.
Market assumptions provided by HVS for Block 14.
Cupertino Municipal Code chapter 3.12.
05/12/2016
78
Table A-19
Cupertino, CA
21
22
5/12/2016
Table A-17.
Retail expenditure potential as percentage of aggregate income, reported by ESRI Business Analyst in its Retail MarketPlace Profile
(2015) for Cupertino. Figure excludes non-store retail and auto dealerships.
23
KMA conservatively assumes City will capture 70% of resident/employee expenditure potential. Based on a retail leakage analysis
using 2013 BOE sales tax data, Cupertino exhibits a surplus in all retail categories except for Miscellaneous Retail.
24
Based on weekly employee restaurant spending in the vicinity of the workplace, as reported in the ICSC report, "Office Worker Retail
Spending in a Digital Age" (2012), for suburban workers, assuming 50 weeks at work per year. It has been assumed that retail and
building services employees will spend in the same range as clerical office workers. Figures adjusted to 2015 using national CPI.
25
Dean Runyan Associates, California Travel Impacts (2014) and HVS Hotel Market Update (2015).
Section 3.32.030 of Cupertino Municipal Code.
Preliminary construction budget provided by Town Center/Community Park developer. Includes Block 14 hotel.
For purposes of this analysis it has been assumed that 50% of materials costs will generate "use tax" revenue to the City of Cupertino
by general and sub-contractors designating the job site in Cupertino as the "point of sale" for the materials.
26
27
28
29
30
Marshall and Swift construction costs (2015) for full service hotel.
RealFacts property value estimate of taxable values FY15/16 for parcels listed in Table A-12.
05/12/2016
79
Table A-20
Cupertino, CA
5/12/2016
General Fund
City Council and Commissions
Administration 4
$739,241
25%
70,800
$2.61
Net Expenses in 2015/16 1
Percent Variable Costs 2
Resident Equivalents 3
Per Resident Equivalent
$4,718,471
25%
70,800
$16.66
Law Enforcement
$282,276
10,000
0.33
3,300
$85.54
Average Cost Per Deputy 20125
Employees Per Deputy
Employee-Resident Equivalent Factor
Resident Equivalents Per Deputy
Public Affairs
$420,962
25%
70,800
$1.49
$2,492,685
25%
70,800
$8.80
$4,896,252
65%
70,800
$44.95
$172,603
0%
70,800
$0.00
Recreation Service
05/12/2016
80
Table A-20
Cupertino, CA
5/12/2016
General Fund (continued)
Public Works
$14,356,867
65%
70,800
$131.81
Maintenance of New Infra.
data unavailable
Transfers Out 7
1
2
3
4
5
$6,203,684
65%
70,800
$56.95
See Table A-22.
A portion of each General Fund expense category is fixed, and does not vary regardless of the amount of
development. The estimated percent of variable costs is based on the experiences of other cities.
See Table A-18
Includes City Manager, City Clerk and City Attorney.
Santa Clara County estimate used in 2013 Economic Impact Study of Apple Campus 2 prepared by KMA. The cost per
deputy has not been escalated based on KMA's analysis that nominal law enforcement costs per resident equivalent
have not increased since FY2013 when the previous analysis was prepared.
6
It is the goal of the Community Development Department to cover service costs with fees, per the City of Cupertino
Finance Department. Limited net expenditures are assumed to be fixed costs.
7
Ongoing General Fund transfers to funds that provide City services, including stormwater program, pavement
maintenance, compensated absence and retiree health.
05/12/2016
81
Table A-21
Summary of City of Cupertino General Fund Revenue Sources in FY 2015/16 1
Cupertino, CA
Revenue Category
FY 2015-16
Budget
5/12/2016
Basis of KMA Projections
Included in the Analysis
Taxes
Property Tax (incl. In-Lieu of MVLF 2)
Sales and Use Tax
Utility Users Tax
Franchise Fees
Other Taxes (bus. lic., prop. transf., cxn.)
Intergovernmental
Gas Tax
Animal License Fees
Fines and Forfeitures
Total Revenue Included
$20,360,000
$16,055,000
$3,100,000
$2,800,000
$1,400,000
$43,715,000
assessed value, City sh. of 1% tax
est. project sales, empl. and resid. spending
resident equivalents
rates from Municipal Code applied to program
$700,000
$43,000
$743,000
per resident
per resident
$550,000
$45,008,000
Deducted from Service Costs
Licenses and Permits Insp. & Building Permits
Additional Developer Deposits (410.401)
Miscellaneous Revenue
To Community Development
To Recreation
Other Financing Sources
Refundable Deposit Revenue
Other Sources
Charges for Services - Planning, Eng., and Enterprise
Zoning and Planning Fees
Engineering Fees
Enterprise Service Fees
$2,138,000
$3,290,000
$5,428,000
deduct from Community Development
$360,895
$17,000
$377,895
deduct from Recreation
$319,000
$24,000
$343,000
$5,162,310
$1,930,000
$8,000
$7,100,310
deduct from Public Works
05/12/2016
82
Table A-21
Summary of City of Cupertino General Fund Revenue Sources in FY 2015/16 1
Cupertino, CA
Revenue Category
Other Service Charges
Other Charges - Community Development
Other Charges - Recreation
Other Charges - Public Affairs
Other Charges - Administration
Other Charges - Administrative Services
Other Charges - Council and Commission
Intergovernmental - COPS Grant
Use of Money and Property - Facility Rentals
Recreation Facility Rentals
Public Works Facility Rentals
Total Deducted from Service Costs
FY 2015-16
Budget
$1,928,655
$919,625
$41,336
$210,393
$359,123
$31,436
$3,490,568
5/12/2016
Basis of KMA Projections
deduct from Public Affairs
deduct from Administration
deduct from Administrative Services
deduct from Council and Commission
$100,000
deduct from Law Enforcement
$292,230
$140,300
$432,530
deduct from Public Works
$17,272,303
Excluded from the Analysis
Intergovernmental
440-401 - Intergovernmental
Use of Money and Property
420-401 - Use of Money
Total Excluded
Total General Fund Revenue
$500,000
independent of project
$5,072,000
$310,000
$5,882,000
$68,162,303
Source: City of Cupertino Adopted Budget Fiscal Year 2015-16, City of Cupertino Financial Data Transparency Portal.
1
2
For funding City departmental services.
Per Cupertino's 2013/2014 Comprehensive Annual Financial Report, Property Tax was $9.17 million and Property Tax In-Lieu of Motor
Vehicle Fees was $5.29 million.
05/12/2016
83
Table A-22
Summary of City of Cupertino General Fund Budget Expenditures in FY 2015/16 1
Cupertino, CA
5/12/2016
FY 2015/16
Budget
Expenditure Category
Council and Commissions
City Council
Commissions
$513,781
$256,896
$770,677
(Less) Other Service Charges
($31,436)
$739,241
Administration
City Attorney
City Manager
City Clerk
$1,911,840
$2,369,072
$647,952
$4,928,864
($210,393)
$4,718,471
Law Enforcement
$10,994,684
(Less) Intergovernmental - COPS Grant
($100,000)
$10,894,684
Public Affairs
Public Affairs
Government Channel
$64,890
$397,408
$462,298
($41,336)
$420,962
Human Resources
Finance
Adm Svcs Administration
$1,381,389
$1,009,092
$461,327
$2,851,808
($359,123)
$2,492,685
05/12/2016
84
Table A-22
Cupertino, CA
5/12/2016
FY 2015/16
Budget
Recreation and Community Services
Facilities and Community Events
Senior Programs
Parks and Rec Admin
Youth and Teen Programs
Community Services
Sports and Fitness
$1,938,802
$1,923,704
$721,454
$780,212
$687,354
$105,581
$6,157,107
(Less) Miscellaneous Revenue
(Less) Enterprise Service Fees
(Less) Other Financing Sources
(Less) Recreation Facility Rentals
($17,000)
($8,000)
($24,000)
($919,625)
($292,230)
($1,260,855)
$4,896,252
Building
Planning
Planning & Community Development
Housing Services
$6,136,080
$6,920,993
$274,390
$40,000
$13,371,463
(Less) Licenses and Permits - Inspection and Building Permits
(Less) Licenses and Permits - Additional Developer Permits
(Less) Refundable Deposit Revenue
(Less) Zoning and Planning Fees
(Less) Miscellaneous Revenue
($2,138,000)
($3,290,000)
($319,000)
($5,162,310)
($360,895)
($1,928,655)
($13,198,860)
$172,603
Public Works
Grounds and Fleet
Facilities
Trees and Right of Way
Developmental Services
Transportation
Service Center
Streets
Administration
$3,777,788
$3,186,022
$2,818,415
$2,547,554
$1,554,512
$1,020,181
$865,013
$657,682
$16,427,167
(Less) Public Works Facility Rentals
(Less) Engineering Fees
($140,300)
($1,930,000)
($2,070,300)
$14,356,867
05/12/2016
85
Table A-22
Cupertino, CA
5/12/2016
FY 2015/16
Budget
Transfers Out 2
Stormwater Program/ Non-Point Source
Pavement Maintenance
Recreation Enterprise Funds
Compensated Absence
Retiree Health
$128,679
$3,000,000
$1,634,510
$440,000
$1,000,495
$6,203,684
Total Expenditures
$62,167,752
Expenditures Net of Off-Setting Revenues
$44,895,449
Transfer Expenditures Excluded
Annual Debt Payment
Other Financing Uses
$3,167,538
$2,239,763
$5,407,301
Source: City of Cupertino Adopted Budget Fiscal Year 2015-16, City of Cupertino Financial Data
Transparency Portal.
1
2
Cost recovery items (negative amounts) are from revenue items listed on Appendix A-21.
Ongoing General Fund transfers to funds that provide City services.
05/12/2016
86
Table A-23
Cupertino, CA
Annual Property Taxes1
Annual Property Tax (1%) to All Jurisdictions
5/12/2016
Net Impact
Plan Area
$18,992,232
Proprerty Tax to Districts Covered in the Analysis
City of Cupertino Property Tax
Cupertino Union Elementatry2
Fremont Union High
Net Taxes to Other Jurisdictions3
Santa Clara County
Educational Revenue Augmentation Fund
County School Service
Midpeninsula Regional Open Space District
Santa Clara County Importation Water-Misc. District
Bay Area Air Quality Management District
Santa Clara Valley Water District West Zone 4
Total
Existing
Condition Gross Impact
Plan Area
Plan Area
$2,016,768 $21,009,000
$1,100,785
$4,691,748
$3,168,476
$8,961,009
$116,891
$498,212
$336,458
$951,561
$1,217,676
$5,189,961
$3,504,934
$9,912,570
$2,888,506
$2,595,839
$1,609,529
$1,209,531
$590,156
$486,676
$295,703
$172,218
$92,838
$35,132
$31,165
$23,930
$306,728
$275,650
$170,914
$128,439
$62,668
$51,680
$31,400
$18,288
$9,858
$3,731
$3,309
$2,541
$3,195,234
$2,871,488
$1,780,444
$1,337,971
$652,824
$538,355
$327,104
$190,506
$102,696
$38,862
$34,474
$26,471
$10,031,223
$1,065,206
$11,096,430
1
Based on Plan Area assessed value, Table A-11.
2
CUSD is a "revenue limit" district; additional property taxes will not impact total operating budget. See Table A-7.
See Table A-16 for property tax allocation factors.
3
05/12/2016
87
Table B-1
Cupertino, CA
5/12/2016
I. One-Time Construction Period Economic Impacts1
On-site
Total Impact
Cupertino
Total Impact
County
12,555
15,947
18,845
Employee Compensation
$1,206.7 million
$1,411.8 million
$1,632.8 million
Industry Ouput
$2,414.4 million
$2,966.6 million
$3,439.5 million
Specific Plan 2
Construction Jobs (person years)
II. Net Annual Recurring Economic Impacts of Specific Plan1
On-site
Total Impact
Cupertino
Total Impact
County
8,264
11,682
14,343
$1,057.6 million
$1,275.9 million
$1,476.4 million
Industry Output
$1,768.6 million
$2,332.3 million
$2,748.6 million
8,264
11,682
14,343
$1,057.6 million
$1,275.9 million
$1,476.4 million
Industry Output
$1,768.6 million
$2,332.3 million
$2,748.6 million
Town Center/Comm. Park 1
Ongoing Jobs
Block 14 2
Ongoing Jobs
Industry Output
Specific Plan 2
Ongoing Jobs
05/12/2016
88
Table B-1
Cupertino, CA
5/12/2016
IV. Annual Recurring Economic Impacts of Existing Shopping Mall3
On-site
Total Impact
Cupertino
Total Impact
County
1,109
1,231
1,318
$36.3 million
$43.6 million
$49.4 million
Industry Output
$62.7 million
$84.5 million
$98.5 million
Ongoing Jobs
V. Gross Annual Recurring Economic Impacts4
On-site
Total Impact
Cupertino
Total Impact
County
9,373
12,913
15,661
$1,093.9 million
$1,319.5 million
$1,525.8 million
Industry Output
$1,831.3 million
$2,416.8 million
$2,847.1 million
Specific Plan 2
Ongoing Jobs
1
2
3
4
Refer to Tables B-2 and B-3 for calculation.
Excludes Block 13 (containing previously approved hotel project).
IMPLAN model run exclusively for existing impacts, Table B-5.
IMPLAN model run without adjustment for existing employment and output, as shown in Table B-4.
05/12/2016
89
Table B-2
Estimated Direct and Indirect Economic Impacts within City of Cupertino
Cupertino, CA
Specific Plan
Annual Recurring Impacts1
Industry Output
Retail
Stores
Restaurants
Fitness/Entertainment
Office
Office Tenants
Building Services
Residential (Household Spending)3
Hotel
Jobs
Retail
Stores
Restaurants
Office
Office Tenants
Building Services
Hotel
Retail
Stores
Restaurants
Office
Office Tenants
Building Services
Hotel
Direct 2
5/12/2016
Economic Impacts
Indirect 3
Induced 3
Total
$25,702,000
$85,800,000
$2,042,000
$4,882,000
$13,464,000
$385,000
$1,485,000
$4,195,000
$121,000
$32,069,000
$103,459,000
$2,548,000
$1,619,200,000
$15,500,000
$0
$20,390,000
$1,768,634,000
$234,333,000
$1,575,000
$0
$3,196,000
$257,835,000
$290,452,000
$2,559,000
$4,732,000
$2,285,000
$305,829,000
$2,143,985,000
$19,634,000
$4,732,000
$25,871,000
$2,332,298,000
115
384
12
22
66
2
10
28
1
147
478
15
7,360
250
0
143
8,264
1,222
9
0
18
1,339
1,958
17
49
15
2,079
10,540
276
49
177
11,682
$4,083,000
$11,127,000
$362,000
$1,683,000
$5,185,000
$107,000
$504,000
$1,423,000
$41,000
$6,270,000
$17,735,000
$510,000
$1,025,248,000
$9,275,000
$0
$7,550,000
$1,057,645,000
$104,641,000
$681,000
$0
$1,335,000
$113,632,000
$98,520,000
$868,000
$2,482,000
$775,000
$104,613,000
$1,228,409,000
$10,824,000
$2,482,000
$9,660,000
$1,275,890,000
05/12/2016
90
Table B-2
Estimated Direct and Indirect Economic Impacts within City of Cupertino
Cupertino, CA
One-Time Construction Impacts
Industry Output
Commercial Construction
Residential Construction
Economic Impacts
Indirect 3
Induced 3
Direct 2
Total
$2,175,201,000
$229,125,000
$10,062,000
$2,414,388,000
$167,250,000
$47,890,000
$1,682,000
$216,822,000
$297,565,000
$35,750,000
$2,084,000
$335,399,000
$2,640,016,000
$312,765,000
$13,828,000
$2,966,609,000
11,307
1,191
57
12,555
785
350
10
1,145
2,006
228
14
2,247
14,097
1,769
81
15,947
$1,089,418,000
$110,037,000
$7,246,000
$1,206,701,000
$69,917,000
$21,249,000
$863,000
$92,029,000
$100,913,000
$11,459,000
$707,000
$113,079,000
$1,260,248,000
$142,745,000
$8,816,000
$1,411,809,000
Jobs- Person Years
5/12/2016
1
2
Impacts net of economic benefits supported by existing facilities.
See Tables B-4 and B-6 for calculation of direct impacts.
3
Indirect and induced effects calculated using 2013 IMPLAN Group LLC multipliers for Cupertino zip code 95014. See table B-9 for distribution of
final demand by IMPLAN sector.
4
Induced impacts associated with new residents at project are produced by the spending of household income, excluding spending at project.
Induced impacts were run in IMPLAN based on average household incomes of project residents. See table B-8.
05/12/2016
91
Table B-3
Estimated Direct and Indirect Economic Impacts within County of Santa Clara
Cupertino, CA
Specific Plan
Annual Recurring Impacts1
Industry Sales
Retail
Stores
Restaurants
Office
Office Tenants
Building Services
Hotel
Jobs
Retail
Stores
Restaurants
Office
Office Tenants
Building Services
Hotel
Retail
Stores
Restaurants
Office
Office Tenants
Building Services
Hotel
Direct 2
5/12/2016
Economic Impacts
Indirect 3
Induced 3
Total
$25,702,000
$85,800,000
$2,042,000
$7,616,000
$19,062,000
$593,000
$2,829,000
$7,622,000
$275,000
$36,147,000
$112,484,000
$2,910,000
$1,619,200,000
$15,500,000
$0
$20,390,000
$1,768,634,000
$405,344,000
$2,624,000
$0
$4,998,000
$440,237,000
$505,881,000
$4,328,000
$14,757,000
$4,012,000
$539,704,000
$2,530,425,000
$22,452,000
$14,757,000
$29,400,000
$2,748,575,000
115
384
12
37
96
3
19
51
2
171
530
17
7,360
250
0
143
8,264
2,244
15
0
28
2,423
3,379
29
150
27
3,656
12,984
294
150
198
14,343
$4,083,000
$11,127,000
$362,000
$2,637,000
$7,115,000
$179,000
$1,120,000
$3,017,000
$109,000
$7,840,000
$21,259,000
$650,000
$1,025,248,000
$9,275,000
$0
$7,550,000
$1,057,645,000
$188,998,000
$1,140,000
$0
$2,039,000
$202,108,000
$200,221,000
$1,713,000
$8,892,000
$1,588,000
$216,660,000
$1,414,467,000
$12,128,000
$8,892,000
$11,177,000
$1,476,413,000
05/12/2016
92
Table B-3
Estimated Direct and Indirect Economic Impacts within County of Santa Clara
Cupertino, CA
One-Time Construction Impacts
Industry Sales
Jobs- Person Years
Direct 2
5/12/2016
Economic Impacts
Indirect 3
Induced 3
Total
$2,175,201,000
$229,125,000
$50,310,000
$2,454,636,000
$293,320,000
$87,593,000
$13,026,000
$393,939,000
$499,163,000
$73,873,000
$17,891,000
$590,927,000
$2,967,684,000
$390,591,000
$81,227,000
$3,439,502,000
11,307
1,191
285
12,783
1,374
658
84
2,116
3,333
494
120
3,946
16,014
2,342
489
18,845
$1,089,418,000
$110,037,000
$36,229,000
$1,235,684,000
$117,953,000
$38,771,000
$6,721,000
$163,445,000
$197,514,000
$29,071,000
$7,081,000
$233,666,000
$1,404,885,000
$177,879,000
$50,031,000
$1,632,795,000
1
Impacts net of economic benefits supported by existing facilities.
See Tables B-4 and B-6 for calculation of direct impacts.
3
Indirect and induced effects calculated using 2013 IMPLAN Group LLC multipliers for Santa Clara County. See table B-9 for distribution of
final demand by IMPLAN sector.
2
4
Induced impacts associated with new residents at project are produced by the spending of household income, excluding spending at project.
Induced impacts were run in IMPLAN based on average household incomes of project residents. See table B-8.
05/12/2016
93
Table B-4
Direct Economic Impact Assumptions (Operations)1
Cupertino, CA
Economic Measure
5/12/2016
Estimating Factor
Specific Plan
I. Net New Industry Output
Retail
Fitness
Entertainment
1
Less (Existing Sales)
40,000 sf
180,000 sf
2
Restaurants
Less (Existing Sales)1
150,000 sf
2
Shops
Less (Existing Sales)1
270,000 sf
2
3
$110 per sf
4
$100 per sf
4
$4,400,000
$18,000,000
($20,358,000)
$2,042,000
8% vacant
3
$700 per sf
5
$96,600,000
($10,800,000)
$85,800,000
8% vacant
3
$600 per sf
5
$149,040,000
($82,100,000)
$ ,
,
0% vacant
3
0% vacant
2
6
Less (Cost of Goods Sold)
6
62% of sales
Office
Office Tenants
8
$
250 net jobs 8
$
7,360 net jobs
Building Services
Hotel
191 rooms
2
(41,238,000)
25,702,000
7
$1,619,200,000
62,000 per job 7
$15,500,000
220,000 per job
$106,763 rev/ rm
10
$20,390,000
II. Net New Project Employment
Retail
Fitness
Entertainment
40,000 sf
180,000 sf
2
Restaurants
150,000 sf
2
8% vacant
3
200 sf / empl
3
690
(306)
384
Shops
1
Less (Existing Employment)
270,000 sf
2
8% vacant
3
350 sf / empl
3
710
(595)
115
Office Tenants
2,000,000 sf
2
8% vacant
2
250 sf / empl
3
7,360
Building Services
2,000,000 sf
2
8,000 sf / empl
3
250
2
3
0% vacant
3
0% vacant
1,000 per sf 4
1,000 per sf 4
40
180
(208)
12
Office
Hotel
2
191 rooms
0.75 emp/rm
05/12/2016
3
143
94
Table B-4
Direct Economic Impact Assumptions (Operations)1
Cupertino, CA
Economic Measure
5/12/2016
Estimating Factor
Specific Plan
III. Net New Employee Compensation
Retail
8
12 net jobs
$30,200 per job
9
$362,000
Restaurants
8
384 net jobs
$29,000 per job
9
$11,127,000
Shops
115 net jobs
8
$35,500 per job
9
$4,083,000
8
7,360 net jobs
$139,300 per job
9
$1,025,248,000
250 net jobs
8
$37,100 per job
9
$9,275,000
143 net jobs
8
$52,827 per job
9
$7,550,000
Office
Office Tenants
Building Services
Hotel
1
Economic impacts are calculated net of existing economic activity. See Table B-5 for KMA estimates of existing economic activity.
2
Development program provided in Notice of Preparation of Draft EIR. See Table A-8.
KMA assumption based on past experience.
Based on existing sales performance for targeted fitness/entertainment uses. See Table B-5.
Sales per square foot benchmarks based on: lower-range of sales per square foot reported by Valley Fair (2015, including anchors)
and Santana Row (2012), as well as the International Shopping Center survey of sales performance at Western- Pacific Malls
(2015). Benchmarks above include taxable and non-taxable sales in contrast with sales estimates used in the fiscal impact section
of the analysis.
3
4
5
6
The Bureau of Economic Analysis and IMPLAN define economic output for the retail sector as gross margin (sales minus the cost
of goods sold). In order to accurately measure indirect and induced effects of retail sales, direct retail store output is also reported in
these terms.
7
Factor derived from the IMPLAN economic impact model for Santa Clara County for a representative set of industries. See Table B9 for assumed industry distribution by economic activity.
See Section II of table for calculation of jobs by economic activity.
Employee compensation per job derived from IMPLAN model for Santa Clara County based on a representative set of industries
(Table B-9). Employee compensation includes wages and benefits.
8
9
10
Based on daily rate of $375 and stabilized occupancy of 78%, estimated by HVS.
05/12/2016
95
Table B-5
Cupertino, CA
5/12/2016
Economic Measure
Plan Area
Baseline
Estimating Factor
I. Existing Retail Employment
Fitness
Entertainment
1
67,300 sf
1
140,700 sf
208,000
Restaurants
Retail Stores
Department Stores
In-Line Shops
Total
1
80,000 sf
23% vacant
1
496,000 sf
1
114,000 sf
610,000
898,000 sf
1
1,000 sf / empl
1
1,000 sf / empl
1
1,000 sf / empl
1
67
141
208
1
200 sf / empl
1
306
1
1,100 sf / empl
1
350 sf / empl
785 sf / empl
1
345
249
595
0% vacant
1
0% vacant
1
0% vacant
23% vacant
1
23% vacant
23% vacant
1
1,109
II. Existing Retail Output
A. Gross Retail Sales (Taxable and Non-Taxable)
Fitness / Entertainment
Fitness/ Bay Club
Entertainment
AMC Movie Theater
Bowlmor Cupertino
Ice Rink
Restaurants
Retail Stores
2
67,300 sf
16 screens
2
32 lanes
2
21,000 sf
$110 per sf
2
3
$7,258,000
$540,000 per screen
5
$40,000 per lane
6
$150 psf
4
$8,640,000
$1,280,000
$3,150,000
$13,100,000
$20,358,000
1
80,000 sf
23% vacant
1
$
176 per sf
7
$10,800,000
1
23% vacant
1
$
176 per sf
7
$82,100,000
610,000 sf
B. Taxable Retail Sales
Total Taxable Sales- Existing Mall 8
Less (Fitness Taxable)
$7,258,000 fitness sales
Less (Ent. Taxable)
$13,100,000 entertainment sales
Remaining Taxable Sales
9
10% of sales
9
30% of sales
Occupied Sq Ft - Excluding Entertainment/Fitness
$97,558,500
-$725,800
-$3,930,000
$92,900,000
528,360
Sales Per Occupied Square Foot-Average for Retail and Restaurants
$176
Source: AMC Entertainment, Bay Club, Bowlmor, Vallco Shopping Mall
1
2
3
4
5
6
7
8
9
Table A-10 (fiscal impact appendix tables).
Based on reported square footage/capacity of movie theater, fitness center, bowling alley, ice rink (per company websites/
news reports).
Forecast for 2014 revenue for Cupertino facility reported by Bay Club.
Average revenues per screen reported in annual 10-k report for AMC Entertainment Holdings Inc.
Average annual revenues per lane derived from Bowlmor AMF Corp consolidated financial statements 2015.
KMA estimate based on reported revenues/square footage of a nearby ice rink.
Gross restaurant and retail sales assumed to reflect reported taxable sales, net KMA's estimate of taxable
fitness/entertainment sales (II.B).
City of Cupertino.
Based on average revenue per screen and share of total revenue attributable to concessions as reported in 2014 financial
reports of Cinemark and AMC Entertainment.
05/12/2016
96
Table B-6
Cupertino, CA
5/12/2016
Region of Impact
Cupertino
Santa Clara
Estimating Factor
Economic Measure
I. Net New Industry Output
Construction Services
Commercial
Residential
+
$2,175,201,242
$2,175,201,242
Residential hard costs 1
$229,125,420
$229,125,420
Non-construction soft costs 1
KMA assumption 2
$100,620,327
10%
$10,062,033
$100,620,327
50%
$50,310,164
Direct hard costs
other Indirect Costs
1
Total output
Local purchase percentage
Local output
II. Net New Project Employment
Commercial
3
$192,378 output per emp
11,307
11,307
Residential
3
1,191
1,191
3
57
285
Arch. & Engineering Services
III. Net New Employee Compensation
Commercial
4
$96,350 per emp
$1,089,417,622
$1,089,417,622
Residential
4
$92,389 per emp
$110,037,089
$110,037,089
4
$127,132 per emp
$7,245,880
$36,229,400
Arch. & Engineering Services
1
2
Source: Construction budget provided by Sand Hill Property Co. See Table B-7.
Whereas construction services are performed on-site, architecture and engineering services may be sourced from a
larger market area. KMA has estimated the share of the soft cost budget to be performed within the region.
3
Factor derived from IMPLAN model for Santa Clara County for a representative set of industries (Table B-9).
Factor applied to industry output estimated in Section I to derive employees. IMPLAN employee estimates are
reported in job-years, where one job is based on the average number of hours worked per employee in a given
industry.
4
Employee compensation per job derived from IMPLAN economic impact model for a representative set of industries
based on averages for Santa Clara County (Table B-9). Employee compensation includes wages and benefits.
05/12/2016
97
Table B-7
Cupertino, CA
Specific Plan Development Budget
Cost
Land
$316,210,000
5/12/2016
Economic Impact
Category
Excluded
Improvements
Direct Costs
Commercial
Residential
$1,688,174,920
$229,125,420
$1,917,300,340
$86,040,140
$100,620,327
$487,026,322
$673,686,789
excluded
Design/Engineering
Indirect Costs
Financing
Other Indirect Costs (TI, Comm. Benefits)
Total Project
1
$2,907,197,129
Preliminary estimate provided by Town Center/Community Park developer. Includes hotel construction costs.
05/12/2016
98
Table B-8
Cupertino, CA
5/12/2016
Estimating Factor
Economic Measure
Region of Impact
Cupertino
Santa Clara
Change in Household Income
Net New Household Income
1
389 HHs
2
$124,300 per HH
Local Purchase Factor3
Less (Project Purchases)4
70%
-28%
42%
Change in Household Income After Factor Adjustments
HH Income Multipliers5
Jobs Per $1M Income
Compensation Per $1M Income
Output Per $1M Income
2
3
4
5
$48,352,700
100%
-28%
72%
$20,308,134
$34,813,944
2.4
$122,194
$233,008
4.3
$255,410
$423,895
49
$2,482,000
$4,732,000
150
$8,892,000
$14,757,000
for HHs earning $100,000-$150,000
Induced Impact
Jobs
Compensation
Output
1
$48,352,700
change in HH income X multipliers
Per development program provided in Notice of Preparation of Draft EIR. See Table A-7. Households assumed to be
net new to Cupertino and county.
Household income estitmated based on anticipated residential lease rates. See table A-15.
In order to determine the induced impacts of household spending on the local economy, the IMPLAN model requires
that a local purchase coefficient be established reflecting the share of total household spending that is likely to occur
in the economic region. KMA determined the above leakage factors based on a review retail leakage in the City and
the County. The factors are consistent with the fiscal analysis. See table A-17.
To ensure net new impacts are reflected, KMA reduced the purchase factor by the percentage of resident purchases
that are anticipated to occur at the project.
Economic multipliers derived from 2013 IMPLAN model for Cupertino and County. Multipliers associated with
household spending vary by income level. KMA applied multipliers associated with households earning $100,000 to
$150,000, which reflects the average household income anticipated at the project.
05/12/2016
99
Table B-9
Cupertino, CA
IMPLAN Sectors
by Economic Activity
5/12/2016
Share of
Final Demand
1
Retail Operations
Retail Stores 2
400 Retail - Food and beverage stores
405 Retail - General merchandise stores
403 Retail - Clothing and clothing accessories stores
397 Retail - Furniture and home furnishings stores
398 Retail - Electronics and appliance stores
406 Retail - Miscellaneious store retailers
404 Retail - Sporting goods, hobby
401 Retail - Health and personal care stores
509 Personal care services
Entertainment 3
423 Motion picture and video industries
497 Fitness and recreational sports centers
498 Bowling centers
3%
33%
23%
6%
13%
7%
7%
3%
5%
100%
43%
51%
6%
100%
Restaurant 4
501 Full-service restaurants
502 Limited-service restaurants
503 All other food and drinking places
56%
42%
2%
100%
Office Operations
Office Tenants 5
451 Custom computer programming services
452 Computer systems design services
430 Data processing, hosting, and related services
449 Architectural, engineering, and related services
422 Software publishers
464 Employment services
461 Management of companies and enterprises
454 Management consulting services
455 Environmental and other technical consulting
448 Accounting
447 Legal services
475 Offices of physicians
Building Services 6
467 Investigation and security services
468 Services to buildings
21%
21%
7%
9%
9%
10%
7%
2%
2%
3%
3%
5%
100%
53%
47%
100%
05/12/2016
100
Table B-9
Cupertino, CA
IMPLAN Sectors
by Economic Activity
5/12/2016
Share of
Final Demand
1
Hotel Operations 6
499 Hotels and motels
100%
Construction
Commercial Construction 7
57 Construction of new commercial structures
100%
Residential Construction 7
60 Construction of new commercial structures
100%
Architecture & Engineering 7
449 Architectural, engineering, and related services
100%
1
The following represents how changes in final demand were allocated for each economic activity to
determine indirect and induced effects in the IMPLAN model, as well as a variety of factors (such as
average compensation) used to calculate direct effects in tables B-4 through B-7. The allocations are
meant to broadly represent the types of industries involved in the economic acitvities supported by the
project using publically available data.
2
Based on distribution of countywide sales for the selected industries, with a 5% allocation reserved for
personal services. See table B-10.
3
Based on KMA's estimate of existing sales distribution within category at project. See table B-5.
Based on distribution of countywide sales for selected industries. See table B-11.
5
Based on distribution of existing employment and 3-year employment growth for selected office-using
industries, with a 5% allocation reserved for medical offices. See table B-12.
6
KMA assumption based on past experience
7
KMA assumption based on nature of expenditures included in project budget (B-7). Construction
industry spending patterns modified to exclude professional services inputs to avoid double counting.
4
05/12/2016
101
Table B-10
Cupertino, CA
Industry Codes
NAICS IMPLAN
Retail Sales in Santa Clara County
Taxable Sales Gross Up Gross Sales
Share of
2013 1
Factor 2
2013
Sales
in $000s
in $000s
Name
Included Retail Store Categories
5/12/2016
Share incl.
Pers. Svcs.3
4
452
448
442
443
453
451
4461244619
405
403
397
398
406
404
401
Comparison Retail
General Merchandise Stores
Apparel Stores
Home Furnishings
Electronics and Appliance Stores
Miscellaneous Store Retailers
Sporting Goods, Hobby, Book, and Music Stores
Health and Personal Care Stores
4452
4453
400
400
Specialty Foods
Specialty Food Stores
Beer, Wine, and Liquor Stores
812100
509
Services
Personal Care Services
$2,558,623
$2,312,465
$604,982
$1,362,785
$702,801
$711,235
$251,705
75%
100%
100%
100%
100%
100%
80%
$3,411,497
$2,312,465
$604,982
$1,362,785
$702,801
$711,235
$313,762
35%
24%
6%
14%
7%
7%
3%
33%
23%
6%
13%
7%
7%
3%
$28,381
$185,609
30%
100%
$94,604
$185,609
1%
2%
1%
2%
N/A
N/A
5%
$9,699,740
100%
100%
N/A
Total Included
$8,718,585
Excluded Retail Categories 4
454
Nonstore Retailers
44611 Pharmacies and Drug Stores
44511 Grocery Stores
44512 Convenience Stores
444
447
441
N/A
Building Material and Home Improvement
Gasoline Stations
Motor Vehicle and Parts Dealers
Source: California Board of Equalization (BOE) 2013, US Business Census 2012
1
Taxable sales reported for 2013 for Santa Clara County by BOE.
2
Gross-up factor determined by comparing 2012 taxable sales data for the state reported by BOE with gross sales data for the same period published by the US
Census.
3
Adjusts assumed share of final demand by alloting 5% to personal services.
4
Included and excluded retail categories determined by KMA based on project description.
05/12/2016
102
Table B-11
Cupertino, CA
Industry Codes
NAICS IMPLAN
7221
7222
7224
501
502
503
Restaurant Sales in Santa Clara County
Taxable Sales Gross Up Gross Sales
Share of
2013 1
Factor 2
2013
Sales
in $000s
in $000s
Name
Included Restaurant Retail Categories
5/12/2016
3
Full-Service Restaurants
Limited-Service Eating Places
Drinking Places (Alcoholic Beverages)
Total Restaurant Sales included
$
$
$
1,901,652
1,413,299
58,119
$
3,373,069
100%
100%
100%
$ 1,901,652
$ 1,413,299
$
58,119
56%
42%
2%
$ 3,373,069
100%
Excluded Restaurant Categories 3
7223
Special Food Services
Source: California Board of Equalization (BOE) 2013, US Business Census 2012
1
Taxable sales reported for 2013 for Santa Clara County by BOE.
2
Gross-up factor determined by comparing 2012 taxable sales data for the state reported by BOE with gross sales data for the same
period published by the US Census.
3
Included and excluded retail categories determined by KMA based on project description.
05/12/2016
103
Table B-12
Calculation of IMPLAN Industry Shares of Office Tenant Economic Activity
Cupertino, CA
Industry Codes
NAICS IMPLAN
Description
5/12/2016
Employment in Santa Clara County 1
Employment
Growth
Share
Share of Assumed
2
2012-2015
2015
2015
Growth Share
Selected Office Industry Categories 3
5415
518
5413
5112
5613
55
5416
5412
5411
451
452
430
449
422
464
461
454
455
448
447
475
Computer Systems Design and Rel Services
66,397
15,425
40%
50%
43%
4
4
ISPs, Search Portals, & Data Processing
Architectural and Engineering Services
Software Publishers
Employment Services
Management of Companies and Enterprises
Management & Technical Consulting Svc
8,019
14,364
16,438
21,739
12,703
9,778
3,018
2,947
2,946
2,756
2,165
754
5%
9%
10%
13%
8%
6%
10%
9%
9%
9%
7%
2%
7%
9%
9%
10%
7%
4%
4
4
Accounting and Bookkeeping Services
Legal Services
Offices of Physicians
8,976
7,543
N/A
Total Office Industries Included
165,957
Excluded Office Industry Categories 5
5611 Office Administrative Services
5172 Wireless Telecommunications Carriers
523 Financial Investment & Related Activity
5312 Offices of Real Estate Agents & Brokers
5171 Wired Telecommunications Carriers
5614
5418
515
512
5179
605
412
N/A
31,028
5%
5%
N/A
2%
1%
N/A
3%
3%
5%
100%
100%
100%
Business Support Services
Advertising and Related Services
Broadcasting (except Internet)
Motion Picture & Sound Recording Ind
Other Telecommunications
Source: Quarterly Census of Employment and Wages 2015
1
Based on average monthly employment in Santa Clara County for Q1 2015 and Q1 2012, Quarterly Census of Employment and Wages.
Average of growth and 2015 employment shares, with a 5% allotment for medical offices.
3
Based on Moody's definition of office-using industries, after applying exclusions below.
4
Assumed share split between two IMPLAN categories.
2
5
Excluded for (a) having no growth 2012-2015, or b) representing less than 4% of employment in the above categories. All medical-related office categories
(besides offices of physicians) were also excluded.
05/12/2016
104

Fiscal and Economic Impacts Analysis Vallco Town Center Specific

Transcription

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