HomeMy WebLinkAboutStudy Session –The Citys consultant, RSG, Inc., completed a 0 CITY OF HUNTINGTON BEACH
Inter Office Communication
Planning Department
TO: Honorable Mayor and City Council Members
VIA: Penny ulbreth-Gr ,, City Administrator
FROM: Howard Zelefsky, Planning Director oCE
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DATE: September 19, 2005
SUBJECT: BOLSA CHICA WARNER MESA ANNEXATION
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Attached is a copy of the Preliminary Fiscal Analysis for the Bolsa Chica Warner Mesa;.;...
Annexation,prepared for the City by RSG, Inc. A presentation by RSG, Inc. will be made apthe
September 19, 2005 City Council Study Session.
Should you have an questions lease contact Jason Kelleyat ext. 1553 or M Beth Broeren at
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ext. 5550.
HZ:SH:MBB:jk
xc: Paul Emery,Deputy City Administrator
Robert Beardsley,Director of Public Works
Ross Cranmer,Director of Building&Safety
Jim Engle,Director of Community Services
Ron Hayden,Director of Library Services
Duane Olson,Fire Chief
Kenneth Small,Police Chief
Scott Hess,Principal Planner
Circulation File
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CITY OF HUNTINGTON BEACH
TO: Honorable Mayor and Members of the City Council
VIA: Penelope Culbreth-Graft, DPA, City Administrator 4� b
FROM: Paul Emery, Deputy City Administrator
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DATE: June 16, 2006 = Cn
SUBJECT: Hearthside Homes, Bolsa Chica Annexation, LAFCO Status
On June 5, 2006, the City Council approved the Out of Service Area Agreement and the
Property Tax Exchange Resolution for the Hearthside Homes project. The current
schedule calls for the project area to be annexed to the Orange County Sanitation
District at the July 2006 regularly scheduled LAFCO meeting.
There is no other action scheduled before LAFCO on this project until the approval of
annexation to the City of Huntington Beach. This annexation is tentatively scheduled for
December of 2006 pending the completion of the necessary planning documentation
including the pre-zoning and environmental documentation. The current proposed
boundary for annexation includes the approximately 105.3 acres of the Hearthside
project in addition to the area commonly referred to as the Goodell Property. The
current proposed annexation that will be considered by LAFCO does not include the
complete Bolsa Chica area.
LAFCO staff has inquired as to the City's willingness to include the complete Bolsa
Chica in an annexation. The City has verbally communicated that we are unwilling to
include the complete Bolsa Chica until a complete analysis of the financial and liability
exposures are determined. City staff has stated to LAFCO staff that no such analysis is
scheduled and would not be considered in the near term. Staff has communicated to
LAFCO our concurrence that the balance of the Bolsa Chica area remains within the
City's sphere of influence.
Attached for your reference are the current LAFCO Commissioners that will hear the
Sanitation District annexation and pending any changes hear the City's annexation in
December 2006. Should you have any questions, please contact me at (714) 536-
5482.
Attachment
c: Executive Team
1
..1 A..- CO Orange
Commission
Commissioner Robert Bouer, Chair
Commissioner Bill Campbell
Commissioner Peter Herzog
Commissioner Arlen Schafer
Commissioner Tom Wilson
Commissioner Susan Wilson
Commissioner John Withers
Alternative Commissioner Patsy Marshall
Alternative Commissioner Rhonda McCune
Alternative Commissioner James Silva
Alternative Commissioner Charley Wilson
CONTACTINFO
Orange Count LAFCO
Y
12 Civic Center Plaza, Room 235
Santa Ana CA 92701
Office Hours: Monday - Friday*, 8:00 a.m. to 5:00 p.m. (except holidays)
(*please note: Our office is closed every other Friday due to a "FLEX"schedule. During this
closure you may leave a message on our voice mail system.)
Phone: (714) 834-2556
FAX: (714) 834-2643
General correspondence to the Commission may be directed to Chair Robert Bouer at the
address above or via email at t r e a r y � .
General correspondence to staff may be directed to Executive Officer Joyce Crosthwaite
at the address above or to the staff via e-mail at staff� s° e.i c a am.� i .
J�
City of Huntington Beach ";'"GT°" BE""'
Preliminary
WamerM Annexation %-wtudy
September 19, 2005
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
• RSG
INTELLIGENT COMMUNITY DEVELOPMENT
ROSENOW SPEVACEK GROUP INC.
309 WEST 4TH STREET
SANTA ANA, CA 92701-4502
T 714.541.4585
F 114.541.1175
E INFO@WEBRSG.COM
WEBRSG.COM
Warner Mesa Annexation Study
City of Huntington Beach
Table of Contents
EXECUTIVESUMMARY............................................................0.6......a........ 1
Conclusions...................................................................... .. .....................................1
BACKGROUNDAND PURPOSE..................................................................2
Purposeof Study.......................................................................................................2
The Boisa Chica Warner Mesa..................................................................................2
MAP1 Brightwater Vicinity.......................................................................................4
Hearthside Homes Project Description....................................................................5
ANNEXATION POLICIES............................................................................. 6
Annexation Procedures and Policies.......................................................................6
Roleof LAFCO...........................................................................................................6
Huntington Beach Sphere of Influence....................................................................7
STUDYMETHODOLOGY............................................................................. 9
Study Approach and Assumptions..........................................................................9
Schedule....................................................................................................................9
AgencyRoles...........................................................................................................10
FISCALANALYSIS.................................................................................... 12
Scenario 1: Annexation Prior to Development......................................................12
Expenditures............................................................................................................12
Revenues.................................................................................................................16
Summary..................................................................................................................20
Scenario 2: Annexation After Development..........................................................23
Expenditures and Revenues...................................................................................23
Summary..................................................................................................................25
Scenario 3: Development with No Annexation......................................................28
Expenditures and Revenues...................................................................................28
Summary..................................................................................................................28
APPENDIX A- PROPERTY TAX TRANSFER RATES................................ 32
APPENDIX B-TABLE FOOTNOTES......................................................... 34
IEXECUTIVE SUMMARY
This Annexation Study ("Study") was prepared for the City of Huntington Beach
("City") to address the fiscal impacts that may be associated with the annexation
of an unincorporated portion of the Bolsa Chica called the Warner Mesa. A
residential development has been approved by the California Coastal
Commission for the Warner Mesa, which will increase the demand for local and
regional services to land currently uninhabited.
This Study has been performed to assist the Huntington Beach City Council as
they deliberate the issue of annexing the Warner Mesa. It should be noted that
the deficit and surplus projections presented in this study do not represent exact
future sums. All fiscal studies must be based on assumptions and
methodologies which could alter forecasted amounts. This study makes every
attempt, however, to ensure that all assumptions are sound and conservative.
The Study examines three scenarios, all of which assume that development will
occur on the Warner Mesa. The scenarios consisted of annexation prior to
development, annexation one year after the commencement of development,
and development with no annexation. A seven year time horizon was used for
each alternative to offer a cycle of costs and revenues that included elections,
periodic street maintenance activities, and housing turnover.
The following is a summary of the cumulative surplus (deficit) resulting from each
of the aforementioned scenarios.
1. Annexation Prior to Development
The fiscal impact to the City under this scenario resulted in positive cash
flow during the study time horizon, with a cumulative surplus of
approximately$19.2 million through the final year of the analysis.
2. Annexation After Development
This scenario resulted in positive revenue generation in each year, with a
cumulative surplus of approximately $4.1 million through the final year of
this analysis.
3. Development Without Annexation
The fiscal impacts to the City produced by this scenario also remain
positive each year, with a cumulative surplus of approximately $3.9
million through the final year of this analysis.
Conclusions
Analysis of the three scenarios utilized in the Study presents a clear picture of
the fiscal trend that would result from annexation. In each case, the City would
financially benefit from the proposed development on the Warner Mesa, but
annexation prior to development would be the most financially beneficial.
ROSENOW SPEVACEK GROUP INC. PAGE 1
Background and Purpose
Purpose of Study
This Annexation Study ("Study") has been performed at the request of the City of
Huntington Beach ("City") to evaluate the fiscal impacts associated with the
annexation of the Bolsa Chica Warner Mesa, specifically the proposed housing
development, Brightwater. The purpose of the Study is to determine the potential
incremental costs and revenues that the City would incur if development occurs,
particularly if the project were to receive municipal services through the City of
Huntington Beach. Information and assumptions are laid out within the text as
well as in the table footnotes, located in Appendix B.
Hearthside Homes, which currently owns the Warner Mesa property, received
coastal development permit (CDP) 5-05-020 from the California Coastal
Commission as conditioned by items adopted on April 14, 2005. The CDP allows
the subdivision and development of approximately 68 acres of the upper bench
of the Bolsa Chica Mesa (the "Warner Mesa") into a single family residential
community, with additional acreage for use as preservation areas and open
space.
The land is currently an unincorporated island adjacent to the City of Huntington
Beach. As such, development permits, as well as local and regional
governmental services, are within the jurisdiction of the County of Orange. Due
to the location of the Bolsa Chica, the City of Huntington Beach has previously
considered annexing the entire area. However, the land has remained
undeveloped, and has therefore historically had minimal need for local or
regional services. If the Brightwater development occurs as proposed, the
demand for these services will increase, making annexation a logical option.
This potential action brings into question the fiscal impacts annexation may have
on the annexing city. As articulated in the City's General Plan, financial impacts
are a primary concern for potential annexation opportunities.
Objective LU 3.1
"Ensure that any proposed annexation is consistent with the overall
objectives and does not adversely impact fiscal or environmental
resources, and public services and infrastructure of the City of
Huntington Beach."
Thus, this Study has been produced to assist the City by evaluating the potential
costs and revenues that would be associated with the annexation of the
proposed Brightwater development, in compliance with the objectives of the
City's policies.
The Bolsa Chica Warner Mesa
The greater Bolsa Chica area is approximately 1,588 acres. It is divided
functionally into the uplands of the Bolsa Chica mesa to the north, the Huntington
Mesa to the south, the centrally located lowlands, and the wetlands. The
lowlands were historically wetlands; but they have long been used for oil
ROSENOW SPEVACEK GROUP INC. PAGE 2
production. A large portion of the lowlands has recently been acquired by the
State of California, and efforts are underway to restore and increase the
functioning wetlands.
The uplands of the Bolsa Chica Mesa consist of a lower and upper bench, the
latter of which is the proposed site for the Brightwater development. At the time
of this Study, the status of the upper bench is as follows:
• The land is currently unincorporated, and within the jurisdiction of the
County of Orange. The 349 residential unit Brightwater development has
received an approved Coastal Development Permit from the California
Coastal Commission with 26 Special Conditions the developer has
agreed to.
• Hearthside Homes, the land owner and proposed developer, anticipates
an area plan amendment, amended tentative tract map, site plan, and
CEQA addendum to be approved by the County of Orange in the fall of
2005, and expects to commence grading activities in March of 2006
through County of Orange permits.
• Hearthside Homes currently has land holdings in the lower bench, and
plans to complete the sale of the land to the State by the end of 2005.
• The Local Agency Formation Commission (LAFCO) holds ultimate
authority to review and approve or deny annexation. LAFCO has held
preliminary meetings with the City of Huntington Beach and is prepared to
facilitate the annexation of the land.
• No current development agreements are in effect.
ROSENOW SPEVACEK GROUP INC. PAGE 3
MAP 1 Brightwater Vicinity
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ROSENOW SPEVACEK GROUP INC. PAGE 4
Hearthside Homes Project Description
The Brightwater project proposes 349 single family units on 67.9 acres of the
Warner Mesa. In addition to the homes, a 3.2 acre site located along Los Patos
Road within the development will be protected as the Los Patos Wetland and
Southern Tarplant environmentally sensitive habitat area (ESHA). Another 34.2
acres will be restored as a coastal sage scrub and native grassland community.
All streets and entrance points to the community will be public, allowing open
access to a public trail leading to the lower mesa and wetlands for recreational
activities such as hiking and bird watching.
The developer will establish covenants, conditions and restrictions (CC&R's), or
an equivalent thereof, for the proposed residential lots to address ownership and
management of all trails, parks, habitat restoration and preserve areas, and
shared landscaped spaces. For further detail, an extensive review of the project
was performed by the California Coastal Commission, and is described in their
Staff Report dated April 14, 2005. With the CDP in place, this study treats the
development in its proposed state as the final product.
ROSENOW SPEVACEK GROUP INC. PAGE 5
�Annexation Policies
Annexation Procedures and Policies
In Orange County, the state-mandated Local Agency Formation Commission
(LAFCO) has created an Unincorporated Islands Program with the collaboration
of the County of Orange and the League of Cities. The intent of the program is to
assist in the transition of unincorporated portions, or "islands"from County to city
jurisdiction. These agencies have established that the County's primary role is to
provide regional services such as courts, social services, heath care, flood
control, and housing. Cities can provide local services, such as police and fire
protection, street maintenance, and code enforcement.
Although the County may continue to provide many local governmental services
to unincorporated areas, having surrounding cities provide them directly is often
more efficient and cost-effective. The Bolsa Chica is an unincorporated portion
of land surrounded by the Pacific Ocean to the west, and the City of Huntington
Beach in all other directions. Given that the Warner Mesa is immediately
adjacent to incorporated territory in the City, annexation has been considered on
several occasions, particularly with regards to potential development.
Annexation is often proposed to take place prior to development in order to
ensure that municipal services are in place. Annexation at this time provides
continuity of services, as well as assurances to the annexing city that
development revenues will accrue solely to that city.
Two primary components in annexation are the concerns of the land owners and
the consistency of annexation with the affected city's General Plan. The City of
Huntington Beach has incorporated policies for annexation in their General Plan,
which are discussed in great detail later in the Study. Hearthside Homes is
currently the sole owner of all parcels in the Bolsa Chica Warner Mesa, making
the decision to annex prior to development limited to the developer, City, County,
and LAFCO. If development was to occur, and residents purchased units prior to
annexation,the new inhabitants would be eligible to vote on the issue.
Role of LAFCO
The Local Agency Formation Commission was established by the State
legislature in 1963 to oversee the jurisdictional boundary process for local
governments and the formation of new jurisdictions. Until the early 1990's, the
role of LAFCO was limited to its authority to approve or deny jurisdictional
annexations, detachments, formations, and other changes of organization related
to jurisdictional boundaries. Recent legislation has given added authority to
LAFCO to initiate local government consolidations, and has mandated that
LAFCO review and approve or deny proposals for the extension of contract
services outside of any agency's jurisdictional boundaries.
The applicable law governing city annexation proceedings is found in the
California Government Code, Sections 56000 et. seq., also known as the
ROSENOW SPEVACEK GROUP INC. PAGE 6
Cortese-Knox-Hertzberg Local Government Reorganization Act. An uninhabited
annexation may be initiated by resolution of any affected city, county, district, or
by petition of the landowner. Once a complete application for annexation has
been received by LAFCO, the staff will prepare an analysis of the proposal for
annexation and make recommendations to the Commission. In the case of an
unincorporated "island" annexation such as this, if only a portion of the island is
proposed for annexation, LAFCO staff will nonetheless review the feasibility of
annexation of the island in its entirety. The Commission has the authority to
amend the annexation to include a larger region than initially proposed, and
would consider recommendations from their staff.
In the case of the Bolsa Chica unincorporated island, it is possible that LAFCO
will request the entire area be annexed, not just the Warner Mesa. The State
Lands Commission, the County of Orange, and the Ocean View School District
currently own the majority of the Bolsa Chica property. Annexation would require
the review of prior agreements and likely new negotiations for the provision and
funding of services between the land holders and the City. Though there are
currently no plans to develop the remaining land, certain responsibilities, such as
public safety will fall to the City and costs will be accrued.
Huntington Beach Sphere of Influence
Local Agency Formation Commissions act in both regulatory and planning
capacities. While annexations are a regulatory act, LAFCO's major planning task
is the establishment of a "sphere of influence" for the various governmental
bodies within their jurisdictions. Under the Cortese-Knox-Hertzberg Act, the
sphere is to be a "plan for the probable physical boundaries and service area of a
local government agency". The sphere of influence is an important tool because
it guides LAFCO officials and local decision makers to recognize that the city
may wish to incorporate the land within the sphere in the future.
The proposed Brightwater development is within the sphere of influence of the
City of Huntington Beach. The development proposes single family units adjacent
to existing single family residential land uses, and is contiguous to corporate
boundaries of the City. The location and proposed land use of the project is
compatible with the General Plan annexation requirements as described below.
The City's General Plan Annexation Goal mirrors LAFCO's policy of rational
expansion, as do the Objective and Policies in the Land Use Element.
Goal LU 3
"Achieve the logical, orderly, and beneficial expansion of the City's
services and jurisdictional limits."
Furthermore, Policy LU 3.1.6
"Consider creating a policy directing the City to consider annexation
of the Bolsa Chica area (prior to development) to link future
development with the City's infrastructure."
ROSENOW SPEVACEK GROUP INC. PAGE 7
Thus, the General Plan specifically includes consideration for the expansion of
City boundaries into the Bolsa Chica, an administrative advantage if Huntington
Beach agrees to annex the Warner Mesa.
ROSENOW SPEVACEK GROUP INC. PAGE 8
Study Methodology
Study Approach and Assumptions
The assumptions used in this analysis were based on documentation and data
provided by the City of Huntington Beach staff members and department
management, Hearthside Homes, and the County of Orange Planning
Department and Assessor's Office. The Huntington Beach General Plan, City
budget data, the 1999 Bolsa Chica Annexation Study (completed by RSG), and
case study methodology were utilized to develop forecasts in this fiscal impact
analysis. RSG has taken precautions to assure the accuracy of the data used in
the formulation of this analysis by working closely with City and LAFCO staff. We
cannot, however, ensure that the current fiscal year revenue and expenditure
estimates will continue the same trends in the future.
This Study anticipates the Brightwater project will develop as currently proposed
by Hearthside Homes, and as approved by the Coastal Commission on the
Warner Mesa. Projections are based on this proposed plan, which consists of
349 single family detached housing units with an estimated ratio of 2.4 persons
per dwelling unit, resulting in an expected population of 838 residents. Based on
these numbers, three alternative development scenarios are presented, each
projecting fiscal impacts over a seven year time horizon.
Scenario 1 —Annexation Prior to Development
Scenario 2—Annexation After Development
Scenario 3— Development Without Annexation
As most fees associated with land use permit fees, inspection fees, processing,
or similar charges that would be collected from new development are calculated
to offset direct costs to the City, they are in this study considered to be fiscally
neutral. Both costs and revenues have been adjusted to reflect an annual
inflation rate of 2%. Furthermore, though future annexation may include more
land than the proposed Hearthside Homes development, only the fiscal impacts
of the Brightwater community itself are considered here.
Schedule
This fiscal analysis commences in fiscal year 2006/2007, based on proposed
preliminary construction activities that may begin to occur at that time. According
to Hearthside Homes, the project shall have a single building phase. Though
Hearthside Homes expects construction completion in the spring of 2007, this.
study takes a more conservative estimate showing completed construction in the
fiscal year 2007/2008 or "Year 2" of this study. Residential occupancy is
expected to begin immediately after completion, and to continue into the
following year, fiscal year 2008/2009, or"Year 3". For the purposes of this study,
the total number of expected residential in-migration has been split equally into
ROSENOW SPEVACEK GROUP INC. PAGE 9
Year 2 and Year 3, thus 50% of the residents move into the development in each
of those two years.
Valuation for the proposed Brightwater development (in 2005 dollars) was
provided by Hearthside Homes and confirmed by RSG's market research.
Valuations for the seven year period were determined as follows:
• Year 1 (FY 2006-07): Assumes 10% of value of development will appear
on the Assessment Roll (Valuations have been inflated at 2% per
annum).
• Year 2 (FY 2007-08) Assumes 55% of total development value will
appear on the Assessment Roll.
• Year 3 (FY 2008-09) Assumes 100% of the value of the development
(with inflation) will appear on the Assessment Roll.
• Years 4 through 7 Assessment Value of development increased by 2%
per annum.
The fiscal analysis extends for seven years, from the 2006/2007 fiscal year to the
2012/2013 fiscal year, to include costs incurred by major road maintenance and
both local and presidential elections, and revenues from housing turnover and
property tax growth.
Agency Roles
As an unincorporated island, the County of Orange is the primary local and
regional governmental service provider to the Bolsa Chica area, including the
proposed Brightwater site. The County is responsible for policy making and
administration, law enforcement through the Sheriff's Department, animal control,
planning and land use regulation, building inspection, parks and recreation, and
library services. The Orange County Fire Authority is currently responsible for
providing fire protection, rescue, and emergency paramedic services to all
properties within the Bolsa Chica.
If the City of Huntington Beach were to annex the Brightwater project at any time,
the City would become the primary local service provider extending police, fire,
paramedic and ambulatory, parks and recreation, senior services, planning and
land use regulation, and library services. Currently, the City contracts with the
County to provide animal control services. Therefore, regardless of whether
annexation occurs, animal control will remain a County of Orange service.
The Brightwater development proposal has been through prior iterations;
therefore consideration for governmental services has been underway for many
years. Particularly germane to the project is water and sanitary sewer service,
which the County does not directly offer. If annexed prior to development, the
City of Huntington Beach would provide local water and sewer service. In the
event that annexation is not completed prior to commencement of construction,
Hearthside Homes has prepared to contract for potable water supply through the
ROSENOW SPEVACEK GROUP INC. PAGE 10
Southern California Water Company ("SCWC'). This would be accommodated
by extending SCWD transmissions lines southward approximately 6.7 miles from
their nearest current service area in the City of Cypress. Therefore, unless
annexation occurs before development, Hearthside Homes has stated they will
execute a water service contract with the SCWD for potable water and connect
directly to the Orange County Sanitation District for sewer service. The City will
not in this case provide water or sewer service to the development.
In the event that annexation occurs after development, as Scenario 2 reflects,
City staff has stated that some service agreements are expected to be negotiated
between the County and the City to insure the effective and cost-efficient
provision of services to the residents of Brightwater during the interim period prior
to annexation. Should the development not be annexed at any time, City staff
anticipates similar service agreements will nevertheless be made with a long-
term time horizon.
ROSENOW SPEVACEK GROUP INC. PAGE 11
Fiscal Analysis
Scenario 1: Annexation Prior to Development
Scenario 1 describes the forecasted incremental expenditures and revenues to
be made by the City if annexation were to occur prior to development.
Annexation of the Warner Mesa would be consistent with LAFCO's policies, and
with both the Land Use and Growth Management Elements of Huntington
Beach's General Plan. Annexation is often proposed prior to development to
ensure that municipal services are in place, which is of particular relevance in
this case with regard to water and sanitary sewer service. Annexation prior to
development would result in municipal water and sewer service from the City,
and would also provide assurances to Huntington Beach that any development
revenues, both one-time and ongoing, will accrue to the City.
Expenditures
The following provides an analysis of the potential cost impacts associated with
annexation upon individual City functions and programs, including costs for
operation, services and equipment, and other miscellaneous expenditures.
Table la reflects these expenditures, which have been categorized by
departments within the City's organizational structure and estimates are
discussed below. It should be noted that it is not the purpose of this study to
analyze the total cost to the City if the proposed Brightwater development is
annexed, but only the incremental costs associated with such action.
General Government.
a. Administration
No new positions, equipment, or major operating costs are
expected be incurred as a result of the annexation. Minimal
expenditures including legal costs, advertising, postage, and other
selected services and supplies are considered to be neutralized
by development permits and fees. Some additional public support
is expected to be required in order to handle basic inquiries and
assistance. These costs have been estimated from the budget of
the City Clerk for public support on a per capita basis.
b. Elections
Costs associated with biennial elections (local and presidential)
are included. Election costs were estimated based on a per
registered voter rate calculated from City budget data and
historical cost figures from the City. The number of voters was
estimated using the overall percentage of registered voters in the
city according to the Orange County Registrar, and applying that
percentage to the number of expected residents in Brightwater.
c. County Property Tax Collection Charges
Beginning in the 1992-1993 fiscal year, the County Auditor-
Controller's Office charged cities and local districts receiving
ROSENOW SPEVACEK GROUP INC. PAGE 12
property tax revenue for incidental administrative costs. These
charges are estimated at 0.946% of all property tax revenues.
Planning and Building and Safety
Upon the annexation of the Brightwater project, the City Planning Department
and the Building and Safety Department will assume the processing of all land
use related services as well as construction inspections. All fees associated with
these services are required to offset costs (in almost all cases) and are therefore
not included in expenditures or revenues.
Community Services
a. Parkland
Regardless of annexation, the regional open space and wetlands
will be the responsibility of the State of California, and the County
of Orange will retain ownership of Linear Park, resulting in no
financial impact on the City.
Within the project boundaries, there are no anticipated costs
relative to landscape maintenance services. All neighborhood
parks, open spaces, and landscaping will be maintained by the
proposed homeowners association. However, this responsibility
was proposed by the developer for the parkland and open space
that currently exists in the Brightwater site plan. Under the
standards set by the City General Plan, five acres of parkland per
1,000 people are required. The development package proposed
by Hearthside Homes offers passive open space with a trail.
Therefore, the creation of additional park space may be
negotiated with the developer or an in-lieu fee may be imposed.
Any possible costs associated with the maintenance of negotiated
additional parkland have not been included in this study.
There will be some impacts on existing recreation programs and
facilities, including day care, summer camp, playground
equipment, and lifeguard services etc., and exist regardless of
whether the City annexes the area. Registration fees will offset
some of the costs of organized activities; however General Fund
expenditures have been calculated on a per capita basis due to
the high volume of informal services made available in the City.
b. Senior Services
The City's Human Services Division provides a variety of
programs for seniors in the community, including the operation of
the Rodgers Seniors' Center and the Seniors Outreach Center.
These costs are included in the General Fund expenses, and are
included regardless of annexation.
Public Safety
a. Police Department
ROSENOW SPEVACEK GROUP INC. PAGE 13
If annexed, the City's Police Department will provide all law
enforcement-related services to the development.
The City's ratio for officer employment is 1.15 per 1000 residents.
With an increase of 838 residents, this ratio indicates a need for
an additional 0.9637 officers. However, the Department does not
anticipate a dramatic increase in service requests, nor the need
for any additional employees. A proportional share of the Police
Department's General Fund expenses has been incorporated into
the City's expenditures, which were calculated using the 2004-
2005 per capita rates.
b. Fire Protection
Recurring fire protection expenditures were estimated using
current City Fire Department budget data for costs associated with
vehicle maintenance, fuel consumption, and vehicle supplies on a
per capita basis. General Fund expenditures are based on the per
capita costs associated with the additional residents of the area.
Paramedic and ambulatory transport costs have been calculated
based on data provided by the City Fire Department at a cost per
emergency medical patient transported in 2004. The Fire
Department also offers a voluntary membership program to
residents called FireMed, which allows members to receive
paramedic and ambulatory service from the City for no additional
out-of-pocket expenses. The costs to operate this program have
been calculated on a per household basis, for those households
enrolled in the program. Approximately 33% of all households
City-wide participate in FireMed at an annual cost to the City of
$51.26 per household. This study projects that 33% of Brightwater
households will also participate in FireMed.
In addition to the above costs, the Fire Department plans to
relocate Fire Station Number 8 in order to increase response time
to the affected residents. The proportional cost share for the
residents in the Brightwater community has been included in the
Study, based on an estimated cost of approximately $10.3 million
to relocate the station in Year 5. This relocation price estimate
was provided by RRM Design Group of San Luis Obispo,
California, and was obtained at the request of City staff. In this
scenario, the proportional cost of relocating the station on a per
capita basis has been captured as an expenditure in Year 5.
Library Services
The additional population produced by the proposed development
will increase the use of library services throughout the City. The
costs associated with the additional residents have been
forecasted using City budget data at a per capita rate. It should be
noted that Library Services has requested one additional
children's librarian and one additional library clerk specialist to
meet the increased demand on the library system, and the City
ROSENOW SPEVACEK GROUP INC. PAGE 14
should consider the marginal impacts associated with the
additional residents. However, for the purpose of this study, only
costs that reflect the per capita estimates of operating the
Huntington Beach library system have been utilized.
Public Works
a. Sewer Maintenance Services
Through annexation, the,addition of residential units to the City
from the Brightwater development will require the expansion and
maintenance of the applicable local sewer system services. Costs
were forecasted based on the estimated length of the piping.
Service costs and maintenance scheduling rates were provided by
the City's Public Works department. Residential sewer lines are
expected to be serviced once a year. Arterial line services are not
included, as only a small extension from the existing arterial line
may be required. Capital costs for improvements or replacement
of pump stations were not included in this analysis. If an additional
lift station or similar apparatus were required to serve the
development, infrastructure will be provided by the developer.
b. Storm Drain Maintenance Services
The community will have approximately 45 storm drain catch
basins, which require cleaning once a year. Upon entering the
storm drain system, stormwater will be then be diverted into a
debris unit at one outlet point. The City employs Continuous
Deflective Separation (CDS) units to capture debris in the nearby
coastal downtown area, and have found them to be successful at
a maintenance rate of four times a year. Based on this
experience, the City expects a similar single CDS unit with similar
maintenance needs will be installed to capture debris from
stormwater runoff on the Warner Mesa. Catch basin and debris
unit cleaning costs and scheduling were obtained from the Public
Works Department.
c. Park and Landscape Maintenance Services
As discussed earlier, it is expected that all park, open space,
median and landscaping will be the financial responsibility of a
homeowners association. Thus, no City landscape maintenance
costs have been included as forecasted expenditures.
d. Street Lighting
According to City estimates, and verified by RSG research,
approximately 100 street lights will be required for 3.17 miles of
road within the Brightwater community. The City already contracts
with Southern California Edison to provide streetlights in other
areas, and expects to do so for the Brightwater community if it is
annexed. The average monthly cost to the City for Southern
California Edison to maintain the light is$10 per unit.
ROSENOW SPEVACEK GROUP INC. PAGE 15
Contingency
A 15% contingency factor has been added to the General Fund
expenditure estimate to meet unforeseen programs or emergency
needs.
Road Maintenance
a. Street Maintenance
Street maintenance expenditures were projected based upon the
length of road measurements provided by the developer, and the
maintenance costs estimated by the City's Department of Public
Works. A total of 6.34 lane miles (3.17 miles of two lane roads)
are planned, all of which are public. Costs include slurry sealing
and bi-monthly street sweeping. According to the City, street slurry
sealing (Type II sealing) occurs approximately every seven years.
Street sweeping is estimated at a rate of 25 times per year.
b. Traffic Signal Maintenance
The Department of Public Works does not anticipate the need for
a new traffic signal.
Revenues
The following revenue section analyzes new, recurring revenues from
various state and local sources that will be received by the City as a result
of annexation. Table lb demonstrates these revenues. One-time only,
development related fees are often discussed as potential revenue
sources, but with the exception of development contributions to the
library, certain public works fees, and possible in-lieu fees for parkland,
one-time fees are expected to have a neutral impact, as they offset any
initial costs of staff services, infrastructure, and supplies.
Taxes
a. Property Taxes
The Local Agency Formation Commission reports that the
property tax ratio contained in the Master Property Tax Agreement
between the City and the County, as set forth in a City Council
resolution adopted on October 28, 1980, is current and will apply if
the Brightwater development is annexed. The division of the
property tax proscribed by the agreement, which is based on
historical tax ratios prior to the passage of Proposition 13, is 56%
City and 44% County. Thus, upon annexation the City would
receive 56% of the total current County General Fund property tax
revenue, and the County would retain the remaining 44% of their
current General Fund property tax revenue share.
In addition to the split of the County base property tax, the City
would receive the tax override of 0.696% for the City's Employee
Retirement System. City staff members have stated that the City
would also receive an estimated 70% of the total current County
Library District property tax revenues for services rendered by the
ROSENOW SPEVACEK GROUP INC. PAGE 16
city library system, and 100% of the total current Orange County
Fire Authority property tax revenue for services provided by the
City fire department.
b. Property Transfer Taxes
Property transfer taxes are generated at the time a new property
is sold or an existing property is resold. A property transfer tax of
$0.55 per $1,000 of transferred value is levied an the sale of real
property and is divided between the County of Orange and the
City. The amount of property tax received will depend upon the
sale of land and the level of resale activity within the project.
These revenues have been estimated based on a 5% annual
turnover rate.
c. Vehicle License Fee
Vehicle license Fee ("VLF") revenue is a subvention collected by
the state and allocated to cities and counties based on a statutory
formula. VLF revenues are an important component of the fiscal
viability of annexations. Prior to 2004, state law required that a
city whose population increased by virtue of annexing land would
receive additional VLF revenue to fund services to that area. With
the VLF for Property Tax Swap of 2004, more than 90% of city
VLF (and VLF backfill) revenue was replaced with property tax
revenue. These changes severely reduced the amount of VLF
revenue available to fund annexations. Because of the difficulty in
accurately projecting these numbers, this calculation is based on a
per capita rate from the additional residents in the development.
Under the law prior, the portion of VLF revenue available for
distribution as general revenue to cities and counties was divided
in half. One half was distributed to the cities on a per capita basis
and the remaining was distributed to counties in a similar manner.
Under the new law, effective FY 2004-05, most of the VLF
revenue allocated to cities and all of the revenue allocated to
counties increases based on assessed value growth instead of
population growth in a jurisdiction. Revenue is distributed as
property tax in-lieu of VLF. Currently, legislative efforts are being
pursued to restore the loss of revenues from the VLF subvention
for annexations and new cities. Under AB 1602, Assemblyman
John Laird, in partnership with the League of California Cities is
drafting language and formulating a solution to re-establish
population calculations and allocation procedures.
d. Supplemental Property Tax Roll
Supplemental Revenue is revenue generated by the tax increment
created when a sale takes place or a construction project is
completed after January 1 of a given year (the assessor's office
cut-off date for the next year's assessment roll), but the
reassessment occurs and the owner is issued a supplemental tax
bill for the period between the sale or completion and the next
ROSENOW SPEVACEK GROUP INC. PAGE 17
regular tax bill. Because the nature of these revenues is
unpredictable, they cannot be accurately projected, and therefore,
no provision is made within the projections to reflect their impact
on future revenues.
e. Franchise Fees
Franchise fees have been established for utilities, transfer
stations, pipeline franchises, cable television franchises, and bus
bench franchises. These fees have been aggregated and
forecasted using data from the budget on a per capita basis.
f. Unitary Utility Tax
Following the passage of AB454, the State Board of Equalization
determines and distributes the statewide apportionment of the
Unitary Utility revenue. This makes revenues difficult to project,
therefore conservative projections are based upon a 5% tax rate
applied to utility service billings City tax rate.
g. Sales Tax
The Brightwater project does not include any retail uses; hence no
direct sales tax revenues will be incurred by the City. However,
sales tax revenues are likely to grow indirectly because of an
increase in population, creating additional purchasing potential.
The project's proximity to retail businesses within the City will
engender some additional sales tax revenue regardless of
annexation.
Road Funds
a. Gas Tax
As stated in the City Municipal Code, all moneys received by the
City from the State under the provisions of the Streets and
Highways Code for the acquisition of real property or interests
therein for, or the construction, maintenance or improvement of
streets or highways other than state highways, shall be paid into
the fund.
Within this study, the Gas Tax revenue was calculated on a per
capita basis, using the total dollar amount from the 2004-05
Budget. This differs slightly from the actual State method used,
which bases revenue on a per capita basis and a per need basis.
This number more closely represents the average dollar amount
over the seven year time period.
b. Measure M
Measure M is a half cent sales tax, approved in 1990 by the voters
of Orange County, which is used for transportation projects. The
breakdown of this tax includes 43% of the funds towards
freeways, 21% towards local streets and roads, 25% towards
transit, and 11% towards regional streets. To date, Huntington
Beach has received $22,854,971. Actual allocation is based on
need and population; therefore calculations in this study are based
ROSENOW SPEVACEK GROUP INC. PAGE 18
on a per capita estimate, using 2004-05 budget numbers for
guidance. Actual numbers may vary due to the discrepancies in
distribution.
Other Revenues
a. Community Services
The Community Services Department has reviewed the
development package proposed by Hearthside Homes, and does
not feel adequate parkland is currently included. Under the
Quimby Act, in-lieu funds can be used for park renovation,
acquisition, and development. The City of Huntington Beach uses
a standard equation for parkland in-lieu fees. At the request of the
city, average land values have been placed at $2.5 million per
acre. The standard equation then reads:
5 (#units x 2.68) / 1000 x $2.5M = Park in-lieu fee
The City may choose to negotiate in-lieu fees based on the park
space the Brightwater plan currently incorporates, which would
reduce this revenue.
b. Library Community Enrichment and Development Fees
The City currently assesses two separate library fees from new
developments. The Community Enrichment Library Fee (CELF) is
assessed at a rate of $0.15 per square foot for new residential
units. Revenue from this fee is split into $0.08 per square foot for
the Art Center operated by Community Services and $0.07 for the
Library, but for the purpose of this study the CELF has been
evaluated as a single fee. The Library Development Fee (LDF) is
assessed at$0.44 per square foot for residential units. Therefore,
a fees total of $0.59 per square foot is incorporated in this study,
using an average housing size of approximately 2,755 square feet
each as proposed by the developer.
c. Paramedic and Ambulance Transport Fees
The City imposes an ambulance and paramedic transport fee for
services rendered. The City's ambulance service charges were
supplied by the Fire Department on a per transport basis, using
service data from 2004, and have been applied at a per capita
ratio to the additional residents.
d. FireMed
The City of Huntington Beach Fire Department offers a voluntary
membership program to residents, which allows members to
receive paramedic and ambulatory service from the City for no out
of pocket expenses. The cost to join the FireMed program is $60
per year, per household. This study estimates a 33% household
participation rate based on the city-wide membership average, for
a total of 115 projected member households in the Brightwater
community.
ROSENOW SPEVACEK GROUP INC. PAGE 19
e. Fines and Forfeitures
This revenue source is generated by Motor Vehicle Code fines,
Municipal Code fines, and other miscellaneous fines and
forfeitures. Projected revenues are based on per capita amounts
from the 2004-2005 budget year.
Summary
The forecasted expenditures and revenues for this study have
been calculated using conservative methodologies and modest
escalation factors. Based on this analysis of annexation prior to
development, forecasted revenues will exceed expenditures.
Projections indicated a cumulative surplus over the seven year
study period of$19,159,306.
ROSENOW SPEVACEK GROUP INC. PAGE 20
Table 1a:Seven Year Expenditure Summary(Annexation Prior to Development)
2006-07 2007.08 2008-09 2009-10 2010-11 2011-12 2012-13
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Administration
Administration/Public Support $10 $718 $1,465 $1,495 $1,524 $1,555 $1,586
Elections 1 $0 $568 $1,204 $1,182 $757 $1,230 $1,303
Animal Control $0 $977 $1,992 $2,032 $2,073 $2,114 $2,157
County Tax Collection Charge 3 $989 $5,548 $10,290 $10,495 $10,705 $10,919 $11,138
Subtotal $989 $7,811 $14,951 $15,204 $15,060 $15,819 $16,184
Building&Safety 4
Permit and Plan Check Services $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Community Services
General Fund Expenses5 $0 $2,262 $4,615 $4,708 $4,802 $4,898 $4,996
Subtotal $0 $2,262 $4,615 $4,708 $4,802 $4,898 $4,996
Fire Department
Fire Med 6 $0 $3,071 $6,265 $6,390 $6,518 $6,648 W781
General Fund Expenses s0 $45,550 $92,877 $94,734 $96,629 $98,562 $100,533
Paramedic&Ambulance Transport 8 $0 $9,586 $19,545 $19,936 $20,335 $20,742 $21,156
Fire Department Relocation 9 $0 $0 $0 $0 $42,940 $0 $0
Subtotal $0 $58,206 $118,687 $121,060 $166,421 $125,951 $128,470
Library Services
General Fund Expensest0 $0 $6,996 $14,271_ $14,557 $14,848 $15,145 $15,448
Library Service Fund 11 $0 $2,831 $2,888 $2,946 $3,004 $3,065 $3,126
Library Development 72 $0 $962 $981 $1,000 $1,021 $1,041 $1,062
Subtotal $0 $10,789 $18,140 $18,503 $18,873 $19,250 $19,635
Police
General Fund Expenses 13 $0 $100,163 $204,236 $208,321 $212,487 $216,737 $221,072
Subtotal $0 $100,163 $204,236 $208,321 $212,487 $216,737 $221,072
Public Works
Residential Sewer Cleanings t4 $0 $11,841 $12.078 $12,320 $12,566 $12,817 $13,074
Storm Drain Basin Cleanings 15 $0 $826 $842 $859 $876 $894 $912
Storm Drain Debris Unit Cleaning 16 $0 $6,242 $6,367 $6,495 $6,624 $6,757 $6,892
Street Lighting t7 s0 $12,240 $12,485 $12,734 $12,989 $13,249 $13,514
General Fund Expenses $0 $36,808 $75,052 $76,553 $78,094 $79,646 $81,239
Subtotal $0 $67,957 $106,825 $108,961 $111,140 $113,363 $115,631
Contingency-15% $148 $37,078 $70,118 $71,514 $79,317 $74,403 $75,898
Road Maintenance
Street sweeping 79 $0 $3,328 $3,394 $3,462 $3,531 $3,602 $3,674
Local Street Maintenance20 $0 $0 $0 $0 $0 $0 $221,486
Subtotal $0 $3,328 $3,394 $3,462 $3,531 $3,602 $225,160
Contingency-15% $0 $499 $509 $519 $530 $540 $33,774
GRAND TOTAL ALL EXPENDITURES $1,137 $288,095 $541,475 $552,252 $612,162 $574,563 $840,819
ROSENOW SPEVACEK GROUP INC, PAGE 21
Table 1 b:Seven Year Revenue Summary(Annexation Prior to Development)
2005-07 2007-08 2008-09 2009-10 2010-11 2011-12 2011-12
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Taxes
Basic Levy-Property Tax $104,435 $585,880 $1,086,541 $1,108,272 $1,130,437 $1,153,046 $1,176,107
Utility Unitary Tax $0 $2,133 $4,351 $4,438 $4,527 $4,617 $4,710
Property Transfer Taxi $0 $92,303 $171,179 $17.460 $17,809 $18,166 $18,529
Subtotal $104,435 $680,315 $1,262,071 $1,130,170 $1,152,773 $1,175,829 $1,199,345
Franchise Fees
Gas,Electric,Cable TV,etc $0 $11,227 $22,892 $23,350 $23,817 $24,293 $24,779
Subtotal $0 $11,227 $22,892 $23,350 $23,817 $24,293 $24,779
Motor Vehicle Revenues
Vehicle License Fees 4 $0 $3,278 $6,684 $6,818 $6,954 $7,093 $7,235
In-Lieu of VLF 5 $0 $16,643 $33,952 $34,631 $35,324 $36,030 $36,751
Subtotal $0 $19,921 $40,636 $41,449 $42,278 $43,123 $43,986
Other Revenues
Fire Mad s $0 $26,156 $53,332 $54,399 $55,487 $56,596 $57,728
Paramedic&Ambulance Transport 7 $0 $391 $797 $813 $829 $846 $863
Fines and Forfeitures $0 $11,097 $22,626 $23,079 $23,540 $24,011 $24,491
Subtotal $0 $37,643 $76,755 $78,290 $79,866 $81,453 $83,082
One Time Fees
Community Enrichment Library 8 Art Center Fee 9 $144,232 $0 $0 $0 $0 $0 $0
Library Development Fee 10 $423,081 $0 $0 $0 $0 $0 $0
Park Space-in Lieu Fee $11,691,500 $0 $0 $0 $0 $0 $0
Traffic Impact Fee 12 $586,320 $0 $0 $0 $0 $0 $0
Sewer Connection Fee(5%to City)13 $30,520 $0 $0 $0 $0 $0 $0
Drainage Fee(per acre)14 $374,000 $0 $0 $0 $0 $0 $0
Water Connection Fee 75 $1.675,200 $0 $0 $0 $0 $0 $0
Subtotal $14,924,853 $0 $0 $0 $0 $0 $0
Road Funds
Measure M-Local Tumback 15 $0 $4,777 $9,740 $9,935 $10,134 $10,337 $10,543
Gas Tax 17 $0 $7,383 $15,053 $15,354 $15,661 $15,975 $16,294
Subtotal $0 $12,160 $24,794 $25,290 $26,795 $26,311 $26.838
GRAND TOTAL ALL REVENUES $15,029,288 $761.266 $1,427,148 $1,298,548 $1,324,519 $1,361,010 $1,378,030
GRAND TOTAL ALL EXPENDITURES(see Table le) $1,137 $288,095 $541,475 $552,252 $612,162 $574,563 $840,819
REVENUE SURPLUS(SHORTFALL) $15,028,151 $473,171 $885,673 $746,296 $712,367 $776,447 $637,210
CUMULATIVE SURPLUS(DEFICIT) $16,028,151 $15,501,322 $16,386,995 $17.133,291 $17,846,649 $18,62Z,098 $19.159,306
ROSENOW SPEVACEK GROUP INC. PAGE 22
Scenario 2:Annexation After Development
The Brightwater project may be initially developed within the jurisdiction of the
County of Orange, and not annexed into the City until after development has
occurred. Once residents have moved into the community, annexation is
typically initiated by the resident registered voters, though the City, County, or a
special district may continue to pursue it as well.
Generally, annexation is requested if residents perceive a need for increased
public services. Because development is complete, annexation at this time does
not provide the city with options to negotiate new or additional assessments or
fees.
The below summary addresses the changes in fiscal calculations based on
annexation occurring in Year 3, or fiscal year 2008/2009. Thus, Years 1 and 2
calculate expenditures and revenues based on the project remaining within the
jurisdiction of the County of Orange. Following annexation, beginning in Year 3,
revenues and costs are calculated in the same manner as Scenario 1. Please
refer to Tables 2a and 2b for projected dollar amounts.
As discussed below, the principal differences in this scenario as compared to
Scenario 1 are the lack of one-time development revenues associated with both
the park in-lieu fees and the library fees.
Expenditures and Revenues
Administration
The city will continue to pay the County Tax Collection Charge based on revenue
it receives from pass through agreements with the County for library and fire
services, as discussed below.
Community Development
a. Parks
Community parks and open spaces within the planned
development are expected to be maintained by the homeowners'
association. If the Brightwater Community annexes after
development, in-lieu fees will no longer be applicable.
b. Community Services
Senior residents of the Brightwater Community may participate in
activities at local City-run senior centers, and may also require
some additional services through City senior programs.
Therefore, costs associated with those activities and services
continue to be included in projections regardless of annexation.
Other recreational services provided by the City such as lifeguards
and maintained recreational equipment in parks will be impacted
by the additional residents regardless of annexation. As such,
ROSENOW SPEVACEK GROUP INC. PAGE 23
General Fund costs have been included based on a per capita
estimate to reflect these expenditures.
Public Safety
Nearly a decade ago, Hearthside Homes proposed a larger housing development
at the same location on the Warner Mesa, and an arrangement was
subsequently established between the City of Huntington Beach, the Orange
County Fire Authority, and Hearthside Homes. This 1997 Tri-Party Agreement
allowed for the City of Huntington Beach to provide fire, paramedic, and
ambulatory services to the project, instead of the Orange County Fire Authority,
which does not maintain a nearby fire station. The Tri-Party Agreement also
included a capital contribution fee. As stated in the agreement, the developer
made this contribution fee to the OCFA for the tentative purpose of locating an
OCFA fire station within the project to serve the development; however, most of
this contribution was in turn made to pass to the City for the relocation of a City
fire station, as the OCFA would not be the service provider. Based on
discussions with the City Fire Department management staff, and the proximity of
the project to the City, this study reflects forecasts based on a similar agreement
for an 80% tax revenue pass-through being negotiated by the City to provide
these services if annexation does not take place. This study currently excludes
any potential capital contribution from the developer to maintain a conservative
projection; but it should be noted that the relocation of the fire station is still
expected to be necessary in order for the Fire Department to maintain city-wide
service standards, and therefore a new capital contribution may be negotiated in
the future.
Hence, in Scenario 2, Years 1 and 2, an 80% pass through of tax revenue from
the Orange County Fire Authority has been included, as was stipulated in the
1997 agreement. After annexation in Year 3, expenditures and revenues were
calculated in the same manner as Scenario 1 wherein 100% of the OCFA
revenues were passed to the City for services rendered by the Huntington Beach
Fire Department. Furthermore, as the City is expected to serve the Brightwater
community regardless of annexation, residents will be able to enroll in the
FireMed program at any time, with its associated cost and revenue impacts both
included in the forecasts.
Library Services
The nearest libraries are maintained by the City of Huntington Beach, and thus
are logically anticipated to be impacted by the addition of residents. A 1996
negotiation between the City, County, and developer resulted in.an agreement to
mitigate for these impacts through one-time fees. This study has made its
projections based on this agreement remaining valid, wherein Hearthside Homes
would pay $200 per unit to the City and the County would pay $100 per unit to
the City upon issuance of grading permits. It should be noted that these fees
were based upon the average revenue generated by the Community Enrichment
Library Fee in 1996, and do not reflect the revenues generated by the Library
Development Fee, which was instituted in 1998. More importantly, it should be
noted that the prior agreement was intended for a no annexation scenario.
ROSENOW SPEVACEK GROUP INC. PAGE 24
Thus, in Scenario 2, Years 1 and 2, based upon direction from Library Services
Department management staff, a 70% pass through of tax revenue from the
County of Orange library fund has been included as well as a $300 per unit
capital contribution, as was arranged in the 1996 agreement. After annexation in
Year 3, expenditures and revenues were calculated in the same manner as
Scenario 1.
Summary
The forecasted expenditures and revenues for this study have been calculated
using conservative methodologies and modes escalation factors. Based on this
analysis of annexation after development, forecasted revenues will exceed
expenditures. Projections indicated a cumulative surplus of$4,061,452 over the
seven year study period.
ROSENOW SPEVACEK GROUP INC. PAGE 25
Table 2a: Seven Year Expenditure Summary(Development Prior to Annexation)
2006-07 2007-08 2008-09 2009.10 2010-11 2011-12 2012-13
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Administration
Administration/Public Support $0 $0 $1,465 $1,495 $1,524 $1,555 $1.586
Elections 1 $0 $0 $1,204 $1,182 $757 $1,230 $1,303
Animal Control $0 $0 $1,992 $2,032 $2,073 $2,114 $2,157
County Tax Collection Charge 3 $0 $0 $10,290 $10,495 $10,705 $10,919 $11,138
Subtotal $0 $0 $14,951 $15,204 $15,060 $15,819 $16,184
Building&Safety 4
Permit and Plan Check Services $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Community Services
General Fund Expenses $0 $0 $4,615 $4.708 $4,802 $4,898 $4,996
Subtotal $0 $0 $4,615 $4,708 $4,802 $4,898 $4,996
Fire Department
Fire Mad 6 $0 $3,071 $6,265 $6,390 $6,518 $6,648 $6,781
General Fund Expenses? $0 $45.550 $92,877 $94.734 $96,629 $98,562 $100,533
Paramedic&Ambulance Transport 9 $0 $9,586 $19,545 $19,936 $20,335 $20,742 $21,156
Fire Department Relocation 9 $0 $0 $0 $0 $42,940 $0 $0
Subtotal $0 $58,206 $113,687 $121,060 $166,421 $125,951 $128,470
Library Services
General Fund Expenses 10 $0 $6,996 $14,271 $14,557 $14,848 $15,145 $15,448
Library Service Fund 11 $0 $2,831 $2,888 $2,946 $3,004 $3,065 $3,126
Library Development 72 $0 $962 $981 $1,000 $1,021 $1,041 $1,062
Subtotal $0 $10,789 $18,140 $18,503 $18,873 $19,250 $19,635
Police
General Fund Expenses13 $0 $0 $204,236 $208,321 $212,487 $216,737 $221,072
Subtotal $0 $0 $204,236 $208,321 $212,487 $216,737 $221,072
Public Works
Residential Sewer Cleanings 14 $0 $0 $12,078 $12,320 $12,566 $12,817 $13,074
Storm Drain Basin Cleanings 15 $0 $0 $842 $859 $876 $894 $912
Storm Drain Debris Unit Cleaning 15 $0 $0 $6,367 $6,495 $6,624 $6,757 $6,892
Street Lighting 17 $0 $0 $12.485 $12,734 $12,989 $13,249 $13,514
General Fund Expenses" $0 $0 $75,052 $76,553 $78,084 $79,646 $81,239
Subtotal $0 $0 $106,825 $108,961 $111,140 $113,363 $115,631
Contingency-15% $0 $10,349 $70,118 $71,514 $79,317 $74,403 $76,898
Road Maintenance
Street sweeping 19 $0 $0 $3,394 $3,462 $3.531 $3,602 $3,674
Local Street Maintenance 20 $0 $0 $0 $0 $0 $0 $221,486
Subtotal $0 $0 $3,394 $3,462 $3,531 $3,602 $225,160
Contingency-15% $0 $0 $509 $519 $530 $540 $33,774
GRAND TOTAL ALL EXPENDITURES $0 $79,344 $541,475 $552,252 $612,162 $574,563 $840,819
ROSENOW SPEVACEK GROUP INC. PAGE 26
Table 2b:Seven Year Revenue Summary(Development Prior to Annexation)
2006-07 2007.08 2008-09 2009-10 2010-11 2011-12 2012-13
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Taxes
Basic Levy-PropertyTax' $62,241 $349,171 $1,086,541 $1,108,272 $1,130,437 $1,153.046 $1,176,107
Utility Unitary Tax 2 $o $0 $4,351 $4,438 $4,527 $4,617 $4,710
Property Transfer Taxi $o $0 $171,179 $17,460 $17,809 $18,166 $18,529
Subtotal $62,241 $349,171 $1,262,071 $1,130,170 $1,152,773 $1,175,829 $1,199,345
Franchise Fees
Gas,Mectric,Cable TV,etc $0 :$0 $22,892 $23,350 $23,817 $24,293 $24,779
Subtotal $0 $0 $22,892 $23,350 $23,817 $24,293 $24,779
Motor Vehicle Revenues
Vehicle License Fees 4 $o $0 $6,684 $6,818 $6,954 $7,093 $7.235
In-Lieu of VLF 5 $0 $o $33,952 $34,631 $35,324 $36,030 $36,751
Subtotal $0 $0 $6,684 $6,818 $6,954 $7,093 $7,235
Other Revenues
Fire Mad 6 $o $26,156 $53,332 $54,399 $55,487 $56,596 $57,728
Paramedic&Ambulance Transport 7 $o $391 $797 $813 $829 $846 $863
Capital Contribution Fee(Library)a $104,700 $0 $o $0 $0 $0 $0
Fines and Forfeitures s $o $5,548 $22,626 $23.079 $23.540 $24,011 $24,491
Park Space-In Lieu Fees $0 $0 $0 $0 $0 $0 $0
Subtotal $104,700 $32,095 $76,755 $78,290 $79,856 $81,453 $83,082
Road Funds
Measure M-Local Tumback 70 $o $0 $9.740 $9.935 $10,134 $10,337 $10.543
Gas Tax $o $0 $15,053 $15,354 $15,661 $15,975 $16,294
Subtotal $0 $0 $24,794 $25,290 $25,795 $26,311 $26,838
Subtotai-One Time Revenues $104,700
GRAND TOTAL ALL REVENUES $166,941 $381,266 $1,393,196 $1,263,917 $1,289,195 $1,314,979 $1,341,279
GRAND TOTAL ALL EXPENDITURES(see Table 2a) $0 $79,344 $541,475 $552,252 $612,162 $574,563 $840,819
REVENUE SURPLUS(SHORTFALL) $166,941 $301.922 $851,721 $711,665 $677,034 $740,416 $500,460
CUMULATIVE SURPLUS(DEFICIT) $166,941 $468,863 $1,320,584 $2,03$249 $$709,282 $3,449.699 $3,950,158
ROSENOW SPEVACEK GROUP INC. PAGE 27
Scenario 3: Development with No Annexation
The Brightwater project may remain an unincorporated island and not annex into
the City of Huntington Beach. As with the first two years of development in
Scenario 2, several services may still be provided to the residents by the City due
to the close proximity, therefore impacting their expenditures and revenues.
Tables 3a and 3b reflect the expenditures and revenues for this scenario.
Expenditures and Revenues
Administration
The city will continue to pay the County Tax Collection Charge based on revenue
it receives from pass through agreements with the County for library and fire
services, as discussed below.
Fire Protection
The City Fire Department maintains the station geographically closest to the
Brightwater community, making it probable that they will often be the first unit to
respond in an emergency. Fire Department management staff has stated that
based upon the prior 1997 Tri-Party Agreement, this scenario provides an 80%
pass through of tax revenue from the Orange County Fire Authority to the City for
services rendered. The City is expected to serve the Brightwater community
regardless of annexation; therefore residents will be able to enroll in the FireMed
program at any time.
Community Services
Senior residents of the Brightwater Community may participate in activities at
local City-run senior centers, and may also require some additional services
through City senior programs. Therefore, costs associated with those activities
and services continue to be included in projections regardless of annexation.
Library Services
Based upon input from the Library Services management staff, the 1996
negotiation between the City, County, and developer was used to forecast this
scenario without any adjustment. Though a renegotiation of fees is probable, it is
unreasonable to project the results. Thus, for the purposes of this study,
Hearthside Homes shall pay a fee of$200 per housing unit and the County shall
pay $100 per housing unit to the City. The City will also receive a 70% pass
through of funds from the County library tax revenue from the development. It
should be noted that the one-time fees were based upon an average revenue
generated by the Community Enrichment Library Fee in 1996, and do not reflect
the revenues generated by the Library Development Fee, which was instituted in
1998.
ROSENOW SPEVACEK GROUP INC. PAGE 28
analysis of development without annexation, forecasted revenues will exceed
expenditures. Projections indicated a cumulative surplus of$3,892,688.
ROSENOW SPEVACEK GROUP INC. PAGE 29
Table 3a:Seven Year Expenditure Summary(No Annexation)
2006.07 2007.08 2008-09 2009.10 2010.11 2011.12 2012-13
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Administration
Administration/Public Support $0 $0 $0 $0 $0 $0 $0
Elections 1 $0 $0 $0 $0 $0 $0 $0
Animal Control $0 $0 $0 $0 $0 $0 $0
County Tax Collection Charge` $589 $3,307 $6,132 $6,255 $6,380 $6,508 $6,638
Subtotal $589 $3,307 $6,132 $6,255 $6,380 $6,508 $6,638
Building&Safety 3
Permit and Plan Check Services $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Community Services
General Fund Expenses4 $0 $2,262 $4,615 $4,708 $4,802 $4,898 $4,996
Subtotal $0 $2,262 $4,615 $4,708 $4,802 $4,898 $4,996
Fire Department
Fire Mad 5 $1,517 $1,547 $1,578 $1,610 $1,642 $1,675 $1,708
General Fund Expenses 6 $7,037 $7,177 $7,321 $7,467 $7,617 $7,769 $7,924
Paramedic&Ambulance Transport 7 $0 $9,586 $19,545 $19,936 $20,335 $20,742 $21,156
Fire Department Relocation $0 $0 $0 $0 $0 $0 $0
Subtotal $8,553 $18,310 $28,444 $29,013 $29,593 $30,185 $30,789
Library Services
General Fund Expenses a $0 $6,996 $14,271 $14,557 $14,848 $15,145 $15,448
Library Service Fund a $0 $2,831 $2,888 $2,946 $3,004 $3,065 $3,126
Library Development 10 $0 $962 $981 $1,000 $1,021 $1,041 $1,062
Subtotal $0 $6,996 $14,271 $14,557 $14,848 $15,145 $15,448
Police
General Fund Expenses $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Public Works
Residential Sewer Cleanings $0 $0 $0 $0 $0 $0 $0
Storm Drain Basin Cleanings $0 $0 $0 $0 $0 $0 $0
Storm Drain Debris Unit Clearing $0 $0 $0 $0 $0 $0 $0
Street Lighting $0 $0 $0 $0 $0 $0 $0
General Fund Expenses $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Contingency-15% $1,371 $4,631 $8,019 $8,180 $8,343 $8,510 $8,681
Road Maintenance
Street sweeping $0 $0 $0 $0 $0 $0 $0
Local Street Maintenance $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
GRAND TOTAL ALL EXPENDITURES $10,514 $35,506 $61,482 $62,712 $63,966 $65,246 $66,561
ROSENOW SPEVACEK GROUP INC. PAGE 30
Table 3b:Seven Year Revenue Summary(No Annexation)
2006-07 2007-08 2008-09 2009.10 2010.11 2011.12 2012-13
Year t Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Taxes
Basic Levy-Property Tax' $62,241 $349,171 $647,554 $660,505 $673,715 $687,189 $700,933
Utility Unitary Tax $0 $0 $0 $0 $0 $0 $0
Property Transfer Tax $0 $0 $0 s0 $0 $0 $0
Subtotal $62,241 $349,171 $647,554 $660,505 $673,715 $687,189 $700,933
Franchise Fees
Gas,Electric,Trash,Cable TV,etc s0 $0 $o $0 1A $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Motor Vehicle Revenues
Vehicle License Fees $0 $0 $0 $0 $0 $0 $0
In-Lieu of VLF $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Other Revenues
FireMed2 $0 $26,156 $53,332 $54.399 $55,487 $56,596 $57,728
Paramedic&Ambulance Transport 3 $0 $391 $797 $813 $829 $846 $863
Fines and Forfeitures° $0 $5,548 $11,313 $11,539 $11,770 $12,006 $12,246
Capital Contribution Fee(Library)5 $104,700 $0 $0 $D $0 $0 $0
Subtotal $104,700 $32,095 $65,442 $66,751 $68,086 $69,448 $70,837
Road Funds
Measure M-Local Tumback $0 $0 $0 $0 $0 $0 $0
Gas Tax $0 $0 $0 $0 $0 $0 $o
Subtotal $0 $0 $0 $0 $0 $0 $0
Subtotal-One Time Revenues $104,700
GRAND TOTAL ALL REVENUES $166,941 $381,266 $712,996 $727,256 $741,801 $756,637 $771,770
GRAND TOTAL ALL EXPENDITURES(see Table 3a) $10,514 $35,506 $61,482 $62,712 $63,966 $65,246 $66,551
REVENUE SURPLUS(SHORTFALL) $156,427 $345,760 $651,513 $664,544 $677,834 $691,391 $705,219
CUMULATIVE SURPLUS(DEFICIT) $156,427 $502,187 $1,153,700 $1,818,244 $2,496,078 $3,187,469 $3,892,688
ROSENOW SPEVACEK GROUP INC. PAGE 31
APPENDIX PROPERTY
Appendix A Table 1:Forecasted Property Tax Transfer(Annexation Prior to Development)
2006-07 2007-08 2008-09 2009.10 2010.11 2011.12 2012.13
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Total Assessed Value $59,829,890 $335.645,682 $622,470,174 $634,919,578 $647,617,970 $660.570,329 $673,781,735
Property Tax Levy @ 1.00696%' $60$463 $3,379,818 $6,268,026 $6,393,386 $6,521,254 $6,651,679 $6,784,713
Current Property Tax Distribution
County of Orange @ 6.27% $37,793 $212,016 $393,193 $401,057 $409,078 $417.260 $425,605
City of Huntington Beach @ 0 $0 $0 $0 $0 $0 $0 $0
Orange County Library District @1.69% $10.215 $57,308 $106,280 $108,405 $110,573 $112,785 $115,041
Orange County Fire Authority @ 11.4% $68,863 $386,320 $716,447 $730,776 $745,392 $760.300 $775,506
Potential Property Tax Distribution
Huntington Beach General Fund @ 3.5% $21,164 $118,729 $220,188 $224,592 $229,084 $233,666 $238,339
OC Library Transfer to City @ 1.69%Y $10.215 $57,308 $106,280 $108,405 $110,573 $112,785 $115,041
OCFA Transfer to City @ 2.7%' $68,863 $386,320 $716,447 $730,776 $745,392 $760,300 $775,506
HB Employee Retirement Fund @.696%` $4,193 $23,524 $43,625 $44,498 $45.388 $46,296 $47,222
Additional Property Tax to City $104,435 $585,880 $1,086,541 $1,108,272 $1,130,437 $1,153,046 $1,176,107
Property Transfer Taxes
Value Transferred. $0 $167,822,841 $311,235,087 $31,745,979 $32,380,898 $33,028,516 $33,689,087
Revenue to City @$0.551$1,000 s $0 $92,303 $171,179 $17,460 $17,809 $18,166 $18,529
ROSENOW SPEVACEK GROUP INC. PAGE 32
Appendix A Table 2:Forecasted Property Tax Transfer(No Annexation)
2006-07 Year 2007-08 Year 2008-09 Year 2009-10 Year 2010.11 Year 2011-12 Year 2012-13 Year
1 2 3 4 5 6 7
Total Assessed Value $59,829,890 $335,645,682 $622,470,174 $634,919,578 $647,617,970 $660,570.329 $673,781,735
Property Tax Levy' $602,463 $3,379,818 $6,268,026 $6,393,386 $6,521,254 $6,651,679 $6,784,713
Current Property Tax Distribution
County of Orange @ 6.27% $37,793 $212.016 $393,193 $401,057 $409,078 $417.260 $425,605
City of Huntington Beach @ 0 $0 $0 $0 $0 $0 $0 $0
Orange County Library District @7,69% $10,215 $57,308 $106,280 $108,405 $110,573 $112,785 $115,041
Orange County Fire Authority @ 11.4% $68,863 $386.320 $716,447 $730,776 $745,392 $760,300 $775,506
Potential Property Tax Distribution
Huntington Beach General Fund $0 $0 $0 $0 $0 $0 $0
OC Library Transfer to City @.11%2 $7,151 $40,115 $74,396 $75,884 $77,401 $78,949 $80,526
OCFA Transfer to City @ 9.1%' $55,090 $309,056 $573,158 $584,621 $596,313 $608,240 $620.405
HB Employee Retirement Fund $0 $0 $0 $0 $0 $0 $0
Additional Property Tax to City $62,241 $349,171 $647,554 $660,506 $673,716 $687,189 $700,933
ROSENOW SPEVACEK GROUP INC. PAGE 33
iPPENDIX B — TABLE FOOTNO
Exhibit 1a: Seven Year Expenditure Summary(Annexation Prior to Development)
Estimates for this scenario assume that the Warner Mesa area will be annexed in early(calendar year)2006
and that development will be completed in Year 2 (2007-08). Approximately half of the community's 838
residents (419) will move in during Year 2, and the remainder will move in during Year 3. Per capita and
usage costs/revenues are adjusted accordingly.
1. The calculations for elections are based on the following assumptions:
• No Elections: Year 1 (FY 2006-07) and Year 5 (FY 2010 - 11) will have no elections, however,
election costs are still accrued to the City. Total election costs for Huntington Beach in the last non-
election year were $143,701. According to the County of Orange Registrar of Voters, there were
125,861 voters in Huntington Beach in 2004,or 63%of the total population. Using this percentage as
a guide, election costs in a non-election year are$1.20 per registered voter. Using actual inflation
rates from the United States Department of Labor, Bureau of Labor Statistics, this equals$1.30 per
registered voter in 2005 dollars. An inflation rate of 2% was used to calculate subsequent non-
election year costs.
• Local Elections:Year 2(FY 2007-08),Year 4(FY 2009-2010), and Year 6(2011-12)will have local
elections. Total election costs from the General Fund in the last local election (2003-04) were
$243,567. Using the OC Registrar of Voters percentage as a guide,the cost of elections in 2003-04
was approximately $1.96 per registered voter. Using actual inflation rates, these costs would be
approximately $2.07 per registered voter. An inflation rate of 2% was used to calculate subsequent
non-election year costs.
• Presidential Elections: Year 3(FY 2008-09)and Year 7(2012-13)will have Presidential elections.
Presidential election costs are based on the election costs in FY 2004-05. Total election costs from
the General Fund were$262,809, or approximately$2.09 per registered voter. Using actual inflation
numbers,these costs would increase to approximately$2.15 per registered voter in 2005 dollars. An
inflation rate of 2%was used to calculate subsequent non-election year costs.An inflation rate of 2%
was used to calculate subsequent non-election year costs.
2. The City of Huntington Beach contracts with the County of Orange to provide Animal Control
services. The expected cost for Animal Control is based on the 2004-05 Budget. Actual approved
funding amounted to$414,149.
3. The Orange County Administration Fee for this Tax Rate Area is.947%.
4. It is assumed that building, permit,grading, etc.fees will offset all costs associated with the additional
labor,and therefore net costs for Building and Safety equal zero.
5. Community Services figures are based upon a per capita statistic. It is difficult to calculate the
percentage of Huntington Beach residents that use City community services (versus non-residents),
thus calculations are distributed evenly among a per capita basis for the purpose of this study.
6. FireMed costs are based on the 2004-05 City of Huntington Beach budget and are calculated on a
per household cost.
7. Fire Department General Fund expenditures are based on a per capita cost of the additional
residents in the development.
8. The paramedic and ambulance transport expenditures were calculated by taking the actual
expenditures in 2004-05 and estimating costs per emergency medical patient.Approximately 4.8%of
the City's residents used these services in 2004-05, and this percentage was applied to the
Brightwater Community.
9. The Fire Department plans to relocate Fire Station Number 8 to increase response time to the
affected residents. The proportional cost share for the residents in the Brightwater community has
been included in the Study, based on an estimated cost of approximately$10.3 million to relocate the
ROSENOW SPEVACEK GROUP INC. PAGE 34
station in Year 5. The relocation price estimate was provided by RRM Design Group of San Luis
Obispo, California, and was obtained at the request of City staff. The number reflects building and
site improvements, design, project management, utility connections, furnishings, equipment, moving
costs, and a 10% contingency. This estimate also reflects an 11% construction cost index for project
cost escalation.
10. These costs reflect the per capita estimates of operating the Huntington Beach library system as a
result of the addition of new residents. It should be noted that Library Services has requested one
j additional children's librarian and one library clerk specialist to meet increased demand on the library
system, and the City should consider the marginal impacts associated with the additional residents.
However, for the purpose of this study, only per capita estimates of operating the Huntington Beach
library system have been reflected here.
11. The Library Service Fund is estimated on a per capita basis.
12. Library Development expenditures are estimated at a per capita basis.
13. These costs are per capita expenditures for the new development. According to the Huntington
Beach General Plan,there is a ratio of 1.15 police officers per 1000 residents. Using the assumption
of 838 new residents in the area, this would equate to .9637 officers. However, potential
demographics of the area do not indicate a need for any additional officers or staff. These estimates
do not reflect the need for an additional officer; however, represent the overall burden of the
increased population on the Police department.
14. Residential sewer cleanings are completed once a year, with a cost of $0.34 per lineal foot. The
number of sewer feet was estimated by using the miles of roads in the development.
15. There are 45 storm drain catch basins in the Brightwater community.They are cleaned once a year at
$17.64 per basin.
16. Storm drain debris units are leaned four times a year at $1500 per unit. There is one unit in the
Brightwater Community.
17. Costs for street lighting are estimated to be $10 per light, per month. Assuming there are 100
streetlights,the average annual cost is$12,000. This number is inflated at 2%every year thereafter.
18. General Fund.expenses are calculated from only the General Fund monies in the Public Works
budget.
19. Street sweeping is$20.18 per curb mile(where one mile of road equals two curb miles)and based on
average of 25 cleanings per year,with 6.34 curb miles of streets in the development.
20. Local street maintenance is$0.18 per square foot and is completed every seven years.This process
is defined as application of slung seal,type II.This cost assumes that the streets in the development
are 32 feet wide.
Exhibit 1 b: Seven Year Revenue Summary(Annexation Prior to Development)
1. The City's general property tax rate is 1.00696% (including the override for the Huntington Beach
Retirement Fund). Calculations are based upon the 1980 Master Property Tax Transfer Agreement
between the County of Orange and the City of Huntington Beach.
2. The utility unitary tax is calculated by taking 5%of the utility user's tax
3. The property transfer tax assumes a 5%turnover rate in Huntington Beach,and$.551$1000 fee.
4. Vehicle License Fee("VLF")revenue is a subvention collected by the state and allocated to cities and
counties based on a statutory formula. VLF revenues are an important component of the fiscal
viability of annexations. Prior to 2004, state law required that a city whose population increased by
virtue of annexing an area would receive additional VLF revenue to fund services to the area. With
the VLF for Property Tax Swap of 2004,more than 90% of city VLF (and VLF backfill) revenue was
ROSENOW SPEVACEK GROUP INC. PAGE 35
replaced with property tax revenue. These changes severely reduced the amount of VLF revenue
available to fund annexations. Because of the difficulty in accurately projecting these numbers, this
calculation is based on a per capita rate from the additional residents in the development.
5. Under the new law, effective FY 2004-05, most of the VLF revenue allocated to cities and all of the
revenue allocated to counties increases based on assessed value growth instead of population
growth in a jurisdiction. Revenue is distributed as property tax in-lieu of VLF. This study estimates
in-lieu VLF on a per capita basis.
6. FireMed revenues are based on a fee of $60 per year and a 33% participation rate among new
households.This is consistent with the current number of households participating in the program.
7. The calculation for paramedic and ambulance transport is based on a per capita rate. In reality, it
would be best to find a percentage of people who have been transported, and apply that average to
calculate actual fees per trip. This information was not available.
8. Fines and forfeitures include, but are not limited to, parking tickets and municipal code violations.This
is a per capita calculation based on revenues in the 2004-05 Budget.
9. The Community Enrichment Library Fee is a one time fee paid to the City by the developer.The fee is
$0.15 per square foot, per unit, with $.07 to the Library, and $.08 to Community Services. This is
based on a total estimated square footage of 961,548 for the development. Square footage estimates
are based on information from Hearthside Homes.
10. The Library Development Fee is a one time fee paid to the City by the developer. The fee is$.44 per
square foot, per unit,for all units.
11. The City has a 5 acre of park land per 1000 people requirement. The in-lieu fee was calculated by
using the formula:
5(#of units*2.681*2.5 million
1000
Where $2.5 million is the per acre value of the project site and 2.68 is the number of people per
household.
12. The City charges developers a one time traffic impact fee $140 per trip end, with 12 trips per
household, per unit.
13. The City charges developers a one time sewer connection for each unit.This calculation is based on
a fee of$1680 per unit,with 95%of this revenue passed on to the Orange County Sanitation District,
and the remaining 5%staying in the City.This rate is effective October 1,2005.
14. The City charges developers a one time drainage fee. This calculation was estimated using a fee of
$5500 per acre,at 68 acres.
15. The City will receive a water connection fee of$4800 per household.
16. Measure M is a half cent sales tax in Orange County that is used for transportation projects. The
breakdown of this tax includes 43% of the funds towards freeways, 21% towards local streets and
roads, 25% towards transit, and 11% towards regional streets. To date, Huntington Beach has
received$22,854,971.Actual allocation is based on need and population. Because of the difficulty in
predicting the need for future projects, calculations in this study are based on a per capita estimate,
using 2004-05 budget numbers for guidance. Actual numbers may vary.
17. Gas Tax revenue was calculated on a per capita basis, using the total dollar amount from the 2004-
05 Budget.This differs slightly from the actual method used,which bases it on a per capita basis and
a per need basis. This number more closely represents the average dollar amount over the seven
year time period.
ROSENOW SPEVACEK GROUP INC. PAGE 36
Exhibit 2a: Seven Year Expenditure Summary(Development Prior to Annexation)
Estimates for this scenario assume that the Warner Mesa area will be annexed in 2008-09. Estimates are
based on the assumption that development will be complete in Year 2(2007-08). Approximately half of the
community's 838 residents(419)will move in during Year 2,and the remainder will move in for Year 3. Per
capita and usage costs/revenues are adjusted accordingly.
1. This assumes that residents of Brightwater will not use City of Huntington Beach facilities to vote in
elections prior to annexation.Annexation is assumed to occur in Year 3.
2. The City of Huntington Beach contracts with the County of Orange to provide Animal Control
services. The expected cost for Animal Control is based on the 2004-05 Budget. Actual approved
funding amounted to$414,149.
3. The Orange County Administration Fee for this Tax Rate Area is.947%.
4. It is assumed that building, permit, grading, etc.fees will offset all costs associated with the additional
labor,and therefore net costs for Building and Safety equal zero.
5. Community Services figures are based upon a per capita statistic. It is difficult to calculate the
percentage of Huntington Beach residents that use City community services (versus non-residents),
thus calculations are distributed evenly among a per capita basis for the purpose of this study.
6. FireMed costs are based on the 2004-05 City of Huntington Beach budget and are calculated on a
per capita cost.The costs assume a 33%participation rate among new households.
7. This number is based on a per capita cost of the additional residents in the development.
8. The paramedic and ambulance transport expenditures were calculated by taking the actual
expenditures in 2004-05 and estimating costs per emergency medical patient. Approximately 4.8% of
the City's residents used these services in 2004-05, and this percentage was applied to the
Brightwater Community.
9. The Fire Department plans to relocate Fire Station Number 8 to increase response time to the
affected residents. The proportional cost share for the residents in the Brightwater community has
been included in the Study, based on an estimated cost of approximately$10.3 million to relocate the
station in Year 5. The relocation price estimate was provided by RRM Design Group of San Luis
Obispo, California, and was obtained at the request of City staff. The number reflects building and
site improvements, design, project management, utility connections, furnishings, equipment, moving
costs, and a 10% contingency. This estimate also reflects an 11% construction cost index for project
cost escalation.
10. These costs reflect the per capita estimates of operating the Huntington Beach library system as a
result of the addition of new residents. It should be noted that Library Services has requested one
additional children's librarian and one library clerk specialist to meet increased demand on the library
system, and the City should consider the marginal impacts associated with the additional residents.
However,for the purpose of this study,only costs that reflect the per capita estimates of operating the
Huntington Beach library system have been reflected here. Because of the proximity to Huntington
Beach Library facilities, residents of Brightwater will use the Library with the same frequency as if
they were residents of the City.Therefore,the same expenditures will be used for each scenario.
11. This fund is estimated on a per capita basis.
12. Library Development expenditures are estimated at a per capita basis.
13. These costs are per capita expenditures for the new development. According to the Huntington
Beach General Plan,there is a ratio of 1.15 police officers per 1000 residents. Using the assumption
of 838 new residents in the area, this would equate to .9637 officers. However, potential
demographics of the area do not indicate a need for any additional officers or staff. These estimates
do not reflect the need for an additional officer; however, represent the overall burden of the
increased population on the Police department. Prior to annexation, City police will not service the
area.
ROSENOW SPEVACEK GROUP INC. PAGE 37
14. Residential sewer cleanings are completed once a year, with a cost of $0.34 per lineal foot. The
number of sewer feet was estimated by using the miles of roads in the development. It is assumed
that the City will not clean these units until annexation.
15. There are 45 storm drain catch basins in the Brightwater community.They are cleaned once a year at
$17.64 per basin. It is assumed that the City will not clean these units until annexation.
16. Storm drain debris units are cleaned four times a year at $1500 per unit. There is one unit in the
Brightwater Community. It is assumed that the City will not clean this unit until annexation.
17. Costs for street lighting are estimated to be $10 per light, per month. Assuming there are 100
streetlights,the average annual cost is$12,000.This number is inflated at 2% every year thereafter.
18. General Fund expenses are calculated from only the General Fund monies in the Public Works
budget.
19. Street sweeping is $20.18 per lane mile and based on average of 25 cleanings per year, with 6.34
lane miles of streets in the development. It is assumed that the City will not clean these units until
annexation.
20. Local street maintenance is$0.18 per square foot and is completed every seven years. This process
is defined as application of slurry seal, type II. This cost assumes that the streets in the development
are 32 feet wide.
Exhibit 2b: Seven Year Revenue Summary(Development Prior to Annexation)
1. The City's general property tax rate is 1.00696% (including the override for the Huntington Beach
Retirement Fund). Calculations are based upon the 1980 Master Property Tax Transfer Agreement
between the County of Orange and the City of Huntington Beach. In Years 1 and 2, the City only
receives revenue from the Orange County Fire Association transfer and the Orange County Library
District transfer.
2. The utility unitary tax is calculated by taking 5%of the utility user's tax.
3. The property transfer tax assumes a 5%turnover rate in Huntington Beach, and $.55/$1000 fee.
4. Vehicle license Fee("VLF')revenue is a subvention collected by the state and allocated to cities and
counties based on a statutory formula. VLF revenues are an important component of the fiscal
viability of annexations. Prior to 2004, state law required that a city whose population increased by
virtue of annexing an area would receive additional VLF revenue to fund services to the area. With
the VLF for Property Tax Swap of 2004, more than 90% of city VLF (and VLF backfill) revenue was
replaced with property tax revenue. These changes severely reduced the amount of VLF revenue
available to fund annexations. Because of the difficulty in accurately projecting these numbers, this
calculation is based on a per capita rate from the additional residents in the development.
5. Under the new law, effective FY 2004-05, most of the VLF revenue allocated to cities and all of the
revenue allocated to counties increases based on assessed value growth instead of population
growth in a jurisdiction. Revenue is distributed as property tax in-lieu of VLF. This study estimates
in-lieu VLF on a per capita basis.
6. FireMed revenues are based on a fee of $60 per year and a 33% participation rate among new
households. Based on a conversation with the Fire Chief, residents of Brightwater will be able to
participate in this program,regardless of annexation.
7. The calculation for paramedic and ambulance transport is based on a per capita rate. In reality, it
would be best to find a percentage of people who have been transported, and apply that average to
calculate actual fees per trip. This information was not available. This calculation is based on the
assumption that the City of Huntington Beach will service the area regardless of annexation.
8. The Capital Contribution Fee for the Library is a$200 per unit fee from the developer to the City.This
is based on the 1996 Library Agreement between Koll (now Hearthside), the County of Orange, and
ROSENOW SPEVACEK GROUP INC. PAGE 38
the City of Huntington Beach. The City of Huntington Beach also added a separate fee to the
developer of$100 per unit,making the total Capital Contribution Fee$300 per unit.
9. Fines and forfeitures include, but are not limited to, parking tickets and municipal code violations.This
is a per capita calculation based on revenues in the 2004-05 Budget.
10. Measure M is a half cent sales tax in Orange County that is used for transportation projects. The
breakdown of this tax includes 43% of the funds towards freeways, 21% towards local streets and
roads, 25% towards transit, and 11% towards regional streets. To date, Huntington Beach has
received $22,854,971. Actual allocation is based on need and population. Calculations in this study
are based on a per capita estimate, using 2004-05 budget numbers for guidance. Actual numbers
may vary.
11. Gas Tax revenue was calculated on a per capita basis, using the total dollar amount from the 2004-
05 Budget.This differs slightly from the actual method used,which bases it on a per capita basis and
a per need basis. This number more closely represents the average dollar amount over the seven
year time period.
Exhibit 3a: Seven Year Expenditure Summary(No Annexation)
1. This assumes that the residents of Brightwater will not use Huntington Beach facilities to vote.
2. The City still needs to pay a County Tax Collection Charge because they are receiving revenues from
the OCFA and County Library District.
3. This calculation assumes that the County does not contract with the City for Building and Safety
Services.
4. This expenditure assumes Community Services programs will be utilized at the same rate as if the
Community were annexed.
5. This assumes that the City will service the area regardless of annexation.
6. This assumes the City will service the area regardless of annexation.
7. The paramedic and ambulance transport expenditures were calculated by taking the actual
expenditures in 2004-05 and estimating costs per emergency medical patient.Approximately 4.8% of
the City's residents used these services in 2004-05, and this percentage was applied to the
Brightwater Community.
8. These costs reflect the per capita estimates of operating the Huntington Beach library system as a
result of the addition of new residents. It should be noted that Library Services has requested one
additional children's librarian and one library clerk specialist to meet increased demand on the library
system, and the City should consider the marginal impacts associated with the additional residents.
However,for the purpose of this study,only costs that reflect the per capita estimates of operating the
Huntington Beach library system have been reflected here. Because of the proximity to Huntington
Beach Library facilities, residents of Brightwater will use the Library with the same frequency as if
they were residents of the City.Therefore,the same expenditures will be used for each scenario.
9. This fund is estimated on a per capita basis.
10. Library Development expenditures are estimated at a per capita basis.
Exhibit 3b: Seven Year Revenue Summary(No Annexation)
1. The property tax levy includes 70% of the Orange County Library District taxes to the Huntington
Beach Library. It also assumes that Orange County Fire Association will pay 80%of the property tax
revenues to the Huntington Beach Fire Department for service of the area.
2. This calculation assumes that the City will service the area regardless of annexation and FireMed is
available to the residents of the Brightwater Community.
ROSENOW SPEVACEK GROUP INC. PAGE 39
3. This calculation assumes the City will service the area regardless of annexation.
4. The calculations for fines and forfeitures assume 50% of the fines that would be accrued than if the
City annexed the community.
5. This fee is based on the 1996 Library Agreement between the County of Orange and the City of
Huntington Beach.This fee is to be paid to the City by the County of Orange.
Exhibit 4a: Forecasted Property Tax Transfer(Annexation Prior to Development)
1. The property tax levy is based on four components:
• The current assessed value of the land owned by Hearthside Homes,according to Metro Scan data
• The assessed value from the projected home sales, based on numbers from Hearthside Homes.
The 349 units range from 1769 —3667 square feet and are projected to sell at prices ranging from
$1.068 million to$2.175 million
• Unsecured value, which is estimated at 2.8% of the projected secured value(sales price) for the
units
• The 1980 Master Property Tax Agreement between the City of Huntington Beach and the County of
Orange.This agreement stipulates that 56%of the General Fund taxes from Orange County will be
shifted to the City of Huntington Beach upon annexation, and the County will retain 44%.
In Year 1, property tax to the City is based on 10%of the estimated future total assessed value of the
development.
In Year 2, property tax to the City is based on 55%of the projected assessed value,to accommodate
for the new residents who have started to move into the development.
In Years 3 — 7, property tax to the City is based on 100% of the projected assessed value of the
development.
2. The Orange County Library Transfer rate assumes that 100% of the County's library funds from that
Tax Rate Area will be passed through to the City of Huntington Beach.
3. The Orange County Fire Association Transfer Rate assumes that 100% of the OCFA funds will be
transferred to the City of Huntington Beach upon annexation.
4. The City of Huntington Beach has an override of.696%for the Employee Retirement Fund.
5. Property transfer taxes to the City have been calculated at $.55/$1000. After the development is
complete,the calculations assume a 5%turnover rate within the development.
Exhibit 4b:Forecasted Property Tax Transfer(No Annexation)
1.The property tax levy in the no annexation scenario is based on six components:
• The current assessed value of the land owned by Hearthside Homes,according to Metro Scan data
• The assessed value from the projected home sales, based on numbers from Hearthside Homes.
The 349 units range from 1769—3667 square feet and are projected to sell at prices ranging from
$1.068 million to$2.175 million
• Unsecured value, which is estimated at 2.8% of the projected secured value (sales price) for the
units
• The 1980 Master Property Tax Agreement between the City of Huntington Beach and the County of
Orange.This agreement stipulates that 56%of the General Fund taxes from Orange County will be
shifted to the City of Huntington Beach upon annexation,and the County will retain 44%.
• The 1996 Agreement between the City of Huntington Beach and the County of Orange regarding
library funds.(See note 2 for details)
• The 1997 Agreement between the City of Huntington Beach, the County of Orange, and Koll (now
Hearthside Homes).See note 3 for details.
2. The Orange County Library Transfer Rate is based on a 1996 agreement between the City of
Huntington Beach and the County of Orange regarding library usage. The County agreed to pay the
City 70%of its Library District funds from that Tax Rate Area to the City for the library.This transfer
ROSENOW SPEVACEK GROUP INC. PAGE 40
also allows residents of the Brightwater Community to attend Huntington Beach libraries without
paying for a non-resident card.
3. The Orange County Fire Association Transfer rate is based on the May 1997 Agreement between the
City of Huntington Beach, the County of Orange, and Koll (now Hearthside Homes). The OCFA
agreed to pay the City"an agreed upon sum which represents eighty percent (80%) of the County's
Fiscal Year 1997/1998 Structural Fire Fund revenue generated by the tax rate area protected (the tax
pass-through). This amount will be adjusted for the percentage increase or decrease in the gross
valuation,including secured and unsecured rolls..."
ROSENOW SPEVACEK GROUP INC. PAGE 41
Warner Mesa Annex ation Study
........
.... .....
City of Huntington Beach
Presentation to City Council
September 19 , 2005
w
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Harbour
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,
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Warner Mesa
Aya
Outer BOISO Say s Isr.4ated Pocket'` aaA. it
Area
State Ecological
Reserve Overlooks
a
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Inner Solsa Bay
o aka.
PACIFIC N ` / �
• Development to be Constructed by Hearthside Homes
• Approximately 105 Total Acres
• 68 Acres of Residential Development on the Upper Bench
• 37 Acre Habitat Area
• 349 Single Family Residential Units
• Estimated prices between $ 1 .07 and $2. 17 million
• 838 Projected New Residents
• Fiscal Impact Analysis of the Annexation to the City
• Three Scenarios:
1 . Annexation Prior to Development
2. Annexation After Development
3. Development Without Annexation
• Development Assumptions
• 50% of Project Built Out in Year 2
• 100% of Project Built Out by Year 3
• 2% Inflation for Costs and Expenditures
Considered Revenue Projections
• Property Taxes
• Motor Vehicles
• Pass-Through Agreements from Orange County
• One Time Fees
• Considered Expenditure Projections
• General Administration
• Community Services
• Public Safety
• Library
• Public Works
F
• Annexation Prior to Development
• Local Services Provided by the City
• City Receives 100% Pass-Through of OCFA Funds
• City Receives 100% Pass-Through of OC Library Funds
• City Receives Significant Revenue From One Time Fees
• Library, Parks, Traffic, Public Works
•Park In-Lieu Fees Included at $11 .7 Million
• $14,924,853 in Revenue from Fees in Year 1
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Grand Total $1 ,137 $288,095 $541 ,475 $552,252 $612,162 $574,563 $840,819
Expenditures
.....................................................................................................................................................................................................................................................................................................................................................................................
Grand Total $15.03 $761 ,266 $1 .4 $1 .29 $1 .32 $1 .35 $1 .38
Revenues million million million million million million
.................................................................................................................................................I..................................................................................................................................................................................................................................
Revenue $15.03 $473,171 $885,673 $764,296 $712,357 $766,447 $537,210
Surplus million
.................................................................................................................................................................................................................................................................................................................................................. ............ .......
Cumulative 19.2*
Surplus (million
*Includes ongoing and one time revenues.
Please refer to Tables la and 1b of the Study for detailed estimates
1:1 MIN
NO
I'M
Year 1 Year 2 Year 3
General Administration $989 $7,811 $141951
.....................................................................................................................................................................................................................................................................................................................................................................................
Community Development $0 $73,547 $1117440
........................................................................................................................................ ........................................I..................................................................................................................................................................................................
Public Safety $0 $158,369 $322,923
........................................................................................................................................ ............................................................................................................................................................................................................I..............................
Library Services $0 $10,789 $18,140
...........................................................................................................I............................ ............I.............I.....................................................................................I..........................................................................................................................
Contingency 15% $148 $37,577 $70)627
Please refer to Tables 1a and 1b of the Study for detailed estimates
,e
Year 1 Year 2 Year 3
Taxes $1047435 $680,315 $1 .26 million
Motor Vehicle & Roads $0 $327081 $657430
.....................................................................................................................................................................................................................................................................................................................................................................................
Public Safety & Other Fees $0 $48,870 $99,647
....................................................................................................................................................................................................................................................................................................................................................................................
One Time Fees $14.92 million $0 $0
Please refer to Tables la and 1 b of the Study for detailed estimates
Type Amount
.........................................................................................................................................................................................................................................................................................................................
Community Enrichment Library Fee $144,232
Library Development Fee $423,081
Park Space In Lieu Fee $11 .69 million
Traffic Impact Fee $586,320
Sewer Connection Fee $30,520
Drainage Fee $374,00
Water Connection Fee $1 .68 million
0�
Total (0*$14.92 million:1H:o:n:j
• Annexation After Development
• City to Annex Warner Mesa in Year 3
• Local Services Provided by the City (Beginning Year3)
• Water Service Provided by SCWC
• Sewer Service Provided by OCSD
• Loss of One Time Revenues
• Agreement Between OCFA and City
• Without Annexation , City Receives 80% of OCFA Pass-
Through Revenue
• Agreement Between City Library and County Library
• Without Annexation , City Receives 70% of County Library
Pass-Through Revenue
• Previously Negotiated Fees of $300 per Unit
• Community Service Impacts Remain
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Grand Total $0 $79,344 $541 ,475 $552,252 $612,161 $574,563 $840,819
Expenditures
.............................................................. ........................................................................................................................................................................................................................................................................................................................
Grand Total $166,941 $381 ,266 $1 .39 $1 .26 $1 .31 $1 .31 $1 .34
Revenues million million million million million
.............................................................. ........................................................................................................................................................................................................................................................................................................................
Revenue $166,941 $301 ,922 $851 ,721 $711 ,665 $740,416 $740,416 $500,460
Surplus
Cumulative $3.95*
Surplus million
*Includes ongoing and one time revenues.
Please refer to Tables 2a and 2b of the Study for detailed estimates
Year Year Year
General Administration $0 $0 $14,951
..................................................I...................................................................................................................................................................................................................................................................................................................................
Community Development $0 $0 $0
.......................................................................................................................................................................I............................................................................................................................................................................................................
Public Safety $0 $0 $0
.................................................... ....................................................................................................................................................................................................................................................................I..................................................
Library Services $0 $10,789 $181140
........................................................................................................................................... ........................................................................................................................................................................................................................................
Contingency 15% $0 $10,349 $70,627
Please refer to Tables 2a and 2b of the Study for detailed estimates
j y
Year 1 Year 2 Year 3
Taxes $621241 $349,171 $1 .26 million
....................................................................................................................................................................................................................................................................................................................................................................................
Motor Vehicle & Roads $0 $0 $31478
....................................................................................................................................................................................................................................................................................................................................................................................
Public Safety & Other Fees $0 $327095 $997647
....................................................................................................................................................................................................................................................................................................................................................................................
One Time Fees $104,700 $0 $0
Please refer to Tables 2a and 2b of the Study for detailed estimates
ri
• Development Without Annexation
• Agreement Between OCFA and City
• City Receives 80% of OCFA Pass-Through Revenue
• Agreement Between City Library and County Library
• City Receives 70% of County Library Pass-Through
Revenue
• Previously Negotiated Fees of $300 per Unit
• Community Service Impacts Remain
F,
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Grand Total $10,514 $35,506 $61 ,482 $62,712 $63,966 $65,246 $66,551
Expenditures
........................................................ ..............................................................................................................................................................................................................................................................................................................................
Grand Total $166,941 $381 ,266 $712,996 $727,256 $741 ,801 $756,637 $771 ,770
Revenues
....................................................... ..............................................................................................................................................................................................................................................................................................................................
Revenue $156,427 $345,760 $651 ,513 $664,544 $677,834 $691 ,391 $705,219
Surplus
....................................................... ................................................................................................................................................................................................................................................................................... ............................ .....
Cumulative $3.89*
Surplus million
*Includes ongoing and one time revenues.
Please refer to Tables 3a and 3b of the Study for detailed estimates
Year 1 Year 2 Year 3
General Administration $589 $3,307 $6,312
........................................................................................................................................... ........................................................................................................................................................................................................................................
Community Development $0 $21262 $4,615
Public Safety $8,553 $18,310 $28,444
..................................................................................................................................... ....................................................................................................................................................................................................................................
Library Services $0 $6,996 $141271
........................................................................................................................................... ........................................................................................................................................................................................................................................
Contingency 15% $11371 $4,631 $8,019
Please refer to Tables 3a and 3b of the Study for detailed estimates
..............-................................
Year 1 Year 2 Year 3
Taxes $627241 $349,171 $647,554
......................................................................................................................................................................................................................................................................I..............................................................................................................
Motor Vehicle & Roads $0 $0 $0
.....................................................................................................................................................................................................................................................................................................................................................................................
Public Safety & Other Fees $0 $32)095 $651442
............................................................................................................I.......................................................................................................................................................................................................................................................................
One Time Fees 1 $104,700 $0 $0
Please refer to Tables 3a and 3b of the Study for detailed estimates
Scenario 1 : Annexation Prior to Development
Cumulative Surplus to City of $19.2 million
Scenario 2: Annexation After Development
Cumulative Surplus to City of $3,95 million
Scenario 3: Development Without Annexation
Cumulative Surplus to City of $3.89 million
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.....
Warner �� Stud
.....
...... .. ...... .......
....... ...-.... ...........
........ ...... ........
........ ............... ..........
......... ..................................
City Huntington Beach
Presentation to City Council
September 19, 2005
-----------------------
..
` ;
\ 7
f
Development to be Constructed by Hearthside Homes
Approximately 105 'Total Acres
m 68 Aems of Residential Development on the Uppe
Bench
7 Ac?e Habitat Area
a 349 Single Family Residential 'Units
Estimated prices between $1,07 and $2,17 million
R 838 Projected New Residents
W, "IWIMMOM
g Fiscal Impact Analysis of the Annexation to the City
Three Scenarios,
1, Annexation Prior to Development
2. Annexation After Development
3. Development Without Annexation
E
------------------
MINA7 kVNXXV1
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Development Assumptions
55% of Project Built Out in Year
1 0% of Project Built Out by Year 3
% Inflation for Costs and Expenditures
a Considered Revenue Projections
Property Taxes
Motor Vehicles
Pass-Through Agreement-s from Orange County
a OneTime Fees
1\71 MWEEMENE01\1 MMNMIMM\� M \ MN
Considered Expenditure> roje tons
Genwal Administration
Community Services
Public Safety
Librwy `'.
m Public Works
f
MOMMEMEMI \ \ �
1- Annexation Prior to Development',
m Local Services Provided by the City
City Receives 100% Pass-Through of OCFA Funds
City Receives 100% Pass-Through of OC Library Funds
City deceives Significant Revenue From One Trrrre Fees
* Library, Parks, Traffic, Public Works,
-Park In-Lieu Fees'Included of 111.7 K1lion
* $14,924.,853 in Revenue from Fees in Year I
\ \ ��ME
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\\ _ \ \
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`` \11MMEM\MEMEMMIN
year 3 Year 2 Ymr 3 Year y0ar r5 y ear 6 ye'ar 7 >>
------ --------- - ! ............................ --- -----
xpendit€ires
Grand Tote; $12; SI."Q 1."iA $1 mac?
�c3.-"Se�F9[f€;;� �};:jjn;; tt,.ili�tf` 'r: 1ir?:3 :n,iPnr� .r}�iiirz� t'•1##::�nr
......... ........ :': a......:.. ..... ......... ..----- .... ----- --. .:!; .... .:!:: ....................................... '!
Revenue, ;)15.,1 $473.'#;Y'1 $764,;,�`,g: \t Mi u?i? 4: $'J�'7,21i
.......: ... ...... ...................
Surpims
Mii
:.f3pf"g arm
Plr'as's I-Oer to Ta3.W z: la and'fib of rhxe.`4i'rtlCfi'i?3£:.:�f°i,:4ii€:'C�F:'J•i}frf£32t€•'�
----------------------------------- . .. .......
I M
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Year year Year 3
Community Development I,$3 w73;5,47 111.,440
...
Public of w.? $
�N8369.. $3122".9231
Library Service$ M,89 $1�?;1 1.0
F'"`>�?�St;Y;?i�:°(f� 3;;�iAff?$ ��t`i�i;��#S iSf i`.T?{y;}`{:�,`I iiii C?'2s`�cii<��•'w b",3ffli3iF:L`:i
Yoar2 Year3
... ..« .........{
"sexes $1 4;435 11W80,3'15 gR1.26 rrilkoo
.................. . ......::... :,
Astor Vedic€§� Roads i �-,Z1 1��
:: ....- ......
Pubs€c,Safety&Othar Fees :�� ��3,�'� �q9,W
........ ......... . ....... .; -____ ....................................
One Time;bees $14A92 million $0
i ea,a i"ref6i to ?a""'los la3o1','ff 11 b t f{?r-`Sty? y f&f de wig,,.d. R,7:i'€mi3fos
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\MIMMOM a \01 1. Wkl
Type Amount
...........
..... ... «..
Community nfth€ en,, Library Fee $14.4222
Library Development Fee $423,081
Park Space In Lieu Fee $11,69 miflion
Trzaf c Impact Pee, $586.,320
Sewer Connecr cn Fee $30:52
Drainage Fee $374,1,)0
Water Connection Fee $1,68 million
a >\$14.92 million
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Annexation After Development
Q City to Annex Warner Mesa in Year 3
Local Services Provided by the City frieginning YAK:•3\
- Water Spiv€ce Provided by CWC
Sewer SeR4ce Provided by OCSD
6
Loss of One Time Revenues
• Agreement Between OCFA and City
Without Annexation, City Receives 0% of 0CFA Rays--
Through Revenue', Upon Annexation, City Receives 100%
• Agreement Between City Library and County Library
Without Annexation, iNky Receives % of County Library
Pass-Through'Revenue: Upon Annexation., City Receives
100%
Previously Negotiated Fees of$300 per Unit
Community Service Impacts Remain
3
Year I You a 'oar:3 'Y '4 Year 6 `ear�6 's`inf i
..............................................
�.'>r1�332E;fR$ f.33�.::;3: 3`•F€€�.�Fi :F?:3�3? r� '2...�E.<i3 ?t2 ��S�:Y
. ....: ..... ,:. _ ,.
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Rease mr-fr?;'fn f:?Nim,t..<3::c rid 2b.;i,f the siue`.fy kw-i.hof-O j We
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Year I Year 2 Year 3
.............................. ----- --------
eneral Administration ;$58� <,3,3€ 7 $14,951.
.{--- ------------- S :i ..................
.....................
v...,i
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ublic Safe : $0 S8.2 04,6 $322,92,3
«.
................................ ...........{:
Phi ase tefor tQ Taf i49S 21,,a as"tli 2b£;,f th,, "�f,?s`£#jt'
INN
1001,101,
NE
.4 \4,NEW
7 3{
t
t Year I Year 2 Year 3`
------- --- -----
Taxes „
{ . ...
Motor Vehicle& Roans ;aD 0 $65,430
Public Safety&Other Fees so $32,00b $9 9,.4
.... ............. ... .. ..: ........
One Time'Fees
..... 10 ,700 $ $#
f�ff:u Q far f£? ,abi3 ?,2£?ar' 2b of 0-,,?S\mfy;,;�i'a#���it'CMti f�3if33?x?iS�C
\N\\\\E
Development Without.Annexation
Agreement Behsteen OCFA and City
g S\\
City Receives 80% of,'OCFA ass-Through Revenue'
Agreement BeUveen City Library and County Library
City Receives 70% of County Li rary Pass-Throug
Revenue
Previously Negotiated Fees of$300 per Unit 3
Community Service Impacts Remain
Year I yow 2 Year 3 ylnr 4 Year 6 Y"r f3 yeu 7
Grand 7'oW> SiEt.S � h s 1i 5:1,��5� S6, t ha :5s. 5£2Y< ,5 saj: z,5 I
� 'F3r2`£id3'£°a
GFi3sd"ratal'., a166,.;�, wv0 k5� '.���a.�>J5 �S,w+.u�i� <5.i 1 s^I `s C,?,i ui�, kfiwtY.
.... -
R�av,- m $159-427 $345.7rO ;$55.,513 ,�WW,44 $67'1,834 a.. �705 Z
..... .........
crE3FTS?.iatik8 1 c "
\
f ff~`ase refer M Tabiem:11 8rd Sat i f ffix?SliX4,fbf dof,ailk;<}
ME
9
Year I Year 2 Year 3
General Administration,' v-,69 $3,307 $6,13,2
... .............. ....
Community Development -,-,-.262
--- :: ... .... ... ......
PubUc Safety $68,206 $18,€8
.:
Library Services
. .........................
Contingency 1 a $ $1<"185 $22,133
3 ea,? e refer to a ks:3'a im'd 3b i�f f ?�k Cf ri c,",
Year I Year 2 Year 3
Taxes
..s $652.241 $349,1 1 `$6417,564
..... ....: ..... .......... .................------.. .........................
Motor Vehicle Roar $3 $
.......
Pubg€c Safety&Other Fees 1$3 $,32.396- $�5,442
.... .......................................... t� iv i
One Time Fees $10;4: 0(n $0 $u
t
'c,a, v 1,:{C,:'tc)Tab!&3 3a ara £3i,.�ui,t::bl;e esfu(dy bs3dt;i',lied
Scenario 1-, Annexation Prior to Development
Cumulative Surplus to City of $1\1,9,1 m1\11ion
Scenario 2,. Annexation After Development
Cumulative Surplus to City of $4,1 m"Iffilon
Scenario 3: Development Without Annexation
Cumulative Surplus to City of$33 M�ffll- 0 n
1111IMM
------------
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�—c e•� f
0 CITY OF HUNTINGTON BEACH
Inter Office Communication
Planning Department
0
TO: Honorable Mayor and City Council Members ,
VIA: Penny Culbreth-Graft, City Administrator c C�,
--� >-,,
FROM: Howard Zelefsky, Planning Director
c-�
DATE: September 16, 2005
SUBJECT: BOLSA CHICA WARNER MESA ANNEXATION FISCAL ANALYSIS
In preparation for the September 19th Study Session, the Preliminary Warner Mesa Annexation
Study,prepared by the City's consultant, RSG Inc., was included in your City Council packet.
The City's consultant has since made corrections to the Study, which has resulted in changes to
seven pages of the report. The revised pages are attached for your information.
The corrections affect Scenario 2: Annexation after Development and Scenario 3: Development
without Annexation. As a result, the net cumulative surplus of Scenario 2 increased from $3.950
million to $4.120 million. The net cumulative surplus of Scenario 3 decreased from $3.893
million to $3.289 million.
The City's consultant will present the results of the Study at the September 19th Study Session.
Should you have any questions in the interim,please contact me at ext. 5465 or Mary Beth
Broeren, Prinicpal Planner, at ext. 5550. Thank you.
Attachments:Revised Pages 1,25-27,29-31 / T
xc: Joan L. ,Fl nn City Clerk
Y tY
Jennifer McGrath,City Attorney
Paul Emery,Deputy City Administrator
Mary Beth Broeren,Principal Planner Jason Kelley,Assistant Planner b(- f I
G:\AdmLtr\2005\0905mbb 1.doc
EXECUTIVE SUMMARY
This Annexation Study ("Study") was prepared for the City of Huntington Beach
("City") to address the fiscal impacts that may be associated with the annexation
of an unincorporated portion of the Bolsa Chica called the Warner Mesa. A
residential development has been approved by the California Coastal
Commission for the Warner Mesa, which will increase the demand for local and
regional services to land currently uninhabited.
This Study has been performed to assist the Huntington Beach City Council as
they deliberate the issue of annexing the Warner Mesa. It should be noted that
the deficit and surplus projections presented in this study do not represent exact
future sums. All fiscal studies must be based on assumptions and
methodologies which could alter forecasted amounts. This study makes every
attempt, however, to ensure that all assumptions are sound and conservative.
The Study examines three scenarios, all of which assume that development will
occur on the Warner Mesa. The scenarios consisted of annexation prior to
development, annexation one year after the commencement of development,
and development with no annexation. A seven year time horizon was used for
each alternative to offer a cycle of costs and revenues that included elections,
periodic street maintenance activities, and housing turnover.
The following is a summary of the cumulative surplus (deficit) resulting from each
of the aforementioned scenarios.
1. Annexation Prior to Development
The fiscal impact to the City under this scenario resulted in positive cash
flow during the study time horizon, with a cumulative surplus of
approximately$19.2 million through the final year of the analysis.
2. Annexation After Development
This scenario resulted in positive revenue generation in each year, with a
cumulative surplus of approximately$4.1 million through the final year of
this analysis.
3. Development Without Annexation
The fiscal impacts to the City produced by this scenario also remain
positive each year, with a cumulative surplus of approximately $3.3
million through the final year of this analysis.
Conclusions
Analysis of the three scenarios utilized in the Study presents a clear picture of
the fiscal trend that would result from annexation. In each case, the City would
financially benefit from the proposed development on the Warner Mesa, but
annexation prior to development would be the most financially beneficial.
ROSENOW SPEVACEK GROUP INC. PAGE 1
Thus, in Scenario 2, Years 1 and 2, based upon direction from Library Services
Department management staff, a 70% pass through of tax revenue from the
County of Orange library fund has been included as well as a $300 per unit
capital contribution, as was arranged in the 1996 agreement. After annexation in
Year 3, expenditures and revenues were calculated in the same manner as
Scenario 1.
Summary
The forecasted expenditures and revenues for this study have been calculated
using conservative methodologies and modes escalation factors. Based on this
analysis of annexation after development, forecasted revenues will exceed
expenditures. Projections indicated a cumulative surplus of $4,119,764 over the
seven year study period.
ROSENOW SPEVACEK GROUP INC. PAGE 25
Table 2a:Seven Year Expenditure Summary(Development Prior to Annexation)
2006-07 2007-08 2008-09 2009-10 2010-11 2011.12 2012-13
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Administration
Administration/Public Support $0 $0 $1,465 $1,495 $1,524 $1,555 $1,586
Elections 1 $0 $0 $1,204 $1,182 $757 $1,230 $1,303
Animal Control $0 $0 $1,992 $2,032 $2,073 $2,114 $2,157
County Tax Collection Charge 3 $589 $3,307 $10,290 $10,495 $10,705 $10,919 $11,138
Subtotal $589 $3,307 $14,951 $15,204 $15,060 $15,819 $16,184
Building&Safety 4
Permit and Plan Check Services $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Community Services
General Fund Expenses5 $0 $2,262 $4,615 $4,708 $4,802 $4,898 $4,996
Subtotal $0 $2,262 $4,615 $4,708 $4,802 $4,898 $4,996
Fire Department
Fire Med 6 $0 $3,071 $6,265 $6,390 $6,518 $6,648 $6,781
General Fund Expense$7 $0 $45,550 $92,877 $94,734 $96,629 $98,562 $100,533
Paramedic&Ambulance Transport 8 $0 $9,586 $19,545 $19,936 $20,335 $20,742 $21,156
Fire Department Relocation 9 $0 $0 $0 $0 $42,940 $0 $0
Subtotal $0 $58,206 $118,687 $121,060 $166,421 $125,951 $128,470
Library Services
General Fund Expenses 10 $0 $6,996 $14,271 $14,557 $14,848 $15,145 $15,448
Library Service Fund 11 $0 $2,831 $2,888 $2,946 $3,004 $3,065 $3,126
Library Development 12 $0 $962 $981 $1,000 $1,021 $1,041 $1,062
Subtotal $0 $10,789 $18,140 $18,503 $18,873 $19,250 $19,635
Police
General Fund Expenses13 $0 $0 $204,236 $208,321 $212,487 $216,737 $221,072
Subtotal $0 $0 $204,236 $208,321 $212,487 $216,737 $221,072
Public Works
Residential Sewer Cleanings 14 $0 $0 $12,078 $12,320 $12,566 $12,817 $13,074
Storm Drain Basin Cleanings 75 $0 $0 $842 $859 $876 $894 $912
Storm Drain Debris Unit Cleaning 16 $0 $0 $6,367 $6,495 $6,624 $6,757 $6,892
Street Lighting 17 $0 $0 $12,485 $12,734 $12,989 $13,249 $13,514
General Fund Expenses'8 $0 $0 $75,052 $76,553 $78,084 $79,646 $81,239
Subtotal $0 $0 $106,825 $108,961 $111,140 $113,363 $115,631
Contingency-15% $88 $11,185 $70,118 $71,514 $79,317 $74,403 $75,898
Road Maintenance
Street sweeping 79 $0 $0 $3,394 $3,462 $3,531 $3,602 $3,674
Local Street Maintenance20 $0 $0 $0 $0 $0 $0 $221,486
Subtotal $0 $0 $3,394 $3,462 $3,531 $3,602 $225,160
Contingency-15% $0 $0 $509 $519 $530 $540 $33,774
GRAND TOTAL ALL EXPENDITURES $678 $85,748 $541,475 $552,252 $612,162 $574,563 $840,819
ROSENOW SPEVACEK GROUP INC. PAGE 26
Table 2b:Seven Year Revenue Summary(Development Prior to Annexation)
2006-07 2007-08 2008-09 2009.10 2010-11 2011-12 2012-13
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Taxes
Basic Levy-Property Taxl $62,241 $349,171 $1,086,541 $1,108,272 $1,130,437 $1,153,046 $1,176,107
Utility Unitary Tax 2 $0 $0 $4,351 $4,438 $4,527 $4,617 $4,710
Property Transfer Taxi $0 $0 $171,179 $17,460 $17,809 $18,166 $18,529
Subtotal $62,241 $349,171 $1,262,071 $1,130,170 $1,152,773 $1,175,829 $1,199,345
Franchise Fees
Gas,Electric,Cable TV,etc $0 $0 $22,892 $23,350 $23,817 $24,293 $24,779
Subtotal $0 $0 $22,892 $23,350 $23,817 $24,293 $24,779
Motor Vehicle Revenues
Vehicle License Fees° $0 $0 $6,684 $6,818 $6,954 $7,093 $7,235
In-Lieu of VLF 5 $0 $0 $33,952 $34,631 $35,324 $36,030 $36,751
Subtotal $0 $0 $40,636 $41,449 $42,278 $43,123 $43,986
Other Revenues
Fire Mad 6 $0 $26,156 $53,332 $54,399 $55,487 $56.596 $57,728
Paramedic&Ambulance Transport 1 $0 $391 $797 $813 $829 $846 $863
Capital Contribution Fee(Library)8 $104,700 $0 $0 $0 $0 $0 $0
Fines and Forfeitures 9 $0 $5,548 $22,626 $23,079 $23,540 $24,011 $24,491
Park Space-In Lieu Fees $0 $0 $0 $0 $0 $0 $0
Subtotal $104,700 $32,096 $76,755 $78,290 $79,856 $81,453 $83,082
Road Funds
Measure M-Local Tumback 10 $0 $0 $9,740 $9,935 $10,134 $10,337 $10,543
Gas Tax 11 $0 $0 $15,053 $15,354 $15,661 $15,975 $16,294
Subtotal $0 $0 $24,794 $25,290 $25,795 $26,311 $26,838
Subtotal-One Time Revenues $104,700
GRAND TOTAL ALL REVENUES $166,941 $381,266 $1,427,148 $1,298,548 $1,324,519 $1,351,010 $1,378,030
GRAND TOTAL ALL EXPENDITURES(see Table 2a) $678 $85,748 $541,475 $552,252 $612,162 $574,563 $840,819
REVENUE SURPLUS(SHORTFALL) $166,263 $295,518 $885,673 $746,296 $712,357 $776,447 $537,210
CUMULATIVE SURPLUS(DEFICIT) $166,263 $461,781 $1,347,453 $2,093,750 $2,806,107 $3,582,554 $4,119,764
ROSENOW SPEVACEK GROUP INC. PAGE 27
Summary
The forecasted expenditures and revenues for this study have been calculated
using conservative methodologies and modes escalation factors. Based on this
analysis of development without annexation, forecasted revenues will exceed
expenditures. Projections indicated a cumulative surplus of$3,289,060.
ROSENOW SPEVACEK GROUP INC. PAGE 29
Table 3a:Seven Year Expenditure Summary(No Annexation)
2006-07 2007-08 2008-09 2009-10 2010.11 2011-12 201243
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Administration
Administration/Public Support $0 $0 $0 $0 $0 $0 $0
Elections 1 $0 $0 $0 $0 $0 $0 $0
Animal Control $0 $0 $0 $0 $0 $0 $0
County Tax Collection Charge` $589 $3,307 $6,132 $6,255 $6,380 $6,508 $6,638
Subtotal $589 $3,307 $6,132 $6,255 $6,380 $6,508 $6,638
Building&Safety 3
Permit and Plan Check Services $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Community Services
General Fund Expenses° $0 $2,262 $4,615 $4,708 $4,802 $4,898 $4,996
Subtotal $0 $2,262 $4,615 $4,708 $4,802 $4,898 $4,996
Fire Department
Fire Mod 5 $0 $3,071 $6,265 $6,390 $6,518 $6,648 $6,781
General Fund Expenses $0 $45,550 $92,877 $94,734 $96,629 $98,562 $100,533
Paramedic&Ambulance Transport 7 $0 $9,586 $19,545 $19,936 $20,335 $20,742 $21,156
Fire Department Relocation $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $58,206 $118,687 $121,060 $123,482 $125,951 $128,470
Library Services
General Fund Expenses $0 $6,996 $14,271 $14,557 $14,848 $15,145 $15,448
Library Service Fund 9 $0 $2,831 $2,888 $2,946 $3,004 $3,065 $3,126
Library Development 10 $0 $962 $981 $1,000 $1,021 $1,041 $1,062
Subtotal $0 $10,789 $18,140 $18,503 $18,873 $19,250 $19,635
Police
General Fund Expenses $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Public Works
Residential Sewer Cleanings $0 $0 $0 $0 $0 $0 $0
Storm Drain Basin Cleanings $0 $0 $0 $0 $0 $0 $0
Storm Drain Debris Unit Cleaning $0 $0 $0 $0 $0 $0 $0
Street Lighting $0 $0 $0 $0 $0 $0 $0
General Fund Expenses $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Contingency-15% $88 $11,185 $22,136 $22,579 $23,030 $23,491 $23,961
Road Maintenance
Street sweeping $0 $0 $0 $0 $0 $0 $0
Local Street Maintenance $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
GRAND TOTAL ALL EXPENDITURES $678 $85,748 $169,710 $173,105 $176,567 $180,098 $183,700
ROSENOW SPEVACEK GROUP INC. PAGE 30
Table 3b:Seven Year Revenue Summary(No Annexation)
2006-07 2007-08 2008-09 2009.10 2010-11 2011-12 2012.13
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Taxes
Basic Levy-Property Tax $62,241 $349,171 $647,554 $660,505 $673,715 $687,189 $700,933
Utility Unitary Tax $0 $0 $0 $0 $0 $0 $0
Property Transfer Tax $0 $0 $0 $0 $0 $0 $0
Subtotal $62,241 $349,171 $647,554 $660,505 $673,715 $687,189 $700,933
Franchise Fees
Gas,Electric,Trash,Cable TV,etc $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Motor Vehicle Revenues
Vehicle License Fees $0 $0 $0 $0 $0 $0 $0
In-Lieu of VLF $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0
Other Revenues
FireMed2 $0 $26,156 $53,332 $54,399 $55,487 $56,596 $57,728
Paramedic&Ambulance Transport 3 $0 $391 $797 $813 $829 $846 $863
Fines and Forfeitures $0 $5,548 $11,313 $11,539 $11,770 $12,006 $12,246
Capital Contribution Fee(Library)5 $104,700 $0 $0 $0 $0 $0 $0
Subtotal $104,700 $32,095 $65,442 $66,751 $68,086 $69,448 $70,837
Road Funds
Measure M-Local Tumback $0 $0 $0 $0 $0 $0 $0
Gas Tax $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $o $0 $0
Subtotal-One Time Revenues $104,700
GRAND TOTAL ALL REVENUES $166,941 $381,266 $712,996 $727,256 $741,801 $756,637 $TT1,T70
GRANO TOTAL ALL EXPENOITURES(see Table 38) $678 $85,748 $169,710 $173,105 $176,567 $180,098 $183,700
REVENUE SURPLUS(SHORTFALL) $166,263 $295,518 $543,285 $554,151 $565,234 $576,539 $588,070
CUMULATIVE SURPLUS(DEFICIT) $166,263 $461,781 $1,005,066 $1,559,217 $2,124,451 $2,700,990 $3,289,060
it
ROSENOW SPEVACEK GROUP INC. PAGE 31
i
HEARTHSIDE HOMES C I T Y OF
HU TINGTON BEACH, CA
RECEIVED
1005 SEI' It, P �:
CFI' 1 2005
September 16,2005 ` CITY OF NUNIINGTON BEACH
ADMINISTRATION OFFICE
Penny Culbreth-Graft
City Administrator
City of Huntington Beach
2000 Main Street
Huntington Beach, Ca. 92648
Subject: Preliminary Warner Mesa Annexation Study
Dear Penny:
Thank you for the opportunity to review the Preliminary Warner Mesa Annexation Study
prepared by Rosenow Spevacek Group dated September 19, 2005. The purpose of this
letter is to provide you with some very brief comments on the study methodology and to
note any incorrect statements contained in the report.
Overall,I agree with the methodology of the study in terms of how it treats annual costs
and revenues. As a resident of the city, I am pleased to see that under any of the three
study scenarios Brightwater provides a fiscal benefit to the city on an annual basis.
However, I am troubled by the way the study calculates some of the"One Time Fees".
The study assumes a best case scenario with respect to some of the one time development
fees that would accrue to the city if the project is annexed prior to development and thus
paints a very unrealistic picture on the revenue side of the equation.
Most troubling is the assumption that the Brightwater project would receive no local park
credit for any onsite parks/open space areas and instead must pay $11.6 million in local
park in lieu fees to the city. The Coastal Commission required Hearthside Homes to
dedicate 34 acres containing an interpretive trail on the perimeter of Brightwater and the
County has conditioned the project to dedicate 49 acres of land to the Harriett Wieder
Regional Park. In addition, the residential portion of Brightwater contains nearly two
acres of passive public park areas maintained by the Brightwater Homeowners
Association. Clearly it is unreasonable to assume that Hearthside would pay in lieu park
fees in addition to dedicating 85 acres for open space and park purposes. There are other
one time fees that I believe are overstated and tend to mislead the reader as to the fee
revenue generated by the project, but there is no need to get into that discussion at this
time.
9/as - #01,6Z-11
6 EXECUTIVE CIRCLE, SUITE 250, IRVINE, CALIFORNIA 92614 (949) 250-7700 FAX (949) 250-7705
On page 10 of the study it states that Hearthside has a contract with Southern California
Water Company(SCWC) to provide domestic water to the project. This statement is
incorrect. Hearthside did at one time have a contract with SCWC for water service.
However, in 1998 the city required SCWC to obtain a Certificate of Public Convenience
and Necessity (CPCN) from the California Public Utilities Commission(CPUC) in order
to secure the road right-of-way for a water transmission line from SCWC's Cypress
service area. The CPUC granted the CPCN in 2000. The CPCN eliminated the need for
Hearthside to have a water service contract with SCWC. SCWC now has a legal right
granted by the CPUC to provide water service to Brightwater and a franchise with the
city. This is an issue that needs to be resolved if the city is interested in pursuing
annexation prior to development.
Again,thank you for the opportunity to comment on the study and I look forward to
working with you on this important issue. If you have any questions concerning this
letter please call me at(949) 250-7760.
Sincere
K
y:
ford, S . Vice President
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