HomeMy WebLinkAboutStaff Report 196-10City of Palo Alto ,
City Manager's Report
TO: HONORABLE CITY COUNCIL
ATTENTION: FINANCE COMMITTEE
FROM: CITY MANAGER
DATE: APRIL 6, 2010
DEPARTMENT: ADMINISTRATIVE
SERVICES
CMR:196:10
SUBJECT: Revkw of the Stanford Univel'sity Medical Center Facilities Renewal and
Replacement Project Fiscal Impact Analyscs
RECOMMENDATION
Staff recommends that the Finance Committee review and comment on the Stanford University
Medical Center Fiscal analysis prepared by Stanford's consultant CB Richard Ellis (CBRE).
(Attachments A and B). In addition, staff recommends that the Finance Committee review and
comment on the peer review prepared by Applied Economics Development (ADE) for the City
(Attachment C).
BACKGROUND
The Stanford University Medical Center (SUMC) comprises the general area between Sand Hill
Road, Vineyard Lane, Quarry Road, Pasteur Drive, and including Welch Road and Blake Wilbur
Drive. The Projget applieant is proposing the demolition of the existing Stanford Hospital and
Clinics (SHC) at 300 Pasteur Drive, and construction of a new hospital building; renovation and
expansion of the Lucile Packard Children's Hospital (LPCH); reeonstruetion of the School of
Medicine' (SoM) facilities; and construction of a new medical office building near Hoover
Pavilion. All of this work is designed to meet State mandated seismic safety standards (SB
1953) and to address eapacity issues, changing patient needs and modernization requirements.
SB 1953 requires hospitals to retrofit or replace noncompliant facilities by January 1,2013, but
Stanford has requested a tw()-year extension pursuant to SB 1661 from the Office of Statewide
Planning and Health (OSHPD), the California State Agency that has jurisdiction over hospitals.
The renovation and expansion project, which would be constructed over a IS-year horizon,
would result in an .increase of approximately 1.3 million sqnare feet of hospital, clinic, and office
space. The following entitlements are anticipated: .
• Comprehensive Plan amendments to:
CMR:196:10
o Change 701, 703 Welch Road and a small portion of Santa Clara County land on
Welch Road to be annexed with "Major JnstitutionallSpecial Facilities" land l,lSe
designation.
Page 1 of7
o Amend Policy L-8 to clarify that the hospital and treatment uses are exempt from
the development cap.
• Zoning Code and Map amendments to:
o Create a new "Hospital Zone."
o Rezone 701 and 703 Welch Road from Medical OlIice Research (MOR) to the
new "Hospital Zone."
o Pcmlit limited heritage tree removals
o Pre-zone the site to be annexed to the City to the new "Hospital Zone."
• Annex the small parcel described above.
• ARB review of the SHC, LPCH, Foundations in Medicine (FIMl), medical olIice
, building at Hoover Pavilion, and Design Guidelines.
• Co~ditional Use Permit
• Development Agreement
The Project applicant has submitted eight substantive project amendments with the most recent
anlendment submitted on March 8, 2010. Since the Project was first submitted to the City,
SUMC has made changes based upon staff analysis and ARB, Planning and Transportation
Commission, and City Council input. These changes include significant modifications to site
plarming and building massing; revisions to the location of parking garages and site access lor
automobiles; refinements to the pedestrian and bicycle network to promote stronger linkages and
connections; and changes to building placement and design to protect significant oak tree
specill1 ens.
As part of the entitlement process for the project the City and SUMC have agreed to complete a
Fiscal Impact Analysis. SUMC has contracted with CBRE to conduct their liscal impact
analysis and agreed to fund a peer review using a City selected fiscal impact consultant. The
City completed a formal RFP process and ADE was selected to conduct the peer review. SUMC
as well as City staff, and APE, have completed their independent reviews of the SOMC project.
DISCUSSION
Long-term fiscal consequences are an essential part of the consideration \Yhen reviewing large
projects. New development could potentially bring new rcsidents, employees, and uses that will
place incremental demands ori local services, such as police, fire protection, community services,
libraries, planning, public works and utilities as well as impaeting City administrative functions.
Anticipating and evaluating the associated fiscal impacts of new development cnsures that the
City does not extend services or infrastructure in a way that imposes a significant burden on
existing and limited resources. In addition, this analysis helps formulate funding strategies for
community facilities and intl'astructure as well as any potential additional mitigation costs.
A fiscal impact analysis also can be used to compare the fiscal costs of alternative approaches to
a development. If a project is not fiscally neutral or sustainable but meets commllnity goals, the
C analysis may suggcst the need for additional revenues or a Development Agreement that
provides supplemental funding to cover costs related to the development.
/
A typical fiscal impact analysis includes a number of assumptions about how revenues will be
generated by the project. An example would be how property tax revenues are affected by the
development. A fiscal impact analysis incorporates the following components foranalysis:
CMR:196:10 Page 2 of?
• The Increased Demand for Services Is Quantified Based on Amount of
Development. The changes that will be caused by the project proposal are quantified into
measurable units such as jobs created, housing units built, or square footage of retail.
Then service demands are estimated, based on factors applied to employment, housing,
and commercial development.
• The General Cost of Services Is Estimated. The type and amount of services are
identified. Then, an estimate of the cost of providing these services is calculated.
Estimating the cost, however, is often diflicult given the "threshold" nature of services
like sewer-that may have little or no incremental cost until capacity is reached. To
provide another example, the police may have suflicient capacity to handle one
development, but may be forced to hire additional staff if the same development were
proposed again but expanded significantly. Staff will often make assumptions to take
these difliculties into account.
• The Cost of Directly Serving the New Development Is Calculated. This can be
expressed as either a per unit cost or a total cost for the development.
• New Revenues Generated by the Project Are Estimated. The likely revenues to be
derived from the project, like property taxes, development fees, license fees, and other
revenues are calculated.
• Projected Costs and'Revenues are Compared. The estimated revenues and costs are
,used to determine the net fiscal impact of the project. A positive bottom line number
indicates that projected revenues are suflicient to cover projected costs.
Fiscal Impact Analysis
The fiscal analysis prepared by CBRE indicates that the potential tax and fee revenues generated
by the SUMC project will be suflicient to fund the anticipated costs of providing municipal
services to the projects (Table I). This includes taxes generated by increased Sales and Use Tax,
Property Tax, Transient Occupancy Tax, Utility Users Tax and other taxes and fines such as
Motor Vehicle In-Lieu and Fines and Penalties. The analysis used a time horizon of thirty years
or 20 I 0 through 2040 to be consistent with some of the key aspects of' the proposed
Development Agreement. CBRE's dynamic analysis finds that over the 30-year time horizon the
SUMC project will net the City General Fund a cumulative net surplus totaling $7.6 million.
This reflects total cumulative revenues of $25.1 million and total cumulative costs of $17.5
million;
In contrast, the peer review completed by ADE indicates that cumulative projected revenues are
$23.9 million and cumulative projected costs are $25.0 million, leaving a total net deficit of $1.1
million. Table 1 compares the two impact studies.
CMR:196:10 Page 3 of7
Table I
Compnhltive Fiscal Analysis of Stlmford University Medical Center Project
Annualized ProjectiollofFiseallmpncts 2010-2040
AnE CBRE ADt minus
Analysis Amtlysis CBRE
Total Total
Item Projected Prolccted ])iffcrcnce
General ft'uDd Revenue
~alcs Tax
SUMC Direct Purchasing $ 1,042,944 $ 909,129 $ 133,815
SUMC Facililics On~site sates 3,332,654 3,433,703 (101,049)
SUMC Employee Spending 1,456,837 1,459,148 (2,311)
SUMC Overnight Visitor Spending 7,394 9,688 (2,294)
Construction RelHted ~lIrchasing 8,148,416 8,148,416
Construction Worker Spending 16,303 112,427 (96,124)
Prol"'rty To. 1,307,143 1,681,451 (374,308)
Transient Ocetlrmncy Tax 151,445 182,806 (31,361)
Ulility Users T(lx 7,358,172 7,978,522 (620,350)
Other
Mot~r Vehicle In-Lieu Fees 318,,825 . 410,502 (91,677)
Flnes and Penalties 799,698 799,680 20
Sub:TotHI $. 23,939,831 $ 25,125,468 $ (1.185.637)
GeneraJ Fund Expense
City Attorney $657,029 76,513 $580,516
City Auditor $182,508 $182,508
City Clerk $255,511 $255,511
CityCounci! $0 $0
City Manage!' $401,518 61,434 $340,084
Administrative Serviees $1,697,325 394,852 $1,302,473
Human Resol1rees $547,524 310,520 $237,004
Community Services $1,524,267 2.382,518 ($858,251)
Fire $4,621,944 4,150,698 $471,246
Library $471,360 ($71,492)
CMR:196:10 Page 4 of7
542,852
'Planni.ng and Community Env $1,438,009 856,165 $581,844
Police $7,980,282 5,744,628 $2,235,654
Public Works $3,645,108 1,903,892 $1,741,216
Non-Pepartmental $1,611,638 1,074,535 $537,103
... _-
Sub-Total $ 25,034,023 S 17,498,609 $ 7,535,414
Net Surrlus/(Dcficit) $ (J ,094, J 92) $ 7,626,860 $ (8,721,052)
"Note: Totals may not add due to rounding.
Revenue Estimates
The analysis indicates differences in total revenues of approximately $1.2 million over the thh1y
year time horizon. There are material differences in the ai'eas of Property Tax and Utility Users
Tax. The total difference between these sources, however, averages approximately $39,521 per
year and staff believes, after discussion with both consultants, that most of the variance can be
attributed to the timing of Propcl1y Tax projections and to potentially better project related
information being provided to CBRE by SUMC in terms of utility consumption projections.
Because the bulk of the project is exempt from property tax due to the non-profit nature of the
use, only modest Propelty Tax revenues are projected.
Of major concern to staff is that the analysis includes significant projections of Sales Tax and
Use Tax coliected during project construction. A total of$14.1 million or approximately 56% of
all projected revenues results from sales and use tax. The California State Board of Equalization
(SHOE) administers local taxes under the Bradley-Burns Uniform Local Sales and Use Tax Law,
arid district taxes under the Transition and Use Tax Law, both of which are governed by
California Revenue and Taxation Code section 72000 et. Seq.
To collect rcvcnucs estimated at these levels, the following actions must occur:
• Stanford University would obtain a California Seller's permit and report the Sales and
Use Tax information directly to the SBOE
• At least 80% of all contracts and subcontracts must be greater than $5.0 million, thus
qualifying for a sellcr's sub-permit
• Under Stanford's permits all qualifying contractors and sub-contractors will voluntarily
obtain seller's sub-permits lor the SUMC construction site and report the required Sales
and Usc Tax information
If these actions do not occur, the Use Tax would flow to the county pool and the City would
receiveasignillcantly smaller share. Staff believes that Stan/tml staff mllst work in tandem with
coiltractors to obtain the appropriate tax permits and monitor the contractors' perforinance in this
area. Otherwise, these revenues will not materialize as projected by Cn'RE or ADE, In addition,
to obtain revenues in fllturC years, SHC and LPCH will both need 10 maintain or obtain direct
pay permits to repoli and pay sales and use tax on qualifying direct purchases. Stanford has
conflrmed and shown that they are remitting use tax on out-of-state purchases.
CMR:196:1O Page 5 of7
Admittedly, these arc complex and time consuming processes with serious implications if the
revenue projections do not become reality. This shortfall could potcntially change CBRE's
projeeted rcvenues fl'om a total of $25.1 million to $11.0 million, resulting in a projected deficit
of$6.4 million and not a $7.6 million surplus. Again, it is Stanford not the City that must work
with the contractors to ensure all potential use tax is realized. Even though CBRE and ADE
estimates for this revenue source are similar, realizing the amount projected can be problematic
given the need for close oversight and the possibility that the amount and type of purchases may
not conform 10 State regulations. Staff recommends that the Development Agreement contain
language whereby Stanford guarantees a revenue stream to cover City expenses in situatiuns
where anticipated revenue projections fall short.
Expense Estimates
The City costs in both the CBRE and ADE analysis are calculated on an average cost basis,
meaning that the eosts allocated to the proposed project are the same cost per employee as those
for existing non·residential uses and employees in the City. The analysis in Table 1 indicates
that there is a significant difference between the' consultants in the determination of long term
expenses.' CBRE has calculated that project related City expenses for the thirty year time
horizon are approximately $17.5 million, whereas ADE has calculated the expense to be
approximately $25.0 million. Staf'funderstands that this difference is due to CBRE's assumption
that certain portions of City services are fixed and not subject to increase as City service
demands increase. Overall, CBRE has estimated that approximately 49% of all City service cost
are fixed costs that will not vary over time. These range from 100% ofthc costs for City Auditor
and City Clerk to 20% of Fire Department costs. this limitation has resulted in a 201 0-2040 cost
projection that is approximately 30% lower than ADE's estimate. ADE and City staff believes
that CBRE's finding is not correct. While lldministrative depmtments mlly grow at a slower rate
than operating departments, the CBRE assumption is that there is a relatively inelastic
connection between demand for services and the need for administrative support. This is not a
reasonable conclusion. ADE has found the need for additional staffing and costs for bOlh City
administrative and line departments. By including the additional salary and benefit costs, ADE
finds a deHcil beginning in year 2015, This is in contrast to the CBRE analysis, which projects a
much lower deficit beginning in year 2024.
Furthermore, the studies both assume that employee staff costs will remain fixed during the 30
year period. While not quantified, ADE and City Staff believe this assllmption further
underestimates expenses. Having gone through several rounds of cost cutting to solve structural
deficits in the last decade, the City does not want to face a similar deficit in the future due to a
significant new project.
Based on the absolute importance of achieving the projected revenues to insure this project is
cost neut~al, staff believes that a revenue guarantee must be included in the proposed
developn1ent agreement.
NEXT STEPS.
Given the significance of this project, staff will present this report to the Policy and Services for
furthcr feedback and will submit it to the full Council for additional discussion and possible
action on May 10, 2610. " , " '
ENVIRONMENTAL REVIEW
The City is preparing all Environmental Impact Report for this project.
CMR: 196:10 Page 6 of7
,
PREPARED BY:
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
ATTACHMENTS
JOE
Deput
LALOPEREZ
tor of Administrative Services
Attachment A: February 19,2009 CBRE Consulting Fiscal Impact Analysis
Attachment B: December 9, 2009 CBRE Dynamic Fiscal Analysis
Attachment C: March 2010 ADE Fiscal Impact Analysis
CMR:I96:10 Page 7 of7
. CBRE CONSULTING, INC.
February 19, 2009
David Ramberg
Assistant Director
Administrative Services Department
250 Hamilton Avenue
Palo Alto, CA 94301
Attachment A
CBRE
ca RICHARD ELLIS
4 Embarcadt'lfO CGnh'ITj Suite 700
Son Francisco, CA 94111
T 4157818900
F 4157335530
Re: Stanford Universily Medical Center Facilities Renewal and Replacement Praject
Fiscal Impact Analysis
Dear Me. Ramberg:
CBRE Consulting, Inc. (CBRE Consulting) is pleased to submit this updated report regarding the
fiscal impact analysis for the planned Stanford University Medical Center Facilities Renewal and
Replacement Project in the City of Palo Alto, Californio. The report evaluates the impact the
expansion will have On the City's fiscal budget, both during. construction and upon full
operations.
CBRE Consulting worked very diligently to ensure that the analysis is transparent, with resourCes
identified and assumptions substantiated to the extent possible, in order to facilitate the peer
review process. In addition, we would be happy to provide the peer reviewer, Applied
Development Economics (ADE), with a catalogue of information and communication used to
produce the analysis, especially including information and materials provided by the City of
Palo Alio. We are also available to meet with you, other City staff, and ADE to discuss the
analysis and receive comments.
The draft report submitted on January 7, 2009 was updated to reflect analysis pertaining to use
tax payments associated with the existing operations of Stanford Hospitals and Clinics and
Lucile Packard Children's Hospital. If use tax dired payment permits are obtained by these
facilities, as requested by the City and discussed in the report, then there will be an increment of
use taxes accruing to the City of Palo Alto associated with eqch facility's existing taxable
spending. The updated repart presents these estimated use tax revenueS accruing to the City of
Polo Alto. .
Please note that the revised report includes the following changes to support the additional
analysis or reflect consistencies with our parallel analysis for the Stanford Shopping Center:
• DMJM Harris is now referred to as AECOM;
• The summary Tables 1 through 4 and Exhibit 71 now include the City Auditor category
under General Fund expenditures. This does not change Ihe net fiscal impact findings since
the analysis estimates that the project will not result in additional expenditures for this
deportment;
• As a result of the additional USe tax analysis and the changes listed below, the summary
Tables 1 through 4 present new total General Fund revenues and net fiscal impact figures;
• Exhibits 7 and 8 now include use tax payments to the California State Board of Equalization
for Fiscal Year 2006-2007;
• Footnote (4) of Exhibit 12 and the associated analysis have been updated to reflect an
inflation rate of 4.87 percent;
CORE CONSULTING, INC. CBRE
CB AICHARD ell-Is
4 Embarcadero CentEH', Suite 700
San Froncisco, CA 94111
T 415 7B1 B900
F 4157335530
• A new Exhibit 15 has been added to summarize the calculation of the City of Palo Alto
capture of existing SHC and LPCH use tax expenditures;
• footnotes have been added to Exhibits 20 through 23 to reflect that the estimated annual
sales tax revenues to the City of Palo Alto by entity are rounded to whole dollars for
presentation purposes;
• The figure $230 has been added to footnote (7) of Exhibit 25;
• The motor vehicle in-lieu fee estimate in Exhibit 35 was updated from Fiscal Year 2006-
2007 figures to Fiscal Year 2007-2008 figures;
• The General Fund revenue estimates from fees and penolties (Exhibits 42 and 43) were
restructured for presentation purposes. The revised presentation did not change the
estimated revenue figures;
• The one-time sales tax revenue estimates from construction worker spending (Exhibit 56)
were updated to account for the cumulative number of full time equivalent construction iobs
over the course of each construction period; and
• The 2015 Stanford Shopping Center net employment figure was updated from 957 to 958
(Exhibits 64 and 69) to reflect the figure being rounded to whole employees for presentation
purposes.
It hos been a pleasure working with you on this proiee!. Please lei us know if you have any
questions or additional needs.
Sincerely,
Amy L Herman, AICP
Senior Managing Director
Enclosure
Melina Rollin
Senior Consultant
STANFORD UNIVERSITY MEDICAL CENTER
FACILITIES AND REPLACEMENT PROJECT
FISCAL IMPACT ANALYSIS
Prepared for:
STANFORD UNIVERSITY MEDICAL CENTER
February 2009
CBRE
CB RICHARD aUS
CBRE CONSULTING, INC.
February 19, 2009
William Phillips
Senior Assaciale Vice President
Sianford University, land, Buildings & Real Estate
2755 San Hill Road
Suite 100
Menlo Park, CA 94025
CBRE
CB RICHARD e~~ls
4 Embarcadero Center
Suite 700
Son Froncisco, CA 94111
T 4157818900
F 4157335530
www.cbre.com/consulting
Re: Stanford University MedicClI Center FClcilities RenewClI Clnd Replacement Project
FlscClllmpClct Analysis
Dear Mr. Phillips:
CBRE Consulting, Inc. (CBRE Consulting} is pleased,to submit this report regarding the fiscal
impact analysis Iar Ihe planned Sianford University Medical Center Facilities Renewal and
Replacement Project in Ihe City of Polo Alto, California. The report evaluates the impact the
expansion will have on the City's fiscal budgets, both during construction and upon full
operations.
It has been a pleasure working with you an this project. Please let us know if you have any
questions or additional needs.
Sincerely,
Amy L. Herman, AICP
Senior Managing Director
Enclosure
Melina Ralfin
Senior Consultant
N:\Team-Sedway\Projects\2007\ 1007043 Stanford\Reports\ 1007043 R07.doc
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY .............................................................................................................................. 1
OVERVIEW ................................................................................................................................................ 1
SUMMARY OF FINDINGS ............................................................................................................................... 1
II. INTRODUCTION ................................................................................................................................... 10
STUDY PURPOSE ....................................................................................................................................... 10
PROJECT DESCRIPTION ............................................................................................................................... 10
STUDY APPROACH .................................................................................................................................... 11
REPORT ORGANIZATION ............................................................................................................................. 12
III. KEY DATA POINTS AND STUDY COMPONENTS .................................................................... , ............... 13
SELECT KEY DATA POINTS AND RELATED ASSUMPTIONS ...................................................................................... 13
STUDY ODMPONENTS ............................................................................................................................... 14
IV. ANNUAL GENERAL FUND REVENUES ................................................................................................... 18
SALES AND USE TAX ................................................................................................................................... 18
PROPERTY TAX .......................................................................................................................................... 26
VEHICLE LICENSE IN-LIEU FEE REVENUE ........................................................................................................... 27
TRANSIENT OCCUPANCY TAX (TOT) ............................................................................................................... 27
UTILITY USERS TAX ..................................................................................................................................... 28
OTHER REVENUES ..................................................................................................................................... 28
SUMMARY OF GENERAl FUND REVENUES ........................................................................................................ 29
V. ONE-TIME REVENUES ........................................................................................................................... 30
GENERAl FUND CONSTRUCTION-RELATED SALES/USE TAX .................................................................................. 30
GENERAl FUND CONSTRUCTION WORKER RETAil SPENDING ............................................................................... 33
IMPACT FEES ........................................................................................................................................... 34
VI. ANNUAL GENERAL FUND EXPENDITURES ............................................................................................ 35
GENERAl FUND SERVICE COST MATRIX ........................................................................................................... 35
fiRE DEPARTMENT ..................................................................................................................................... 36
POLICE DEPARTMENT ................................................................................................................................. 38
SUMMARY OF PALO ALTO GENERAL FUND EXPENDITURES .................................................................................... 39
PALO ALTO UNIFIED SCHOOL DISTRICT (PAUSD) ............................................................................................... 40
VII. NET FISCAl IMPACTS ......................................................................................................................... .41
PRESENTATION OF FINDINGS ...................................................................................................................... 41
ONE-TIME IMPACT .................................................................................................................................... 41
ANNUAL IMPACT ...................................................................................................................................... 42
NET IMPACT ALLOCATION BY SUMC ENTITY ..................................................................................................... 42
ASSUMPTIONS AND GENERAL LIMITING CONDITIONS
APPENDIX: EXHIBITS
s
CBRE CONSULTING, INC. CBRE
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
Exhibit 7
Exhibit 8
Exhibit 9
Exhibit 10
Exhibit 11
Exhibit 12
Exhibit 13
Exhibit 14
Exhibit 15
Exhibit 16
Exhibit 17
Exhibit 18
Exhibit 19
Exhibit 20
Exhibit 21
Exhibit 22
Exhibit 23
Exhibit 24
Exhibit 25
5
CB RICHARD ELLIS
LIST OF EXHIBITS
Summary of SUMC Facilities Existing and Planned Project Description, 2007, 2015 and·
2025
Detailed SUMC Facilities Existing and Planned Project Description, 2007,2015 and 2025
Summary of SUMC Fadlilies Square Feet, 2007,2015 and 2025
SUMC Facilities Patient Visits and Employment Estimates, 2006, 2015 and 2025
Hotel Nights Generated bySUMC Expansion, 2007, 2015 and 2025
City of Palo Alto and Sphere of Influence Demographics, 2005-2010 and Fiscal Years
2005·2006 to 2008·2009
SHC Use Tax Payments, Fiscal Years 2004-2005 to 2005-2006
lPCH Use Tax Payments, Fiscal Years 2004.2005 to 2005·2006
Use Tax Direc! Payment Permit Holder Rebate Programs in California, September 2008
SHC and Subsidiaries Operating Expenses, Fiscal Years 2005.2006 and 2007·2008
lPCH Operating Expenses, Fiscal Years 2005·2006 and 2007-2008
Calculation of City of Palo Alta Sales and Use Tax Revenues Assuming SHC and lPCH
Use Tax Direct Parment Permits, Fiscal Year 2006-2007
City of Palo Alto Sales and Use Tax Revenues, Patient· Based Calculation Assuming SHC
and lPCH Use Tax Direct Payment Permits
Incremental City of Palo Alto Sales and Use Tax Revenues, 2015 and 2025
Calculation of City of Palo Alto Capture of SHC and lPCH Use Tax Expenditures, Fiscal
Year 2006-2007,2015 and 2025
Existing and Proposed Revenue-Generating SHC and lPCH Programs, 2008, 2015 and
2025
Existing and Proposed Revenue-Generating SaM and Total SUMC Programs, 2008, 2015
and 2025
Taxable Sales from Revenue Generating SHC Programs, Fiscal Year 2006-2007
Taxable Sales from Revenue Generating lPCH Programs, Fiscal Year 2006·2007
Net Taxable Sales from Revenue Generating SHC Programs, 2015 and 2025
Net Taxable Sales from Revenue-Generating lPCH Programs, 2015 and 2025
NetTaxable Sales from Revenue-Generating SaM Programs, 2015
Net Taxable Sales from Revenue.Generating SaM Programs, 2025
Office Worker Weekly Retail Spending Patlerns
Office Worker Annual Retail Spending Estimates
CBRE CONSULTING, INC. CBRE
Exhibit 26
Exhibit 27
Exhibit 28
Exhibit 29
Exhibit 30
Exhibit 31
Exhibit 32
Exhibit 33
Exhibit 34
Exhibit 35
Exhibit 36
Exhibit 37
Exhibit 38
Exhibit 39
Exhibit 40
Exhibit 41
Exhibit 42
Exhibit 43
Exhibit 44
Exhibit 45
Exhibit 46
Exhibit 47
Exhibit 48
Exhibit 49
Exhibit 50
Exhibit 51
Exhibit 52
s
Medical Office Emplayees Income Estimates, 2007
SHC and LPCH Employees Income Estimates, 2006
Consumer Expenditure Survey, 2006
CB RICHARD ELLIS
Net Annual Soles Tax Revenues from SUMC Proiect Employee Spending, 2015 and 2025
Net Annual Sales Tax Revenues from SUMC Proiect Overnight Hospital Visitor Spending,
2015 and 2025
Net Annual Sales and Use Tax Revenues from SUMC Proiect, 2015 and 2025
211 Quarry Rood Community Physicians' Offices Valuation and Annual Net Property Tax
Estimates, 2015 and 2025
Hoover Pavilion New Medical Office Building Valuation and Annual Net Property Tax
Estimates, 2015 and 2025
Net SUMC Proiect Property Tax Revenues Estimates, 2015 and 2025
Net SUMC Project Motor Vehicle In·Lieu Fees Estimate, 2015 and 2025
Annual Transient Occupancy Tax Revenues, 2015 and 2025
SUMC Project Utility Meters and Usage Estimates, 2007, 2015 and 2025
Utility Rates and SUMC Proiect Net Annual Utility Bill Estimates, 2015 and 2025
Annual Utility Users Tax Revenue Estimates, 2015 and 2025
Net Percentage Change in Utility Demand by SUMC Entity, 2015 and 2025
Net Annual Utility Users Tax Revenues by Hospital Entity, 2015 and 2025
General Fund Revenues pe~ Employee from Fines and Penalties
Estimated Revenues from Fines and Penalties, 2015 and 2025
City of Palo Alto Annual General Fund Revenues Estimates as a Result of SUMC Proiect,
2015, and 2025
SHC and Hoover Pavilion Site Construction Cost Estimates
lPCH Construction Cost Estimates
Stonford University School of Medicine Construction Cost Estimates
SUMC Facilities Taxable Construction Cost Estimates Per Square Foot, 2015 and 2025
SUMC Facilities Taxable Construction Cost Estimates by Entity and Construction Period,
2015 and 2025
Share of SHC and lPCH Purchasing Subiect to City of Palo Alto Receipt of Sales and Use
Tax
SHC Construction·Related Sales and Use Tax Revenues Accruing to the City of Palo Alto,
2009·2015 and 2009·2025
LPCH Construction·Related Sales and Use Tax Revenues Accruing to the City of Palo Alto,
2009·2015 and 2009·2025
CBRE CONSULTING, INC. CBRE
Exhibit 53
Exhibit 54
Exhibit 55
Exhibit 56
Exhibit 57
Exhibit 58
Exhibit 59
Exhibit 60
Exhibit 61
Exhibit 62
Exhibit 63
Exhibit 64
Exhibit 65
Exhibit 66
Exhibit 67
Exhibit 68
Exhibit 69
Exhibit 70
Exhibit 71
Exhibit 72
s
C9 RICHARD ELliS
SaM Construction-Related Sales and Use Tax Revenues Accruing to the City of Palo Alto,
2009-2015 and 2009-2025
Construction-Related Sales and Use Tax Revenues Accruing to the City of Palo Alto, 2009-
2015 and 2009-2025
Construction Staffing Estimates, 2009-2025
One-Time Sales Tax Revenues from Construction Worker Spending, 2015 and 2025
Estimated New PM Peak Hour Trips Generated by SUMC Project, 2025
Estimated City of Palo Alto and Palo Alto Unified School Distrid Impact Fees
City of Palo Alto General Fund Expenditures and Estimating Factors, Fiscal Year 2008-
2009
SUMC Prolect-Related City of Palo Alto General Fund Expenditures, 2015 and 2025
Palo Alto Fire Department SHC and SaM Calls for Service, Fiscal Years 2005-2006 and
2006-2007
Palo Alto Fire Department LPCH and Total SUMC Calls for Service, Fiscal Years 2005-
2006 and 2006-2007
Palo Alto Fire Department Estimated Expenses for SUMC and SSC Prolects, City-Provided
Cost Estimate, at 8uildout
Palo Alto Fire Department Estimated Prolect-Related Expenses, 2015 and 2025
Palo Alto Fire Department Estimated Project-Related Expenses by Entity, 2015 and 2025
Palo Alia Police Department Calls for Service, 2007
Palo Alto Police Department SUMC Prolect Calls for Service, 2007
Palo Alto Police Deportment Estimated Expenses for SUMC and SSC Projects, City
Provided Cost Estimate, at Buildout
Palo Alto Police Department Estimated Project-Related Expenses, 2015 and 2025 .
Palo Alto Police Department Estimated Project-Related Expenses by Entity, 2015 and 2025
City of Palo Alto Annual General Fund Expenditures Estimates as a Result of SUMC
Prolect, 2015 and 2025
LPCH School Enrollment and Staffing Estimates
CBRE CONSULTING, INC. CBRE
C8 RICHARO ELLIS
I. EXECUTIVE SUMMARY
OVERVIEW
The Stanford University Medical Center (SUMC) is in need of renewal and replacement of
current facilities associated with the Stanford Hospital and Clinics (SHC), Lucile Packard
Children's Hospital (LPCH), and the Stanford School of Medicine (SoM). Reasons in support of
these plans include regulatory requirements, hospital healthcare and service stondards,
statutory code requirements, and other criteria important to SUMC's ability to effectively serve its
patients and the community. In keeping with State of California regulatory requirements, the
hospitals are planning a multi-phased building and construction process, with 2015 and 2025
assumed to comprise benchmark years.
The SUMC Renewal and Replacement Project (SUMC Project) involves the construction of
1,866,300 square feet of new building area by 2015, including new hospital, clinic, office, and
research space. An additional 658,977 square feet of clink, medical of/ice, and research space
will be built by 2025. A significant portion of these facilities are intended to replace existing
focilities, thus the overall program includes demolition of 199,529 square feet of building area
by 2015 and demolition of on additional 1,014,230 square feet by 2025. The net result of the
SUMC Project will include the following:
• 870,018 net additional square feel of building area associated with SHC;
• 441,500 net additional square feet of building area associated with LPCH; and
• No nel additional square feel of building area associaled with SaM.
Of the tolal square footage, a cumulative total of 446,000 square feet is needed to meet
current standards and requirements .(i.e., "right-sizing") regarding patient rooms and the
emergency departments.
The size, scope, and nature of the SUMC Project require an Environmental Impact Report (EIR).
As a separate b"t companion document to Ihe EIR, the City of Palo Alto seeks to have a fiscal
impact analysis of the SUMC Project completed for the purpose of evaluating the impact the
expansion will have on the City's fiscal budgets, both during construction and upon full
operations. CBRE Consulting performed this fiscal impact analysis on behalf of Stanford
University, Stanford Hospital and Clinics, Lucile Packard Children's Hospital and the Stanford
School of Medicine, the SUMC Project applicants.
SUMMARY Of FINOINGS
The findings of the SUMC Project's net fiscal impact on the City of Palo Alto General Fund are
documented in a series of five tables, one each for SHC,. LPCH, SoM, non-SUMC, and a
summary table. These tables are inserted at the end of this Chapter, with the SUMC Project
summary presented first. The summary tables list all analyzed revenue and expenditure
categories, both one-time and annual, and present findings after the completion of the 2009-
2015 construction period and then at buildoutlfull occupancy in 2025. All figures are presented
in 2008 dollars.
SUMC PROJECT FISCAL IMPACT ANAlYSIS 1 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHAAD ELLIS
One-lime Impact
r
There will be fwo components to the one-time impacts attributable to the SUMC Project. These
include one-time revenue items,such as sales and use tax revenues, and one-lime City and
Palo Alto Unified School District (PAUSDj impact fees.
Revenue Items. By the time the SUMC Project is complete and fully occupied in 2025, $8.3
million in one-time sales and use tax revenues is estimated to be generated 10 the benefit 01 the
City 01 Palo Alto (see Table 1). These revenues are attributable to taxable events during SUMC
Project construction, and assume that qualifying contractors and sub-contractors will obtain a
seller's sub-permit allowing the construction site to be the point-ai-sale for the construction
activity. The City 01 Palo Alto has expressed a strong desire for this to occur.
Impact Fees. Based upan the City 01 Palo Alto's impact fee schedule, and an expectation that
some, but not all portions of the SUMC Project will be subiect to impact fees, total City of Palo
Alto impact fee generation is estimated at $10.0 million (see Table 1). By impact fee, this total
comprises the following;
• $2.2 million in Housing impact fees;
• $2.0 million in Transportation impact lees; and
• $5.8 million in Community Facilities impact fees.
The SUMC Project will also generate an estimated $616,413 in PAUSD impact lees. 01 this
total, $408,908 will be attributable t9 SHC and $207,505 will be attributable to LPCH. As there
is no net additional square footage planned for SaM, no PAUSD impact fees will be assessed
for this component 01 the SUMC Project.
The City of Palo Alto and PAUSD estimates are the total impact fee amounts anticipated ta be
paid by the SUMC Project during the course of the construction period. For presentation
purposes, however, these fees are reflected during the 2015 time frame in the summary tables.
Annual Impact
The annual General Fund impact of the SUMC Project will be the result of projected revenues
less expenditures, resulting in a net fiscal impact. A summary highlight of each of these fiscal
components follows.
General Fund Revenues. At buildout, the SUMC Project is projected to generate $638,836 in
annual revenues to the City of Palo Alta General Fund (see Table 1). The largest revenue
categories include utility users taxes totaling $296,572 and sales and use taxes totaling
$236,495. Tne City of Palo Alto has asked SUMC to consider obtaining a use tax direct
payment permit for the purpose of self-reporting use taxes to the California State Boord of
Equalization. This permit would result in a greater share of use taxes directed to the City of Palo
~h~~~~h~_~~and~will~n~~~~
use taxes accordingly.
If SHC and LPCH obtain the use tax direct payment permit, then all applicable existing taxable
purchases (not just for the SUMC Project) subject to this reporting method will accrue 10 Ihe City
SUMC PROJECT FISCAL IMPACT ANALYSIS 2 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
of Polo Alto. The additional uss taxes from existing facilities ars estimated to be $24,260.
Including this additional increment of use taxes would boost the 2025 onnual revenues to the
City of Palo Alto to $663,096.
General Fund Expenditures. General Fund expenditures for 011 major City of Palo Alto
departmenls were estimated for the SUMC Project. Expenditures were estimated on an average
cost basis, assuming future service costs would be similar to current service costs standardized
across the populaTIon served. The resulting annual expenditures estimate is $635,016 at
buildout. Of this amount, 63 percent is comprised of costs for Fire and Police services.
Net General Fund Impact. The net difference between the annual estimated General Fund
revenues and expenditures for the SUMC Project results in an annual surplus of $3,820,
reflecting that revenues are estimated to exceed expenditures by this amount. This surplus
increases to $28,080 if one credits the SUMC Project for the additional use tax revenues that
will accrue to the City of Palo Alto based upon existing operations {i.e., absent the SUMC
Project). In addition, the fiscal impact analysis projects a net one-time revenue of $8.3 million
by the buildout year. Thus development of the SUMC Project is deemed to be a substantial net
fiscal contributor to the City of Palo Alto.
To sum up, by project buildaut the SUMC Project is estimated to add $28,080 annually to the
City's General Fund, along with one·time contributions totaling $8.3 million to be generated
over the course of the project construction period.
Net Impact Allocation by SUMC Entity
During public meetings about the SUMC Project several public officials indicated an interest in
reviewing the fiscal impact analysis results by entity (SHC, lPCH, SaM, and non·SUMC) and by
construction phase. Tabl.es 2 through 5 disoggregate the fiscol impact results in this monner.
These individual results are summarized below, focusing on the buUdout/full occupancy year.
Net one·time sales tox revenues ($6,318 at buildou!) from onsite infrastructure improvement
construction workers ore not presented far specific SUMC entities since the improvements
benefit the entire SUMC Project area. Net annual property·tax based revenues, which include
property taxes ($57,595 at buUdout) and motor vehicle in·lieu fees {$14,061), are also not
presented for specific SUMC entities because the property tox increment associated with each
entity is not known. Many SUMC properties have multiple entities as tenants, including non·
SUMC ennties, so determining the share of property taxes from SHC, lPCH, and SaM is not
possible. Property tax revenUes currently levied from the properties at 701 Welch Road, 701 A,
C, and DWeich Road, 701 B Welch Road, 703 Welch Road, and 1101 Welch Road will be lost.
However, property tax revenues added by the new medical office building at the Hoover
Pavilion site and the added leasable space at the existing Hoover Pavilion building at 211
Quarry Road will mare than offset the losses.
Stanford Hospitals and Clinics. From Table 2, reflecting the results for SHC, it can be seen that
the one·time net revenues are estimated at $4.7 million, with an additional $7.6 million
generated in City of Palo Alto impact fees and $408,908 generated in PAUSD impact fees. The
annual net fiscal impact at buildout is estimated as a deficit of $6,963, which converts to a
surplus of $16,829 when SHC is credited with use lax payments on applicable taxable
purchases for existing operations.
SUMC PROJECT FISCAL IMPACT ANAlYSIS 3 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD I:LLIS
Lucile Packard Children's Hospital. The results for LPCH, presented in Table 3, indicate a one
time net revenue estimate of $2.6 million, with additional Cily of Polo Alto impact fees of $2.3
million and PAUSD impact fees of $207,505. The annual net fiscal impact at buildout is
estimated as a deficit of $99,692, which becomes a deficit of $99,224 whan LPCH is credited
with usa tax paymants on applicable taxable purchases for axisting operations.
School 0' Medicine. The SaM does not entail any net new square footage. As shown in Table 4,
ana-time revenues anticipated to accrue to the Cily over the construction period total $917,998.
No impact fees are anticipated given the lack of any net new square footage. Upon full
completion, the net annual revenue generated will total $64,278, associated with increased an
site taxable retail sales and uti lily users tax.
Non-SUMC, The non-SUMC category is included to present revenues associated with non
SUMC employment in the medical office space at the Hoover Pavilion site. This category does
not include construction of additional square footage because the square footage is attributed
to the SUMC entily that will own the buildings. Table 5 shows that net revenue will total $2,854
per year, associated with employee spending and revenues from fines and penalties. The
annual net fiscal impact is estimated as a deficit of $25,457.
Summary. In summary, on an annual basis, the SHC and LPCH components of the SUMC
Projact are both projeded to generate a small annual deficit to the Cily of Polo Alto General
Fund upon full buildout, while tha SaM component will generate a slight surplus. The deficit for
SHC converts to a surplus when the SUMC Project is cradited with usa tax ravenues generated
by ·spending for existing operations assuming SHC obtains a use tax direct payment permit as
requested by the Cily of Polo Alta. However, even if these additional use tax revenues are not
credited to the SUMC Project, the large one-time revenue benefits generated during the
construdion period assuming project contractors .and sub-contradors obtain seller's subpermits
for the construction project will provide a substantial and significant surplus to the Cily of Palo
Alto that will for outweigh potential deficits.
SUMC PROJECT FISCAL IMPACT ANAlYSIS 4 FEBRUARY 2009
T.bl.l
Summary of Total SUMC Project-Related Revenues and Expenses, 2015 and 2025
In 7008 Doll."
SUMC Project Filcallmpad Anal)'lil
Eltlmated Amount
2015 2025
Item One·TIme Annual One-11me
General Fund Revenues
Soles and Use Tax $7,576,13.4 $195,015 $8,260,843
SUMC Direct Purchasing (1) . $0 $18,522 $0
SUMC Facilities On-Site Solos $0 $125,938 $0
SUMC Employee Spending $0 $50,368 $0
SUMC Overnight Visitor Spending $0 $187 $0
Construction-Related Purchasing $7,482,172 $0 $8,1.48,416
Construction Worker Spending $93,962 (2) $0 $112,427 (3)
Property Tax (4) $0 $57,595 $0
Transient Occupancy Tox $0 $3,823 $0
UtiliI)' Users Tox $0 $323,337 $0
OIher Taxes and fines $0 $35,627 $0
Motor Vehicle In-Lieu Fees (4) $0 $14,061 $0
Fines and Panallie. $0 $21 1566 $0
Total General Fund' !UYenuN 57,576,134 $615,397 58,260,843
With UN Tax DIAId Payment PermH on Eldttlng
Purchases (5) $7,576,134 $639,657 $8,260,843
General Fund Expendilures
Cily AHamey $0 $2,065 $0
Cily Auditor $0 $0 $0
Cily Clerk $0 $0 $0
Cily Council $0 $0 $0
Cily Manager $0 $1,659 $0
Administrative Services $0 $10,610 $0
Cammunily Services $0 $64,024 $0
Fire (6) $0 $143,363 $0
Human Resources $0 $8,353 $0
Library $0 $14,583 $0
Planning & Communily Environment $0 $23,013 $0
Police (6) $0 $198,417 $0
Public Works $0 $51,157 $0
Non.Depar1mentol $0 $28!878 $0
Total General Fund Expendlturel $0 $546,12.2 $0
General Fund Net FllC(]llmpact $7,576,134 $69,275 $8,260,843
Wrth Use Tax DiAld Payment Permit on Existing
Purchases (5) $7,576,134 $93,535 $8,260,843
City of Palo Alto ImOod Fees
Housing $2,164,795 NfA $2,164,795
Transpor1ation $2,002,.264 NfA $.2,002,264
Communily Facilities $5l831794 NfA $5l83!794
Total City Impact F_ $9,950,853 N/A $9,950,853
PAUSD Impact Fees $616,413 NfA $616,413
Sources: Appendix Exhibits; and CBRE Consulting.
Annual
$236,495
$43,013
$134,323
$58,718
$441
$0
$0
$57,595
$9,036
$296,572
$39,138
$14,061
$25!077
$638,836
$663,096
$2,400
$0
$0
$0
$1,929
$12,337
$74,445
$166,699
$9,712
$16,958
$26,759
$230,715
$59,485
$33!577
$635,016
$3,8.20
$28,080
NfA
N/A
NfA
N/A
N/A
(l) ReAects sales and use tal(es ossuming SHC and LPCH obtain use tox direct payment permits for Ihe payments 01 use tal(es on out·ol.stote toxoble
purchases to the benefit 01 the Cily of Polo Alto. This figure is 20 parcent less than the estimated omount of soles and use toxes assuming the Cily of Palo Alto
rebeles 20 percent of the use taxes to SHC and LPCH to compensate for the significant added occounting burden associated with the use tax direct payment
permits.
(2) Includes $3,402 Irom onsile inlroslructure improvemenl5 construction workers.
(3) Includes $6,318 Irom onsile infraslructure improvemenl5 construction workers.
(4) Property.tox oosed revenues, which include property toxes and molor vehicle in·lieu fees, are estimated for the SUMC Project but are nol distributed
amongsl the entities since Ihe property tax increment auociated with each entily is not known. Many SUMC proper1ies have multiple en1ities os tenants,
including non·SUMC entilies, 50 determining Ihe share 01 property laKes Irom SHC, LPCH, SaM, and non-SUMC entities is not possible.
(5) The fiscal impact for the SUMC Project assumes SHC and LPCH obtain use tax direct payment permits. If this occurs, the Cily of Palo Alto will reap use lox
benefits from purchasing associated wilh the SHC and LPCH operations nol associated with the SUMC Project. This line item reflects the addition of Ihe
$24,2602008 equivalent 01 use lox revenues associated wilh Fiscol Year 2006·2007 out·ol·stote taxable purchasing len an assumed 20 percant rebate
provided by the Cily 01 Palo Alto noted in footnote (1). The $24,260 figure is cited in the text in the section 'SHC and LPCH Taxable Spending Findings and
(6) Figures are based on the average cost approach.
ceRE Con.ulling, U19f2009 N,\T ...,m-S&dway\p,ojed.\2007\ 1 007043 Slcnlord\Wort.ina Documenl.W.odel\SUMC Fiscal Impad.R07.x1.
Table 2
Summary of SHe Project.Related Revenues and Exp • .,. .. , 2015 and 2025
In 2008 Dellars
SUMC Project Fiaoollmpad Anal"i.
2015
110m One-Time
Ganeml Fund Revenues
$(:.18$ and Use T 0)( $4,5:36,782
SHC Direct Purchasing (1) $0
SHe Facilities On-S~e Sales $0
SHe Employee Spending $0
SKC Ovtlrnighi Visitor Spending $0
Conslrudion-Relaled Pun:hosing $4,479,779
Conslruction Worker Spending 157,OOS
Property TOK ;2) $0
T mnsiem Occuponcy TOI( $0
Ulilliy USM Tax $0
Olhl!lrToxes 000 fines $0
MQ/'or Veol;lc!e In-Lf$u f~ {2) $0
fino 000 Penoliies $0
Total General Fund Rawnuea $4,1536,182
Wrth UN TO)!: Ojr6d Payment Permit on Exilling
Pv""._ 131 $4,536,782
Genera! fynd Espeodifum
Cily Morney $0
City Auditor 10
City Clerk $0
City Cound! $0
OtyMonoger $0
Administrative ServicQS $0
Communily Services $0
Fire {41 $0
Human R:$s(,wrc •• $0
library $0
PlQill'ling 8. Comml)nily envjronment $0
Police {4l $0
Pl)bllcWorks 10
NQ(I-Deporlmonlol $0
Total Gan.rel Fund EJrpendilutel $0
Gaml!n:d Fund Net FllOOllmpoct 54,5$6,782
With Ut. TalC DinK:f Payment Permit on Exiating
Pv.m."'131 $41536 ,782
Cl!yof Po!o Alto !mooct Fal»
Hou$ing $2,164,795
Troruporiotlon $1,610,400
CornmooilY Facilities $3,836/779
T<IfOI City Imp<'ld FeN $7,611,974
PAllED !mpoct rSft S408,908
$aur;:;n: Appendix exhibils; and CBRE Consuliing.
Ettimm.d Amount
2025
Annual One·Time Annual
$147,768 $4.709,979 $178,568
$17,530 10 $41,025
1104,136 10 $104,136
126,031 10 $33,264
171 SO $143
$0 $4,641,043 10
$0 $68,936 10
ISa6 Table 11 $0 ISae Table i)
$1,457 10 $2,932
1196,831 SO $151,723
110,945 10 $13,986
(,"",Tobl"1 SO tSee Tobie 1)
$10,945 $0 S13t986
$357,001 $4$709,979 $341,209
$360/793 $4,709,979 $371 t OOl
$1,048 $0 11,339
SO $0 $0
$0 $0 $0
$0 $0 $0
$842 SO 51,076
$5,385 $0 $6,881
$32,493 SO $41,521
$72,759 $0 $92,974
$4,239 SO $5,417
$7,401 $0 $9,458
511,679 $0 $14,924
$100,700 $0 $12B,676
125,963 10 $33,177
$14,656 $0 $18/27
$277,165 $0 $354,172
579,836 $41 709,979 (U,9631
5103,628 $4,709,979 $16,829
N/A $2,164,795 'ItA
N/A $1,610,400 NIA
N/A $3,836,779 NIA
N/A $7,611,974 N/A
N/A $408,908 N/A
(1) RtMem $OI(!$: ooU \JH 10)(1$ oHumlli9 SHC o1>foin$ 0 VH lox direct poym(lnl permil fOf th. poymMlt of u,. kwM on o\J!-of .. lalt> 10)<01>1. purcOOt$$ to lhe
beJ'l$fi' of the City of Polo Alia, Thi, figure is 20 pen:eol/essloon II •• wlimoled omount of salM ond 11M loxet Q$$Umlli9 the City of Pula AI!Q r.hofM 20 perC4mt af
Ihe use foxes 10 SHC 10 compensote for the tignificonl added occounline burden ouociated wilh the 1.1&& tox dj(1)d poyment pwmUs.
(2) Property-lox bosed r~nU$$, which Include property toxea and mofor vehicle in-lieu fees, ore eslimoted for Ihe SUMC Projed bul are nol distribuled amongst
the entilies sin(e 1he PI'Op$rty!1»( increment onodoled wilh each enlify is not known. M»ny SUMC properliet hove multiple enlifi>n os !enenl$, including non.
SUMC et'Ifill(l3, lIO det.rmlnili9 the ,hare of properly loxM from St-IC, LpCH. ScM, and non-SUMC enilli61 i. not poum!.,
(3) The fiscol impoct for SHe onvmes SHC obloins 0 usa lOll direa payment permit. If this OCCUI'i, the City of Polo Alto will I'0Op lJMt fox benefitt from purcho$ill9
omKioleci wilh SHC aperolion, nol ()$$oc1o!ed wilh the SUMC Project, This line Hem reflects Ihe (lddilion of $23,792 2008 equivolenl of utle to}( revenUlls
ol$ocioltid with fiscal V&Or 2006-1007 oul·of-$lole iQ)(oble purchasing len an Q~umed 20 percent rehate provided by the City of Polo A!to noted in fOOlnate 11},
The $23,792 figure is etled In 1M leid s&dion of "SHC ond lPCH T olloble Sp&nding findings ond Proiection,",
(4) figura$ ore bOled on Ihe overoge cost opprPoch. .
CBREC.,,,,uliillQ, '1/1912009
Tabl.3
Summary of lPCH Proiect-Related Revenues and Expense" 2015 and 2025
In 2008 Ooliars
SUMC Prajetl Fi,ooll.,pad Anah',i,
2015
I .. ." On.·hm.
GftMwl Fund RivwQi
Soles OM UN Tax $2,626,548
LPCH Direct PvrcholiOQ (I) $0
lPCH facililies On·Site Solin $0
lPCH Employee SpendinG $0
LPCH Ovemlghl V'l$ilor Sp.nding $0
Canl'tudion.ReI'aled f\;rchosinQ $2.596,173
ContlfUdion Worker SpeooiO{J $30,375
f>toperly Tox (21 $0
Tronaiem OccuponCf 1m:: $0
Wilily Users TOl( $0
Other Taxel aod Fines $0
Motor Vehicle In-Lleu Fees (2j $0
FinQ$ and Peoolti9! $0
Totol O.f1ttJQ1 Fund Rtmnv'" $',6'6,548
WIth U .. Tax Oi,., Poym.nt Permit on Exittine
Pu""''''(3) $2,626,5.48
General Fund EXPendjtur!t
City Attorney $0
City Audllor $0
City Clerk $0
City COlJndl $0
City Manager $0
Admlnis!rotive Services $0
Community Sarvical $0
Fire (4. $0
Human Re$OUfCes $0
library $0
Planning 8. Communily Envin:mment $0
Police (4J $0
PublkWorXs $0
Non~Departmental $0
Toiol """""I Fund flqandilv ... $0
Generol Fund Net FtKiGllmpad $2,626,548
With u.. TOlf Olf«t PoymW r.rmlt Gn &O .. lng
p"-(3) $2,6'6,548
Cay of Polo Abo Impact fum
Ho1JSlng $0
Transportolion $391,864
Community Fadlilie. $l t 947 t015
Total City Impact fM8i $2,336,819
PAUSD hnpod faes $207,505
Sources: Appendix fxhlbilsj and CBRE Consulling.
Eltimofitd Amov.nl
2025
MIWGI On.-Tim8 Annual
$47,412 $2,626,548 $49,707
$992 $() $1,988
$23,703 $() $23,703
$22,601 $() $23,718
$116 $() $298
$() $2,596,173 $0
SO $30,375 $0
(Sel! r obi. 1) $0 (S5e Table l}
$2,366 $0 $6,104
$83,531 $0 $87,057
$9/503 $0 $9,973
{See Toble1) $0 (Sea Table 1)
$9203 $0 $9,973
$142,111. $2,626.5.48 $152,1141
$143,280 $2,626,5.48 $153,309
$910 $0 $954
$0 $0 $0
$0 $0 $0
$0 $0 $0
$731 $0 $767
$4,675 $0 $4,906
$28,212 $0 $29,605
$63,172 $0 $66,293
$3,681 $0 $3,862
$6,426 $0 $6,744
$10,141 $0 $10,642
$87,431 $0 $91,751
$22,542 SO $23,656
$1:V25 $0 $13~53
$240,646 $0 $252,533
($97,834) $2,6'6,548 1$99,692)
{$97,366) $',626,548 ($99,224)
N/A $() N/A
N/A $391,864 N/A
N/A $1,947,015 NLA
N/A $',338,87. N/A
N/A $'07,505 N/A
i1) Refleds $oles and U$$ 10~6 a$1uming LPCH oblains Wle lox dired payment permits for the payments of usa \aXM on olrl-of·stole tOJ(ob!e purchases 10 the
benefit Gfthe City of Palo Alto. This figure is 20 percent leu-than Ihe estimated amGunl Gf sales Gnd usa tGJW$ auumlng tha City of Polo Allo r«boles 20 p-9rcent of
the use loxes to lPCH to compensole for the slgniticanl odded occounting burden asaodated wilh Ihe ute tox difed poYlYle/'t! penni!s.
(2~ Property.tax based fiQvenues, which include praperty laxea and !'1I(tlor vehicle in_liett fees, are S$timoled for lhe SUMC Project bul are nol diilribulrm amongsl
the entities since the property tax incremenl ossodoted with each enilly h. not knawn, Many SUMC properties hove O\iJlliple $OliliM 0$ tenant" including non
SUMC entities, 1i0 determining lhe Ml.afi9 of property toxas irom SHe, lPCH, SoM, and non--SUMC emities is not po-ss!b!e.
(3J The fisrol impact for lPCH (loume! lPCH obtains 0 utU» lox difi9d po;menl permit. It this occurs, the City a' 1'0100 Allo will reop we lox bei'Wfih from purchasing
o~odoted wilh lPCH operotions nat aHocloled wllh Ihe SUMC Project. This line item reflects lhe addilion of $469 2008 equivo!(mt at U$e lox ($V$J\IJ$$ aGlO1:ioied
wilh fiscol Year 2006·2007 out·of-tla!elo::roble purchasing len an o4$umed 20 percenl rebate provDd by the City of Polo Alit) nal&d in footnoliQ (l}. lh!t $.468
fie~ is ciled in thiQ fex! $eclion of "SHC and LPCH To ...... bfe Spending Findines and PrGjeclions".
{4j Figures ariQ bos&d art the average cobi approach.
Table 4
Summary of SoM Project-Related Revenues and Expenses, 2015 and 2025
In 2008 Dallars
SUMC Project Fiscal Impoct Analysis
Estimated Amount
2015
Hem On .. Time AnnlJ~d
Genergl Fund Reyenues:
Sales and Use Tax $409,402 ($1,901)
SaM Dirac! Purchasing $0 $0
SaM Facilities On-Site Soles $0 ($1,901)
SoM Employee Spending $0 $0
SoM Overnight Visitor Spending $0 $0
Construction-Related Purchasing $406,220 $0
Construction Worker Spending $3,182 $0
P,op.r1y Tax (1) $0 (5 •• Tabl.l)
Transient Occupancy Tax $0 $0
Utility Users Tax $0 $42,976
Other Taxes and Fines $0 $0
Motor Vehicle In-Lieu Fees (1) $0 (Se. Tabl.l)
Fines and Penalties $0
T 01.1 General Fund Revenue. $409,402 $41,075
General Fund Exnenditures
: Cily Attorney $0 $0
City AudilQ, $0 $0
City Clerk $0 $0
CityCoundl $0 $0
Cily Manag", $0 $0
AdministrativE! Services $0 $0
Community Services $0 $0
Fire $0 $0
Human Resources $0 $0
library $0 $0
Planning & Community Environment $0 $0
Police $0 $0
Public Work> $0 $0
Non-Departmenfal $0
Tolal General Fund Expenditures $0 $0
Gene",1 Fund Net Fiscal Impact. $409,402 $41,015
~i~ 2f e912 6!!Q lOOQ9s(! Ee~s
Housing $0 N/A
Transportation $0 N/A
Community Facilities $0 N/A
T 01.1 City Impact Foes $0 NlA
EA!J§tlIWL29£! E~at~ $0 NlA
Sources: Appendix Exhibits; and CBRE Consulting.
2025
One-Time Annual
$917,998 $6,484
$0 $0
$0 $6,484
$0 $0
$0 $0
$911,200 $0
$6,798 $0
$0 (5 •• Tobl. 1)
$0 $0
$0 $57,794
$0 $0
$0 (Sao Tobl.1)
$0 $0
$917,998 $64,218
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$911,998 $64,218
$0 N/A
$0 N/A
NLA
$0 NlA
$0 NlA
(l} Property-lox based revenues, which indude properly toxes and motor vehide in-lieu fees, ore estimoted for file SUMC Projec:t
but ore not distributed amongst the entities since the property tax increment associated with &Och entity is not known. J.kJny SUMC
properties hove multiple entitles os tenants" including non-SUMC enti1ies, sO determining the shore of propi.'1l1y toxas from SHe,
lPCH, SaM, and non-SUMC entities is not possible.
caRE Cornvlling, 2/19/'2009
Table 5
Summary of Project· Related Revenues and Expenses from Non.SUMC Entities, 2015 and 2025
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Eslimatod Amount
2015 2025
Item One~Time Annual One~Time
General Fund Revenues
Sales and Use Tax $0 $1,736 $0
Direct Purchasing $0 $0 $0
Oo~Site Sales $0 $0 $0
Employee Spending $0 $1,736 $0
Overnight Visitor Spending $0 $0 $0
Construction-Related Purchasing $0 $0 $0
Conslruction Worker Spending $0 $0 $0
Prop.rly Tox 11) $0 ISoe TobIe 1) $0
Transient Occupancy Tax $0 $0 $0
Utility Users Tax ,$0 $0 $0
OlherToxes oDd Fines $0 $1,118 $0
Motor Vehicle I",-lieu Fees (1) $0 (S •• Tobl.1) $0
finel'; ond Penalties $0 ~1,118 $0
Total General Fund Revenues $0 $2,854 $0
General Fund ExQ!ndilures
CityAHomoy $0 $107 $0
City Audiior $0 $0 $0
City CI.rk $0 $0 $0
CityCound' $0 $0 $0
City Manager $0 $86 $0
Administrative Service$ $0 $550 $0
Community SaI'Vices $0 $3,319 $0
Fire $0 $7,432 $0
Human Resources $0 $433 $0
Library $0 $756 $0
Planning & Community En"';ronm~mt $0 $1,193 $0
Police $0 $10,286 $0
Publk Works $0 $2,652 $0
Non*Deporlmenfol $0 $1,497 $0
Tolal General Fund fxpenditure. $0 $28,311 $0
General Fund N.I fj •• allmpocts $0 ($25,457) $0
q~ of Palo Alto Imt29g ~e§
Housing $0 N/A $0
T ronsportotion $0 N/A $0
Community Facilities $0 $0
Tolal City Impad Fee. $0 N/A $0
~AUSO f!llQO~t Ei~i $0 N/A $0
Sources: Appendix Exhibits; and CBRE Consulting.
Annual
$1,736
$0
$0
$1,736
$0
$0
$0
(5 •• Tobl. 1)
$0
$0
$1,118
IS •• Tabl. 1)
~l, 118
$2,854
$107
$0
$0
$0
$86
$550
$3,319
$7,432
$433
$756
$1,193
$10,286
$2,652
$1,497
$28,311
($25A57)
N/A
N/A
N/A
N/A
N/A
(1) Property-tax based revenU&fi, which include property taxes and motor '1ehide in~lieu fees, ore estimated for the SUMC Project
but are not distribuled amongsf the entities since the property fox increment assooaled with each enlity is not known, Many SUMC
properties hove multiple emities 0$ fanants, including non-SUMC enfiJias, so det+:<rmining the shore of property toxes from SHe,
LPCHf $oM, and non-SUMC entities is no1 possible.
CBRE O:msullhog, 2/1912009
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
II. INTRODUCTION
STUDY PURPOSE
The Stanford University Medical Center (SUMC) is in need of renewal and replacement of
current fadlities associated with the Stanford Hospital and Clinics {SHC}, Lucile Packard
Children's Hospital (LPCH), and the Stanford School of Medicine (SaM). There are many
reasons in support of ihese plans, centering on regulatory requirements (California Senate Bill
1953), hospital healtncare and service standards, statutory code requirements, and other
criteria important to tne hospitals' and SoM's abilities to effectively serve their patients, the
communily, and their research needs.
The size, scope, and nature of the SUMC Facilities Renewal and Replacement Proiect (SUMC
Proiect) require an Environmental Impact Report (EIR), which is being prepared by the
environmental consulting firm PBS&J. A number of subconsultant firms are working in
association with PBS&J to complete the EIR. As a separate but companion document to the EIR,
the City of Palo Alto seeks to have a fiscal impact analysis of the SUMC Proiect completed for
the purpose of evaluating the impact the expansion will have on the City's fiscal budgets, both
during construction and upon full operations. This study comprises the SUMC Project's fiscal
impact analysis, which was conducted for Stanford University and the Proiect applicants, with
input from multiple resources.
PROJECT DESCRIPTION
The SUMC Proiect involves the construction of 1,866,300 square feet of new building area by
2015, including new hospilal, clinic, office, and research space (see Exhibits 1-3). An additional
658,977 square feet of dinic, medical office, and research space is expected to be built and
fully occupied by 2025.
A significant portion of these focilities are intended to replace existing focilities, thus the overall
program includes demolition of 199,529 square feet of building area by 2015 and demolition
of an additional 1,014,230 square feel by 2025. The net result of the SUMC Proiect will include
the following:
• 870,018 net additional square feet of building area associated with SHC;
• 441,SOO net additional square feet of building area associated with LPCH; and
• No net additional square feet of building area associated with SaM.
The existing hospital buildings employ a combination of single-bed and semi-private patient
rooms in accordance with hospital planning standards at the time of their construction. Meeting
current hospital needs requires conversion of semi-private to single-bed patient rooms. Of the
additional space required for SHC, approximately 295,000 square feet is needed for SHC to
convert and support the current inventory of single-bed and semi-private rooms to all single
bed rooms. In addition, the emergency department shared by SHC and LPCH is undersized by
approximately 25,000 square feet. For LPCH, about 126,000 square feet of the expansion is
for conversion to, and support of, single-bed rooms. Of the net 1,311,518 square feet
requested for the SUMC Proiect, 446,000 square feet will be added by the hospitals to meet
current requirements and standards (i.e., "right-sizing"), including:
SUMC PROJECT FISCAL IMPACT ANALYSIS 10 FEBRUARY 2009
CORE CONSULTING, INC. CBRE
CB RICHARD ELLIS
• 320,000 square feet of building area associated with SHC; and
• 126,000 square feet of building area associated with LPCH.
As noted where relevant, the study at times bases the analysis on the total built square footage
or the net square footage.
While not part of the same project as SUMC for the purpose of City of Palo Alto approvals or
EIR process, there is another project on Stanford University lands engaged in the development
approvals process concurrent with the SUMC Project. This is the Stanford Shopping Center
Project (SSC Project), which entails a 240,000·square.foot expansion of the existing Stanford
Shopping Center and the development of a 120·room hotel, together comprising a total of
360,000 square feet of new development. The shopping center expansion and hotel are
located on property owned by Stanford University but subject to a long.term ground lease with
Simon Properties. The SSC Project is mentioned because some City.provided information was
presented as pertaining to both projects at the same time.
STUDY APPROACH
In keeping with the benchmark years, the fiscal impact analysis findings included in this study
are presented for two construction periods: from 2009 to 2015 and cumulatively from 2009 to
2025. In addition, the analysis was conducted in 2008 dollars. CBRE Consulting project
representatives attended several City of Palo Alto public meetings on the subject of the SUMC
Project during the course of the project research. A City preference that emerged during those
meetings wos for the fiscal impact analysis to additionally examine each component of the
SUMC Project individually (i.e., SHC, LPCH, and SoM). In response to this, every effort was
made in the analysis to sort the SUMC Project impacts by entity and time period, with the results
presented for the first construction period (2009 to 2015) and cumulatively (2009 to 2025). Not
all data were provided by entity or construction period. The reader will therefore find estimation
procedures incorporated into the analysis for some major categories of impact to spread costs
or revenues by entity and construction period.
The fiscal impact analysis examines the net fiscal impacts of the SUMC Project on the City of
Palo Alto General Fund, both on an ongoing basis as well as one·time. The one·time impacts
include anticipated impact fees as well as construction· period revenues. The analysis relies
upon an average cost approach, which examines service delivery costs on the basis of a
standardized metric, usually across an estimated service population comprising a mix of local
residents and employees.'
To prepare this fiscal impact analysis, CBRE Consulting worked very closely with representatives
of Stanford University, Stanford Hospitals and Clinics, Lucile Packard Children's Hospital, the
Stanford University School of Medicine, and the City of Palo Alto, including representatives of
the Administrative Services, Planning, Fire, Police, and Utilities Departments. In addition, select
data points included in the analysis were provided by the EIR consultant PBS&J, who was
retoined directly by the City of Palo Alto, and sub·consultants to PBS&J, including Keyser
Marston Associates, Inc. and AECOM (formerly DMJM Harris). Numerous other data sources
, The specific metric used for the study is presented in the appropriate study section.
SUMC PROJECT FISCAL IMPACT ANALYSIS 11 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
. CB RICHARD ElliS
were relied upon for the study, including the SUMC Proiect Application, City of Polo Alto
publications and other City informational sources, the Association of Boy Area Governments,
the California Deportment of Finance, the California Stote Boord of Equalization, the hospitals'
Consolidated Financial Statements, the Bureau of Labor Statistics, the U.S. Census Bureau
County Business Patterns, the Santa Clara County Assessor's Office, the Santa Clara County
Controller's Office, and industry resources such as the International Council of Shopping
Centers, the HdL Companies, Real Capital Analyfics, and the Building Owners and Monagers
Association.
At the inception of the assignment CBRE Consulting was made aware that the research and
findings would be subiect to a peer review. In conducting the assignment CBRE Consulting
worked very diligently to perform well documented and thorough analysis. Every effort possible
was made io ensure that the analysis is transparent, with resources identified ond assumptions
substantiated io the extent possible. " is CBRE Consulting's intention that no reader of this
document will need to question how a figure used in the analysis was derived or where source
data were obtained.
REPORT ORGANIZATION
The balance of this report includes the data, assumptions, analysis, and findings leading to the
fiscal impact of the SUMC Proiect. The information is organized into discrete chapters as
follows:
I. Executive Summary
II. Introduction
III. Key Data Points and Study Components
IV. Annual General Fund Revenues
V. One-Time Revenues
VI. Annual General Fund Expenditures
VII. Net Fiscal Impacts
The study analysis is summarized in four summary tables, which are included in the Executive
Summary. The numerous linked exhibits documenting the analysis are included in the Appendix.
All exhibits are referenced where appropriate in the reportlext. The contents of this report are
subiect to the appended Assumptions and General limiting Conditions.
SUMC PROJECT FISCAL IMPACT ANALYSIS 12 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
. CB RICHARD ELLIS
III. KEY DATA POINTS AND STUDY COMPONENTS
SELECT KEY DATA POINTS AND RELATED ASSUMPTIONS
This section includes a presentation of select key data points that drive the SUMC Project fiscal
impact analysis. These include hospital patient estimates, SUMC Proiect employment estimates,
Project-related hotel nights estimates, and Polo Alto population, employment and day-time
population estimates. Other key data points are presented elsewhere in the study, such as
SUMC Project construction estimates and estimated number of construction workers, but the
data points presented in this section provide key drivers or baseline information relevant to the
analysis. As stated earlier, the study findings ore presented in constant 2008 dollars for the year
2015 (SUMC Project Phose 1) and the year 2025 (SUMC Project's buildout yeor).
Project Hospital Patient Estimates
Existing and projected hospital patient counts based on doto presented in the SUMC Project
Application. There were 403,885 annual outpatient visits to SHC and 107,363 annual
outpatient visits to LPCH in 2006, for a Iota I of 511,248 outpatient visits to SUMC (see Exhibit
4). SHC annual outpatient visits are estimated to increase from the 2006 base year by 67,038
by 2015 ond by 169,064 by 2025. LPCH annual outpatient visits are estimated to increase by
31,530 by 2015 and by 45,986 by 2025. Tolol SUMC annual outpatient visits will therefore
increase by 98,568 by 2015 and 215,050 by 2025.
There were 132,182 annual inpatient days for SHC and 70,752 annual inpatient days for LPCH
in 2006, for a total of 202,934 days for SUMC (see Exhibit 4). SHC annual inpatient days are
estimated to increase from the 2006 bose year by 18,653 by 2015 and by 37,567 by 2025.
LPCH inpatient days are estimated to increase by 15,226 by 2015 and by 39,134 by 2025.
Tolol SUMC inpatient days will therefore increase by 33,879 by 2015 and 76,701 by 2025.
Projed Employment Estimates
Employment estimates are provided on a full-time-equivalent basis by Keyser Marston
Associates, Inc. (KMA), "Draft Housing Needs Analysis:' June 2008. KMA developed
employment estimates based on existing and planned employment estimates provided by
Stanford University, which KMA evaluated for reasonableness.
There were on estimated 5,240 SHC full-time equivalent employees, 1,666 LPCH full-time
equivalent employees, and 2,823 SaM full-time equivalent employees in 2006. There were also
151 non-SUMC full-time equivalent employees that worked in existing to-be-demolished
buildings adjacent to the SUMC facilities, which bring total 2006 employment to 9,880 full-time
equivalent employees (see Exhibit 4). SHC employees are estimated to increase from the 2006
base year by 979 by 2015 and by 1,251 by 2025. LPCH employees are estimated to increase
by 850 by 2015 and by 892 by 2025. According to KMA, replacement of the existing SoM
facilities is not projected to result in on increase in employment. Nan-SUMC employment is also
estimated to increase by 100 by 2015. Total SUMC full-time equivalent employees will therefore
increase by 1,929 by 2015 and 2,243 by 2025.
5UMC PROJECT FISCAL IMPACT ANAl Y515 13 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
Proiect-Related Hotel Nights Estimates
Personnel from the LPCH Housing Department and the SHC Housing Assistance Office were
interviewed to obtain information regarding the current number of !hotel nights generated by
hospital patients, their families, and friends. These data, combined with estimates for current
overnight hospital patients -in "inpatient days" -were used to determine the quantitative
relationship between the number of inpatients and the number of hotel nights generated by
these patients and their families and friends. Whereas information provided by SHC was
insufficient to accurately develop this statistic, CBRE Consulting found that LPCH-generated
hotel night stays were approximately 6 percent of LPCH Inpatient days (see Exhibit 5).
Exhibit 5 utilizes the 6 percent assumption applied to proiected inpatient days for LPCH and 3
percent for SHC (see Exhibit 4 for proiected inpatient days). Half of the LPCH assumption was
opplied to SHC to occount for the foct that an adult hospital is likely to generate less hotel
nights than a children's hospital. In 2015, LPCH will generate an estimated 988 hotel nights
over its 2007 base-year level, while SHC will generate an additional 606 hotel nights. In 2025,
the onnual net increase will reach 2,540 hotel nights associated with LPCH and 1,220 hotel
nights associated with SHC. SUMC Proiect-reloted net hotel nights will therefore total 1,594 by
2015 and 3,760 by 2025 ..
Palo Alto Population, Employment, and Day-Time Population Estimates
The population base of the City of Palo Alto and Sphere of Influence (SOl), which includes the
Stanford campus, was estimated using data provided by the City of Palo Alto Department of
Plonning ond Community Environment, the State of California Department of Finance (DO F),
and the Associotion of Bay Area Governments (ABAG). The population base is estimated for
Fiscol Year 2008-2009 to be consistent with the City of Palo Alto's "2008-09 Proposed
Operating Budget." CBRE Consulting's populotion base estimate was developed in association
with City of Palo Alto staff, who appraved the final estimotes.
The City of Palo Alto and SOl employment base was estimated using data fram ABAG. The doy.
time population was then colculated by adding the population base to half of the employment
base, equating two employees with one resident. This is an industry standard approach for the
purpose of fiscal impact analysis. CBRE Consulting's employment base estimate was pravided
to and approved by the City of Palo Alto. The City of Palo Alto SOl day.time population
estimate for Fiscal Year 2008·2009 is 130,385 (see Exhibit 6).
STUDY COMPONENTS
The study focuses on the SUMC Praiect's net fiscal impact on the City of Palo Alto General
Fund. Toward that end, the study examines General Fund revenues and General Fund
expenditures attributable to the SUMC Praiect. The General Fund revenues include ongoing
revenues attributable to the operations of the SUMC Praiect and one·time revenues attributable
to Proiect construction.
SUMC PROJECT FISCAL IMPACT ANALYSIS 14 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
Generol Fund Revenues
The study's General Fund revenues analysis attributable to SUMC Project operations indude the
ravenue categories reflected in the City of Palo Alto budget. The revenue categories, and the
nature of revenue estimation conducted by CBRE Consulting for the SUMC Project, are as
follows:
• Soles ood Use Tox -CBRE Consulting estimated current and incremental net sales tax
revenues generated by SUMC facilities on-site sales, SUMC employee spending, and
SUMC overnight visitor spending. CBRE Consulting also estimated sales tax revenues
and use tax generated by SUMC direct purchasing;
• Property Tox -CBRE Consulting estimated the net property tax revenues and motor
vehicle in-lieu tax revenues as a result of the SUMC Project. While SHC, LPCH and SaM
are non -profit institutions, and as such are exempt from property tax, some portions of
the SUMC Project will be subject to property taxes given the nature of their tenancy. Net
property tax revenue was estimated for the entire SUMC Project but was not distributed
among the three SUMC entities;
• Tronsient Occuponcy Tax (TOT) -CBRE Consulting estimated the net TOT revenues
generated by additional patients and visitors staying overnight in Palo Alto;
• Utility Users Tox (UUT) -CBRE Consulting estimated additional UUT revenues for water,
gas, and electricity; and
• Other Toxes ClOd Fines -CBRE Consulting estimated Fines and Penalties, but not Motor
Vehicle License Fees or Documentary Transfer Taxes, since they are not tied to the
employment base.
SUMC is an employment-based operation and does not entail any resident-based population.
CBRE Consulting therefore did not estimate other General Fund revenues that are not
dependent on the employment bose. These categories include Charges for Services, Permits
and Licenses;2 Return on Investment; Rental Income, From Other Agencies, Charges to Other
Funds, and Other Revenue.
One-lime Revenues
There will be two maior sources of one-time revenues accruing to the City of Palo Alto:
construction-related revenues; and impact fees. Construction-related revenues will result from
on-site SUMC Project construction spending as well as construction worker spending in Palo
Alto and impact fees will be assessed by the City and the school district.
Construction-Related Revenues. State of California regulations allow for cities or other
jurisdictions to receive significant one-lime revenues associated with construction-related taxable
purchases. This portion of the study reviews these regulations and estimates the construction
period revenue potential 10 the City of Palo Alto based upon estimates of total and taxable
2 Permits are issued for new construction, street openings, hazardous materials, fire, and parking
while licenses are issued for dogs, bicycles, and taxis.
SUMC PROJECT FISCAllMPACf ANALYSIS 15 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
construction costs. The significont volume of construction workers engaged in the construction
effort will also provide revenues to the City of Palo Alto through toxable purchases made in the
course of their employment in Polo Alto.
Impact Fees. For the SUMC Project, City of Palo Alto impact fees are as follows:
• City of Palo Alto. The City of Palo Alto collects impact fees from new de'(elopment for
affordable housing, transportation (i.e., the Citywide Transportation Impact Fee), and
community facilities (parks, community centers, and libraries). Per the City 01 Palo Alto
Municipal Code, "New development shall mean, with respect to nonresidential
development, any development that creates additional square footage. Where a
development praject includes replacement of existing square footage, the new
development shall mean only the portion that constitutes additional square 160tage."3
Per the City of Palo Alto Development Impact Fees schedule,' hospitals and
convalescent facilities are exempt from the City of Palo Alto's Housing Impact Fee.
However, outpatient clinics, and research and medical office buildings are not exempt
from the Affordable Housing Impact Fee. Some of the clinic and medical office space
identified in the SUMC Project is and will be built within hospital structures and/or within
the hospital licenses. As such, that space could potentially be included in exempt
hospital construction. Nevertheless, this fiscal impact analysis assumes that all net clinic
and medical office square footage is subject to the Affordable Housing Impact Fee.
Finally, according to the City of Palo Municipal Code,S the Citywide Transportation
Impact Fee is assessed per new PM peak hour vehicle trip. The study estimates the
Transportation Impact Fee using trip estimates provided by AECOM.
• Palo Alto Unified School District. The Palo Alto Unified School District (PAUSD) colleels
School Impact Fees on new residential and commercial construction within school
district boundaries. The PAUSD website defines commercial development as structures
to be used for commercial or industrial purposes, most senior housing, adult-only
mobile homes, and hotels and motels. CBRE Consulting estimated PAUSD impact fees
for all the SUMC Project net square footage.
General Fund Expenditures
The City of Palo Alto's General Fund includes the following expenditure categories:
• City Morney
• City Auditor
• City Clerk
• City Council
• City Manager
• Administrative Services
• Community Services
3 Section 16.58.010 of the City of Palo Alto Municipal Code.
• "City of Polo Alto Development Impoct Fees," updated November 6, 2008.
5 Section 16.59.060 of the City of Palo Alto Municipal Code.
SUMC PROJECT FISCAL IMPACT ANALYSIS 16 FEBRUARY 2009
CBRe CONSULTING, INC. CBRE
ca RICHARD ELLIS
• Fire
• Human Resources
• Library
• Planning & Communily Environment
• Police
• Public Works
• Non-Departmental
CBRE Consulting estimated net expenditures as a result of the SUMC Project for all of the above
expenditure categories. The study estimates variable cost assumptions based on existing full
time staffing by Deportment as a bosis for an overage cost analysis as well as presenting case
study in/ormation provided by the Police and Fire Departments. The method of estimation is
noted and reviewed in the study for each expenditure category. The study ocnclusions rely on .
the average cost method rather than the case study information because CBRE Consulting did
not have access to the underlying data and assumptions supporting the Fire and Police
Departments' estimates and therefore oculd not assess and confirm the reasonableness of those
estimates.
SUMC PROJECT FISCAL IMPACT ANALYSIS 17 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
C8 RICHARD ELLIS
IV. ANNUAL GENERAL FUND REVENUES
SALES AND USE TAX
There are several prospective sources of sales and use lax generated by the SUMC Project that
will benefit the City of Palo Alto. These sources indude SUMC spending, on-site SUMC sales,
SUMC employee spending, and spending generated by overnight visitors associated with
hospital slays and hospital visitation. Analysis of each of these sources of sales and of use lax
follows.
SUMC Spending
As one of the largest employers in the City of Palo Alta and a very significant medical institution,
SUMC has extremely high expenditures. Given the California State Boord of Equalization (BOE)
regulations that govern the distribution of sales and use lax (with sales taxes paid on laxable
purchases mode from within-state vendors and use taxes paid on taxable purchases made from
out-ai-state vendors), the City 01 Polo Alto cannot maximize the sales and use tax benelit Irom
SUMC's spending since most vendors are not located in Palo Alto. The City of Palo Alto seeks a
change to this situation, and has asked SUMC to consider obtaining a use tax direct payment
permit, which would allow SUMC to self report use taxes applicable to all out-ai-slate taxable
purchases. If this occurs, the City 01 Palo Alto could benefit from an additional infusion of use
taxes to boost the City's General Fund. A discussion regarding the potential for this and the
implications relative to SUMC's current spending patterns follows.
The City 01 Palo Alto currently receives four potential sources of sales and use taxes associated
with SUMC spending. These sources are as follows:
• The City of Palo Alia receives a 1.0 percent sales tax on all taxable purchases made by
SUMC from Palo Alto vendors.
• The City of Palo Alto receives a 1.0 percent use tax on alilaxable purchases equal to or
greater than $500,000 made from vendors outside the State of California that have a
SMe of California seller's permit.
• The City of Palo Alto receives a relatively small percent shore (usually 5 to 7 percent of
1.0 percent) of taxable purchases less than $500,000 made from vendors outside the
State of California that have a State of California seller's permit.
• The City of Palo Alto receives a 1.0 percent use tax on alilaxable purchases made from
vendors outside the State 01 California lacking a California seller's permit.
In accordance with State regulations, the City of Palo Alto does not receive any share 01 soles
taxes paid on purchases from California vendors not located in Palo Alto. A lurther explanation
of these sales and use tax distribution mechanisms follows.
Sales and Use Tax Dislribution. If a purchase is made from a California vendor, the vendor
charges sales lax and the local share (typicaily 1.0 percent of the sales amount, which is the
City 01 Palo Alto's sales tax rate) goes to the city in which the sale is negotiated (i.e., point 01
sale). In the case of SUMC, only purchases made from Palo Alto vendors would provide the City
of Palo Alto this 1.0 percent share of taxable sales.
SUMC PROJECT FISCAL IMPACT ANALYSIS 18 FEBRUARY 2009
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When a purchase is made from aut·af·state, use tax is charged instead of sales tax, at the same
rate as sales tax. However, the distribution of the local 1.0 percent tax depends upon whether
or not the vendor has a California Seller's Permit and the amount of each individual sale
transaction (i.e., less than $500,000, or equal to or greater than $500,000).
If a vendor has a California seller's permit (which they would have if they have any sort of
presence in the state, including a sales representative who comes into the state), they are
obligated to collect use taxes from the consumer an California's behalf and report it to the
state. When sales are reported, they are lacationally coded and distributed as fallows:
• Purchases equal to or grealer than $500,000. If a purchase made from an aut·of·state
vendor who collects use tax is valued at $500,000 or mare, then the vendor designates
to the BOE the city where the item is going. The lacol share of use tax revenues then
accrues to the city at the typical 1.0 percent rate through the BOE's sales and use tax
reporting process.·
• Purchases less than $500,000. If a purchase made from an aut·af·state vendor who
collects use tax is valued at less than $500,000, then the 1.0 percent local tax ultimately
goes to the county (nat the city) where the item is shipped. This becomes the "county
pool." The city where the purchase was sent then receives a share of the use tax based
upon its proportional county share of all collected sales and use taxes. These revenues
are distributed to cities quarterly, based upon the City's share of sales and use taxes
collected each quarter. For example, the City of Palo Alta accounted for approximately
6.24 percent of all collected sales and use taxes in Santa Clara County in the second
quarter of 2008.' Thus, for $1.0 million in aggregate qualifying purchases made by
Palo Alta consumers, the City of Palo Alta would receive $624, which is much lower
than the $10,000 the City would have received ifthe use tax was reported directly to the
City.
If a purchase is made from an out·af·state vendor who does not collect use tax, then the
recipient is obligated to report it an their use tax permit. The loco I share of these taxes goes
directly to the jurisdiction in which the purchased item is placed in service. SHC and LPCH
appropriately engage in this practice. Analysis of data submitted by SHC and LPCH regarding
use tax payments made to the State of California indicates that in Fiscal Year 2006·2007, SHC
and LPCH made $892,811 and $33,919 in use tax payments, respectively, to the State of
California (see Exhibits 7 and 8).8 These compare to Fiscal Year 2004-2005 figures of
$473,848 for SHC and $66,561 for LPCH and Fiscal Year 2005-2006 figures of $661,098 for
SHC and $55,320 for LPCH.
These local tax revenues accrued in large part to the City of Palo Alta. However, to the extent
same items were purchased for use in other facilities located outside the City of Palo Alto, the
• This local rate varies by city, but the majority of California cities, including Palo Alia, receive a 1.0
percent sales tax.
7 See page 201 of the "State Board of Equalization, Fund Distribution, Quarterly Allacotian Summary
of 8radley 8urns Local Tax Allocation Period: 05/14/2008 -08/13/2008";
http://www.bae.ca .gav/sutax!pdf/2q08 _ distri butian. pdf.
8 Fiscal Year 2006-2007 annualized data are nat yet available pursuant to BOE determinations.
SUMC PROJECT FISCAL IMPACT ANALYSIS 19 FEBRUARY 2009
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local share of use lax revenues associated with those items accrued to the benefit of other local
jurisdictions. Analysis presented in the following Additional Use Tax Direct Payment Permit Tax
Revenue Potential section further estimates the share of use tax revenues associated with existing
operations accruing exclusively to the City of Palo Alto. Regardless of the jurisdiction benefiting
from these use tax revenues, Exhibits 7 and 8 demonstrate that SHC and LPCH are
appropriately making use tax payments for taxable purchases made from out-of-state vendors
lacking a California seller's permit.
Use Tax Direct Payment Permit
California State Board of Equalization Regulation 1699.6 has provisions that allow a use tax
direct payment permit holder to self-assess and pay state, local, and district use taxes directly to
the BOE. The result would be that instead of the local allocation of use taxes being directed to
the county pool for purchases under $500,000, the local tax allocation would directly accrue to
the city where the permit holder is located and takes receipt of the item purchased. In addition,
taxes associated with purchases equal to or greater than $500,000 would also be reported
directly by the perm;t holder. This direc! reporting would only pertain to taxable purchases from
outside the State of California.
To qualify for a use tax direct payment permit, a permit holder has to agree to self-assess and
pay directly any incurred use tax liability and certify that during the calendar year preceding the
application they made $500,000 or more in aggregate taxable purchases subject to use tax.
The permit holder must issue a use tax di rect payment exemption certificate to retailers or sellers
from which taxable purchases are made, thereby relieving the seller from the duty of collecting
the use tax. Tax payments must be made quarterly and are subject to the same penalty
provisions thai apply 10 a seller or retailer. State regulations providing the BOE with the
statutory aUlhority 10 issue direct payment permits were enacted in the late 1990s.
The City of Palo Alto has requested Ihat SHC and LPCH obtain a use lax direct payment permit
as a means of increasing the use tax revenues thai accrue to Ihe City. SHC and LPCH would
qualify for this per"";it given their level of taxable purchasing. The following sections therefore
analyze the sales tox revenue potential for the City of Palo Alto in Ihe event SHC and LPCH do
oblain uSe tax direct payment permits. Several cities throughout the State of California have
programs in place to encourage local businesses to obtain these permits as a means for their
host cilies to capture a greater share of use tax revenues. examples include the cities of EI
Segundo, Long Beach, los Angles, San Diego, and Tulare (see Exhibit 9). Close to Palo Allo, the
City of San Jose is in Ihe process of enacting such a program. Among the cities with existing
programs, businesses are provided with a rebate on the collected use tax in recognition of the
administrative burden assumed by these businesses. This rebate is typically a minimum of 20 to
25 percent. These reb ales are In addition to staff assistance extended to the permit holders
designed to ease the administrative burden. This burden accounts for the relatively low number
of organizations in California with use tax direct payment permits. As of mid-2007, there were
136 use tax direct payment permits in the state, with only 44 held by private companies and 92
held by local taxing jurisdictions"
9 Memorandum to Community and Economic Development Committee, City of San Jose, May 2,
2007, From Paul Krutko, page 2.
SUMC PROJECT FISCAL IMPACT ANAL Y515 20 FEBRUARY 2009
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SHC and LPCH Taxable Spending Analysis
CBRE Consulting engaged in extensive analysis of SHC and LPCH's taxable spending for the
purpose of projecting future sales and use taxes that could accrue to the City of Palo Alto for
purchasing related to the existing SUMC space and the net expansion space. The steps involved
in this analysis included the following:
• Work with SHC and LPCH representatives to obtain databases of Fiscal Year 2006-
2007 spending; 10
• Analyze Fiscal Year 2006-2007 spending patlerns, sorted by vendor location (i.e., Palo
Alto, other California, other U.S., and international), size of purchase (amounts less
than $500,000, equal to, or greater than $500,000), and nature of purchase (taxable
versus nontaxable);
• Assess the level of sales and use taxes that could have been received by the City af Palo
Alto if SHC and LPCH had operated during Fiscal Year 2006-2007 with a use tax direct
payment permit;
• Standardize sales and use taxes by patients served during Fiscal Year 2006-2007; and
• Project future sales and use tax revenues accruing to the City of Palo Alto pursuant to
the SUMC Project .•
By using this approach the analysis assumes that SHC and LPCH's future taxable spending
patlerns will be relatively comparable to the Fiscal Year 2006-2007 taxable spending patlerns.
A description of each step follows.
Obtain Spending Database. CBRE Consulting worked extensively over the course of many weeks
to obtain Fiscal Year 2006-2007 spending databases for SHC and LPCH. CBRE Consulting staff
consulted with SHC and LPCH staff to determine the relevant accounting system for data
retrieval and the means of data retrieval most conducive 10 CBRE Consulting's analytical needs.
The procurement system for the hospitals maintains an item file listing/database of all
purchases processed by the procurement system. During the course of the fiscal impact analysis,
CBRE Consulting leorned that this item file listing includes thousands of individually coded
items, with the items further coded as taxable or non-taxable. This item file listing is periodically
audited by a notional accounting firm to ensure conformance with State of California
regulations.
The hospitols do not have integrated procure to pay systems. Therefore, an estimate of
purchases was prepared based on the audited financial systems as well as the procurement
system. CBRE Consulting understands that the databases include all fiscal year spending for
SHC and LPCH with the exception of capital purchases such as construction contracts or non
recurring purchases of equipment, professional services for temporary staff and outsourced
services (which are generally nontaxable), payments to the School of Medicine/Stanford
10 This timeframe was seleded as it is the most recent fiscal year for which full year data are
available.
SUMC PROJECT FISCAL IMPACT ANAlYSIS 21 FEBRUARY 2009
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University, and employee salaries and benefits. This focus on recurring expenditures odds on
element of conservatism to the analysis os some degree of nonrecurring expenditures will occur,
albeit on on infrequent and irregular basis.
Analyze Spending Database. CBRE Consulting sorted the spending databases by geography of
vendor and taxable versus nontaxable status of the purchase. A further effort was made to sort
the purchase by size, separating purchases valued at or above $500,000 from all other
·purchases. The intent of this sorting was to determine the extent to which the City of Palo Alto
currently receives a 1.0 percent share of use taxes for purchases over $500,000. However, data
provided by the hospitals indicate that there are no purchases over $500,000.
Assess Potential City Revenues With Use Tax Direct Payment Permit. CBRE Consulting analyzed
the Fiscal Year 2006·2007 spending databases to determine the level of sales and use taxes
the City could have received if SHC and lPCH had use tax direct payment permits in effect
during thai year.
Standardize Sales and Use Taxes Across Patients. CBRE Consulting standardized the sales and
use laxes to the City of Palo Alto across patients served by both SHC and lPCH.ll While Ihe
expenditures data were for Fiscal Year 2006·2007, the patient count data are for calendar year
2006, as corresponding data for the fiscal year were not available. The use tax data were
inflated to 2008 to conform to the balance of the fiscal impact analysis. Patient days for each
facility were combined between inpatients and outpatients, with two outpatient days assessed as
equivalent to one inpatient day, in recognition that inpatients are more costly to serve than
outpatients. The result is an cmalyticol total of patient days. This generally parallels the service
population estimating methodology for the City's General Fund analysis, which equates two
employees with one resident. The inflated sales and use tax data findings were then divided by
the annualized patienl count data to obtain a per.patient estimate of sales and usa lax
generation.
Project SUMC Sales and Use Tax Revenues. The findings from the patient standardization were
applied to the projected incremental patient counts for SHC and lPCH to generate estimated
annual City of Palo Alto sales and use tax revenues resulting from SHC and lPCH taxable
expenditures for 2015 and 2025.
SHC and LPCH Taxable Spending Findings and Tax Projedions
CBRE Consulting's analysis relevant to the projection of prospective City 01 Palo Alto sales and
use lax revenues associated with the existing SUMC operations and that of the additional space
resulting from the SUMC Project, assuming SHC and lPCH obtain use tax direct payment
permits, is documented in Exhibits 10 through 14. While Ihe analysis focuses on Fiscal Year
2006·2007, comparative data for Fiscal Year 2005·2006 are also presented.
11 The data could hove alternatively been standardized across other measures, such as square feel
or employees. Far the purpose of this analysis, however, patients were deemed the most appropriate
measure given that SHC and lPCH are medical institutions whose sale purpose is ta provide patient
core.
SUMC PROJECT FISCAL IMPACT ANALYSIS 22 FEBRUARY 2009
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Estimated Direct Purchasing Taxable Sales. Exhibil 10 indicates thai in Fiscal Year 2006·2007,
SHC expenditures related to supplies tala led $236.0 million, of which $105.0 million were
recorded as taxable (see Exhibit 12), while Exhibit 11 indicates that LPCH supply expendilures
totoled $35.9 million, of which $14.5 million were recorded as taxoble (see Exhibit 12).
Estimated Direct Purchasing Sales and Use Tax Revenues. As demonstrated in Exhibit 12, if SHC
and LPCH held use tax direct payment permits during Fiscal Year 2006·2007, tax revenues
received by the City of Polo Alto would have totoled $ J 33,300 from SHC's expenditures and
$4,520 from LPCH's expenditures, lolaling $137,820. Infloled to 2008 dollars, this is
equivalent to $144,533.
Direct Purchasing Sales and Use Tax Metric. For the purpose of deriving a per pa*enl spending
estimate, CBRE Consulting developed a patient metric based upon two outpatients deemed
equivalent to one inpatient for expenditure allocation purposes. Summing Ihese two ligures
together provides an analytical total number of patient days. This melric recognizes that
inpatients are more costly to serve than outpatients given the high cost of overnight visits. Using
this metric, the 2008 equivalent of sales and use tox revenues accruing to the City of Polo Alto if
SHC and LPCH had direct payment permits is $0.42 per analytical total patient day for SHC
and $0.04 per analytical total panent day for LPCH (see Exhibit 13).
To be conservative, CBRE Consulting assumes for analytical purposes that in keeping wilh
practices in olher California cilies, as documented in Exhibit 9, Ihe City of Polo Alto will rebate a
portion of the use toxes colleeled as a result of SHC and LPCH's use tax direct payment permits.
The purpose of this rebate would be to compensate SHC and LPCH for the administrative
burden associated with the use tox direct payment permit. The assumed rebate is 20 percent,
which is at the lower end 01 cities with comparable programs.
SUMC Proiect Projected Direct Purchasing Sales and Usa Tax Revenues. Based upon the
preceding calculations, as documented in Exhibit 14, the anticipated net increment of inpatient
and oulpatieht visits for both SHC and LPCH, the assumption that future patient spending will
be comparable to current patient spending, and that SHC and LPCH will each obtain a use tax
direel payment permit, CBRE Consulting estimales that the City of Palo Alto will receive sales
and use tax revenues associated with SHC and LPCH spending in the following amounts:
• $17,530 annually by 2015 for SHC and $992 annually by 2015 for LPCH; and
• $41,025 annually by 2025 for SHC and $1,988 annually by 2025 for LPCH.
In the absence of SHC and LPCH obtaining use lax direct payment permits, these potential
revenues would be lower, though there would be some level of revenues given the historic direct
reporting of use tox payments by both SHC and LPCH presented in Exhibits 7 and 8.
Additional Use Tax Direct Payment Permit Tax Revenue Potential. In addition to the tax revenues
derived from projected SUMC Project taxable spending, the City of Palo Alta would also derive
sales and use tox revenues from the existing facilities and existing bose of patients if SHC and
LPCH obtoined use tax direct payment permits. Exhibit 15 presents an estimate of these
revenues. This estimate is derived from several data benchmarks for Fiscal Year 2006·2007,
including comparison of potential use tax revenues to the aelual use taxes paid by SHC and
LPCH (Fiscal Year 2006-2007 is the last full year for which use tax payments are available). An
adjustment is applied to the data to isolate use tax payments relevant to recurring expenditures
SUMC PROJECT FISCAL IMPACT ANAlYSIS 23 FEBRUARY 2009
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associated with the Palo Alto facilities. The data are inflation-adjusted to 2008 and the analysis
then identifies the net increment of revenues that would accrue to the City of Palo Alto if SHC
and LPCH obtain use tax direct payment permits.
The findings indicate that in 2008 dollars, the existing SHC and LPCH operations are estimated
to generate $106,640 and $3,616 in use tax revenues, respectively, to the direct benefit of the
City of Palo Alto assuming SHC and LPCH obtain use. tax direct payment permits. Approximately
22 percent for SHC and 13 percent for LPCH of these revenues, or $23,792 for SHC and $468
for LPCH ($24,260 total for the SUMC Project), are estimated to comprise a net benefit to the
City over existing use tax revenues accruing to the benefit of the City of Palo Alto."
SUMC Facilities On-Site Sa les
There are existing revenue-generating programs (e.g., cafeterias, gift shops, a pharmacy, and
cafes) at SHC, LPCH, and SoM, all of which will expand as a result olthe SUMC Project.
Additional taxable sales at these programs were estimated based on taxable sales at existing
programs and assumed taxable sales per category-specific data compiled by The HdL
Companies (HdL), a California-based tax consultant firm.
There are a total of 10,670 square feet of revenue-generating programs at SHC in 2008,
including a lO,OOO·square-foot cafeteria and a 670-square-foot gift shop (see Exhibit 16). An
additional 20,500 square feet of revenue-generating programs are anticipated at SHC, to be
completed by 2015, bringing the total square footage of revenue-generating programs to
31,170 square feet.
LPCH provides a total of 7,525 square feet of revenue-generating programs in 2008 (see
Exhibit 16). This includes a 7,200-square-foot cafeteria and a 325-square-foot gift shop. As a
result of the SUMC Project, an additional 10,300 square feet of revenue-generating programs
is anticipated to be added to LPCH, increasing the total space to 17,825 square feet by 2015.
There are two cafes at the SoM in 2008, totaling 1,500 square feet, which are located in
buildings within the City of Palo Alto (see Exhibit 17). The 680-square-foot cafe is scheduled ta
close in 2010 and a 3,OOO-square-foot cafe is planned to open in 2017 at the earliest. SoM
revenue-generating programs within the City of Palo Alto would therefore total 3,820 square
feet in 2025.
Taxable sales estimates were prepared for these SUMC retail components as a basis of
estimating associated City of Palo Alto sales tax generation. Sales estimates were based on
either actual historic performance for comparable SUMC retail space (see Exhibit 18 for SHC
retail space and Exhibit 19 for LPCH retail space) or, where data were not available, based
upon industry averages prepared by HdL. The resulting taxable sales estimates are presented in
Exhibit 20 for SHC, which total $10,413,607, Exhibit 21 for LPCH, which total $2,370,282, and
Exhibits 22 and 23 for SoM, which total a decline of $190,053 in 2015 and a net increase of
$648,418 by 2025.
12 These figures are forthcoming, pending analysis of Fiscal Year 2005-2006 taxable spending for
SHC and LPCH.
SUMC PROJECT FISCAL IMPACT ANALYSIS 24 FEBRUARY 2009
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SHC revenue-generating programs will conlribufe on estimaled additional $104,136 in annual
sales tax revenues in 2015 and 2025 (see Exhibit 20). SHC sales tax revenues are the same for
2015 and 2025 since additional revenue-generating programs are anticipated to be completed
by 2015. lPCH will generate on estimated additional $23,703 in annual sales tax revenues in
2015 and 2025 (see Exhibit 21). lPCH sales tax revenues are !he some for 2015 and 2025
since additional revenue-generating programs ore anticipated to be completed in 2015. Due to
the closure of one of !he existing cafes, SaM will generate $1,901 less in annual soles tax
revenues in 2015 compared to Fiscal Yeor 2006-2007 (see Exhibit 22). Once that cafe is
replaced by a larger one, SaM will generate on estimated additional $6,484 in annual sales tax
revenues in 2025 (see Exhibits 23). In total, net SUMC revenue-generating programs will
generale an additional $125,938 in annual sales tox revenues in 2015 and $134,323 in 2025.
Employee Spending
The new SUMC employees will generole taxoble sales for Polo Alto retailers, which will result in
soles tox revenues to !he City of Polo Alto. CBRE Consulting engaged in a conservative process
to estimate the level of taxable retail expenditures attributable to these new employees. This
pracess involved the preparation of a per employee taxable retail spending estimate
benchmarked to office worker retail spending potterns published by the International Council of
Shopping Centers (ICSC).
The process of developing the per employee taxable spending estimote is documented in
Exhibits 24 to 29, with Exhibit 24 presenfing the ICSC study weekly retoil spending findings far
office workers in downtown locations with ample retail. These findings pertain to the amount of
retoil spending generated by office workers close to their work location, which CBRE Consulting
considers a proxy far the community in which they work. These data were presented by ICSC for
2003, which CBRE Consulting inflated to 2008 for study purposes. The weekly Clato were then
annualized in Exhibit 25, which also estimates the percent of spending· that is taxable. The result
of this analysis indicates that an overage office worker spends $3,258 in retoil sales annually in
2008 dollars dose to their work location, with on estimated 93 percent taxable. Exhibit 26
presents medical office employee income estimates and Exhibit 27 presents SHC and lPCH
income estimates. Exhibit 28 then analyzes household retail spending patterns in on effort to
benchmark SUMC employee incomes and spending patterns to the ICSC data presented in
Exhibits 24 and 25,.
Exhibit 29 develops on adjustment fador far SHC and LPCH employees to apply to the
. estimated office worker spending since the SHC and lPCH employees are conservatively
assumed to generally eat in the cafeteria or pack a lunch from home, rather than purchase
food off-site. This analysis, suggesting a discount factor of 88 percent for the SHC and lPCH
employees, results in a per employee annual taxable spending estimate in Palo Alto of $2,659
(see Exhibit 29). Exhibit 29 applies a similar discount fador for non-SUMC medical office
workers as well as on additional adiustment factor to reflect !he fad that medicol office workers
are estimated to eorn less than the overage office worker. This analysis, suggesting a discount
factor of 57 percent for non-SUMC medical office employees, results in a per SUMC employee
annual taxable spending estimate in Palo Alto of $1,736 (see Exhibit 29). These estimates
include an allowance for employe" taxable spending at on-sit" retail opportunities at SHC,
lPCH, and SaM.
The estimated increases in nef annual sales tox revenues accruing 10 ihe City's General Fund as
a result of SHC employee spending, in addition to what they are spending on-site, are $26,031
SUMC PROJECT FISCAL IMPACT ANALYSIS 25 FEBRUARY 2009
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in 2015 and $33,264 in 2025 (see Exhibit 29). Additional revenues as a result of lPCH
employee spending are $22,601 in 2015 and $23,718 in 2025. Non-SUMC employees will
generate $1,736 in additional annual sales tax revenues in 2015 and 2025. Employee
spending is not estimated for SaM since the planned SUMC Project is not expected to generate
a net increase in SoM employees. In total, net SUMC Project employees will generate on
additional $50,368 in annual sales tax revenues by 2015 and $58,718 by 2025.
Overnight Visitor Spending
SUMC-related visitors who stoy in Polo Alto hotels will comprise on additional source of sales
tax revenue to the City of Polo Alto attributable to their taxable spending. This analysis does not
separately estimate additional sales tox revenues from SUMC-related day visitors since most of
these revenues are estimated to be captured by on-site revenue generating programs. As cited
previously, there will be estimated demand for 1,594 hotel nights generated by the SUMC
Proiect by 2015 and 3,760 by 2025 (see Exhibit 5). Not all these hotel nights will be spent at
hotels located in the City of Polo Alto. Based upon information collected by lPCH, an estimated
14 percenl of lPCH-relaled hotel nights are spent at Palo Alto hotels (see Exhibit 30). By
extension, CBRE Consulting assumes this figure will apply to ali SUMC-related hotel visitors. To
translate these Palo Alto room nights into number of visitors, CBRE Consulting applied on
estimated average hOlel roam visitor count of 1.5, resulling in an estimated annual number of
visitors stoying in Palo Alia hotels totaling 334 by 2015 and 789 by 2025. Figures presented in
Exhibit 30 distribute this count between SHC and lPCH.
A 2008 sludy regarding Stanford University's economic impact estimates that the average
Stanford University-related visitor spends $35 doily in Ihe locol community. CBRE Consulting
further assumes based upon a windshield survey of shopping and dining options proximale to
the SUMC facilities, that for SUMC visitors, 20 percenl of this spending will occur 01 SUMC
facilities. Applying these factors to the estimated overnight visitor counts results in estimated
increases in net annual sales tax revenues accruing to the City's General Fund as a result of
SHC overnight visitor spending of $71 in 2015 and $143 in 2025 (see Exhibit 30). lPCH
overnight visilor spending will generate an additional $116 in annual sales tax revenues in
2015 and $298 in 2025. Visilor spending is not estimated for SoM since the planned SUMC
Project is not expected 10 generate a net increase in SaM visilors. In total, net SUMC overnight
visitors will generale $187 in additional sales tax revenues in 2015 and $441 in 2025.
Total Sales Tax Revenues
As shown in Exhibit 31, SHC will generale estimated net increasas of $147,768 to the City's
General Fund in sales tax revenues by 2015 and $178,568 by 2025 from Ihe on-site revenue
generating programs, employee spending, and overnight visitor spending. lPCH will generale
on additional $47,412 by 2015 and $49,707 by 2025. SoM will generate $1,091 less
compared 10 the bose year (Fiscal Year 2006-2007) by 2015 and on additional $6,484 by
2025. Non-SUMC employee spending will generate on additional $1,736 by 2015 and 2025.
Combined, SHC, lPCH, SoM, and non-SUMC will odd on estimated net of $195,015 by 2015
and $236,495 by 2025.
PROPERTY TAX
CBRE Consulting estimated the net improvement value for the proposed hospitols, clinics, and
medical office spaces in order to estimate property taxes accruing 10 the City of Polo Alto's
SUMC PROJECT FISCAL IMPACT ANAlYSIS 26 FEBRUARY 2009
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General Fund. According to the Santa Clara County Controller's Office, annual property tax is
1.0 percent of assessed value, of which the City of Palo Alto General Fund receives
approximately 9.42 percent.'3
A number 01 community health care providers currently lease space adjacent to the SUMC in
facilities owned and operated by SHC, LPCH, or private building owners. The SUMC Project
includes the demolition of three buildings on Welch Road that are leased in part to community
health care providers -701 Welch Road, 703 Welch Road, and 1101 Welch Road (see Exhibit
2). Those tenants at 1101 Welch Road who require proximity to the hospitals will be offered
long-term leases for space at the existing Hoover Pavilion building at 211 Quarry Road, which
will be renovated lor this use. Tenants at 701 and 703 Welch will have the opportunity to lease
nearby SUMC-controlled space in Menlo Park. The space leased to health care providers at 211
Quarry Road will generate $23,277 in property tax revenues to the City of Palo Alto by 2015
(see Exhibit 32).
By 2015, all SUMC facilities that are currently leased to community health core providers, with a
current (Fiscal Year 2007-2008) assessed value of approximately $12.8 million net of property
tax exemptions, will be demolished and will be replaced by facilities that will become 100
percent property tax exempt." The $12,081 in General Fund revenues lost from these
properties will be more than offset by both the Hoover Pavilion renovation and the construdion
and subsequent assessment of a new medical office building on the Hoover Pavilion site, which
will be leased to non-SUMC healthcare providers. Based on CaRE Consulting's valuation, the
proposed new Hoover Pavilion medical office building will generate opproximately $46,399 in
General Fund property tax revenues at buildout in 2015 (see Exhibit 33). These changes result
in a net increase of approximately $57,595 in property tax revenueS to the City of Palo Alto (see
Exhibit 34).
VEHICLE LICENSE IN-LIEU FEE REVENUE
Beginning in the 2005-2006 Fiscal Year, the State of California reduced the Vehicle License
Fees (VlF) received by cities and offset the reduction by property lax in-lieu of VLF. This
offsetting revenue is based on the growth of the real property assessed value in the City of Palo
Alto as a result of the proposed SUMC Project. Based upon this methodology, CBRE Consulting
estimated annual motor vehicle-in-lieu property tax resulting from the SUMC Project to be
approximately $14,061 (see Exhibit 35).
TRANSIENT OCCUPANCY TAX (TOT)
The City of Palo Alto General Fund is entitled to a 12 percent Transient Occupancy Tax (TOTJ
on all holel room revenues within the City limits.'s In order to estimate the TOT revenue
13 The 9.42 percent cllocction to the City of Polo Alto Geneml Fund is ofier the Educotionol Revenue
Augmentotion Fund (ERAF) paymenl.
14 Fiscal Year 2007-08 property tax payments to Santa Clara County were provided by Stanford
University Land, Buildings and Real Estate by parcel. Since many of these properties have multiple
entities as tenants, including non-SUMC health care providers, determining the share of property
taxes from SHC, lPCH, and the SaM is not possible
" Voters approved a 2 percent increase in transient occupancy tax from 10 percent to 12 percent,
which is effective as of January 1, 2008, Transient occupancy tax is not charged to hotel guests that
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generated by the future SUMC facilities expansion, CBRE Consulting first estimated the
additional hotel nights generated by the SUMC Project, then applied market rata revenue
assumptions to these figures. This process is documented in Exhibit 36, which projects added
demand of 138 hotel nights associated with LPCH and 85 associated with SHC by 2015. A total
of 356 rooms are estimated to be associated with LPCH and 171 with SHC by buildout.
The calculation of annuol City of Palo Alta TOT revenues from the added hotel nights is further
presented in Exhibit 36. In 2015, the LPCH expansion will generate an estimated $2,366 in
TOT revenues. The SHC expansion will generate an additional estimaled $1,457, for an SUMC
Project total of $3,823 in 2015. In 2025, the LPCH expansion will generate $6,104 while the
SHC expansion will generate $2,932, for an SUMC Project tolal of $9,036 of incremental TOT
revenue at buildout.
UTI LIN USERS TAX
The City of Palo Alto collects a utility users tax, equivalent to 5 percent of utility payments, on
water, electricity, gas, and telephone bills. The SUMC Project will add to the City's annual utility
users tax revenue by virtue of their increased demand for utilities, though not for phone usage
since that is supplied and billed through Stanford University.
CBRE Consulting obtained existing and projected utility demand estimates for the SUMC
facilities from PBS&J, the City of Palo Alta Utilities Department (CPAU) and Palo Alta Green, and
the SUMC Application. Where water meter projections were not available, the current demand
per square foot was projected forward based on the planned square feet of the SUMC Project.
The projected demand estimates were then applied to the appropriate utility rate schedules,
also provided by CPAU, to arrive at the estimated future utility payments from the SUMC
Project. Finally, the incremental revenues were apportioned to SHC, LPCH, and SoM based on
the net percentage change in utility demand associated with each entity.
As shown in Exhibits 37 through 41, the SUMC Project will add approximately $323,337 in
annual utility users lax 10 the City's General Fund by 2015. Of the $323,337, approximately
$196,831 will be paid by SHC, $83,531 will be paid by LPCH, and $42,976 will be paid by
SoM based on the relative magnitude of each entity's utility demand. By 2025, the total
incremental utility users tax revenues will stabilize at approximately $296,572. Of the tolol,
approximately $151,723 will be paid by SHC, $87,057 will be paid by LPCH, and $57,794 will
be paid by SoM.
OTHER REVENUES
CBRE Consulting estimated net revenues fram fines and penalties as a result of the SUMC
Project. The SUMC Proiect will add approximately $21,566 in annual fines and penalties 10 the
City's General Fund by 2015 and $25,077 by 2025 (see Exhibits 42 and 43).
stay far al leost 30 nights, provided that the guest discloses his or her intention to stay for 30 doys at
the time of check-in.
SUMC PROJECT FISCAL IMPACT ANALYSIS 28 FEBRUARY 2009
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SUMMARY OF GENERAL FUND REVENUES
As shown in Exhibil44, annual Ciiy of Palo Alto General Fund revenues projected for the SUMC
Project in 2015 for Ihe revenue calegories Ihal can be attributed by enliiy are $357,001 for
SHC, $142,812 for LPCH, and $41,075 forSoM, Total properly taxes of $57,595, which were
not able 10 be attributed to a specific SUMC entiiy, bringing the tala I for 2015 to $615,397. In
2025, this General Fund revenue tolal is estimaled to be $638,836, This total comprises
$57,595 in properly tax revenues (not distribuled to specific SUMC enlities), $347,209 in
revenues generated by SHC, $152,841 in revenUes generated by LPCH, and $64,278 in
revenues generated by SaM,
In addilion to the lax revenues derived from projected SUMC Projectlaxable spending, Ihe Ciiy
of Palo Alia would also derive sales and use tax revenues from Ihe exisling foci lilies and exisling
base of palienls if SHC and lPCH obtained use lax direct paymenl permits, This would
comprise a sum of $24,260 assuming a fulure taxable spending pattern similar to Ihal of Fiscal
Year 2006-200 7,
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V. ONE· TIME REVENUES·
GENERAL FUND CONSTRUCTION· RELATED SALES/USE TAX
There is the potential for significant one·time revenues to accrue to the City of Polo Alto's
General Fund from taxable purchases assodated with the SUMC Project construction effort. This
section reviews the State of California regulations that can facilitate the generation of this
revenue stream and estimates the revenue potential based upon estimates of total and taxable
co nstruction costs.
Canstructian.Related SaleslUse Tax Generation Potential
Relevant State Regv/atians. Large-scale construction projects can be the source of sales and use
tax revenues to the benefit of the cammunity in which the project is being built. Pursuant to
California State Board of Equalization Regulation 1806, the construction jobsite is regarded as
a place of business of a construction contractor or sub-contractor and is the place of sale of
flfixtures" furnished and installed by contractors or sub-contractars.16 More importantly, relevant
to lorge-scale construction projects, when a general construction contractor or sub-contractor
works on a jobsite, they can obtain a seller's sub-permit for that site if the value of their contract
is $5.0 million or more, pursuant to a Board of Equalization resolution effective January 1,
1995.17 Each contract must be worth $5.0 million or mare. Therefore, if the General Contractar
is earning less than $5.0 million but individual sub-contractors are earning $5.0 million or
more, only the sub-contractors would be able to take <lut a sub·permit. This sub'permit allows
the construction site to be the point-of-sole for the construction activity. Accordingly, the local
jurisdiction where the jobsita is located will receive its share of relevant sales and use tax
payments for taxable construction-related purchases, assuming the contract is not lump_sum.1s
If a contractor/sub-contractor qualifies to obtain a sub'permit, the type of transactions that
would qualify to be reported by the contractor/sub-contractor includes the following:
• Materials they purchase, as long as they do not pay sales tax when they purchase them.
They would be exempt from these taxes if they have a resale cerlificate, which they
would create and give to the seller, proving that they plan to resell the items. For
example, if they purchase something from Home Depot and give Home Depot a resale
certificate, then Home Depot would not collect the taxes.
• Taxes would also qualify on fixtures and equipment. If a contractor paid tax on fixtures
and equipment but marked up the cost to their client, they would then charge additional
sales tax an the incremental increase in the cast.
16 See California State Board of Equalization, "Uniform local Sales and Use Tax Regulations,
Regulation 1806. Construction Contractors". Adopted May 1, 1956, lost amended June 5, 1991.
17 See California State Board of Equalization Publication 9, HTax Tips for Construction and Building
Contractors, Soles and Use Taxes," December 2002, page 11.
18 Different tax-related pracedures are in effect for lump-sum contracts.
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If the contractor/sub-confractor does nol have a seller's sub-permil for the construction si!e,
Ihen all collected construction-related taxes are directed to the California city in which the seller
is locoted or to the county pool if the seller is outside California.
Potential for Palo Alto Construction-Related Tax Revenues. To maximize City receipl of
construction-relaled sales and use taxes associated with the SUMC Project, Ihe City of Palo Alto
has expressed a strong preference for all qualifying construction contractors and sub
contractors to obtain seller's sub-permits for the SUMC construction site. If Ihis occurs, then the
City of Palo Alto will receive a significant infusion of sales and use taxes over the course of the
SUMC construction period. The following analysis regarding construction-related sales and use
tox revenues assumes all contraclars and sub-contractors will obtain seller's sub-permits
associated with their construction efforts, though the sales and use tax recovery role may nol be
100 percent. CBRE Consulting estimates that the SUMC Project would capture 85 percent of
potential sales and use tax revenues associated with construction contracts.
In addition to contractor/sub-contractor purchases, many soft costs and equipment and other
related purchases will be made directly by SHC, LPCH, and SaM. If SHC and LPCH obtain the
direct pay permit as requested by the City of Palo Alta (see earlier discussion in Sales and Use
Tax section), then there will be significant additional sales and use tax revenue potential for the
City of Palo Alto during the construction period. Since SoM is operated by Sianford University,
which conducts central purchasing through the University, SaM purchases would not qualify for
a direct pay permit.
T ClXable Construction Costs
Construction of the SUMC facilities will comprise a significant capital project within the City of
Palo Alto. Across all three components, construction costs con be estimated to tolal $5.1 billion.
By component, these costs, and the exhibits in which the costs are documented, are as follows:
• SHC and Hoover Pavilion Site, $3,156,614,000 (see Exhibit 45);
• LPCH, $1,436,657,000 (see Exhibit 46); and
• School of Medicine, $527,838,000 (see Exhibit 47).
These construction cost estimates were prepared by the entities associated with the SUMC
planning effort. CBRE Consulting did not conduct an independent review or analysis of these
construction costs.
The SUMC cost estimates were classified into three types of costs: direct, soft, and equipment
and other costs. Total costs lor each type of cast were provided by the relevant Proiect entities
along with estimated taxable costs. Thus, Exhibits 45 through 47 indicate that taxable casts as a
percent 01 total costs are estimated at 44 percent for SHC, 45 percent for LPCH, and 36 percent
for SaM.
To meet the City 01 Palo Alto's needs to examine revenue potential by SUMC component and by
construction phase, Exhibits 48 and 49 were prepared for taxable construction-related cos!
allocation purposes. Exhibit 48 estimates the taxable costs for direct, soft, and equipment and
other costs across the square footage planned to be built for SHC, LPCH, and SaM. These
SUMC PROJECT FISCAL IMPACf ANALYSIS 31 FEBRUARY 2009
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results indicate that total estimated taxable costs will range from $417 per square foot to
$1,042 per square foot, and overage $781 per square foot.
Exhibit 49 applies the per square foot taxable costs derived in Exhibit 48 by entity and type of
cost to the square footage estimated by entity by construction phase. These results indicate that
taxable construction costs are estimated to total $1.7 billion during the 2009-2015 construction
period and $2.2 billion for the entire 2009-2025 construction period. However, not all taxable
costs will be subject to sales or use tax to the benefit of the City of Palo Alto. The amount of
potential sales and use tax revenues that will accrUe to the City of Palo Alta will depend upon
two faelors: the share of purchases made by contractors/sub-contractors with contrads valued
at $5.0 million or more; and the share of taxable purchases made by SHC and lPCH from
vendors located in Palo Alto and outside the State of California.
Polo Alto Construction-Related Sales and Use Tax Revenues
Relevant Taxable Sales. CBRE Consulting developed estimates of the portion of taxable
construction-related expenditures that can be subject to City of Palo Alto sales or use tax. These
estimates are documented in Exhibits 50·53 by entity and by construction period, and
summarized in Exhibit 54. For all exhibits, it is assumed that direct costs will be paid by
contractors or sub-contractors and that soft costs and equipment and other costs will be paid by
the relevant entity (i.e., SHC, lPCH, and SaM). In accordance with this assumption, only the
direct costs are subject to the $5.0 million sub-permit regulation, and would apply to direct
costs for all facilities to be built. For SHC and lPCH, sales and use taxes would only accrue to
the City of Palo Alto based on taxable purchases made in Palo Alto or outside California, with
the latter reported directly by SHC and lPCH through their direct pay permit, which this analysis
assumes they will obtain. Taxable purchases mode by SoM would only benefit the City of Polo
Alto to the extent the purchases are made from Palo Alto vendors.
Key Assumptions. To complete the sales and use tax revenues analysis relevant to the City of
Palo Alto, two types of assumptions were applied to the taxable purchases. One assumption
pertains to the shore of construction contrads and sub-contrads estimated to be valued at $5.0
million or more and the other assumption pertains to the cumulative shore of SHC and lPCH
taxable purchases made from vendors located in Palo Alto or out of California.
For the shore of contrads and sub-contracts valued at $5.0 million or more, CBRE Consulting
relied upon Stanford University land, Buildings and Real Estate for an overall estimate of 80
percent based upon examination of other capital construction project contracts and an
understanding of the SHC, LPCH, and SaM construction needs. 'CBRE Consulting reviewed this
figure for reasonableness to the extent possible, including reviewing the quantity and size of
contracts for some nearby construction projects that Stanford has underway.
During the construelion period, SHe and lPCH taxable purchases fall into two categories: (1)
soft costs, and (2) equipment and other costs. For soft costs, CBRE Consulting assumes that all
taxable purchases will be made from California vendors not located in Polo Alto. Therefore,
none of these purchases will qualify for payment by either SHC or lPCH through their assumed
direct pay permit. The taxable soft costs identified in Exhibits 45 and 46 for SHC and lPCH are
in the categories of Architect Engineer Fees, Other Consulting Fees, and
Printing/Reproduction/Distribution. CBRE Consulting believes it is appropriate to assume none
of these expenditures will be mode out of California, and while some may be made in Polo
SUMC PROJECT FISCAL IMPACT ANALYSIS 32 FEBRUARY 2009
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Alto, the historic level of taxable purchases rTl,ade in Palo Alto is very low (see earlier analysis
regarding taxable purchasing palterns for SHC and LPCH documented in Exhibits 11 and 12).
Therefore, it is conservative to assume no construction-related taxable purchases made from
Palo Alto vendors.
For taxable equipment and other cost purchases, the analysis assumes a share of purchasing
subject to locally reported soles or use taxes comparable to the share identified earlier for SHC
and LPCH operations-related purchases. As documented in Exhibit 50, these percentages
totaled 12.7 percent for SHC and 3.1 percent for LPCH. In other words, these are the combined
share of purdhases that are projected to be made from vendors in Palo Alto, and thus locally
reported to the benefit of the City of Palo Alto, and vendors outside of California or
internationally, and thus subject to SHC's and LPCH's use tax p~yment through their assumed
direct pay permit.
Estimated City Revenues. The results of the sales and use tax revenues projected to accrue ta the
benefit of City of Palo Alto are summarized in Exhibit 54. These findings indicate the potential
for the City of Palo Alta to receive $7.5 million in sales and use tax revenues during the 2009-
2015 construction period, and a total of $8.1 million through 2025 for the entire construction
effort. The largest shore of total revenues will be contributed by SHC, at $4.6 million, followed
by $2.6 million for LPCH and $911,200 for SaM. As staled previously, these figures are
predicated upon two significant assumptians, which are that all contractors and sub-contractors
with contracts valued at $5.0 million or more will obtain a seller's sub-permit for their
construction activity and that SHC and LPCH will both obtain direel pay permits for the purpose
of "'fporting and paying use taxes for qualifying purchases. In addiction, CBRE Consulting
estimated that the SUMC Project would capture 85 percent of potential sales and use tax
revenues associated with construction contracts.
GENERAL FUND CONSTRUCTION WORKER RETAIL SPENDING
During the entire construction period from 2009 through 2025, construction workers on site will
spend wages in the local community, generating sales tax revenues for the City of Pala Alto that
would not be realized without the SUMC Project. The City's General Fund receives
approximately 1.0 percent of the taxable retail dollars spent. In order to estimate the sales tax
revenues, CBRE Consulting estimated construction staffing on an average annual basis (as
shown in Exhibit 55), then applied these annual staffing estimates to spending-per-warker
estimates shown in Exhibit 56. Note that these sales tax revenues will be realized during the
construction period only (as oppased to recurring, annual revenues), during the period from
2009 through 2015, and during the period between 2016 and 2025.
Exhibit 55 shows that average annual construction staffing between 2009 and 2015 will be
approximately 3,284 for the SHC praject, 1,750 for the LPCH project, and 183 for the SoM
project, with an additional 196 workers dedicated to onsite infrastructure improvements. During
the second construction phase, from 2016 through 2025, there will be an annual average of
6B8 workers for SHC, 208 workers for SaM, and 168 workers for the site infrastructure. The
LPCH project will be completed during the first phase of construction, so na construction
workers will be dedicated to the LPCH project during the second phase. All employment figures
are rounded.
Exhibit 56 estimales the average annual retail expenditures by construction workers in Palo Alto,
then multiplies this estimate by the average number of construction workers for the SUMC
SUMC PROJECT FISCAL IMPACT ANAlYSIS 33 FEBRUARY 2009
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Project. To estimate average daily spending, CBRE Consulting used average daily spending by
affice workers, then discounted this spending to account for construction workers' average
woges and spending habifs. As shown in Exhibit 56, CBRE Consulting estimates that
construction workers in the Palo Alto area will spend an average of $1,736 on retail
expenditures close to their job site, per year.
Using these eslimates, CBRE Consulting found that from 2009 through 2015, construction
workers will generate a Iotal of $93,962 in sales tax revenues for the City of Palo Alto. This total
comprises $57,003 for the SHC project, $30,375 for the LPCH project, $3,182 for the SoM
project, and $3,402 from those workers dedicating their time to infrastructure improvements.
During the second phase of construction, from 2016 through buildaut in 2025, construction
workers will generate another $18,465 in sales lox revenues for the City's General Fund. These
will comprise $11,933 from the SHC project, $3,616 from the SaM project, and $2,916 from
off-site infrastructure improvements. In total, construction workers will generate on estimated
$112,427 in sales tax revenues from 2009 through 2025.
IMPACT FEES
City of Palo Alto. CBRE Consulting collaborated very closely with the City of Palo Alto to obtain
information on the impact fee schedule, the relevant components of the SUMC Application
subject to impact fees, and the associated fee amounts. Information from EIR subconsultants
was also a critical input to the determination of the estimated fees. Exhibit 57 documents
estimated trips generated by the SUMC Project at buildout and Exhibit 58 documents the City of
Palo Alto fee structure, portions of the SUMC Project subject to the fee payment, and estimated
fees.
As shown in Exhibit 58, the SUMC Project will generate an estimated $10.0 million in City of
Palo Alto impact fees. Of this total, $7.6 million will be attributable to SHC and $2.4 million will
be attributable to LPCH. The components of the impact fee include the following: $2.2 million
in Housing Impact Fees attributable to SHC; $2.0 million in Transportation Impact Fees, with
$1.6 million attributable 10 SHC and $0.4 million attributable to LPCH; and $5.8 million in
Community Facilities Impact Fees, with $3.8 million attriblllable to SHC and $1.9 million
attributable 10 LPCH. As there is no net additional square footage planned for SoM, no impact
fees will be assessed for this component of the SUMC Project.
Palo Alto Unified School District (PAUSD). The Palo Alto Unified School District (PAUSD) collects
School Impact Fees on new residential and commercial construction within the school district's
boundaries. The PAUSD website defines commercial development as structures to be used for
commercial or industrial purposes, most senior housing, adult.only mobile homes, and hotels
and motels. Exhibit 58 documents the PAUSD fee structure and estimates fees.
As shown in Exhibit 58, the SUMC Project will generate an estimated $616,413 in PAUSD
impact fees. Of this total, $408,908 will be attributable to SHC and $207,505 will be
attributable to LPCH. As there is no net additional square footage planned for SoM, no PAUSD
impact fees will be assessed for this component of the SUMC Project.
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VI. ANNUAL GENERAL FUND EXPENDITURES
GENERAL FUND SERVICE COST MATRIX
Average Cost Approach
CBRE Consulting developed 0 Cily of Polo Alto General Fund service cost matrix to support on
overage cost analysis of Cily services. This is a standord fiscal impact component, used in cases
where marginal costs (also known as the case study opproach) are not available or sometimes
as an adjunct to the marginal cost approach, Often studies present both the average cost and
marginal cost approach to provide a range of potential cost impacts,
CBRE Consulting prepared this matrix to estimate net General Fund expenditures for all Cily
Departments as a result of the SUMC Project, As is lypical for this lype of analysis, CBRE
Consulting estimated the shore of Cily casts by major category that are anticipated to be
variable, i,e., change with the size af the service population. For example, CBRE Consulting
esti mated that the Cily Council costs are fixed, such that they would not change with an increase
(or de"crease) in the size of the Cily's service populaHon (see Exhibit 59). In contrast, CBRE
Consulting estimated that BO percent of fire costs are variable, reflecHng the expectation that
more firefighters and associated personnel will be needed as the population base changes (see
Exhibit 59). However, same associated fire costs would not change, such as there would be no
need to add anolher Fire Chief or Fire Marshal with added population.
The percentage estimates for variable expenditures was based upon detailed analysis of the
Cily's budget. CBRE Consulting examined the information regarding staffing per Cily
Department and develaped assumptions regarding the positions or lype of positions that would
likely change with the size of the respective service population,19
Average Cost findings
The estimated annual variable expenditures per new employee (see Exhibit 59) and associated
SUMC-Project-related annual expenditure estimates by.budget category are summarized below
(see Exhibit 60); the figures Ore presented in 2008 dollars to be consistent with the rest of the
analysis:
• Cily Attomey -$1.07 per employee; 5UMC-Project·related expenditures ara estimated
to be $2,065 in 2015 and $2,400 in 2025;
• Cil)' Manager -$0.86 per employee; SUMC-Project-ralated expenditures are estimated
to be $1,659 in 2015 and $1,929 in 2025;
• Administrative Services -$5.50 per employee; SUMC-Project-related expenditures are
estimated to be $10,610 in 2015 and $12,337 in 2025;
• CommuniI)' Services -$33.19 per employee; SUMC-Project-reloted expenditures are
estimated to be $64,024 in 2015 and $74,445 in 2025;
19 The service population for all City Departments except for the POlice Departments is the City's 501.
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• Fire -$74.32 per employee; SUMC-Project-related expenditures are estimated to be
$143,363 in 2015 and $166,699 in 2025;
• Human Resources -$4.33 per employee; SUMC-Projed-related expenditures are
estimated Jo be $8,353 in 2015 and $9,712 in 2025;
• Ubrary -$7.56 per employee; SUMC-Project-related expenditures are estimated to be
$14,583 in 2015 and $16,958 in 2025;
• Planning & Community Environment -$11.93 per employee; SUMC.Projed-relaled
expenditures are eslimated to be $23,013 in 2015 and $26,759 in 2025;
• Police -$102.86 per employee; SUMC-Project-relaled expenditures are estimated to be
$198,417 in 2015 and $230,715 in 2025;
• Public Works -$26.52 per employee; SUMC-Project-related expenditures are estimated
to be $51,157 in 2015 and $59,485 in 2025; and
• Non·Departmental -$14.97 per employee; SUMC-Project-related expenditures are
estimated to be $28,878 in 2015 and $33,577 in 2025.
CBRE Consulting eslimated that the CHy Auditor, Cily Clerk, and Cily Council categories do not
have any variable costs (i.e., change with the size of Ihe service population). The expenditures
for these departments are estimated to be fixed, such that they would not change with an
increase (or decrease) in the size of the Cily's service population.
The total Cily of Palo Alto General Fund expenditure per new employee is estimated to be
$283.11 for Fiscal Year 2008.2009, including expenditures for the Fire and Ihe Police
Departments. The Fire and Police Departments combined expenditures total $177.18 per
employee, or 63 percent of total expenditures per employee, thus they comprise the majorily of
estimated service costs. A case study cost analysis for the Fire and Police Departments is
presented below, based upon projected Cily of Palo Alto service costs for the SUMC Project.
However, CBRE Consulting has not relied upon the case study cost analysis in presenting the
study condusions becouse it did nol have access to the underlying assumptions and data used
by the Fire and Police Departments ta develop the estimates that they provided, and therefore
could not assess and confirm the reasonableness of those estimates.
FIRE DEPARTMENT
The SUMC Project is located within the Palo Alto Fire Department's (PAFD) jurisdiction. The
PAFD has four major functional areas emergency response (emergency readiness and
medical, fire suppression, and hazardous materials response), environmental and safely
management, training and personnel management, and records and information
management.
Existing Level of Service
The PAFD staffs seven full-time stations located throughout the Cily. To provide coverage in the
sparsely develaped hillside areas, an additional fire station is operated during summer months
when fire danger is high. Excluding the station dedicated to Ihe SJonford Linear Accelerator
Center (SLAG) and the hillside area station, Polo Alta is reported ta have more fire stotions per
SUMC PROJECT FISCAL IMPACT ANALYSIS 36 FEBRUARY 2009
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capita than most ather local jurisdictions (e.g., San Jose, Sunnyvale, Fremont, Milpitas, San
Mateo, Redwood City, and Mountain View}.w
Fire Station 1, located at 301 Alma Street, is the closest station to the SUMC Project. The Fire
Station 1 district is approximately 1.5 square miles. In the event that apparatus from Station 1
are not available (on another call or out of district), a response would be sent from Station 6,
located at 711 Serra Street on the Stanford campus, or Station 3, located at 799 Embarcadero
Road. There is also a mutual aid agreement with Menlo Pari<.
During Fiscal Year 2006·2007, the PAFD handled 7,236 calls for service.21 Based on data
provided by the City of Palo Alto Fire Department, there were 130 calls for service for SHC and
SaM during Fiscal Year 2006-2007 (see Exhibit 61). Since SHC and SaM share the same 300
Pasteur Drive address, the PAFD was not able to provide calls far service for each entity
separately. During the same year, there were an additional 17 calls for service far the Hoover
Pavilion, bringing the total colis for service for SHC and SaM ta 147 (see Exhibit 61). LPCH
generated a total of 25 calls for service ta the PAFD during Fiscal Year 2006·2007 (see Exhibit
62). In totol, SUMC generated 172 calls for service during Fiscal Year 2006-2007 (see Exhibit
62), or 2.38 percent of total calls for service handled by the PAFD that year.
Cost Anolysis
Average Cost Approach. The PAFD servas the resident population and employees of Palo Alto
and Stanford. The day·time population in the service area is estimated at 130,385 during Fiscal
Year 2008-2009 (see Exhibit 6). SUMC is an employment-based operation, and does not entail
any resident-based population. SHC employees are estimated to increase by 979 by 2015 and
by 1,251 by 2025 (see Exhibit 60).lPCH employees are estimoted to increase by 850 by 2015
and by 892 by 2025. Replacement of the existing SaM facilities is not projected to result in an
increase in employment. Non-SUMC employment is also estimated to increase by 100 by 2015
and 2025. Total full-time equivalent employees will therefore increase by 1,929 by 2015 and
2,243 by 2025.
As previously discussed, the estimated annual variable fire expenditure per employee in 2008
dollars is $74.32 (see Exhibit 59). SUMC Project-related PAFD expenditures are therefore
estimated to be $143,363 by 2015 ond $166,699 by 2025 (see Exhibit 60). The 2015 estimate
includes $72,759 for SHC, $63,172 for lPCH, and $7,432 for the nan-SUMC component of
the Project. The 2025 estimate includes $92,974 for SHC, $66,293 for LPCH, and $7,432 far
non-SUMC.
Cose Study Approach. While it is important to present the SUMC and the SSC Projects
independenfly when estimating their potential impacts on service providers, the PAFD has
estimated potential costs associated with the combined projects due to their proximity and
similar development timeline. The PAFD estimates that the SUMC and SSC Projects will require
a new ladder truck and three additional paramedic operators. Exhibit 63 shows that the
estimated PAFD expenses for both the SUMC and SSC Projects amount to a total of $516,200
far annual expenses and a total of $915,000 for one-time expenses. CaRE Consulting was not
'" City of Palo Alta, "Service Efforts ond Accomplishments Report 2006-07," January 2008, p. 37.
21 Ibid.
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provided supporting data and assumptions for these estimates and was therefare unable to
assess or confirm their reasonableness.
In order to estimate the expenses related to the SUMC Project only, CBRE Consulting distributed
the expenses for the SUMC and the SSC Projects based on a net employee approach. Expenses
were not distributed baser! on net square feet since a significant portion of the SUMC Project, or
34 percent (see Exhibit 3), is due to right·sizing. The employee approach distributes the
estimated costs by time period amongst the Projects by applying the respective percentage of
"total net employees to the relevant expense figures. The estimated SUMC Project-related annual
expenses (based an the estimates provided bylhe PAFD) are $344,908 in 2015 and $361,711
in 2025 (see Exhibit 64). One-time expenses are estimated by applying the Projects' percentage
of 2025 total net employees to the one-time expense figure. Accordingly, Ihe one·time expenses
associated with the SUMC Projecl are $641,157.
Expenses were then allocated amongst SUMC entities by CBRE Cansulting based on their
respective percentage of SUMC net employees. Annual expenses as a result of SHC net
employees ora $175,047 in 2015 and $201,739 in 2025 (see Exhibit 65). In addition,
$325,398 in one-time expenses ore allocated to SHC. Annual expenses as a result of LPCH net
employees are $151,981 in 2015 and $143,846 in 2025. LPCH one-time expenses are
estimated to be $282,521. Annual expenses as a result of non·SUMC net employees are
$17,880 in 2015 and $16,126 in 2025. Non-SUMC one·time expenses are estimated to be
$33,238. Since there is no planned increase in employment as ci result of the SoM, no fire
services expenses are allocated to that entity.
POLICE DEPARTMENT
The SUMC Project is located within the Palo Alto Police Deportment's (PAPD) jurisdiction. The
PAPD has seven major functional areas-field services, technical services, investiganons and
crime preven~on services, traffic services, parking services, police personnel services, and
animal services.
Existing Level of Service
ACcording to the "City of Palo Alto 2008-09 Proposed Operating Budget," PAPD total calls for
service for Fiscal Year 2006·2007 were 60,079.22 The City of Palo Alto provided PAPD calls for
service data for Command Area 1, which consists of the areo in and around SUMC.23 District
113 covers SHC, LPCH, and the surrounding areas (i.e., general streets, facilities, and
neighborhoods within the District). District 112 covers the Hoover Pavilion (SHC), the Stanford
Shopping Center, and the surrounding areas. As shown in Exhibits 66 and 67, there were 866
PAPD calls for service in and oround SUMC in 2007, or 1.44 percent of total calls for service
handled by the PAPD during Fiscal Year 2006·2007.
" See page 125.
23 Leller from Ron Watson (Lieutenant/Patrol Watch Commander, Palo Alto Police Department) to
David Romberg, "Follow-up Information regarding Medical Center and Shopping Center
Expansion," dated April 21, 2008.
SUMC PROJECT FISCAL IMPACT ANALYSIS 38 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
Cost Analysis
Average Cost Approach. The PAPD serves the resident population and employees 01 Palo Alto.
The day-time population in the service area is estimated at 101,430 during Fiscal Year 2008-
2009 (see Exhibit 6). As previously discussed, the estimated annual variable police expenditure
per employee in 2008 dollars is $102.86 (see Exhibit 59). SUMC Project-related PAPD
expenditures are iherelore estimated 10 be $198,417 by 2015 and $230,715 by 2025 (see
Exhibit 60). The 2015 estimate includes $100,700 for SHC, $87,431 far lPCH, and $10,286
for the non-SUMC component of the Project. The 2025 estimate includes $128,678 for SHC,
$91,751 for lPCH, and $10,286 for non-SUMC.
Case Study Approach. Similarly ta the Fire Department, the PAPD has estimated potential costs
associated with the cambined SUMC and SSC Prajects. The PAPD estimates that the SUMC and
SSC Projects will require a new patrol vehicle and two additianal police officers. Exhibit 68
shows that the estimated PAPD expenses lor both the SUMC and SSC Projects amount to a total
of $338,000 for annual expenses and a Iotal of $302,200 for one-lime expenses. CBRE
Consulting was not provided supporting data and assumptions for these estimates and was
therefore not able to assess or confirm their reasonableness.
The PAPD case study analysis mirrors the Fire Department analysis by distributing the expenses
for the SUMC and the SSC Projects based an a net employee approach. The employee
approach estimates SUMC Project-related annual expenses to be $225,841 in 2015 and
$236,843 in 2025 (see Exhibit 69). One-time expenses associated with the SUMC Project are
$211,757. .
Expenses were then allocated amongst SUMC entities by CBRE Consulting based on their
respective percentage of SUMC net employees. Annual expenses as a result of SHC net
employees are $114,618 in 2015 and $132,096 in 2025 (see Exhibit 70). In addition,
$107,470 in one-time expenses are allocated to SHC. Annual expenses as a result of lPCH net
employees are $99,515 in 2015 and $94,188 in 2025. lPCH one-time expenses are estimated
to be $93,309. Annual expenses as a result of non-SUMC net employees are $11,708 in 2015
and $10,559 in 2025. Non-SUMC one-time expenses are estimated to be $10,978. Since there
is no planned increase in employees as a result of the SoM, no police services expenses are
allocated to that entity.
SUMMARY OF PALO ALTO GENERAL FUND EXPENDITURES
The projected City of Palo Alto General Fund expenditures associated with the SUMC Project
are summarized in Exhibit 71. This summary indicates that using the 'average cost approach to
estimating fire and police service costs, the total annual cast of the SUMC Project to the City's
General Fund will be $546,122 by 2015 and $635,016 by 2025. By the buildout year in 2025,
the share of the total costs will be distributed as follows:2'
• 55.8 percent SHC;
• 39.8 percent lPCH; and
14 Figures are rounded 10 whole tenth of a percent for presentation purposes and may not add up to
100 percent.
SUMC PROJECT FISCAL IMPACT AHAlYSIS 39 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
• 4.5 percent non-SUMC.
As there are no net additional employees planned for SoM, there are no net additional costs
allributable to this portion of the SUMC Project.
As indicated in Exhibit 71, absent the estimated fire and police service costs, the General Fund
expenditures a1lributable to the SUMC Project are projected to be relatively low, totaling
$204,342 by 2015 and $237,602 by 2025. If the case study approach to fire and police
services was substiMed for the average cost approach, total General Fund expenditures far the
SUMC Proiect would increase to $775,091 by 2015 and $836,156 by 2025.
PALO ALTO UNIFIED SCHOOL DISTRICT (PAUSD)
According to lPCH, the school at lPCH has an average daily census for Fiscal Year 2007·2008
of 50, including 18 lor grades K·5 and 32 lor grades 6· 12 (see Exhibit 72). less than two
percent of students allending the lPCH School are from the PAUSD. The lPCH School staff
currently includes four full·time teachers, three aides (one at four hours per day and twa at five
hours per day, or 1.8 full·time equivalent), and one secretary (one at five hours per day, or 0.6
full·time equivalent). The lotal LPCH School full.time equivalent staff is 6.4 for Fiscal Year 2007·
2008. Assuming that the ratios of students to total patients and of staff to students remain
constant for 2015 and 2025, the SUMC expansion will require an estimated additional 1.4 total
full·time equivalent staff by 2015 and 3.6 total FTE staff by 2025 (see Exhibit 72).
PAUSD currently pays the salaries of 3.5 teachers, all aides, and the secretary, in addition to
supplying all teaching materials, textbooks, and supplies for the students. lPCH currently
provides half the salary for one teacher, the facility space, furniture, telephone equipment, and
telephonelfax connections. PAUSD impact fees are used only for construction and
reconstruction of school facilities. CBRE Consulting put in a request to PAUSD regarding their
funding mechanisms for the operational casts of lPCH School and is awaiting a response.
SUMC PROJECT FISCAL IMPACT ANALYSIS 40 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
C6 RICHARD ELLIS
VII. NET FISCAL IMPACTS
PRESENTATION OF FINDINGS
The findings of the SUMC Project's net fiscal impact on the City of Polo Alto General Fund are
documented in a series of five tables, one each for SHC, LPCH, SoM, non-SUMC, and a
summary table. These tables were presented earlier at the end of the Executive Summary. The
summary tables list all analyzed revenue and expenditure categories, both one-time and
annual, and present findings after the completion 01 the 2009-2015 construction period and
then at buildout and full occupancy in 2025. To the extent possible, this level of presentation is
consistent with the expressed wishes of City of Palo Alto public officials during several public
meetings about the SUMC Project. All figures are presented in 2008 dollars.
ONE-TIME IMPACT
There will be two components to the one-time impacts attributable to the SUMC Project. These
include one-time revenue items, such as sales and use tax revenues, and one-time City of Palo
Alto and PAUSD impact lees.
Revenue Items
By the time the SUMC Project is complete in 2025, on estimated $B.3 million in one-time sales
and use tax revenues is estimated to be generated to the benefit 01 the City of Palo Alta (see
Table 1). These revenues are attributable to taxable events during SUMC Project construction,
and assume that qualifying contractors and sub-contractors will obtain a seller's sub-permit
allowing the construction site to be the point-ol-sale lor construction activity. The City of Palo
Alto has expressed a strong desire for this to occur.
Impact Fees
Based upon the City 01 Palo Alto's impact fee schedule, and an expectation that some, bul not
all portions of the SUMC Project will be subject to impact fees, total City of Palo Alto impact fee
generation is estimated at $10.0 million (see Table 1). By impact fee, this total comprises the
following:
• $2.2 million in Housing impact fees;
• $2.0 million in Transportation impact fees; and
• $5.8 million in Community Facilities impact fees.
The SUMC Project will also €Jenerate an estimated $616,413 in PAUSD impact fees. Of this
tatal, $408,908 will be attributable to SHC and $207,505 will be attributable to lPCH. As there
is no net additional square footage planned far ScM, no PAUSD impact fees will be assessed
for this component of the SUMC Project.
The City of Palo Alto and PAUSD estimates are the total impact fee amounts anticipated to be
paid by the SUMC Project during the course of the construction period. For presentation
purposes they are reflected during the 2015 time frame in the summary tables.
SliMe PROJECT FISCAL IMPACT ANALYSIS 41 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
ANNUAL IMPACT
The annual General Fund impact of the SUMC Project will be the result of projected revenues
less expenditures, resulting in a net fiscal impact. A summary highlight of each of these fiscal
components follows.
General Fund Revenues
At buildout, the SUMC Project is projected to generate $638,836 in annual revenues to the City
of Palo Alto General Fund (see Table 1). The largest revenue categories include utility users
toxes totaling $296,572 and sales and use taxes totoling $236,495. The City of Palo Alto has
asked SUMC to consider obtaining a use tax direc! payment permit for the purpose of self
reporting use taxes to the California State Board of Equalization. This permit would result in a
greater share of use toxes directed to the City of Palo Alto. The analysis makes the assumption
Ihot SHC and LPCH will abtain this permit and report use taxes accordingly.
If SHC and LPCH obtain the use tax direct payment permit, then all applicable existing laxable
purchases (not just for the SUMC Project) subject to this reporting method will accrue to the City
of Polo Alto. The additional use to xes from existing facilities are estimated to be $24,260.
Including this additional increment of use taxes would boost the 2025 annual revenues to the
City of Palo Alto to $663,096.
General Fund Expenditures
General Fund expenditures for all major City of Polo Alto departments were estimated for the
SUMC Project. Expendilures were estimated on an average cost basis, assuming future service
costs would be similar to current service costs standardized across the population served. The
resulting annual expenditures estimate is $635,016 at buildout. Of this amount, 63 percent is
comprised of costs for Fire and Police services.
Net General Fund Imaad
The net difference between the annual estimated General Fund revenues and expenditures for
the SUMC Project results in an annual surplus of $3,820, reflecting that revenues are estimated
to exceed expenditures by this amount. This surplus increases to $28,080 if one credits the
SUMC Project for the additional use tox revenues that will accrue to Ihe City of Palo Alia based
upon existing operafions (I.e., absent the SUMC Project). In addition, the fiscal impact analysis
proiects a nel one-time revenue of $8.3 million by the buildout year. Thus development of the
SUMC Project is deemed to be a substantial nel fiscal contributor to the City of Palo Alto.
To sum up, by project buildout the SUMC Project is estimated to add $28,080 annually to the
City's General Fund, along with one-time contributions totaling $8.3 million to be generated
over the course of the proiect construction period.
NET IMPACT AUOCATION BY SUMC ENTITY
During public meetings about Ihe SUMC Project several public officials indicated an interest in
reviewing the fiscal impact analysis results by entity (SHC, LPCH, SaM, and nan·SUMC) and by
construction phase. Tables 2 through 5 disoggregate the fiscal impact results in Ihis manner.
SUMC PROJECT FISCAL IMPACT ANALYSIS 42 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD ElLIS
These individual results are summarized below, focusing on the buildoul and full occupancy
year.
Net one-time sales tax revenues ($6,318 at buildout) from onsile infrostructure improvement
construction workers are not presented for specific SUMC entities since the improvements
benefit the entire SUMC Project area. Net annual property-tax based revenues, which include
property taxes ($57,595 at buildout) and molar vehicle in-lieu fees ($14,061), are also not
presented for specific SUMC entities because the property tax increment associated with each
entity is not known. Many SUMC properties have multiple entities as tenants, including non-
5UMC entities, so determining the share of property taxes from SHC, LPCH, and SaM is not
possible. Property tax revenues currently levied from the properties at 701 Welch Road, 701 A,
C, and D Welch Road, 701 B Welch Road, 703 Welch Road, and 1101 Welch Road will be losl.
However, property tax revenues added by the new medical office building at the Hoover
Pavilion site and the added leasable space al the existing Hoover Pavilion building at 211
Quarry Road will more than offset the losses.
Stanford Hospitals and Clinics
From Table 2, reflecting the results for SHC, it can be seen that the one-time net revenues are
estimated at $4.7 million, with an additional $7.6 million generated in City of Palo Alto impact
lees and $408,908 generated in PAUSD impact lees. The annual net fiscal impact at buildout is
estimated as a deficit 01 $6,963, which converts to a surplus 01 $16,829 when SHC is credited
with use tax payments on applicable taxable purchases for existing operations.
Lucile Packard Children's Hospital
The results for LPCH, presented in Table 3, indicate a one·time net revenue estimate 01 $2.6
million, with additional City of Palo Alto impact fees of $2.3 million and PAUSD impact lees of
$207,505. The annual net fiscal impact at buildout is estimated as a deficit of $99,692, which
becomes a deficit of $99,224 when LPCH is credited with use tax payments on applicable
taxable purchases for existing operations.
School of Medicine
The SaM does not entail any net new development. As shown in Table 4, one-time revenues
anticipated to Clccrue to the City over the construction period total $917,998. No impact fees
are anticipated given the lack of any net new square lootage. Upon lull completion, the net
revenue generated will tolal $64,278 per year, associated with increased on-site taxable retail
sales and utility users tax.
Non·SUMC
The non·SUMC category is included to present revenues associated with non·SUMC
employment in the medical office space at the Hoover Pavilion site. This category does not
include construction of additional square footage because the square footage is attributed to
the SUMC entity thai will own the buildings. Table 5 shows thai net revenue will total $2,854
per year, associated with employee spending and revenues from lines and penalties. The
annual net liscal impact is eslimated as a deficit of $25,457.
SUMC PROJECT FISCAL IMPACT ANALYSIS 43 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD SLliS
Summary
In summary, on on annual basis, the SHC and LPCH camponents of the SUMC Project are both
projecled 10 generate a small annual deficit to the City of Palo Alto General Fund upon full
buildout, while the SoM camponent will generate a slight surplus. The deficit for SHC converts
to a surplus when the SUMC Project is credi1ed with use to. revenues generated by spending for
existing operations assuming SHC obtains a use tax dired payment permit as requested by the
City of Polo Alto. However, even if these additional use tax revenues are not credited to the
SUMC Project, the large one-time revenue benefits generated during the construction period
assuming project contractors and sub-contractors obtain seller's subpermits for the construction
project will provide a substantial and significant surplus to the City of Palo Alto that. will far
outweigh po1ential deficits.
SUMC PROJECT FISCAL IMPACT ANALYSIS 44 FEBRUARY 2009
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
ASSUMPTIONS AND GENERAL LIMITING CONDITIONS
CBRE Consulting, Inc. has made extensive efforts to confirm the accuracy and timeliness of the
information contained in this study. Such information was compiled from a variety of sources,
including interviews with government officials, review of City and County documents, and other
third parties deemed to be reliable. Although CBRE Consulting, Inc. believes all information in
this study is correct, it does not warrant the accuracy of such information and assumes no
responsibility for inaccuracies in the information by third parties. We have no responsibility to
update this report for events and circumstances occurring alter the date of this report. Further,
no guarantee is made as,to the possible effect on development of present or future federal,
state or local legislation, intluding any regarding environmental or ecological matters.
The accompanying projections and analyses are based on estimates and assumptions
developed in connection with the study. In turn, these assumptions, and their relation to the
projections, were developed using currently available economic data and other relevant
information. It is the nature of forecasting, however, that some assumptions may not
materialize, and unanticipated events and circumstances may occur. Therefore, dctual results
achieved during the projection period will likely vary from the projections, and some of the
variations may be material to the conclusions of the analysis.
Contractual obligations do not include access to or ownership transfer of any electronic data
processing files, programs or models completed directly for or as by-products of this research
effort, unless explicitly so agreed as part of the contract.
This report may not be ,used for any purpose other than that for which it is prepared. Neither
all nor any part of the contents of this study shall be disseminated to the public through
publication advertising media, public relations, news media, sales media, or any other public
means of communication without prior written consent and approval of CBRE Consulting, Inc.
CBRE CONSULTING, INC. CBRE
CB RICHARD ELLIS
APPENDIX: EXHIBITS
e..hmit I
Sumtl1Ql')' 01 SUMC FaciUIies _09 and Planned Projad Desaiption, 2007, 2015 and 2025
SUMC Project ."",1 Impact AnaIj$is
&i:sting Constrvdion AdTvitv 2009~201S
Sq. FI, ilUlIi -Not""""""
"...."" I"'" (1) (2007) Sq. Fl. Sq. Ft. Sq, FI. (21
SHe Ma;n SITe
Hospital 788,232 1,100,000 0 1,100,000
C/ini.:: J Ml\'dlr.:al Office 6581883 0 140,1001 ~O,iOOj "'-, 1#7,115 1,100,000 (.40f l00) 1,059,900
?He !:!oover !3ci!.ien ~f&
ami<;; / MOOk;Qi Offi~ 84,230 0 0 0
MeditCIl Office 0 60,000 0 00,000
~/Shops 13,831 0 )13,8 31 i {l3,S3l l
"'''''''"' 98,061 60,000 (13,ll31) 46,169
~
Hoopa.! 788,23:2 1,100,000 0 16 1(0)lOO _01
756,944 6OB!!!! ~l931~ 6~ ....... , 1,545,176 1.160,000 (53,931) 1~106,069
j,f!d:!
Hoop"" 274,700 471,300 0 471,300
ClInic! Medical Office 79,600 50,000 179•8001 !29!800l
"'''''''"' 354,500 521,300 (79,600) 441,500
2015
IMIdout
Sq. ft. (3)
1,88$,232
611V83
2,507,.015
84,230
00,000
0
144..230
1_,23:2
763~13
2,651,245
746.000
50t OOO
796,000 ------------------------------------
lio!1
Raaarch / laboratory 467,203 185,.(100 {6S.798J 119;202 :?86,405
TOTAl 2,356)!79 1,866,300 (199,529) 1.66h.771 ,-------
Construction AdMtv 2016--2025 2025 --Not Chang. -Sq. ... Sq. Ft. Sq. FI. (2) Sq. FI. (3)
0 {356,B75) (356,875j 1,531,357
429aQ:Q j30S.176! 120,824 739,607
429.000 (665,051) (236,051) 2,270~964
0 0 0 84,230
0 0 0 60,000
0 0 0 0
0 0 0 144.230
0 (356)175) (356,&7S! 1,531,357
429tOOO e2!t176) 120~ 883!!;7
429.000 1665"") (236,051) 2,415,194
0 0 0 746,000
0 0 0 SOtOOO
0 0 0 796,000 --------------------------
229,977 (349~i79! 1119,202) 467.zo3
658,977 p.o14,23O) (355,253) 3,67&,391
----
So"'rT;$S: SUMC Apj:>flO.'Jlion, "Part 3 _ Proj«t OescripflOFi" f1IYised ~r 11, 2008 (~C'rty of Palo Aito's ~); Stanford University land, Buildings and Real €slate; ond CBRE Comviling.
(l) Acronyms l'Iond for Stanford Ho!1pflol and Oinia ~SHC), Lucile ~ Children':i Haspitol {LPCH), ond Storrlord School of Medicine (SoM):.
(2) Cak",lafeod by s\.lbtrodlflg 1M -demolished sqVOTe footn!;pl from the b<.ll'\t squQrfI footnge.
(3) C,IJ;lJlafeod by odding the wmng sql.lQrofoa!og~ Qrld frw nat chenge !iq1JQ!'9 rootage.
(4) CoIJ;lJIat9d by odding ngt dlonge sql.lOr9 footnS-for 2009-2015 end 2016..2025.
2009~2025
Not Chang.
Sq. Ft·!41
743,125
$0,724
823,849
0
60,000
P3,831 t
46,169
743~125
1'16S
870,018
471.300
129 .... 1
441,.soo
0
1,311,518
CBRE~g,:U19/2Q09 N:\1~~OO1\1007043S!onIord\Wo<ki"lJ D-..mctoIII~C "''''''''' /rnpQdJ107.oh
c.nibit2
Oetoil«f SUMC FOa1ilios I'mIing and 1'1_ """'" Doocriplia", 2007, 2015 and 2025
SUMC Proi"" ""'" Impa<t Ana"""
....... ConsIM:IionQ~2015 :201. Conmudion AdMIv 201 &.202.5 202S ...,. .....
t:2OO7l Built H.I Ch:rrp 'oAdouI IIWl tlomoI ..... .... """"'" 8.1dout .... """"'" """''' u.. Sq.'" ...... ... "-1% ... ) Sq .... ... " ...... (Sq. ft.) 5q. Fl. (Sq. ... )
SHe Mcisl Sile
1959 ~I-Ea:st/W~e~! HO$pi'!ol 133.025 Q 133.025 (133.,025; (133.025) Q [133,025l
1959 t-b-pikll -E,qstjWeWCQre!l~o:n_U c:linicIMedk.ni Ofllica 308,176 Q 300,176 (308,176) (308,176) 0 (lOS,176l
Hospitcl McMemizoIion Pro;ect
_lIoI
431,280 Q 431,280 0 431,280 Q
'''''Y -.,. 77 Q 77 0 77 0
Slake Wilbur Clink CUnic;/lI'wdicol ~ 73,100 0 73,100 0 73,100 Q
AI.'Ml:nr;'4d Madidne Cam. Clini(/~l Oftic& 224,836 0 224,836 0 224,836 0
801 Welch Rood Oinit;/~I Office 12,671 0 12,671 0 12,671 0
N_SHC~ -0 1,100,000 1,100,000 1,100,.000 0 1.100..000 1,100,000
~ SHe ~i«I:l Off'ic;. Ornic/M$dioal Of&e 0 0 0 429,000 429,000 429,000 429,000
1101 wekhRQQd Clinic/.M$dicol O!ka 40,100 \40,100) (40',100) 0 0 0 (40.100)
Core ~pansion (1973) HO$prtol 223&50 Q 223,850' fg23,850! g23&\~l 0 ~223~
T¢lQI SHe MtlinSftt} 1.447,115 1,100,000 (40,100) 1.059,900 2.S07,015 429_ l66S,051) (236,OSl} 2,,270,964 823.849
~c I btwer fll!!'lion SiI9
HOO¥$/'. Main Building Clfni<:/lVr.aditcal ~ 84;230 0 M.23O 0 84,230 0
~r-~ St"",.._ 13,831 p3.B31i (13,83l) 0 Q Q (13,.831)
Mediall Offit;e ~ Comfnl4lity f"rodic:a Medit;al<.:>fllo:l 0 60,000 6O.!lQQ 60,000 0 60,000 6Ol!00
1ok11 HOQ"I(f( Pov11ion 9$,061 60,000 (13,831) 46,169 144,230 0 0 0 144,230 46.169
!.f9:!
Mom H\:)$pital HO'$pital 274,700 0 274,700 0 274.700 • ~ LPOi Hospilol -0 471,300 471,300 471.300 0 471,300 471,300
New LPCH CliniclMudiaJI Offic:e Oink/Medicaf Offlo::e 0 50.000 50.000 SO,OOO 0 50,000 50,000
701 wt»t;h Rood Clif\WMedicol Offi", 56,300 (56,.300) ("''''001 0 0 0 {56.aOO)
703 W$kh Rood Clink/Medicol Offi«l 23 j 5oo !23 a i3 3 eOQj 0 ~3aQQl
T""" Ll'CH 354,,500 521~00 179.aoo1 441;.500 796,\J'OO .... ,-"'"
:i!;i,!
FOI.mdatioo in Mladk:ine 1 Resean:h/loborotcry Q 185,000 185):100 185,000 0 185_ 1a5,.{)OO
~iflM<:tdkioe2 Researchllo~ 0 0 0 120,000 . 120,000 120,000 120,000
~fI in Medk:inE 3 """",,,IV""""""'" 0 0 0 109,977 109,977 109,977 109,977
Gront ~~ 151.982 0 151,m {151,982) (1S1,982f 0 {151,982)
""'" ~-84,i17 0 84,717 (84,717) \84,717) Q {84,717)
l,oo RcwJtchllaborol<:q 112,.480 0 ,12,.48Q \11~SOj {112.48O) 0 (112,.460)
""""'" ~rch!LQborutcry 65,798 [6$,798) (65,798) 0 0 0 (65J98)
NJ5,: 8\111ding """""'IV""""""", 5:2t226 0 52,226 0 52,226 0
TdlJl ScM ~7,2Q3 185,000 (65,798) 119.202 586,.405 229,977 {349,179) i1i9.202i 467,203 0
TOTAl 2.366,879 ,,.,...-1'99...., '.-;T1' ',G33.650 658/177 (1,014.230) (;155.253) 3.67~ 1,311,518
Sour.:w; SUMC Applit.xitioo, "Pot; 3 _ Projod DI!:Iit;ription~ ~ Docembef 1 'I, 2008 \poi1f City of Pm"" Alto's ~; Stanfotd UI'I;"'rs.ity Land, -Sulldil'lgS l:md Rool &tc.te;.and caRE Consulting_
cmC_ ..... $.2!191'lOfR N:\r~\2Wl\l0D704'3~Woo.il!g~~fil<:d:Jmpoq.R07.lb
Exhibit 3
Summary of SUMC Facilities Square Feet, 2007, 2015 and 2025
SUMC Proiect Fiscal Impact Analysis
Net Change (Sq. Ft.) (1)
SUMC En1iIy 2009-2015 2015-2025 2009-2025
SHC (Main Si"') 1,059,900 (236,051) 823,849
SHe (Hoover Pavilion Site) 46,169 ° 46,169
Subtotal -SHC 1,106,069 (236,051) 870,018
lI'CH 441.500 ° 441.500
SaM 119,202 (119,202) 0
TOTAL 1,666,771 (355,253) 1,311,518
Net~. Ft. for Right Sizi!lll Illl Buildout (Sq. Ft.) (I)
I'e..:enlago of
Sq. Ft. Net Chango 2007 2015 2025
320,000 (3) 39% 1,447,115 2,507,015 2,270,964
° 0% 98,061 144,230 144,230
320,000 37% .1,545.176 2,651,245 2,415,194
126,000 29% 354,500 796,000 796,000
° 0% 467,203 586,405 467,203
446,000 34% 2,366,879 4,033,650 3,679,397
Sources: Exhibit 1; SUMC Appltcationr ftPort3 -Proiect Oesc;.riptioo·, Table 3-2, revised December 11,2008 (per City of Polo Aito's websitG); and CBRE Consulting_
(I) So. Exhibit 1.
(2) From SUMC Applicotion.
{3} Includes 295,000 square feet to convert and support the current inventory ofsingl.bed and semi-private rooms to all single-bed rooms and 25,000 square feet for the undersized
emergency department shared SHe and lPCH.
CBRE Consulring, 2/19nOO9 N:\Tl:'IQm-Sedwoy~\2007\1007043 Stonfcm\Working [)o(:umtmts\Modef\SUMC Fiscollmpad.R07.x1s
Exhibit 4
SUMC facilities Pati/1lnt Visits and Employment Estimates, 2006, 2015 and 2025
SUMC Praject fiscal Impact Analysis
Projected Projected NellnCre<lse
Item
Hospital Patient Visits (1)
Annual Outpatient Visits
SHC
lPCH
TOTAL
Annual Inpatient Days
SHC
LPCH
TOTAL
Average Daily Census
SHC
lPCH
TOTAL
Employment (2)
SHC
LPCH
SoM (3)
Non-SUMC
TOTAL
2006
403,885
107,363
511,248
132,182
70.752
202,934
362
194
556
5,240
1,666
2,823
151
9,880
2015 2025 2009-2015 2009-2025
470,923 572,949 67,038 169,064
138,893 153,349 31,530 45,986
609,816 726,298 98,568 215,050
150,835 169,749 18,653 37,567
85,978 15,226 39,134
236,813 33,879 76,701
413 465 51 103
236 301 42 107
649 766 93 210
6,274 6,562 979 1,251
2,609 2,655 850 892
2,823 2,823 0 0
257 257 100 100
11,963 12,297 1,929 2,243
Sources, SUMC Application, "Part 5 -Demographics and Operations" revised December 11, 2008 (per City of Palo
Alto's website); Keyser Marston Associate., Inc.(KMA), "Droll Housing Needs Analysis, Proposed Expansions;
Stanford University Medical Center, Stanford Shopping Center," June 2008; and ceRE Consulting.
(1) Estimates of hospital patient visits ore provided by the SUMC Application. Hospital visitorship is proiected to
stabilize in 2018, at the levels shown lor 2025.
(2) See Table 1·3 ("Projected Increose in Employment and Adjustments for Pari Time') of KMA's report for
employment figures. Employment figures are adjusted to account for part time employees by weighing part lime
employees based on their percentage of a full time schedule. Estimates are rounded 10 whole numbers.
(3) According 10 KMA, replocement of Ihe existing SoM facilities i. not projected to result in an increase in
employment.
caRE COlisultins. '){19/2009 N;\Taom·S-edwoy\Projeds\2D07\1001043 Stanford\Warking Documants\.W!odel\SUMC fiscal impad,R07 .xls
Exhibit 5 .
Hotel Nights Generated by SUMC Expansion, 2007, 2015 and 2025
SUMC Project Fiscal Impact Analysis
SUMC EnIiiy/l1em
Jggj
Inpatient Days {1}
Hatel Nighls from LPCH (2)
Hatel Nights as Percent of Inpatient Days (3)
SHC
Inpatient Days (1)
Hotel Nights as Percent of Inpatient Days (4)
Hotel Nights from SHC (4)
TOTAL -Hatel Nights
2007
70,752
4,592
6%
132,182
3%
4,289
8,881
y"",..
2015
85,978
5,580
6%
150,835
3%
4,895
10,475
2025
109,886
7,132
6%
169,749
3%
5,509
12,641
NetChonge
2007-2015 2007-2025
15,226
988
18,653
606
1,594
39,134
2,540
37,567
1,220
3,760
Sources: Exhibit 4; Lucile Packard Children's Hospital, Housing Deportment; Stanford Hospital and Clinics, Housing Assistance Office; and C8RE
Consulting.
See Exhibit 4. Inpatient days are calculated by multiplying average daily census by 365 days. Full occupancy would equal the total number of
beds multiplied by 365 days.
(2) Hatel nights estimate for 2007 represerrts the average number of hotel nights for Fiscal Year 2002 through Fiscal Yeor 2007, as provided by
lPCH. Estimates for 2015 and 2025 are based on the inpOOent days projections and the 2007 hotel nighls percen10ge of 10101 visilorship, which
was 6 percent, os shown. Figures are rounded to whole nvmbers.
(3) Percentage for 2007 was calculated using inpatient days and hotel nights as shown. Because future year hotel.toy projections were not
avoilable, it was assumed that the 'Hotel Nighls as Percent of InpOOent Days" will remain constant in 2015 and 2025, at 6 percent.
(4) Hotel night figvres were not available for S1onford Hospital and Clinics. The only information available from SHC wos the number of pOOerrts
that were given housing assistance. This figure was not sufficient for estimating hotel nights, because it does not account for the lype of housing
(hotel, apartment, or other housing), the number of rooms provided, or the number of nights. Research conducted by CBRE Consulting 10
determine the relOOonship between inpotient days and hotel nighls generated at o1iher hospitals of equal regional caliber to SHC also did not
provide such informOOon. CBRE Consulting therefore conservatively used half the "Hotel Nighls as Percent of Inpatient Days' from LPCH, as
shown in this exhibit, to estimate the hotel nighls from SHC. Figures are rounded to whole numbers.
C$Ul£Cons.A!ina. 2/19/7009 N:\T~ieds\2'OO7\!OOr0.:3~~Workif;!gDoeVl'llffl'!ls~UMCF=I!rnPQd.IW7.ih
Emibit 6
Cily of !'cia Mo and Sphere of Influence Demographics, 2005-2010 and FISCtd Yea", 2005-2006 iO 2008·2009
SUMC Project Rscallmpact Analysis
9!!:of 1'<>10_ 1'<>10 _ Sol .... of IntI_ ........, Day-lime Pop.IaIion Slarrford Tctal Dc:Iy-.lime
V .. , Population HouoeMkk -Total Jobs Pop.IaIion Ho. Iddt in Households -Population Total Jobs PopuIafion
Calender Yoof
2005 61,650 (I) 27.522 (6j 2.2 111) 75,610 112) 9'1.455 (14) 28,282 115) 62,220 (16) 14,458 (ll) 76,678 (20) 95,710 (12) 124.533 (14)
2006 620424 (I) 27,642 (7) 2.3 (ll) 75,968 (13) 1000408 (14) 28,613 (15) 65,810 (16) 14.455 (17) 80,265 (20) 96,212 (21) 128,371 (14)
2007 62.615 (1) 27,763 {61 2.3 (lll 76.326 113) 100,778 (14) 28,948 {15) 66,580 (16) 14,476(17) 81;056 (20) 96,714121) 1290413 (14)
2008 62,846 (2) 27,888 I"l 2.3 {11) 76.684 (ll) 101,188 (14) 29,078 (15) 66,sao (16) 14,570 (18) 810450 (20) 97,216 (21) 130,058IU)
2009 63,150 (2) 28,014 (8) 2.3 (ll) 77.042 (13) 101,671 114) 29,209 (15) 67,181 (16) 14.670 (18) 81,851 (20) . 97.718 (21) 130,710 iU)
2010 63,424 (2) 28.126 (8) 2.3 {11) 77,400 (12) 102.124 (14) 29.341 (15) 67,483(16) 14,770118) 82,253 (20) 98.220 (12) 131,363 (14)
Fiscol Year
2005-06 62-148(3) 27.58 2(9) 2.3 (ll) 75,789(9) 100,043 (14) 28,448 (V) 64,015 (9) 14,456 (19) 7B,471 (20) 95,961 (9) 126,452 (U)
2006-07 62,615 (3) 27,703 (10) 2.3 Ill) 76,147 (10) 100,689(14) 28,781 (10) 66,195 (10) 14,465 (19) 80,660 (2Q) 96,463 (lO) 128,892114)
2007-OB 62.731 141 27,826141 2.3 Ill) 76,505 (4) 100,984 1141 29,013 (4) 66,730 (4) 14,520 (19) 81,250 (20) 96,965 (4) 129,733 11.)
2008-09 62,9'18 (5) 27,951 (5) 2.3 (11) 76,863 (5) 101.430 (14) 29,144 (5) 67.031 (5) 14,620 (19) 81,651 (20) 97,467 (5) 130,385 IU)
Nates: Continued on nEr.ld' poge.
CaRfCo",vlting, 2119fW(19 N,\Tsam~\Projedt\2Oor\l007(t43 Stanfcrd\Wril'l9 ~\Model\SUMC nlmli fmpoct.R07 ~s
Bmibit 6, continued
City of Palo AI10 and Sphere of Influence Demogtaphics. 2005-2010 and FiScal Yea", 2005-200610 2008-2009
SUMC Prafect Fiscallmpac:t Analysis
Sources: City of Pedo Alto, Department of Planning and Community Environment; City of Palo Afto ·200S~09 Propesed' Operating 8ud~; State of California, Department of finance (DOF), ~E-l
Population Estimates for Cities, Counties and the State with Annual Peroent Change -JQtlvary 1,2006 and 2007", Soaomento, Ccliifomia, Muy 2007; Association of Bay Area GO\Iernments
(ABAG), "Projections 2007"; Stcnford University Land, Bvildings (md Reol &tate; $tQnford University; -Stanford Fads 2008·, and CSRE Consulting.
(l) DOF dattl: provided by the City of Palo Alto Department of Pfanning and Community Environment.
(2) Estimates provided by the City of Polo Alto Deportment of Planning and Communny Environmem_
(3) Demographic'duta from poge 293 of the City of Palo Alto's "20(}8-09 Proposed OparoiTng Budger. FismI)'«Ir 2006~2007 populot'ion figure c:onsistent with 2007 DOF January 1> 2007
population estimate, i-e_, the mid-poim of the fiscal year.
(4) CBRE Consulting ~1'I'lQtes based on 2007 and 2008 overage; figures Or>? rounded.
(5) CBRE Consulting estimates bosed on 200S and 2009 overage; figures 'Ore rounded.
(6) City of Palo lillo's _I housing unil> from DOPs M<ly estim __
(7) CBRE Consuhing estimate based on the 2005 and 2007 data; figur>? is rounded.
(8) The 2008 and 2009 housetdd estimates are cafculat1ild by increasing the previous yea~s estimate by 0.45 pereetrt and tm, 2010 estimate by increa$ing the 2009 estimate at a rate of 0.40
percent pe-r the City of Polo Alto Department of Planning and Community Environment. FI9IJr13S ore roundad'.
(9) CBRE Consulting esnlTIclt$ based on 2005 and 2006 average; ngufC\S ore rounded.
(10) CBRE Consulting estimate based on 2006 and 2007 overage; figures are rounded.
(11) CBRE Consulting es1i1'nQtes bar.ed on dividing population by households; consistent with figures provided by the cay of Polo Alto Department of Planning and Community Environment.
(12) Employment data !rom ABAG "Proiections 2007:
(13) CBRE Ccosulting estimate based 00 annual job growth from 200510 2010 of 358 iobs.
(14) Day-time population estlmated by adding population and 50 percent of tatal jobs; 6g1J1'eS are rounded.
(15) Spher>? of Influence (SOl) household estimates are consistent with CBRE's "Draft Stanford Shopping Center Expansion Economic Impact/Urban Decay Analysjs·~ June 2008. The 2005 esfimcrte
of SOl households i$ the 27,522 households that the DOF estimates ¥Vera in the City of Palo Alto In 2005 plus the 760 households that Stanford Universrty Land, Buildings und Real Estote
estimofe$ lived on the Stanford CamptJ$ (port of the Crly of Palo Alto SOl) as of 2000. The 760 figure excludes households living in the Sronford West Apartments because 'those households are
located within City boundaries and ore already counted as such. Households in 2006 are interpolated between the 2005 estimate and a 2007 estimate. The 2007 estimate is the DOPs May
2007 estimate of housing units in the City of Polo Alto plus the 760 households living on the Stanford campus as of 2000 plus 425 new hovsing units that Stanford University land, Buildings and
Real Estate estimates ~re burlt on the Stuniord campus by the beginning of 2007. Annual growth rates from 2008 to 201 0 for households in Palo Alto's SO) are fom the City of PQIo Aftols
Deportment of Planning and Community Environment. The 2008 number of households in the SOlis estimated by incre:osing the 2007 estimate by 0.45 percent IlS provided "by the City of Polo
Alto Oepcrtl'l'Kmt of Planning and Community Environment; the 2009 figure is estimated similorly. The 201 0 number of households in the SOl is estimated by increasing 'the 2009 estimate by
0.40 percent as: pn:::wided by the Qy of Polo Alto Department of Planning and Communrty Environment. This approach was l"e\Iiewed and approved by RoIond Rivera of the City of Palo Alto
Department of Planning and Community Environment.
no} Estimated by multiplying SOl households by City of Pedo Alto persons per household estimCft<a. Figures are rounded.
(17) CBRE Consulting estimate based on school calendar year data provided by Stunford University, excluding the students living in the new 425 individual student housing units buih by the
beginning of 2007, which are olrQQdy induded in thQ SOl households estimate; figures are rounded.
{IS) CBRE Consulting estimate based 01'1 annual growth in student population from school years 2000 to 2007 of 100 students, based on data frO(J'"j Stanfotd Unrvef'Sity.
{19) Demographic data provided by Stcnford Univ$t"Stty, ew.duding the students living in the nEfW 425 individual student housing unitS built by the beginning of 2007, which we alreody included in
the 501 households estimate. Estimates O$SUme a school calendar year is: the equivalent of 0: fiscol yeor.
(20) CBRE Consulting estimate based 01'1 the sum of population in households o:nd Stonford stu~.
{21} caRE Consulting estlmCft<a based on annual rob growth from 2005 to 2010 of 502 jobs, bosed on data fromAJ3AG.
C6ft£ Conwtting, 2/191'2009 N:\T~\Projad$\2007\lOO:r043 Stanford\Working ~\M~UMC flsrollmpod.R07 At
Exhibit 7
SHC Use Tax Payments, Fiscal Years 2004-2005 to 2006-2007
SUMC Project Fiscal Impact Analysis
Fiscal Yeor Fiscal Yeor FiscalYeor
Payment Month (1) 2004-05 2005-06 2006-07
September $35,657 $52,513 $76,854
October $47,543 $65,477 $61,864
November $21,222 $39,347 $112,108
December $22,573 $38,633 $67,372
January $48,001 $57,840 $86,888
February $35,175 $91,244 $85,727
March $23,100 $36,333 $45,616
April $36,775 $65,414 $109,194
May $28,828 $58,752 $77,996
June $79,246 $81,971 $73,412
July $45,294 $28,571 $47,881
August $50,435 $45,002 $47,897
Total Paid $473,848 $661,098 $8n,811
Sources: Stanford Hospital and Clinics, Finance Department; and CBRE
Consulting_
(1) Payments reflect previous month's use tax net of estimated refunds or
actual refunds, if any_
CBRE Consultingl 2/19/2009 N:\Team-Sedwoy\Projecfs\2007\1007043 Slanford\Working Documents\Model\SUMC Fiscal impoct.R07,x]s
Exhibit 8
lPCH Use Tax Payments, Fiscal Years 2004·2005 to 2006·2007
SUMC Project Fiscal Impact Analysis
Fiscal Year Fiscal Yeor FiscolYeor
Payment Month (1) 2004·05 2005.06 2006·07
September $8,590 $6,691 $3,659
Oelober $8.,298 $3,478 $3,171
November $10,169 $5,668 $2,578
December $5,600 $1,757 $493
January $6,365 $3,782 $4,364
February $3,004 $3,597 $2,929
March $4,396 $4,150 $2,575
April $6,065 $5,535 $2,819
May $2,603 $4,023 $3,817
June $3,579 $4,869 $2,033
July $4,329 $5,385 $2,565
August $3,562 $6,383 $2,916
TokJl Paid $66,561 $55,320 $33,919
Sources: Lucile Packard Children's Hospital, Finance Deportment; and CBRE
Consulting.
(1) Each payment is for the previous month's use tox,
caRE Consulting, 2/1912009 N:\Teom·Sedwoy\i'roj&I,\2007\1007043 Sfonford\Working Documenl.\Mod.I\SUMC Fiscollmpoct.R07,xl.
Exhibit 9
Use Tax Direct Payment Permit Holder RebaIe Programs in Caliliomia
September, 2008
SUMC Praject Fiscollmpad AnaljlSis
c;ty
EISegundo
long Beach
los Ange1es
Son Diego
Tulore
-",-
50 petamt of the addmonol use tax to the city
is appfied as a credit towards business flcense
<:>:>$Is,
NegOhated cosQ..by~c;ose. for a new bus!l'~
planni09 to mO"a into long Beach, iha
business mare may be os high as 65 percent
of the additional City J1iJVenuet with the
f'9mairung 35 percent going to the City. For
companies already located in Long Beach,
the revenue is generally split 50/SO between
the business and the City.
Permit holder re<:eives 20 percent of1he
added revenue to the City. los Angeles is
pursuing legislation that will require
COfltrodors to hove direct pay perrniis for
g<Mm1ment con1rods (they will still ~
the 20 percent rebate).
Co$:h rebate of 25 basis points on the total
sale or purch0$9: price, or 0 buSiness
tax/de'V&lopment fee credit of 45 basis points
on the totQl sola or purchase prrce.
Generally 50 p0fCeflt, but vories ond may be
as low Q$: 10 percent.
Qvalilkolions
Any business§ ossuming it poy$ a U$G tax.
Program is nEl¥.'. so no standards hove been
established for the revenue sharing or other
serviO;)$.
Company must hl:We had purd10ses of at least
$500,000 in the 12~month period prior to
applying for the permit (stondard for all
incentive progroms in Los Ang_).
firms that choose'lbe business ttl)( ·crecfrt may
use it to poy thQir annual business liean.se tax
and/or fees from new faolity development.
Credit may be ncnshed in R at 0 later date.
There are no specmc qualifications; but r~ent
porticipanb had budgef':$ between $20 and $40
million. Usually new or expanding businesses
porticipa1e as on economic devek>pment
benef<l,
C;ty As.;m,,,,,,
ISPecffic Consulfantll
None.
No established program, but
City is open to negotiations.
City pl'QYldes a tax
consuttont.
v_
Program_
EstabrIShed
N/A
2007
2004 or 2005
City provides a tax 2001
consultant.
crty pn:.wides a tax consultant N/A
but passes the cost through to
the company,
Number 01
Companies that
HawlJsad Program
"'Alar
"A ""'"
15 or 16 sinee inception
2
Sources: EO':momic D0Velopmeot Offices of EI Segundo, Long Beach, Los Angeles, Son Diego, ond Tulare; ond CBRE Consulting.
CSRE Coru;odIina. 2119/2009 N;\T~y~\2OO7\l007043 S+anliJrd\WOtiIing ~uMC fisaJlimpod".Ff)7.xk
Exhibit 10
SHC and Subsidiaries Operating Expenses, Fiscal Years 2005-2006 and 2006-2007
In Thousands of Dollars
SUMC Project Fiscal Impact Analysis
Fiscal Year 2005-2006 Fiscal Year 2006-2007
Item Amount Percentage AmoUn! Percentage
Salaries and Benefits $595,7B9 43% $664,522 46%
Professional Services $24,274 2"A, $23,609 2%
Supplies $213,012 16% $236,010 16%
Purchased Services $370,482 27% $368,874 25%
Provision for Doubtful Accounts $58,930 4% $46,175 3%
Depreciation and Amortization $39,372 3% $44,934 3%
Interest $20,848 2% $22,988 2%
Other $100,804 7% $106,029 7%
Expense Recoveries from Related Porties [$52,371) -4% [$65,437) -5%
TOTAL $1,371,140 100% $1,447,704 100%
Sources: "Stanford Hospital and Clinics cnd Subsidiaries Consolidated Financial Statements, August 31 ,2007 and
2006~'; and CBRE Consulting.
CBRE Consulting, 2/19/2009 N,\Team-Sedway\Prajeds\2007\ 1007043 Slonfard\Warking Documenl>\Madel\SUMC Fi.eollmpact.R07 .xl.
Exhibit 11
LPCH Operating Expenses, Fiscal Years 2005-2006 and 2006-2007
In Thousands of Dollars
SUMC Project Fiscal Impact Analysis
Fiscol Yeor 2005-2006 Fiscal Year 2006-2007
l!em Amount Percentage Amount Percentage
Salaries and Benefits $226,952 49% $252,507 43%
Professional Services $?.Q17 2% $10,306 2%
Supplies $30,052 7% $35,934 6%
Purchased Services $132,564 29% $159,032 27%
Provision for Doubtful Accounts· $9,641 2% $11,137 2%
Other $36,553 6% $101,023 17%
Depreciation and Amortizalion $16,957 4% $19,333 3%
TOTAL $461,736 100% $569,272 100%
Sources: "Lucile Salter Packard Children's Hospital at Stanford Financial Statements, August 31, 2007
and 2006"; and CBRE Consulting.
caRE Con,ulting, 2/19/2009 N:\Team.S.dway\Proiecls\2007\ 1007043 Sionford\Working Documenl,\ModeI\SUMC Fiscallmpacl.R07 .xIs
Exhibit 12
Calculation of City of Polo Alto Sales and Use Tal< Revenues Assuming SHe and LPCH Use Tal< Direct
Payment Permits
Fiscal Year 2006·2007 Adjusted to 2008 Dollars (1)
SUMC Project Fiscal Impact Analysis
FY 2006·07
Total
Spending (2)
Taxable
Spending (3)
Prospective City Sale. and
U.e Tax Revenue. !41 (51
Entity I Vendor l.ocotlon
SHC
Polo Alto
Other California (7)
Other U.S. (9)
International
Tatar
bEQ:!
Polo Alto
Other California (7)
Other U.S. (9)
International
Total
TOTAL
$375,000
$155,180,000
S80, 110,000
$345,000
$236,010,000
$26,000
$29,480,000
$6,326,000
$102,000
$35,934,000
$271,944,000
$0 $0 (6) $0
$91 ,645,000 $0 (8) $0
S13,330,000 $133,300 (10) $139,793
$0 $0 :10) $0
$104,975,000 $133,300 $139,793
$0 $0 (6) $0
$14,042,000 $0 (8) $0
$452,000 $4,520 (10) $4,740
$0 $0 PO) $0
$14,494,000 $4,520 $4,740
$119,469,000 $137,820 $144,533
Sources: Stanford Hospital and Clinics, Finance and Purchasing Department.; Bureau of labor Statistics (BlS); and CBRE
Consulting.
(1) Fiscol year .tarting September 1, 2006 and ending August 31, 2007.
(2) Agreed to financial .Iolement •• upply expense and excludes .alaries and benefits, payments to School of
Medidne/Stanford University, capital payments such as construdion contracts and purchases of equipment qnd professional
services for tempol'Oty staff and outsourced services. Amounts by location basad on extracts from procure to pay system and
general ledger payment •. Amounts are not greater than $500,000.
(3) Agreed to procurement .ystem extract and extroct of sole. tax payments.
(4) Fi.cal Year 2006·20071oxoble spending figures are inflated to 2008 based on the con.umer price index for the Western
U.S, with an inflation rate of 4.87 percent, derived from the BlS information from June 2007 to June 2008.
(5) Figures are rounded to dollars.
(6) Sal .. tax revenues will accrue to the City of Polo Alto's General Fund from Palo Alto sales.
(7) Excludes the City of Palo Alto. Spending primarily rel"Ies to physician specialty items thot are non· taxable.
(8) U.e tax revenues will not aCcrue to the City of Polo AlIa'. General Fund from Other California sales.
(9) Exclude. the State o! Coli!ornie.
(10) Use tax revenue. will accrue to the City of Polo Alto'. General Fund from Other U.S. and International soles.
CBRE Consvhina, 2/19/2009 N:\Team-Seclwoy\Projed,\2007\ 1007043 Stanford\WorkiflQ Dowmenle\Model\SUMC Fiscollmpod.R07 ,xl.5-
Exhibit 13
City of Palo Alto Sales and Use Tax Revenues
Patient-Based Calculation Assuming SHC and LPCH Use Tax Direct Payment Permits
In 2008 Dollars
SUMC Project Fiscollmpact Analysis
2008 Estimated Existing Annuol
Sales and Use Patient Days {2) Tolal Analytical
SUMC Enti1y Tax Revenues (1) Inpalient Outpalient Patient Days (3)
[A I [ B I [C I [D=B+C/2j
SHC $139,793 132,182 403,885 334,125
lPCH $4,740 70,752 107,363 124,434
Sources; Exhibils 4 ana 12; and CBRE Consulting.
Sales and Use
Tax Revenues per
Patient Day (4)
[E =A/D]
$0.42
$0.04
(1) See Exhibit 12. This reflects !he soles and use lax revenues !hat the City of Polo Alto would have received from SUMC in Fiscal
Yeor 2006-2007 if SUMC W<]s!he holder of a use lax direct payment permit at that time.
(2) See Exhibit 4.
(3) For analytical purposes, one inpalient day ""luols two outpalient days, in recognition !hot inpotienls are much more costly to serve
than outpatients given the high cost of overnight visils.
(4) Figures are rounded to the nearest two decimal places.
C6RE COIl$ulling2/1912009 N:\Team-Sedway\projeds\2007\1 007043 S1<Infor<l\Working Documents\Model\SUMC Fis<:ollmp<ld.R07.x1s
Exhibit 14
Incremental City 01 Palo Alto Solos and Use Tax Rev9nuos, 2015 and 2025
Patient-Based C<lk:ulmion """",,,ing SHe and LPCH U ... Tax Dinod Payment Permils
In 2008 Dallal'S
SUMC Project RSCQllmpact Analysis
SaIEIIS and Use .M .. I .... ltal Annual Salas and Use T=
Tax Rl!w9nVGS P"I" 2009~2015 hlQII!IIllBIllai PQh"unt !22x! 00: 2009-2025 '"""'"""'" -!!!!l! m ----.~!
Entily 1'01;,,",(11
Inpc::rlients o.ApaIionb
(A) [8 ) [el
SHC $0,42 18.653 67,038
IPCH $0,04 15.226 31,530
TOTAl. $0.46 33,879 98,568
Soorcoo: Exhibit$. 4 and 13; and CBRE Consulting_
(11 s.. Exhibit 13,
(2J s.. E<hibit4,
,,,,,,I AnoJ,ti",1 (3)
-Do,. Inpa1isnb
[[) -.B + C 121 IE J
52,172 37..567
30,991 39,134
83 .. 163 76~701
Toto! AnoIy1icol (3) for~ 2009_2015 2009_2025
~ -Do,. SlIMC_J4I
I FJ [G=E+F/21 I)iJ (I~A-D-(l.H)J [J =A'G-(l-H)J
169,064 122,099 20.00% $17,530 $41,025
45,986 62,1Z1 20.00% $992 $1,988
2151050 184,226 2O.oolIi $18,522 $43,013
(3) for analytical porposesr one inpatient cloy eqUQIs two outpotieot dQY$, in recognmon that inpctienti are m .... d; more eostly to serve then ootpO'tients g1ven the high cosf of overnight ",biro; see Exhibft 13.
{41 CERE Consulting GOnMf"'latlvely llS.$utneS that in ~ng with p~ in Qth$r Califomio cities, as documented in &;hibit 9, the City of Palo Alta will reIxtte Q portion of the IJSe taxes coIl~ 0$ Q result of SHe end
lPCH's VSI!t tox dinad poyrno;mI permiJL The ptirpostl of this rebate would 00 ~oryfor the adrninistratiYe burden (l$.'$Q(:iotad with h IJ"A tax di«'ld payment permits. The O&81.ImecI rebate for Qnolytiool pVrpo$es
is 20 percent {at the lower end of cilia with CQt'TlPOrobie pI'09rotT'!$J.
(5f Figorw!W) rovndl!ld to whole dollars.
CeRE O:>m .. JtiI'lS M 912009 N;\TtlQm~~\2007\1007G43Skl!'\fl!lrd\~~~Fi;Q;llmpgd.R07A
Exhibit 15
Calculation of City of Palo Alto Capture of SHC and lPCH Use Tax Expenditures
From &O"n9 Openmon. and Project Operations
F=I Year 2006-2007, 2015 and 2025, In 2008 00110",
SUMC Project fiscallmpad Analysis
110m
Ile_ of AddiOOnaI Ute Tox CapiunId by Palo Alto _119 _ u.. Tox Di_ Poym<mt Pormit
lJs9 Tax. Payments 10 BOE
Use Tax Payment; '" 80", Inflamd '" 2008 (4)
Perwnt of Non-Recurring Expend~
Pert;ent of RsKurring Cqxlnditu!'E$
Uw Till( Po)'fnEI'nfs to SDe from fWcurring Expsndi1vres (7)
Use T Q)( f'oyrn9nts to BOE from !W<:vrring Exp&ndftl.ltH
Sarrtc O:Iro County $Qiss Tax Rats
Deriygd Recurring expenditure!> Ge:nel'lO'fing Oil9d lhe Tox Payments;a BOE (S)
Derived Recurring ecpendrtUf'SS Generating Dlred Usa Tax P<:Jyments to BOE
Estimated Tcxcble Spending Ouis1de Coflfornio (9)
Recurring Expenditures Generating Direc:t Use Twc Poyments QS Percent of Estimated To:mbl$ Spending
Additional Recurring Expencfrtures. POfl!tntiolly Goneronng Direoct Un Ta.x Poyments os Q Result of Use Tax Dirsd" Poyment Permit, Q$ ra~
of Esti~ Taxable Spending
Total Direct Use Tax ~nues frt.:wn EldsJing OperationsA:auming Use T=:Direct Payment Permit
Estimated TQxoble Spending Outside Califomio (9)
Locol Soles Tox Rcrle
Soles Tax Revenues Ac:crving to City of Polo Alto Genoral Ftlnd Assuming Ut;e To}!; Di~ Poyment Parma (12)
PrestJmed SUMC RebQf$ for Admini$ff1'Jtiw Burden (13) .
Use To}!; RElY$nVEr$ Actrving to City of Polo Alto General Fund After Rebate
Notes: Carrtinwd on nwt pags.
FY 2006-2007 Amount (1)
SHe lI'CH
$892,811 (2)
$936,301
27% (51
73%
$683,500
$683,500
8,25%
$S,2S4,S48
$8,284,848
$13,330,000
62%
38% (10)
$13,330,000
I'll
$133,300
20%
$106,640
$33,919 (3)
$35,571
27% (6)
73%
$25,967
$25,967
8,25%
$314,752
$314,752
$452,000
70%
30% (11)
$452,000
1%
$4,520
20%
$3,616
TOTAl.
$926,729
$971,872
27%
73%
$709,467
$709,467
8.25%
$8,599,600 '
$8,599,600
$13,782,000
62%
38%
$13,782,000
1%
$137,820
20%
$110,256
CBitE ComIAing. 2[l9f"l,W1 N;\T~'IOQr\Proill<t$\2oo7\ 1007043 StaI'l'fotd\w01"bng ~\Modol\SUMC FGcollmpad.R07.Jd.t
Exhibit 15, coniinued
Calculation of City of Palo Alto Capture of SHe and lPCH u... Tax Ccpendilums
From Existing Open,1ion. and I'rojecl Operation.
Foscol Y""r 2006-2007, 2015 and 2025, In 2008 [)dIG'"
SUMC Project Fiscollmpact Analysis
'-
Add"lfionai OintlCt I.J$a Tax ~ frt)m &isting Opan:::rtionsAzumirg lJ,s.a Tax Dil'9d Payment Ponnn
Rsl:vrrins Expenditul'9S Geooruting Di11!lCt Use Tax Poymerd$ 10 BOE (t 4)
City of Palo Alto Sal9$ Tax Rote
Sttimerte of Cumtm Crty of Polo Alto ~nerol Fund Use Tax Revon\JQ$ Assuming No Use Tox Direct Poymant Permit (12)
Us.e Tax R&venves: ACcruing to City of Polo AJto GsI'I!&I'ClI Fund After P.ebc::m!l
&/il1'lOte ofC~Cityof PoioAlio General Fund Use TaxR~Assuming No Use Tax Direct Poyment Permit
AnnU'Q1 Adtflfionol Use Tax Revo!"n..le$ to Crty of Polo Alto G$naral Flmd from Exiilting Operotion Assuming Use Tax DJrect Poymant Permit
As a Pel'Oilnt of Use Tax RaYen!../El$ Attruing to City of Poio Alto General Fund After Rebate
0;_ u.. Tax _ ..... fn>m E>donded OporatIomksumi"" u.. T .. Dinod I'aymont Pormit, 2015
Use Tax RsvenI,lG os 0 Result ofSUMC Project Assuming Use Tox Oil'$d Payment Permit, Not of 20 P~CQnt Rebate, 2015 {15t
TOTAL OiAlflCt Use Tax Revenues Assuming Uw TQX Dired Payment Pwmitt 2015
Annual Addmono:! Use Tox ~nves to City of PQlo Alto General Fvnd from:
&i:s:flng Op<trotion .As.wming Use T<»: Direct PoyrMnt ~rmft (16)
Expanded Operation Assvming Use Tolt. Direct POym9nt ~rmit, 2025 {16j
To101
Oimd Usa Tax Re¥enuus: from Exmnded Opemflar"l$ Assuming Use Tox O'imd Payment Permit, 2025
Use Tux R~VEl as 0 Ra.svlt of SUMC Project A$suming Use Tax Oinad Payment Permit, Not of 20 Plifa;mt ~, 2025 (15)
TOTAl. Direct U. Tax ~ Assuming Use Tax Direct Payment Permit. 202S
Annuol Additionol Uso Tax Revenues to City of PoIoAtIQ GlInel'Oi Fund from;
Existing Ope:mtion A:s$uming Use T(lx Dinlld Poym9nt Permit (16)
Expanded Op<trcfiQn Assvming l)sQ T(IX Oi~ Poyment Pem;/t, 2025 (16)
Totol
Notes: Continued on next page.
SHe
$8,284,848
1%
$82,848
$106,640
$82,848
$23,792
22%
$17,530
$23,792
$17,530
$4j;322
$41,025
$23,792
$41,025
$64,817
-Ill
IJ'CH
$314,752
1%
$3,148
$.3,616
$3,148
$468
13%
$992
$468
$992
$1,460
$1,988
$468
$1,988
:l2,4!r6
TOTAl.
$8,599,600
1%
$85,996
$110,256
$85,996
$24,260
22%
$18,522
$24,260
$18,522
$42,782
$43,013
$24,260
$43,013
$67,273
elm!: COfmA1I'I9, 2{19'/2009 N:\T~\2'O07\1007043 Sta~Workirl9 ~\,MoIHI1\SUMC Fl$CallmprxJ..RW..m
&hibilI5, con1inuod
Calculation of Crly of Polo AI10 Capture of SHC and LPCH \Joe Tax Expenall\JrEo$
From Disiing Operotions and /'roioc! Opora6ons
FISCOI Year 2006-2007, 2015 and 2025, In 2008 Dollars
SUMC /'roioc! FlSCClllmpact MaIysi.
Sources: Exhibits 7. 8, 12. and 14; Stanford HO$pltol and Ciinics-, Finonce Deportment; and CBRE Con$uliing,
(l J Unfess sfaI9d otherwise, figul"9S ore b~d on Flsml Year 2006-2007 dctQ.
12) Sea Exhiba 7.
13) Sea bhibit 8.
(4) Fiscal Year 2006·2007 'klxObl& spending ngr.Jt'&S. Offl inflated to 2008 bawd on tho consumer prico index fortlte Wesmrn U.s., with an inflarion rata of 4.87 permnf, dc,riY&d from BLS information
from June 2007 to Juna 2008. Figures are rounded to whale doUot'S.
(5) The SHe non-r«umng ~m.I1'e assumption WQ5 provided by the SHe nnonca Department The$e ex.penditvt'G$ ore considered nan..reeun'ing becouse they O!'e associated with on&-fime capitol
projects such os the f'IEIW Stanford Medicine O~nt Center in Redwood City and ore nat rekrt$d to the at'\nval open::rtions of the hospilol.
(6) Tha onalysis OS$UITWlS that the p9f'CQnt of nan-recurring expencfrhil1i!$ for SHe is appflCOble 10 LPCH.
(7) Cokuksted by multiplying the 73 p&rcanf mcurring expend'rlun!I$ Q$sumption to the usa tax payments to 60E figUI'9. FigUf9Ii are rovnded to whol$ dollo"..
(8) Analy$ls ClSSumes the tatel toxabte cost of ptJrch('lS(! is equal to the total !,ISe tax payment divided by 8.25 peramt, which is 1he $anla Clara CoI.II"ITy solgs tax rata.
(9) The e9t1l'l'Klted taxabla spending figul'9!'li rsHed supply expenditures: and exclude $Clones ond beNfifs. poymenl'$ to School of Medkine/Stomord U1'\iv$rsitt, ctlpitol payrrlilnts $UCh as cons.1rudlon
;:ontrods, and purchate& of equipment and pr0/9ssioOt::lI servicos for mmporory staff and ol../t$Qurced sorvices. Sec ioXable spending from "Other U.S,' vendol'$ in Exhibit 12.
{1O) SHe r&Ct1rnng expGnOrt",res. g9m1rating dired use tax pQyments fo BOE ($8,284,848) rep~nt 62 pen:ent of astimatad SHe taxoble spending ($13,330,OOO). k suchy it is estlmcrted that on
additional 38 pert'6nt of usa tax rtrYe1'\VG$ from SHe sstirnated ft.WJbls spending eovl'd aect'Ue to the C11y of Polo Alto's Genm"J1 F",nd as 0 ('$Svtt of a Vsa tax direct payment permit held by SHe.
(11) I.PCH recurring expenditures: generating direct U$e tox poyrnents to BOE ($314,752) fflPteGent 70 pcarcqntof eS'Iimof9d LPCH twtobte spending {$452,OOO}. los svc:h, it is estimated that on odditionol
30 percent of use tax revel'llJe.ll from t.PCH estimated foJ!.obie spending could oGeni'i3' to the Ccty of Polo Alto'1O General fund 0$ 0 result of 0 !"ISe 'k:Ix dired payment permit held by LPCH.
(l2J Anolys,is Q$$Ufl")El'$ the cay of Polo Alto f9C$~ its 1.00 pef'CGnt SClles tax on the total cost of pun:ho.sM, which are ossvmed to be eqvol to the rotai use1i:lx pQ)'r'Mnt divided b)' 8,25 peromt, which bs
the Santo Clara County SClIreS tox rote.
(13) CBRf Consvfring conse~y QS:$umes that in kMping with pradioos in ather CofifQmio ernes, the City of Palo Atto wiil mbat9 0 portion of the US$ tW!9$ collected os Q result of SHC and LpCH':s: usa
tax direct payment permits. TM purpose of this rebo'te wovid be compen$O'lory for the administrative burden associated with #Ie usa im dirud payment p$n'Ylits. The ossumed rebate for onQlytico!
p~ is 20 p&t'Ulnt (at the !QW9r ~nd of.::iIie$ with QOmparoble progroms). See Exhibit 14.
(14} Analysis ossumos these payrMnts ore opproprial$ly bEking distributed by the BCE f1:ithe Cdy of Polo Alto.
(5) Sea Exhibit 14.
(16) Figures ore rounded to wnote dollors.
CBRE ~ng, 2/19/'1009 N:\T~~7\lOO7043Stanfo!J1\Woding Doo..rmv~SUMC Fis.::oII~,R07"" ,
Exhibit 16
Existing and Proposed Re.enue-Generoling SHe ond LPCH Programs, 2008, 2015 ond 2025
SUMC Project Fiscal Impact Analysis
SHC 1l!9. Fl.} LPCH (Sq. Ft.}
Existing NetO"mge 8uildout E>doline Net Chang ..
Progrnm. (2008) (2009-2015) (I) (201512(25) (2008) (2009-2015) (2)
Cafe!eria 10,000 14,500 24,500 7,200 7,700
Gift Shop 670 1,500 2,170 325 1,200
Pharmacy (3) 0 1,500 1,500 0 lAoo
Other Reteil 0 3,000 (4) 3,000 0 0
TOTAl (5) 10,670 20,500 31,170 7,525 10,300
8uildout
(2015;2025)
14,900
1,525
lAW
0
17,825
Sources: Stanford University Medical Center, Planning ~i9n & Construction; Stanford Hospitol and ainies, Finance Deportmenti
Lucile Packard Children's Hospitol, Finance Department; and CBRE ConsultTng.
CBRE Col'Isoltfng. 2/19!2009
(I) An~cipo1ed to be compleled in 2015, so 2015 and 2025 buildout sqoor. footogefigures are idonlical
(2) An~cipo1ed to be compleled in 2015, so 2015 and 2025 buildout sqoom footogo figures are idonlical
(3) The Advanced Medicine Ceomor [I.e., lhe Cancer Center) phonmacy is loosed and operoied by Walgreens. Tho' analysis assumes
thot the proposed SHC pharmacy will also be leased and operated by Wolgreens or a similar operoior.
(4) Other r6'tail uses: have not yet been finalized and ore estimated 10 consist of two independent vendors leasing space in SHe,
poten1iolly a colfee shop and a bookstore, each with one-hoff of lh. _I squor. footoge [I.e., 1,500 squore feet each).
(5) Do .. not indude the Respirntory Deportment, C."""I and Supply, and Ladmion Conler at LPCH.
N,\T .. ~~\2007\lOQ7U43 Skmfurd\woOOng Docv~\Mod.l\SUMC FimD Impact.Ra7.>d,
Exhibit 17
Existing and Proposed Revenue-Generating SoM and Total SUMC Programs, 2008, 2015 and 2025
SUMC Project FlSCOllmpact Analysis
ScM !Sq. Ft.l
Ccisling Net Change Buildout Net Change Buildaut Existing
Programs (2008) (2009-2015) (2015) (2009-2025) (2025) (2(08)
Cafeteria 0 0 0 ° 0 17,200
Gilt Shop 0 0 0 0 0 995
Pharmacy 0 0 0 0 0 0
Other Retail 1,500 (1) (680) (2) 820 2,320 (3) 3,820 1,500
TOTAl. (4) 1.500 (680) 820 2,320 3,820 19,695
Net Change
(2OO9-2015)
22,200
2,700
2,900
2,320
30,120
Sourl;es: Exhibit 16; Stanford University School of Medicine, Office of Facilities Planning & Management; and CBRE Consulting
{l) The only iwo on-site (evenue-generoting.SoM programs in buildings within the Cify of Palo Aho are two cofes.
{2) One of the exisling cafes with 680 ,quare!....t will close in 2010.
SUMC !:!!!joc:l
Buildout Net Chango Buildaut
(2015) (2009-2025) (2025)
39,400 22,200 39,400
3,695 2,700 3,695
2,900 2,900 2,900
3,820 5,320 6,820
49,815 33,120 52,815
(3) Arl additional 3,OOO~square foot cafe is onticipated to be built in 2017 (when the construction of one of the new raseorch buildings is complete) of the eorliest; similar to 1I1e
exisling cafes, this would be for $oM s1aff and focul1y. Th. addinonal3,000 squor.!eet less the 680 dosed in 2010 results in a netincreqse of 2,320 squore!....t.
(4) T oIul SUMC Project figures are indusive of SHC and lPCH figur.s; see Exhibit 16.
CBRf Consuhin9. 211 9/2009 N,ITeam-$ed"")'IP,,*,"'\2007\l 007043 Stonf<ml\Wooor>g Do<:v""""'\M<xleI\SUMC Fi=I [mpod.1ID7.>1s
Exhibit 18
TaxablE> Sal ... from Re.enue G&rnm:mng SHe Programs, Fiscal Year 2006-2007
SUMC Praject Fiscallmpad Analy$i$
Mo!l!!!!l: T"""bl. Solo. !ll
SHCPmgrwns Sop-06 Od-06 Nov-06 Deo-06 Jon-07 f0b.07 Mar...()7
C ..... ria(2) $~98,251 $474,385 $365,786 $380,345 $436,884 $390,187 $432,146
GiftSnQP $51,336 $55,513 $52,316 $66,864 $56,544 $56,108 $53,858
TOTAL (3) $449,587 $529,898 $418,102 $447,209 $493,428 $446,296 $486,0()4
Sources: Stanford H01lpiiol QIld Qinics, FinQOQl! Department; and CBRE Consufting.
~-lJ7 IoN>y-lJ7 100-01
$421,084 $648,346 $198,278
$57,606 $95,129 $28,048
$478,691 $743,476 $226,326
(1) SHe W: required by seE to pay the first 15 days of June tax with 'the Mat payment. The Moy soles. figures therefore include hair of the June salesiwr..
(2) Induding Bing Dining.
{3} Ooes not indvde the Walgreens pnarmo<:y in the Advanced Medicine Canter; see Exhibit 16.
ToInl
JuI-07 Aug-07 T.".mJe Soles
$418,206 $442,065 $5,005,964
$54,527 $51,617 $679~66
$472,733 $493,582 $5,585,43]
caRE COMIJ!ting. 2/j 912009 N;\T~\Pr0feds\2007\lOO7043 ~W'r.lri:ing DocIJlTl~!\SUMC Fisr;allmpod.R07 As
Exhibit 19
Taxable Sales from Revenue Generating LPCH Programs, Fiscal Year 2006-2007
SUMC Project Fiscal Impact Analysis
.v.anth~ Taxable Sales
LPCH Programs Sop-06 Oct-06 N0v-06 D0c-06 Jan-07 feb.07 ihn-07
Cafeteria $117,031 $127,491 $127,922 $111,913 $120,967 $119,570 $133,125
Respiratory Department $231 $139 $93 $93 $93 $278 $0
Central and Supply $200 $300 $600 $500 $',300 $600 $800
Lactation Center $2,622 $43,069 $1,669 $4,409 $54 $14,983 $8,145
TOTAL (1) $120,084 $170,999 $130,283 $116,914 $122,414 $135,431 $142,070
Sources: Lucile Packard Children's Hospital, Finance Department; and CBRE Consuhing.
(l) Does not include taxable sales for the gift shopi see Exhibit 17.
CBRE Consulting, 2/l9/2O'J9
Total
"",-07 May-<J7 Jun-07 Jul-07 iwg-07 Taxable Sales
$123,540 $133,014 $130,643 $120,544 $137,312 $1,503,070
$46 $93 $93 $93 $139 $1,389
$1,200 $300 $900 $600 $1,000 $8,300
$7,323 $13,931 $6,574 $7,602 $26,025 $136,406
$132,109 $147,338 $138,209 $128,838 $164,476 $1,649,165"
N:\T9IJm-Sedwoy\Projeds\2007\lOO7043 S1onford\Working Documents\Model\SUMC rlSCOllmpad.R07..ds
Exhibit 20
Net Taxable Sales from Revenue Generating SHC Programs, 2015 and 2025
In 2008 Dollars
SUMC Project Fiscollmpact Analysis
Taxable
Existing FY 2006-07 Salesl§g. Ft.
SHC Progroms Sq. Ft. 11) Taxable Sales FY 2006-07 2008 (2)
Co!..leria 10,000 $5,005,964 (4) $500.60 $516.92
GjflShap 670 $679,466 (4) $1,014.13 $1,047.19
Pharmacy 0 $0 S170.00 (5) $175.54
Other Retail (6)
Coffee Shop 0 $0 $500.00 (7) $516.30
Soak Store 0 $0 $200.00 (8) $206.52
TOTAL 10,670 $5,685,431
Annuel Sales Tax Revenues to the City of Palo AI10 (9)
Net New Net Taxable Sal""
Sq. Ft. (1) (2008 0(110111) (3)
14,500 $7,495,280
1,500 $1,570,784
1,500 $263,313
I,SOO $774,450
1,SOO $309,780
20,500 $10,413,607
$104,136
Saurces: Exhibits 16 and 18; Bureau 01 Labor Slolislics (BLS); The Hdl Companies, '2007 Reloil Store Taxable Sal"" Estimates;' and
CBRE CansuUing.
(1) See Exhibit 16.
(2) Fiscal Year 2006·2007 sales per square foot figures are inflated 10 2008 based on the consumer price index lOr the W_n U.S. of
3.26 percent from June 2007 to June 2008, derived from the BLS information.
(3) Figures are rounded to whole dollars.
(4) See Exhibit 18.
(5) The Hdl Companies reported 2007 annual taxable sales per gross square lOot lOr drug stores 10 be in the range of $125 to $215.
This analysis uses the average annual taxable sales per square foot to estimate pharmacy sales.
(6) Other retail uses have not yet been finalized and are estimated ta consist of two independent vendors leasil1Q space in SHC,
potentially a co!!..e shop and a bookstare.
(7) The Hdl Companies reported 2007 annual taxable sales per gross square lOot lOr coffee shops to be in the mnge of $400 ta $600.
This analysis USes the avemge annual taxable sales per square lOot to estimate coffee shop sales.
(8) The HdL Companies reported 2007 annual taxable sales per gross square lOot lOr small book stores ta be in the range of $100 to
$300. This analysis uses the avemge annual laxoble sales per square foot to estimate book store sales.
(9) Annual sales lax revenues are estimated to be 1.00 percent of annual net taxable sales. Figure is rounded ta whole dollars.
CBRE Consulting, 211912009 N:\Teom-Sedway\P,oi""'\2007\ 1007043 S1<In.,.,j\Working Documents\Model\SUMC Fiscollmpod.R07.xJ,
Exhibit 21
Net Taxable Sales from Revenue-Generating LPCH Programs, 2015 and 2025
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Taxable
Existing FY 2006-07 Sales/Sq. Ft.
lPCH Programs Sq. Ft. (1) T axcble Sales FY 2006-07 2008 (2)
Cafeteria 7,200 $1,503,070 (4) $208.76 $215.57
Gift Shop 325 $121,875 $375.00 (5) $387.23
Respiratory Department N/A $1,389 (4) N/A N/A
Central and Supply N/A $8,300 (4) N/A N/A
Lactation Center N/A $136,406 (4) N/A N/A
Pharmacy 0 $0 $170.00 (6) $175.54
TOTAl 7.525 $1,771,040
Annual Sales Tax Revenues to the City of Palo Alto (7)
Net New Net Taxable Sales
Sq. Ft. (1) (2008 Dollars) (3)
7,700 $1,659,853
1,200 $464,670
0 $0
0 $0
0 $0
1,400 $245,759
10,300 $2,370,282
$23,703
Sources: Exhibits 16 and 19; Bureau of Labor Statistics (BLS); The HdL Companies, "2007 Retail Store Taxable Sales Estimates;" and CBRE
Consulting.
(1) See Exhibit 16.
(2) Fiscal Year 2006-07 sales per square foot figures are inflated to 2008 based on the consumer price index for the Western U.S., with an
inflation rate of 3.26 percent, calculated from the BLS information from June 2007 to June 2008.
(3) Figures are rounded to whole dollars.
(4) See Exhibit 19.
(5) Taxable sales data for the existing gift shop are not available. The HdL Companies reported 2007 annual taxable sales per gross square
foot for cards/gift stores to be in the range of $150 to $600. This analysis uses the average annual taxable sales per square foot to estimate
gift shop sales.
(6) The HdL Companies reported 2007 annual taxable sales per gross square foot for drug stores ta be in the range of $125 to $215. This
analysis uses the average annual taxable sales per square foot to estimate pharmacy sales.
(7) Annual sales tax revenues are estimated to be 1.00 percent of annual net taxable sales. Figure is rounded to whole dollars
CBRE Consul~ng, 2/19/2009 N:\Team-Sedwoy\projects\2007\1007043 Sronford\Working Documents\ModeJ\SUMC Fiscal Impact.R07.xls
Exhibit 22
Net Taxable Sales from Revenue-Generating SoM Programs, 2015
In 2008 Dollars
SUMC Project FIScal Impact Analysis
Taxable
Exisring FY 2006-07 Sales/SQ. Ft.
SaM Pmgrams Sq. Ft. (1) T COOlble Sal... (2) FY 2006-07
Other Retail 1,500 $406,000 $270.67
Annual Salas Tax Revenues to the City of Palo Alto (5)
Ne! New Ne! T COOlble Sal ...
2008 (3) Sq. Ft. (1) (2008 Dollars) (4)
$279.49 (680) ($190,053)
($1,901)
Sourc ... : Exhibit 17; Stonford University School of Medicine, Office of Facilities Planning & Management; Bureau of Labor Stolislics (BLS); The
HdL Companies, '2007 Re1ail Store Taxable Sales Estimates;" and CBRE Consulting.
(1) See Exhibit 17.
(2) Taxable sales dato from Stonford University School of Medicine, Office of Facilities Planning & Management
(3) Fiscal Yeor 2006-2007 sales per square foot figures are inflated to 2008 based on the consumer price index for the Western U.S, with an
inflation rale of 3.26 percent, derived from the BLS information from June 2007 to June 2008.
(4) Figures are rounded to whole dollars.
(5) Annual sales lax revenues are estimated to be 1.00 percent of annual nellaxable sal .... Figure is rounded to whole dollars
CBRE Consvlting, 2{19/2009 N:\Tecm-Sedwoy\Projeds\2007\l 007043 Skmford\Working Documen1s\Model\SUMC Fiscollmpoc:l.R07.x1s
Exhibit 23
Net Taxable Sales from Revenue-Generating $oM Programs, 2025
In 2008 Dollan;
SUMC Project Fiscollmpact Analysis
Taxable
Existing FY2006·07 Salest§g. Ft.
SaM Programs Sq. Ft. (1) Taxable Sales (2) FY 2006-07
Other Remil 1,500 $406,000 $270.67
Annuol Sales Tax lUMmues 10 the City of Polo AIio (5)
Ne!New Net Taxable Sales
2008(3) Sq. Ft. (1) (2008 Dollars) (4)
$279.49 2,320 $648,418
$6,484
Sources: Exhibit 17; Slonford University School of Medicine, Office of Facilities Planning & Management; Bureau of Labor Srotistics (BLS); The
HdL Companies, "2007 Re10il S10re Taxable Sales Estimates;" and CBRE Consulting.
(ll See Exhibit 17.
(2) Taxable sales data from Stonford Universily School of Medicine, Office of Facilities Planning & Management
(3) Fiscal Yeor 2006-2007 sales per square foot figures are inflated to 2008 bosed on the consumer price index for the Westem U.S, with an
inflation rate of 3.26 percent, derived from the BLS information from June 2007 10 June 2008.
(4) Figures are rounded to whole dollars.
(5) Annual sales tax revenues are estimated to be 1 .00 percent of annual net taxable sales. Figure is rounded to whole dollars
CBRE Consul1ing, 211912009 N:\T""m.Sedwoy\Proiecls\2007\1007043 Sl<lnford\Worlcing Documents\Model\SUMC Fiscallmpad.R07.x1s
Exhibit 24
Office Worker Weekly Retail Spending Patterns
In 2003 and 2008 Dollars
SUMC Project Fiscal Impact Analysis
Item
Lunch
Weekly Expenditures per Worker
Shopping Items
Location of Spending
Closer to Home
Closer to Work
Total
Weekly Expenditures per Worker
Mall-type Merchandise
Grocery .
Personal Care/Incidentals
Total
After Work Dinner and Drinks
Location of spending
Closer to Home
Closer to Work
In between Home and Office
Unknown
Total
Weekly Expenditures per Worker
2003 (2)
$26.20
62%
38%
100%
$46.00
$16.00
$14.00
$76.00
50%
29%
12%
9%
100%
$15.00
Amount (1)
2008
$29.76 (3)
62%
38%
100%
$52.25 (3)
$18.17 (3)
$15.90 (3)
$86.32
50%
29%
12%
9%
100%
$17.04 (3)
Sources: International Council of Shopping Centers (ICSC), "Office Worker Retail
Spending Patterns 2004"; Bureau of Labor Statistics (BLS); and CBRE Consulting.
(1) The amounts shown reflect the "Downtown Ample" category from the ICSC
publication, which is most appropriate for the SUMC proiect because of the ample retail
shopping options in the vicinity of the SUMC Project area.
(2) Office worker spending patterns were published by ICSC, in weekly amounts and in
2003 dollars.
(3) Retail spending patterns from 2003 were inflated by CBRE Consulting to 2008
dollars. For 2003 to 2007, inflation was based on the consumer price index for all
urban consumers in the San Francisco-Oakland-San Jose Metropolitan Statistical Area,
calculated from BLS information. For 2007 to 2008, inflation was calculated using the
mid-year 2007 and the mid-year 2008 consumer price index. The average annual
inflation from 2003 to 2008 was 2.58 percent. Figures rounded to two decimal places.
CBRE Consulting 2/19/2009 N:\Team-Sedway\Proiecls\2007\1007043 Stanford\Working Documenls\Model\SUMC Fiscallmpact.R07.xls
Exhibit 25
Office Worker Annual Retail Spending Estimates
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Item
Lunch
Annual Expenditures per Worker (1)
Shopping Items
Location of Spending (2)
Closer to Home
Closer to Work
Annual Expenditures per Worker (3)
Mall-Type Merchandise
Grocery
Personal Care/Incidentals
Total Annual
Indicated Annual Expenditures Closer to Office (4)
Mall-Type Merchandise
Grocery
Personal Care/Incidentals
Total Annual
After Work Dinner and Drinks
Location of spending (2)
Closer to Home
Closer to Work
In between Home and Office
Unknown
Annual Expenditures per Worker (3)
tndicated Annual Expenditures Closer to Office (5)
Total Annual Spending Closer to Work (6)
Amount of Sales that are Taxable (7)
Percent Taxable
Notes: Continued on next page_
Amount
$1,428
62%
38%
$2,580
$865
$757
$4,202
$980
$329
$288
$1,597
50%
29%
12%
9%
$802
$233
$3,258
$3,028
93%
CBRE Consulting 2/19/2009 N:\Team-Sedway\Projects\2007\1 007043 Slanford\Working Documents\Model\SUMC Fiscallmpacl.R07.xls
Exhibit 25, continued
Office Worker Annual Retail Spending Estimates
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Sources: Exhibit 24; International Council of Shopping Centers (ICSC), "Office
Worker Retail Spending Patterns 2004"; U.S. Census Bureau, "2002 Economic
Census"; California State Board of Equalization (BOE); and CBRE Consulting.
(1) Annual expenditures are calculated by multiplying the average weekly
expenditure of $29.76 in Exhibit 24 by 48 weeks (92.3 percent of 52-week work
year, ta account for 10 Federal holidays and 10 vacation days). This is the
methodology used in the ICSC publication to generate these figures. Figure is
rounded to dollars.
(2) See Exhibit 24.
(3) Weekly figures from Exhibit 24 were adjusted ta annual figures using the
methodology noted in Footnote 1. Figures are also adjusted to reflect that the
survey data originally published by the ICSC was for the month of October.
Octaber's share of annual retail spending is 8.1 percent for mall-type merchandise
("Shopper Goods"), 8.4 percent for grocery and personal care goads ("Convenience
Gaods"), and 8.5 percent for dinner and drinks. This methodology is used in the
ICSC publication as well. Figures are rounded to whale dollars.
(4) Applies 38 percent "Closer to Work" factor to "Shopping Items" annual
expenditures per worker. Figures are rounded to whole dollars.
(5) Applies 29 percent "Closer to Work" factor to "Alter Work Dinner and Drinks"
annual expenditures per worker. Figures are rounded to dollars.
(6) Includes expenditures for lunch, shopping items, and alter work dinner and
drinks.
(7) Based upon detailed analysis of sales trends reported by the Census Bureau's
Econamic Census Subject Series for Retail Trade published in 2002, and
supplemented by discussions with BOE representative., CBRE Consulting estimates
that 30 percent of grocery sales are taxable. The total annual taxable sales "closer
to work" figure is therefore found by subtracting $230 (70 percent· $329) from
$3,258. Figure is rounded to dollars.
CBRE Consulting 2/19/2009 N:\Team-Sedway\Projects\2007\1007043 Stanford\Working Doc:uments\Model\SUMC Fiscallmpod.R07 .xls
Exhibit 26
Medical Office Employees Income Estimates, 2007
Deflated to 2006 Dollars
SUMC Project Fiscal Impact Analysis
Percentage of
Occupation Total Workers (l r
Management 2.3%
Healthcare Practitioners and Technical 41.2%
Healthcare Support 15.2%
Office and Administrative Support 37.3%
All Other Medical Office Related 4.0%
TOTAL 100.0%
Weighted Mean
AnnualWaae
2007 (1) In 2006 Dollars (2)
$118,100 $114,400
$103,600 $100,300
$36,400 $35,200
$39,200 $38,000
N/A N/A
Sources: Keyser Marston Associates, Inc.(KMA), IIDraft Housing Needs Analysis, Proposed Expansions: Stanford University
Medical Center, Stanford Shopping Center," June 2008; Bureau of labor Statistics (BlS); and CBRE Consulting.
(l) Data from Appendix Table 10 (Average Annual Compensation, 2007 -Medical Office Worker Occupations) of KMA
study.
(2) Annual wages in 2007 were deflated to 2006 dollars using the consumer price index for all urban consumers in the
Son Francisco-Oakland-Son Jose MSA, reported by the BlS. The inflation rate from 2006 to 2007 was 3.27 percent.
Figures are rounded to hundreds for presentation purposes.
CBRE Consulting, 2/19/2009 N:\T eom.Sedway\Projeds\2007\ 1007043 Stanford\ Working Documenls\tY'lodel\SUMC Fiscallmpad.R07 .xls
Exhibit 27
SHC and LPCH Employee Incomes, 2006
SUMC Project Fiscal Impact Analysis
SHC 11} IJ'CH III
Pen:en1age of No. Of Pen:en1age Median No. of Peramlalle Median
TImeWorlOng Employees of Employees Compensation Employees of Employees Compensation
20% 27 0.4% $175,000 (2) 29 1.3"A> $137,000 (3)
30% 19 0.3"A> $166,700 (4) 79 3.5% $158,300 (5)
50% 308 5.1% $100,000 (6) 126 5.5% $120,000 (7)
60% 329 5.5% $125,000 (8) 210 9.2% $125,000 (9)
63% 4 0.1% $59,500 (10) ° 0.0% N/A (11)
70% 5,335 88.6% $65,000 (12) 1,845 80.6% $82,500 (13)
TOTAL 6,022 100.0% 2,289 lOQ.O%
Noles: Continued on next poge.
CBRE Consulting, 2/19/2009 N,IT eom-Sed""y\l'roiedsI2007l1007043 SIonfor<l\Wor!:;ng DocUm.nls\Mxl<>!\SUMC F=llmpoet.R07.l11s
Exhibit 27, continued
SHe and LPCH Employee Incomes, 2006
SUMC Project Fiscollmpact Anolysis
Sources: Keyser Marston Associates, Inc. (KMA), "Draft Housing Needs Analysis, Propo<;ed Expansions: Sionrortt Universi1y Mediool Cerner,
Sklnfard Shopping Center," June 2008; and CBRE Consuhing.
(l) Based on dolo from Appendix 11 Table (SHC and LPCH Existing Employee Salary Distribunon Dam) of KMA study.
(2) CBRE Consulting estimate bosed on the fact thai of the ""isting SHC employees thai work 20 percent of the time, a cumulative 37 percent fall
within the 5150,000 -$174,995 compensation ronge and a cumulative 63 percent fall within the $175,000 -$199,995 compensation "'nge.
(3) CBRE Consulting estimate based on !he fad thai of the existing LPCH employees !hat work 20 per<:enl of lhe time, Q cumulative 48 percent fall
within the 5125,000 -$149,995 compensation ",nge.
(4) CBRE Consuhir\g estimate based on !he fad thai of lhe existing SHC employees thai work 30 percent of lhe lime, a cumulative 42 percent fall
within the 5150,000 -$166,663 compensation "'nge and a cumulative 58 percent fall wilhin !he $166,667 -$183,330 compensation range.
(5) CBRE Consulting estimate based on !he fad thai of the existing LPCH employees thai work 30 percent of lhe time, a cumulative 51 percent fall
within the 5150,000 -$166,663 compensation ",nge.
(6) CBRE Consulting estimate based on !he fad thai of the existing SHC employees thai work 50 percent of the lime, a cumulative 48 percent fall
within the $110,000 -$119,998 compensation range and a cumulative 55 percent fall wilhin!he $120,000 -$129,998 compensation "'nge.
(7) CBRE Consulling estimate bosed on !he fad lhal of the existing LPCH employees thai work 50 percent of lhe time, Q cumulative 47 percent fall
wilhin the $90,000 -$99,998 compensation range and a cumulative 54 percent fall within the $100,000 -$109,998 compensotion ronge.
(8) CBRE Consulting estimate based on the fad lhal of the existing SHC employees lhal work 60 pen:enI of the time, a cumulative 47 percent fall
wilhin the $116,667 -$124,998 compensation "'nge and a cumulative 56 percent fall within the $125,000 -$133,332 compensation ",nge.
(9) CBRE Consulting estimate bosed on lhe fad thai of the existing LPCH employees thai work 60 percent of the time, a cumulative 49 percent fall
wilhin the $116,667 -5124,998 compensolion "'nge and a cumulative 56 percent fall within the $125,000 -5133,332 compensation "'nge.
(10) CBRE Consulting estimate based on the fact thai of the existing SHC employees thai work 63 percent of !he time, a cumulative 50 percent
fall within the $55,556 -$63,490 compensation "'nge.
(11) There are no LPCH employees lhal work 63 percent of the lime.
CBRE Consulting estimate based on !he fad thai of !he existing SHC employees that work 70 peraent of the time, a cumulative 49 percent
fall wilhin lhe 560,000 -564,999 <x>mpensation range and a cumulative 54 percent fall within the $65,000 -$69,999 compensation "'nge.
(13) CBRE Consulfing estimate based on the fact lhal of the existing LPCH employees !hat work 70 percent of the lime, a cumulative 50 percent
fall wilhin!he 580,000 -$84,999 compensation range.
CBRE Consulting, 2/19/2009 N,\T..,m-Sodwoy\Pro~\2007\ 1007043 .5;,nr,,""WorlQng Do<;u""'n1s~C F;scollmpod.R07.>is
Exhibit 28
Consumer Expenditure Survey, 2006
SUMC Project Fiscal Impact Analysis
Category
Relevant Employment Sectors
Average Income before Taxes (6)
Ave'rage Annual Expenditures (6)
Retail Expenditures (6)
Foad at home
Food away from home
Alcoholic beverages
Maintenance, repairs, insurance, other expenses
Housekeeping supplies
Houshold furnishings and equipment
Apparel and services
Vehicle purchoses (net outlay)
Gasoline and motor oil
Maintenance and repairs
Drugs
Medicol supplies
Audio and visual equipment and services
Pets, toys, hobbies, and playground equipment
Other entertainment supplies, equipment, services
Personal care products and services
Reading
Tobacco products and smoking supplies
Miscellaneous
Total Average Annual Retail Expenditures
Total Excluding "Food Away From Home"
Pre·tax Income Bracket [1)
$50,000 to $69,999 $70,000 and More
Medical Office Workers [2)
Construction Workers (3)
$59,253
$50,086
$3,603
$2,892
$505
$1,097
$667
$.1,717
$1,981
$3,597
$2,599
$789
$588
$114
$974
$442
$392
$629
$116
$382
$871
$23,955
$21,063
Office Workers (3)
SHC Employees (4)
LPCH Employees (5)
$125,688
$82,294
$4,798
$4,502
$833
$1,929
$1,003
$3,137
$3,078
$6,331
$3,319
$1,095
$622
$182
$1,363
$696
$1,008
$949
$201
$311
$1,412
$36,769
$32,26.7
Sources: Bureau of Labor Statistics, Consumer Expenditure Survey (CES) 2006, "Table 2 Income Before Taxes: Average
Annual Expenditures and Characteristics"; U.S. Census Bureau, County Business Patterns 2006 for the San Jose-Sunnyvale
Santo Clara Metropolitan Statisticol Area (MSA); Exhibits 26 and 27; and CBRE Consulting.
(1) Pre-tax income brackets are from the CES.
(2) C8RE Consulting estimates that the average annual income for medical office workers is $65,000, based on the
weighted mean annual wages by occupation presented in Exhibit 26.
(3) Construction workers and office workers were placed in the appropriate income category using County Business
Patterns data on average income for these employment sectors. Construction Workers (Industry Code 23) had an average
annual income of $52,866. Office Workers, which combined the "Finance and Insurance" (Industry Code 52) and
"Prafessional/Scientific/Technical" (Industry Code 54) categories, had a weighted average annual income of $1041356.
(4) CBRE Consulting estimates that the average annual income for SHC workers is $701000, based on the median
compensation by percentage of time working presented in Exhibit 27.
(5) CBRE Consulting estimates that the average annual income for LPCH workers is $90,000, based on the median
compensation by percentage of time working presented in Exhibit 27.
(6) Dato are from the CES.
CBRE Consulting 2/19/2009 N:\Team.Sedway\Projecls\2007\ 1007043 Slonford\Working Documents\Model\SUMC Fiscollmpoct.R07 ,)(Is
Exhibit 29
Net Annual Sales Tax Revenues from SUMC Project Employee Spending
2015 and 2025, In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Assumptions
SHC and LPCH Employee.
Average Annual Retail Expenditures per Office Worker IICloser to Work" (1 J
Percent of Sales Taxable III
Discount Foelor for SHe and LPCH Employees (2)
Local Annual Taxable Expenditures per SHe and LPCH Employee in Palo Aile
Medical Office Employe .. (Non-SUMCI
Average Annual Retail Expenditures per Office Employee "Closer to Work" (11
Percent of Sales Taxable (1)
Discount Factor for Medical Office Employees (3)
local Annual Taxable Expenditures per Medical Office Employee in Palo Aile
$3,258
93%
88%
$2,659
$3,258
93%
57%
$1,736
Net New Amount
SUMC Proiect Entity
SHC
Net New Employees (4)
Total Annual Taxable Spending in Palo Alto (5)
Total Annual Sales Tax Revenue@ 1.00 percent (5)
LPCH
Net New Employees (4)
Total Annual Taxable Spending in Polo Alto (5)
Total Annual Sales Tax Revenue@ 1.00 percent (5)
Non-SUMC
Net New Employees (4)
Total Annual Taxable Spending in Polo Alto (5)
Total Annual Sales Tax Revenue@ 1.00 percent (5)
Tatal Annual Soles Tax Revenues from SUMC Proiect
Sources: Exhibits 4, 25, and 28; and CBRE Consulting.
(1) See Exhibit 25.
2015 2025
979
$2,603,116
$26,031
850
$2,260,111
$22,601
100
$173,569
$1,736
$50,366
1,251
$3,326,351
$33,264
892
$2,371,787
$23,718
100
$173,569
$1,736
$58,718
(2) The discount factor for SHC and LPCH employees adjusts the office worker spending "Closer to Work"
to account for the assumption that these employees will generally eat in the cafeteria or pack a lunch
from home, rather than purchase food off-site. The discount fador was calculated using the County
Business Patterns and the Consumer Expenditure Survey, excluding the "Food Away from Home'l category.
The 88 percent estimate implies thai the total dollars spent by SUMC employees is equivalent to
approximately 88 percent of office workers' spending. tn order to calculate the 88 percent, divide
$32,267 by $36,769, which are found in Exhibit 28.
(3) The discount factor for medical office employees adjusts the office worker spending close to work to
account for medical office workersl lower average income, and to account for the assumption that
workers will generally pack a lunch from home rather than purchase food off-site.The discount factor was
calculated using the County Business Patterns and the Consumer Expenditure Survey, excluding the "Food
Away from Home" category. The 57 percent estimate implies that the total dollars spent by medical office
workers is equivalent to approximately 57 percent of office workers' spending. In order to calculate the 57
percent, divide $21,063 by $36,769, which are found in Exhibit 28.
(4) See Exhibit 4.
(5) Figures are rounded to whole dollars.
CBRE Consulling, 1/7/2009 N:\Team·Sedwoy\Projecls\2007\ I 007043 Slanford\Working Documenls\Model\SUMC Fisoollmpacl.R07 .xls
Exhibit 30
Net Annual Sales Tax Revenues from SUMC Project Overnight Hospital
Visitor Spending (1)
2015 and 2025, In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Item
Hotel Nights from Hospital Visitors Added (2)
SHC
LPCH
Total
Palo Alto Share of Hotel Nights (3)
Estimated Persons per Hotel Room (4)
Toto I Overnight Visitors (5)
SHC
LPCH
Total
Average Length of Stay per Visitor (days) (6)
Average Doily Spending per Visitor (7)
Percenklge of Spending Already Accounted for by
SUMC Revenue-Generating Programs (8)
Annual Overnight Visitor Spending from SUMC Project
SHC
LPCH
Total
Annuol Sales Tax Revenue from SUMC Projecl (9)
SHC
LPCH
Total
Notes: Continued on next page'.
Net New Amount
2015 2025
606 1,220
988 2,540
1,594 3,760
14% 14%
1.5 1.5
127 256
207 533
334 789
2.0 2.0
$35 $35
20% 20%
$7,112 $14,336
$11,592 $29,848
$18,704 $44,184
$71 $143
$116 $298
$187 $441
CBRE Consumng, 1/7/2009 N;\ T eom-Sedway\Proiecl,\2007\ 1007043 Stanford\ Working Documenls\Model\SUMC Fiscallmpocl.R07 .xI,
Exhibit 30, continued
Net Annual Sales Tax Revenues from SUMC Project Overnight Hospital
Visitor Spending (1)
2015 and 2025, In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Sources: Exhibil 5; The Pacific Partners Consulting Group, Inc., "Stanford University
Economic Impact Study 2008"; lucile Packard Children's Hospital (lPCH) Housing
Department; and CBRE Consulting.
(1) Visitor spending is not estimated for the SaM since the SUMC Project is nat expected to
generate a net increase in SoM visitors.
(2) These are the incremenlal hotel nights generated by the increased capacity of the SUMC
facilities; see Exhibit 5.
(3) Palo Alto's share of hotel nights associated with hospital visitors was calculated using
data provided by the lPCH Housing Deportment. During June and July of 2008 (the only
recent time period for which data were available), hotel nights from lPCH in tha City of Palo
Alto averaged 53 nights, which is equivalent to 636 nights annually. These 636 hotel nights
represent approximately 14 percent of the total 2007 hotel nights from LPCH shown in
Exhibit 5.
(4) CBRE Consulting estimate.
{51 Equals hotel nights times 14 percent limes 1.5 persons per hotel room. Figures are
rounded to whole visitors.
(6) Assumes that visitors staying overnight spend two days in Palo Alto (i.a., the day that they
check-in and the day that they check-out).
(7) Average daily spending per visitor is provided by The ·Pacific Partners Consulting Group.
(8) Based on a windshield survey of shopping and dining options proximate to the SUMC
facilties, CBRE Consulting astimates thai approximately 20 percant of visitor spending will
occur at the SHC and lPCH cafeteria, gift .hop, pharmacy, and other retail outlets. The
remaining 80 percent will OCCur at other rataillocations within Palo Alia.
(9) Annual sale. tax revenues ora estimated to be 1.00 percant of annual visitor spending in
Palo Alto, per tha City of Palo Alia sales tax rate. Figures are rounded to dollars.
CBRE Consulting. 1/7/2009 N:\Toam.Sedway\Projeds\2007\1007043 Stonford\Worldng Documen!,\Model\SUMC Fiscallmpoc!.R07.xl,
Exhibit 31
Net Annual Sales and Use Tax Revenues from SUMC Project, 2015 and 2025
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Entity litem
SHC
Direct Hospital Spending (1)
Revenue-Generating Programs (2)
Employee Spending (3)
Overnight Visitor Spending (4)
Subtotol -SHC
LPCH
Direct Hospital Spending (1)
Revenue-Generating Programs (5)
Employee Spending (3)
Overnight Visitor Spending (4)
Subtotal -lPCH
SoM
Revenue-Generating Programs (6)
Non-SUMC
Employee Spending (3)
SUMC Project
Direct Hospital Spending (1)
Revenue-Generating Programs (5)
Employee Spending (3)
Overnight Visitor Spending (4)
TOTAL -SUMC Project
Net New Annual
Tax Revenue
2015
$17,530
$104,136
$26,031
$71
$147,768
$992
$23,703
$22,601
$116
$47,412
($1,901)
$1,736
$18,522
$125,938
$50,368
$187
$195,015
Sources: Exhibits 14,20, 21, 22, 23, 29, and 30; and CBRE Consulting.
(1) See Exhibit 14. Includes consideration of use tax rebate to SHC and lPCH.
(2) See Exhibit 20.
(3) See Exhibit 29.
(4) See Exhibit 30.
(5) See Exhibit 21.
(6) See Exhibits 22 and 23.
2025
$41,025
$104,136
$33,264
$143
$178,568
$1,988
$23,703
$23,718
$298
$49,707
$6,484
$1,736
$43,013
$134,323
$58,718
$441
$236,495
CBRE Con,ulling. 2/19/2009 N:\ T eam-Sedwoy\projecls\2007\1 007043 Stonlord\ Working Documenl,\ModeI\SUMC Fiscallmpod. R07 .xI,
Exhibit 32
211 Quarry Road Communily Physicians' Offices Valuation and Annual Net Properly Tax Estimates,
2015 and 2025 (1)
In 2008 Dollars
SUMC Prajed Fiscallmpad Analysis
Item Assumptions Amount
Proposed Square Feet of Leasable Office Space (2) 30,100
Gross Potential Rent (Full.Service) (3) $70 pOT square foot per year $2,107,000
Less Vacancy/Collection Lo .. (4) 5.0% of gro .. potential rent ($105~501
Gross Annual ~ncome $2,001,650
Less Variable Operating Expenses (5) $8.00 per 'quare foot per year ($240,800)
Less Fixed Expenses (5) $1.05 per square foot per year 1$31,605)
Net Operating Income $1,729,245
Indicated Volue 7.0% cap rat. (6) $24,703,500
Per Square Foot (7) $821
Total Property Tax 1,0% of assessed value $247,035
Palo Alto Oeneral Fund Allocation (8) 9,4% of properly tax $23,277
Sources: SUMC Application, 'Part 3· Project Descriplion", revised April 10, 2008, p. 9; Stanford University Medical Center, Real
Estate, Faciliiies Design and Construction Department; BuildIng Owners and Managers Association (SOMA)I "Experience
Exchange Report 2006"; Reol Copilal Analylics, 'Market Trend. Report," Quarter 1, 2008; Santa Clara County Assessor's Office;
Santa Claro County Controller's Office; and CBRE Cansulting.
(1) Hoover Pavilion renovation for 1101 Walch community physicians' offices.
(2) Proposed square footage figure from SUMC Application.
(3) Stanford University expects thot full·service rents will be $7010 $78 per square foot per year, with a one·time tenont
improvement allowance of $50 to $75 per square foot.
(4) Vacancy rote proiections of 310 5 percent were provided by the SUMC Real Estate, Focilities Design and Construction
Department. Vacancy rates ore not expected to exceed 5 percent for a number of reasons. First, medical office lease periods
are vsuolly long term, because tenant improvement costs are relatively high for medical space, and because doctors would
prefer to remain in a single location for CI long period of lime in order to maintain their patient/customer base. These lease
preferences drivelhe proiected vacancy role downward. Additionally, .pace that is vocant will likely be backfilled by other
SUMC enlilies.
(51 Operaling and fixed expenses are based on BOMA natonal overages for suburban medical buildings, adjusted based on
San Jose and San Mateo suburban office buildings. Operating axpenses include maintenance, repairs, utilities. adminlsirationt
and security. Fixed expenses exclude property tax, but include other taxes and insurance.
(6) Total property tax rol. of 1.00 percent is added fo the base cap rot. of 6.00 percent. 8ase cap rote is based on informalion
published in July 2008 by Real Capital Anolyiics, for olllce buildings in greater San Jos •.
(7) Figure is rounded.
(8) The Tax Rate Area was provided by Ihe Santa Claro Caunty Assesso~s Office. Post·EMf tax allocation to Ihe City of Polo
Alto General Fund was provided by the Santo Claro County Controller', Office for Tax Rate Area 06-001. Figure is rounded to
whole dollars.
Exhibit 33
Hoover Pavilion Ntw Medical Office Building Voluation and Annual Net Proptrty Tax Estimates, 2015
and 2025
In 2008 Dollal1l
SUMC Project Fiscallmpacl Analysis
Item Assumptions Amount
Proposed Square Feet of Medical Office Space (l) 60,000
Gross Poten6al Rent (FuIl·Service) (2) $70 per square foot per year $4,200,000
Less Vacancy/Colledion loss (3) 5.0% of gross potential rent {$21 0,0001
Gross Annual Income $3,990,000
Les. Variable Operating Expense, (4) $8.00 per square foot per year ($480,000)
Less Fixed Expense. (4) $1.05 per square foot per year {$63,0001
Net Operating Incame $3,447,000
Indicated Value (5) 7,0% cap rate (6) $49,242,857
Per Square Faal $621
Total Property Tax 1.0% of ossessed value $492,429
Palo Alto General Fund Allocation (7) 9.4% of property lox $46,399
Sources: Exhibit 2; Stanford Uni"" .. ity Medical Center, Real Estate, Facilities Design and Construction Department; 8ullding
Owners and Manage", Association (SOMA), "Experience Exchange Report 2006;' Real Copital Analytics, "Market Trends
Report," Quarter 1, 2008; Santa Clara County A .... sor's Office; Santa Clara County Controlle"s Office; and C8RE Consulting,
(1) See Exhibit 2,
(2) Stanford University expects that full·service rent. will be $ 70 to $78 per square foot per year, with a ana· time tenant
improvement allowance af $50 to $75 per square foot.
(3) Vacancy rale projections of 3 to 5 percent were provided by the Stanford University Medical Center Real Estale department.
Vacancy rates, are not expected to exceed 5 percent for c number of reasons. Firstj medical office tease periods are usually long
term, because tenant improvement costs are rela1ively high for medical space, and because doctors would prefer to remain in a
single location for a long periad of time in order to maintain their patient/customer base. These lease preferences drive the
prOjeded vacancy rate downward, Additionally, .pace that is vacant will likely be backfilled by other SUMC entities,
(4) Operating and fixed expen,es are based on BOMA natonal averages for suburban medical buildings, adiusted based on
Son Jose and San Mateo suburban office buildings. Operating expenses include maintem:mce, repoirsE unHties, administration,
and security. Fixed expenses exclude property tax, but include other taxes and insurance.
(5) Figure is rounded to whole dollar,
(6) Total property tax rate of 1,00 percent i. added to the base cap rate of 6,00 percent. ease cap rate is based on information
published in July 2008 by Reoi Capital Anolytics, for office building. in grettler Son Jose.
(7) The Tox Rate Area was provided by the Santo Clara County Assessor. Office. Post·ERAF tax allocation to the City of Palo
Alto General Fund was provided by the Santo Clara County Controllers Office for Tax Rate Area 06·001, Figu", is rounded to
whole dollars.
Exhibit 35
Net SUMC Project Motor Vehicle In-Lieu Fees Estimates, 2015 and 2025
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Item
June 30, 2008 Cily of Palo Alto Assessed Valuation (1)
Changes in Assessed Value as a Result of SUMC Project
Hoover Pavilion New Medical Office Building (2)
Hoover Pavilion Renovotion for 1101 Welch Communily Physicians' Offices (3)
Other Pa reels (4)
Net Change
Total Assessed Value including Changes
Percent Increose in Assessed Value
FY 2007-08 VLF In-Lieu Revenue (5)
Net Annual VlF In-Lieu Revenues from SUMC Project (6)
Amount
$18,922,488,000
$49,242,857
$13,703,500
($1 ,821 ,000)
$61,125,357
$18,983,613,357
0.32%
$4,367,000
$14,061
Sources: Exhibits 32, 33, and 34; Cily of Palo Alto 2007-08 Comprehensive Annual Financial Report (CAFR)
for Fiscal Year ended June 30, 2008; City of Palo Alto Administrative Services (email correspondence from Joe
Sacdo; January 26, 2009); and CBRE Consulting.
(1) Citywide assessed value is found on page 146 of the Cily of Palo Alto CAFR.
(2) See Exhibit 33.
(3) Calculated by subtracting the existing assessed value of 1101 Welch Rood of $11,000,000, as shown in
Exhibit 34, from the projected assessed value of $24,703,500 shown in Exhibit 32.
(4) The properties at 701 and 703 Welch Rood, which will be demolished as a result of the SUMC Project,
have a Fiscal Yeor 2007-08 combined assessed value of $1,821,000.
(5) VLF In-Lieu amount is provided by theCily of Polo Alto Administrative Services Department. VLF revenues
are comprised of two components: the Direct VLF Payment, which was $282,000 in Fiscal Year 2007-08, is
dependent on population and is nat shawn in this exhibit; the second (in-lieu) camponent, as shawn in this
exhibit, i. dependent an the City's assessed value.
(6) Net annual revenues from the Molor Vehicle In-Lieu Tax Revenues will be realized in 2015 and 2025.
Figure is rounded 10 whole dollars.
CBRf Consulting, 2/19/2009
Exhibit 36
Annual Transient Occupancy Tax Revenues, 2015 and 2025 (1)
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Item
lucile Packard Children's Hospital (lPCHl
Additional Annual Hotel Nights from lPCH Patients and Visitors (2)
Palo Alto Share of Hotel Demand (3)
Additional Hotel Nights in Palo Alto (4)
Palo Alto Average Daily Hotel Room Rate (5)
Additional Room Revenue added by lPCH Project
Transient Occupancy Tax Revenue. added by lPCH (6)
Stanford Hospital and Clinics (SHC)
Additional Annual Hotel Nights from SHC Patients and Visitors (2)
Palo Alto Share of Hotel Demand (3)
Additional Hotel Nights in Palo Alto (4)
Palo Alto Average Daily Hotel Room Rate (5)
Additional Room Revenue added by SHC Project
Tran.ient Occupancy Tax Revenues added by SHC (6)
TOTAL· Transient Occupany Tax Revenue. added by SUMC Facilities
Net New Amount
2007-2015 2007-2025
988 2,540
14% 14%
138 356
$142.88 $142.88
$19,717 $50,865
$2,366 $6,104
606 1,220
14% 14%
85 171
$142.88 $142.88
$12,145 $24,432
$1,457 $2,932
$3,823 $9,036
Sources: Exhibit 5; City of Palo Alto Managers Report, February 5, 2008; lucile Packard Children's Hospital (lPCH) Housing
Departmentj and CBRE Consulting;
(1) T rensient occupancy lax (TOT) revenues are calculated for LPCH and SHe because hospital patients and their visitors
generate hotel stays within the City of Palo Alto that would otherwise not occur. The increased LPCH and SHe patient
visitorship from the SUMC project will therefore increase TOT revenues to the City of Palo Alto. TOT is not estimated for the
School of Medicine (ScM) facilities because there is no planned increase in employment or square footage for the SoM. As
such, hotel stays attributable to the SoM will remain constant.
(2) See Exhibit 5.
(3) Palo Alto's share of hotel nights associated with hospital visitors was calculated using data provided by the LPCH Housing
Department. During June and July of 2008 (the only recent time period for which data were available), hotel nights from
lPCH in the City of Palo Alto averaged 53 nights, which is equivalent to 636 nights annually. These 636 hotel nights
represent approximately 14 percent of the total 2007 hotel nights from LPCH shown in Exhibit 5.
(4) Figures are rounded to whole numbers.
(5) The average daily rate is for the first five months of Fiscal Year 2007-08, the most recent period for which data were
available, per page 3 of the City of Palo Alto Managers Report.
(6) The City of Palo Alto TOT rate is 12 percent. Figures are rounded to whole dollars.
C8RE Con.ulling, 7/19/2009 N,\T eorn.Sedway\Proi .. ,h\7007\1007043 S!onfOld\W",king Oocvtnenl.\Model\SUMC Hs<ol Irnpod.R07.xI_
Exhibit 37
SUMC Pn:>jed Utility Meiers and Usage Estimates, 2007,2015 and 2025
SUMC Projed Fi .... llmpaci Analysis
Gonerulion Exiol;,,,, and Proieclod Domand ~I N .. _Oomand ru
110m Fado, (1) 2007 2015 2025 2007·2015 2007·2025
Wale,
Number of Water ~I"$ {3)
2~inen irrigation meters 0.000000526 PO' sq. fl. 1 3 2 2 1
6..in<:n i'i1"0 S$rvK:O rrKlIIur$ 0.000002106 PO' sq. fl. 4 9 8 5 4
2~ineh meters {general wttter) 0.000000526 PO' sq. fl. 1 3 2 2 1
3~meh mehmi {genG«JI wafo&r) 0.000001053 1"" sq. II. 2 5 4 3 2
4..irK:h motors '(general wttfer) 0.000000526 PO' sq. II. 3 2 2 1
10~jneh tmltGrs (general water) 0.000000526 PO' sq. II. 3 2 2 1
A'll. Osmond (gollo""day) (41 362,040 466,420 539,340 106,380 177,300
A'll. Osmond (""' .... ""'1 (4) 14,722 19,048 21,932 4,326 7,210
~
Pook o.mund (kW) (5) 11,160 20,970 20,200 9,810 9,040
A'll. o.....nd !kWhlday) (5) 206.soo 379,926 355,150 173A26 148,650
A'll' Demond (kWhlmonlh) 6,281,042 11,556,083 10,802A79 5,275,041 4,521A38
~. Demond (kWhl,...,) 75,372,500 138z672,99O 129,629,750 63,3OOA90 54,257,250
Go,
Number of Ga, M.ro,. (6) per sq. ft. 11 11 11 0 0
A"". Demond (dh) [7) 1,200 l.2oo
A'll. o.mond 11fw"",''''''''''') (7) 8,760 8,760
Sovrces: Exhibit 3; Stunfurd Un~fty Land, Buildings, and Root Estate; Brian Ward~ Programs Manager for Pole Alto Green~ Cdy of Palo Alto Utirrties Deportment (CPAU); Roland
Ed<strond. CPAU; SUMC Application, "Port 6 -utirrties" ~ 10/08,108, lobles 0...1 and 6-2; stonfcrd University, Land Use and Environmental Planning; and CSRE Consulting.
{l) Gl!!flel'Otlon rodon 01'$ dl»ivtw:l by dividing 2007 demand ~rtfed in this exhibit by 2oo71ota1 axisfing tiqUO!"'lll _ (2,366,.879 sqVDrv r-t}, $00 Exhibit 3.
(2} Demond <rltribllfoblo to the SUMC program for 011 componeoh induding SHC,lPCH, ond SaM.
{31 Existing water fTII!Iie,r detuils YMrG provided by Brian Wordr CPAU. Ptojedad I'ttetert; were e$limated by multiplying the geoerof1on {odQrs and the ~nt SUMe Project buildout
square Tootagefl91.11'9S (4,033,650 square feet by 2015 and 3,678,397 by 2025); see Exhibit 3. FigUres are rounded 'to whole numbs",. .
(4) Water demand estlmom for 2007 ~ 2015, and 2025 ora from the SUMC Application. These figures are provided in gallons per day while the rot9: $cllodules from the CPAU an!!
in one hundr9d cubic feet (cd) per month. Sirn:e one cef is equivalent to 748 gollott$ of wcrter, ana gallon per dey Isc eqUfvQlent to appro;dmatoly 0.04066 {365/12/74S} 'Cd per
month. Figl.ll'9S are rounded to whole number.;.
(5) CU1'1'$nt and projodad peak electrical demol'ld and ttYO!"O~ eledticol demand arg from the SUMC ApprtQ;rtiQn.
(6) According to Stonford Univ$l'$!ty Land, Building$, and Reol E:s1ate, the only pomons of the SiJMC project that might require tOO addition Qr subtroctioo of 9Cf$ ~ OfQ tho SHC
kftchen, which will inc!'I!IQse in floor Qrea by 11,000 squom i$et, and rite LPCH kitchen, which WJ11 incnKJSe in Roor area by 5,000: sqtJOfQ feet. Roland fd:strond of CPAU opined that
these net incre<:J.$El;!l in kitchen Si;t9S may increas& the gas: fTII!Iie,r S:~QS, but likaly will not change the number of gas meters required for the !"t£N'" kitew,n spaces.
(7) Go$ demand eaiimom for 2015 and 2025 wete providod by Stonfotd Univen:ify, l.ond Use and Envimnmentof Planning. These figUI'9S ore provick;d in wbi<: ~ per hour {dh}
while the n::rle scnedt.lles from the CPAU are in thenT'l5 per month. Since 100 cf is equivalent to 1 therm, one dh Is equivakmtto opproximateiy 7.3 (1 1100·24· US 112) therms
p$r )'G'Qr. Figul'9S ore rounded to whole numbers.
CElRe CoM.llhi"9, 2/191:2009 N:\Tea""'~~\2007).1007043 Stonford\Wmting Docut!'lll!'lts~ FislooIlmpoet.Rn7"
Exhibit 38
Utility Rate. and SUMC Projoct NEIl Annual Utility Bill Esfima1es, 2015 ancl2025
In 2008 Dolla ...
SUMC Project Fisc:allmpact Analysis
Utilily
w_
p",-
2·inch inigation ~
6·irn::h firm service: meters
2-irn::h meters (general wafer,
3·inch meters (general woktri
4·ioch meters (general wokir)
. lO...fnch meters (9~ water)
Pored (4)
TotaI_
~
""'k 0."",,"; Cl=ge "'" kW (5}
A",_ Demond Ch",9" "'" kWh (6}
Total EIodri<iIy
Ngwrol Gas
Charge per MeIer
Avwage Demand Charge per Therm
Total NoNmlGat
TOTAl. -Ulililioo
Rate
PorMonth (1)
$19.37
$7.00
$19,37
$77.65
5130.60
$383.67
$6.50
$12.93
$0,07002
$35.00
$1.5155
2007-2015 .... NowsOMC_
Demand Por Month (2)
2 m"",,,
5 mete"
2 mete"
3 'mete"
2 rude"
2 """."
4,326 Cd'<
9,810 kW
5,.'275,041 kWh
o ",.,...
8,]60 themu
NetAnnuol
Bill 13)
$465
$420
$465
52,795
$3,134
59,208
$337.428
$353,915
51.521-531
$4,431.984
$5,953,515
$0
$159,3{)9
$159,309
$6,466,739
2007-2025
.... NOWstJMc .. """
Domand Por Month (2)
meten.:
4 m""",
1 meten.:
2 mete",
1 mef~1'$
1 mete"
7,210 Cd',
9.040 kW
4,521.438 kWh
o met""
8,760 therrt'l$
NotAnnuoal
11iI1131
$232
$336
$232
$1,864
$1,567
$4,604
5562,380
$571,.'215
51,402,104
53,798,821
$5,.'200,925
$0
5159,309
$159,309
$5,931,449
Source:s: =ibi1 37: City of Polo.Alto UtIlities Rate $chedul$$ E.7, W.4, aod G-2 os of December 9, 2008; and CBRE Consulting,
(1) Monthly mft'oeI; were pl'O'Vided by 1he City of Polo.Alto Uh1mcs Deportmern. 8edricity rates are found in schedule E~7. Gos rot~ are found In schedule G·2, RD_ for TIre"rvi;:e ~
are found in :s:chedule W.:.J. Generol W'Otei' seI"Yice is. found in schedule W-4_lrrigalicn wotef ~ce rates are fovnd in schedule W-7.
(2) Incremental demond \$ found in Exhlbl'l 37.
(3) Figures are rounded to whole dollors.
(4) AverQge rote per montn for vrt'Qter cOl'lWmption is on opproximcte weighted Qve«lge estimated by CBRE Consulting tOo be $6.50 based on rate schedules for water rnel$rs, and the
projected sna~ of dOlTlQnd ~ated with each m$lef. ~$ are approximately $4.697 for general wafer service, $4.697 for irrigolion water s$1'Yice, and $10.00 for fire semce per
(5) This NJte is applied fO' the peak. ellitdridty usage during each month, m00sUt'ed in ki~. Rep~ the overoge of1he summer I'tIte and the winter rate, which are $15.96 ood
$9.89, rt!I$pectively.
{6} This NJte is applied 10 tho total eloctricity used during ~ mantn, meo:s:uroo in Idlowcrit hours. Represents iha m;erage of1hc summer rate and tho winter /'Qfe, which QI'$ $0.07342
(lnd $0.06661, resplitdively.
CBRf COTVllfting. 211912009 N:\T....,m·~~\2007\1007043StonbU\WOJ'kmg ~\Modo!\SUMC ~ lmp;td,RQ1,.,u;
Exhibit 39
Annual Utility Users Tax Revenue Estimates, 2015 and 2025
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Item
Utility User Tax Rate (l)
Annual Utility Bill (2)
Water
Electric Peak Demand
Electric Average Demand
Gas
TOTAL
Utility User Taxes Accruing to General Fund (3)
Water
Electric Peak Demand
Electric Average Demand
Gas
TOTAL
SUMC Project
Incremental Amount
2007-2015 2007-2025
5% 5%
$353,915 $571,215
$1,521,531 $1,402,104
$4,431,984 $3,798,821
$159,309 $159,309
$6,466,739 $5,931,449
$17,696 $28,561
$76,077 $70,105
$221,599 $189,941
$7,965 $7,965
$323,337 $296,572
Sources: Exhibit 38; City of Palo Alto Administrative Services Department; and CBRE
Consulting.
(1) Utility user tax rate is provided by David Ramberg, City of Palo Alto Administrative
SelVices.
(2) See Exhibit 38.
(3) Utility Users Tax associated with telephone and internet usage provided by
Stanford University is not estimated for the planned SUMC facilities; figures are
rounded to whole numbers.
CBRE Consulting, 2/19/2009 N:\Team·Sedway\Projects\2007\1007043 Sfanford\Working Documents\Model\SUMC Fiscallmpacl.R07 .xls
Exhibit 40
Net Pen:entage Change in UrilHy Demand by SUMC Enrity, 2015 and 2025
SUMC Project FiSCtlllmpact Anolr.;is
-!11
Entity / U6r.,. 2007 2015 2025
SHe
Water Awrage Demond (gollo!'l$/day} 210,540 289,500 (2) 342,140
Electric Average Demond (kWh/day) 144,500 248,300 210,550
Electric Paolo:. Demand (kW) 7,630 13,570 12,170
Gas. (therms/morrth) 23,174 23,174
lPCH
_ W_ A_" De~nd (gol1on>/day) 68,500 125,200 (2) 163,000
Eledric A"""'9" Demand (kWh/do)? 28,600 70,000 70,000
Electric Paok Demand ikWj 1,530 3,830 3,830
Gas (the""" montb) 2'3,174 23,174
SaM
W_ Avorog<o Demand Isallom/day) 83,000 53,720 (2) 34,200
Eledric A_ Demand (kWh/do)) 33,400 61,626 74,600
Electric Paok Demond (kW) 2,000 3,570 4,200
Gas (tbetm${montb)
lOTALSUMC
Water Aven:J9$ Demand {gallons/day) 362,040 468,420 539,340
Electric Average Demond (kWtl/doy) 206,500 379,926 355,150
8edric Peak. Demand (1o:.W) 11,160 20,970 20,200
Gas (therms/month) 37,587 46,347 46,347
"'-e .!TotaI
Neta..-m SUMC Proied Nat Cha!!S8
2007.2015 2007·2025 2007-2015 2007-2025
78,960 131,600 74% 74%
103,800 66P5O 60% 44%
5,940 4.540 61% 50%
4,380 (3) 4.380 (3) 50% 50%
56,7(}Q 94.500 53% 53%
41,400 41,400 24% 28%
2,300 2.300 23% 25%
4,300 (3) 4,380 (3) 50% 50%
(29,280) 14 8,800} -28% -28%
28,226 41,200 16% 28%
1,570 2,200 16% 24%
o (3) o (3) 0% 0%
106,380 177 ,300 100% 100%
173,426 148,650 100% 100%
9,810 9,040 100% 100%
8,760 8,760 100% 100%
Sources: SUMC Application, "Part 6 _ Utilitios~ revised 10/08/08, tab1&$ 6..1 and 6-2; AECOM (form«ly OMJM Harris), "Stanford Shopping Cent9r and Stanford Unr..ersTty
Medicol CenieT Trip Getlerotion Scenol'io$: November 14, 2007 i Stanford University,.LGnd Use aod mvironmentcd Plannil"l9; a.,d CaRE Consulting_
(lJ Figures ore based on the sUMC Application unl$$i nof9d ofhe/"Wi$Q,
(2) Assumes that 60 psrc:ent of the change in demand from 2007 to 2025 will happen by 2015; assHJm,.mon from AECOM memorondum.
(3) Gas emmcmas by entity were provided by Stanford University, Lond Use and EnvironmontaJ Planning.
CURE CQnMting, 2(19/2009 1'4:\T~OO7\lOO7043 Stanfmd\Wori;ins Docu~\ModeI\SUMC r~ ~R07 $
Exhibit 41
Net Annual Utility Users Tax Revenues by Hospital Entity, 2015 and 2025
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
2007-2015 2007-2025
Percentage ofT otal Net New Percentage of Total Net New
SUMC Project Utility Users Tax SUMC Project Utility Users Tax
SUMC Entity Net Change (1 ) Revenue (2) Net Change (1) Revenue (2)
SUMC Project
Water 100% $17,696 (3) 100% $28,561 (3)
Electric Peak Demand 100% $76,077 (3) 100% $70,105 (3)
Electric Average Demand 100% $221,599 (3) 100% $189,941 (3)
Gas 100% $7,965 (3) 100% $7,965 (3)
TOTAL -SUMC $323,337 $296,572
SHC
Water 74% $13,135 74% $21,199
Electric Peak Demand 60% $45,534 44% $31,150
Electric Average Demand 61% $134,179 50% $95,391
Gas 50% $3,983 50%
Subtotal -SHC $196,831
LPCH
Water 53% $9,432 53% $15,223
Electric Peak Demand 24% $18,161 28% $19,525
Electric Average Demand 23% $51,955 25% $48,326
Gas 50% $3,983 50% $3,983
Subtotal -LPCH $83,531 $87,057
SaM
Water -28% -$4,871 -28% -$7,861
Electric Peak Demand 16% $12,382 28% $19,430
Electric Average Demand 16% $35,465 24% $46,225
Gas 0% $0 0% $0
Subtotal -SaM $42,976 $57,794
Sources: Exhibits 39 and 40; and C8RE Consulting.
(1) See Exhibit 40.
(2) Net new utility users tax revenue by utility type and entity is calculated by applying the relevant percentage of total
SUMC Project net change to the SUMC Project net new utility users tox revenue. Figures are rounded to whole dollars; the
sum of the revenues by utility type and entity may therefore not exactly add up to total for the SUMC Project.
(3) See Exhibit 39.
CBRE Consulting, 2/19/2009 N:\Team-Sedway\Proiects\2007\ I 007043 Stanford\Working Documenls\Model\SUMC Fiscallmpact.R07 .xls
Exhibit 42
General Fund Revenues per Employee from Fines and Penalties (1)
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
City of Polo Aho Revenues
Adopted Budget Per Day-lime
2008-09 [21 l'ersonServed [31
Budget Ca1egory [A] [S = A/130,3S5]
Fines and Penalties $2,916,000 $22.36
Revenues Per
Em(!loyee Served [4}
[C = Bx 50%]
$11.18
Sources: Exhibit 6; Joe Soccio, Administrative Services Deportment (ASD), City of Palo Alto (phone conversation
November 17, 2008); City of Polo Alto 2007-09 Proposed Operating Budget; City of Polo Alto 2008-09 Proposed
Operating Budget; and CBRE Consulting.
(1) Fines and Penalties consist mostly of parking violations and library fines per Joe Soccio, ASD, City of Palo Alto.
(2) Totol fines and penalties were provided by Joe Socdo, ASD, City of Palo Alto.
(3) Day-time population for the Palo Alto Sphere of Influence (SOl) is estimated by adding 501 population to 50 percent
of total SOl jobs; see Exhibit 6.
(4) Revenues per employee represents 50 percent of revenues per day-time population. Figure is rounded to whole cenls.
CBRE Consulting, 211912009 N:\Team-Sedway\proieds\2007\l007043 Slonforrl\Working Docvrnenls\Model\SUMC F!SCQ\ Impod.R07.x1s
Exhibit 43
SUMC Project Net Annual Revenues from Fines and Penalties, 2015 and 2025
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Net Revenues from
Fines and Penalties
Net Emelolees 11} 1$11.18/Emel~el {21131
SUMC Project Component 2015 2025 2015 2025
SHC 979 1,251 $10,945 $13,986
LPCH 850 892 $9,503 $9,973
SoM ° ° $0 $0
Non-SUMC 100 100 $1,118 $1,118
TOTAL SUMC PROJECT 1,929 2,243 $21,566 $25,077
Sources: Exhibits 4 and 42; City of Palo Alto 'Proposed Operating Budget 2008-2009"; and CBRE Consulting.
(1) See Exhibit 4 •
. (2) See Exhibit 42 for revenue per employee estimate.
(3) Net revenue ligures are raundad 10 whole daliars.
caRE Consulting, 2/19/2009 N:\Tscm.SedwQy\Pr<>jeds\2007\ 1007043 Stonford\Working O()(;uments\Model\SUMC Fiacollmpor;t,R07,~
Exhibit 44
C1!y of Palo Alto Annual Gen<IraI Fund Revenues Estimates as a Result of SUMC Project, 2015, and 2025
In 2008 001101$
SUMC Project Fiscal impad Analy&i.
SHe
Mnvcll .......... "",I_ ..... fAhow Bose Y!!!!l From SUMC !':!!E!!nsion
IJ'CH ScM Non-SUMC
8udget Item 2015 2025 2015 2025 2015 2025 2015
G§!1"IQ1'Cl1 E:!:!ng ~nv6$
Sales and Use Tex $147,768 $178,568 $47,412 $49,707 ($1,901) $6.484 $1,736
SUMC Di~ Purchasing $17,530 $41.025 $992 $1,988 SO $0 SO
SUMC FodiiOOs On-S'rta So~ $104,136 $104,136 523,703 523,703 ($1,901) $6.484 SO
SUMC Employee Spending $26,031 $33,264 522,601 523,718 $0 50 $1,736
SUMC Overnight Vtsttor SpendIng 571 $143 $116 $298 $0 $0 $0
Properly T ox (1 ) s..NoIe2 s..NoIe 2 SeeNo1e2 See Noto 2
T moslem Occupancy Tax (rOT) $1,457 $2,932 52,366 $6,104 $0 $0 $0
Utility Usors TCJt (UUTJ 5196,831 $151,723 $S3,531 $87,057 $42,976 $57,794 $0
Other T CX$S end Fineos $10,945 $13,986 $9,503 $9,973 $0 $0 $1,118
Motor Vehjde-in~Lieu Fees (1) s..t«m2 See Note 2 See Note 2 s...NoIe2
Documentary T mnsf'er TCIxe$ Noi Estimated Not &timof'&d Not Estimated NO't t.:stimoted
Fines end Penotties $10,945 513,986 $9,503 $9,973 $0 $0 $1,118
Charges for Services (2) Not Estimated Not f:stimoted Not Estimated Not Estimated
Permits ond licenses (3) Not Estimated Not E:stimoi'&d Not Estil'TlQ'l9d NotEsnmomd
~m on Investment Not EstimQfed Not EstimGrl'$d Not EstiI'TlQ'l9d Not Emmoted
Rentollncome (4) Not Estimoted Not EstimGrl'$d Not Estima'led Not Eslimomd
From OtMr Agencies Not Estimated Not EstimGrl'$d Not Es1imaf9d Not Eslimomd
Charges to Oll-'Ier Funds {5} Not Estimated Not &:timotod Not EstimOf$d Not Emmomd
Other ~nue (6) Not Estimated Not Estimotod Not mmoted Not J;;t;momd
TOTAl. $351t001 $347.209 $142,812 $152,841 $41,Q75 $64,278 $2,854
2025
T_ISUMC""'i'!!'!
2015 2025
$1,736 $195,015 $236,495
$0 $18,522 $.43,013
$0 5125,938 $134,323
$1~736 550,368 $58,71S
$0 $187 $441
$57,595 557,595
$0 $3,823 $9,036
$0 5323,337 $296,572
$1,118 535,627 $39,138
$14,061 $14,061
Not Estim0t9d
$1,118 $21,566 525,077
Not EslimolOd
Not EstirT\Qf$d
Not Estif'Mt1:!d
NotEll1i~d
Not Estimated
Not Estimated
Not Estimated
$2,854 $615,397 $638,836
So~; fmibils 29, 30, 31, 34, 36, 41, and 43; Crty of Palo Alto 2008-09 'Propo$6d Open:rrlng Sudget"; Joe Saccio, Administl"l:'.ltiw Services DePQrtment (ASD), City of Palo Alto (emoil can"$$pondenC$
Oeeernber 3, 2008); and C8RE Consuffing.
{1} Property-tax bowd ~ves, whfeh include property fQ;wm and motor vehicle in-lieu fees, oro not shown for specific SUMC entities bec<:.Juse the property ta)lt incromant CSSiOciat9d with each !IIOIrty is not
Known. Many SUMC properti9$ hoV1!!l muitipfe entities 05 fenom, including non·SUMC entities, $0 deNrmirnng th& shorn of property texas from SHe, LPCHz SoM. and non-$UMC is no1 po!"$ible. Property 'lax
teWffi.19S cllfrently levied from the pl"Operties ot 701 Welch Rood, 701 A, C, and D Welch Rood, 701 e Welch ~d, 703 Welch Rood, and 1101 W&lch Rood win be lost However, property 'lax nMmUQ$
added by the new medical office bvilding ot the HOQ'IfGr Povi[ion site and fhe added Ie<:L$Qble sp<IC$ crt the existlng HooYSr Pavilion building 0'1 211 Q.,Iony Rood will more1han offset the losses.
(21 Chars~ for Cvrrent Services mainly comprise extemal reimbunlements and fee...for--5e!"lriOO payments generated by Generol fund dePQrtt'l"lents. such as Stanford University's payment forflre pl'Qtedlon
services ($7.4 million), paramedic: fees t$1.7 million), and plan c:hedcing fees ($7.3 million). '
(3) Revenves from Permi'ls and lioat'lSe$ consist mostly of permits for new construction, stroet openirt9S.0 hrxtardous moteriois. firo, and parking. and TIQiInS9S for dogs, biqcle$, ond kWs pet Joe Soa:lo, ASD,
City 01 Polo Ai1o,
(41 Rentaf Income primarily comprises !'ent charged to En1'e:rprise Funds for use of Crty land.
(5) Chorges to O1her Funds om reimbUfUmertI'S ~ by the General fund for provision of adminisfrativ9 servas to Entarprfu& and ln1'e:rnol Services n.mck.. The Generof Fund charges these funds for
logar, human r'9SO!JI"eeS. finance, and genercl administn:.:rtTv9 $qMc:es performed.
(6) Other Revenue mainly comprises Animal ServiCl9$ revenue from neighboring cines. Polo Alto Un'lf'ied School District's {pAUSDj shore of mointanance for athletic Fields, and one-time nilVenoo sources.
~~, 2/i9/2009 N,\ T ""'I'I'\-S..:Iwqy\J>~\2007\ 1 00r043 Sitlnfor.."IWori:ins Dccumernb~C Fitml Impt:ld.RO'1..;ds
Exhib~45
SHC and Hoover Pavilion Site Conslrudion Coot Estimates (1)
In 2008 Dollars
SUMC Projod Flo",:" Impact Analysis
"" ..... 1 F-utunt erma _SiIo[!l!
Co.! 110m Em_Co.! Toxable Cost ~Co.! T ........ Co.! ~Co.!
Dil'1il'd Costs
Hard Construction Costs $1,384,333,000 $553,733,000 $627,241,000 $250,897,000 S123,762,000
SgftCom
OSHPD Permits (3) S20,634,000 SO $0 SO $0
Polo AIio COMtrudion P9rmlts 512,582))00 $0 $4,894,000 SO $418,000
Att:h~ Engineer Fees 5125,816,000 $6,291,000 558,724,000 52,936,000 55,015,000
Other Consufting FGo&s 5103,798,000 55,190,000 $33,032,000 $1,652,000 51,776,000
Printing/Rsprociodion/Dittribvtion $2d!'0,000 $2,516,000 $979,000 $979,000 SO
Subtotal $265,346,000 $13,997,000 $97,629,000 55,567,000 $71209,000
~ujE;!ment Qnd ~r Costs
Medieol Equipm'l!nt 5240,000,000 $240,000,000 $106))32,000 $106,032,000 $0
Material!; Management Equipm;mt $25,163,000 525,163,000 $6,851,000 $6,851,000 SO
Food Service Equipment $2].389,000 $21 ,389,000 $0 $0 SO
Telephone, Computer and Do1a 5127,582,000 538,274,000 $89,127,000 $26,738,JJ00 50
Fumnvre, Fixtures, Miscellaneol.$ Equipment 525,163,000 $25,163,000 $9,787,000 $9,787,000 SO
Sobio"'l $439,297,000 $349,989,000 S211,797,000 $149,408,000 $0
TOTAL $2,088,976,000 $917,719,000 $936,667,000 5405,872,000 5130,971,000
T!J.XQble Cost Q$ % of fmmated ~ 44% 43%
SoUK'QS: Stanfwd Univer.;ity !.and, Buildin9$ and Reo! &tate; and C8RE Conwhing.
(11 For eoc.h projocf. the Q§OoCicrtad parking, site costs, ate. are included with that proted, Esfimarns cire roundGCI to the nQQrest thousand.
(21 Inelude1i tl-le Hoover Pavilion ienont improvements, H(loO'V'$( Medical Offit:e Building, and the Hoover perking strudure.
(3) Office of Sk:r:mwide Heahtt Planning and Dewlopment (the permating ageney for hospitals).
Tambl& Cost
$49,505,000
50
SO
5251,000
589,000
SO
5340,000
50
SO
$0
$0
SO
SO
$49,845,000
3S%
T* Em_Co.! Taxable Cost
$2,135,336,000 $854,135,000
520,634,000 SO
517,894,000 50
5189,555,000 $9,478,000
S 138,006,000 $6,931,000
$3,:!95,000
S370,184,000
$346,032,000 5346,032,000
532,014,000 532,014,000
S21,389,000 $21
$3,156,614,000 51,373,436,000
44%
CSREConsvlting, 1/19/1009 N!\T~\~\2007\1001043 Starrford\worlc:frIg ~I\SUMC: FUoooll~.Rtl7.ldf
Exhibit 46
lJ'CH ConslnJction Cost Estimates (1)
In 2008 Dollars
SUMC Project Fiscallmpad Analysis
IIo.oiul !61 crmic:s@j Ref'll:'WQfion of Emfies Hoseital Totol
Item EsIi ....... CosI T_CosI EsIi ....... CosI TambieCosl EsIi ....... CosI T_CosI EsIi ....... CosI TambleCoM
DirodCosis
Hard Construdff:.sl"! Costs 5727,045,000 5290,818,000 $62,289,000 524,916,000 5139,111,000 555,644,000 $928,445,000 $371,378,000
SohC_
OSHPD Pormils (4) 59,623,000 $0 51,022,000 $0 $2,281,000 $0 $12,926,000 $0
P<lIo AIto Construction PQfmits 55,868,000 $0 $623,000 $0 $0 $0 $6,491,000 $0
AI'c:hited Engineer Fee:; $70,412,000 $3,521,000 $7,475,000 5374,000 $16,693,000 $835,000 $94,sao,000 $4,730,000
Other Can:s:ulting Fees $48,408,000 52,420,000 55,139,000 5257,000 $11,477,000 5574,000 $65,024,000 $3,251,000
Pnnting/Reprooudion/Oistribufion 51,174,000 51,174,000 $125,000 5125,000 5278,000 5278,000 51,577,i
Subtoiol 5135,485,000 $7,115,000 514,384,000 5756,000
~uie!:D!!lt ond 2!.b!r Costs
Msdic:cl Equipment 5141,771,000 $141,771,000 510,298,000 $10,298,000 $47,700,000 $47,700,000 $199,769,000 5199,769,000
_ria~ Manogemgnt Equipment 516,429,000 516,429,000 $1,744,000 51,744,000 51,948,000 $1,948,000 520,121,000 520,121,000
Food Servioe Equipment $4,987,000 $4,987,000 $529,000 5529,000 $0 $0 $5,516,000 $5,516,000
Telephone, Compvltsr and DQfQ 561,446,000 $18,434,000 $8,804,000 52,641,000 $16,195,000 $4,859,000 $86,445,000 525,934,000
Fvmitvte, rlXtvres, MiKeUcneous Equipment $11 ,735,000 511,735,000 $1,246,000 51,246,000 $2,782,000 $2,782,000 $15r1 63 ,000 $15,763,000
Subtotal 5236,368,000 $193,356,000 522,621,000 516,458,000 $68,625,000 $57,239,000 $327,614,000 $267,103,000
TOTAL $1,098,898,000 $491,239,000 599,294,000 542,130,000 $238,465,000 $114~620,OOO $1,436,657,000 5648,039,000
Taxable Ccm as % of Estimated Cost 45% 42% 48% 45%
$oVl'C9$: Stanford University Land, Buildings and Revl Emte: and CBRE Comutting.
(1 r stanford UnMmiity Land, Buildings, and Ree! ~ divided the 521.300 new sq. fL into the lnpomnt and clinics components f,o. mQ'h:h the project eppliecmon, $V$"! ihough they will \)Q housed in one
strvctul'e. Potking fo, LPCH il;: included in the Hospital ngUN$, &ti~ ere round&d to th& neoorest thQ\nCnd.
(21 471,300 "l. ft,
(3150,000 "!, ft,
(4) OffiC9 of ~ H~11h Planning and Development [thO pormiHing agency ror hospttalsJ.
ORE ConsuItinQ, '2/1f:J{2f)<:j9 N:\ T oorT'l"Sedway\J"rojffdli\2oo7\ 1 001043 Stmrford\ Working DocunYmh:~lJMC FiKW Irnpoct.R01.xfs
Exhibit 47
Stanford University School of Medicine Construction Cost Estimates (1)
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Cost Item
Direct Cosls
Hard Construction Costs
Soft Costs
OSHPD Permits (3)
Polo Alto Construction Permits
Architect Engineer Fees
OIher Consulting Fees
Printing/Reproduction/Distribution
Subtotal
Equipment and Other Costs (4)
All Equipment
Telephone, Computer, and Data (5)
Furniture, Fixtures, Miscellaneous Equipment (61
Subtotal
TOTAL
Taxable Cost as % of Estimated Cost
FIMs (2)
estimated Cost T axoble Cost
$334,000,000 $134,000,000
$143.000,000 $7,150,000
$41,500,000 $41,500,000
$3,113,000 $934,000
$ 6,22 5 ,000 _-".$;;6~,2;:.;2;;:;5.!iii'0,,"00,""
$50,838,000 $48,659,000
$527,838,000 $189,809,000
36%
Sources: Stanford University School of Medicine, Office of Facilities Planning and Management;
Stanford University Department of Project Management; Stanford University Land, Buildings and
Real Estate; and CBRE Consulting.
(1) Estimates are rounded 10 the nearest thousand.
(2) Foundations in Medicine (FIMs)1 , 2, and 3.
(3) Office of Statewide Health Planning and Development (the permitting agency for hospitals)
(4) Estimates for total equipment and other costs are provided by Stanford University Lands,
Buildings, and Real Estate.
(5) Actual total expenditures for Telephone, Computer, and Data were esfimated to be
$6,225,000; however, only $3,112,500 of these expenses will be for equipment. 01 the
$3,112,500, approximately 30 percent 01 the sales are estimated to be taxable. This estimate is
calculated bosed on the taxable vs. non-taxable sales in this cost category from SHC and LPCH.
See Exhibits 45 and 46. These estimates were approved by Stanford University School 01
Medicine, Office 01 Facilities Planning and Management.
(61 Actual total expenditures lor Furniture, Fixtures, Miscellaneous Equipment Were estimated to be
$8,300,000; however, only $6,225,000 of these expenses will be lor equipment.
CBRE Con$\Jlting, 2119{2009 N:\ T eom-Sedwoy\Proied,\2007\ 1007043 Stonford\ Working Documenl,\Model\SUMC Fiscollmpod.R07 .xI,
Exhibit 48
SlIMC Facilities Tamble Construction Cost Estimates Pa-Square Foot, 2015 and 2025
In 2008 Dolla~
SlIMC Project FisaJllmpad Analysis
To ... lt
~.R·lm T~DinldCosh
EntiIy/Type of$pace 2009-2015 2015-2025 2009-202S TGlaII2l PwSq. Ft.
SHC M.ain Site
Hospital 1.100,000 0 1,100,000 $553,733,000 $503
Clink/Medical Office 0 429,000 429,000 $250,897,000 $585
SHC HOC7WIr Pavilion Site
Medical Office (3) 90,100 0 90,100 $49,505,000 $549
LpCH
Hospital 471,300 0 471,300 $290,818,000 $617
Clink/Medical OffiCII 50,000 0 50,000 $24,916,000 $498
RenO¥Qlion of Emting Hospital 274,700 0 274,700 $55,644,000 $203
SoM
R......,rch/laboratory 185,000 229,977 414,977 $134,000,000 '323
TOTAL 2)J30,071 $1.359.513))00 S480
Soun:es: Exhibits 1, 32, 45,46, ond 47; and CeRE Consulting.
(1) See Exhibill.
(2) See Exhibits 45, 46, ond 47 for Iotal dir1ld, soft, equipment, ond other cosIs.
T~SohCosh T~~uioc''''lan::lOtt-Cosh Total Tcmd:>Ia Cosh
TGlaII2l PflrSq.R. T"'(2J PwSq. Ft. Totr::il(2) PwSq. Ft.
$13,997,000 $13 $349,989,000 $318 $917,719,000 .834
$5,567,000 $13 $149,408,000 $3" $405,872,000 $946
$340,000 $4 '0 SO $49,845,000 $553
$7,115,000 S15 $193,356,000 $410 $491,289,000 $1,042
$756,000 $15 $16,458,000 $329 $42,130,000 '843 $1,687,000 •• $57,289,000 "'>9 $114,620,000 $417
$7,150,000 $17 $48,659,000 $117 $189,809,000 $457
136,612))00 S13 $81:5,1:59))00 .-S2.211,284,OOO '781
(3) Indu<les 60,000 :square feel of new medical office spoce at Hooyer Pavilion, as shown in Exhibit 1, and 30,100 square hoet of reriQVa!ed $pQQI at 211 Quarry RQQd, as shawn in Exhibit 32.
CBRE ec.-lting, 1/712001' 1'I:\T~\2007\ 1007043 StcnfcnI\W".Iting D<>cum ..... \ModooI\SUMC Fioed Irnpad.Im.do
Exhibit 49
SUMC Facilities Taxable Conatrudion Cost Estimates by Entity ond Construction Period, 2015 and 2025
In 2008 Dollars
SUMC Project Fiscallmpad Analysis
2009-2015
TaKabl.
Co*' per Total
Entity/Type of Space Sq. Ft. 111 Sq. Ft. (21 ToltClbl. eo*, Sq. Ft. III
SHe Moio Site
Hospitol 1,100,000 1,100,000
Dired Costs $503 $553,733,000
Soft Costs $13 $13,997,000
Equipment & Other Costs $318 $349,989,000
Clinic/Medicol Office 0 429,000
Dired Costs $585 $0
Soft Costs $13 $0
Equipment & Other Cosls $348 $0
Tolal SHe Main Sit. 5917,719,000
SHe I:!QQve[ !3!vilion Sile
Medical OHice (2) 90,100 90,100
Dired Costs $549 $49,505,000
Soft Costs $4 $340,000
Equipment & Other Costs $0 $0
Tolal SHe Hoover Pavilion Site $49,845,000
l.fQj
Hospital 471,300 471,300
Dired Costs $617 $'290,818,000
Soft Costs $15 $7,115,000
Equipment & Other Costs $410 $193,356,000
Renovation of EKisting Hospital '274,700 '274,700
Dired Costs $203 $55,644,000
Soft Costs $6 $1,687,000
Equipment & Other Costs $209 $57,289,000
Clinic/Medical Office 50,000 50,000
Dired Costs $498 $'24,916,000
Soft Costs $15 $756,000
Equipment & Other Costs $3'29 $16 1458 1°00
Tatal LPCH S648,039,OOO
:i2M
Research/Laborotory 185,000 414,977
Dired Costs $3'23 $59,738,'251
Soft Costs $17 $3,187,5'26
Equipment & Other Costs $117 $'21,69'2 1564
Total SoM S84,618,340
TOTAL SUMC PROJECT $1,700,221,340
Sources: Exhibits 1 and 48; and CBRE Consulting.
(1) See Exhibit 1.
('2) See Exhibit 48.
2009-2025
Ta)(Qble
eo*, per Tatal
Sq. Ft. (21 Taxable Colt
$503 $553,733,000
$13 $13,997,000
$318 $349,989,000
$585 $250,897,000
$13 $5,567,000
$348 $149,408 1°00
51,323,591,000
$549 $49,505,000
$4 $340,000
$0 $0
$49,845,000
$617 $'290,818,000
$15 $7,115,000
$410 $193,356,000
$203 $55,644,000
$6 $1,687,000
$209 $57,'289,000
$498 $'24,916,000
$15 $756,000
$3'29 $16 1458 1000
$648,039,000
$3'23 $134,000,000
$17 $7,150,000
$117 $48 1659 1000
$189,809,000
52,211,284,000
CBRf Con.utfing, 1/7/'2009 N,\ T eam·Sedway\Proied.\2007\ I 007043 Slanford\Worldng Do<umenl.\ModeI\SUMC Fi,callmpad.R07 .0:1.
Exhibit 50
Share of SHC and LPCH Purchasing Subject to Cily of Palo Alto Receipt of
Sales and Use Tax
Fiscal Year 2006-07
SUMC Project Fiscal Impact Analysis
Vendor Location
Palo Alto
Other California
Other U.S.
International
TOTAL
Percent of Adjusted Taxable Purchases
Excluding Other California:
Sources: Exhibit 12; and CBRE Consulting.
(1) See Exhibit 12.
SHC
Taxable
Spending (11
$0
$91,645,000
$13,330,000
$0
$104,975,000
12.7%
LPCH
Taxable
Spending (1)
$0
$14,042,000
$452,000
$0
$14,494,000
3.1%
CBRE Con,ulling, 2/19/2009 N:\Team-Sedway\Projects\2007\1 007043 Stanford\Working Documenls\Model\SUMC Fiscallmpact.R07.xls
Cchibit 51
SHC Construdi~ Sal .. and u... Tax RMnuosAa:ruing to tho City of Palo Alto, 2009-2015 and 2009-2025 (1l
In 2008 Doll ...
SUMC project Fiocallmpac:t Analyois
2009-2015
Percent Subjrld 'Ie .A.rnolW Sub7edto """"'"' ..... nd
Coo""""",,,, T_Coo Sols and Use Tm: Sa)as and Use; Tax .... 12) Use T(lXp) T_Coo
Dirad com 14, (5)
Hospital $553,733,000 80"" $442;986AOO as"" $3,165,* $553,733,000
CliniCll/Medkol Office .0 0.0% '0 85.0% $0 $250,897,000
Hoo ... ec PQ..iliOl'l SitEI $491505,000 SO."" 139,604,000 as."" $49.sos,ooo
S"'*"'" $OO3,23S,OOO 5482.590_ . $854,135,000
~(4)1'1
Hospnc! $13,991,000 0."" SO as.O% .0 $'13,997,000
Qinia!M.&dicoJ Office $0 O.or. ,0 as.O% SO $5,567.000
HOO>'CI' Pll'Iillon Si!9 0.0% SO SS.O% 1340;000
5""",,,,' SO $19,904,000
fgyrorr-rt l ~ ~ {4} (7)
Hospftal $3'49,989,000 12_~ S44A42,.51S 85.0% 1377,761 $349,989;000
a;nia/.Y.ed"1COI Office so 12.7% SO SS.or. $0 1149,408,000
Hoover Pavilion Sifg 12.7% .0 as.O% $0
&bolo! $44..442,518 $499,397,000
TOTAl.. .967,564_ $527,032,918 $.I,479,m $1,373,436_
Sources: exhibit 45; Ex;hlbit 49; Exhibit 50; Stonfortl Unive~ity LQnd, Bvildings, Clnd Real Estate; cmd CBRE Cor.sl..lltil'lg,
(1) Only solElS and \fi tQXeS ElStimakld to accrue to th" bG11ll11it of tha CfIy of Polo AIkt are included in this Qm::dy:sl~.
(2) CBRE Consutting estimo'te:$ thtrt the $UMC Proied would capture 8S pcrcerd of potential ~Ios and U!'lQ fa:It!'t'!tWlrlOO$ ~ with eomtrudion ~
(3) Applies Oty of Polo Alto II»:; I'IlN of 1.00 peroor1l:. Figures ar& I'Olffided to whole dollot$.
(4) See Exhibit 49.
""""-202S -....... '" .Arnom!l~1o """"'"' .... and
sm-and IJs& TaK Was and Use T(I)( -(2) lise Tax(3)
80.0% $442,986,..400 as.or. $,3,765,384
0.0% .0 85.0% '0
SO.O% $39.604,000 65,(1% 1336,634-
S482)S90AOO $4,102,018
0.0% SO 85.0% $0
0.0% $0 85,0% ,0
0.0% 85.0% $0
SO
12.7% $44,442,:518 as."" 3377,761
12.7% $18,972,219 85.0% $161,264
12.7% .0 85.0% SO
163,414,737 1539,025
$546,005,137 $.1,64',0.<3
(S} Stanford Univenii1y land, Bvildings, and Rael EmrIe estimates !hot 60 petcant of COI'ltr'a'ct'5 and $vb-corth'!'.ld$. will be $S miDion or !'n\'.IJ'S. Thls estimote is hosed on Slol'lford Univemfy lends, SWdings, and}tool EMm ~nation of Qth$1"
r,;Qpital consfTlJdion projed CQnfTocIs and an undemanding of SHes oo~ needs.
16} Soft ~ Of'!.' DI'I!il::ipok!d to be pcid diffldly by SHe, All pr~ of fQxQbIe goods 0( se~ ote: 0$Ii!Jf'f!ed to be 'Iooc.ctod in CoIifbmio outside Palo Alto. Then!6ore, no soles or use twt bllfl9fit is a~ to 0i;Q'US to the: Crty of p..,to Aito
from lhese costs.
~7} These pvrchQSC$ (lro as.';!JI'l"I(l(] to be mod&dirdy by Sf-fe, Ao:::oroingly, trw analysis «$$\!1"!'I$t. th;) mrn of pvtmcsiog nvbjed to looolly ropartod soles and u:se~ «>mpCl'\1b1e foltw shal'9 idQrrtllied h>r SHe operaii_~aIed
pv~ dooJmanrod in Exhibit 50.
CSR.e C:nsul!ina. 2{19!2009 ":\T~~\f'roPds\200"""(0)'0.t3Sttl<'lf=j\~ ~~f'iitecllmj:!Gdm7"
ElIhm~ 52
LPCH Constrvdion-Roluled Sal .. and Use Tax Rovenu .. Alxtuing to the City of 1'<>10 Alto, 2009-2015 and 2009.2025 (I)
In 2008 Dollars
SUMC f'r<>jod FiOCQllmpact Ano~
.''',.MOl. ~n:ent Subject to Atnounf~to """""" --c..to.."..y T"""""c..t Sales and Use Tm: SoIet and UM T4X -(2) U.TQX~ T"""""c..t
"""" em (4)15)
HQSPirol $290.818,000 SO • .", 5232.,654,400 85.'" $1,917.562 529(),81B.OOO
Ren()'Io'Otion of Existing Hotpitol $55,.644,000 BO.O% $44,.515,200 85,0% $378.379
CllolQ'HospaQI $24,916,(100 SO.'" $19,932.soo 85.0% $169,.429
S ... btoIol S371~78,OOO $297,102,.400 $2.525,370
~(41(61
Hospi1al $7,115~OOO 0.0% SO 85,0% $0 $7,115,000
Rmovotion of Existing Hospital $1,687,000 0-"" $0 85.0% $0 $1,687,000
ClinldHOi$pfIoI $756,000 0.0% 1!l . ..",. $0 $756,000
Subtotal $9,.558,000 SO $0 59,558.000
§gvio'IH&1 It & OIher Com: (4) (7)
Hl'./Spi1o;l $193,.356,000 3.1% $6,029,868 85.0% $St254 "93,356.000
Reoovofion of emting Hospital $57.289,000 3.1% $1,786,576 85.0% $15,1136 $57,289,000
Cli~pitoi $16.458,000 3.1% $513,248 85"" $4,363 $16.458,000
SWIotal $267,103,000 $8,329,692 $70,803 $267,103,000
TOTAl. ---$305-52,596;11'3 5648P39;ooo
Soun:lcs~ Exhibit 46; exhibit .49; exhibit 50; Slnnford Uni~ Lond, Buiklj~ and RaQ! Estate; ond CBRE Consulting.
(1) Only sales ond ImJ t\J;Xf!$ G~ to o~iO 1h;; benafit offhg City of PobAito (11'9 ind.....ded in thi!-ooo!y:si:t.
(2) caRE ConsvIting astill'lOh!l5 that the SUMCPra/ed wovId capt...re 85 per:;.oot of ponmtiol soles ond U$e Iwt reYeflV8S o$$Olci~ with (;OfIstnx:tion CO/'JtrQds.
(S) AppI'_OIyofPok>AItotnx roM of 1.00 pen:em. RguresQr9fO\1nded iowhol ... dollort.
(A) See &hibif 49.
""""...,.. Pien:IDnt Sut:Ijed 10 Ammri Subject » """""" _.od
SoaondUs:eTtIIC: Sales <md u.e TQlt -(2) Use Ta.:(3)
SO . .,. :&232,654,400 85.'" $1,977,562
SO.O% $44,515,200 85.0% $378,379
SO.O% 519,932 cSOO 85.0% $169.,429
:&297,102..400 $2,525,370
0.0% $0 85.0% $0
0.0% .0 85.0% .0
0.0% $0 85.0% '0
$0 $0
3.1% $6,029,S6l3 85.0% 551,254
3.1% $1,736,576 85.0% $15,186
3.1% SS13,24S 85.0% 54,363
$8,329,692 $70,803
$305-52,596,173
{S) Skinfon:! Univerolty land, Buiidings, ond lWeI E~ estimates that 60 perOllllf of t:ontrcds Qnd $1,Ib-wn1rOds 'Mt1 be $5 million Of' more. This estimate is ba.d em Stonford UniYWlIlily Londs, 8uildings, ond Real Estahi! """",rnioalion of
ather f;Opitol ~ pro'f9Q ronf!'l;ld:s Qnd on undemundina of lPCH'$ amstrvdlon nseds.
(6j Soft COS't$ oro tmricipotad to be pard ditocily by LPCH. Alf providers of fw.oble goods or $ervi~ Qre (l551,jn'tE!d fQ bill kxI::OOd in CoHfomlo (llMide Polo Alto. Therefore, no sales or usa tax bcflcfit is assumed 10 ao:rve ioine City of Polo
Alto from ttme ()QISt$...
(7) ThQ$0 pl.!t'd1QSQS oro assumed:to be made diroctly by lPCH. Aa:ordingly, the 'Cnatys~ 'Cssvmes the $hol1ll of purtho:sing subf$d:to 10\':0111 reported sol05 and use foxes comparable lo tne shore identified for LPCH operalions.wlated
pv!"d!osas dowmented in ahibit SO.
CSR15 eo-.Jting, 2/19(2009 r-c\T~~\2007\ll»704Z~W....ru"9~~~Impc:d.PJ)1..ls
Exhibit 53
ScM ConsInldion-Rslatad Sal .. and U ... Tao< _nu .. A=ving to the City of Polo Alto, 2009-2015 and 2009-2025 tll
In 2008 Dollo ..
SUMC Project Fiscallmpod Anolyois
2009-2015 2009-2025
Pen:nnt Subfect to AnMxmtSul:'!jew;':tto Cophuo SalMond -&A>joc!" Amount &A>joc! " co .... SoJesond
c..tCa!ooo<Y T_c..t w. and Use Teu: Sok!:s;and lhe TG'It -121 UmTax{3) T_c..t &;.1_ and lJ$$ T(I)( SOles and UM TGl( -12) U5U Tax (3)
S59.738,25t av."" $47,790,600 as."" 5406,220 $I 134,000,000 80.0% $107.200,000 85.0% .$9",200
~i'115)
FIMs 1,2,Qrtd:3 $3,187,526 0.0% '0 as.O% .0 $7.150,000 "-0% .0 85."" $0
tgyil2:ll!QO! £; ~ ~ (3) (6)
FIMs 1,2,Qi'ld:3 $21,69:2,564 0.0% .0 85.0% .0 $48,659,000 0.0% '0 85."" $0
TOTAL '84,618,340 $47.790,liOO $406,220 $1119,1lO9,000 $107,200.000 $911,200
$oVI'C'Kw. 'Exhibil 49; 5ronford Uni..-etlility lond, S ... i!dil'!91. ond Reo! Estate; ond CBRE Consulting.
t 1} Oruy $OM ond VS$ ta:res: estimoted to 0C'Cl"\I0 to the beruI:fiI of thR City of Polo AJIo Onil included in #Us amiym.
f2) CStE~"9 estirnaJe$thatthe SiJMC.Pn:ljed would mplvro as percent of po+MIioI S1:llos and US6 fox ~el'Il.1'Elt cssodoted with eonstrudiotl ~d3,
(3) App50s City of P<:a:1o ;\kQ m rote of 1.00 pen;eot. Filgvms orelVUf\ded tQ....hota dollars.
(A) Sere Exhibit 49.
{51 Stanford U~ !.tInd, SuildiflgS. 'Om! R.oaI 'Estote '\l$fimam that eo per<:::ent of (:Ol'1tff.Ids ofld :sub.eorl/rQds will be $IS million or more. TM~ $$!imate is bosed 00 Stanford Uni"'Cfllity Lands, Buildings, and Reol Estate examination of
oth!iw<:op'fml ~ profi!d 1XIfltnlds tn'Id OIl urnl(!l'$1Qodifl9 of the SoM's coM1rudiOl'l needs,
(6) Soh com¢~antkif'Xll$d to be pcid diredly brlhe 80M. All PfQYidIWS ofltJXable good!; Of Soef'\IiC/1l$ Qre Q$:Svmcd to be locawd in California oWid+ PaloAJt,:,. Therai'we, no IfOIes: Qr tJ_ia:i< ~ is O$$urTl9'd fQ ~tothe Cilyof
Polo Nm from th_ cm.I$.
(i) A5sutnEl$ oft PlJ~, b<rth IoXCIble Qna noo~to, ....ould be made by Stanford Uni-...crsity, which is not lo~ in the City of Pa!oAlto. ThWllifors, tn0l'tl is no potential for the City of Polo Alto to obtain sales or use tax ffl'I/U'l\JC$
from those p<.Irchooo!;.
C8IIECO!I~ Z/19t2009 N'\TI'CI~\ProillCh\2007\1 007043 ~\WWv o...:..~lJo\odel\Sw.\C 1'1=1 ~,.fI1)'1,""",
Exhibit 54
Construction-Related Sales and Use Tax Revenues Accruing to the Cilyof Polo
Alto, 2009-2015 and 2009-2025
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Entity / Cost Category
SHC (1)
Direct Costs
Soft Costs
Equipment and Other Costs
Subtotal
LPCH (2)
Direct Costs
Soft Costs
Equipment and Other Costs
Subtotal
SoM (3)
Direct Costs
Soft Costs
Equipment and Other Costs
Subtotal
TOTAL
2009-2015
$4,102,018
$0
$377,761
$4,479,779
$2,525,370
$0
$70,803
$2,596,173
$406,220
$0
$0
$406,220
$7,482,172
Sources: Exhibits 51, 52, and 53; and CBRE Consulting.
(1) See Exhibit 51.
(2) See Exhibit 52.
(3) See Exhibit 53.
2009-2025
$4,102,018
$0
$539,025
$4,641,043
$2,525,370
$0
$70,803
$2,596,173
$911,200
$0
$0
$911,200
$8,148,416
CBRE Consulting, 2/1 9/2009 N:\Team~Sedway\Proiects\2007\1007043 Stonford\Working Documents\Model\SUMC Fiscallmpact.R07.xls
Exhibit 55
Construction Staffing Eatimate., 2009~2025
SUMC Project Fi,callmpact Analysis
Averoge Employment
DuratIon Duration Average For Consirud!on
Enlily/Con .... udion Phose (1) !1!lon'h'l!ll !y'ear.1 Emel2lment Pl Period
IAI IB=A/121 ICl ID=BxCj
Pho,. 1, 20091hrough 20 15
SHe (Majn SUMC Silo)
Late 2009 10 Mid 2011 6 0.50 75 37.50
Lola 2009 to Mid 2011 10 0.83 100 83.33
Lola 2009 to Mid 2011 2 0.17 50 8.33
Mid 1011 10 Lore 201 1 4 0.33 60 20.00
lole 2011 to 201 5 11 0.92 500 458.33
lale 2011 to 2015 16 1.33 600 800,00
Late 2011 102015 25 2.08 800 1.666.67
SHe jHoover Pavilion Sl!e}
2010 fa 2012 4 0.33 140 46.67
1010 to 1012 6 0.50 140 70,00
1010fo 1012 8 0.67 140 93.33
Toiol .SHC(2) 3,284.17
Annual Averoge • SHe (3) 505.26
lJ'Ql
Mid 2009 fa lote 2010 4 0.33 30 10.00
Mid 2009 fa lote 2010 12 1.00 30 30.00
Mid 2009 to lole 2010 2 0.17 30 5.00
Eafly 2010 fa 2014 10 0.83 270 225.00
Early 201 0 to 2014 14 1.17 300 350.00
Eoliy 2010 to 2014 18 1.50 450 675.00
Eorfy2013to2015 12 1.00 200 200.00
Eoriy20J3fo2015 6 0.50 170 85.00
Early 2013 to 20 15 12 1.00 170 170.00
T 0101 • lPCH (2) 1,750.00
Annl,lol Average -lPCH {4j 269.23
§11M
2010 '0 2015 (5) 4 0.33 150 50.00
2010'02015 (5) 4 0.33 175 58.33
2010 '0 2015 {51 4 0.33 225 75.00
Total· SaM PI 183.33
Annual Averoge -SoM (6; 28.21
P!Qject~wlge OIJ~le IrIFros!rugure !!!!!1rovemenls
2009 through 2015 84 7.00 28 196.00
TolQI • Infraslrvdur. (2) 196.00
Annual Averoge " Infrotlrudure 17l 30.15
TOTAL SUMC Proj.ct • Ph ... 1 (2) 5,413.50
TOTAL SUMC Proiect Annual Aver(lse ~ Pnoee 1 (e) 832.85
Note!: Continved on next page
CIIRf C<msul!:nlJ, 2/1912009
E><hibit 55, conlinued
Construction Siaffing Estimate., 2009·2025
SUMC Project Fi.callmpod Analysis
Enlily/CondnJ<ll.n Ph ... (II
Duratior'!
1Mon1h<1 !J)
Ouralfon
!Yeor.)
Avtrogo
EMployment !1!
SHe fMajn SVMC Silt)
Early 201710 lota 2019
Late 2019 10 Mid 2021
Lola 201910 tole 2021
T oIol • SHe (9)
Annual Average. SHe (101
SaM
2015 to 2020 (5)
2015 to 2020 (51
2015 to 2020 (51
2017 to 2019; 2013; ond 2021
Totol . SoM 19)
Annucl Average -SaM (11)
Projecj.-wide ensile !oftpalnx;lulJ! Improvemeols
2016 through 2021
TOkll-lnfrostrudure (9)
Annuol Avarog8 ~ Infto$lrvClvreIl2)
TOTAl. SUMC Proj"" • -. 2 (9)
TOTAl. SUMC "'oj"" Ann ... 1 A'.rag •• -. 21131
30
10
14
4
4
4
6
72
IB A/12)
2,50
0,93
1.17
0,33
0,33
0,33
0,50
6.00
SoufCa$; SUMC Applicalion, 'tort 8 • Contlrudion Adivitlell" (&vised April 7, 2008; ond CBRE Comvlling.
(1 j Construdion pM!!$$:, number of monlhs, and OV$fOge employmen! ore provided by the SUMC Applicolion.
{2; RepresenlS Ih~ cumulative numb« of full lime Bqujvolenl jobs over the entire 6.S-year construction per'lOd.
Iq
120
185
200
150
175
225
50
29
Average Empfoyment
For Conmudlotl
""rio<!
300,00
154.17
233,33
687.50
68.75
50,00
59,33
75,00
25.00
209,33
20,93
168,00
169,00
16,80
0163.83
106.38
(31 Reprosenls Iho cumulati'fll' number of full lime Bqujvolenl jobs on an annual baitis. Approltimately 505 ' .... Orker9 employed full 11me for 0,5 years it the
equivalent of 3,'284 cumulative jobs over the el"ltireCon5truetian period,
(4J Represents Ihe cumulati'fll' number of full lime liIquivalenl jobs on an annual basis, Approximately 269 workers employed full1ime for 0.5 years lit Ihe
equivalent of 1,750 cumulolivG jobs over the entire con$trudion p$riod.
(5) Actual School of Medicine conslruelion schedule oolle for Ihree, eight-momh periods from 2010 to 2020 ond one, six~month period from 20171Q 2021, To
ollocate the construction workars inlo 2015 and 2025 (:ole:gories/ CaRE Consulting auumed thai for Ihe construction period between 2010 and 2020, half of
the work will lake place be:fore 2015 ond half will lake place between 2015 ond 2025.
(6) Represents the cumulative number of full time equivalent jobs on on annual basis. ApprO)umately 28 workers employed full ,ime for 6.5 yeaf$ is the
equivolenlof 1 a3 cumulative jobs over the enlire canslftK:lian period.
(7) Represents the cumulatIve number of full time equivalent jobs on 01"1 annual basis. Approximolely 30 workers employed full time for 6.S yOO(S is the
IXIvivolent of 196 cumuloii~ job1 over jhe entire (:onstnK:tion period,
(a) ~pr&S&~e jhe cumulative number of ful! time equivalent lobs on on annual basi$. Approximolely 833 workers emp!oyed full lime for 6,5 yeorl ie the
equi'il'Jlo$nt of 5,414 cumulative jabs aver ihe eniire coostrudion period.
(9) Reprellsnfs the cumulative number of fvlllifW\e equivalent jobs over Jhe enlire 10-year constrlJdion period,
(10) ReprElS,mle the cumulative number af full time Bquivalanl job$ on on annual bo,ti, Approximately 69 workers employed full time for 10 years is Ihe
equivalent of 686 cumulolive iobs OVet the entir'B contll'lJ(;lion period.
(11) Represenls the cumulative number of foil fill'l$' equivolenl jobs on on annual ba,is. Approximctefy 21 workers employed full time for 10 years is Ihe
Bquh<olant af 208 cumulative jabs over the ontire conslrvction period.
(12) Repretenls the cumwolive number of foil time 8'quivolenJ job. on an annual basie. Approximately 17 workers employed full lime for 10 )'iXlrs is the
equivalent of 168 cvmvlalive joba over the entire constrvdlon period,
(l3) RepresMls the cumulative number of full lime equivolenl job. on 01'\ annual basis. Approximately 106 worken ~mploy$d full time for 10 ytJOl1I it Ihe
eqvivaleflf of 1.064 cumulative jobs aV&l the entire conslruction period.
Exhibit 56
Ono·Time Sales Tax Revonuos from Conslruction Wo"",r Spending, 2015 and 2025
In 2008 Dollars
SUMC Projoct Fi.""llmpact Analysis
Assumotions
Average Annual Retail Expenditures per Office Worker "Closer to Work" (1)
Percent oJ Sales To)(oble (1)
Discount Fodor for Construction Workers (2)
local Annual Taxable Expenditures per Construction Worker in Palo Alto
SUMC Entity
Stanford Hospital ond Clinics (SHe)
Average Annual Construction Workers for Period Shown (3)
Total Taxable Spending in 1'<>10 AI", (4)
Totol Soles Tax Revenue@ 1,00 percen' (4)
Lucile Packard Children's Hospital (LPCH)
Average Annual Construction Workers for Period Shown (3)
Total Taxoble Spending in Palo Alto (4)
Tota! Soles Tax Revenue@ 1.00 peN:enl (4)
School of Medkine (50M)
Average Annual Canslrudion WQrkers fQr Period Shown (3)
TQrol ToxableSpending in Palo Alto (4)
TQlaJ Soles Tax Rev&l1ue @ 1.00 percent (4)
On·Site Infrestructure Improvements (5)
Avetoge Annual Canstrudion Workers for Period Shown (3)
Tolal Taxable Spending in Palo Alio (4)
Tolal Sales Tax Revenue@ 1.00 percent (4)
Totol SUMC Project
Average Annuaf Construction Workers for Period Shown (3l
Total Taxable Spending in Polo Alto (4)
Total 501 .. Tox Rovenu. @ 1,00 percent (4)
2009-2015
3,284.17
$5,700,299
$57,003
1,750,00
$3,037,459
$30,375
183.33
$318,210
$3,182
196.00
$340,195
$3,402
5,413.50
$9,396,163
$93,962
$3,258
93%
57%
$'1,736
Torol
2016-2025 2009·2025
687,50 3,971.67
$1,193,288 $6,893,587
$11 ,933 S68,936
0.00 1,750.00
SO $3,037,459
$0 $30,375
208.33 391.67
$361,602 $679,812
$3,616 $6,798
168.00 364.00
$291,596 $631,791
$2,916 $6,318
1,063.83 6,477.33
$1,846,486 $11 ,242,649
$18,465 $112,427
Sources: U.S. Census 8ur8CUt 2006 Businass Patterns for Son Jose~Sunnyvale·San'a Claro, CA Metropolitan Stotisticol Area (MSA); Exhibit 55;
International Council of Shopping Centers {lCsq. Office Worker Retail Spending Potterns 2004; Bureau of Lobor Stotistic$} Consumer
Expenditure Survey 2006; and CBRE ConsultinB.
(1) See Exhibn 25.
(2) The discount facior for con$trucfion wotkers adjusts the office worker spending "Closer to WOlk" to account for the assumption thot
construction workers are more likely to pock a lunch from home than purchase food off~site. The discount foeiar wos calculated using the
County Business Patterns and the Consumer Expenditure Suvery, excluding the "Faad Awoyfrom Home" {.ategory. The 57 percEll'll estimate
implies 1hat the totol dollars s.pent by eo(Ultrudion workers Is equivalent to approximote1y 57 per<:ent of office wcrkers.' s.pending. In order to
eo!colale the 57 percent, divide $21/063 by $36,769, which ore found in Exhibit 28.
(3) Figures repfEl$ent the cumulative number of full time equivolent iobs over the periods shawn. See Exhibit 55 far staffing eslimates.
(4) Figures are rounded to whale doltars,
(5) Consfrudion workers offilloted with general on~site infraslructurEi improvements may nol be associated wilh a specific SUMC entity, since Ihe
improvements benefit the entire SUMC Project area,
CBRE COMl,llIin9, 1/7/2009 N:\Teorn.SedwQy\ProjectJ\2007\ 1 007043 SIonrord\Woricing Oot;uffiO)(!t&\,MQdel\$U,!i\C filrol fmpad.R07,xl,
Exhibit 57
Estimated New PM Peak Hour Trips Generated by SUMC Project, 2025
SUMC Project Fiscal Impact Analysis
Facility
Hospitals
SHC
lPCH
Subtotal
Medical Office Buildings
701 Welch Rd.
703 Welch Rd.
1101 Welch Rd.
Hoover Pavilion
Hospital Use Conversion
New Space
Subtotal
Totals by Entity
Entity
SHC
lPCH
SHC
lPCH
Subtotal
lPCH
lPCH
SHC
SHC
SHC
SHC
LPCH
SaM
Net New Space
Percent of
Sq. Ft. (1) Subtotal
459,670
395,300 (2)
854,970
(56,300)
(23,500)
(40,100)
84,230
60,000
144,230
54%
46%
100%
Net PM
Peak Hour
Vehicle Trips
693 (31
373 (41
320 (41
693
(123) (3)
(51) (3)
(88) (3)
315 (3)
600
146
o
Sources: AECOM/DMJM Harris (email correspondence from Nichole Seow; September 17, 2008);
Fehr & Peers, 'Stanford University Medical Center Trip Generation and Parking Demand Study,"
March 2008; and CBRE Consulting.
(1) Square footage figures are from Table ES·3 (Summary of Medical Center Projectl, page 3 01 Fehr
& Peers study.
(2) Note that the lPCH Hospital square lootage figure used for the March 2008 Fehr and Peers study
has since changed; therefore the square footage figure presented here is different thon the one
presented in Exhibit 1.
(3) Net PM peak hour vehicle trip estimates are from AECOM.
(4) The new PM peak hour vehicle trips for the Hospitals were allocated to the SHC and lPCH entities
by applying the percentage of total net square rootage for each entity to the tatal Hospilals trip figure;
figures are rounded to whole numbers.
CBRE Consvlting, 2/1912009 N:\Teom.Sedway\Projecls\2007\ 1007043 Slonford\Working Documenls\Modell,SUMC Fiscolimpocl.R07 ",I.
Emibit58
Estimalad City oIl'u1o Alto and I'uIo Alto Unified SchocI ODic! Impod Fees
In 2008 Dollar>
SUMC Ptojed Fiscallmpad Analysis
SHem
N« N .... Sq. Ft. or fveISq. ft. or --,,,,,,,,,,Foe Net New r riP (2) Net NewTnp$ Foe (31
Cd! m fm2l!lt2 ~)
HouOng (5)
Hospital 743,125 sq. ft. {6} $0.00 I",.~. (71 .0
Non.Hos.pital 126,139:3 sq. ft. t6, S17.06 !sq. ft. {S) $2,164,,9$
Sv!:dQh:d $2,164,795
Transportation {1Qj: 600 trips (111 12,684 I!rip {!II :1.1,610.400
CommuriIy ..........
Pmb(l2J 870,018 sq. ft. {6} $3.972 /sq. ft. {at $3,455,71 T
CommuMyCenl'ern (13) 670,018 sq. ft. (6j 10.224 /sq. ft. {St $194,684
libmries (14) 870,018 sq, ft. 16} 50.214 {sq. ft. {BI $,186,184
Svb<oiol $3,836,779
TOTAL $7.,611,974
PAIlSD ~S) 870.01 .... ft. {hI $0-'7 I",. II. (16) S408.906
Not'e$;: CQnlinvod 0fI neld PQ9¢.
C<WJ: ~ng, Z/19J2009
Net New Sq. Ft. or
Na-NIIIWTrip (2)
471,300 sq. ft (6)
o sq. h. i9}
146 trip::; {1 i}
441,500 sq. ft. {6t
441.soo sq. ft. \6)
441,500 $q, ft, (6)
441_ ..... (61
I.PCH SaM Toiol
fMISq. Ft. or --eI New Sq. Ft. ()f" FeeISq. A. or Em"""'" "'''''''''' Net New Trips Foe (3) Net New Trip (2J Nat Naw Trips .... 13) Foe (3)
SO.OO !sq. ft. f7I ro o sq. it (6) SO.OO /sq. fl:-m .0 SO
'17.06 I ... &. 181 ro o "I.~. ,61 $17.06 /liq.ft. (S) .0 12,164,7'95
ro '0 $2,164,795
.2 .... /Irip {!I) 1391,864 {) trips (11) $2,684 /trip 18) SO $2,002,264
$3.972 /sq. fl. IS) $1,753,638 o ~q. ft, (6J 13.972 /$<:1,. ft. (B) .0 $5,,209,3049
$0..224 {sq. ft, (8) $98,896 o $q. ft. (6) $0.224 /.$q. ft. (S): .0 $293,780
$,0,214 {sq. ft. (S) $94,4B1 o "1' h. 16) $0.214 /.sq, ft. (8) '0 $:(80,665
$1,947,015 >0 $5,783,794
$2,338.B19 so $9.950,853
SO..l' ""-'. P6) $207_ o .. II. (0) $0A7 1"1-'. (161 $0 $616.413
r.I;\T.,,.,..s...;I""Q)'\PI'oj+d'J\2001\1007t14S·$I\:I~rd\w.::..t.in9 ~\M<>dtl'$UMC ~ ~d ROJ,;d.
Extu*bit 58, continued
I;siimated City of Palo Nto and Palo Nto Unified Sd!ooI District Impad Fees
In 2008 Della ..
SUMC Project fiscallmpad Anolysis
5<JlJrces: Exhibits 1 and 57; City of Polo AIt¢ Mvnicipol Code (see Sedioo dtotktns in footnotes); City of Polo Alto News Details, "Oe$cription of City of Palo Aho Affordoble I-Iou$ing Fund· 2005D; "C1Iy of Polo Alto
Development Impod Fees," IJpdalod November 6, 2000; City of Polo Aho. 'Pionnins and Tronsportotion Commission Staff Feport AuSV3f 27. 2003"; Palo Alto Unined School Distrid {PAUSO)~ website, "'Schooi Impact
~'; PBS&.!; and CBRf Consulting.
(1) Indudes the Hoover Povilion S-lte.
(2) Per page l·of 1he uCity of Palo Alto [)e>.oelopment Impod Fees~. the Housing ond Community Facilities impoct fee: ore o$'$es:sod on a per square foot basis. With resped 10 the Transpar!a6on impod fee, per Sedion
1659.060 of the Palo Alto MlJnicipo! Code. "The fee imposed vpon a new development shall be calrulated by multiply1ng [I) the number of new PM peok hour vehlde trips projected to be genen:rted by a new
development by [Ii} the current fee rate."
(3) Fr9IJrM ore rovnded to whole numbets.
(4) Per Sedton 16.58.040 of the Ofy of Polo Alto Municipa[ Code, "The obligation to pay the fees esfobiishod by this diopter shalf OQ;rUC os of the date the first dh.c;retIOl'lory opproval is given for the deYeiopment, or if
no disO"etionary opproval is required, os of !he date 0 complete oPFdication is submitted for 0 buildins permit for the development. Feoo sholl be due ond payable as of the date 0 complete oppl"K:O'tlon is submitted for
a building permit for the de\'elaptnent. fges sholl be due ond ~ble to the Oty of Polo Alto prior 10 isslJonce of a building permrt fur the development, and sholl be colculated Qfthe rate of the_ in effect os offhe
dole the obligotion to pay the fees oc;crued.~
{5} Per the City of Polo Aho's news webpage, ~ Oetoifs (www.pafd.org/n$\OlSf'disp40ynews.osp?N~D=532&Tal'9etID"'208. accessed December 8,20(8), "The Affordable Housing Fund is 0 local housing irusl
fund estoblishod by the City Covncil of the City of Polo Alto, Cofrfomio to prcMOe nnonciol O$$mance fw the development of housing offordable to 'Mry law, low and moderote-incoma hoU$1l:holds thot li~ or work
within the City." The Affordabte Hoosing Fund ~ of the ~identiol Fund and th& Commerc;ial Fund. The Commercial Fund is composed of halJsing mitigation fees collectad from commerd"ol developers under
Chapter 16.47 offhe Municipal Code.
(6) Par Sed:1O!1 16.58.010 of the City of Palo Alto MlJniJ;ipal Code, "'New devIlIIopment sha!! mean, with to$ped to nonresidential developmcm, ony development fhat crUe'S oddilional square footage. W'here a
development projed includes replacement of existing sqvore~" the new develapment shall moon only the portion that constitutes: oddltional squore footage." Sola Exhibrt 1 for square footage figUrM.
(7) Per page 2 of the ''CIty of Polo Alto ~ment Impod foes"~ hospitols and wnvalesamt facilities are exempt from t~ City of Pella AIto~ Housing impoct fee.
(8) Fees per squore foot and per net new trip ore from page 1 of the "O!y of PoIo'Aifo OeWllopmeof Impoct Fees".
(9) If the new square footoge is nogalive fI.e.. the proposod SUMC Pmjed is reducing the amount of space), see Exhibit 1 fot square footage figures.. the new squore footoge is 05sumed to be te:fO for the purpose of
this analysis since impod fees ore only ~ on additional squore footage.
(10) Pet paSEI 2 mihe City of 'Polo Alto Plonning ond Tronsportofion Commission Stoff Repart. the objective\!: of the Citywide Tronspartofion Irnpad Fee OM 'to recover 0 foir portion offuture City of Palo Alto
tronsportoiion impn,:)\(emer!f costs from fvtul'$lond d~nt ond t~elopmMt city wide"; "to provide a fvndlng sOlJrC*: for implementing fhe Polo Alto Comprehensive Plan, Bicyde Tronspartotion Plan, and
Transportation Stratogic; Plan proied:s, including bike lones., btcyde and pode$trion IJnde!crossings of Colttain. shuttle tronsit services ond equipment, and advancedtrofSc signal system te<:hnclogies: cny.o.;de"; ond "to
p!'OVide kxd I'I'ICfch funds {typically from 15 to 25 per'O:!nt} for federal, state, regioooJ transportation gronn. to retdi%e projects from the Polo Alto Comprehensive Plan, Bkyde Transportation Plan. ond Tronsportotion
StrQ'legic PIon."
(11) s.. &!Ubi! 57.
(12) Per Section 16.58.020 of the City of Polo Alto Municipoi Code, the parks development fee is "to fund ocquisition efland and impco.eiitelds for neighborhood and dIStrict porks, in on omounl os set furth in the
mlJnicipa[ fee sd"edule."
n 3) 'Per SectIon 16,58.020 of the City of Polo Alto Municipal Code, the commvnity cent0r d~ent fee is "to fund devdopmerrt ond impn,:)\(en"lerd1i to community ~nters, in on omount os s91: forth in the mooidpal
fee schedule,·
(l4J Per Section 16.58.020 of the Cify of Polo AJto Municipal Code, the library deWllQpmenf fee is "10 fund ~OPl"lW!nt and improvements to libruries, in on al'n01.Jnt 0$ set furlh in 1he municipal fee !id'tedule."
(15) According to the PAUSD website (www.pQlJ$d.org/commlJnity!fe.es/~Jmpoc:t.shtml. accessed on December 8, 2008). PAUSD impad ''fIMs ore lJ$ed only fur coMtrudion and ~uction of 1;(;hooi foci!mes."
{l6) According to the PAUSO WI'ilbsikl, PAUSe impact "fees ate o~e$$$d on strucf\I~ to be IJsed for comtn(l('do! or indlJ~rial purposes, mO$l senior hOlJSing, adult-only mob~e homes. ond hotels ond motals! Fees fot
commerl;iol development are O$$Il!$$ed at $0.42 per sqoote foot.
~c......"Hin9, 2/19/2009 1'I,\T"'m~\~7\lOO704J!tanbd\Wcor!lill9 ~\Modol\SUMC ~ \rnpod.R01JJ:s
_59
City of Palo Alto G<lnon:d Mmd 0pendiIures and &fimaling Fadors, fiscal Yea, 2QO&.2009
In 2008 DoIIarn
SUMC Project fiscal Impact AnoIysis
0Iy"' ..... -l= Variablo~
"'-"'" BuIpt o,-ting No! -Variable Pweay..1ime V(lriobll!l~Pw
2008.()9 Tn:msien Out {l} -00 Variable f!l --PeAon Sorted i4~ ~--~ BuIpt~ fAJ (e) [e -A-Bj [0] fE-elfiO] [F -E /130,385J [G=F:II:SO%]
City A:k:omey $2,778.285 W $2,778,285 10%(6) $277,829 52.13 51.07
City Al.x:frtot $931.267 W $931.2:67 0%(7) .0 $0.00 SO.OO
City Oork 5,1,264,485 SO $1,264.485 0%(8) '0 $0.00 $0.00
C'rtyC01..!nciI $314,606 $0 $314,606 0%(9) '0 SO.OO '0,00
OIyMo_ $2,233,005 $2,039 52,230,966 10% (10) $223,097 $1.71 $0.96
.AdminfsttoliYe SeM('M; $7,17U~S3 .0 57.171,853 20% Ill) $1,434,371 $11.00 $5.50
Community Servi<::<!l$ $21,642.469 $6,990 $21,63$.479 40% {l2j $8,654,192 $66.37 $33.19
R,. $24.225,206 SO $24,225,206 80% (13) $19,380,165 $148,64 $74.32
Human Resovrt:eS S2,821,nl '0 $2,821,771 40% (l4) $1,128,708 $B.66 $4.33
UbrQry $6.569,566 $0 $6,569,566 30% {lSI $1,970,870 $15.12 $7.56
PlQMing 8, Comrmmity ftwironrnetlt $10,376,519 $7,60] $10.368,912 30% (16) $3,110,674 $23.86 $11.93
Poi"" $29,8iO,128 $0 $29,810,128 70% {l7) $20,867,090 $205.73 {20) $102,86
PvblkW¢f~ ,$,13,847,231 $16,574 $13,830,657 50% (18) 56,915,329 $53.04 $26.52
Non.Dep<:lrtmental $8,055,000 .0 58,055,000 48% (19J $3,902,760 $29.93 $14.97
roTA!. $132,()41 ,391 $33;210 $132,008,181 $61,865_ $566.18 $283.11
NQfe$: Continued on M'.Id page.
CeRE COlIs"";,,,!!, 2/19!2009 N:\T~\2OO7\lOO1043Siodurd\W<ll'iins~~Im.pod,RO?"
e.hiblt S9, <XlI1finued
City 01 Palo Alto Gonoml Fund Expenditv .... and Estimating Facto", fU<:aI Yoor 2008-2009
In 2008 Dollal1l
SUMC Project fj""llmpad Analys;'
SoUfte:s; EXhibit 6; "City of Palo Abo 2008-2009 Proposed Open:rting IW<;lget;' and CBRI: Consulting.
(1} Per the City'l prcposed budget, operoJing m:mmr.l; are means of mQ'fir19 !"e$OU(a!I$ betwgen funds, The Cdy of Palo Alto'$; Genero:l Fund maintoimobligcriiom to other funds $Uch (f$ Siorm Dfilinaga Fvnd, Copik:ll Project
Fvnd (mil Debt $ervke Funds.
(2} ~d1tvf$$ paid by the Geneml Fund railler ilian ether sources.
(3} ~m9. of e()$f$ thQf i~ with gmwIh, as ~ to fixed o:.om. CBRE ConwIting emlt"tl.'.ltM voriGble cost ~ bcsecl on aristing -M1.n1'M' skrlfing. Depo~ with Ies$ thon 10,00 fvll-time positions Qre
estlmablx:! to hQ'l/lJ' 1 00 ~nt flXlKl~. Other CSRE e:.1i~ Q1'l9 rovnded,
,41 Day-firm popvkrtion MiifMireod: by odding poplJiation and 50 pemmt of f¢fCl lOb!:. T¢fC1 penoN ~ in the City and '!he Sphere of lnfIue~ ~ _imati!id in Edu'brr 6.
IS} Costs per employee ~.50 percent of CO$Is pet' ~til\'!& popvloticn. hgvMS (U'& r~ to whoto~,
\6} Per1he: CitYs pfOpom:I budget {po 34;, there ore 10.60fUf-time staltil'l the City~ Office. CSRE Corrw1i1ns emmctesthQf 1.OOfuU-time positron, or 10 pereent, is variable.
!itt the CitYs pt~ budget {p. 40}, there ore 4..00 futI~time wit In the Oty Auditor's Officc. CSRE Consulting elliiimr.rtes iMtthere are no ...arioble~_
Per the Cily's pro~ budget {p. 46}, there ore 6.75 full-time steff in the City cter\($ OAim. CBRE Conwlting estim<Jte5; thcrt there are no -variab16 e:om.
m the ~ pro~ blJdget (p. 53), there ore 9.00 fufI~time mft wpporltng the Crty Coundl. CBRE Cm:!:ultlng dmcrtes thcrt there are no -varioble e:om.
P&!' th$ atYs propo«l!d budget (po 56), there ore '9.50 full-time mft in the City Manager's Office; thl5 figure d00$ not indtXie the Workfurc:e D~pment Coordinator position tnot hli fully funded thl"tX.lgh the Communtty
ServiecG ~rtment" CSRE Con.tv&rng e:;ti~ that 1.00 MI~fime pqsttian, or 10 peramt, is VClriobl ..
{11} Per the ~ propos1l!d budget {po 62). there ore 94.00 full-time stoff in the Administr;;mY$ Servie:es Department, CBRE Consulting estimates that all Generolledger posmOt1$ (4.50). PoyroI! posmorm {4.oor. and ~nll9
CoIlectiom positions [9.00), or 20 percent, o~ '\IQriobie.
(12/ Per the ~ pn;!~ budge'! [po 70), there ore 97.25 full-time doff in the Communit)' Services Deportment. CBRE Con5ulting estimates that 011 posiIkmll' respo~1& for eootdincmns progrQm:! and moi!"!tenance l38.5O),
Of 40 percent, ore VClriah~.
{13) P'$r the City';; pf'(Iposed budget (p. 84), there are 126.00 full·lime staff in the Fife Deportmerrl. CBRE C011$~ng e:sfimates that 011 categories with more thon 3 po:sitiorm {3S.50), or SO percani!, are variobl-e.
(14) f>&r the ~ proposed budget (p. 92), there ore j 6.00 full..time doff in thl!l Human Reoout'Oi't.S Deparment, CaRE Consultfng es1im<Jte5; that aU ~rim wfth alleoGt.2 positions \6.(0), ()1" 40 pen;enl, oro variabie.
(15) Par ilie CIfts proposed budget (p. 1(0), there ore 43.75 full·time staff in the Ubrary DeparI'n"MJI. CBRE Cons.uiting est1m<Jte5; that all Specialist and Assimrn Pwiliom (13,50), et 30 psreenI, er.wrioble.
(16) Par the Crty's prop<.l$$d budget \p, , DB), there ore 55.50 full-time staff in the Pklnnil'l9 end Community ErMrQl'UT1enf Dc-portmenl. CBRE Con:sultf~ estil'lllJ:tM thai the Planl'lW, ~io!O Plcnner~inabllity Coordinator,
ond Planning Technician positions in Current Planning (5.00); the ~nior Pklf'll'l&l' and Planner ~jtions in Ad-varn;.e. pfanning (4.00); the T~l"I!;pori'Otion Engineoers;n Tn.:mspa!1'tllion (2.oo); the Building Technician positions
in Building (2.0); and the Building Inspector positions in Impedion ServitJillll 14.00), ar 30 percent, afW:'l votiQble,
(17) Per the City's prop<.l$$d budget (p. 118), there ore 163.00 full-iil'l'le tkrffin the Ptitl«l Oep:.rrtmenl. CBRE Comu1ting arMte:$ thc.rt 0I! ~..,.Jth at least 8,00 po:;mm (110,00), Of 70 psreenI. Oft! ........ ioble.
(18) Pet the CrtYs prap<.l$$d budget (po 128). there ere 215.00 full_Iil'M' tkrff in the Pubfu; Works Department. CaRE Con.dtfng estimates that an ~Iie$: with at least 3.00 positions. {l07.oo). tit 50 pen:ent. ore -variable.
(19) Token 0$ 0 weightod overage baw;f on departments' blJdgel$ and percenl votiable a.'!sumptioO$.
(20) The service popukItion for the Fire Deportmenl ~ 'he Ctty, or 101,.430; see EXhibit 6.
CBRE~""'''B. 2/19/'2009 N:\T~1\lOO10.t3~~DoI:u-.ls~F<P=IImpod.R07.m
CdUbit60
SUMC ~ Cily 01 Palo Alto Gonen>Inmd~, 2015 and 2025
In :2008 o.:.lIan
SUMC I'n>jod AoI:allmpocl Analysis --Nat New Cosb g}
.... I'm"..,... SHe LJ'Oi $oM Non-SUMC T"""
Budgot CaIegorio> _I'l 2015 ZIl:l5 201. mB 2015 2025 2015 2025 201. 2025
"""""'" _ s..-l{31 97. 1,251 B50 892 0 0 100 100 1,929 Z,243
C'ityAtlornoy S1.07 $1.048 $1,339 $910 $954 '0 SO $107 $107 $2,065 .2,400
Ofy Auditor $0.00 $0 $0 .0 .0 .0 .0 '0 .0 .0 $0
cay Oerk so.oo .0 .0 '0 .0 ,0 .0 '0 .0 '0 .0
City Council 50.00 '0 '0 .0 '0 $0 SO $0 .0 SO '0
City ManofJ"H' $0.86 '''''2 $1,076 $731 '£767 .0 .0 '56 ... $1,659 $1,929
Admin'sm.nivo $oN'icos $5.50 $5,385 56,881 $4.675 $4,906 .0 .0 '550 '550 $10,610 $12,337
Commum)y Serv~ $33.19 $32,493 54',521 '28,212 $29,605 ,0 .0 53,319 $3.319 .... ,02. $74.445
Fire $74.32 572,759 592,97.4 $63,112 $66,293 $0 SO 57,432 $7,432 $i43~63 $166,699
Hvmon RotolJi"COS $4.33 $4,239 55,417 53.681 53,862 .0 '0 $.133 $433 $8,353 $9,712
Libtoty 57.56 $7,401 $9,458 56,426 $6,744 $0 .0 $756 $756 $14,,583 $16,958
Planning &. Comrrwnily El'J"fronmem $1,.93 $11,679 $14,924 $10,141 $10,642 $0 ,0 $1,193 $1,193 $2:3,013 $26,759
Polloa $102.86 5100,700 5128,678 $87,431 $91,751 SO SO 510,286 $10,2U $198;417 $230,715
PubGcWorb $26..52 $25,963 $33,177 $22,542 $23,6M SO $0 52,652 $2,652 $51,157 $59,485
Noo<-Deportmetllci 51.4.97 514,656 SHI,7i1 $12,725 $13,353 SO $0 $01,497 $1,497 $28,878 $33,577 ------
TOTAL 5283.11 $271,165 $3.54~1:n
$240_
S2S2.533 $0 $0 $18,311 528,311 $546,122 $635.016
So~ Exhibits A ond 59; and CBRE Consulting.
(1f See Exhibit 59"
(21 MgVN'! al"ll fOIOnde<i to whole dollars.
f3~ See E!d'Iibit 4.
em ~"9< 2fl9f,1OO9 N;\T~~\2007\1007Q43~~~R=1mpoe1l$'.IAI1
E>dtibiI61
Palo Alto Fire Dopar1ment SHe and $oM Coils fur SeMce (1)
r!$COl Yeors 2005-2006 and 2006-2007
SOMe Project Fi"",IImpad: Analysis
Call Twa
Alarm SysIem Soundod due to Molfundion
AJonn ~m Sound'llC!. No Fife ~ Unintentiorrol
~lnVQlid
bii: Life Support InhJrfocility T ran:lport Only
lAte<:tor Adrvmion, No Fire ~ Unintentional
Dispatched &. Cancalled en Rovta
EMS a.1I, DoW't'l9radeod: for BLS transport
EMS Coli, &duding Vohide Accident with Injllry
EMS Col!, Party Tr<Jnsported by Non-Fire Agency
FoIsoAlarm or Folse Cnll, Other
FkuTlmabte Gas or Uquid Condition. OthfiH'
Good Il"Itl>nt CoIl, Other
Heat Datedo( At:tiYation dU& to Molfum:tion
HeQt fr9m $hurt Ot¢Jit (Wiring), D~om
lock-In
lO<k-Ovt
MoIici0v5, MischilMlu$ Folse Coli. Ot~
Oil or OtherCombvstibioUq.,id Spin
RmnoYQl of Vicfim(s) from Stclled EI$VQtor
li'.if'l9 or J(!)W(Ilry ~al
Smoke ~ Adivction due to M=llfvndion
Smoke DImodor .AdWation, No Finil' -Unimrmont:!1
SrTlQk.e Scare, Odor of Smoke
Un~ondTfI;:m$mi$$ion cf AIoI"t'I"I, Other
Vohid. kcidant with Injvri6S
Wattqt MClJation
Uniderrtifwd
TOTAl-Colb Iws-w.
SHCISoM!2l Hoow,.r Pavilion Total SHe and SaM
FY201l5-06 FY2006-07 FY 2005-06 Py .2006-07 FY'-OOs-06 FY :i!OOCHl7
Gglb b Pen:xrnt Call, fur fWoent CCllb fw fWoent CaihlfOl---Pen::.tt t::::aib for hrcant c.albfcr f'en:IInt
SoMoa ofT"",1 s-w. ofToIoI Sarviat of Total Service, of Total Stmca afToIai s-vica ofTctaI
2
2
o
46
3
23
o
5
o
2
o
2
2
o
1
o
o
n • B 0 ~ 0 ~ 2 n 4 B
2% 1% 0 0% 0 0% 2 2% 1%
0% 1% 0 0% 0 0% 0 0% 1 1%
42% 57 44% :3 18% 6% 49 39% 58 39%
• 1 1% 0 ~ 0 • 3 n 1 1%
21% 36 28% 0 0% 6% 23 18% 37 25%
0% 0 0% 2 12% 6% 2 2% 1 1%
5% ;; 4% 11 65% 10 59% 16 13% 15 10%
0% 1 1% 0 0% 0 0% 0 0% 1%
2% 1 1% 0 0% 0 0% 2 2% 1 1%
ft 0 _ 0 ~ _ 0 ~ 1 1%
n 0 ~ 0 ~ 0 ~ 2 no.
2% 1% 0 0% 0 0% 2 2% 1%
1% 0 0% 0 0% 0 0% 1 1% 0 0%
_ 0 • • ~ 1 _ a _ 1%
1% 1 1% • ~ 0 ~ 1% I.
ft 0 • 0 • 0 ~ 0 _ a _
0% 2 2% 0 0% 0 0% 0 0% 2' 1%
1% 0 0% 0 0% 0 0% 1% 0 0%
1 1% 0 0% 0 0% 0 0% 1% 0 0%
8 ~ 8 • 0 _ 1 • 8 • 9 _
8 7% 5 4% 0 0% () 0% 8 6% 5 3%
o 0% 0 0% 0 0% '0 0% 0 0% 0 0%
2 n 2 n 0 ~ 0 ~ 2 n 2 1%
t 1% 0 0% 0' 0% 0 0% 1% 0 0%
o • 2 n 0 ~ 0 _ 0 ~ 2 1%
___ .:.0' 0% Z 2% 6% 1 6% 1 1% 3 2%
110 101:S. 130 101l'1. 11 lOB 11 1O<R 121 1O<R 147 10m;
Sources: City of Polo Alto Fire 'Department; ond CBRE Consuhing.
(1) CoIls for servie& to Statiorw 1 and 6.
(2) Cells for SII1'l'Iice for 300 Pasteur Oriv9, whk.h is tho addl'1Q$$ for SHC cmd ScM.
em c-!Iing.. 2/19 t.2OCW N:\T~Pf~\1007'\lOO704:iSt!:miom\W~ ~~ Fialmpad.R07.xb
Exhibit 62
Palo Alto Fire Department LPCH and Tolal SUMC Calls for Service
Fiscal Yea~ 2005·2006 and 2006·2007
SUMC Project Fiscal Impact Analysis
LPCH Tetal SUMC III
FY 2005·0. FY 2006'()7 FY 2005-0. FY 200 •• 07
Call. for '.n::ent Cal~ for Percent Call. for Percent C.I~for Percent
Call Typo Service of Total Service of Toto!, Service ofTotal Service of Total
Alarm Sysiem Sounded due 10 Malfunction 2 So/, 4% 4 3% 5 3%
Afarm Syste:m Sounde:d. No Fire· Unintenfional 0 0% 4% 2 1% 2 1%
Asslsllnvalid 0 0% 0 0% 0 0% 1 1%
Soi1<: life Support Intsrfacility T ronsport Only 16 64% 0 0% .5 43% 58 34%
OetedQr Adlvofion, No Fire -Unintentional 0 0% 0 0% 3 2% 1 1%
Dispatched & Cancelled en Route 2 8% 11 44% 25 16% 48 28%
EMS 0011, Downgroded fur BlS Jransport 1 4% 0 0% 3 2% 1 1%
EMS Coil, excluding Vehicle Accident with Injury 0 0% 4% 16 11% 16 9%
EMS Coil, Party Transportsd by Non-Fire Agency 0 0% 0 0% 0 0% 1 1%
False Alarm or Fabe Call, Other 0 0% 2 8% 2 1% 3 2%
Flammable Goa or liquid Condition, Of her 0 0% 0 0% 0 0% 1%
Good Intflnl Call, Other 4% 0 0% 3 2% 0 0%
Hoot Detector Activotion duo to Molfundion 0 0% 0 0% 2 1% I 1%
Hoot from Short Cir.;uil (\'Virlns). PafediveIWorn 0 0% 0 0% 1% 0 0%
lock-In 0 0% 4% 0 0% 2 1%
Lock·Out 0 0% 0 0% 1 1% 1%
Molidou$, Miachievou$ Ferae Call, Other 1 4% I 4% 1 1% 1%
Oil or Other Combuatible Liquid Spill 0 0% 0 0% 0 0% 2 1%
Removal of Victlm(s} from Stalled EJevolor 0 0% 0 0% 1% 0 0%
Ring or Jawelry Removal 0 0% 0 0% 1 1% 0 0%
Smo~e Oaleclor Activation due 10 Malfunction 4% 4% 9 6% 10 6%
Smoke Detector AdiVQlian, No Fire· Uninlenti<lnal 0 0% 4% a 5% 6 3%
Smoke Score, Odor of Srno3<e 0 0'';' 4% 0 0% 1 1%
Uninlertlrono' Trammlaslon of Alarm, Olhsr 1 4% 4% 3 2% 3 2%
Vehicle Accident with Iniuri1* 0 0% 4% 1 1% 1%
Woler evacuation 0 0% 0 0% 0 0% 2 1%
UnIdentified 0 0% 2 8% 1 1% 5 3%
TOTAl. • Call. for _ito 25 100% 25 10014 152 100% 172 10014
SoOl'tes: exhibit 61; City of Polo Alto Firs Dspartment; ond CBRe Consulting.
(1) Includes SHe ond $oM colis for "rvice; see Exhibit 61.
CBRE Comulling, 'l/lYflOO9
Exnibil63
Palo Alto Fire Department Estimated Expenses for SUMC and SSC Projects (1)
Ci1y·Provided Cos, Estimate, at Buildoul
In 2008 Dollars .
SUMC Projee! Fiscal Impa e! Analysis
Amount Per Unit
ANNUAl. EXPENSES
COIl
Mdifional Stoff
Salory and Benefits 3 poromedic operators $154,900 (2)
Cgpile! Expenditures
Annonl Vehide Reploooroont Costs
Annual Vehide Maintenance Costs
Vehicle Communlcalion Replocemenl Coi'S
Subtotal
TOTAL ANNUAL EXPENSES
ONE·TlME EXPENSES
Hiring Additiongl Stgff
New Hire Expenses (3)
Background, Medical, Psych
Training Costs
Academy Fees
Salory and Benefits during Academy
Uniforms and Other Equipm$nt
Sub!"'al
Capitol Expenditures
1 OO-Foof Ladder Truck
Equipment 'Ond onboord electronics
Subtotal
TOTAL ONE. TIME EXPENSES
lodder trock
lodder truck
ladder truck
3 paramedic operators
,3 paramedic operators
3 paramedic operators
3 poromedk operators
1 ladder lruck
1 lodder truck
$43,000
$5,000
$3,500
$51,500
$3,000
$1,000
$25,000
$5;000
$34,000
S800,000
$!3,000
$813,000
Torol
$464,700
$43,000
$5,000
$3,500
$51,500
$516,200
$9,000
$3,000
$75,000
$15,000
$102,000
$800,000
$13,000
$813,000
$915,000
Sources: City of ·Palo Alfo Adminlstrativ .. Services Department (e~mail correspondence fram David Rambersi
June 5, 2008); City of Polo AJto Fire Deportment (e-moil corraspondance from Dan Firth; Sepktmber 22. 20(0);
and CBRE Cal1$ulting.
p) The City of Polo Alto cost information was provided for both the SUMC Proiecl and the Stanford Shopping
Cenfer {ssq Proied. The Fire Department indicated their expectation that the moiority of CO$ts would be for ihe
SUMC Proiect, but no specific information '#Os provided regording the allocotion of ihe costs.
(2) Figure hos been rounded 10 Ihe nearest hundrad.
(3) Paramedic operators for 24-hour medical unit.
caRE COfliull1ng, '2/1911009 N:\ T eom-Sedwav\Projecb\ZOO7\ 1 007043 Sianford\ Worldng Dotl.l(fl6oh\Mcde!\$UMC Pisco! Impact ,RO? ,xls
Exhibit 64
Palo Alto Fire Department Eslimated Project-Related Expenses, 2015 and 2025 (1)
In 2008 Dollars
SUMC Project Fiscal Impad Analysis
2009-2015 2009-2025
Annual Annual One-Time
Hem Amount Expenses Amount Expenses Expenses
Total Expenses
for Both Projects (2) $516,200 $516,200 $915,000
. SUMC Project (3) 1,929 nel employees 2,243 nel employees
SSC Project (4) 958 net emE!lo>;:ees 958 net emE!loX!!""
Total 2,887 net employees 3 ,201 net employees
SUMC Project 67% of Iota I $344,908 (5) 70% of total $361,711 (5) $641,157 (6)
SSC Project 33% of total $171,292 (5) 30% of Iota I $154,489 (5) $273,843 (6)
Total 100% of talal $516,200 100% of 10101 $516,200 $915,000
Sources: Exhibits 3, 4 and 63; Keyser Marslon Associates, Inc. (KMA), "Draft Housing Needs Analysis, Proposed Expansions: Stanford Uni ..... rsily
Medical Center, Stanford Shopping Center: June 2008; and CBRE Consulting.
(1) The Palo Alto Fire Deportmenl has indicaled Ihat most of Ihe estimaled expenses as a result of the SUMC and Ihe SSC Projects would be
attribuloble 10 Ihe SUMC Project. Since no additional informalion was provided regarding distributing Ihe estimated expenses to each Project, CBRE
Consulting distributed expenses based on net employees. Expenses were not distribuwd based on net square feet since 34 percent of the SUMC
Project is due to righI-sizing; see Exhibil 3.
(2) See Exhibit 63.
(3) See Exhibil4.
(4) See Table 1-3 ('Projected Increase in Employment and Adjustments for Part lime") of KMA's report for employment figures, which are rounded 10 .
whole employees.
(5) Calculated by applying percen10ge of 10101 net employees to relevont expense figure. Figures ore rounded to whole dollars
(6) Calculaled by applying percentage of 2025 lolal net employees to one-time expense figure. Figures are rounded to whole dollars
CBRE Con,ulting, 2/19/2009 N:\Teom-Sedwoy\Projeds\2oo7\l 007043 Stanlord\Working Documents\Modei\SUMC Fis<:ollmpod.R07.>1s
Exhibit 65
Palo Alto Fire Deportment Estimated Project-Related Expenses by Entity, 2015 and 2025
In 2008 Dollars
SUMC Project FlSCallmpoct Analysis
2009-2015 2009-2025
Annual
EnIi!y Amount!l) &penses (2) Amount(1)
SUMC Project 1 ,929 net employees $344,908 2,243 net employees
SHC 979 net employees 1,251 net employees
% of Project 51 % of SUMC net employees $175,047 56% 01 SUMC net employees
lPCH 850 net employees 892 net employees .
% 01 Project 44% of SUMC net employees $151,981 40% 01 SUMC net employees
SoM o net employees o net employees
% of Project 0% of SUMC net employees. $0 0% 01 SUMC net employees
Non-SUMC 100 net employees 1 00 net employees
% 01 Project 5% of SUMC net employees $17,880 4% of SUMC net employees
Sources: Exhibits 1,4, and 64; and CBRE Consulting.
Annual One-TIme
&penses (2) Expenses (2)
$361,711 $641,157
$201,739 $325,398
$143,846 $282,521
$0 $0
$16,126 $33,238
(1) See Exhibit 4 for net employee figures.
(2) &penses from Exhibit 64 are allocated amongst SUMC entities based on their respective percentage 01 SUMC net employees. For
presenlotion purposes, the analysis assumes ihot one-time expenses will occur during phose 1 01 construction ft.e., by 2015) while in reality
these costs are likely to be spread over time.
CBRE Consulfing, 2/19/2009 NN eom-Sedway\Proieds\2007\ 1007043 Slornord\Wo,king D"""menis\ModeI\SUMC Fiscallmpacl.R07 .xis
Exhibit 66: Palo Alto Police Department Calls for Service, 2007
Palo Alto, CA
• S1onfon! _,.,,1 Center
33 Addresms
866 ratal Calls /26 Call Averoge
" Sand Hm Rd
18Add~
64 Totql Ccdl$/ 4 CQII Average
• Other
CB RICHARD EllIS
Exhibit 67
Palo Alto Police Department SUMC Project
Calls for Service, 2007 (1)
SUMC Project Fiscal Impact Analysis
Address
100 Pasteur Dr.
1000 Welch Rd.
. 11 00 Welch Rd.
11 0 1 Welch Rd.
1110 Welch Rd.
1120 Welch Rd.
1130 Welch Rd.
1150 Welch Rd.
1160 Welch Rd.
1170 Welch Rd.
1180 Welch Rd.
200 Pasteur Dr.
300 Pasteur Dr.
701 Welch Rd.
701 B Welch Rd.
701 C Welch Rd.
703 Welch Rd.
725 Welch Rd.
777 Welch Rd.
801 Welch Rd.
825 Welch Rd.
875 Blake Wilbur Dr.
900 Bloke Wilbur Dr.
900 Welch Rd.
901 Bla ke Wilbur Dr.
905 Blake Wilbur Dr.
925 Bloke Wilbur Dr.
Blake Wilbur Dr. & Pasteur Dr.
Pasteur Dr. & Quarry Rd.
Pasteur Dr. & Welch Rd.
Quarry Rd. & Welch Rd.
Welch Rd. & Pasteur Dr.
Welch Rd. & Quarry Rd.
TOTAl
District
113
113
113
113
113
113
113
113
113
113
113
113
113H2
113
113
113
113
113
113
113
113
113
113
113
113
113
113
113
113
113
113
113
113
Call. for
Service
1
5
14
30
11
1
7
3
1
2
2
24
534
4
1
1
1
86
4
2
1
40
42
8
1
19
1
1
1
7
1
2
8
866
Sources: City of Palo Alto Police Department; and CBRE Consulting.
(1) Data for Command Area 1, Beat 1.
CBRE Consulting, 2/19/2009 N:\TeamwSedwoy\P(ojeCls\2007\1 007043 Stonford\Warklng Dacoments\Modal\SUMC Fiscollmpact.R07 .xIs
Exhibit 68
Palo Alto Police Department Estimated Expenses for SUMC and SSC Projects (1)
City-Provided Cost Estimate, at Buildout
In 2008 Dollars
SUMC Project Fiscal Impact Analysis
Expenses
ANNUAL EXPENSES
Additional Pelice Officer
Salary cnd Benefits (3)
Capitel Expenditures
Annual Vehicle Replacement Costs
Annual Vehicle Maintenance Costs
Vehicle Communication Replacement Costs
Subtotal
TOTAL ANNUAL EXPENSES
ONE-TIME EXPENSES
Hiring Additional Police Officers
Background, Medicol, Psychological and Polygraph Tests
Training Costs
Academy Fees
Salary and Benefits during Academy (4)
Salary and BenJefils during Field Training Officer (FTO) (5) (6)
Overtime in FTO ( New Officer) (7)
Overtime in FTO ( FTO Officer) (8)
Uniforms, Weapons, and Other Equipment
Subtotal
Capital Expenditures
Patrol Vehicle
Communication Equipment for Vehicle
Subtotal
TOTAL ONE-TlME EXPENSES
Notes: Conlinued on next page.
Amount
2 police officers
patrol vehicle
patrol vehicle
patrol vehicle
2 police officers
2 police officers
2 police officers
2 police officers
2 police officers
2 police officers
2 police officers
palrol vehicle
patrol vehicle
Cost
Per Un» (2) Total
$157,000 $314,000
$10,000 $10,000
$10,000 $10,000
$4,000 $4,000
$24,000 $24,000
$338,000
$2,100 $4,200
$1,800 $3,600
$55,700 $111,400
$50,600 $101,200
$3,100 $6,200
$2,800 $5,600
$5,000 $10,000
$121,100 $242,200
$44,000 $44,000
$16,000 $16,000
$60,000 $60,000
$302,200
CBRE Consulling, 2/19/2009 N:\Team.Sedway\Proiecl5\2007\1007043 Slanlord\Working Documenls\Model\SUMC Fiscallmpact.R07.){ls
Exhibit 68, continued
Palo Alto Police Department E.timaled Expenses lor SUMC ond SSC Projeds (1)
City-Provided Cost Estimate, at Buildout .
In 2008 Dollars
SUMC Prajed Fiscallmpad Analysis
Sources: City of Palo Alto Administrative Services Department (a-mail correspondence from David Ramberg; May 12, 2008); and
CBRE Consulting.
(1) The City of Palo Allo cost information was ptovidad for both the SUMC Project and the sse Project. The Police Department
indicated iheir 8ICpectotron that the majority of cosls would be for the sse Project, but no specific information wos provided
regording the allocation of the costs.
(2) Figures have been rounded to the nearest hundred.
(3) Cost of solary and benefits per officer assumes $47.18 per hour for 2,080 hoors'and .60 percent benefils.
(4) Cosl of salary and benetfls per officer during the Academy assumes $33.49 per hour for 1,040 hours plus 60 percent benefits,
The benefits percentage flO an average of the benefit CQsts for a police officer, including ln~lieu holiday, (etiremenf penlOlon,
medical, retiree medical, dental, worker's: compensation, life insurance, long-term disability, ond reimbursements for educational
expenses,
(5) The firsf phalOe of the FTO program is Ihe police academy, 'the second phase is the field Iraining program, one! the third phase
consists of the officers demonslrating profidency and ability to do,the job on their own before compleling probation. During the
four to ffve months field iroipJng program, new officers have a 1raining officer with Ihem al all times,
(6) Cost of salal)' and benefits: during FTO per new officer assumes $40,55 per hour for 780 hourlO and 60 percent benefils.
(7) Cott of overtime in FTO per new officer assumes $40.55 per hour plus 1.5,limelO for the overnme rate for 51 ,5 hovrs.
(8) Cost of overtime in flO per FTO officer assumes $47.18 per hour pillS 1.5 times for the overtime rate for 39 hours.
CaRE ConauUing, 211912009
Exhibit 72
LPCH School Enrollment and Staffing Estimates
SUMC Project Fiscal Impact Analysis
Itom FY2oo7'()8
LPCH Inpotient Days (1) 70,752
lPCH T otol Average Doily Census (2) 194
lPCH School Average Daily Census (3) \,-50
Sludents as Percent of Patienls (4) 25.8%
Staffing (FIE)
Teachers (5) 4.0
Sludentlo Teacher Ratio (6) ]2,5,1
Aides (5) 1.8
Sludenllo Aide RoIio (6) 28,6, 1
Secrelaries (51 0.6
Sludent 10 Secretary Ratio (6) 80,0,1
TOTAL· lPCH School Staff 6,4
Source" lPCH School; Exhibil4; and CBRE Consulling,
(I) See Exhibil4,
2015 2025
85,978 109,886
236 30]
61 78
25.8% 25.8%
4,9 6,2
12.5, 1 12.5: 1
2,1 2.7
28,6: 1 28,6,1
0,8 1.0
80,0,1 80,0,1
7,8 9,9
Net Now
2007·2015 2007·2025
15,226
42
11
0.9
0.4
0,1
1.4
39,134
107
28
2,2
1.0
0.4
3,6
(2) Average daily census is calculaled by dividing inpatienl days by 365 days. Figures are rounded.
(31 Fiscal year 2007·2008 figu", was provided by LPCH School. Average daily affendance is 18 for grades K·5 and 32 for
grades 6·12. Projections for 2015 and 2025 were calculated by applying the fiscal year 2007·08 ratio o!students to
patients to fhe total average dally census. Figures ore rounded.
(4) Fiscal year 2007·2008 ratio of students to ponents is estimaled by dividing the school overage doily census by the Iotol
average doily census. Ratio of students to patients is assumed to remain constant for 2015 and 2025.
(5) Fiscal year 2007 .2008ligure was provided by LPCH School. Projection. for 2015 and 2025 were calculated by applying
the fiscal year 2007·2008 rano of stoff to students to the schoo! overage doily census.
(6) Fiscal year 2007·2008 ratio of stoff 10 students is estimated by dividing the number of stoff by Ihe school overage doily
census. Ratio of stoff to students is assumed to remain constant fQr 2015 and 2025.
CBRE Con$ul1jl'lg, 2/19}2009 N:\ T eom·Sadway\Projects\2007\ 1007043 Slonmrd\Working Documenls\Mod,I\SUMC FiKollmpod,R07 .J'!~
Attachment B
CBRE CONSULTING
December 9, 2009
Mr. William Phillips
Senior Assodate Vice President
Slanford Univarsily, Land, Buildings & Real Estate
2755 Sand Hill Road, Suite 100
Menlo Park, CA 94025
CBRE
CB RICHARD ELLIS
101 California Street, 441h Floor
San Francisco, CA 94111
T 4157720123
F 4157720459
RE Uc. 00409987
www.cbre.com/consulting
Re: Dynamic Fiscal Impact Analysis for SUMC Facilities Renewal and Replacement
Project Based Upon Revised Service Population
Dear Bill:
CBRE Consulting has completed a dynamic fiscal impact analysis of the SUMC Facilities
Renewal and Replacement Project pursuant to our meeting with the Cily of Palo Alto and the
City's peer reviewer, Applied Development Economics (ADE), on September 24, 2009. Based
upon our discussion at the meeting, this dynamic analysis includes annual analysis of the fiscol
impoct findings through 2040 and calculation of the overage municipal service costs based
upon the service population living and working within the boundaries of the Cily of poro Alia,
with the exceplion of fire services, which are odditionally provided 10 the population within the
Cily's Sphere of Influence, Le., Stanford in unincorporated Sonta Claro Counly. The purpose of
Ihese changes was to better focililate 0 comparison between the anolysis conducted by CBRE
Consulting and the analysis conducted by ADE. The ADE analysis comprises a peer review of
CBRE Consulting's full report and was prepared on July 28, 2009. On September 22, 2009,
CBRE Consulting separately prepored and submitted a letter to the Cily of Polo Alto with
comments on ADE's approach and findings included in its peer review.
Approach
CBRE Consulting's dynamic analysis is documented in the attached exhibits. The analysis is fully
supported by the research and findings reported in CBRE Consulting's February 19,2009 fiscal
impact report for the SUMC project (hereinafter referred to as "full report.") The changes
reflected in the dynamic analysis are itemized below. The itemization also includes reference to
adjustments not relevant to the static analysis included in the full report. Referenced exhibits are
included in the Appendix.
• Exhibit 1 indicates the average cost figures used in the dynamic analysis for all Cily
setvices except Fire. The Cily service costs are the same as included in the full report.
Only the variable expenses per day-time person served (column F) and per employee
sarved (column G) vary from the full report as they are now spread across the
population bases within the boundaries of the City of Polo Alto. These population
figures are presented in Exhibit 2.'
1 This exhibit is identical to Exhibit 6 included in the full report.
CBRE CONSULTING
Mr. William Phillips
December 9, 2009
Page 2
CBRE
CB RICHARD ELliS
• Net new SHC and LPCH employment anticipated to be in place by 2025 is assumed to
be phased in at equal annual increments starting in 2022, following anticipated 2021
construction completion.
• The existing Hoover Pavilion at 211 Quarry Road is assumed to undergo renovation in
2010 with new occupation occurring in 2011. There will be no net new employment
associated with this new occupation, but the building will transition from properly tax
exempt to taxable.
• The New Hoover Pavilion Medical Office Building (MOB) is assumed to be under
construction in 2010, 2011, and 2012. It will be completed in 2013 ot which time
building occupation will occur. Net new employment starting in 2013 will total 100. A
proportional amount of sales tax associated with employee spending will begin to
accrue in 2013.
• Properly tax payments for the New Hoover Pavilion MOB will be phased in during the
construction period based on work in place tax payments (i.e., assessed at the
beginning of each year based upon the proportion of construction completed at that
time). The analysis assumes the property will be assessed at 1/3 its full value in 2011,
2/3 its full value in 2012, and its full value in 2013.
Findings
The results of CBRE Consulting's dynamic analysis ore presented in Exhibit 3 for the years 2010
through 2040. This parallels the years included in ADE's July 28, 2009 peer review of CBRE
Consulting's full report. CBRE Consulting finds that over the 30-year time horizon, the SUMC
Facilities Renewal and Replacement project will net the City of Palo Alto's General Fund
cumulative net revenues totaling $7.6 million. This reflects total cumulative revenues of $25.1
million ond total cumulative costs of $17.5. This net revenue figure increases to $8.4 million
when revenues associated with use tax payments from existing operations are included as
discussed in the full report.
In contrast to CBRE Consulting, ADE's analysis results in net costs to the City's Generol Fund
over the 2010-2040 time period. While not cited in its report, ADE's cumulative revenue figure
totals $23.9 million. This figure compares favorably to CBRE Consulting's figure of $25.1
million. In contrast, ADE's cumulative cost figure of $28.5 million is much higher than CBRE
Consulting's figure, largely attributable to the difference in the average cost methodology
employed by the two firms, with CBRE Consulting assuming that a portion of most City service
costs are variable, while ADE assumes that most costs are fixed, and therefore spread
proportionally across the service population. Furthermore, the ADE analysis also does not
include estimation of revenues attributable to the use tax payments received by the City of Palo
Alto attributable to existing purchases. ADE's total revenues would be higher with this revenue
stream included, and their net cost figure would be lower.
ADE's onalysis also included summary revenue and cost figures for four time periods: 2010,
2015, 2025 and 2040. For the sake of comparison, CBRE Consulting presents the
corresponding figures from the attached dynamic analysis for the same time periods, based
upon the findings in Exhibit 3. Please note these figures may vary from figures included in CBRE
Consulting's full report because of the above-referenced adjustments associated with a dynamic
analysis.
CB.RE CONSULTING
Mr. William Phillips
December 9, 2009
Page 3
CBRE
CB RICHARD ELliS
Table 1
Summary of Cumulative Fiscal Analysis
2010 2015 2025 2040
Revenues $1,539,487 $743,626 $668,262 $668,262
Expenditures $0 $604,394 $702,777 $702,777
Annual Net Revenue/ICost) $1,539,487 $139,232 ($34,515) ($34,515)
Cumulative (2010-2040)
Net Revenue/ICost) $1,539,487 $8,006,371 $8,896,641 $8378,920 . . Source: Exhibit 3 .
Pursuant to Exhibit 3, the year 2025 comprises the first year with a net cost to the City of Palo
Alto attributable to SUMC. In ADE's analysis, the net costs begin to accrue in 2015. Again,
these differences are attributable to the cost factors assigned to each SUMC employee.
Closing Comment
Please let us know if you have any questions regarding the preceding analysis. We will be
happy to answer any questions you may have or provide further information if necessary.
Sincerely,
Amy L. Herman, AICP
Senior Managing Director
RE Lie. 01821384
N:Projects\2007\I007043\Peer Review\1007043 Dynamic Analysis v3.doc
CBRE CONSULTING CBRE
CB RICHARD ELLIS
APPENDIX
&him 1
Cdy 01 Palo AIIo _I Fund ~ and e.tima6ng _, "-I V .... 2008-2009
In 2008 Dclm
SUMC I'mjed n.caIlmpad """I,...
SeNi", Popul"'" Based Upon Cdy Boundaries (Capt far nroj
OtyolPaloAilo '=
~8ud", o,-m""
~ Trn...m.s Cot 111
Bud",~ [Aj [SJ
City Attorney $2,778,285 $(l
OtyAud"'" 5931,267 $(l
GtyClerk $1,264,485 $(l
City Council $314,606 $(l
City Monaget $2,233,0()5 $2.039
Administrotive Se"";ces $7,171,853 SO
Community Services $21,642,469 $6,990
Fife $24,225,206 SO
Humon~ $2,821,771 $(l
library $6,569,566 $0
?fonnfng & Community Environment $10,376,519 $7,607
Police $29,810,128 $(l
Public Works $1l,847.231 $16,574
Non_Departmental $8,055,000 50
TOTAl. $132,041,391 $33,210
NatOlI: Continued on n9)l.t poge.
CSRE C..",.lIbi"s. T 1/3/2005'
....
~~
IC -A-S[
$2,778,285
$931,267
51,264,485
$314,606
$2,230,966
$7,171,853
$21,635,479
$24,225,206
52,821,771
$6,569,566
$10,368,912
$29,810,128
513,830,657
$8,055.000
$132,OO8J 181
VQriabkt~
""""'" Variable Per-Oay.1ime Variable ~ Per
Variable@l !2!e! .... ~n Served (4) !l!!l!1 ..... Somod@
[OJ [1' C:r;D] IF = Ell01,4301 1<" = fx50"1
10.0% (6) $277,829 $2]4 $1.37
0.0% (7) SO SO.GO $0.0()
0,0% {81 SO $(l,QO $0,0()
0.<)% (9) $0 $(l.GO $(l.0()
10.0% {lO) $223,097 $2.20 $1.10
20.0% (l1J $1,434,371 $14.14 $7.07
40.0% (12) $$i),54,192 $85.32 $42.66
80.0% (13) $19,380.165 $148.64 (20) $74.32
40,0% (14) Sl,128,708 $11.13 $5.56
30,0% (IS) $1,970,l!70 $19.43 $9.72
30.0% (16) $3,110,674 $30.67 $15.33
70.0% (17) $20,867,090 $205.73 5102.Jl6
50.0% (18) $6,915,329 $68.1S 534.09
48.5" (19) $3,902,760 $38.4B $19.24
$67,865,082 $626.65 $313.32
~:\TIIQ~~OO7\l00in4.3S1an~P-r~\SUMCR_Impad.itl8_0rd302009"
Exhibit 1, cenlinued
01y all'aIo Alto Gerleo>I Fund ~"""" .nd Edirnoting "'''''''"' n-I Y .... 2008-2009
In 2008 Dollars
SUMC Pro;"" nm Impd Anal,,;.
Sourees; bhibit 2; "City of Polo Alto 2008-2009 Pn:iposed OpetQting BudgetF MDy 6, 2008;" ond CBRE .Conwlting.
{1} Per the Cify'l pt¢'posed budg'l!!t, ~ing 1ra~ are a means of I'nO'Ving ~ betv.oeen funds. The City of Polo Alto'to General Fund mointall'l$ obligations to other funds weh as Storm Droinage Fund. Capitol
Protect Fund and Debt Service Fvrtd$.
(2) ExpenditlJl1lllS pold by tho Genera! Fvnd rctIwr thon other SIOIJ!"CeS.
(3j ~e of costs that i~ wtth g«:tWTh, 0$ opposed fa fi:md c:mts. CBRf Consulting estimates VQrioble cost Q$$umpnoos ba$ed on ~;sting full..fime staffing. ~partments with less than 1 0.00 full~time
positions are t1IISiIimohlld to h:rve 100 pen:;$f'It nmd CO$Is. <>tho!" C8RE estimates ore rounded.
\4) Doy-Jime population estimr.:rt«l by adding popvtaf'icn and 50 pm:w1t of1oto1 iob$. SE!rvice area is COf'ISldered the City of Poto Alto n::,r all departments wx:ept for Fil'$, which has a service area corresponding 10 the
Palo Alto Sp~ of !n9v0ne;;.. T¢fOI pe1"S'Ol1$ SoetVEtd in the Oty'Ond the Sphere of Influence are es:timated in B<hibit 2. Figures for FI$CXlI Yoor 200$.09 WElre ~ed, i.e., City day-time population of 101.430 and Sphere
of Inflwnee tioy..time populotlon of 130,385.
{51 Costs per employee repre.nts 50 ~ 'Of co. par day-time population. Figures are rounded t'O whole cents..
{6} ~ ftle City's proposed budget {p. 341. th$rEl ore 10.60 full..fimEl:stoff in the City AIforney's Office. CBRE Cansutting estimates. that 1.00 full~time position • .or 10 pqrcent, is variable.
\?} Per the CrtYs proposed budget (p. 40); there ore 4.00 fvn~fime staff in the-Oty Auditor's Office. C8RE Consulting estima1es that there are no varioble cO&1$.
{B} Per the Citf.o propo:s:ed budget {p. 46\. tfwre ore 6.75 fvn~time stoff in the-City Clerk's Office. CBRE Con$ultil"l9 Ml:ir'l'lOte$ that thlllrtll ore no variable.l;om..
{9) Pet" the Crty's proposed budget {p. 53)f there ore ,9.00 fvn~til"l"ll!t stoff $upporting the City Council. CBRE COJ1Sulting esti~ that ther& ore no vtlriabte costs,
{lOi Pet" the C'rty's proposed budget \p. 56), there are 9.50 fvll~time :s;taff in the-Crty Monager's Offi(;e; thi$ figure dO$$ nO! indude. the WorkfQree DevelopmMlt CQordinator posi1ion 1h!:rt is fully funded through 1h&
Community SMvices Deportment. CBRE Consulting estimates that 1.00 full~time po$ition, ot 10 pert:ent. i$ voriobloiJ.
111/ Per the Crty's proposed budget ip. 62), there '01'$ 94.00 full..,ime mff in the Administraf'ive Services Deportment. CSRE Consvltil'l9 esliJ"nQ'les that all General ledger positions {4.501, PcyroU positions {4.oo}, and
Revenue Collections positiorw (9.00), or 20 percent, are variable. \.
[121 Per tne Cays proposed budget {po 70), there are 97.25 full..time mff in the Community Sel"viees Depal'ttne(tl. CBRE CON1.Ilting estimates that all poslti()flS responsible for coordinating progn:UM cnd molntenonee
(38.50),0( 40 pereant, ore vorioble,
(13) Per the City'$ proposed budget (p. 84), there are 126.00 full..time stoff in tho Fire Deportment. CBRE Consuhil"l9 esllrmles '!hat aU categories Wfth !'T'!t:Ite thon 3 positi()flS {38.50}. or 80 ~, ate voriabla.
(14) Per the City's proposec:l budgd (p. 92), there ore 16.00 full-time staff in the Humon Resoun:es Oeporment. cm Consvlling estimates that all o;;ategones with at leaSt 2 positions (6.00), or 40 percent, are variable.
(15) Per the Ci1y's proposec:l budgd ~p. 100}, fhere of'lll43.75 fuJI-time $I'off in the Jjbroty Department. CBRE Consulting estimates 1hat all Specio!fsi cod Assi$tQm Po$itiOO$ (13.50), or 30 percent, ore variable.
il6) Per the City's pr.oposed budget (p. 108), there ore-55.50 full..time $I'off in Ihe Planning and Community Environment Deportment. cm CQt'mJlting estimates that the Planner, ksociate Ploot1erfS;Jstoinobility
Coordinator, ond pfonril'l9 Tochnidon positions in Current Planning (5.00,; the Senior Planner and f'tanner Positions in Advance Planning (4,(0); 1he Transportation Engineer.> in Tn:msportotlon (2.00l;the Building
Te<:;hnicion po$itions in 8uilding (2.0}; 'Ond the Building InspodOf positions in Inspedion SeMees (4.00)~ Of 30 percent, ore varmbie.
(l7J Per the Ciiy's proposed budgm (p. 118). there ore 163.00fvll-tlme stoff in the Poliee Department. CBRE Consuttlng drnatas that aft ~ries. with at least 8.00 ~Il$ il10.oo},. ar 70 pereent, are variable.
(18) Pet" the C~ proposed budgm (po 128), there are 215.00 fvll~time stoff in the Public Works Deportment. CBRE Consulting esn~ that 011 categories with at least 3.00 positions n07.oo}. or 50 ~nt. OM 'oOciabl
il9) TClken ClS Cl weighted ~rage based on depQrtn"l$nts' bu., ond pa~ 'oOrlab!e assvmptions.
(20) The service popuiatiCln for the Fire Oepr:u1rnent·is lhe Sphere of InfiVQfll;e.
CBRE Cons"'r.!!. 11/3}2009 N:\T~Rl!·'I9d:!\1OO7\lOO7043~p;;.~~lmpqd"!lle_0a301OO9.
Exhibit 2
City of PaIo_ and Sp""" of Infl"""", Demograph;"', 2005-2010 and _ Y .... 2005-200610 2008-2009
SlIMC Projod FisaJllmpact Anc~
C!!l of PaIo_ Palo __ of Influencs
~ Dar-T .... """"-SIa_
Total OC)""Trme
Yea, Popolation H.lI«Ihoids H_kI ToIalJ .... PopuIo1ion -in~ ntlOkb -Population T_IJ .... Populalion
Calendar Year
2005 61,650 (1) 27,522 (6) 2.2 (11) 75,610 (12) 99,455 (14) 28,282 (151 62,220 (16) 14,458 (17) 76,678 (20) 95,710 (12) 124,533 (14)
2006 62,424 (1) 27,642 (7) 2.3 (111 75,968 (13) 100,400 (14) 28,613 (15) 65,810 (16) 14,455 (17) 80,265 (20) 96,212 (21) 128,371 (14)
2007 62,615 (I) 27,763 (6) 2.3 (11) 76,326 (13) 100,778 (14) 28,948 (15) 66,580 (16) 14,476 (17) 81,056 (20) 96,714 (21) 129,413 (14)
2008 62,846 (2) 27,888 (8) 2.3 (11) 76,684 (13) 101,188 (14) 29,078 (15) 66,830 (16) 14,570 (18) 81,450 (20) 97,216 (21) 130,058 (14)
2009 63,150 (2) 28,014 (8) 2.3 (11) n,042 (13) 101,671 (14) 29,209 (151 67,181 (16) 14.670 (18) 81,851 120) 97,718 (21) 130,710 (14)
2010 63,424 (2) 28,126 (8) 2.3 (11) 77,400 (12) 102,124 (14) 29,341 (lSI 67,483 (16) 14,nO (18) 82,253 120) 98,220 (12) 131,363 (141
Fiscal Year
2005-06 62,148 (3) 27,582 (9) 2.3 (11) 75,789 (9) 100,043 (14) 28,448 (9) 64,015 (91 14,456 (19) 78,471 (20) 95,961 (9) 126,452 (141
2006·07 62,615 (3) 27,703 (10) 2.3 (111 76,147 (10) 100.689 (14) 28,781 (10) 66,195 (10) 14,465 (19) 80,660 1201 96,463 (101 128,892 (141
2007.08 62,731 14) 27,826 (4) 2.3 (11) 76,505 (4) 100,984 (14) 29,013 14} 66,730 141 14,520 (19) 81,250 (20) 96,965 (41 129,733 (141
2008-09 62,998 15) 27,951 (5) 2.3 (11) 76,863 (5) 101.430 (14) 29,144 (5) 67,031 {51 14,620 (19) 81,651 (201 97,467 (51 130,385 (141
Notes: Continued 0l'J next poge.
CBRf Con!:ulting. 11/3/2009 N:\T';IQI'1~\2OO7\l007043 ~ Pwr Review\SUMC Fim::llmpca.P _ O:t 30 2009Jds
&bibit 2, mntinued
cay of 1'010 All<> ""d Sphe<e of Influence Domcgn>phi<:s, 2005-2010 and Fi=1 y", .. 2005-2006 10 2008-2009
SUMC Project Fi=11mpad Analysis
~rees: City of ~olo Alto, .Department of PIo~ning and Community Environment; City of Polo Alto fl200B_09 Proposed Operating Budgw"; State of Califomia, Deportment of Finance (DOFJ, nE_l Population
Esh~ for Crties .. ColJl"ltles cnd the State with Annual PerolIOt Change -January 1. 2006 and 2007", Sacramento, California, May :2007; As$ociation of Bay Area Goycmments (ABAG), ·Projections
2007"; Skmford Universily lend, Buildings and Real Estate; Sklnford University, 'Stonford FtJds 2008"; cnd CBRE Consulting.
(1) OOF data provided by the City of Polo Alto Department of Planning and Community Environment.
(2) Estimo\'es p~ed by the CiIy of Palo _ o.pa_ of Planning and Community Envlronmont.
(3) Demogrnpnk: data from page 293 of the City of Palo Alto's "2Q08..09 PropoHd Operating Budge!". Fiscal yeor 2006~2oo7 population figure eonsislent with 2007 DOF January 1, 2007 population
estimate, i.e., the mid-point of the fiscol year.
(4) CeM! Cansutfing estimates based on 2007 and 2008 overose; figures ate rnunded.
(5) CBRE Consulting estimates bo$ed on 2008 and 2009 ~; figures 0N!i round$d.
(6) Ctty of,Polo Aho's totol housing units from DOf's Moy estil'l'l\lte$.
(7) CBRE Consufting estil'T'lO'te based on the 2005 and 2007 data; figuN!i is rounded.
(8) The 2008 and 2009 household estimates are calculated by II'U::l"e<lSins the pl'eViOI,l$ yegl"s emmote by 0.45 percent ond ihe 2010 estimoie by inCJ'9(J$ing the 2009 estimate at 0 rote of 0.40 percent per
the City of Palo Alto Department of Plonning and Communrty Environment. Figures 01'$ round$d.
(9) CBRE Consulting estimote based on 2005 and 2006 Q';'E!fage; figures are rounded.
(10) CBRE Consulting estimate based on 2006 and 2007 ~roge; figutes 0N!i raunded.
(11) CaRE Consulting estimates based on dividing population by households; consistent with figures provided by 'he City of Polo AJto Oe(xfrtment of PIonning and Communtty Environment.
(12) Employment data from ABAG ·Projedions 2007."
(13) CeM! Consulting estimate based on annual job growth from 2005 to 201 0 of 358 jobs.
(14) Day~time population estimated by odding papulation and 50 percent of tatal fobSi figures are round$d.
(15) Sphere of Influence (SOl) household estimates ore consistent with CBRE's "Droft Sklnford Shopping Center Expansion Economic Impact/Urban Dec:ay Analysfs", June 2008. The 2005 estimate
of SOl hoo$eholds is the 27~522 hCU$E!hokls that the OOF estimates were in the City of Palo Alto in 2005 plus the 760 hoU$$halds that Stunford University lend, Buildings and Real Estote
estimates liWKI on the Stunford Compus (port of th~ City of Palo AJto SOl) os of 2000. The 760 figure excludes households living in the SfQrtford West Aptlrtmenis because those households am
loa:tled within City boundaries and are olready counted as such. Households in 2006 are interpolated-between the 200S ~imote and a 2007 estimate. The 2007 estirrnrte is the DOPs May
2007 estimate of housing units in the City of Polo Alto plus the 760 households living on the Stanford campus, as of 2000 plus 425 n¢'W housing units that Stanford Uni ... ersity land, Buildings and
Real Estate est11TlOtes were built on the Stanford compus by the beginning of 2007. Allnuol growth rates from '2008 to 201 0 for households in Palo A.ItOs SOl ore fom the City of PoloAJto's
Depar'ltnent of Planning ond Communtty Environment. The 2008 nvmbo3r of houS$holds in the SOl is estimated by increosingihe 2007 estimate by 0.45 percent as provided by the City of Polo
AJt.o Department of Planning and Communtty Environment; the 2009 figuN!i is estimated similarly. The 2010 number of h()I,Jseholds in the SOl is estimated by increasing the 2009 estimate b).
0.40 percent os provided by the City of Polo Alto Department of Planning ond Community Environment. This opproach was revIewed and approWKI by Roland RivetO of the City of Palo AJto
Cfflportment of Planning 0t'Id Community Environment.
(16) Estimated by multiplying SOl households by City of Polo AJto persons per hOl,l$oooid mrnote. Figures are rounded.
(7) CBRE Consukfng estimate bosed on school c:alendory«Jr doto provided by Stanford Univen;ity~ exduding 1he students living in the n¢'W 425 individual student housing units built by the beginning of
2007, whieh are already included in the SOl hovsehokis estirrnrte; figures aN!i rounde<L
(1 S) CBRE Consukfng esfimOie based on onnual growth in ,student population from Khool years 2000 to 2007 ,of 100 stvdents, based on dato from Stanford University.
\19) Demographic dote provided by Sto:nford University, excluding the ,students living in the new 425 individual student hausing units built by the beginning of 2007, which are already induded in the SOl
househoJds esnrncrl9. Estimates ossume a school coJendor yeor is the equivaletlt of 0 fiKOI yoor.
(20) CSRE Consuhing estimote based on the sum of popvlofion in households and Stanford ,students.
(21) CBRE Consulting estimote based on onnual job growth from 2005 to 2010 of 502 jab$. based on data from N3AG.
C6l1:E Co'lwltirog, 1113/2009 N,\T>l(II11~~\2OO1\l007043Stcnford\AOE PMf RIwi-',SUMC ~I f~_Od 30 2009''*
"'''ihi! 3 SUMC_
AnnuoIimd I\ojodicn af __ 2010 _ ""'" Nof&: ~llfil1ued on nm page __ :>
T*31-Y..,.
"-' -20 •• 2011 201' "'13 201< 20 •• 201. 2017 2018 201. 2020 -SHeP) '.2'0 5,240 '240 '2'" 52 ... 6,71:9 6,219 6,219 6,219 6,219 6.219 U"CH (1)
,_
',«6 1,_ 1.'" 1._ 2,516 2,516 2,516 2,516 2,516 1,5j6
10M V'.3 7)l23 2J"" ',82' 2,823 """ 2,82' ,.'" vm ',82' 2,a23
Noo.SUMC (2) 151 '" '51 251 251 lS' 251 251 251 251 '" ''''' ..... ''''' . .... .-.-II .... iib ll_ 11)69 11 .... "_ tfIt t:imI:I"" , ... I b!m EmitstIQ~
SHe 0 0 0 0 0 "" .,. .,. m .,. '" LPCH • • • 0 0 85Q IiSO IiSO "'" .,. "'. s.M • • • 0 • • 0 • • • 0
NQn-5lJMC 0 • 0 '00 '00 100 '00 '00 100 100 '00
'd~ • • • 100 100 1f129 1f129 ,,,,,, 1,'" 1f129 1f129
Gentmt ft. ItIvwlIM
~andUil'OTax
SiJMC orn.a Pvrd'lQ!ing $909,179 '0 •• '0 $a '" 512.527 $111.$22 SlUZZ 518,522 $18,522 S18,SZl
SUMC FoI:iI"lIlw On.st. SIll. $3,433,703 $0 '0 '0 $a ,0 5125,93& $125,938 5125,938 Sl25)l3S $125,938 Sl25,ns
SUMC Em?!ip«>d't1'19 $1,459,148 SO SO .0 Sl,736 $1,736 $SO,36$ S.50,3&E1 $50,368 550.368 '50"" ... "" SUM<: ~hl Y,Jit« $p9r&ng $9,688 '" $0 .0 $a SO 5187 S187 $187 S187 $187 S187
CcNIlVd'_~ P<K~ng (3) $&,148,416 $1.496,..434 51,.496,.434 $1,.496,434 $1,496,434 $1,496,434-S9S,l78 595,176 595,178 $S>'s,178 595,178 595,176
~Worit .. ~(3j S112,427 SlS,m 518,792 SHJ,m $18,79'2 S18,79'2 S:Z,638 $2,63' >2,638 $2.638 $2,638. S7,6:lI!
~TGKt4i
~TCltItedl..di:Qt'I$fn:m<,~~\SJ !$362,430! SO [S12,oe11 t$12,081) ($11,081) [517,081) 1$12,08J) ($12,(61) ($12,08t; ($12,osl) (512,081) ~512,0811
211~~M061lioRnc:wa1ion $698,.31;) .. $23:,277 $23,277 $23;217 523,277 $23,277 $23,277 $23,27/ $23,217 523,277 $23,277
Nww~~i<m¥~~ 51.345,571 .. 515,466 :$lO)?33 $4,,391' $46,399 $4''''' $66,399 $46,'" $4,,391' $46,399 $46,399
TromlMi~Tax 5;82~ '" SO $0 SO SO 53,823 .,"'" $3,823 $3,823 53,823 53,S'23
UIif;y u-::. TClt 57,'ml,522 .. .. $0 '0 SO $$23,337 $323,.337 $323,337 $32S,337 5323,337 S323,337 OIhofT __ FltM
M<:IiQ(' v~ lrNJov J:'oots (Of $41O,50Z SO $6"" "10,285 5U.,061 514.001 514,061 $14,061 $14,061 $14,061 $14,061 514,061
Flrm13lld~'" 5799,676 .. SO '" $0 $0 S27,7?Q $27l20 $27l20 $27 l:20 $27,720 527."20
Tomi Gwo!onII f'Imd ~ m,125M8 $1,51$bi $1,.504:8,398 $1.,567,.641 11,5l18,.618 Sl.588.618 S71"1,366 $719.,366 $719,.366 S71"1,,366 In"1,366 $719.366
With u.. Tm:~ ~ "-'iIi CI'!
E!oIPI'i"'9~ -,.,. $1.539.A87 .. ..,."... $l)Wt,901 $l,612.J78 11,.612,1J18 $7"' .... ""' .... $743,826 $7"",626 57"",626 $743,626
c. .. III ~EirDMiot:Iltun.
CItyJI4IQrt'!'IY $16,513 SO SO SO $137 5137 >2.643 52.6CI $2."" 52,643 $2,643 52,M3
C!fyAt.ldit<ot SO SO SO '" SO SO SO SO $II SO SO ..
C<tyO.,k SO '" SO SO $a SO .. .. '0 SO SO $0
Cil)' Coonci! '0 $0 SO '" SO SO SO .. .. SO SO $a
CiI)'MQI'IQg<tr $6',A34 SO SO $0 5110' $110 52.122 $2,122 $2,122 $2,172 52,122 52,122
Adminj:JIt'QIi~. 5eroi .... $394,852 $. SO SO 570'7 $707 $13,638 51',033 $13,638 S13,638 S13,63& 5llt.,638
Ccmmvnl1y Seman 52,382,518 SO SO SO $4266 $4," SSZ,:z?l "',291 "',291 "".291 $87,291 >82,29' ... $4,150,698 '0 '0 SO 57,.432 570432 5143,363 l"o143,363: 5143,363 $143,3:63 $143,363' $143,363
Ho.ttoon ~vl"tll'lS $310,520 '0 $0 SO "50 $55, $10,715 5'0;125 l"oHi,725 $10,725 $10,725 :$10,725
"""" $542,852 '0 SO SO "'" .972 51~,75O $18,750 5H!),50 518.750 $18.]50 $18,750
A<!:onYI,ng &. Commvnl1y fnoir"""....,1 SSS6,1~ ,0 '0 SO 51,53S $1.533 52'9,572 m~'" $29~n $29,572 "",,., $29,572 ,.,,'" $5,744,628 ,0 '0 SO $10,286 510,286 1198,417 519$:,417 $193,.417 5198,A17 l"ol9So4ll $1')80417
P\lbI,~ Wor'r.J 51,903,892 .0 '0 '0 S3~09 $30409 $65,760 S~,760 $6$,760 $65,760 $«;,74(1: $6$,760
Non-Dopattmlrnkll 51,0742;3:5 '" SO ,. $1,924 51(71.4 $37,114 ~>: $37,114 $37~4 $37,114 $37,11 4
TdGI~Ft.n!~ S17,A98,,609 iii SO SO $31,332 $31,332 UOI;.;9'( ........ ..... .... ".. .......
a..wuI Rmd N.t F*IIII ~ "' .... -$1,515.,2'27 ,,-$1,567.64' 11,557,286 $1,557,2806 $11.4 . .912 $11'(,.972 $114,"172 $11,(..9?'2 111'(,971 $11.4,972
.... U. TQ\III:'lntd ~ "-'ilion --.... "..,., $1.53'9,K1fl $\,571,658 $l)Wl,901 ",s8l".. Il,.581;w& $139,232 $139,232 1139,232 $139,232 1139,232 1139,232
Ii
J 1~~l]J
I i
i i
i i
~ i
i i
[ i
[ i
i i
[ i
Exhibit 3, conlinued
SUMC Project
Annualized Projection of Fiscal Impacls, 2010 -2040
Source: CBRE Consulting.
(1) Net new SHC and LPCH employment anticipated to be in place by 2025 is assumed to be phased in at equal annual increments slarting in 2022,
following anticipated 2021 construction completion.
(2) Assumes the new Hoover Pavilion medical office building, with 100 employees, opens in 2013.
(3) The tolal Phase I and Phase II revenue estimates for construction-related purchasing and construction worker spending are from the CBRE Consulting
fiscal impact analysis. These lalals by phase were spread across the five years from 2010 through 2014 for Phase I, and the seven years from 2015
through 2021 for Phase II.
(4) New assessed value from the original CBRE Consulling report. Assumes the renovated Hoover Pavilion focility at 211 Quarry Road is placed inla
service in 2011 and the new medical office building at Hoover Pavilion is placed into service in 2013, with construction starting in 2010, resulting in
(5) Assumes demolition of the following structures in 2010: 701 Welch Road; 701 Welch Road A, B, C, and D; 703 Welch Road; and 1101 Welch Road.
(6) These payments parallel the property tax payments, at '24.4 1 percent (rounded) of the property lax revenues Ia the City of Palo Alto.
CBRE Consulling 11/3/2009 N:\Team·Sedway\Projeds\2oo7\ 1007043 Stanrord\AOE Peer Review\SUMC Fisoollmpad.R08 _ Od 30 2009.xls
JULY 28, 2009
(Revised March 2010)
Prepared for the
City of Palo Alto
Prepared by
Applied Development Economics
Attachment C
100 Pringle Avenue, Suite 560' Walnut Creek, California 945%' (925) 934·8712
2151 River Plaza Drive, Suite 150' Sacramento, CA 95833' (916) 923·1562
www.acieusa.com
A PPLlED
b eVEl.OPMENT
E:coN OM I eS
I
CONTENTS
Executive Summary ..... HH ...................... ~.~ ••••••••••••••••••• u •••................... u ............................ l
Revenue Analysis .............................................................................................................. 5
Sales and Use Tax.H .. H ... ~U ........ H •••••• u •••••••••••••••• r ............••••......••• u .••• n ••••. H ••••••••••••••••• 5
Property Tax .............................................................................................................. .7
Transient Occupancy Tax (TOT) ............................................................................... 8
City Service COsts'~ ........... H .................... H ... H ................................................. u ................ 9
Revised Fiscal Analysis ....... ~ .......... Uh ............... HH .............................. n ............. u ... u ........ 11
Appendix A: Sales and Use Tax Background Information ............................................... 15
Appendix B: Detailed Fiscal Projections ........................................................................... 25
I
I
I
I
I
I
I
I
EXECUTIVE SUMMARY
Applied Development Economics has been engaged by !:he City of Palo Alto to
conduct a peer review of the fiscal analysis prepared by CBRE!Sedway for the
Stanford University Medical Center Facilities Renewal and Replacement Project
(February 17, 2009). CBRE estimated potential tax and fee revenues that the project
would pay to the City of Palo Alto as well as the anticipated costs of providing
municipal services to the projects. The fiscal analysis is concerned with whether the
revenues would meet the project costs or whether the City will be faced with an
unfunded service obligation. Our conclusion upon reviewing the fiscal report is that it
generally follows accepted industry standards in terms of the methodologies and data
sources. However, certain assumptions made in the report regarding economic
conditions and the impacts to City service departments lead to conclusions in the
report that suggest a more positive fiscal impact of the proposed project than may
actually occur.
Based on our review, the City asked for a revised fiscal analysis to indicate the effect of
alternative methodologies and assumptions on the conclusions about the fiscal effects
of the proposed project. ADE prepared a report (July 28, 2009) to provide this
information, which was reviewed at a meeting with City and Stanford officials on
September 24,2009. Subsequently, CBRE prepared a revised analysis (December 9,
2009), which addressed one major concern with their prior analysis related to the
service area used to calculate City service cost factors.
The present report acknowledges the CBRE report of December 9'· and compares the
results of the two studies. In addition, ADE has made revisions to projected Police and
Fire Department costs based on further discussion with City staff about the anticipated
impact of the project.
Despite the various revisions undertaken by the two sides, there remains a significant
difference in the figures presented in the two fiscal reports. The ADE analysis indicates
a cumulative net cost of the project in Year 30 of about ($1.1 million) while the CBRE
report shows a positive net benefit of $7.6 million. Positive net revenues occur in the
early stages of the project as the result of large Use Tax payments anticipated during
the construction phase of the project. By Year 25 when the project is complete, both
analyses show an annual negative impact from the project: ($374,238) in the ADE
report and ($58,775) in the CBRE memo.' Under the CBRE scenario, the cumulative
fiscal impact of the project would eventually be negative if the time frame of the
analysis is extended.
1 CBRE has also estimated existing hospital operations couM genernte an a.dditional $24,260 in Use Tax per year,
which is not included in this analysis.
Applied Development Economics, Inc. 1
This report summarizes the peer review findings and provides the additional analysis
incorporating the critique of the CBRE reports. The initial CBRE report was prepared
before the current economic downturn was in full swing, and there are questions about
whether the assessed values and taxable sales levels, as well as possibly the hotel
revenues, would be lower than projected. This would reduce the amount of revenue
generated for the City budget. We prepared alternative projections based on a "worst
case" assessment of existing market conditions. Since economic changes are occurring
rapidly, actual conditions obtaining at the point the project is constructed may be
different.
In addition, ADE updated its analysis to include City budget data based on mid-year
changes adopted by the City Council on April 6, 2009. While CBRE did not have
access to that information at the time they prepared their initial report, it appears they
have also updated the budget data for their more recent analyses.
We have provided alternate figures for certain revenues and costs to indicate for the
City what the possible worst case scenario may be in terms of the fiscal impact of these
projects. This is intended to provide some perspective on the sensitivity of certain
assumptions in the report to the final outcome of the analysis. We expect the true
fiscal impact of these projects will lie somewhere between the figures prepared by
CBRE and the figures provided below in our review. Table 1 summarizes the
differences in the cumulative and annual results of the two studies. Table 2 breaks out
the results for revenues and costs at interim time frames.
TABLE 1
COMPARISON OF CBRE AND ADE FISCAL ANALYSES
2010-2040
Gener.' fund Net Fiscal Impaet CumulatIve
ADE Analysis ($1.094,192)
CBRE Analysis· $7,626,868
* Not inc::luding Use Tax from existing operations.
Source: ADE, Inc.
Annual
In 2040
($374,238)
($58,775)
The first phase (2009-2015) construction revenue, mainly the Use Tax on construction
materials, provides a net gain for the City. However, beginning with Phase 2 (2016-
2025) when construction activity is reduced, the net fiscal balance declines and turns
negative in both studies by 2025.
2 Applied Development Economics, Inc.
Expenditures
Annual Net
ExpendItUres
Annual Net
TABLE 2
To summarize, our questions about the CBRE analysis include the following:
• Construction related Use Tax calculations depend on numerous assumptions
about the size of construction contracts, the location of suppliers and the
willingness of contractors to obtain seller's sub permits.
• Property Tax calculations are based on market data that may be compromised
by current economic conditions.
• Transient Occupancy Tax calculations make assumptions about visitation for
adult inpatient care that may not be warranted.
• In their analysis of City service costs, CERE significantly reduced the
departmental budget figures on the basis that large segments of City operations
are fixed and not subject to expansion as City service demands grow. ADE
believes this is inaccurate given the long projected life of the project.
It should be noted that neither the ADE study nor the CERE study take into account
the effects of inflation on City costs and potential increases in projected employee
costs. Also, the studies do not address the potential City contributions necessary to
complete funding for mitigations of project impacts nor the contribution that is
necessary from the City General Fund to development impact fee accounts in order to
complete funding of capital improvements. These issues will magnify the full impact of
the project on City finances.
Applied Development Economics, Inc. 3
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4 Applied Development Economics, Inc.
REVENUE ANALYSIS
SALES AND USE TAX
The analysis of potential use tax from the construction of the project relies on a
number of assumptions about the nature of the construction process and the
subcontracts for the work.
• Stanford University would obtain a California Seller's permit, under which the
contractors could obtain sub-permits.
• 80 percent of contracts and subcontracts will be $5 million or more, thus
qualifying for seller's sub-permits.
• All qualifying contractors and sub contractors will voluntarily obtain seller's
sub-permits for the SUMC construction site. If this does not occur, the Use Tax
will flow to the county pool, of which the City gets a much smaller share.
• SHC and LPCH will both obtain direct pay permits to report and pay use tax
on qualifying direct purchases.
• Sales and Use tax will be paid on 85 percent of qualifying transactions.
• CBRE does not appear to assume any rebate for construction-related Use Tax,
although a 20 percent rebate is anticipated for non-construction purchases.
In addition, the analysis calculates Sales and Use Tax from ongoing operations of the
new medical center facilities. As noted above, a portion of these revenues to the City
are based on the assumption that any program the City would adopt to induce
facilities like Stanford Hospital to obtain a permit woukl only include a 20 percent
rebate of the revenues back to the permit holder. This is at the very low end of the
range cited for other cities in the study. If the University successfully negotiates a
higher rebate, it will further exacerbate what we project below to be a negative fiscal
impact of the project on the City.
A detailed discussion of the construction-related Use Tax process is provided below.
CALIFORNIA USE TAX AND DIRECT PAYMENT PERMITS
The California State Board of Equalization administers local taxes under the Bradley
Burns Uniform Local Sales and Use Tax Law, and district taxes are administered under
the Transactions and Use Tax Law, both of which are governed by California Revenue
and Taxation Code §72000 et. seq. This section highlights the application of the use tax
to large scale construction contracts and the establishment of a Direct Payment Permit
program. The administrative requirements of the program have dissuaded local
jurisdictions from obtaining a greater share of sales and use tax from large construction
projects. In recent years there has been increasing interest on the part of local
Applied Development Economics, Inc. 5
jurisdictions to recoup a greater share of construction contract material and fixture use
taxes. The Stanford University Medical Center project could potentially be a source of
increased revenue to the City.
Use Tax
Use tax is imposed on the purchase for storage, use, or other consumption of tangible
personal property purchased from a licensed retailer. When property or title to a
tangible good is transferred to a purchaser inside California from a seHer outside
California, the transaction is subject to use tax regardless of whether any registered
place of business of the retailer participates in the sale. Much like the sales tax revenue
allocation, use tax is generally allocated through a countywide pool to the local
jurisdictions in the county where the property is first "used". In many cases, the
delivery address of materials is considered to be the place of use. Construction
equipment and material purchases are often cited-as examples of use tax eligible
transactions by construction contractors who are purchasers and consumers of
materials used in property development and redevelopment and whose job sites are
regarded as the place of business.
Use Tax Direct Payment Permit
Revenue and Taxation Code $7051.3 authorizes the State Board of Equalization to
issue a Use Tax Direct Payment Prmnitto qualified applicants. The permit allows
purchasers and lessee's of tangible property to self-assess and pay use taxes directly to
the State Board of Equalization instead of to the vendor from whom the tangible
property is purchased.
Permit holders who acquire property under a certificate must self-assess and report the
use taxes directly to the Board on their tax returns, and allocate the local taxes to the
county or city in which the property is first used. To qualify the applicant must agree
to 1) self assess and pay directly to the Board any Use Tax which is due on property
for which a Use Tax direct payment exemption certificate was given, and 2) the
applicant must certify to the Board either of the following a) the applicant purchased
or leased for its own use tangible property subject to use tax which cost $500,000 or
more in aggregate during the calendar year immediately preceding the application of
the permit, or b) the applicant is a county, city, or redevelopment agency'.
Under a Board of Equalization resolution adopted in 1994, an installing construction
contractor or sub-contractor may elect to obtain a sub-permit for the jobsite of a
contract valued at $5,000,000 or more. This option provides local jurisdictions the
2 Governmental agencies who do not hold a California SCUfrs permit or a consumer use taX atcount must obtain a
consumer use tax account and then complete the application for a Use Tax Direct Payment Permit, sign the
certification statement attesting they qualify for a permit under the conditions described above. and submit an
additional statement to that effect under offidalletterhead and signed by and authorized governmental
representative.
6 Applied Development Economics, Inc.
opportunity to receive the full one percent local tax revenue on materials consumed
and fixtures furnished by the contractor directly rather than through the countywide
pooling process where the local jurisdiction of sale would only get a portion of the one
percent based on a complex allocation formula. It is important to note that
participation by contractors is strictly voluntary. Construction contractors Use Tax
requirements are detailed in the State Board of Equalization Regulation 1521.
The Stanford University Medical Center project is a multi·billion dollar project that,
under the $5 million dollar regulations, the City could potentially benefit from
establishing a Use Tax Direct Payment program. Contractors may elect to allocate the
sales and use tax directly to the local jurisdiction, but the $5 million contract price
applies to each contract and subcontract for work performed on site,not the overall
construction value, or construction budget, for the project.
As stated previously, the Stanford University would need to obtain a California seller's
permit and then the contractor, and his sub-contractors, must obtain a sub-permit
under the University's seller's permit for the jobsite in order for the allocation of use
tax revenue to take place.
Another mechanism for the City to recoup additional project related use tax revenue
would be the establishment of 'purchasing corporations", which is essentially the
prime contractor establishing a purchasing company for better control of project
inventory and procurement for large scale and complex construction projects.
Establishing an entity such as this is extremely complex, but offers tax and non-tax
benefits for both the City and the prime contractor.
There are relatively few (less than 200 statewide) Use Tax Direct Payment Permits in
the State of California. There are many complexities to establishing such a program,
and the reality is that establishing a permit is completely voluntary to the contractor.
The few California cities that have existing permits have established Use Tax Direct
Payment rebate programs in order to entice taxpaying firms to establish these types of
relationships with the state, relationships that ultimately benefit the local jurisdiction.
Appendix A includes publications of The HdL Companies, an independent California
revenue and taxation consultancy. The Construction Contracts memorandum of July
15, 2002 highlights the opportunities, pitfalls and issues associated with establishing a
Use Tax Direct Payment Program. The Purchasing Corporations and Buying Companies
document discusses the benefits and requirements of establishing purchasing
corporations under California State Board of Equalization Regulation §1699.
PROPERTY TAX
CBRE based the medical office valuation on a capitalized net income formula using
lease rates from last year. We feel certain that market conditions will not be so
favorable going forward, although we recognize that this project is long term in nature
and hopefully the effects of the recession will not be significant by the time these
Applied Development Economics,. Inc. 7
facilities come online. Nevertheless, we believe it would be prudent for the City to
consider what the project impact would be if the property tax revenues were ten
percent lower than projected. This would reduce the revenues from this source by
about $5,700 per year and the Motor Vehicle In-Lieu property tax by about $1,400.
TRANSIENT OCCUPANCY TAX (TOT)
We have reviewed the analysis used to calculate TOT taxes for the project. We
understand that better data are available regarding lodging stays related to the Lucille
Packard Children's Hospital (LPCH) than for Stanford Hospital and Clinics (SHe) ..
Although CBRE has estimated that hotel stays for the latter would be half the amount
generated by LPCH, we question whether even that· is too high. Only family members
traveling great distances would be inclined to stay over night to visit adult patients, but
the CBRE report does not provide any indication of the residence patterns of in
patients at SHC. In ADE's analysis, We have removed the $2,923 in annual TOT
revenues from SHC.
UTILITY USERS TAX
The City levies a five percent tax on certain utility bills including water, electricity,
gas, and telephone. We have reviewed the data sources and methodologies used by
CBRE to calculate these utilities bills and resulting revenues. Much of the key
information appears to have come from the City Utility Department or the EIR
consultant from related impact studies for the EIR. We have also calculated a straight
per capita revenue estimate based on the increased employment from the project.
The estimates of this tax in the CBRE are substantially higher than a per capita
estimate, but we recognize the demands of a hospital for electricity and water are
particularly high. The usage figures are provided by SUMC in their application or
estimated as a function of current demand at the medical center. We do not have
independent information to question these figures.
OTHER REVENUES -FINES AND PENALTIES
CBRE has revised its initial analysis to reflect a City-boundary based service area and
the per capita calculation of fines and penalties matches that of ADE, at $32,232.
8 Applied Development Economics, Inc.
CITY SERVICE COSTS
The City costs in the CBRE analysis are generally calculated on an average cost basis,
meaning that the costs alklcated to the proposed project are the same per employee as
existing non-residential uses in the City. The two studies have been aligned in terms of
the service areas used for the analysis; however, the cost basis for calculating the per
capita factors is still in question.
CBRE has postulated that certain portions of City service costS are fixed and not
subject to increase as City service demands expand. Overall, they have estimated that
49 percent of City service costs are subject to this limitation, ranging from 100 percent
of costs for the City Auditor and City Clerk to 20 percent of Fire Department costs.
The analyses or rationale leading to these specific percentage adjustments for each
department are not provided in the report. ADE views this as an issue of time
perspective. Over the long term, nearly all City costs are subject to increase as the City
expands. As cities grow, not only do line departments need to expand to serve the large
population and employment base, additional layers of management are often needed
and the salaries paid to top managers increase as well with the complexity of the City
service network.
In addition, we believe CBRE has underestimated the impact on City Administrative
Departments. Based on the fiscal model we have developed for the Comprehensive
Plan Update, we calculate that general government costs to be much higher than the
figure estimated by CBRE.} In part, this is because we believe the average cost
approach should be applied to administrative departments as well as line departments.4
As City government grows to serve more residents and businesses, the demands on
administrative departments grow as well. Therefore, we have calculated the cost
impact on the general government departments as an overhead charge based on the
costs to provide direct services to the proposed project.
If we accept CBRE's estimates of direct service costs, then our general government
costs would be about $122,600 per year, compared to CBRE's estimate of $21,400.
However since our estimates of direct costs are also higher than those of CBRE, our
projections of general government costs are about $150,800, about seven times higher
than those of CBRE.
Table 3 shows the per capita City cost factors ADE has calculared for the fiscal model.
These figures also take into account the midyear budget adjustments approved by the
City Council on April 6, 2009. The 62/38 percent split reflects the standard
, Applied Development Economics. Inc. F~cal Background Repon. March 10. 2009
4 Administrative departments in this context include the City Attorney, City Auditor, City Clerk, City Manager,
Administrative Services, and Human Services. These Departments constitute the "general government" function of
the City.
Applied Development Econcmi<s, Ine. 9
assumption employed by CBRE that the impact of employment generating uses is half
the impact of the residential population. However, for Community Services and the
Library, we have allocated a greater share to residential uses since these services are less
in demand from workers not residing in the City.
TABLE!
ADE CALCULATED PER CAPITA cosr FACTORS FOR PALO ALTO
City Department
General Government [aJ
Community Services
Ar.
Library
Planning and Communi", Environ.
Police
Public Works
Non-Departmental
Source: ADE, Inc.
Residential Non-Residential
Percent Allocation Dollar Factor Percent Allomlon Dollar Factor
18% NA 18% NA
90% $298.36 10% $27.39
62% $164.13 38% 62.06
90% $92.30 10% $8.47
62% $51.69 38% $25.84
62% $274.90 98% $143.40
62% $130.99 38% $65.50
62% $57.91 38% $28.96
Note: [aJ Percent of direct line department costs.
10 Applilld Development Economics, Inc.
REVISED FISCAL ANALYSIS
Table 4 below shows ADE's cost estimates, including the City estimates of Police and
Fire costs, as well as adjustments to the other City costs and revenues as discussed
above. The primary difference with CBRE's analysis is in the cost estimates. While
ADE's annual revenue estimates are only about $10,000 lower than CBRE's, the City
annual City cost estimates are more than $300,000 higher. This is primarily due to the
reduction CBRE made in the City service cost per capita factors.
TABLE 4
REVISED FISCAL ANALYSIS OF STANFORD UNIVERSITY MEDICAL
FACILmES PROJECT BASED ON ADE ANALYSIS (YEAR 2025)
Estimated Amount
.Item One· Time Annual
General Fund Revenues
Sales Tax $8,164,719
SUMC Direct Pwr:haslng
SUMC Facillttes On-site Sales
SUMC Employee Spending
SUMC Overnight VisItor Spending
ConslnJctlon ReiatedPurchasing ~148,416
Construction Worlrer Spending $16,303
Property Ta.
Transient Occupancy ta.
Utility Users Tax
Othe, Taxes and Fines
Motor Vehicle In-Lieu Fees
Fines and Penalttes
Total General Fund Revenu.. $8,164,719
General Fund Expenditures
City Attorney
City Auditor
City Cieri<
City Council
City Manager
Administrative Services
Human Resources
Community Services
Fire'
Library
Planning and Community Environment
Police·
public Works
italicized items helow them.
$235,375
$42,1136
$134,323
$S8,718
$298
$51,836
$6,104
$296,572
$44,875
$12,643
132,232
$G21,801
$26,482
$7,355
$10,298
$15,183
$68,411
$22,058
$61,436
$186,288
$18,998
$57,959
$321,645
$145,917
* Annual cost estimates include allocation for additional equipment as well as
personnel.
Source: ADE, Inc.
Table 4 represents a snapshot for the year 2025 when the project construction is
completed and operations are stabilized. However, the potential cumulative impact of
the project is much greater, considering that annual losses for the City will occur year
Applied Development Economics, Inc. II
after year. Table 5 summarizes the results of a 30 year projection, from 2010 to 2040,
of the complete construction period and subsequent operations of the expanded
medical facility. The complete year by year analysis is provided in Appendix B.
CBRE's analysis is divided into two time frames 2009 to 2015 and 2015 to 2025. In
preparing our analysis, we have assumed that the initial construction period would last
through 2014, when the initial buildings would be available for occupancy. Therefore,
there are no operational impacts, or revenues, unti12015, when we assume the initial
. phase would be occupied and operating.
TABLES
THIRTY YEAR CUMULATIVE fISCAL ANALYSIS
General Fund R ..... nues 2010 2015 2025 2040
SalesT""
SUMC Direct Purchasing $0 $36,151 $42,036 $42,036
SUMC Facilities On-site sales $0 $115,519 $134,323 $134,323
SUMC Employee Spending $0 $50,496 $58,718 $58,718
SUMe Overnight Visitor Spending $0 $256 $298 $296
Construction Related Purchasing $1,496,434 $95,178 $0 $0
Construction Worker Spending $2,891 $264 $0 $0
Property Tal( $0 $40,241 $51,836 $51,836
Transient OCcupancy tax $0 $5,249 $6,104 $6,104
Utility Users Tax $0 $255,055 $296,572 $296,572
Other Taxes and Fines
MolJlr Vehicle In-Ueu Fees $0 $9,815 $12,643 $12,643
Fines and Penalties $0 $27,720 $32,232 $32,232
Total General Fund Revenues ~1,499,326 ~635,946 i634.?62 ~634,762
General Fund EXpenditures
aty AtIJlrney $0 $22,774 $26,482 $26,482
aty Auditor $0 $6,326 $7,356 $7,356
City Clerk $0 $8,857 $10,298 $10,298
City Coundl $0 $0 $0 $0
City Manager $0 $13,918 $16,183 $16,183
Admlnistratlve services $0 $58,834 $68,411 $68,411
Human Resources $0 $18,979 $22,066 $22,068
Community 5ervtces $0 $52,635 $61,436 $61,436
FIre $0 $160,209 $186,288 $186,288
Library $0 $16,339 $18,996 $16,998
Planning and Community Environment $0 $49,845 $57,959 $57,959
POlice $0 $276,619 $321,646 $321,646
Public Wprks $0 $126,350 $146,917 $146,917
Non-Departmental $0 $55,864 $64,957 $64,957
Total General Fund Ex~nditures ~O ~867,74S ~1,OOS,999 ll,008,999
General Fund Net FlscalImpact $1,499,326 ($231,802) ($374,236) ($374,236)
Cumulative General Fund Im2act ~1,499,326 p,264,826 i!1.519,373 [~I,094,192l
Soun:e: ADE, Inc.
The Phase II construction is then assumed to be completed in 2021 and the remaining
permanent employment and patient levels would phase in and ramp up between 2022
and 2025.
Under these assumptions, the project produces substantial benefit for the City during
initial construction phase as use taxes are paid but little city cost if incurred. In 2015,
this changes dramatically, as construction revenues decrease and the City begins to
incur the ongoing costs of providing services to the newly occupied medical facilities.
12 Applied Development Economics, Inc.
This negative impact stabilizes at about a $374,200 annual loss by 2025. The
cumulative net revenue gained through the initial construction period continues to
erode and turns negative in the year 2038. By 2040, it reaches a level of negative $1.1
million. If the time period of the analysis were extended to 50 years, the cumulative
impact of the project would be a negative $8.6 million.
CONCLUSION
ADE's analysis indicates that from a fiscal perspective, the SUMC project will be a
relatively low revenue generator for the City of Palo Alto General Fund while still
exerting strong demands for City services such as police and fire protection, among
others. The resulting negative fiscal impact of the project will affect the City's ability
to pay for services needed for this project and other service recipients in Palo Alto.
CBRE's analysis does not adequately portray the fiscal impact for several reasons:
• Construction related Use Tax calculations depend on numerous assumptions
about the size of construction contracts, the location of suppliers and the
willingness of contractors to obtain seller's sub permits and may overstate the
benefit from this revenue source.
• Property Tax calculations are based on market data that may be compromised
by current economic conditions.
• Transient Occupancy Tax calculations make assumptions about visitation for
adult inpatient care that may not be warranted.
• In their analysis of City service costs, CBRE significantly reduced the
departmental budget figures on the basis that large segments of City operations
are fixed and not subject to expansion as City service demands grow. ADE
believes this is inaccurate given the long projected life of the project.
It should be noted that neither the ADE study nor the CBRE study take into account
the effects of inflation on City costs and potential increases in projected employee
costs. Also, the studies do not address the potential City contributions necessaty to
complete funding for mitigations of project impacts nor the contribution that is
necessaty from the City General Fund to development impact fee accounts in order to
complete funding of capital improvements. These issues will magnify the full impact of
the project on City finances.
Applied Development Economics, 1m;. 13
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14 Applied Deve/opment Economies, Inc.
APPENDIX A: SALES AND USE TAX
BACKGROUND INFORMATION
ISSUE OPUA TE
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Applied De .... lopment fconomics, Inc. 15
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24 ApplIed Development Economics, Inc.
APPENDIX B: DETAILED FISCAL PROJECTIONS
TABLE B-1
FISCAL PROJECTIONS
General Fund _enue. 2010 2011 2012 2013 2014 2015
Sales Tax
SUMC Direct Purchasing $0 $0 $0 $0 $0 $36,151
SUMC Facilities On-site Sales $0 $0 $0 $0 $0 $115,519
SUMC Employee Spendlns $0 $0 $0 $0 $0 $50,498
SUMC Overnight Visitor Spending $0 $0 $0 $0 $0 $256
Coostructlon Related Purchasing $1,496,434 $1,496,434 $1,496,434 $1,496,434 $1,496,434 $95,178
Construction Worker Spending $2,891 $2,891 $2,891 $2,891 $2,891 $264
Property Tax $0 $0 $0 $0 $0 $40,241
Transient Occupancy tax $0 $0 $0 $0 $0 $5,249
Utility Users Tax $0 $0 $0 $0 $0 $255,055
Other Taxes and Fines
Motor Vehicle In-Lieu Fees $0 $0 $0 $0 $0 $9,815
Fines and Penalties $0 $0 $0 $0 $0 $27,720
Total General Fund Revenues ,1,499,326 !!1,499,326 !!1,499,326 !!1,499,326 ~1,499,326 !!635,946
General Fund Expenditures
City Attorney $0 $0 $0 $0 $0 $22,774
City Auditor $0 $0 $0 $0 $0 $6,326
City Clerk $0 $0 $0 $0 $0 $8,857
City Council $0 $0 $0 $0 $0 $0
aty Manager $0 $0 $0 $0 $0 $13,918
Admlnlstratlve Services $0 $0 $0 $0 $0 $58,834
Human Resources $0 $0 $0 $0 $0 $18,979
Community Services $0 $0 $0 $0 $0 $52,835
Rre $0 $0 $0 $0 $0 $160,209
Library $0 $0 $0 $0 $0 $16,339
Planning and Community Environment $0 $0 $0 $0 $0 $49,845
Police $0 $0 $0 $0 $0 $276,619
Public Works $0 $0 $0 $0 $0 $126,350
Non-Departmental $0 $0 $0 $0 $0 $55,864
Tolal General Fund EXl!!lndltures !EO !EO !EO !EO 10 ~8£7,748
General Fund Net Fiscal Impact $1,499,326 $1,499,326 $1,499,326 $1,499,326 $1,499.326 ($231,802)
Cumulative General Fund Imeact ~1,499,326 ~2,998,651 ~4,497,977 !E5,997,302 ~7,496,628 p,264,826
Employment Change 1,929
Cumulative Eml?lo~ment Increase 0 0 0 0 0 1,929
Source: ADE, Inc.
Applied Development Economics, Inc. 25
TABLE B-2
FISCAL PROJECTIONS
General Fund Revenues 2016 2017 2018 2019 2020 2021
Sales Tax
SUMC Direct Purchasing $36,151 $36,151 $36,151 $36,151 $36,151 $36,151
SUMC Fadlitle.On-sltoSale. $115,519 $115,519 $115,519 $115,519 $115,519 $115,519
SUMC Employee Spending $50,498 $50,498 $50,498 $50,498 $50,498 $50,498
SUMC Overnight Visitor Spending $256 $256 $256 $256 $256 $256
Construction Related Purchasing $55,178 $95,178 $95,178 $55,178 $95,178 $95,178
ConstructIon Worker Sp:endlng ~264 ~264 ~264 ~264 j;264 ~264
Property Tax $42,174 $44,106 $46,038 $47,971 $49,903 $51,835
Transient Occupancy tax $5,249 $5,249 $5,249 $5,249 $5,249 $5,249
Utility Users Tax $255,055 $255,055 $255,055 $255,055 $255,055 $255,055
OIherTaxes and Fines
Motor Vehide In-Lieu Fees $10,287 $10,758 $11,229 $11,701 $12,172 $12,643
Fines and Penalties $27,720 $27,720 $27,720 $27,720 $27,720 $27,720
Total General Fund Revenues ~638,350 ~640,754 ~543,158 ~645,561 ~647,965 ~650,~§9_
General Fund Expenditures
City Attorney $22,774 $22,774 $22,774 $22,774 $22,774 $22,774
City Auditor $5,326 $5,325 $6,326 $6,325 $6,326 $6,326
City Clerk $8,857 $8,857 $8,857 $8,857 $8,857 $8,857
.OtyCoundl $0 $0 $0 $0 $0 $0
Oty Manager $13,918 $13,918 $13,918 $13,918 $13,918 $13,918
Administrative Services $58,834 $58,834 $58,834 $58,834 $56,834 $58,834
Human Resources $18,979 $18,979 $18,979 $18,979 $18,979 $18,979
Community Services $52,835 $52,835 $52,835 $52,835 $52,835 $52,835
Fire $160,209 $160,209 $160,209 $150,209 $160,209 $160,209
Library $16,339 $16,339 $16,339 $16,339 $16,339 $16,339
Planning and Community Environment $49,845 $49,845 $49,845 $49,845 $49,845 $49,845
Police $276,619 $276,619 $276,619 $276,619 $276,619 $276,619
PubliC Works $126,350 $126,350 $126,350 $126,350 $126,350 $126,350
Non-Departmental
26 Applied Development Economics, Inc.
TABLE B-3
FISCAL PROJECTIONS
General Fund Revenues 2022 2023 2024 2025 2026 2027
Salesnx
SUMC Direct Purchasing $37,627 $39,103 $40,579 $42,036 $42,036 $42,036
SUMC Facilities On-slte Sales $120,235 $124,951 $129,667 $134,323 $134,323 $134,323
SUMC Employee Spending $52,560 $54,621 $56,683 $58,718 $58,718 $58,718
SUMC C>wlrnlght Visitor Spending $267 $277 $288 $298 $298 $298
Construction Related Purchasing $0 $0 $0 $0 $0 $0
Construction Worker Spending $0 $0 $0 $0 $0 $0
Property Tax $51,836 $51,836 $51,836 $51,836 $51,836 $51,836
Transient Occupancy tax $5,464 $5,678 $5,892 $6,104 $6,104 $6,!04
UUllty Users Tax $265,467 $275,879 $286,292 $296,572 $296,572 $296,572
OlherTaxes and Fines
Motor Vehicle In-Lieu Fees $12,643 $12,643 $12,643 $12,643 $12,643 $12,643
Fines and Penalties $28,851 $29,983 $31,115 $32,232 $32,232 $32,232
Total General Fund Revenues $574,949 $594,971 $614,994 $634,762 $634,762 $634,762
General Fund Expenditures
ety Attorney $23,704 $24,634 $25,564 $26,482 $26,482 $26,482
City Auditor $6,584 $6,843 $7,101 $7,356 $7,356 $7,356
City Clerk $9,218 $9,580 $9,941 $10,298 $10,298 $10,298
Oty Council $0 $0 $0 $0 $0 $0
Oty Manager $14,486 $15,054 $15,622 $16,183 $16,183 $16,183
Administrative Services $61,236 $63,638 $66,040 $68,411 $68,411 $68,411
Human Resources $19,753 $20,528 $21,303 $22,068 $22,068 $22,068
Community Services $57,149 $59,306 $61,436 $61,436 $61,436
Fire $173,290 $179,831 $186,288 $186,288 $186,288
Ubrary $17,673 $18,340 $18,998 $18,998 $18,998
Planning and Community Environment $53,915 $55,950 $57,959 $57,959 $57,959
Police $299,204 $310,497 $321,646 $321,646 $321,646
Public Works $136,666 $141,824 $146,917 $146,917 $146,917
Non-Oepertmental
Applied Development Economics, Inc. 27
TABLE B-4
SUMC Direct Purchasing $42,036 $42,036 $42,036 $42,036 $42,036 $42,036
SUMC Facilities on-sil:e Sales $134,323 $134,323 $134,323 $134,323 $134,323 $134,323
SUMC Employee Spending $58,718 $58,718 $58,718 $58,718 $58,718 $58,716
SUMC OVernight Visitor Spending $298 $298 $298 $298 $298 $298
Construction Related Purchasing $0 $0 $0 $0 $0 $0
Construction Worker Spending $0 $0 $0 $0 $0 $0
Property Tax . $51,836 $51,636 $51,836 $51,836 $51,636 $51,836
Transient Occupancy tax $6,104 $6,104 $6,104 $6,104 $6,104 $6,104
Utility Users Tax $296,572 $296,572 $296,572 $296,572 $296,572 $296,572
Other Taxes and F!nes
Motor Vehicle In-UOu Fees $12,643 $12,643 $12,643 $12,643 $12,643 $12,643
Fines and Penames $32,232 $32,232 $32,232 $32,232 $32,232 $32,232
Total General Fund Revenues ~634,762 ~634,762 ~634,762 ~34,762 j!634,762 j!634,762
General Fund Expenditures
Oty Attorney $26,462 $26,482 $26,462 $26,462 $26,482 $26,482
City Auditor $7,356 $7,356 $7,356 $7,.356 $7,356 $7,356
City Oerk $10,298 $10,298 . $10,298 $10,298 $10,298 $10,298
City Council $0 $0 $0 $0 $0 $0
Oty Manager $16,163 $16,163 $16,163 $16,183 $16,183 $16,163
Administrative Servtces $68,411 $68,411 $68,411 $68,411 $68,411 $68,411
Human Resources $22,068 $22,068 $22,068 $22,068 $22,068 $22,068
Community SaNices $61,436 $61,436 $61,436 $61,436 $61,436 $61,436
Fire $186,288 $186,288 $186,288 $186,288 $186,288 $186,288
Ullrary $18,998 $18,998 $18,998 $18,998 $18,998 $18,998
Planning and Community EnVironment $57,959 $57,959 $57,959 $57,959 $57,959 $57,959
Police $321,646 $321,646 $321,646 $321,646 $321,646 $321,646
Public Works $146,917 $146,917 $146,917 $146,917 $146,917 $146,917
Non-Departmental .$64,957 $64,957 $64,957 $64,957 $64,957 $64,957
Total General FUnd ExQ!!ndltures ~1,O08,999 ~1,008,999 ~1,OOS,999 il,OOS,999 l;1,OO8,999 j!1,OOB,999
General Fund Net Fiscal Impact ($374,238) ($374,238) ($374,238) ($374,238) ($374,238) ($374,238)
CUmulative General Fund Iml!l!ct $3,396,660 $3,022,422 $2,648,185 $2,273,947 $1,899,709 $1,525,472
Employment Change ° 0 ° ° ° ° Cumulatlve Em~loy'ment Increase 2,243 2,243 2,243 2,243 2,243 2,243
Source: ADE, Inc.
28 Applied Development Economics, Inc.
TABLE B-5
FISCAL PROJECTIONS
General Fund Revenues 2034 2035 2036 2037 2038 2039
Sal •• Tax
SUMC Direct Purchasing $42,036 $42,036 $42,036 $42,036 $42,036 $42,036
SUMC Facilities On-site Sales $134,323 $134,323 $134,323 $134,323 $134,323 $134,323
SUMC Employee Spending $58,716 $58,718 $58,718 $58,718 $58,718 $58,718
SUMC Overnight Visitor Spending $296 $298 $298 $298 $296 $298
·Constructlon Related Purchasing $0 $0 $0 $0 $0 $0
Construction Worker Spending $0 $0 $0 $0 $0 $0
Property Tax $51,836 $51,836 $51,836 $51,836 $51,636 $51,836
Transient Occupancy tax $6,104 $6,104 $6,104 $6,104 $6,104 $6,104
U~11ty Users Tax $296,572 $296,572 $296,572 $296,572 $296,572 $296,572
Other Ta ... and Fines
Motor Vehicle In-Uau Fees $12,643 $12,643 $12,643 $12,643 $12,643 $12,643
Fines and Penalties $32,232 $32,232 $32,232 $32,232 $32,232 $32,232
Total General Fund Revenues ~634.762 ~634,762 ~634,762 i 634,762 l634,762 i 634,762
General Fund Expenditures
City Attorney $26,482 $26,482 $26,482 $26,482 $26,482 $26,482
City Auditor $7,356 $7,356 $7,356 $7,356 $7,356 $7,356
City Clerk $10,298 $10,298 $10,298 $10,298 $10,298 $10,298
City Council $0 $0 $0 $0 $0 $0
City Manager $16,163 $16,183 $16,183 $16,183 $16,163 $16,183
Administrative Services $68,411 $68,411 $68,411 $68,411 $68,411 $68,411
Human Resources $22,068 $22,068 $22,068 $22,068 $22,068 $22,068
Community Services $61,436 $61,436 $61,436 $61,436 $61,436 ~61,436
Fire $186,2atr $186,288 $186,288 $186,288 $186,288 $186,288
Library $18,998 $18,998 $18,998 $IS,998 $18,998 $18,998
Planning and Community Environment $57,959 $57,959 $57,959 $57,959 $57,959 $57,959
Police $321,646 $321,646 $321,646 $321,646 $321,646 $321,646
Public Works $146,917 $146,917 $146,917 $146,917 $146,917 $146,917
Non-Departmental $64,957 $64,957 $64,957 $64,957 $64,957 $64,957
Total General Fund EXll'lndltures . il,008,999 ll,008,999 ~1,OO8,999 !1,OOS,999 il,OOS,999 i 1,OOS,999
General Fund Net Fiscal Impact ($374,236) ($374,238) ($374,238) ($374,238) ($374,238) ($374,238)
Cumulative General Fund l!lJlli!ct 11,151,234 l776,996 !41l2,759 ~28,521 (i345,717l (!719,954l
Employment Change 0 0 0 0 0 0
CUmulative Eml1:k>~ment Increase 2,243 2,243 2,243 2,243 2,243 2,243
Sou ... , ADE, Inc.
Applied Development Economics, Inc. 29
30
TABLE B-6
FISCAL PROJECTIONS
General Fund Revenues
Sole. Tax
SUMC Direct Purch.slng
SUMC Fadllties Dn-slte Sales
SUMC Employee Spending
SUMC Overnight Visitor Spending
Conshuctlon Related Purchasing
Construction Worker Spending
Property Tax
Transient Occupancy lax
Utility Users Tax
other Taxes and Fines
Motor Vehicle In-lieu Fees
Fines and Penalties
Total Genera! Fund Revenues
General Fund expenditures
aty Attorney
aty Auditor
City Cierk
City Coundl
CIty Manager
Administrative Services
Human Resources
Community Services
Fire
Library
Planning and community Environment
Pollee
PubliC Worl<s
Non-Departmental
Total General Fund Expenditures
Gener.1 Fund Net FlscaUmpact
Comulatlve General Fund Impact
Employment Change
CUmulative Employment Increase
Source: ADE, Inc,
2040
$42,036
$134,323
$58,718
$298
$0
$0
$51,836
$6,104
$296,572
$12,643
$32,232
$634,762
$26,482
$7,356
$10,298
$0
$16,183
$68,411
$22,068
$61,436
$186,288
$18,998
$57,959
$321,646
$146,917
$64,957
$1,008,999
($374,238)
($1,094,192)
o
2,243
Applied Development Economics, Inc.