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Home My WebLink About1997-05-19 City CouncilTO: of Palo Alto City Manager’s Repor HONORABLE CITY COUNCIL 4 FROM: AGENDA DATE: CITY MANAGER April 8, 1997 DEPARTMENT: City Manager CMR:190:97 SUBJECT:REVISED FISCAL IMPACT ANALYSIS OF STANFORD WEST PROJECTS ON PALO AL~FO UNIFIED SCHOOL DISTRICT (PAUSD) REQUEST This is an information report and no Council action is required. EXECUTIVE SUMMARY In response to Council questions related to information provided during the public testimony process, staff revised the fiscal impact analysis prepared for the projects, incorporating updated assumptions regarding student generation, classroom size and school capital facilities costs. Staff has also had the opporttmity to review the updated analysis with the incoming School Superintendent, who provided additional information discussed below. Revised Fiscal Impact Analysis In preparing the revised fiscal impact analysis, staff adjusted four significant assumptions. In terms of one-time revenues and eXpenditures, the revenues associated with the developer impact fee were incorporated into the analysis; and the per square foot cost of new construction was updated based on the most recent cost estimates for the Building for Excellence Program. In terms of ongoing revenues and expenditures, staff revised operating costs to reflect the impact of the Governor’s Class Size Reduction Program. Costs were estimated very conserVatively, in that the current program only covers grades 1 through 3: however, in the analysis it was assumed that the program will be expanded to include kindergarten and grades 4 and 5. An additional element of conservatism is reflected in the fact that while operating expenses were increased for the Class Size Reduction Program, neither the $650 per student in revenue attributable to the program nor the existing State educational allotment of $120 for all students is shown in the revenue side of the equation. Offsetting this somewhat, staff also revised the projected enrollment associated with the project downward, from 290 to 200 students. The 290 student project was characterized by District staff as a "worst case scenario," and given the compounding nature of the conservative assumptions used throughout the analysis, staff felt it would be more appropriate to use the midrange in what increased enrollment was projected to be rather than the worst case scenario. CMR:190:97 Page 1 of 2 Additional Information Provided by District Staff The methodology used in the revised fiscal impact analysis is consistent with the original analysis, in that operating cost increases are calculated on a marginal cost basis. In reviewing the revised fiscal analysis with the incoming Superintendent, staff was told that there was a concern about the appropriateness of using a marginal cost analysis as opposed to a per capita analysis. District staff estimate that the average per capita student cost on a district-wide basis is between $5,800 and $6,000, when adjusted to only include local funding. If this number is used, the net positive fiscal impact of the project on an ongoing basis drops from $872,000 to a net positive fiscal impact of between $405,000 and $445,000. Additionally, the absence of land costs in the one-time costs related to building a new school and recognition of issues related to loss of school playing fields in the options for expanding existing elementary schools or locating portable classrooms were important elements to be considered from the District’s perspective. Available land has not been identified should a new elementary school be required. A 6 to 7 acre site would be required, at a cost of $6 to $7 million. Since the students coming from Stanford West housing have been estimated as representing 60 percent of the new elementary school, this would increase the net one-time deficit for the project on the high end of the range from $3.6 million to between $7 and $8 million. Finally, the fiscal analysis does not reflect the fact that expansion of a current elementary school site or location of portable classrooms on an existing school site will impact the availability of fields that are used both by the schools and the community. Relation of Stanford West Apartment Component The discussion above describes the impact of the entire project proposed on the PAUSD. In contrast, Exhibit B-6 presents only the PAUSD impacts of the Stanford West Apartment component. This exhibit indicates that the apartment component on its own will likely generate an ongoing deficit to PAUSD. This reinforces the importance of the other project components in balancing the fiscal impacts of the apartment component relative to PAUSD. ATTACHMENTS:Exhibits 6, 9, B-6, B-9 PREPARED BY:Emily Harrison, Assistant City Manager CITY MANAGER APPROVAL: FLEMING Manager CMR:190:97 Page 2 of 2 SEDWAY GROUP I I Real Estate and Urban Economics EXHIBIT 6 FISCAL IMPACT ON PALO ALTO UNIFIED SCHOOL DISTRICT STANFORD WEST DEVELOPMENT SCHOOL DISTRICT REVENUES AND COSTS Revenues Developer School Impact Fees (1)NA $1,282,600 Property Taxes (2)$1,607,000 NA TOTAL REVENUES (3) Costs School Capital Improvements (4) $1,607,000 $1,282,600 NA ($1,927,200) to ($4,584,400) School Operating Cost (5)($734,600)NA TOTAL COSTS ($734,600)($1,927,200) to ($4,584,400) NET IMPACT ON SCHOOLS $872,400 ($644,600) to ($3,301,800) General Note This revised analysis is based on recentJy enacted legislation requiring smaller classroom sizes in the K-3 gradelevels. The previous analysis was based on 27 students per classroomin all grade levels; the revised analysis is based on 20 students per classroom in elementary schools and 27 per classroom in the middle and high schools. Current legislat~on only requires smaller classroom sizes in four of the five elementary grade levels. This analysisconsentatively assumes smaller classes in all elementary grades. Total students from the Project is estimated at 200. (1)Based on school Impact fee res01utJon adopted by the PAUSD of $1.84 per square foot for the Stanford West Apartment component, and $0.30 per square foot for the Stanford Shopping Center and senior housing components applied to the estJmatad net assessable building area provided by Stanford Management Company, (2) Properl_v_ Tax Calculation (See I=xhiblt 3 for derivation of allocafions~Total ValualJon (see Exhibit 4)$342,503.000Property Taxes Allocated to PAUSD (of 1% basic rate) Annual Property Taxes to PAUSD $1,607.000 (3)Annual Revenues do not include $120 per student in Stata aid I$24,000) or $650 per K-6th Grade student received asparts of the GovemoCs Class Size Reduction Program ($53,000), (4)Estimated One-Time Cost CalculationNew Elementary School, OR ¯ExPand Elementary Schools, ORPortable Elementa~’y School Classrooms, OR.Re-Open Closed Elementary Schools $3,600,000 or $1~16,S00 or $942,857 or $2,100.000 or (5) Expand Middle SchoolsExpand High Schools Classroom Furniture and Equipment School Buses Total One-Time Cost if Build a New Elementary School Tota~ One-Time Cost if Expand Existing Elementary Schools Total One-Time Cost if Portable Elementary School Classrooms Total One-Time Cost if Re-Open Closed Elementary Schools Average $289,611 $304,463 $93,704 $296.593 $4,584,370 $2,201,170 $1,927,228 $2,949,285 Note:The cost to re-open closed elementary schools is estimated to range from $500,000 (if only new paint is require~) up to $3,500,000 (if the school needs to be brought up to current code and ADA standards). An estimated 60% of this cost is attributable to the Stanford Project. Because it is not likely that a school would re-open without a substantial renovation, the higher cost alternative is assumed, However, ff this option is chosen, the PAUSD would lose approximately $300,000 in net rental income annually because the current tenants would be displaced, Annual Cost CalcutatJ.oJ~ Potanfial New Students from Apartment Component 200Estimated Annual Marginal Cost to Provide School Service for New Students $734,556 Note: The number of new ~tudents of 200 is less than the 290 PAUSD estimated. Estimate reflects marginal operating costs associated with smaller elementaq/ school class sizes. Sources: Stanford Management Company; Palo Alto Unified School District; Santa Clara County Finance Department; Sedway Ko~Jn Mouchly Group. D:\12595~ISCIMP,W~4 kwf. 1/96 01-Apr.97 12:36 PM | SEDWAY GROUP IReal Estate and Urban Economics EXHIBIT B-6 STANFORD WEST APARTMENTS SUMMARY OF IMPACTS TO PALO ALTO UNIFIED SCHOOL DISTRICT 1994o95 DOLLARS Revenues Developer School Impact Fees (1)NA Property Taxes (2)$346,900 ITOTAL REVENUES (3)$346,900 Costs School Capital Improvements (4)NA $1,020,000 NA $1,020,000 ($1,927,200) to ($4,584,400) School Operating Cost (5)($734,600)NA TOTAL COSTS ($734,600). ($1,927,200) to I I($4,584,400)’ NET IMPACT ON SCHOOLS ($387,700)($907,200) to ($3,564,400) (1) Net Assessable Building Area 554,354 Fee per Assessable Square F~ot $1.84 Tot~!l Impact Fee $1,020,011 (2)Property. Tax Calculation (See Exhibit 3 for derivation of allocations~ Total Valuation (see Exhibit 4)Property Taxes Allocated to PAUSD (of 1% basic rate) Annual Property Taxes to PAUSD $73,931,000 $346,900 (3)Annual Revenues do not include $120 per student in State aid ($24,000) or $650 per K-6th Grade student received as parts of the Governor’s Class Size Reduction Program ($53,000). (4)Estimated One-Time Cost Calculation New Elementary School, OR Expand Elementary Schools, OR Portable Elementary School Classrooms, OR Re-Open Closed Elementary Schools $3,600,000 or $1,216,800 or $942,857 or $2,100,000 or Expand Middle Schools Expand High Schools Classroom Furniture and Equipment School Buses $289,611 $304,463 $93,704 $296,593 Tota~ One-Time Cost if Build a New Elementary School Total One-Time Cost if Expand Existing Elementary Schools Total One-Time Cost if Portable Elementary School Classrooms Total One-Time Cost if Re-Open Closed Elementary Schools Average $4,564,370 $2,201,170 $1,927,228 $2,949,285 Note:The cost to re-open closed elementary schools is estimated to range from $500,000 (if only new paint is required) up to$3,500,000 (if the school needs to be brought up to current code and ADA standards). An estimated 60% of this cost isattributable to the Stanford Project. Because it is not likely that a school would re-open without a substantial renovation, thehigher cost alternative is assumed. However, if this option is chosen, the PAUSD would lose approximately $300,000 n netrental income annually because the current tenants would be displaced. (5)Annual Cost Calculation Potential New Students from Apartment Component Estimated Annual Marginal Cost to Provide School Service for New Students 200 $734,556 Note: The number of new stiJdents of 200 is less than the 290 PAUSD estimated. Estimate reflects marginal operating costs associated with smaller elementary school class sizes. Sources: Stanford Management Company; Palo Alto Unified School District; Santa Clara County Finance Department; Sedway Kotin Mouchly Group. D:\12595\F!~CIMR WK4 kwf, !/96 01-Al~r-97 12;37 PM SEDWAY GROUP I Real Estate and Urban Economics EXHIBIT B-9 STANFORD WEST SENIOR HOUSING SUMMARY OF IMPACTS TO PALO ALTO UNIFIED SCHOOL DISTRICT 1994-95 DOLLARS Revenues Developer School Impact Fees (1) Property Taxes (2) TOTAL REVENUES NA $1 ,O34,8OO $1,034,800 Costs School Capital Improvements School Operating Cost TOTAL COSTS NET IMPACT ON SCHOOLS $226,600 NA $226,6o0 NA $0 $0 NA $o $o $1,034,800 $226,600 (1)Net Assessable Building’ Area. Fee per Assessable Square Foot Total Impact Fee .(2)Property. Tax Calculation (See Exhibit 3 for derivation of allocations) Estimated Value of Senior Housing Component (see Exhibit 4) Property Taxes Allocated to PAUSD (of 1% basic rate) Annual Property Taxes to PAUSD 755~484 $226,645 $220,555,000 $1,034,800 Sources: Stanford Management Company; Palo Alto Unified School District; Santa Clam County Finance Department; Sedway Kotin Mouchly Group. D:\12595\FISClMP.WK4 kwf, 1/96 01-Apt-97 12:30 PM