Gonzales Sphere of
Influence Area
Annexation
Fiscal Impact Analysis
Phase 1 Final Report
April 18, 2023
Exhibit H
This page intentionally left blank.
Table of Contents
EXECUTIVE SUMMARY .......................................................................... 1 Background and Study Objectives 1
Organization of the Report 1
Summary of Fiscal Impact Results 1
1. INTRODUCTION ........................................................................... 3 Project Area Background 3
2. OVERVIEW AND METHODOLOGY ................................................... 7 Fiscal Impact Methodology 7
3. FISCAL IMPACTS ......................................................................... 8 Assumptions and Key Drivers 8
Assumptions 8
Key Drivers and Interrelationships of Analysis Results 10 Changes in Service Providers and Level of Service 10
Fiscal Impact Analysis 11
General Fund Revenues 11
Property Tax 11
Property Transfer Tax 13
Sales Tax 15
Revenue Summary 15
General Fund Expenditures 17
Fire Department Expenditures 19
Police Department Expenditures 21
Recreation, Community Centers, and Aquatics 23
Public Works 25
Expenditure Summary 27
Net Fiscal Impact 29
1 Executive Summary
This report identifies the estimated fiscal impacts of the potential annexation of two specific plan areas, the Vista Lucia Specific Plan (Vista Lucia), and the Puente del Monte Specific Plan (Puente del Monte), and an agricultural cooler project to the City of Gonzales. A Fiscal Impact Analysis estimates the net impact on a City’s General Fund of the results of additional service demands in the area that is being annexed to the City. This is done by estimating the increase in revenues and expenditures to a city. For Gonzales, the estimated revenues that will be increased include a variety of taxes including, but not limited to, property taxes and sales tax from the future development in the area. Table 11 of this report summarizes the different tax categories and estimated annual revenues for each specific plan. Expenditures are calculated by estimating costs to the City for services, including police, fire, recreation and public works due to an increased service population and service area.
Background and Study Objectives
The City of Gonzales Sphere of Influence (SOI) contains two specific plan areas which will be developing into housing, plus some nonresidential uses. The existing land use in the SOI is predominantly agriculture. These areas would need to become part of the City in order to provide municipal services to future development, including future residents and workers in the SOI. This analysis will provide stakeholders and decision makers the fiscal implications of annexing these SOI areas to the City of Gonzales.
Organization of the Report
The remainder of the report details the results of Willdan’s research and analysis:
1. Introduction
2. Overview of Fiscal Impact Analysis Methodology
3. Fiscal Impacts
Summary of Fiscal Impact Results
Following is a summary of the fiscal impact analysis, explained in further detail (including definitions) in the body of the report. Note that net fiscal impact is estimated with two different fire protection cost models.
• Under either fire protection cost scenario, as shown in Table 1, Vista Lucia will generate fiscal revenue to the City of Gonzales of approximately $3.6 million. Annual costs will range from $6.5 to $6.7 million, depending on the fire protection cost scenario. The fiscal impact of the residential phases of the project will range from negative $3.3 to negative $3.5 million, while the nonresidential land uses of the project represent a positive fiscal impact.
• Under either fire protection cost scenario Puente del Monte will generate annual fiscal revenue to the City of Gonzales of approximately $2.4 million. Annual costs will range from $4.2 to $4.3 million, depending on the fire protection cost scenario. The fiscal impact of the residential phases of the project will range from negative $2.1 to negative $2.2 million, while the nonresidential land uses of the project represent a positive fiscal impact. • The agricultural cooler project will provide a positive net fiscal impact of between $24,358 and $26,518, depending on the fire protection cost scenario.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 2 Table 1: Net Fiscal Impact
Village 1 Village 2
Total
Residential Nonresidential West East
Total
Residential Commercial
Agricultural
Cooler
Fire Cost Scenario 1
Revenues2$ 1,726,032 $ 1,496,788 $ 3,222,820 $ 401,949 $ 641,203 $ 1,432,797 $ 2,074,000 $ 307,876 $ 72,664 Expenditures3
3,497,590 2,998,662 6,496,252 26,801 1,323,584 2,863,722 4,187,305 25,302 46,146 Net Impact $(1,771,558) $(1,501,875) $(3,273,433) $ 375,149 $(682,381) $(1,430,925) $(2,113,305) $ 282,574 $ 26,518 Fire Cost Scenario 2
Revenues2
$ 1,726,032 $ 1,496,788 $ 3,222,820 $ 401,949 $ 641,203 $ 1,432,797 $ 2,074,000 $ 307,876 $ 72,664 Expenditures3
3,599,237 3,086,477 6,685,714 27,977 1,361,262 2,946,778 4,308,040 26,203 48,306 Net Impact $(1,873,205) $(1,589,689) $(3,462,894) $ 373,972 $(720,059) $(1,513,982) $(2,234,040) $ 281,673 $ 24,358 1 Annual General Fund impact at build out in current dollars. 2 See Table 11.
3 See Table 20.
Source: Willdan Financial Services
Vista Lucia
Annual General
Fund Impact1
Puente del Monte
3 1. Introduction
This report identifies the fiscal impacts that would be generated by the SOI areas described above to the City of Gonzales. This chapter describes the project area background.
Project Area Background
The SOI area contains primarily agricultural land uses, and existing development is considered de minimis. Projected residential development and nonresidential development, by neighborhood for Vista Lucia and Puente del Monte are detailed in Table 2. In addition to examining the fiscal impact of the two specific plans, this analysis also includes the fiscal impacts of a planned agricultural cooer project, consisting of 313,000 square feet.
Table 2 summarizes the development scenarios examined in this fiscal impact analysis.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 4 Table 2: Development Program
Development Type Village 1 Village 2
Total
Residential Nonresidential West East
Total
Residential Nonresidential
Agricultural
Cooler
Residential Dwelling Units
Low Density 685 525 1,210 - 86 588 674 - -
Medium Density 644 483 1,127 - 271 328 599 - -
Medium High Density 240 300 540 - 341 445 786 - -
High Density 270 271 541 - - 177 177 - -
Mixed Use 20 60 80 - 23 21 44 - -
Subtotal 1,859 1,639 3,498 - 721 1,559 2,280 - -
Nonresidential Building Square Feet
Mixed Use - - - 94,000 - - - 72,000 -
Industrial/Manufacturing - - - - - - - - 313,800
Subtotal - - - 94,000 - - - 72,000 313,800
Sources: City of Gonzales, Willdan Financial Services.
Vista Lucia Puente del Monte
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 5 Table 3 calculates the service population associated with each of the development scenarios summarized in Table 2. The estimated number of persons served includes existing residents and employees and anticipated residents and employees associated with each scenario. Willdan assumed that the residential would be occupied by households that range from 3.40 to 4.20 persons per household, based on data specific to the City of Gonzales, and consistent with the City’s recent Development Impact Fee Nexus Study Update (2022). The factors used to estimate the number of employees by land use range are 550 square feet per employee for commercial mixed uses, and 1,000 square feet per employee for industrial uses, also consistent with the recent Nexus Study. Willdan assumes that each employee has approximately one half the impact of a resident on the cost of providing municipal services. Therefore, the total number of persons served is based on the residential population of each phase, plus half the on-site employee population. The fiscal analysis uses this “total persons served” figure to estimate municipal service revenue and cost increases.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 6 Table 3: Demographic Calculations
Type Village 1 Village 2
Total
Residential Nonresidential West East
Total
Residential Nonresidential
Agricultural
Cooler
Residential Dwelling Units
Low Density 685 525 1,210 - 86 588 674 - -
Medium Density 644 483 1,127 - 271 328 599 - -
Medium High Density 240 300 540 - 341 445 786 - -
High Density 270 271 541 - - 177 177 - -
Mixed Use 20 60 80 - 23 21 44 - -
Total Residential Dwelling Units 1,859 1,639 3,498 - 721 1,559 2,280 - - Nonresidential
Mixed Use - - - 94,000 - - - 72,000 -
Industrial/Manufacturing - - - - - - - - 313,800
Total Nonresidential - - - 94,000 - - - 72,000 313,800
Persons Served1
Residential Dwelling Units 1
Multifamily 1,802 2,145 3,947 - 1,238 2,186 3,424 - -
Single Family 5,582 4,234 9,815 - 1,499 3,847 5,347 - - Total Residential Population 7,384 6,379 13,763 - 2,737 6,033 8,770 - - Nonresidential 2
Mixed Use - - - 171 - - - 131 -
Industrial/Manufacturing - - - - - - - - 314
Total Employees - - - 171 - - - 131 314
Total Persons Served3 7,384 6,379 13,763 85 2,737 6,033 8,770 65 157 1 Assumes 4.20 residents per single family unit, and 3.40 residents per multifamily unit consistent w ith the City's 2022 Development Impact Fee Nexus Study Update. 2 Assumes 550 square feet per employee for
3 Defined as total population plus 50% of employees.
Sources: City of Gonzales, Development Impact Fee Nexus Study Update, 2022; Table 2, Willdan Financial Services.
Vista Lucia Puente del Monte
7 2. Overview and Methodology
This chapter discusses data gathering process, and analysis methodology used to calculate the fiscal impact analysis results.
Fiscal Impact Methodology
This section details the underlying methodology used to estimate the fiscal impact of the proposed SOI area annexations on the City of Gonzales.
1 The fiscal impact analysis uses a
combination of techniques to estimate the increases in revenues and expenditures. Where possible, the increases in revenues and expenditures are modeled following the way they are collected and allocated, referred to as the case study methodology. For example, increases in property tax revenues are based on an estimate of the increase in assessed valuation associated with a given project component. In other cases, where this type of detailed modeling is not possible due to lack of adequate data, Willdan utilized revenue multipliers that represent the current average per service population. Generally, this methodology presents a reasonably conservative analysis of the potential fiscal impacts of the proposed development.
In addition to applying case study-based or service population-based estimates of General Fund revenues and expenditures, certain municipal line-item revenues or costs vary more with growth and development than others. For example, on the expenditures side, General Government costs vary more with population growth than Planning and Building costs. Therefore, a percent variable factor was included in the analysis of the major line items.
To generate the fiscal impact model, Willdan used the City of Gonzales FY2022-2023 City and Successor Agency Recommended Budget to extrapolate revenues and expenditures that could result from the SOI area annexation. All results of the analysis are presented in current dollars, rather than inflated to a future nominal value. It is important to note that the analysis does not consider excess capacity that may exist for particular city services or the possibility that the proposed development might fall at a service threshold level, requiring major new capital construction to accommodate increased growth. Rather, it applies current fiscal conditions and municipal service levels to anticipate future costs upon completion and operation. 1 The ultimate revenue and service arrangements are subject to approval by LAFCO through an annexation process, so for the purposes of this report Willdan has assumed that the project will eventually be fully integrated into the City’s services. For the purposes of this analysis, it is assumed that the County’s share of property tax in the annexation areas will be split evenly between the City and the County, although the precise property tax split is subject to negotiation.
The implicit assumption is that the County will continue to provide Countywide services to the annexation area after incorporation.
8 3. Fiscal Impacts
Assumptions and Key Drivers
Assumptions
The following list documents additional land use, demographic, and other development-related assumptions used in this fiscal impact analysis:
• Demographic Data – Base year demographic data used to estimate existing population and employment in the City of Gonzales came from the California Department of Finance, and the US Census Bureau’s OnTheMap Application. • City of Gonzales FY2022-2023 City and Successor Agency Recommended Budget– The analysis utilizes the most recently available adopted budget for the City at the time of the preparation of this report.
• Future Population and Employee Estimates – Population projections are calculated using average persons-per-household factors derived from the U.S. Census. Employee estimates are based on average square feet per employee factors for nonresidential land uses.
• Assessed Value – The assessed valuation is estimated based on assumed market values for the various residential and nonresidential product types included in the Specific Plans and nonresidential cooler project.
General assumptions and land use assumptions are presented in Tables 4 and 5. The paragraphs that follow provide detailed explanations of each table utilized in the model.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 9 Table 4: General Assumptions
Table 5: Land Use Assumptions
Item Assumption
General Assumptions
Base Fiscal Year1
FY 2022-23
Property Turnover Rate (% per year)2
Multifamily 5%
Single Family Homes 10%
Nonresidential 5%
General Demographic Characteristics Estimates
City of Gonzales
City of Gonzales Population38,340
City of Gonzales Employees4
2,231
City of Gonzales Persons Served59,456
2 Property turnover rates based on Willdan research.
3 Based on January 2022 estimates from the California Department of Finance. 5 Defined as total population plus 50% of employees.
4 Based on latest data from OnTheMap.
1 Revenues and expenditures are in 2023 dollars. Analysis uses FY2022-23 Final Budget
Sources: California Department of Finance (DOF), Table E-5, 2022; U.S. Census Bureau, OnTheMap Application, http://onthemap.ces.census.gov; Willdan Financial Services
Land Use
Residential
Low Density 2,000 $ 325
Medium Density 1,800 325
Medium High Density 1,600 350
High Density 1,500 370
Mixed Use 1,200 375
Nonresidential
Mixed Use n/a $ 250
Industrial/Manufacturing n/a 175
Subtotal
1 Estimated unit sizes based on Willdan research.
2 Estimated assessed values per square foot or room based on Willdan research.
Sources: Table 3, Willdan Financial Services.
Estimated
Unit Size (Sq
Ft)1
Estimated
Assessed Value
Per Sq Ft2
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 10 Key Drivers and Interrelationships of Analysis Results As will be discussed further below, there are several factors that are key drivers for the results of the fiscal impact analysis:
• Assessed Value: Willdan has used a combination of market analysis and comparables to estimate the likely assessed value of development. The assessed value determines the property tax paid by development. A reduction in the projected market value of development would result in lower property tax revenues. • City share of ad valorem property tax: The SOI is currently within Tax Rate Area (TRA) 076-001. It has not yet been determined what the City’s share of ad valorem property tax will be in the area of the project currently under the jurisdiction of Monterey County. This analysis assumes that the City and County will evenly split the County’s share of property tax received in the annexation areas. The eventual tax sharing agreement will be the subject of a negotiation of the City and County, facilitated by LAFCo. A lower tax rate for the City in the annexed area will result in lower property tax revenues from the project. • Retail sales tax: Retail sales tax is estimated for mixed use land uses of the annexation area. It is also estimated that existing retail uses within the City will generate additional sales tax based on the spending associated with residential development in the annexation area.
Changes in Service Providers and Level of Service
This analysis estimates the fiscal impact of annexation. The annexation will provide different levels of services as a result of the changes in some service providers. Generally, the City provides a higher level of service than the County provides in unincorporated areas. The following service providers will change:
• Law Enforcement – The City of Gonzales Police Department will now serve the annexation area as opposed to the Monterey County Sheriff Department. • Fire Protection – The City of Gonzales Fire Department will become the primary service provider in the area, assuming responsibilities from the Gonzales Rural Fire Protection District.
• General Government (administration, attorney, finance, human resources, IT, etc) will change from the County of Monterey to the City of Gonzales. • Public Works – Service will change from the County of Monterey to the City of Gonzales’s Department of Infrastructure Maintenance & Operations and Engineering & Capital Improvement Projects departments.
• Planning and Building – Services will change from the County of Monterey to the City of Gonzales.
Other Countywide services will continue to be provided by the County and will not change. These include: Assessor/Recorder, Auditor Controller, Child Support Services, Civil Rights Office, District Attorney, Elections, Emergency Communications/911, Health, Library, Military & Veterans' Affairs, Natividad Medical Center, Probation, Public Defender, Social Services and Treasurer-Tax Collector.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 11 Fiscal Impact Analysis
General Fund Revenues
A listing of all General Fund revenue sources and the corresponding methodology used to forecast future project revenues is shown in Table 6. For some categories, such as property and sales tax, Willdan prepared a case study consisting of detailed revenue projections. For other categories where the impact of the project on revenues is more diffuse, Willdan has calculated the revenue the City receives on a per capita basis. To account for the fact not all revenue is directly related to population, Willdan has applied a “percent variable” factor to each of the per capita estimates, ranging from ten percent for revenue from other agencies to 75-percent for utility user taxes, franchise fees, fines and licenses and permits. It is important to note that these factors are estimates based on the nature of the project, its size relative to the City, and Willdan’s experience with other projects.
Table 6: City Revenues & Estimating Methodologies, FY 2022-23 Property Tax
The property taxes the City will receive from the project are derived from the total assessed value of new development and the City’s property tax allocation share of the one percent ad valorem property tax. Any allocation of property tax for annexation area will be subject to a tax sharing agreement between the City and Monterey County. Willdan assumed that the City would receive the half of the County property tax allocation in the annexation area. Of the one percent property tax, the City is assumed to receive approximately 11.8 percent of ad valorem property tax revenue, as shown in Table 7.
Budgeted
Description by Entity
Revenue
Amount Methodology Gross
Percent
Variable Net
Annual General Fund Revenues
Property Tax $ 870,676 Case Study
Property Transfer Tax 15,000 Case Study
Sales Tax 1,200,000 Case Study
Motor Vehicle In Lieu Tax / VLF Adj 1,056,664 Case Study Transient Occupancy Tax 252,000 Case Study
Franchise Fees 95,000 Per Persons Served 10.05 75% 7.54 Utility User Tax 250,000 Per Persons Served 26.44 75% 19.83 Licenses and Permits 70,000 Per Persons Served 7.40 75% 5.55 Fines 28,000 Per Persons Served 2.96 75% 2.22
Income from Investments 65,000 Not Applicable
Transfers 625,605 Not Applicable
Revenue from Other Agencies 7,500 Per Persons Served 0.79 10% 0.08 Fees and Charges 10,750 Per Persons Served 1.14 50% 0.57 Miscellaneous 76,000 Per Persons Served 8.04 50% 4.02
Departmental Revenues 1,449,331 Not Applicable
Total Revenues $ 6,071,526
Sources: City of Gonzales FY2022-2023 City and Successor Agency Recommended Budget; Willdan Financial Services.
Factors
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 12 Table 7: Estimated Annual Property Tax Revenue at Build Out Agricultural
Item Rate Village 1 Village 2 Total Residential Nonresidential West East Total Residential Nonresidential Cooler Assessed Value
Residential Dwelling Units
Low Density $ 445,250,000 $341,250,000 $ 786,500,000 $ - $ 55,900,000 $382,200,000 $ 438,100,000 $ - $ - Medium Density 376,740,000 282,555,000 659,295,000 - 158,535,000 191,880,000 350,415,000 - - Medium High Density 134,400,000 168,000,000 302,400,000 - 190,960,000 249,200,000 440,160,000 - - High Density 149,850,000 150,405,000 300,255,000 - - 98,235,000 98,235,000 - - Mixed Use 9,000,000 27,000,000 36,000,000 - 10,350,000 9,450,000 19,800,000 - - Subtotal $1,115,240,000 $969,210,000 $2,084,450,000 $ - $415,745,000 $930,965,000 $1,346,710,000 $ - $ - Nonresidential
Mixed Use $ - $ - $ - $ 23,500,000 $ - $ - $ - $ 18,000,000 $ - Industrial/Manufacturing - - - - - - - - 54,915,000
Subtotal $ - $ - $ - $ 23,500,000 $ - $ - $ - $ 18,000,000 $54,915,000 Total Assessed Value $1,115,240,000 $969,210,000 $2,084,450,000 $ 23,500,000 $415,745,000 $930,965,000 $1,346,710,000 $ 18,000,000 $54,915,000 Total Property Tax Revenue 1.0% $ 11,152,400 $ 9,692,100 $ 20,844,500 $ 235,000 $ 4,157,450 $ 9,309,650 $ 13,467,100 $ 180,000 $ 549,150 Estimated Property Tax
City Share1 11.8199% $ 1,318,197 $ 1,145,592 $ 2,463,789 $ 27,777 $ 491,404 $ 1,100,387 $ 1,591,791 $ 21,276 $ 64,909 County Share1 11.8199% $ 1,318,197 $ 1,145,592 $ 2,463,789 $ 27,777 $ 491,404 $ 1,100,387 $ 1,591,791 $ 21,276 $ 64,909 1 County share post ERAF is currently 23.6397%. Assumes City and County equally share the County's share of the 1%.
Source: County of Monterey MPTS2010 Property System - Auditor Tax Increment Distribution Report for TRA 076-001; Tables 3 and 5, Willdan Financial Services.
Vista Lucia Puente del Monte
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 13 Property Transfer Tax
Property transfer tax is based on the assessed value of the development’s land uses and the anticipated turnover rate of properties over time. This fiscal impact analysis is based on the assumption that the project’s apartments and nonresidential property will turn over once every 20 years (five percent per year) and single family homes will turn over about once every ten years (10 percent per year). The City earns $0.55 for every $100 of assessed value for properties that turn over. Property transfer tax assumptions are presented in Table 8.
Table 8: Property Transfer Tax Revenue Assumptions
The property transfer tax revenue calculations are detailed in Table 9.
Rate/
Assumption
Rate per $100 of AV (City of Gonzales) $ 0.55
Turnover Rates
Multifamily 5%
Single Family 10%
Nonresidential 5%
Source: Willdan Financial Services.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 14 Table 9: Estimated Annual Property Transfer Tax Revenue Village 1 Village 2 Total Residential Nonresidential West East Total Residential Nonresidential Agricultural
Cooler
Assessed Value
Residential
Low Density $ 445,250,000 $ 341,250,000 $ 786,500,000 $ - $ 55,900,000 $ 382,200,000 $ 438,100,000 $ - $ - Medium Density 376,740,000 282,555,000 659,295,000 - 158,535,000 191,880,000 350,415,000 - - Medium High Density 134,400,000 168,000,000 302,400,000 - 190,960,000 249,200,000 440,160,000 - - High Density 149,850,000 150,405,000 300,255,000 - - 98,235,000 98,235,000 - - Mixed Use 9,000,000 27,000,000 36,000,000 - 10,350,000 9,450,000 19,800,000 - - Residential Land Uses Subtotal $ 1,115,240,000 $ 969,210,000 $ 2,084,450,000 $ - $ 415,745,000 $ 930,965,000 $ 1,346,710,000 $ - $ - Nonresidential
Mixed Use $ - $ - $ - $ 23,500,000 $ - $ - $ - $ 18,000,000 $ - Industrial/Manufacturing - - - - - - - - 54,915,000
Nonresidential Land Uses Subtotal $ - $ - $ - $ 23,500,000 $ - $ - $ - $ 18,000,000 $54,915,000 Total $ 1,115,240,000 $ 969,210,000 $ 2,084,450,000 $ 23,500,000 $ 415,745,000 $ 930,965,000 $ 1,346,710,000 $ 18,000,000 $54,915,000 Transfer Tax Revenue
Residential
Low Density $ 24,489 $ 18,769 $ 43,258 $ - $ 3,075 $ 21,021 $ 24,096 $ - $ - Medium Density 20,721 15,541 36,261 - 8,719 10,553 19,273 - - Medium High Density 3,696 4,620 8,316 - 5,251 6,853 12,104 - - High Density 4,121 4,136 8,257 - - 2,701 2,701 - -
Mixed Use 248 743 990 - 285 260 545 - -
Residential Land Uses Subtotal $ 53,274 $ 43,808 $ 97,082 $ - $ 17,330 $ 41,389 $ 58,719 $ - $ - Nonresidential
Mixed Use $ - $ - $ - $ 646 $ - $ - $ - $ 495 $ -
Industrial/Manufacturing - - - - - - - - 1,510
Nonresidential Land Uses Subtotal $ - $ - $ - $ 646 $ - $ - $ - $ 495 $ 1,510 Total $ 53,274 $ 43,808 $ 97,082 $ 646 $ 17,330 $ 41,389 $ 58,719 $ 495 $ 1,510 Sources: Tables 3, 7 and 8.
Vista Lucia Puente del Monte
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 15 Sales Tax
The City generates sales tax revenue under two sales taxes, a general City sales tax of 1.0%, and the Measure “K” Transaction and Use Tax of 0.5%. Sales tax revenue generated by the new mixed use development is based on an estimate of the taxable sales generated by retail land uses in the annexation area. Willdan has not conducted a market study specific to annexation area, but instead has used conservative industry-standard estimates of sales per square foot for retail establishments and restaurants to estimate nonresidential retail sales tax revenue.
This analysis also assumes that new residents in the annexation area will spend money at existing retail establishments in Gonzales, which will increase the sales tax revenue generated by those existing establishments. It is assumed that each occupied dwelling unit will on average spend $2,900 annually in the City.
Estimated sales tax revenue for the City is presented in Table 11.
Table 10: Estimated Annual Sales and Use Tax Revenue - New Development
Revenue Summary
A summary of General Fund revenues resulting from the annexation of the SOI areas to City of Gonzales, based on the factors discussed above, is presented in Table 11.
Square
Feet
Retail
Sales Per
Sq Ft1 Total Sales
Taxable
Percentage Taxable Sales
City Sales
Tax @
1.00%
Measure ‘K’
Transaction
and Use Tax @
0.5%
Total -
Sales and
Use Taxes
Residential
Vista Lucia - Village 1 $ 5,391,100 75% $ 4,043,325 $ 40,433 $ 20,217 $ 60,650 Vista Lucia - Village 2 4,753,100 75% 3,564,825 35,648 17,824 53,472 Puente del Monte - West 2,090,900 75% 1,568,175 15,682 7,841 23,523 Puente del Monte - East 4,521,100 75% 3,390,825 33,908 16,954 50,862 Total - Residential Sales Tax $ 12,567,150 $ 125,672 $ 62,836 $ 188,507 Nonresidential
Mixed Use - Vista Lucia 94,000 $ 350 $ 32,900,000 75% $ 24,675,000 $ 246,750 $ 123,375 $ 370,125 Mixed Use - Puente del Monte 72,000 350 25,200,000 75% 18,900,000 189,000 94,500 283,500 Total Annual New Development Sales Tax Revenues $ 43,575,000 $ 435,750 $ 217,875 $ 653,625 1 Retail sales per square foot based on Willdan research. 2 Assumes $2,900 retail spending per dwelling unit in Gonzales based on an analysis of retail spending in similar communities.
Source: Willdan Financial Services.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 16 Table 11: Summary of Estimated City Revenues from Gonzales Annexation Areas Net Factor Village 1 Village 2
Total
Residential Nonresidential West East
Total
Residential Nonresidential
Agricultural
Cooler
Annual General Fund Revenues
Property Tax Case Study $1,318,197 $1,145,592 $2,463,789 $ 27,777 $491,404 $1,100,387 $1,591,791 $ 21,276 $ 64,909 Property Transfer Tax Case Study 53,274 43,808 97,082 646 17,330 41,389 58,719 495 1,510 Sales and Use Tax Case Study 60,650 53,472 114,122 370,125 23,523 50,862 74,385 283,500 - Transient Occupancy Tax Case Study - - - - - - - - -
Franchise Fee 7.54 55,639 48,068 103,707 644 20,624 45,463 66,088 493 1,182 Utility User Tax 19.83 146,419 126,494 272,913 1,695 54,274 119,641 173,915 1,298 3,111 Licenses and Permits 5.55 40,997 35,418 76,416 474 15,197 33,499 48,696 363 871 Fines 2.22 16,399 14,167 30,566 190 6,079 13,400 19,478 145 348 Income from Investments - - - - - - - - - -
Revenue from Other Agencies 0.08 586 506 1,092 7 217 479 696 5 12 Fees and Charges 0.57 4,197 3,626 7,823 49 1,556 3,430 4,986 37 89 Miscellaneous 4.02 29,674 25,636 55,310 343 11,000 24,247 35,247 263 631 Total Revenues $ 1,726,032 $ 1,496,788 $ 3,222,820 $ 401,949 $ 641,203 $ 1,432,797 $ 2,074,000 $ 307,876 $ 72,664 Sources: Tables 3, 7, 9 and 10.
Vista Lucia Puente del Monte
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 17 General Fund Expenditures
In this fiscal impact analysis, certain expenditures that are expected to be affected by the proposed annexation are forecasted by using the average cost per service population methodology. As with revenues above, Willdan has calculated the per capita budgets and applied a variable factor depending on the degree to which expenditures will be affected by increased service population. For the services using this approach, for example, Willdan expects the project will have a minimal effect.
For direct services such as fire, police, public works and recreation, on the other hand, Willdan expects a significant impact and has therefore prepared case studies based on interviews with City staff, which identified increased staffing and other costs needed to serve new development in the annexation area. All General Fund expenditure items and the methodologies used to estimated expenditures are listed in Table 12.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 18 Table 12: City Expenditures & Estimating Methodologies, FY 2022-23 Net Factors
Description
Budgeted
Expenditures Methodology Gross
Percent
Variable Net
Annual General Fund Expenditures
General Government1
$ 610,261 Per Person Served $ 64.54 20% $ 12.91
Police Department 3,036,339 Case Study
Fire Department 840,849 Case Study
Planning and Building Services 447,410 Per Person Served 47.32 10% 4.73 Parks and Recreation 653,183 Case Study
Public Works 191,868 Case Study
Non-Departmental 727,611 Per Person Served 76.95 25% 19.24 Total Expenditures $ 6,507,521
1 General government includes the following departments: City Council, City Manager/Clerk, City Attorney and Finance.
Source: City of Gonzales FY2022-2023 City and Successor Agency Recommended Budget; Willdan Financial Services.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 19 Fire Department Expenditures
Willdan interviewed staff from the Fire Department to identify the additional costs needed to serve the annexation area. The Department indicated what while the area could be served with six additional firefighters and a deputy fire chief, that ideally 9 additional firefighters should serve the area. This analysis examined the resulting fiscal impact of both the six and nine firefighter cost scenarios. It is assumed that either scenario would serve the entire annexation area. Table 13 calculates the fire expenditures at buildout for the entire annexation area using the Fire Department’s staffing needs and total compensation data per position data from the City’s FY2022-23 Compensation Plan. Table 14 allocates the costs from Table 13 to each phase of development in the annexation area proportionally based on the persons served in each phase.
Table 13: Fire Protection Case Study
Quantity Units
Total
Compensation
per FTE Total
Scenario 1
Additional Fire Fighters 6 FTE $ 104,811 $ 628,867
Deputy Fire Chief 1 FTE 216,666 216,666
Vehicle Maintenance Cost 24,027 24,027
Total Annual Cost $ 869,560
Scenario 2
Additional Fire Fighters 9 FTE $ 104,811 $ 943,300
Deputy Fire Chief 1 FTE 216,666 216,666
Vehicle Maintenance Cost 24,027 24,027
Total Annual Cost $1,183,993
Sources: Gonzales Fire Department; City of Gonzales FY2022-2023 Compensation Plan; Willdan Financial Services.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 20 Table 14: Fire Protection Services Cost per Phase
Type Village 1 Village 2
Total
Residential Nonresidential West East
Total
Residential Nonresidential
Agricultural
Cooler
Resident Equivalents 7,384 6,379 13,763 85 2,737 6,033 8,770 65 157 Scenario 1
Total Costs $ 869,560
Cost per Capita $ 38.07 $ 38.07 $ 38.07 $ 38.07 $ 38.07 $ 38.07 $ 38.07 $ 38.07 $ 38.07 Cost per Phase $281,102 $242,849 $ 523,951 $ 3,253 $104,198 $229,692 $ 333,890 $ 2,492 $ 5,973 Scenario 2
Total Costs $1,183,993
Cost per Resident $ 51.84 $ 51.84 $ 51.84 $ 51.84 $ 51.84 $ 51.84 $ 51.84 $ 51.84 $ 51.84 Cost per Phase $382,749 $330,664 $ 713,412 $ 4,430 $141,876 $312,749 $ 454,625 $ 3,393 $ 8,133 Note: Assumes each scenario from Table 14 would serve the entire annexation area. Costs are allocated to based on persons served.
Sources: Tables 3 and Table 13, Willdan Financial Services.
Vista Lucia Puente del Monte
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 21 Police Department Expenditures
Table 15 estimates the annual costs of police services for each phase of development based on the Police Department’s identified sworn staffing ratio. The estimate includes additional sworn patrol officers and shares of police Sergeants, Corporals and Patrol Offices associated with the annexation area, based on the persons served in each phase. The annual salary of each position used in the analysis is the total compensation data per position from the City’s FY2022-23 Compensation Plan.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 22 Table 15: Police Services Case Study
Type Phase 1 Phase 2
Total
Residential Nonresidential West East
Total
Residential Nonresidential
Agricultural
Cooler
Persons Served 7,384 6,379 13,763 85 2,737 6,033 8,770 65 157 Sworn Staffing Ratio 1.55 1.55 1.55 1.55 1.55 1.55 1.55 1.55 1.55 Additional Sworn Staff (FTE) 11.40 9.90 21.30 0.10 4.20 9.40 13.60 0.10 0.20 Sergeants 2.85 2.48 5.33 0.03 1.05 2.35 3.40 0.03 0.05
Corporals 2.85 2.48 5.33 0.03 1.05 2.35 3.40 0.03 0.05
Patrol Officers 5.70 4.95 10.65 0.05 2.10 4.70 6.80 0.05 0.10 Support Staff 0.50 0.50 1.00 - 0.50 0.50 1.00 - -
Staff Costs Annual Salary
Sergeants $ 163,508 $ 465,999 $ 404,683 $ 870,682 $ 4,088 $ 171,684 $ 384,245 $ 555,928 $ 4,088 $ 8,175 Corporals 161,056 459,008 398,613 857,621 4,026 169,108 378,481 547,589 4,026 8,053 Patrol Officers 117,543 669,996 581,839 1,251,835 5,877 246,841 552,453 799,294 5,877 11,754 Support Staff 58,943 29,471 29,471 58,943 - 29,471 29,471 58,943 - - Total Staff Costs $ 1,624,474 $ 1,414,606 $ 3,039,081 $ 13,991 $ 617,104 $ 1,344,650 $ 1,961,754 $ 13,991 $ 27,982 Vista Lucia
Sources: Gonzales Police Department; City of Gonzales FY2022-2023 City and Successor Agency Recommended Budget; City of Gonzales FY2022-2023 Compensation Plan; Willdan Financial Services.
Puente del Monte
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 23 Recreation, Community Centers, and Aquatics
The City is planning to expand recreation, community center and aquatics activities for all residents in the City, including potential residents in the annexation area. This represents an increase in the level of service provided. City staff provided Willdan with estimates of staffing projected to provide this higher level of service. Table 16 summarizes the projected staffing needs. Salary for full-time positions is total compensation (including benefits, etc.), however part time (PT) positions do not include any benefits.
Table 16: Recreation, Community Centers, and Aquatics Expenditures Table 17 allocates the costs from Table 16 to each phase of development in the annexation area proportionally based on the residents served in each phase. Note that these costs are not allocated to nonresidential phases.
Quantity Units Salary Total
Community Center 10.00 FTE $ 64,622 $ 646,216
Community Engagement 5.00 FTE 64,622 323,108
After School Programming 1.50 FTE 64,622 96,932
After School Programming (Seasonal, PT) 10.00 FTE 31,200 312,000 Aquatics (Salary) 2.50 FTE 64,622 161,554
Aquatics (Seasonal, PT) 7.50 FTE 32,531 243,984
Sports Programming (Salary) 5.00 FTE 78,400 391,998
Sports Programming (Seasonal, PT) 2.50 FTE 31,200 78,000 Gonzales Youth Council Advisors 1.50 FTE 323 484
Total $ 2,254,276
Sources: City of Gonzales; City of Gonzales FY2022-2023 Compensation Plan; Willdan Financial Services.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 24 Table 17: Recreation, Community Centers, and Aquatics Expenditures per Phase Type Village 1 Village 2 Total West East Total
Existing Residents 8,340
Residents (New Development) 7,384 6,379 13,763 2,737 6,033 8,770 Residents (Cumulative) 15,724 14,719 22,103 11,077 14,373 17,110 Total Costs $ 2,254,276
Cost per Resident $ 57.49 $ 57.49 $ 57.49 $ 57.49 $ 57.49 $ 57.49 Cost per Phase $ 424,478 $ 366,714 $ 791,192 $ 157,344 $ 346,846 $ 504,190 Note: Assumes that total costs from Table 16 would serve the entire city plus all annexation areas. Costs are allocated to based on persons served.
Sources: City of Gonzales; Tables 3, 4 and 16, Willdan Financial Services.
Vista Lucia Puente del Monte
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 25 Public Works
The Public Works expenditure case study is based on maintaining the ratio of public works personnel to population. The first step in the analysis is identifying the current ratio of FTE per resident, based on the staffing in the City’s current Budget. Table 18 displays the current staffing ratio analysis.
Table 18: Public Works 2022 Allocated Personnel
Similar to the police expenditure analysis, the public works expenditure analysis is based on maintaining the current ratio of FTE to service population for each phase of development in the annexation area. The annual salary of each position used in the analysis is the total compensation data per position from the City’s FY2022-23 Compensation Plan. Table 19 details the projected annual public works expenditures per phase.
Public Works Director / City Engineer 1.00 FTE
Public Works Supervisor 1.00 FTE
Lead Worker 1.00 FTE
Technician 1.00 FTE
Mechanic 1.00 FTE
Maintenance Workers 6.00 FTE
Admin Assistant 1.00 FTE
Total 12.00 FTE
Population 8,340
FTE per Resident 1.44
Sources: City of Gonzales; City of Gonzales FY2022-2023 City and Successor Agency Recommended Budget; Willdan Financial Services.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 26 Table 19: Public Works Case Study
Type Village 1 Village 2
Total
Residential Nonresidential West East
Total
Residential Nonresidential
Agricultural
Cooler
Persons Served 7,384 6,379 13,763 85 2,737 6,033 8,770 65 157 Staffing Ratio 1.44 1.44 1.44 1.44 1.44 1.44 1.44 1.44 1.44 Additional Staff (FTE) 10.60 9.20 19.80 0.10 3.90 8.70 12.60 0.10 0.20 Public Works Supervisor 1.00 0.80 1.80 - 0.40 0.80 1.20 - - Lead Worker 1.00 0.80 1.80 - 0.40 0.80 1.20 - -
Technician 1.00 0.80 1.80 - 0.40 0.80 1.20 - -
Mechanic 1.00 0.80 1.80 - 0.40 0.80 1.20 - -
Maintenance Workers 5.80 5.00 10.80 0.10 2.10 4.70 6.80 0.10 0.10 Admin Assistant 1.00 0.80 1.80 - 0.40 0.80 1.20 - -
Staff Costs Annual Salary
Public Works Supervisor $ 139,511 $ 139,511 $ 111,609 $ 251,121 $ - $ 55,805 $ 111,609 $ 167,414 $ - $ - Lead Worker 124,424 124,424 99,539 223,963 - 49,769 99,539 149,308 - - Technician 87,598 87,598 70,079 157,677 - 35,039 70,079 105,118 - - Mechanic 102,683 102,683 82,146 184,829 - 41,073 82,146 123,220 - - Maintenance Workers 64,051 371,498 320,257 691,756 6,405 134,508 301,042 435,550 6,405 6,405 Admin Assistant 69,526 69,526 55,621 125,147 - 27,810 55,621 83,431 - - Total Staff Costs $ 895,240 $ 739,251 $ 1,634,493 $ 6,405 $ 344,004 $ 720,036 $ 1,064,041 $ 6,405 $ 6,405 Sources: City of Gonzales; Gonzales FY2022-2023 Compensation Plan; Tables 3 and 18, Willdan Financial Services.
Vista Lucia Puente del Monte
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 27 Expenditure Summary
Based on the expenditure factors calculated above, Willdan has estimated an increase in expenditures for the City for each phase of each Specific Plan in the SOI. These estimates are presented in Table 20.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 28 Table 20: Summary of Estimated Annual Expenditures from Gonzales Annexation Description Net Factor Village 1 Village 2
Total
Residential Nonresidential West East
Total
Residential Nonresidential
Agricultural
Cooler
Annual General Fund Expenditures
General Government $ 12.91 $ 95,311 $ 82,341 $ 177,651 $ 1,103 $ 35,329 $ 77,880 $ 113,209 $ 845 $ 2,025 Police Department Case Study 1,624,474 1,414,606 3,039,080 13,991 617,104 1,344,650 1,961,754 13,991 27,982 Fire Department (Scenario 1) Case Study 281,102 242,849 523,951 3,253 104,198 229,692 333,890 2,492 5,973 Planning and Building Services 4.73 34,938 30,184 65,122 404 12,951 28,549 41,499 310 742 Parks and Recreation Case Study 424,478 366,714 791,192 - 157,344 346,846 504,190 - - Public Works Case Study 895,240 739,251 1,634,491 6,405 344,004 720,036 1,064,040 6,405 6,405 Non-Departmental 19.24 142,048 122,718 264,766 1,644 52,654 116,069 168,723 1,259 3,018 Total Expenditures $ 3,497,590 $ 2,998,662 $ 6,496,252 $ 26,801 $1,323,584 $2,863,722 $4,187,305 $ 25,302 $ 46,146 Annual General Fund Expenditures
General Government $ 12.91 $ 95,311 $ 82,341 $ 177,651 $ 1,103 $ 35,329 $ 77,880 $ 113,209 $ 845 $ 2,025 Police Department Case Study 1,624,474 1,414,606 3,039,080 13,991 617,104 1,344,650 1,961,754 13,991 27,982 Fire Department (Scenario 2) Case Study 382,749 330,664 713,412 4,430 141,876 312,749 454,625 3,393 8,133 Planning and Building Services 4.73 34,938 30,184 65,122 404 12,951 28,549 41,499 310 742 Parks and Recreation Case Study 424,478 366,714 791,192 - 157,344 346,846 504,190 - - Public Works Case Study 895,240 739,251 1,634,491 6,405 344,004 720,036 1,064,040 6,405 6,405 Non-Departmental 19.24 142,048 122,718 264,766 1,644 52,654 116,069 168,723 1,259 3,018 Total Expenditures $ 3,599,237 $ 3,086,477 $ 6,685,714 $ 27,977 $1,361,262 $2,946,778 $4,308,040 $ 26,203 $ 48,306 Sources: Tables 3, 13, 14, 15, 17 and 19.
Vista Lucia Puente del Monte
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 29 Net Fiscal Impact
Based on the analysis of revenues and expenditures detailed above, Willdan has estimated the annual net fiscal impact of each phase of each Specific Plan at buildout. Generally, the residential components have a negative fiscal impact, and the nonresidential components have a positive fiscal impact. Note that net fiscal impact is estimated with two different fire protection cost models. • Under either fire protection cost scenario, as shown in Table 21, Vista Lucia will generate fiscal revenue to the City of Gonzales of approximately $3.6 million. Annual costs will range from $6.5 to $6.7 million, depending on the fire protection cost scenario. The fiscal impact of the residential phases of the project will range from negative $3.3 to negative $3.5 million, while the nonresidential land uses of the project represent a positive fiscal impact.
• Under either fire protection cost scenario Puente del Monte will generate annual fiscal revenue to the City of Gonzales of approximately $2.4 million. Annual costs will range from $4.2 to $4.3 million, depending on the fire protection cost scenario. The fiscal impact of the residential phases of the project will range from negative $2.1 to negative $2.2 million, while the nonresidential land uses of the project represent a positive fiscal impact. • The agricultural cooler project will provide a positive net fiscal impact of between $24,358 and $26,518, depending on the fire protection cost scenario.
City of Gonzales Sphere of Influence Annexation Fiscal Impact Analysis 30 Table 21: Net Fiscal Impact
Village 1 Village 2
Total
Residential Nonresidential West East
Total
Residential Commercial
Agricultural
Cooler
Fire Cost Scenario 1
Revenues2$ 1,726,032 $ 1,496,788 $ 3,222,820 $ 401,949 $ 641,203 $ 1,432,797 $ 2,074,000 $ 307,876 $ 72,664 Expenditures3
3,497,590 2,998,662 6,496,252 26,801 1,323,584 2,863,722 4,187,305 25,302 46,146 Net Impact $(1,771,558) $(1,501,875) $(3,273,433) $ 375,149 $(682,381) $(1,430,925) $(2,113,305) $ 282,574 $ 26,518 Fire Cost Scenario 2
Revenues2
$ 1,726,032 $ 1,496,788 $ 3,222,820 $ 401,949 $ 641,203 $ 1,432,797 $ 2,074,000 $ 307,876 $ 72,664 Expenditures3
3,599,237 3,086,477 6,685,714 27,977 1,361,262 2,946,778 4,308,040 26,203 48,306 Net Impact $(1,873,205) $(1,589,689) $(3,462,894) $ 373,972 $(720,059) $(1,513,982) $(2,234,040) $ 281,673 $ 24,358 1 Annual General Fund impact at build out in current dollars. 2 See Table 11.
3 See Table 20.
Source: Willdan Financial Services
Vista Lucia
Annual General
Fund Impact1
Puente del Monte