Administrative Draft Report
Market Study and Fiscal Impact
Analysis of Pacifica Sea Bowl
Residential Project
Prepared for:
Toll Brothers
Prepared by:
Economic & Planning Systems, Inc.
March 27, 2024
EPS #231099
Table of Contents
1. Introduction and Key Findings .......................................................... 1 Key Findings ...................................................................................... 2
2. Project Description.......................................................................... 4
3. Market Context............................................................................... 7
4. Fiscal Impact Analysis ................................................................... 12 Methodology ....................................................................................12 General Fund Revenues .....................................................................15 General Fund Expenditures................................................................. 19 Net Fiscal Impact on General Fund ......................................................23 List of Tables
Table 1 Summary of Fiscal Impacts........................................................... 2 Table 2 Pacifica Citywide Demographic Assumptions.................................... 4 Table 3 Pacifica Sea Bowl Residential Development Program and Assumptions 5 Table 4 Pacifica Sea Bowl Existing Development and Assumptions ................. 6 Table 5 Population and Housing Trends (2013 -2023) .................................. 7 Table 6 Pacifica Employment by Industry................................................... 8 Table 7 Commercial Market Indicators.....................................................10 Table 8 Experiential Retail Market Indicators ............................................11 Table 9 Pacifica General Fund Revenue Summary .....................................15 Table 10 Pacifica General Fund Expenditure Summary................................. 20 Table 11 Annual General Fund Fiscal Impact Detail .....................................23 List of Figures
Figure 1 Project Site Context..................................................................... 1 Figure 2 Median Sales Price in Pacifica (2012 -2023) .................................... 9 Economic & Planning Systems, Inc.
1 1. Introduction and Key Findings
Toll Brothers (Developer) proposes to develop a parcel within the City of Pacifica (City) in San Mateo County into a residential development including market-rate for-sale units and below-market-rate (BMR) for-rent accessory dwelling units. The
9.2-acre site is located at the intersection of Sea Bowl Lane and Highway 1. The parcel currently contains a vacant 31,319 square foot building, previously home to the Sea Bowl Entertainment Center.
Figure 1 Project Site Context
This report provides a summary of market research focused on the residential and retail markets in and around the City of Pacifica as well as a fiscal impact analysis that evaluates the expected annual General Fund impacts of the Project. The report is organized into the introduction and key findings, followed by the Project Description, Market Context, and concludes with the Fiscal Impact Analysis.
Detailed data tables supporting the conclusions presented in the Fiscal chapter can be found in Appendix A.
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Market Study and Fiscal Impact Analysis
Pacifica Sea Bowl Residential Project
2 Key Findings
1. Despite recent population declines, increases in the cost of housing along with decreases in the number of vacant units point to unmet demand for additional housing in Pacifica. Like other markets in California and the San Francisco Bay Area, townhome values increased dramatically since 2013. The median sales prices for townhomes increased nearly 50 percent since 2013. Even as additional housing units were constructed, the residential vacancy rate in Pacifica decreased from 5 percent to 3.3 percent. These indicators point to unmet demand for new housing in the City.
2. While employment concentrations in retail trade and
accommodation and food services industry sectors suggest that these sectors are important components of Pacifica’s economy, current real estate indicators do not point to strong demand for additional retail space. Retail makes up the majority of commercial space in Pacifica, however very little new retail space has been constructed in the past decade. Overall, the retail market in Pacifica underperforms relative to the Peninsula Coastline region. Pacifica has a higher vacancy rate, as well as lower market rents and market sales prices per square foot than the surrounding submarket.
3. As proposed, the Project is expected to generate a positive annual net fiscal impact on the City of Pacifica’s General Fund. The proposed Project is anticipated to generate a positive net fiscal surplus to Pacifica’s General Fund in the range of $255,000 each year at project buildout as shown in Table 1. The Project is expected to generate annual General Fund revenues above and beyond the General Fund expenditures required to serve the Project, thereby more than covering its costs and generating surplus revenues to enhance services and/or service levels citywide. If the Sea Bowl property were to re-open as a bowling alley it would generate an estimated $94,000 annual net fiscal benefit to the City (driven primarily by sales tax revenue), $161,000 less than the anticipated net fiscal impact of the Project.
Table 1 Summary of Fiscal Impacts
General Fund
Revenues and Expenditures Vacant Occupied New Project
Annual General Fund Revenues $4,000 $101,000 $414,000
Annual General Fund Expenditures $0 $7,000 $159,000
Annual Net Impact on General Fund $4,000 $94,000 $255,000 Source: Economic & Planning Systems
Existing Development
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3 4. Property tax is estimated to comprise the largest revenue source for the Pacifica General Fund. The proposed development program is estimated to generate a total assessed value (AV) of approximately $138 million, resulting in a net AV increase of $136 million after accounting for the site’s current AV of $1.6 million. A substantial portion of the estimated General Fund revenues generated by the Project, including $260,000 a year in property taxes and $98,000 annually in property tax in-lieu of vehicle license fees, are directly tied to the new assessed value generated by the Project.
5. Public Safety costs are expected to make up the largest additional expenditure impact on the City’s General Fund. Public Safety costs, which include Police and Fire, are estimated to make up 66 percent of the additional General Fund costs at approximately $105,000 per year at Project buildout. Public Works costs comprise the next largest portion of estimated costs at around $25,000 per year.
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Market Study and Fiscal Impact Analysis
Pacifica Sea Bowl Residential Project
4 2. Project Description
The Project site is located near the western edge of the City of Pacifica on a 9.2- acre parcel, south of Sea Bowl Lane and east of Highway 1, about 600 feet from the Pacific Ocean. The parcel currently contains a 31,319 square foot bowling alley previously home to the Sea Bowl Entertainment Center, which vacated the building in May of 2023. Pacifica is in San Mateo County and has approximately 37,000 residents and about 4,200 jobs, as shown in Table 2.
Table 2 Pacifica Citywide Demographic Assumptions
The proposed development program includes 113 residential units consisting of 91 market-rate for-sale units and 22 below-market rate (BMR) accessory dwelling units. The City’s 6th Cycle Regional Housing Needs Allocation (RHNA) is 1,892 housing units with further delineation by income categories to ensure that housing is planned for households at all economic levels. The breakdown by income category is defined below:
• Very Low Income: 538
• Low Income: 310
• Moderate Income: 291
• Above Moderate Income: 753
As proposed, this Project would satisfy 2.6 percent of the City’s Lower Income allocation.
Citywide
Item Total Source
Total Housing Units 14,749 Department of Finance 2023
Occupied Households 14,255 Department of Finance 2023
Population 37,082 Department of Finance 2023
Persons per Household
Single Family 2.87 Census ACS 2022 5-Year Est.
Primary Jobs 4,183 LEHD Employment Statistics 2021
Service Population 38,959 Appendix Table A-1
Source: Economic & Planning Systems
Economic & Planning Systems, Inc.
5 The market-rate program includes a mix of 81 townhome and ten (10) duplex units, with anticipated price points ranging from $1.1 million to $1.8 million, resulting in a weighted average price point of $1.5 million for all market-rate units. The BMR program includes 22 accessory dwelling units (ADUs) affordable at 80 percent Area Median Income (AMI). The ADUs would be deed-restricted, such that if the owners of the units make them available for rent, the rents would have to be affordable to low income tenants. The details of the proposed development program are summarized in Table 3. Note that there is no price point listed for the 22 ADUs as their value is included within the market rate ownership unit price.
As shown, the total program is anticipated to house up to 284 residents with an estimated average household income of about $250,000 for the market-rate units and $104,000 for the BMR units. The market-rate household income estimates are based on the weighted average of the price points provided by the Developer while the BMR household income estimates are based on County-specific limits based on depth of affordability and household size (studio units are assumed to have a household size of one).
Table 3 Pacifica Sea Bowl Residential Development Program and Assumptions Total New Avg. Ann.
Item Units1 Residents2 HH Income3
Market Rate
Ownership Units 91 262 $1,511,522 Sale Price $253,702
Below-Market-Rate
Rental ADUs 22 22 $104,400 4
Total Overall Program 113 284
[3] See Appendix Table A-8 for detail on how these estimates are calculated for Ownership units.
Source: State of California Department of Housing and Community Development; Toll Brothers; Economic & Planning Systems
Weighted Average
Price Point per Unit1
[1] Per information provided by the developer.
[2] For Ownership units, multiplies number of units by average persons per single-family household assumption from Table 2, rounded to nearest whole number. Rental unit household size calculated as number of bedrooms (from developer-provided development program) plus one, and all ADUs are proposed to be studio units.
[4] Affordable Rental Household Income based on 2023 San Mateo County Income Limits (as determined by HUD) at 80% of Area Median Income for a family size of one.
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Pacifica Sea Bowl Residential Project
6 As previously stated, the Project site is currently developed with a vacant commercial property. Table 4 below shows the current assessed value of the parcel and the service population contribution under two scenarios. The first scenario treats the site as it currently is, a vacant commercial property with no active use. The second scenario evaluates the site under its previous conditions as an operational bowling alley. This distinction is carried forth through the analysis in order to provide a comparison of the proposed Project’s fiscal impact with the currently vacant site and also under a scenario wherein an operator takes over Sea Bowl and restarts operations as a bowling alley.
Table 4 Pacifica Sea Bowl Existing Development and Assumptions The following chapter presents an overview of the market context for the Project site. Trends in population and employment are provided, followed by market indicators for the residential and commercial real estate market.
Service Assessed
Item Use Population1 Value2
Scenario 1
Current Use (Vacant) Vacant Commercial 0 $1,626,625
Scenario 2
Prior Use (Occupied) Bowling Alley 13 $1,626,625
Source: San Mateo County Assessor; CoStar Group; Economic & Planning Systems [1] Scenario 1 (Vacant) considers the site as it currently is, wherein there is no active business on site and therefore no contribution to City service population.
Scenario 2 (Occupied) considers the site when it was active. Per CoStar Group data, SeaBowl had 29 employees. The above value of 13 is found by multiplying 29 employees by the 44.9% employee service population equivalency derived in Appendix Table A-1.
[2] Assessed value for APN 022-150-440 per FY2023-2024 San Mateo County Secured Tax Bill.
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7 3. Market Context
This chapter lays out the existing market conditions in the City of Pacifica and the implications for the demand for new residential and commercial development.
Using data sourced from the California Department of Finance, JobsEQ, Redfin, and CoStar, this analysis provides context for the Project site.
Population Trends
Pacifica and San Mateo County have both experienced similar population declines in recent years. In the past ten years, from 2013 to 2023, San Mateo County’s population decreased by one percent, while the population in Pacifica decreased by three percent in the same period.
Despite these population declines, the number of housing units increased in both Pacifica and San Mateo County over the same period, with the highest growth seen in the single family attached unit stock. During the past decade, the number of single family attached homes increased nine percent in Pacifica and eight percent in San Mateo County, as seen in Table 5.
Table 5 Population and Housing Trends (2013 -2023)
Even with the City’s decline in population and increase in the number of housing units, the City’s vacancy rate decreased over the past decade from 4.5 percent to
3.3 percent. This suggests that there is still strong interest in living in Pacifica.
Employment Trends
Since 2013, employment in Pacifica increased 13 percent, with the current number of jobs in Pacifica just under 5,500. The industries that experienced the greatest rate of growth in Pacifica from 2013 to 2023 include Agriculture, Forestry, Fishing and Hunting; Health Care and Social Assistance; and Arts, Entertainment, and Recreation. Currently, the industry sectors with the largest share of employment are Accommodation and Food Services, Health Care and Item 2013 2023 Growth 2013 2023 Growth
Population 38,384 37,082 -3% 747,550 737,644 -1%
Housing
Total Housing Units 14,539 14,749 1% 272,477 287,967 6% Total Vacancy Rate 4.5% 3.3% -26% 5.2% 5.3% 2%
Townhomes 948 1,037 9% 25,079 27,099 8%
Source: California Department of Finance; Economic & Planning Systems Pacifica San Mateo County
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Pacifica Sea Bowl Residential Project
8 Social Assistance, Educational Services, and Retail Trade (see Table 6). While industry categories do not clearly fall into specific land use categories, there appears to be a substantial retail-oriented labor force within the City.
Table 6 Pacifica Employment by Industry
Industry Amount Pct. Of Total # %
Agriculture, Forestry, Fishing and Hunting 28 1% 26 1478% Mining, Quarrying, and Oil and Gas Extraction 0 0% 0 -87% Utilities 47 1% 6 16%
Construction 586 11% 137 31%
Manufacturing 108 2% -50 -32%
Wholesale Trade 37 1% -4 -9%
Retail Trade 702 13% 70 11%
Transportation and Warehousing 75 1% -30 -28%
Information 40 1% 7 21%
Finance and Insurance 110 2% 18 19%
Real Estate and Rental and Leasing 103 2% 12 13%
Professional, Scientific, and Technical Services 368 7% -30 -8% Management of Companies and Enterprises 1 0% 0 20%
Administrative and Support and Waste
Management and Remediation Services 144 3% 4 3%
Educational Services 704 13% 73 12%
Health Care and Social Assistance 840 15% 300 55%
Arts, Entertainment, and Recreation 192 3% 58 43%
Accommodation and Food Services 897 16% 153 21%
Other Services (except Public Administration) 261 5% -110 -30% Public Administration 243 4% -4 -1%
Unclassified 0 0% -8 -97%
Total - All Industries 5,483 100% 627 13%
Source: JobsEQ 2023; Economic & Planning Systems
Jobs (2022) Growth (2013-2023)
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9 Real Estate Market
This section examines the existing supply and demand for residential and commercial properties. The residential market data is sourced from Redfin, with a focus on townhomes to align with the proposed program. Commercial market data is sourced from CoStar, which compares market data for office, industrial and retail spaces. Additional consideration is given to “experiential retail,” a category which includes bowling alleys, movie theaters, restaurants, etc.
Residential
Townhome prices in Pacifica have largely trended upward over the past decade, with the median sales price of a townhome increasing more than 150 percent from 2012 to 2023. Figure 2 shows the average median sales price of townhomes in Pacifica over this period.
Figure 2 Median Sales Price in Pacifica (2012 -2023)
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10 Commercial
Pacifica falls into the larger Peninsula Coastline Submarket area, which includes communities such as Half Moon Bay and Pescadero. As shown in Table 7, retail spaces in Pacifica had lower market rents, sale prices, and higher vacancy rates as compared to the overall submarket.
Table 7 Commercial Market Indicators
These findings do not indicate strong demand for additional retail space in Pacifica. In considering the existing use as a bowling alley, this study examines “experiential retail” as a subset of general retail. This category consists of retail spaces which focus on experiences typically unique to the space and/or location, such as restaurants, bars, movie theaters, and bowling alleys. Table 8 demonstrates some of the market differences between “experiential retail” and general retail in Pacifica and the larger submarket area.
Item Office Industrial Retail
Pacifica
Inventory (SF) 173,862 161,788 1,011,291
Pct. of Total Comm. Space1 13% 12% 75%
Vacancy Rate 0.00% 0.00% 3.30%
Market Rent/SF $36.38 $25.71 $29.87
Market Sale Price/SF $419 $330 $444
Market Cap Rate 6.59% 6.20% 4.90%
Peninsula Coastline - Submarket
Inventory (SF) 676,212 824,171 3,152,121
Pct. of Total Comm. Space1 15% 18% 68%
Vacancy Rate 1.50% 17.40% 1.70%
Market Rent/SF $37.80 $20.70 $33.39
Market Sale Price/SF $483 $341 $521
Market Cap Rate 6.60% 5.90% 4.60%
Source: CoStar Group (February 2024); Economic & Planning Systems [1] Total commercial space includes properties identified by CoStar as office, industrial, or retail. It does not include flex properties, sports facilities, hospitality properties, or healthcare facilities.
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11 Table 8 Experiential Retail Market Indicators
Both retail categories perform better in the larger submarket than in Pacifica. This indicates that there is not strong demand for the existing retail use at the Project site. While particular retail businesses within Pacifica are successful, there is little indication that either general or “experiential” retail are in high enough demand to require the continued use of this particular site as a commercial retail property.
Experiential General
Item Retail Retail
Pacifica
Inventory (SF) 81,800 1,011,291
Pct. of Total Retail Space 8.09% N/A
Vacancy Rate 0.00% 3.30%
Market Rent/SF $28.25 $29.87
Market Sale Price/SF $455 $444
Market Cap Rate 5.10% 4.90%
Peninsula Coastline - Submarket
Inventory (SF) 257,695 3,152,121
Pct. of Total Retail Space 8.18% N/A
Vacancy Rate 1.80% 1.70%
Market Rent/SF $35.56 $33.39
Market Sale Price/SF $468 $521
Market Cap Rate 4.90% 4.60%
Source: CoStar Group (February 2024); Economic & Planning Systems Administrative Draft Report
Market Study and Fiscal Impact Analysis
Pacifica Sea Bowl Residential Project
12 4. Fiscal Impact Analysis
The fiscal impact analysis compares the potential additional costs incurred by the City from providing public services to the Project with the additional public revenues generated by the Project. The analysis indicates whether the Project can be expected to have a positive or negative overall fiscal effect at buildout. The overall fiscal effect of the Project is presented along with the fiscal effect of the existing use under two scenarios. Scenario 1 analyzes the site as it currently is, with the commercial building sitting vacant with no ongoing business activity, and with no impact on the budget other than annual property tax generation. Scenario 2 presents a hypothetical set of circumstances, in which Sea Bowl recommences operations as a bowling alley in order to estimate the site’s fiscal performance with no change in use.
It should be noted that fiscal results (annual surpluses or deficits) are simply indicators of fiscal performance; they do not mean that the City will automatically have surplus revenues or deficits because cities must have a balanced budget each year. Persistent shortfalls shown in a fiscal analysis may indicate the need to reduce service levels or obtain additional revenues; persistent surpluses will provide resources to reduce liabilities or improve service levels.
The impacts of the proposed Project are considered upon completion of construction and full stabilization (Project buildout) with estimates provided in constant dollar terms. The analysis is based on a number of sources, including the City’s Fiscal Year 2023-24 Adopted Operating Budget, information on the development program and anticipated home sale prices provided by the developer, public data sources such as the Census, the Department of Finance, and the Bureau of Labor Statistics, along with EPS’ prior work experience in similar jurisdictions.
Methodology
This section describes the methodology and key assumptions used in calculating the impact of the proposed Project on Pacifica’s General Fund. For each revenue and expenditure line item, EPS uses the most appropriate forecasting methodology available based on the data and information available and industry best practices.
Service Population
“Service Population” is a concept that allows the impacts of both residents and employees to be estimated, acknowledging that employees who work but do not live in the City do not require City services to the same degree residents do. The City of Pacifica’s service population is shown in Table 2 and is calculated using Economic & Planning Systems, Inc.
13 U.S. Census and Department of Finance data. The calculation accounts for commute patterns by considering the proportion of employees who commute into the city and the proportion of residents who commute out of the city and applies weighting based on the portion of time these cohorts spend within the City with access to City services. The detailed calculation used to arrive at this estimate can be found in Appendix Table A-1.
Fixed vs. Variable Expenditures
In calculating the estimates of General Fund expenditures attributable to the Project, a percent variable factor has been applied. Most City departments operate with some fixed amount of overhead that does not vary as the City’s service population grows or contracts. For example, even as the City grows, the City only needs one City Manager or one City Clerk. This percent variable factor is applied to departmental expenditures to represent the proportion of expenditures that are assumed to vary and therefore would scale with increases in service population. Expenditures assumed to be fixed would include overhead costs, director salaries, and other costs that would not scale with service population and therefore would be unaffected by new developments such as the Project.
Case Study
A case study approach is used to calculate those revenues that can be estimated using assumptions specific to the development program. Items estimated using a case study approach in this analysis include property tax, property tax in-lieu of VLF, property transfer tax, and sales tax.
Average Revenue/Expenditure per Service Population
This approach estimates average revenues or expenditures per the City’s current service population and applies that average revenue or expenditure to the Project’s proposed service population. Revenues and expenditures are based on the City’s 2023-24 Adopted Operating Budget. The relative impacts of employment and population are compared and used to estimate the City’s service population. An employee is only likely to access services during work hours and therefore has a lower impact than the residential population. The City has an estimated service population of 38,959, and the Project is estimated to generate an additional service population of up to 284. The calculation supporting the estimates of the City’s service population is included in Appendix Table A-1.
Cost Recovery
A Cost Recovery approach is used for the Charges for Current Services revenue items. The City of Pacifica 2023-2024 Adopted Operating Budget identifies Charges for Services revenue for each department within the Department Work Programs section. These revenues are considered cost recovery revenues, as they Administrative Draft Report
Market Study and Fiscal Impact Analysis
Pacifica Sea Bowl Residential Project
14 recover costs expended by the departments performing these services. The revenues are not calculated with the other General Fund revenue items but are shown in the General Fund Expenditure table where they are offset from the relevant departments’ expenditures.
Not Impacted
Some budget items are not estimated because certain City revenues and expenditures are not directly impacted by the new development associated with this Project, such as Business License Tax revenues, Transient Occupancy Tax, and Intergovernmental revenues, among others.
The next section details the methodology and assumptions used for each revenue item estimated in the analysis, followed by a section pertaining to the expenditure items.
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15 General Fund Revenues
This section describes the methodology and assumptions used for each revenue item estimated in this analysis. Several General Fund revenue items are not forecasted because the Project is not expected to affect them. Table 9 below displays a summary of Pacifica’s General Fund revenue items based on the adopted 2023-2024 budget, with details on how each impacted revenue item is estimated. The remainder of this section explains how the Project’s estimated revenue impacts are derived.
Table 9 Pacifica General Fund Revenue Summary
FY 2023/24
General Fund
Description Revenues*
Property Tax $16,204,900 18.92% of 1% of base assessed value2 Vehicle License Fees $5,508,600
Business License Tax $520,700 - not impacted
Cannabis Tax $950,000 $24.38 per service population
Sales Tax $3,401,000 0.95% of estimated taxable sales3
Measure Y $2,800,000 0.5% of estimated taxable sales4
Transient Occupancy Tax $2,669,500 - not impacted
Utility Users Tax $2,700,000 $69.30 per service population Other Taxes1 $1,266,800 - not impacted
Intergovernmental $2,431,700 - not impacted
Other Revenue $105,000 - not impacted
Charges for Services $9,091,000
Transfers In $1,291,900 - not impacted
Total General Fund Revenues $48,941,100
Source: City of Pacifica Adopted Operating Budget FY 2023-2024; San Mateo County Assessor; CDTFA; Economic & Planning Systems
[3] City of Pacifica's Retain Rate of the 1% local sales tax revenue per California Department of Tax and Fee Administration's Sales Tax Rate Table 23.
[4] Pacifica Vital Services Measure Y, adopted in November 2022, places an additional one-half percent sales tax on purchases made in the City, sunsetting in 2032. [5] A portion of these revenues is considered as cost recovery and is taken out of relevant departmental expenditures as shown in Table 10.
Impact Estimating Factors
*2023-24 Adopted General Fund Budget values per City of Pacifica Adopted Operating Budget FY 2023-2024.
Case Study Approach
Cost Recovery5
[2] Post-ERAF property tax distribution to the City of Pacifica for Tax Rate Area 016-017 per the San Mateo County Assessor.
[1] Per City of Pacifica Adopted Operating Budget FY 2023-2024, Other Taxes consist of Franchise Fees. There is no mention of Property Transfer Tax in the City's budget, but the Municipal Code indicates there is Property Transfer Tax in the City. Franchise Fees are not estimated as part of this analysis but Property Transfer Tax is (Appendix Table A-4).
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16 Property Tax
Property taxes are based on the assessed value of land and improvements, such as new development. The Project comprises 91 market-rate for-sale units and 22 below-market-rate for-rent accessory dwelling units (ADUs). The assessed value for the accessory dwelling units is not included as a distinct item as their value is accounted for within the market-rate units to which they are attached. The estimated assessed value of the Project is $138 million based on anticipated price points provided by the Developer (see Appendix Tables A-2 and A-3), and the existing assessed value of the site is $1.6 million. The assessed value of the existing development is not netted out from the estimated value of Project in this analysis as the existing development’s fiscal impact is calculated separately. San Mateo County collects property tax based on 1.0 percent of the assessed value, and the City of Pacifica receives 18.92 percent of the County’s property tax base from property located in Tax Rate Area 016-017 (post-ERAF).1 The annual property tax revenue the City currently receives from the site is about $3,000, and this is expected to increase to about $260,000 at Project buildout. This share is assumed fixed going forward.
Property Tax In-Lieu of Vehicle License Fees
In 2004, the State of California adjusted the method for sharing vehicle license fees (VLF) with local jurisdictions. Recent state budget changes replaced the VLF with property tax, which grows proportionate to increases in the assessed value of cities and towns. The Project is expected to increase the City’s total assessed valuation by 1.79 percent (assuming no other assessed value growth) and will generate the same increased percentage in in-lieu VLF revenues, estimated to be about $98,500 per year (see Appendix Table A-3). Using this same method, the existing development is estimated to generate about $1,100 annually in property tax in-lieu of VLF.
Property Transfer Tax
The property transfer tax, or real estate transfer tax, is charged on documents that transfer real estate, and the Project’s proposed residential units would incur this tax when sold and transferred to new parties. As previously indicated, Pacifica’s 2023-24 Adopted Operating Budget does not mention this tax (EPS assumes it is included within a grouped revenue item in the budget, such as “Other Taxes”), but according to Chapter 5 Sec. 3-5.02 of Pacifica's Municipal Code the City’s property transfer tax is $0.55 per $1,000 in assessed value of the transferred property. The 91 market-rate for-sale units are assumed to be resold, 1 Per San Mateo County Assessor 2022/23 Annual Tax Increment Tables.
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17 on average, every five years.2 This results in an annual property transfer tax to the City of 20 percent of the total assessed value of the Project, or about $15,000 per year. Appendix Table A-4 shows this calculation. This revenue item is not estimated for either of the two existing development scenarios as commercial properties do not sell as often or as regularly as residential properties.
Sales Tax
Sales tax generation for the Project is based on estimates of taxable sales generated by the new population in the City attributable to the Project. To forecast new sales, estimates are made for household income, spending on taxable items, and the portion of spending captured in the City, as shown in Appendix Table A-5. EPS constructed average household incomes based on the weighted average of the Developer-provided sale prices for the market-rate units and HUD-mandated income limits for the below-market-rate accessory dwelling units. The weighted average annual income of the future market-rate for-sale unit households is estimated to be about $250,000, while new below-market-rate households are estimated to make about $104,000 a year. EPS established a share of taxable spending for each income group,3 with a conservative estimate of 25 percent of total taxable expenditures assumed to be captured by retailers in Pacifica. This equates to an estimated $14,000 in sales tax revenue annually for the City’s General Fund based on the City’s standard 0.95 percent share of taxable sales in addition to the 0.50 percent via Measure Y. The sales tax for the existing development under Scenario 1 (vacant) is $0 and is $93,788 under Scenario 2 (occupied) based on actual sales tax payments made by Sea Bowl in 2022 as provided by the Developer.
Pacifica’s Vital Services Measure Y was approved by Pacifica voters on November 8, 2022. This measure enacts a 0.50 percent sales tax which sunsets in 2032, intended to “help address city services … such as keeping pollution and trash off our beaches, attracting jobs and businesses, street paving, and storm drain maintenance…”4 According to the City’s 2023-2024 Adopted Operating Budget, revenues generated via Measure Y flow to the City’s General Fund. 2 In the developer’s experience, the townhome product type often serves as a “starter” home and turns over more frequently than detached single family homes, for example.
3 Based on the 2022 Bureau of Labor Statistics National Consumer Expenditure Survey by Income.
4 City of Pacifica November 23, 2022 Press Release titled “Pacifica Voters Adopt Measure Y.”
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18 Business License Tax
The City imposes a Business License Tax on every fixed place of business within the City based on gross receipts of the business. As a residential development, the Project would not generate any Business License Tax revenues. Under Scenario 1, the existing development would not generate this revenue either as it would be vacant, and under Scenario 2 the existing development is estimated to pay $1,305 annually based on actual taxes paid by Sea Bowl per information provided by the Developer. These values are shown in Appendix Table A-6.
Cannabis Tax
The City collects revenue from cannabis operations based on gross receipts of sales, which are assumed to increase on a per-service population basis. As shown in Appendix Table A-6, this results in $24 per service population. The Project’s 284 estimated residents would therefore increase cannabis tax revenues by an estimated $6,900 per year at buildout. The existing development under Scenario 1 has no service population attributable to it, meaning it would not impact cannabis tax revenues, but under Scenario 2 it would increase this revenue by an estimated $300 per year.
Utility Users Tax
The City collects a tax on the use of utility services, and the Project would increase utility revenues in town. The net increase in Utility Users Tax is estimated at approximately $70 per service population, totaling about $19,700 annually at project buildout (as shown in Appendix Table A-6). For the existing development, this revenue item would be $0 under Scenario 1 and $900 under Scenario 2.
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19 General Fund Expenditures
This section describes the methodology and key assumptions for calculating key General Fund expenditure items. All Departments consist of both fixed and variable costs. While fixed costs are independent of new development, variable costs are assumed to increase based on new growth in the City. Only variable costs are used to project the General Fund expenditures in this analysis. The approach is presented in Table 10.
Offsetting revenues, consisting of Charges for Services described previously, are subtracted from relevant departmental expenditures to arrive at the net expenditures by department. A percent variable is applied to each Department’s net expenditure to derive the annual variable expense, which is then divided by the citywide service population to produce a per-service population General Fund expenditure for each City Department. Following Table 10 below, this section describes the Departmental expenditure items in further detail and the estimated expenditures attributable to the Project and Scenario 2 of the existing development. Note that Scenario 1 of the existing development has no service population and therefore is not estimated to impact General Fund expenditures.
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Market Study and Fiscal Impact Analysis
Pacifica Sea Bowl Residential Project
20 Table 10 Pacifica General Fund Expenditure Summary
Percent Annual Variable Per Service Pop.
Item Total Offsetting1 Net Variable2 Expense GF Expenditures3 Fire Department $7,969,668 $429,400 $7,540,268 75% $5,655,201 $145.16 General Government4 $7,155,340 $0 $7,155,340 15% $1,073,301 $27.55 Non-Departmental $4,883,300 $0 $4,883,300 - $0 $0.00
PB&R $5,862,623 $2,486,600 $3,376,023 50% $1,688,012 $43.33 Planning $5,831,718 $1,751,900 $4,079,818 30% $1,223,945 $31.42 Police Department $12,003,585 $323,100 $11,680,485 75% $8,760,364 $224.86 Public Works $4,901,022 $365,700 $4,535,322 75% $3,401,492 $87.31 Total General Fund
Expenditures $48,607,256 $5,356,700 $43,250,556 $559.63 FY 2023/24 Adopted GF Expenditures*
Source: City of Pacifica Adopted Operating Budget FY 2023-2024; Economic & Planning Systems [4] The General Government Category consists of the City Council, City Manager, City Attorney, and Administrative Services Departmental expenditures.
*2023-24 Adopted General Fund Budget values per City of Pacifica Adopted Operating Budget FY 2023-2024. [1] Represents a portion of Charges for Services line item shown in Table 9. [2] EPS assumption.
[3] Divides annual variable expense by total Citywide Service Population of 38,959 from Table 2.
Economic & Planning Systems, Inc.
21 Administrative Government Functions (15 Percent Variable Expenditures)
There are four City departments that generally serve administrative government functions and as such are attributed a 15 percent variable assumption: City Council, City Manager, City Attorney, and Administrative Services. These are grouped into an overall “General Government” category in Table 10. Based on EPS’s research in similar jurisdictions, new development of the Project’s scale typically affects administrative and legislative government costs by only a fraction of these departments’ operating budgets. As a result, EPS assumes that 15 percent of the cost of these services is variable and will be affected by new development. The combined per-service population expenditure by these departments is estimated at $27.55, totaling about $8,000 annually at Project buildout compared to $400 for Scenario 2 of the existing development.
Development-Related Functions (30 Percent Variable Expenditures) Pacifica’s Planning Department provides development-related functions for the City. While new development of the Project’s scale typically affects these costs by a fraction of the operating budget, this department provides more citizen-facing services than the Administrative Government functions and therefore is attributed a higher variable percentage of 30 percent. The per-service population expenditure by this department is estimated at $31.42, totaling about $9,000 annually at Project buildout compared to $400 for Scenario 2 of the existing development.
Parks, Beaches & Recreation (PB&R) (50 Percent Variable Expenditures)
The City of Pacifica’s Parks, Beaches & Recreation Department oversees recreation and human services to the community. These functions are assumed to scale more closely with increases in service population than the previous categories, as additional residents will increase participation in programming and usage of City facilities (and required maintenance), thereby increasing Departmental expenditures. A 50 percent variable factor is applied to account for existing overhead costs, resulting in a $43.33 per-service population expenditure and an estimated $12,000 annual cost attributable to the Project compared to $600 for Scenario 2 of the existing development.
Public Safety and Public Works (75 Percent Variable Expenditures) Public Safety, consisting of the Police, Fire, and Public Works functions are assumed to scale most closely with changes in service population and are given a variable expenditure assumption of 75 percent. The costs required to perform these services are tied closely with the size of the population they serve, as additional population attributable to the Project may require additional law Administrative Draft Report
Market Study and Fiscal Impact Analysis
Pacifica Sea Bowl Residential Project
22 enforcement and fire department personnel and/or staff time and equipment, as well as additional wear on Public Works’ maintained infrastructure and facilities.
These three Departments’ expenditures combined represent over half of Pacifica’s General Fund budget, and this combined with the high percent variable assumption results in the relatively large combined per-service population expenditure of about $450. This equates to an estimated $130,000 in annual General Fund expenditures at Project buildout compared to $6,000 for Scenario 2 of the existing development.
Economic & Planning Systems, Inc.
23 Net Fiscal Impact on General Fund
Based on the assumptions and analysis described above, the annual net fiscal impact associated with the proposed development is estimated at approximately $256,000 after completion of construction, as summarized in Table 11. The Project is estimated to generate about $414,000 in annual General Fund revenues compared to $159,000 in annual General Fund costs. Actual fiscal impacts may vary due to the actual timing of Project buildout and changes in economic and budgetary conditions.
The existing development, under Scenario 1 (vacant), would generate only about $4,000 annually in property tax-related revenues, and would generate no expenditures due to the lack of service population, resulting in a positive annual net fiscal impact of $4,000. Under Scenario 2 (occupied), the existing development is estimated to generate about $100,000 in General Fund revenues but only $7,000 in costs for an annual net fiscal impact of $93,000. This result is due to the small service population attributable to the bowling alley and the relatively large amount of sales tax generation. Still, the proposed Project is estimated to generate a higher net fiscal impact than the existing development under either scenario.
Table 11 Annual General Fund Fiscal Impact Detail
Annual General Fund Impacts Vacant Occupied New Project General Fund Revenues
Property Tax $3,000 $3,000 $260,000
Vehicle License Fees $1,000 $1,000 $98,000
Business License Tax $0 $1,000 $0
Cannabis Tax $0 $0 $7,000
Sales Tax $0 $61,000 $9,000
Measure Y $0 $32,000 $5,000
Utility Users Tax $0 $1,000 $20,000
Property Transfer Tax $0 $0 $15,000
Total Revenues $4,000 $101,000 $414,000
General Fund Expenditures
Fire Department $0 $2,000 $41,000
General Government $0 $0 $8,000
PB&R $0 $1,000 $12,000
Planning $0 $0 $9,000
Police Department $0 $3,000 $64,000
Public Works $0 $1,000 $25,000
Total Expenditures $0 $7,000 $159,000
Annual Net Impact on General Fund $4,000 $93,000 $256,000 Existing Development
Note: Values shown are rounded to the nearest thousand. Numbers may not sum due to rounding.
Source: Economic & Planning Systems
APPENDIX A
Appendix Table A-1
Service Population Factors based on Resident to Employee Equivalencies Pacifica Sea Bowl Fiscal Impact Analysis; EPS #231099
Item # %
Employment Status of Pacifica Residents1 Formula: a = b * 37,082 b 1 c = b * c Not in Labor Force 20,144 54.3% 100% 54.3%
Employed in the City3 1,221 3.3% 50% 1.6%
Employed Outside of the City 15,717 42.4% 67% 28.4%
Total Residents 37,082 100.0% 84.4%
Residence Status of Pacifica Employees1 Formula: a = b * 4,183 b 1 c = b * c Live in the City3 1,221 29.2% 50% 14.6%
Live Outside the City 2,962 70.8% 33% 23.3%
Total Jobs 4,183 100.0% 37.9%
Employee to Resident Equivalency Factor 4 (37.9% / 84.4%) = 44.9% Service Population Calculation
Amount Attributable to Residents (@ 100%) 37,082 95.2%
Amount Attributable to Employees (@ 44.9%) 1,877 4.8%
Total Service Population 38,959 100.0%
Sources: LEHD OnTheMap 2021, Department of Finance, and Economic & Planning Systems [4] Equals weighted average of residents divided by weighted average of employees.
Existing Weight2 Weighted
Average
[1] Distribution and total jobs based on data from U.S. Census (OnTheMap 2021). Total residents based on 2023 estimates provided by DOF in Table E-5.
[2] Represents EPS estimate of how various types of residents and employees relate to each other in terms of demand for City Services.
[3] The number of residents who are employed in the City and the number of employees in the City who are residents are the same, representing the same group of unique individuals. This group is reflected both in the Total Residents and the Total Jobs to demonstrate the composition of the totals, with their weighting split evenly between the resident and employee groups.
24 Appendix Table A-2
Estimated Assessed Value of Proposed Development
Pacifica Sea Bowl Fiscal Impact Analysis; EPS #231099
Market Value Unit
Item per Unit1 Count Total
Market Rate Ownership Units $1,511,522 91 $137,548,476
Source: Toll Brothers; Economic & Planning Systems
[1] Weighted average per Table 3. Values for ADUs are included within the per-unit ownership housing market value.
25 Appendix Table A-3
Property Tax Revenue Estimate
Pacifica Sea Bowl Fiscal Impact Analysis; EPS #231099
Existing New
Item Formula Development Project
Property Tax
Assessed Value1 a $1,626,625 $137,548,476
Property Tax b = a * 1.0% $16,266 $1,375,485
Annual Pacifica General Fund
Property Tax Revenue2 c = b * 18.92% $3,078 $260,242
Property Tax In-Lieu of VLF
Existing Citywide Property Tax In-Lieu of VLF3 d = $5,508,600 Citywide Taxable Assessed Value4 e = $7,696,794,259
Percentage of Citywide Assessed Value f = a / e 0.021% 1.787% Annual Pacifica General Fund
Property Tax In-Lieu of VLF d * f $1,164 $98,444
Source: C y it of Pacifica Adopted Operating Budget FY 2023-2024; San Mateo County Assessor's Annual Report 2022-2023; Economic & Planning Systems
[1] Existing value per Table 4, New Project value per Appendix Table A-2. [2] Post-ERAF tax distribution to the City of Pacifica for Tax Rate Area 016-017 per the San Mateo County Assessor. [3] per Table 9.
[4] Citywide Net Secured AV per San Mateo County Assessor's Annual Report 2022-2023. 26 Appendix Table A-4
Real Estate Transfer Tax Estimate
Pacifica Sea Bowl Fiscal Impact Analysis; EPS #231099
New
Item Formula Project
Assessed Value1 a $137,548,476
Turnover Rate2 b 20%
Average Annual Value Turnover c = a * b $27,509,695
Real Estate Transfer Tax Revenue3 = (c / 1,000) * $0.55 $15,130 Source: Pacifica Municipal Code; Economic & Planning Systems [1] New Project Assessed Value per Appendix Table A-2.
[3] Per Chapter 5 Sec. 3-5.02 of Pacifica's Municipal Code, Pacifica's Real Property Transfer Tax rate is $0.55 per $1,000 of value.
[2] New Development (for-sale residential) assumed to sell every five years.
Note: Existing development not assumed to regularly sell and therefore transfer tax is not estimated.
27 Appendix Table A-5
General Fund Annual Sales Tax Revenue Estimate
Pacifica Sea Bowl Fiscal Impact Analysis; EPS #231099
Item Vacant Occupied Ownership Rental (ADU) Total
Residential Spending
Estimated Annual Household Income1 - - $253,702 $104,400 - Household Taxable Retail Spending
as a Percent of Income - - 14.3% 23.4% -
Taxable Retail Spending per Household - - $36,375 $24,399 - Household Count - - 91 22 113
Total Retail Spending from Households - - $3,310,170 $536,777 $3,846,947 Taxable Retail Sales Captured in Pacifica 25% of Retail Expenditures3 - - $827,542 $134,194 $961,737 General Fund Household Sales Tax Revenue 0.95% of Taxable Sales4 - - $7,862 $1,275 $9,136 Measure Y Household Sales Tax Revenue 0.50% of Taxable Sales4 - - $4,138 $671 $4,809 On-Site Retail Sales
Total On-Site Retail Sales Tax Revenue - $93,788 - - -
General Fund On-Site Retail Sales Tax Revenue - $61,447 - - - Measure Y On-Site Retail Sales Tax Revenue - $32,341 - - - Total General Fund Sales Tax Revenue - $61,447 $7,862 $1,275 $9,136 Total Measure Y Sales Tax Revenue - $32,341 $4,138 $671 $4,809 Assumptions /
Estimating Factors
Existing Development
Actuals via Project Applicant
[1] Weighted average ownership household incomes derived on Appendix Table A-8, rental household income values per Table 3.
New Project
Source: BLS 2022 Consumer Expenditure Survey; Economic & Planning Systems Appenix Table A-8
Bureau of Labor Statistics2
Table 3
See Footnote 5
[4] per Table 9.
[2] Based on the Bureau of Labor Statistics 2022 Consumer Expenditure Survey. Value shown for Ownership units is percentage for households with incomes above $200,000. Value shown for Rental units based on households with incomes between $100,000 and $149,999. [3] EPS assumption.
[5] Assumed the total sales tax figure is inclusive of both the General Fund Bradley-Burns sales tax and the additional half-cent Measure Y sales tax. The total figure is portioned out based on the proportion of the total 1.45% sales tax that goes to each category. 28 Appendix Table A-6
Other General Fund Revenues
Pacifica Sea Bowl Fiscal Impact Analysis; EPS #231099
New
Revenue Source Vacant Occupied Project
Business License Tax2 $0 $1,305 $0
Cannabis Tax $24.38 per service population $0 $317 $6,916 Utility Users Tax $69.30 per service population $0 $901 $19,655 Source: Economic & Planning Systems
[2] This value, provided by the Project Applicant, is the actual Business License Tax the Existing Development paid in 2022.
Assumptions /
Estimating Factors1
Existing Development
See Footnote 2
[1] See Table 9 for revenue estimates and Table 3 and Table 4 for estimated service populations. 29 Appendix Table A-7
Annual General Fund Expenditures
Pacifica Sea Bowl Fiscal Impact Analysis; EPS #231099
New
Expenditure Item Vacant Occupied Project
Fire Department $145.16 per service pop. $0 $1,887 $41,167 General Government $27.55 per service pop. $0 $358 $7,813 PB&R $43.33 per service pop. $0 $563 $12,288
Planning $31.42 per service pop. $0 $408 $8,910
Police Department $224.86 per service pop. $0 $2,923 $63,772 Public Works $87.31 per service pop. $0 $1,135 $24,761
Total Annual Expenditures $559.63 per service pop. $0 $7,275 $158,711 Source: Economic & Planning Systems
Expenditure Estimation
Factors1
Existing Development
[1] See Table 10 for cost estimates and Table 3 and Table 4 for estimated service populations. 30 Appendix Table A-8
Annual Household Income Estimate - Ownership Units
Pacifica Sea Bowl Fiscal Impact Analysis; EPS #231099
Wgt. Avg.
Item Formula Ownership HH
Sale Price1 a $1,511,522
Downpayment b = a * 0.2 $302,304
Mortgage c = a - b $1,209,217
Payments d = PMT fn:30-Yr @ 5% $78,661
Taxes, Insurance, & Maintenance e = a * 0.02 $30,230
Annual HOA Dues2 f $200
Total Annual Housing Costs g = d + e + f $109,092
Annual HH Income3 g / 0.43 $253,702
Source: Toll Brothers; Economic & Planning Systems
[1] per Table 3.
[2] Assumes all products pay $200/month.
[3] Assumes total annual housing costs are equal to 43% of annual household income based on developer-provided information.
31