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Report For:
2021 Comprehensive Public Safety Feasibility
Study and Service Level Analysis
July 2021
TABLE OF CONTENTS
Section 1 | INTRODUCTION .................................................................................................... 1 Section 2 | BACKGROUND ...................................................................................................... 2 Police Program ......................................................................................................................... 2 Fire Safety Program .................................................................................................................. 2 Public Safety Services Budgets ................................................................................................. 4 City Persons Served .................................................................................................................. 6 Future City Persons Served ...................................................................................................... 7 Future Development ................................................................................................................ 8 Section 3 | REVENUE ESTIMATE ........................................................................................... 10 Property Tax Revenue ............................................................................................................ 10 Property Tax in Lieu of Vehicle License Fee (“VLF”) Revenue ............................................... 14 Documentary Transfer Tax Revenue ...................................................................................... 14 Sales Tax Revenue .................................................................................................................. 15 Other City Revenue ................................................................................................................ 18 Future Development Revenue Summary ............................................................................... 19 Section 4 | PUBLIC SAFETY EXPENDITURES ESTIMATE .......................................................... 21 Projected Future Development Expenditure Summary......................................................... 25 Section 5 | FUTURE DEVELOPMENT FISCAL IMPACT ............................................................. 26 Section 6 | FISCAL IMPACT FUNDING OPTIONS .................................................................... 27 Community Facilities Districts ................................................................................................ 27
LIST OF TABLES
Table 1. City Persons Served ................................................................................................................................. 6 Table 2. Future City Employee Population ........................................................................................................... 7 Table 3. Future City Persons Served ..................................................................................................................... 7 Table 4. Change in Persons Served ....................................................................................................................... 8 Table 5. Future Residential Development ............................................................................................................ 8 Table 6. Future Non-Residential Development .................................................................................................... 9 Table 7. Future Development Summary............................................................................................................... 9 Table 8. Total Assessed Value of Future Residential Development ................................................................... 11 Table 9. Undeveloped Residential Acreage Expected to Develop...................................................................... 11 Table 10. Incremental Assessed Value of Future Residential Development ...................................................... 11 Table 11. Property Tax Revenue Generated by Future Residential Development............................................. 12 Table 12. Total Assessed Value of Future Non-Residential Development ......................................................... 12 Table 13. Undeveloped Non-Residential Acreage Expected to Develop ............................................................ 13 Table 14. Incremental Assessed Value of Future non-Residential Development .............................................. 13 Table 15. Property Tax Revenue Generated by Future Non-Residential Development ..................................... 13 Table 16. Property Tax Revenue Generated by Future Development ............................................................... 13 Table 17. Incremental Property Tax in Lieu of VLF Ratio .................................................................................... 14 Table 18. Property Tax in Lieu of VLF Revenue .................................................................................................. 14 Table 19. Projected Documentary Transfer Tax Revenue .................................................................................. 15 Table 20. Residential Sales Tax Revenue ............................................................................................................ 16 Table 21. Sales Tax Revenue Generated by Future Employees .......................................................................... 16 Table 22. Sales Tax Revenue Generated by Commercial Development ............................................................. 17 Table 23. Sales Tax Revenue Generated by Future Development ..................................................................... 17 Table 24. Other City Revenue ............................................................................................................................. 18 Table 25. Other City Revenue per Person Served .............................................................................................. 19 Table 26. Future Development Other City Revenue .......................................................................................... 19 Table 27. Total Future Development Revenue ................................................................................................... 20 Table 28. Future Development Revenue Applicable to Public Safety ................................................................ 20 Table 29. Current Public Safety Expenditures Summary .................................................................................... 21 Table 30. Current Public Safety Service Expenditures Per Person Served ......................................................... 21 Table 31. Required Increase in Firefighter Personnel ........................................................................................ 22 Table 32. Required Increase in Firefighter Personnel Expenditure .................................................................... 23 Table 33. Increase in Fire Protection Services Personnel and Apparatus Expenditure ...................................... 23 Table 34. Increase in Fire Protection Services Personnel and Appartus Expenditure per Person Served ......... 24 Table 35. Code Enforcement Services per Future Population Served ................................................................ 24 Table 36. Total Expenditures per Future Person Served .................................................................................... 25 Table 37. Total Projected Future Development Expenditures ........................................................................... 25 Table 38. Future Development Overall Fiscal Impact......................................................................................... 26 Table 39. Future Development Fiscal Impact by Development Type ................................................................. 26 Table 40. Proposed CFD Special Tax Rates ......................................................................................................... 28 City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 1 SECTION 1 | INTRODUCTION
The City of Patterson (the “City”) is undertaking a comprehensive review of the net fiscal impact that would be placed upon the City’s Police and Fire Protection Services (“Public Safety Services”) based upon the potential future development or redevelopment throughout the City. To summarize, our review of the revenues projected to be generated by future development, as compared with the additional costs the City will incur to provide recurring Public Safety Services, indicates that projected single family residential, multi-family residential, and industrial development will produce an overall negative fiscal impact and commercial development will produce an overall positive fiscal impact for the City.
This fiscal impact report will provide a background of the projected future development, financial information, and recommended actions for the City’s consideration. To accomplish this objective, the report includes the following information:
Background information. The introductory portion of the report focuses on the City, as well as the public services and operations under review.
Revenues. The revenue section of the report identifies the various revenue sources and the potential recurring revenues produced from projected future development, given certain reasonable assumptions.
Expenditures. The expenditures section of the report identifies the estimated recurring cost burden placed upon City Public Safety Services operations as a result of the projected future development. Fiscal Impact. Using identified projected revenues and allocated expenditures, this section of the report identifies the overall fiscal impact on City Public Safety Services operations resulting from projected future development. Fiscal impacts are addressed on a land use basis in the aggregate and further on a per-unit basis. Depending on the objectives of the analysis, the per-unit factor may be on a per person served, per dwelling unit, per parcel, and/or per square foot or acre basis. Recommendations. The report concludes with a summary of findings and recommendations for the City to consider.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 2 SECTION 2 | BACKGROUND
The following is a description of the Public Safety Services carried out by the City. This report refers to these two programs cumulatively as the “Public Safety Services”.
Police Program
The mission of the Patterson Police Department is to serve all the citizens of Patterson with loyalty, integrity, and professionalism. The Patterson Police Department is dedicated to keeping the City of Patterson a safe and nurturing place to live and raise a family. The goal of the Department is to provide equal treatment to all citizens, protection of life, property and to maintain order in a professional but effective manner through positive interaction with the citizens of Patterson.
In 1998 the City of Patterson Police Department was consolidated into the Stanislaus County Sheriff’s Department, resulting in the formation of Patterson Police Services of the Stanislaus County Sheriff’s Department. The Police Department is responsible for the public safety related to the enforcement of local and state laws. The department works in partnership with other agencies and departments to prevent crime and to improve the quality of life for the residents of the City. Currently, Patterson Police Services provides the City of Patterson with a wide range of municipal law enforcement services including, but not limited to; Administration, Patrol, Traffic Enforcement, Investigations, Records Management, Training, Recruitment, Specialized Enforcement Teams, and Citizen Volunteer Programs. The Department fields six patrol deputies during the peak hours of the day, which is augmented by four detectives, three traffic officers, a community service deputy, and a school resource officer. Additionally, the police department is supplemented by two community service officers and three records clerks.
The members of the Patterson Police Department are dedicated to serving and protecting the community through the highest standards of professionalism and ethical conduct by enforcement, prevention, and education in partnership with the community. In 2020, the department responded to approximately 13,000 calls for service, arrested 457 people for various crimes and executed over 200 search warrants.
Fire Safety Program
The mission of the Patterson Fire Department (PFD) is to protect life and property by providing all-risk emergency services to the citizens of the City’s community 24 hours a day, 7 days a week, 365 days a year.
The Operations Division is responsible for providing a coordinated and organized response to emergencies and other requests for service. The division is comprised of emergency response personnel and equipment.
The daily emergency response staffing for the entire City is 6 personnel. This staffing includes a Chief Officer, 2 Captains, 2 Engineers and 2 Firefighters/Medics. The City provides a full range of emergency response services including but not limited to; emergency medical services, structural fire suppression, wildland urban interface fire suppression, hazardous materials incidents, Urban Search and Rescue, water rescue, vehicle extrication, technical rescue as well as basic life support medical services. As of 2016, Advanced Life Support (ALS) is provided through City Firefighters/Medics.
Through an automatic-aid agreement, the PFD also provides all-risk emergency services to portions of the West Stanislaus Fire Protection District service area. The department provides a wide variety of services to an expanding and diverse population.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 3 Emergency response personnel respond to almost 1,600 incidents annually, of which approximately 80% are medical in nature, ranging from motor vehicle accidents and elderly falls to childbirths and heart attacks. The Operations Division often provides non-emergency customer service when there is no other public agency or private firm willing or available to assist. The Operations Division also conducts routine fire inspections on buildings in the City as well as servicing and testing the cities nearly 900 fire hydrants.
Although not included in the Division 400 Fire budget, Code Enforcement Services are required as part of the Fire Safety Program. Therefore, Code Enforcement Division 300 has also been recognized in this analysis.
Special Financing Districts
There are three Special Financing Districts that contribute towards Public Safety Services revenue, as detailed below.
PATTERSON GARDENS FIRE SUPPRESSION ASSESSMENT
The Patterson Gardens Fire Suppression Assessment (the “Assessment” or “Assessment District”) was formed by the City to fund fire suppression services. The Maximum Assessment per parcel that may be levied annually on developed property increases each fiscal year after the base year by an inflation factor equal to the change in April to April All Urban Consumer Price Index (CPI) for the San Francisco-OaklandSan Jose area.
For Fiscal Year 2020-21, there were 1,009 parcels within the Assessment District’s boundary. As of June 1, 2020, there were 984 parcels levied at the maximum assessment rate special tax of $524.27, for a total levy amount of $516,563.64. Currently, of the amount collected annually through the Assessment, an estimated $500,000 is transferred annually to Fire Station 2 (Fund 190) and the remaining amount is used for administrative expenses associated with the Assessment.
CFD NO. 2015-2
The West Patterson Financing Authority (the “Authority”) CFD No. 2015-2 was created to fund public safety and fire protection services. It was established pursuant to a Resolution of Formation adopted by the Authority on July 7, 2015. A successful landowner election authorized the levy of a Mello-Roos special tax on taxable property within CFD No. 2015-2. The services funded by the special tax are in addition to services provided in the territory of the CFD before the date of creation of the CFD, and do not supplant services already available within the CFD territory.
The maximum special tax rates are adjusted every July 1 by the All Urban Consumer Price Index (CPI) for the San Francisco-Oakland-San Jose region that occurred in the one-year period concluding with April 30 of the prior fiscal year. As of June 1, 2020, there was one parcel levied a total amount of $90,459. Currently, of the amount collected annually through the special tax, an estimated $85,000 is transferred annually to Fire Station 2 (Fund 190) and the remaining special tax collections are used for administrative expenses associated with CFD No. 2015-2.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 4 CFD NO. 2003-1
Community Facilities District No. 2003-1 (Public Safety/Fire Protection Services) (the “District”) was formed by the City to finance all direct and incidental costs related to providing public safety within the District with the first priority being fire and emergency medical service. More specifically: (i) fire protection and suppression services; (ii) emergency medical services including ambulatory services; (iii) community information with regard to public safety; (iv) earthquake and other emergency relief programs; and (v) other public safety services, including police protection services. The services financed by the District are in addition to services provided in the territory of the District before the date of creation of the District, and do not supplant services already available within the District. The services funded by the special tax are in addition to services provided in the territory of the CFD before the date of creation of the CFD, and do not supplant services already available within the CFD territory.
Territory was added to the Future Annexation Area of the District so that additional annexations can be accomplished under a streamlined process. The Maximum Special Tax that may be levied annually on Taxable Property increases each fiscal year after the base year by an inflation factor which is the April to April All Urban Consumer Price Index (CPI) for the San Francisco-Oakland-San Jose area. For Fiscal Year 2020-21, there were 1,775 parcels within the District’s boundary. As of June 1, 2020, there were 1,554 parcels levied at the maximum special tax of $543.87, for a total levy amount of $1,183,027.60. Currently, all of the annual levy revenues are applied towards Fire Station #2 expenditures.
CFD No. 2003-1 is currently running an annual deficit. Expenditures exceed revenues on an annual basis by approximately $900,000 and Fund 190 is currently running a large negative fund balance. The District is currently levied at the maximum special tax rate, therefore there is no ability to recover these funds from the District. This is discussed further below.
Public Safety Services Budgets
The Public Safety Services Budgets are split between the General Fund (Fire – Division 400, Code – Division 300 and Police – Division 500) and Fund 190 (Fire Station #2). The Police and Code Enforcement budgets are housed within the General Fund. Fire Station #1 is also housed within the General Fund.
The City receives two annual reimbursements related to shared staff resources. Stanislaus County (“County”) utilizes City Fire Personnel for a strike team to put out fires. The estimated Fiscal Year 2020-21 reimbursement amount is $425,569. The City also receives an annual reimbursement related to General Fund staff shared with Fire Station #2. Currently, the Fiscal Year 2020-21 annual transfer amount is $482,360 to cover 40% of those shared staff resources with the General Fund.
Fire Station #2 is not budgeted under the General Fund, but rather under Fund 190. Fire Station #2 receives revenues from all three of the Special Financing Districts discussed above. Currently, the fire station budget is running a deficit of approximately $900,000 annually. As a result, Fund 190 is running a high negative fund balance.
Because CFD 2003-1 is already being taxed at the maximum special tax rate, the General Fund is continuing to accrue a large receivable. To address this annual expenditure budget deficit, the City’s General Fund will begin contributing $900,000 annually to Fund 190 beginning in Fiscal Year 2022-23 to offset the ongoing annual expenditure deficit.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 5 Fiscal Impact Considerations
It is important to evaluate the contributions and demands that future development will place upon a public agency’s General Fund. To determine the potential positive or negative fiscal impacts placed upon the City by projected future development, this fiscal impact analysis is designed to quantify the approximate cost of Public Safety Services provided by the City to its residential and employee population. This fiscal impact analysis assumes that projected future development will impact the City’s Public Safety Services in a similar manner as existing development within the City. In addition, this analysis recognizes that enhanced levels of Public Safety Services are needed to provide an optimal level of service to populations within future residential and non-residential development. This report culminates in a recommendation to establish a funding source able to fund enhanced levels of Public Safety Services for projected future development.
To determine the projected future development’s overall fiscal impact on City Public Safety Services, this fiscal analysis focuses on the recurring revenue produced from projected future development, compared to the increased demands placed upon the City’s recurring Public Safety Services operational budget funded through the General Fund. Current-day dollar values are used in this analysis due to the inability to project revenues and expenditures at the time of buildout with accuracy. Furthermore, this analysis makes no assumptions as to when buildout of any projected future development is set to occur. Revenue estimates for this fiscal analysis do not include government transfers or one-time development impact fees that are paid to offset additional burdens placed upon public infrastructure or any economic impacts that result from the construction of the development. Similarly, the expenditure section of the analysis excludes certain government transfers and any capital allocations directed towards public infrastructure.
Analysis Methodology
The revenue portion of the fiscal impact analysis focuses on various taxes, fees, and other City revenues eligible to be allocated to the City’s Public Safety Services program. The expenditure portion of the fiscal impact analysis focuses solely on the City’s Public Safety Services expenditures.
There are several industry-accepted methods for allocating a public agency’s revenues and expenditures to future development. This analysis largely focuses on two industry-standard approaches: the case study approach and the multiplier approach. Both approaches are summarized below.
CASE STUDY APPROACH
When data used in a fiscal impact analysis is specific to the analysis itself and not dependent upon a generalized multiplier such as the number of residents, employees, etc., the case study approach is utilized. The case study approach relies on development-specific data to estimate the fiscal impacts of the projected future development. Data used in the case study approach may include assessed valuations, property turnover rates, residential and employee populations, household incomes, estimated sales, and retail expenditures.
MULTIPLIER APPROACH
The multiplier approach is used in this fiscal impact analysis when the relationship between revenues or expenditures generated from projected future development is difficult to quantify. This approach anticipates that certain revenues and expenditures are indicators of future anticipated revenues and City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 6 expenditures, which can be quantified based upon changes in the number of persons served. To apply this approach, this analysis determines an average revenue or expenditure amount on a per-person served basis. Depending on the type of revenue or expenditure, persons served can include residents, employees, or a combination of both.
City Persons Served
To best utilize the multiplier approach in the fiscal impact analysis and to allocate applicable revenues and expenditures, City population information is needed. The City’s existing residential and employee population figures are identified in the following section.
RESIDENTIAL POPULATION
City population data was obtained from the State of California’s Department of Finance1. According to the most recent information available, the January 2020 total estimated residential population of the City is 23,074 residents.
EMPLOYEE POPULATION
The City’s employee population data was obtained from the Employment Development Department March 2020 Benchmark (dated April 16, 2021).2
The City's estimated total employee population is 9,900 employees.
PERSONS SERVED
Using the residential and employee population estimates provided above, the total number of persons currently served within the City can be determined. When establishing the total number of persons served within an area, it should be noted that the employee population does not have the same impacts that the residential population has on an agency’s public services. While the exact service demand relationship between an employee and a resident is often difficult to measure, a relationship of one-half employee to one resident is common fiscal practice. This 50% employee adjustment suggests that a resident will have twice the impact on a public agency’s revenues and services than that of an employee. Applying this 50% adjustment to the City’s existing employee population base, the total number of persons served within the City is provided in the table on the following page.
TABLE 1. CITY PERSONS SERVED
Residential
Population Served
Employee
Population Served (1)
Current
Persons Served
23,074 4,950 28,024
(1) Adjusted to reflect 50% of the total employee population of 9,900.
Based upon the City’s residential population and adjusted employee population, the total number of persons currently served within the City is 28,024 persons. 1 The State of California Department of Finance demographics estimates, forecast for 2020 2 Employment Development Department Monthly Labor Force Data for the City of Patterson, March 2020 Benchmark City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 7 Future City Persons Served
FUTURE RESIDENTIAL POPULATION
The Stanislaus Council of Governments (“StanCOG”) prepared a 2018 Regional Demographic Forecast Report3 (“2018 StanCOG Report”) which estimates that by 2045 the City’s total residential population will increase to approximately 43,577 residents.
FUTURE EMPLOYEE POPULATION
According to the 2018 StanCOG Report, the projected employment by 2020 was 4,851. However, as mentioned above, the most recent Employment Development Department figures estimate the employee population to be 9,900. In reviewing the annual employee growth percentages in the 2018 StanCOG Report, from 2020-2045, it is conservatively estimated that there will be annual employee growth of 2%. Applying this 2% annual growth percentage through 2045, the estimated employee population in 2045 is 16,242.
TABLE 2. FUTURE CITY EMPLOYEE POPULATION
Description Value
Current Employee Population 9,900
Annual Growth Rate 2%
2045 Estimated Employee Population (1) 16,242
(1) Equal to (2020 Employee Population) x (1 + 2%)^25.
FUTURE PERSON SERVED
Based upon the City’s projected future residential population and adjusted employee population, the total number of future persons served within the City is 51,698 persons. The following tables present the City’s future persons served and change in residential and employee population.
TABLE 3. FUTURE CITY PERSONS SERVED
Future Residential
Population
Future Employee
Population (1)
Future
Persons Served
43,577 8,121 51,698
(1) Represents 50% of the total future employee population of 16,242.
The following table presents the City’s projected change in residents, employees, and persons served. 3 Regional Transportation Plan Sustainable Communities Strategies, Stanislaus Council of Governments, August 15, 2018 City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 8 TABLE 4. CHANGE IN PERSONS SERVED
Description Value
Change in Residential Population 20,503
Change in Employee Population (1) 6,342
Change in Persons Served 23,674
(1) Non-adjusted figures listed.
Future Development
FUTURE RESIDENTIAL DEVELOPMENT
To estimate the number of residential units that will be required to house the projected increase in the residential population, the City’s average household size and amount of undeveloped property within the City currently planned for residential use are considered.
Per the U.S. Census Bureau July 1, 2019, population estimates for the City, the average household size within the City is 3.70 persons per household. This household size is applied to projected single family residential (“SFR”) development and reduced to 80% for multi-family residential (“MFR”) development.
According to County Secured Roll data dated January 2021, of vacant land within the City zoned for residential use, approximately 84% will be dedicated to SFR development and 16% will be dedicated to MFR development. As such, this analysis assumes that 84% of the increase in the City’s residential population will be housed in SFR developments and 16% will be housed in MFR developments.
The number of SFR and MFR units projected to be developed given the increase in the City’s population is calculated below.
TABLE 5. FUTURE RESIDENTIAL DEVELOPMENT
Description SFR MFR
Change in Residential Population (1) 17,133 3,370
Persons per Dwelling Unit (2) 3.70 2.96
Projected Number of Residential Units: (3) 4,631 1,139
(1) 86% of Change in Residential Population identified in Table 4 applied to SFR and 14% applied to MFR. (2) SFR based upon the U.S. Census Bureau July 1, 2019, Quickfacts. SFR figure multiplied by 80% to arrive at MFR figure. MFR figure is estimated and subject to change. (3) Equal to (Change in Residential Population) / (Persons per Dwelling Unit), rounded to the nearest whole number.
FUTURE NON-RESIDENTIAL DEVELOPMENT
To estimate the amount of non-residential development that will lead to the projected increase in the City’s employee population, average employees per building square feet, and the amount of undeveloped property within the City currently planned for commercial (“Commercial”) and industrial (“Industrial”) use are considered.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 9 In reviewing multiple buildout methodology reports from neighboring areas, including an Association of Bay Area Governments Non-Residential Buildings Analysis (“ABAG Analysis”),4 on average Commercial development employs one person for every 335 building square feet and Industrial development employs one person for every 733 building square feet. According to Stanislaus County Secured Roll data dated January 2021, of vacant land within the City zoned for non-residential use, approximately 56% will be dedicated to Commercial development and 44% will be dedicated to Industrial development. Thus, this analysis assumes that 56% of the increase in the City’s employee population will be employed by businesses classified as Commercial and 44% will be employed by businesses classified as Industrial.
The amount of Commercial and Industrial building square feet projected to be built in the City is calculated in the following table.
TABLE 6. FUTURE NON-RESIDENTIAL DEVELOPMENT
Description Commercial Industrial
Change in Employee Population (1) 3,563 2,779
Average Building Square Footage per Employee (2) 335 733 Projected Building Square Footage: (3) 1,193,621 2,036,972 (1) 56% of Change in Employee Population identified in Table 4 applied to Commercial and 44% applied to Industrial. (2) Per the ABAG Analysis.
(3) Equal to (Change in Employee Population) x (Average Building Square Footage per Employee), rounded to the nearest whole number.
FUTURE DEVELOPMENT SUMMARY
A summary of the change in residential and employee population as a result of future development is presented in the following table.
TABLE 7. FUTURE DEVELOPMENT SUMMARY
Description SFR (1) MFR (1) Commercial (2) Industrial (2) Change in Population 17,133
Residents
3,370
Residents
3,563
Employees
2,779
Employees
Projected Through 2045 4,631
Units
1,139
Units
1,193,621
Bldg. Sq. Ft.
2,036,972
Bldg. Sq. Ft.
(1) See Table 5.
(2) See Table 6.
4 ABAG Non-Residential Buildings Analysis, Erin Wardell, Tara Weidner, PB, November 28, 2011 City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 10 SECTION 3 | REVENUE ESTIMATE
To carry out the goals and objectives of the City-provided Public Safety Services, the City relies on revenue received from a variety of sources. City revenue sources include property tax revenue, property tax in lieu of vehicle license fees, sales tax revenue, revenue from additional taxes, fines, fees, forfeitures, and other revenue sources. To determine the estimated total revenue generated from future development, the case study approach is predominantly used in this analysis. The multiplier approach is used to allocate certain types of revenue to future development when specific data needed to utilize the case study approach is not readily available.
Property Tax Revenue
Under California law, non-exempt property pays an ad valorem property tax equal to 1% of the assessed value of the property. Any additional voter-approved taxes or assessments will result in a total property tax rate burden that can exceed 1% of the property’s assessed value. The property tax revenue received from the 1% ad valorem property tax rate is then allocated to various overlapping public agencies based upon their authorized allocation for each tax rate area (“TRA”). The City is located within several TRAs and per the City’s 2020 Comprehensive Annual Financial Report (“2020 CAFR”), the City receives approximately 18.877% of the 1% ad valorem property tax revenue.
The total assessed value of the projected future development types is calculated below, followed by a calculation of the incremental assessed value and property tax revenue expected to be generated for the City.
RESIDENTIAL DEVELOPMENT
Property is subject to the 1% ad valorem tax rate unless it can qualify for an exemption under existing California laws. Certain types of property that are granted this property tax exemption, also known as the Welfare Exemption, include hospitals, universities, churches, affordable housing, and other non-profits. If the Welfare Exemption is granted, the property will not be subject to the 1% ad valorem property tax.
However, the property may still be subject to other assessments, taxes, and charges levied by local governments. For purposes of this analysis, it is assumed that none of the projected future SFR and MFR development will qualify for the Welfare Exemption.
To calculate the amount of property tax revenue projected to be generated for the City by future SFR and MFR development, the median sales price of each property type as of April 2021 is considered. For purposes of this analysis, it is assumed that all residential units will apply and qualify for a Homeowner Exemption which reduces the assessed value of each unit by $7,000.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 11 TABLE 8. TOTAL ASSESSED VALUE OF FUTURE RESIDENTIAL DEVELOPMENT Description SFR MFR
Median Price per Unit (1) $465,000 $240,000
Homeowners Exemption (7,000) (7,000)
Assessable Value per Unit (2) 458,000 233,000
Units (3) 4,631 1,139
Total Assessed Value: (4) $2,120,774,670 $265,281,850
(1) Per movoto.com Market Trends and Statistics for the City as of April 23, 2021. (2) Equal to (Median Price per Unit) – (Homeowners Exemption). (3) Calculated in Table 5.
(4) Equal to (Assessable Value per Unit) x (Units).
Undeveloped land zoned for residential use currently generates a level of property revenue for the City. For purposes of assigning base assessed value to the property that will contain the projected future SFR and MFR development, it is assumed that 80% of currently undeveloped property will develop.
TABLE 9. UNDEVELOPED RESIDENTIAL ACREAGE EXPECTED TO DEVELOP Description Acreage Assessed Value
Total Undeveloped Acreage (1) 225.16 $14,569,081
% Expected to Develop to Contain
Projected Future SFR & MFR Development (2) 80% 80%
Amount Expected to Develop: (3) 180.13 $11,655,265
(1) Per County secured roll assessed valuation data as of January 2021 reflecting valuation as of January 2020. (2) Estimated; subject to change.
(3) Equal to (Total Undeveloped Acreage) x (80%).
This analysis assumes that of the undeveloped land expected to develop, 84% of the land will be designated for SFR development and 16% for MFR development. Given this distribution, the incremental assessed value of projected SFR and MFR development is calculated in the following table.
TABLE 10. INCREMENTAL ASSESSED VALUE OF FUTURE RESIDENTIAL DEVELOPMENT Description SFR MFR
Total Assessed Value (1) $2,120,774,670 $265,281,850
Estimated Current Assessed Value (2) 9,739,474 1,915,791 Incremental Assessed Value: (3) $2,111,035,196 $263,366,060 (1) Calculated in Table 8.
(2) Assessed value of property expected to develop identified in Table 9 split 84% to SFR and 16% to MFR. (3) Equal to (Total Assessed Value) – (Estimated Current Assessed Value).
The amount of property tax revenue expected to be generated by projected residential development is presented in the following table.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 12 TABLE 11. PROPERTY TAX REVENUE GENERATED BY FUTURE RESIDENTIAL DEVELOPMENT Description SFR MFR Total
Incremental Assessed Value $2,111,035,196 $263,366,060 $2,374,401,256 1% Ad Valorem (1) 21,110,352 2,633,661 23,744,013
Projected Property Tax Revenue: (2) $3,985,001 $497,156 $4,482,157 (1) Equal to (Incremental Assessed Value) x (1.00%).
(2) Equal to (1% Ad Valorem) x (18.877%).
NON-RESIDENTIAL DEVELOPMENT
To calculate the amount of property tax revenue projected to be generated for the City by future Commercial and Industrial development, the average sales price of each property type was calculated. An average price per building square foot was calculated for each property type using listing price data of property in and immediately surrounding the City listed for sale as of the date of this report5. These averages were then multiplied by the projected building square feet of future nonresidential development to obtain the projected assessed value of future Commercial and Industrial property.
TABLE 12. TOTAL ASSESSED VALUE OF FUTURE NON-RESIDENTIAL DEVELOPMENT Description Commercial Industrial
Average Price per Building Sq. Ft. (1) $149.24 $74.36
Projected Building Sq. Ft. (2) 1,193,621 2,036,972
Total Assessed Value: (3) $178,138,501 $151,468,527
(1) Per the online Commercial real estate marketplace LoopNet.com, see footnote 5. (2) Calculated in Table 6.
(3) Equal to (Average Price per Building Sq. Ft.) x (Projected Building Sq. Ft.).
Undeveloped land zoned for non-residential use currently generates a level of property tax revenue for the City. For purposes of assigning current assessed value to property that will contain the projected future Commercial and Industrial development, it is assumed that 80% of currently undeveloped property will develop.
5 Listing price data drawn from the online Commercial real estate marketplace LoopNet.com. List price data as of the date of this report of Commercial and Industrial property for sale within the City and the City of Modesto were used in this analysis.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 13 TABLE 13. UNDEVELOPED NON-RESIDENTIAL ACREAGE EXPECTED TO DEVELOP Description Acreage Assessed Value
Total Undeveloped Acreage (1) 313.54 $37,016,219
% Expected to Develop to Contain
Projected Future Non-Residential Development (2) 80% 80% Amount Expected to Develop: (3) 250.83 $29,612,975
(1) Per County Secured Roll data dated January 2021.
(2) Estimated; subject to change.
(3) Equal to (Total Undeveloped Acreage) x (80%).
The incremental assessed value of projected future non-residential development is calculated in the following table.
TABLE 14. INCREMENTAL ASSESSED VALUE OF FUTURE NON-RESIDENTIAL DEVELOPMENT Description Commercial Industrial
Total Assessed Value (1) $178,138,501 $151,468,527
Total Estimated Current Value (2) 16,637,093 12,975,882 Incremental Assessed Value: (3) $161,501,408 $138,492,645 (1) Calculated in Table 12.
(2) Assessed value of property expected to develop from Table 13, split 56% to Commercial and 44% to Industrial. (3) Equal to (Total Assessed Value) – (Estimated Current Assessed Value).
The amount of property tax revenue expected to be generated by projected future non-residential development is presented in the following table.
TABLE 15. PROPERTY TAX REVENUE GENERATED BY FUTURE NON-RESIDENTIAL DEVELOPMENT Description Commercial Industrial Total
Incremental Assessed Value $161,501,408 $138,492,645 $299,994,054 1% Ad Valorem (1) 1,615,014 1,384,926 2,999,941
Projected Property Tax Revenue: (2) $304,866 $261,433 $566,299 (1) Equal to (Incremental Assessed Value) x (1.00%).
(2) Equal to (1% Ad Valorem) x (18.877).
PROPERTY TAX SUMMARY
A summary of the property tax revenue projected to be generated by future residential and non-residential development is provided in the following table.
TABLE 16. PROPERTY TAX REVENUE GENERATED BY FUTURE DEVELOPMENT SFR MFR Commercial Industrial
Total Property Tax
Revenue
$3,985,001 $497,156 $304,866 $261,433 $5,048,456
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 14 Property Tax in Lieu of Vehicle License Fee (“VLF”) Revenue Property tax in lieu of VLF is revenue that the City receives in addition to the City’s share of property tax revenues. In 2004, the California Legislature permanently reduced the VLF rate from two percent to 0.65% and compensated cities and counties for their revenue loss with a like amount of property taxes, dollar-fordollar. A public agency’s property tax in lieu of VLF revenue allocation changes in proportion to the growth or decline in the gross assessed valuation for that public agency. Therefore, to determine the anticipated amount of property tax in lieu of VLF to be generated from future development, a ratio of the budgeted property tax in lieu of VLF to the City’s total secured assessed value is determined. Using information from the January 2021 County Assessor’s secured roll parcel data as well as the Fiscal Year 2020-21 Budget, the estimated incremental property tax in lieu of VLF ratio is calculated below.
TABLE 17. INCREMENTAL PROPERTY TAX IN LIEU OF VLF RATIO Description Amount
2020-2021 Total City Secured Assessed Value $2,145,749,268 2020-2021 Budgeted Property Tax in Lieu of VLF 2,000,000 Property Tax in Lieu of VLF Ratio: 0.093%
The property tax in lieu of VLF ratio can then be applied to the incremental assessed value of the projected future development presented in the Property Tax Revenue section of this report to determine the amount of property tax in lieu of VLF revenue expected to be generated from projected future development.
TABLE 18. PROPERTY TAX IN LIEU OF VLF REVENUE
Description
Incremental
Assessed Value (1)
Property Tax in Lieu
of VLF Ratio
Property Tax in Lieu
of VLF Revenue (2)
SFR $2,111,035,196 0.093% $1,963,263
MFR 263,366,060 0.093% 244,930
Commercial 161,501,408 0.093% 150,196
Industrial 138,492,645 0.093% 128,798
Total Property Tax in Lieu
of VLF Revenue: $2,674,395,309 $2,487,188
(1) Calculated in Tables 10 and 14.
(2) Equal to (Incremental Assessed Value) x (Property Tax in Lieu of VLF Ratio).
Documentary Transfer Tax Revenue
When property is sold, a documentary transfer tax is charged. The documentary transfer tax is charged at a rate of $0.55 per $500 of assessed value, or $1.10 per $1,000 of assessed value. This transfer tax is then split between the City and the County. To determine the annual documentary transfer tax, the estimated property turnover rate must be considered. This analysis assumes that SFR and MFR units will turnover approximately every 13 years, which results in an annual turnover rate of about 8%. Commercial and Industrial land uses typically have minimal ownership turnover. However, to consider the potential for land use turnover, a conservative estimate of once every 20 years, or an annual turnover rate of 5%, is applied in this analysis to the projected non-residential development. Utilizing the estimated incremental assessed City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 15 value of projected future development and the estimated annual turnover rates, the City’s share of the documentary transfer tax is calculated in the following table.
TABLE 19. PROJECTED DOCUMENTARY TRANSFER TAX REVENUE
Description SFR MFR Commercial Industrial
Incremental Assessed Value $2,111,035,196 $263,366,060 $161,501,408 $138,492,645 Estimated Annual Turnover
Rate (1) 8% 8% 5% 5%
Annual Turnover Estimated
Value $168,882,816 $21,069,285 $8,075,070 $6,924,632
Annual Turnover Estimated
Value / $1,000 $168,883 $21,069 $8,075 $6,925
Documentary Transfer Tax
Rate per $1,000 (2) $0.55 $0.55 $0.55 $0.55
Documentary Transfer Tax
Revenue: $92,886 $11,588 $4,441 $3,809
(1) Source: “Latest Calculations Show Average Buyer Expected to Stay in Home 13 Years”, Economic and Housing Policy, National Association of Homebuilders.
(2) The $1.10 tax rate split $0.55 to the County and $0.55 to the City.
Sales Tax Revenue
The minimum combined sales tax rate for the City of Patterson is 7.875%. The California sales tax rate is currently 7.25% and the County sales tax rate is 0.625%.
RESIDENTIAL SALES TAX REVENUE
To project the amount of potential sales tax revenue to be generated from the future residential population, household income is considered. Based on information obtained from the U.S. Census Bureau, the median household income for the City is $66,233 (based upon 3.70 persons per household). For purposes of this analysis, it is assumed that the average persons per household of a MFR Dwelling Unit is
2.96 (3.70 * 80%). Therefore, the estimated household income for Multi-Family Residential units is $51,830.
Per the State Board of Equalization, approximately 29.5% of a household’s spending is spent on taxable retail goods. This percentage is discounted by 35% to attempt to account for purchases made outside of City boundaries and shifts in taxable sales from one point of sale to another within the City. The estimated sales tax revenue generated by projected future households is calculated in the following table.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 16 TABLE 20. RESIDENTIAL SALES TAX REVENUE
Description SFR MFR
Median Household Income $69,233 $51,830
Percentage of Income Spent on Taxable Retail
Sales per Household (1) 19.18% 19.18%
Income Spent on Taxable Retail Sales
Within City per Household (2) $13,275 $9,938
Number of Households (3) 4,631 1,139
Total Future Resident Sales Tax Revenue: (4) $614,701 $113,149 (1) 29.5%, per BOE.gov household spending for California taxable retail goods, discounted by 35% to account for shifts in taxable sales and purchases made outside of the City boundaries. Estimate; subject to change. (2) Equal to (Median Household Income) x (Percentage of Income Spent on Taxable Retail Sales per Household). (3) Calculated in Table 5.
(4) Equals (Income Spent on Taxable Retail Sales per Household) x (Number of Households) x (1.00%).
EMPLOYEE SALES TAX REVENUE
In addition to the increased residential population, the increase in employees resulting from the projected future development will generate a certain amount of sales tax revenue for the City. The International Council of Shopping Centers conducted a survey6 that evaluated the average spending habits of the workforce. The survey determined that the average employee within an urban market spends about $4,695 per year on taxable goods and services. While personal spending is unique to each individual, this analysis assumes that approximately 75% of the employee’s annual spending will be on taxable purchases that will occur near their place of employment within the City’s boundaries. Using this information, the estimated sales tax revenue generated from future employees is calculated in the following table.
TABLE 21. SALES TAX REVENUE GENERATED BY FUTURE EMPLOYEES Description Commercial Industrial Amount
Average Annual Taxable Spending per Employee (1) $4,695 $4,695 N/A Number of Future Employees (2) 3,563 2,779 N/A
Estimated % of Taxable Sales within City (3) 75% 75% N/A Future Employee Taxable Sales within City (4) 12,545,044 9,784,343 $22,329,387 Total Future Employee Sales Tax Revenue: (5) 125,450 97,843 $223,294 (1) Drawn from a survey conducted by The International Council of Shopping Centers. (2) Identified in Table 6.
(3) Estimated; subject to change.
(4) Equal to (Average Annual Taxable Spending per Employee) x (Number of Future Employees) x (75%). (5) Equal to (Future Employee Taxable Sales within City) x (1.00%).
NON-RESIDENTIAL SALES TAX REVENUE
Sales tax revenue will be generated from taxable sales that occur within future non-residential development. Economic activity within future Industrial development may generate sales tax revenue, 8 International Council of Shopping Centers, Office-Worker Retail Spending in a Digital Age, 2012 City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 17 though due to an inability to determine the type of businesses that will reside within future Industrial development, this analysis takes a conservative approach and does not attempt to estimate the amount of sales tax revenue that may be generated by Industrial property.
To best estimate the increase in sales tax revenue that will be generated by future Commercial property, an estimated $390 of taxable sales per square foot is considered based on a report authored by PwC in 2013.7 It is important to note that not all taxable sales generated from future Commercial development will be new taxable sales for the City. There will be a portion of these taxable sales that will shift from one existing place of business within the City to a future Commercial development’s place of business.
Furthermore, a portion of the Commercial sales tax revenue will derive from the future residential and employee population, which is quantified separately in this analysis. Therefore, to account for shifts in taxable sales from one point of sale to another point of sale within the City and separately calculated sales tax revenue from the future residential and employee population, an estimated 50% reduction has been applied. Applying the estimated taxable sales per square foot and the sales tax revenue reduction percentage, the estimated sales tax revenue from the projected Commercial development can be determined.
TABLE 22. SALES TAX REVENUE GENERATED BY COMMERCIAL DEVELOPMENT Description Amount
Estimated Taxable Sales per Square Foot (1) $390
Projected Building Square Footage (2) 1,193,621
Taxable Sales (3) $465,512,135
Future Commercial Development Sales Tax Revenue: (4) $2,327,561 (1) Figure drawn from the Measuring Up Retail Benchmarking Survey prepared by PwC in 2013. Figure is the average of the median sales per square foot figures of various retail categories. (2) Calculated in Table 6.
(3) Equal to (Estimated Taxable Sales per Square Foot) x (Projected Building Square Footage). (4) Equal to (Taxable Sales) x (City Sales Tax rate of 1.00%) x (50%). 50% reduction aims to account for shifts in taxable sales from one point of sale to another point of sale within the City, and separately calculated sales tax from the projected future residential and employee population.
SALES TAX SUMMARY
A summary of the sales tax revenue projected to be generated by future residential and non-residential development is provided in the following table.
TABLE 23. SALES TAX REVENUE GENERATED BY FUTURE DEVELOPMENT Description Sales Tax Revenue
Residential Sales Tax Revenue $727,849
Commercial Sales Tax Revenue 2,453,011
Industrial Sales Tax Revenue 97,843
Total: $3,278,704
7 Measuring Up Retail Benchmarking Survey, PwC Consulting, 2013 City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 18 Other City Revenue
The City receives revenue from sources that have not been previously quantified via the case study and multiplier approach in earlier sections. Other City revenues include fees, fines, penalties, charges for services, and other revenues. For purposes of this fiscal impact analysis, revenues that are not allocated to the projected future development include one-time building and planning permits, charges for services, interest from City investments, special project funds, and short term and non-recurring grants.
The City currently receives revenues from its Cannabis Pilot Project Program. The City has identified recurring revenues specifically attributable to Public Safety services as identified below. Those revenues include funding for two FTE for Public Safety Positions and a portion of an administrative support position, for a total annual revenue amount of $233,278. Additionally, the City receives an annual COPS Grant – AB 3229, a Reimbursement from the State Office of Emergency Services for City Staff supporting the County Strike Team, and a General Fund Reimbursement from Fund 190 for 40% of shared fire personnel staff, which have been removed as those revenues do not change based upon population.
The following table presents the Fiscal Year 2020-21 Other City Revenues derived from the Fiscal Year 2020- 21 City Budget which apply to the projected future development (i.e., categories of revenue expected to be generated by future development).
TABLE 24. OTHER CITY REVENUE
Description
City’s 2020-2021
Budget Amount
Franchise Fee Revenue $220,000
Business License Revenue 123,324
Cannabis Pilot Project Program 233,278
To estimate the overall impact that future development will have on the listed other City revenue sources, it is assumed that the current per capita revenue amounts will serve as the best indicator of the future per capita revenue amounts. Therefore, to best allocate these other City revenues to projected future development, the multiplier approach is utilized.
It was previously identified that the total numbers of persons currently served within the City is 28,024.
Using the number of persons served, the amount of other City revenue per person can be determined. The total other City revenue amounts, the total number of persons served, and the amount per person served are presented in the following table.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 19 TABLE 25. OTHER CITY REVENUE PER PERSON SERVED
Description
City’s 2020-2021
Budget Amount
Persons or
Employees Served
in City (1)
Amount per
Person Served
Franchise Fee Revenue $220,000 28,024 $7.85
Business License Revenue 123,324 4,950 24.91
Cannabis Pilot Project Program 233,278 28,024 8.32
Total: $576,602
(1) The Amount per Person Served for Business License Revenue is calculated using the current employee population count. Amount per Person Served for Franchise Fee Revenue and Cannabis Pilot Project Program Revenue is calculated using the current persons served count.
To determine the amount of other City revenue allocated to the projected future development, the other City revenue amount per person is multiplied by the increase in persons served within the projected future development. As previously determined in Table 4, the increase in persons served as a result of projected future development is 23,674, which results in a total City revenue amount of approximately $540,788 for the listed revenue categories.
TABLE 26. FUTURE DEVELOPMENT OTHER CITY REVENUE
Description
Increase in
Persons Served (1)
Amount per
Person Served
Other City
Revenue (3)
Franchise Fees 23,674 $7.85 $185,841
Business License 6,342 24.91 157,979
Cannabis Pilot Project Program 23,674 8.32 196,968
Total Other City Revenue: $540,788
(1) See Table 4.
(2) Equal to (Increase in Persons Served) x (Amount per Person Served).
Future Development Revenue Summary
The projected future development within the City will generate City revenue from several different sources.
A portion of the anticipated revenue was calculated based upon the case study approach and the remaining City revenue was allocated to the projected future development using the multiplier approach. A summary of the estimated total City revenues projected to be generated by future development is calculated in the following table.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 20 TABLE 27. TOTAL FUTURE DEVELOPMENT REVENUE
Description SFR MFR Commercial Industrial Total
Property Tax $3,985,001 $497,156 $304,866 $261,433 $5,048,456 Property Tax In Lieu of
VLF 1,963,263 244,930 150,196 128,798 2,487,188
Documentary Transfer
Tax 92,886 11,588 4,441 3,809 112,724
Sales Tax 614,701 113,149 2,453,011 97,843 3,278,704
Other City 134,493 26,455 102,740 80,131 343,820
Subtotal Revenue: $6,790,344 $893,279 $3,015,255 $572,014 $11,270,892 Cannabis Pilot Project
Program Revenue: $142,546 $28,039 $14,822 $11,560 $196,968 Projected future development in the City is anticipated to generate approximately $11.6 million in total revenue to support recurring City operations. However, this analysis seeks to determine the net fiscal impact future development has on the portion of the City’s General Fund dedicated to the Public Safety Service program rather than on the City’s General Fund as a whole. In reviewing several years of City budgets, the portion of the total budget allocated to Public Safety services ranged from 43%-49% of the total budget.
Therefore, for purposes of this analysis, 45% of the City’s annual revenues are being allocated to Public Safety Services, which includes Police, Fire and Code Enforcement services. As such, to determine the net fiscal impact future development has on the portion of the City’s General Fund dedicated to the Public Safety Program, the Subtotal Revenue figures calculated in Table 27 are multiplied by 45%. However, because revenues from the Cannabis Pilot Program identified in Table 24 are 100% attributable to Public Safety Services, those revenues have not been discounted, as shown below.
TABLE 28. FUTURE DEVELOPMENT REVENUE APPLICABLE TO PUBLIC SAFETY Revenue SFR MFR Commercial Industrial Total
Subtotal Revenue (1) $6,790,344 $893,279 $3,015,255 $572,014 $11,270,892 Subtotal Revenue
Applicable
to Public Safety: (2)
$3,055,655 $401,975 $1,356,865 $257,406 $5,071,901
Cannabis Pilot Project
Program Revenue $142,546 $28,039 $14,822 $11,560 $196,968 Revenue Applicable
to Public Safety: (3) $3,198,200 $430,015 $1,371,687 $268,967 $5,268,869 (1) Identified in Table 27.
(2) Equal to (Subtotal Revenue) x (45%).
(3) Equal to (Subtotal Revenue) + (Cannabis Pilot Project Program Revenue)
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 21 SECTION 4 | PUBLIC SAFETY EXPENDITURES ESTIMATE
The future development revenues identified in Section 3 of this report are intended to pay for recurring expenditures related to general City services, which includes Public Safety Services. However, as mentioned, only 45% of the General Fund revenues are allocated to Public Safety Services.
Projected future development will add residents and employees to the City’s existing population base. This residential and employee population increase will place additional demands on existing Public Safety Services provided by the City. To account for the increased costs associated with additional demand, the General Fund Public Safety expenditures must first be identified.
Due to COVID-19 pandemic related impacts to the City’s budget and expenditures, per the City, the Fiscal Year 2019-20 and Fiscal Year 2020-21 expenditures were reviewed and blended to determine the appropriate Adjusted Fiscal Year 2020-21 General Fund Public Safety Service expenditures. Those expenditures are identified in the following table.
TABLE 29. CURRENT PUBLIC SAFETY EXPENDITURES SUMMARY
Description
Fiscal Year 2020-2021
Adjusted Amount
Code Enforcement Costs (Division 300) $273,547
Fire Station 1 Costs (Division 400) 2,893,756
Police Protection Costs (Division 500) 5,831,162
CFD 2003-1 Annual Expenditure Deficit (1) 900,000
Current Public Safety Service Expenditures: $9,898,465
(1) General Fund contribution to CFD 2003-1 to offset the annual expenditure budget deficit.
Public Safety Services serve the City’s residential and employee population. As such, the calculated Current Public Safety Service Expenditures are divided by the City’s current persons served to arrive at a Current Public Safety Service Expenditures per person served amount.
TABLE 30. CURRENT PUBLIC SAFETY SERVICE EXPENDITURES PER PERSON SERVED Description Value
Current Public Safety Service Expenditures $9,898,465
City Persons Served (1) 28,024
Current Public Safety Service Expenditures
per Person Served: (2) $353.21
(1) Identified in Table 1.
(2) Equal to (Current Public Safety Service Expenditures) / (City Persons Served).
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 22 Increased Public Safety Services Expenditures
For the City to provide the projected future development the same level of Public Safety Services the current population receives, the City will need to hire additional personnel and purchase and maintain additional apparatus as discussed further below.
Police Protection Services
The City’s current standard level of service is one fully burdened sworn police personnel per 1,000 residents. The City is currently meeting this standard level of service. Additionally, the City has contracted with the County Sheriff’s Department to provide vehicles. The city is currently in the process of finalizing the construction of a new Safety Center designed to house the police department in order to maintain the City’s standard level of service and attract more staff to meet the needs of the growing population.
Fire Protection Services
The City’s current standard level of service is one fully burdened firefighter personnel per 1,000 residents.
The City is not meeting this standard level of service. Currently, the ratio of firefighter personnel to residents is 0.87:1,000. The number of firefighter personnel the City will need to hire to ensure a firefighter personnel to residents ratio of 1.00:1,000 for its projected future population is calculated in the following table. Note that non-whole personnel figures represent positions that are less than full-time.
TABLE 31. REQUIRED INCREASE IN FIREFIGHTER PERSONNEL
Description Value
Current Residential Population 23,074
Current Firefighter Personnel to Residential
Population Ratio (1) 0.00087
Current Firefighter Personnel (2) 20.00
Future Residential Population 43,577
Future Firefighter Personnel Given Current Firefighter
Personnel to Residential Population Ratio (3) 37.77
Optimal Firefighter Personnel to Residential
Population Ratio (4) 0.00100
Optimal Future Firefighter Personnel (5) 43.58
Required Increase in Fire Personnel: (6) 5.81
(1) Equal to 0.87/1,000.
(2) Equal to (Current Residential Population) x (0.00087). (3) Equal to (Future Residential Population) x (0.00087) (4) Equal to 1.00/1,000
(5) Equal to (Future Residential Population) x (0.00100). (6) Equal to (Optimal Future Firefighter Personnel) – (Future Firefighter Personnel Given Current Firefighter Personnel to Residential Population Ratio).
The City has indicated that of its current firefighter personnel, approximately 40% are Chief and Captain Personnel and approximately 60% are Dedicated Personnel which includes all firefighting personnel not categorized as Chief and Captain Personnel. As such, of the calculated required increase in firefighter personnel, this analysis assumes that approximately 40% will be Chief and Captain positions and City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 23 approximately 60% will be Dedicated Personnel. According to data obtained from the City’s Fire Budget, the average cost for Chief or Captain Personnel is approximately $189,186 annually. The average cost for Dedicated Personnel is approximately $135,546. The projected cost of employing the required increase in police personnel is calculated in the following table.
TABLE 32. REQUIRED INCREASE IN FIREFIGHTER PERSONNEL EXPENDITURE Description Personnel Count (1) Cost per Personnel (2) Projected Total Cost (3) Chief or Captain Personnel 2.32 $189,186 $439,326
Dedicated Personnel (4) 3.48 135,546 472,145
Total: 5.81 $911,470
(1) 60% of Required Increase in Firefighter Personnel calculated in Table 31 allocated to Chief or Captain Personnel & 40% allocated to Dedicated Personnel, per current distribution of existing firefighter personnel. (2) Average fully burdened salary and benefits cost of existing positions in FY 2020-21 Budget. (3) Equal to (Personnel Count) x (Cost per Personnel).
(4) Includes Fire Engineer, Firefighter-Paramedic and Fire Engineer Paramedic.
The City has also indicated that to provide an optimal level of fire protection services to its community, there will be a need for additional fire apparatus to serve the future population. There will be a need for 2 fire engines estimated to cost $750,000 each. The City will also need to purchase a new aerial apparatus, estimated to cost $1.5 million. Per the National Fire Protection Association, front line apparatus should be replaced every 15 years. Therefore, one replacement cycle has been included for the fire engines and the aerial apparatus. A summary of the projected cost of required increases in Fire Protection Services is presented below.
TABLE 33. INCREASE IN FIRE PROTECTION SERVICES PERSONNEL AND APPARATUS EXPENDITURE Description
Fire
Protection
Cost for Required Increase in Firefighter Personnel (1) $911,470 Cost for 2 Fire Engines (2) 200,000
Cost for 2 Fire Utility Vehicles (3) 20,000
Cost for Aerial Apparatus (4) 200,000
Total Cost for Fire Protection Services Personnel and Apparatus: $1,331,470 (1) Calculated in Table 32.
(2) Per the City, assumes 2 fire engines estimated to cost $750,000 each with a lifecycle replacement of 15 years; assumes purchase plus one full replacement. (3) Per the City, assumes 2 fire utility vehicles estimated to cost $75,000 each with a lifecycle replacement of 15 years; assumes purchase plus one full replacement. (4) Per the City, assumes aerial apparatus estimated to cost $1.5 million with a lifecycle replacement of 15 years; assumes purchase plus one full replacement.
The required increase in Fire Protection Services Personnel and Apparatus would serve the City’s projected increase in residential and employee population. As such, the calculated Required Increase in Fire Protection Services Personnel and Apparatus Expenditure is divided by the City’s projected increase in persons served to arrive at a Required Increase in Public Safety Services Personnel and Apparatus Expenditure per future person served amount.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 24 TABLE 34. INCREASE IN FIRE PROTECTION SERVICES PERSONNEL AND APPARTUS EXPENDITURE PER
PERSON SERVED
Description
Fire
Protection
Required Increase in Fire Protection Services Personnel and Apparatus Expenditure $1,331,470
Increase in Persons Served 23,674
Required Increase in Fire Protection Services Personnel and Apparatus Expenditure per Person Served: (1) $56.24
(1) Equal to (Required Increase in Fire Protection Services Personnel and Apparatus Expenditure) / (Increase in Persons Served).
The amount of annual additional Fire Protection Services Personnel and Apparatus per person is $56.24. The fire protection services are intended to serve both the residential and employee population, therefore these costs apply to both the future residential and employee population.
Code Enforcement Services
As a result of expected future new development, additional funding will be needed to cover necessary Code Enforcement services. The City estimates needing 2 additional Code Enforcement Personnel to serve the anticipated future population of 23,674. The City provided a fully burdened cost of $79,626 for Code Enforcement Personnel. Utilizing this information, the increased Code Enforcement services per person served can be determined.
TABLE 35. CODE ENFORCEMENT SERVICES PER FUTURE POPULATION SERVED Description Value
Increase in Persons Served 23,674
Additional Code Enforcement Personnel (1) 2.00
Total Cost for 1 Additional Code Enforcement Personnel (2) $79,626 Total Additional Code Enforcement Costs (3) $159,252
Annual Increased Code Enforcement Services per Person Served: (4) $6.73 (1) Estimated; subject to change.
(2) Per the City, annual fully burdened cost of 1 Code Enforcement Personnel. (3) Equal to (Total Cost for 1 Additional Code Enforcement Personnel) x (Additional Code Enforcement Personnel)
(4) Equal to (Total Additional Code Enforcement Costs) / (Total Future Population).
The Code Enforcement services are intended to serve both the residential and employee population, therefore these costs apply to both the future resident and future employee population. The total combined expenditures per future person served is calculated in the following table.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 25 TABLE 36. TOTAL EXPENDITURES PER FUTURE PERSON SERVED
Description Value
Current Public Safety Service Expenditures per Person Served (1) $353.21 Required Increase in Fire Protection Personnel and Apparatus Expenditures per Future Person Served (2) 56.24
Required Increase in Code Enforcement Expenditures per Future Person Served (3) 6.73
Total Expenditures per Future Person Served: $416.18
(1) Calculated in Table 30.
(2) Calculated in Table 34
(3) Calculated in Table 35.
Projected Future Development Expenditure Summary
To determine the total amount of City Public Safety Services expenditures allocated to projected future development, the total expenditures per future person served is multiplied by the estimated increase in persons served. Applying the total expenditures per future person served amount to the increase in persons served as a result of future development, the projected impact of the future person served population to the City’s Public Safety expenditures is approximately $9.85 million, as shown in the following table.
TABLE 37. TOTAL PROJECTED FUTURE DEVELOPMENT EXPENDITURES Description SFR MFR Commercial Industrial Total
Change in Persons Served (1) 17,133 3,370 1,782 1,389 23,674 Total Expenditures per
Future Person Served (2) 416.18 416.18 416.18 416.18 N/A Total Expenditures: (3) $7,130,413 $1,402,579 $741,439 $578,276 $9,852,707 (1) Calculated in Table 7. Employee figure in Table 7 reduced by 50% to obtain Change in Person Served. (2) Calculated in Table 36.
(3) Equal to (Change in Persons Served) x (Total Expenditure per Future Person Served).
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 26 SECTION 5 | FUTURE DEVELOPMENT FISCAL IMPACT
Based on the projected future development’s estimated revenue determined in Table 28 and the accompanying expenditures presented in Table 37, the projected future development will result in an overall negative fiscal impact for the City in respect to its providing of Public Safety Services. The table below sets forth the total anticipated negative fiscal impact.
TABLE 38. FUTURE DEVELOPMENT OVERALL FISCAL IMPACT
Description Amount
Total Revenue (1) $5,268,869
Total Expenditures (2) (9,852,707)
Positive / (Negative) Fiscal Impact: ($4,583,838)
(1) Calculated in Table 28.
(2) Calculated in Table 37.
The projected SFR, MFR, and Industrial development are projected to have a negative fiscal impact, while the projected Commercial property is projected to have a positive fiscal impact. The table below sets forth the total anticipated negative fiscal impact by Development Type.
TABLE 39. FUTURE DEVELOPMENT FISCAL IMPACT BY DEVELOPMENT TYPE Description SFR MFR Commercial Industrial
Total Revenue $3,198,200 $430,015 $1,371,687 $268,967
Total Expenditures (7,130,413) (1,402,579) (741,439) (578,276) Positive / (Negative) Fiscal
Impact: ($3,932,213) ($972,564) $630,248 ($309,309)
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 27 SECTION 6 | FISCAL IMPACT FUNDING OPTIONS
To mitigate the overall negative fiscal impact identified in Section 5 of this report, the City could consider the establishment of a special tax or special assessment. Since the City’s negative fiscal impact is attributable to the provision of Public Safety Services, a special assessment would not be the most appropriate funding option for the City. Special assessments require the identification and separation of general and special benefits. Special benefits can be assessed to property, but all general benefits must be funded by sources other than the special assessments. Therefore, a special assessment would not entirely alleviate the negative fiscal impact created by projected future development.
Community Facilities Districts
A Community Facilities District, or CFD (also referred to as a Mello-Roos District), is a type of SFD that is established via the Mello-Roos Community Facilities District Act of 1982 (“1982 Act”). Through the levy and collection of a special tax, CFDs provide funding for authorized public improvements and/or public services.
The CFD’s Rate and Method of Apportionment includes procedures for identifying and classifying property within the CFD, establishing the initial maximum special tax rates, and the formula for calculating the annual special tax and assigning the special tax to taxable property within the CFD. Since CFDs authorize the levy and collection of a special tax, as opposed to a special assessment, there is no requirement to make a finding of special benefit for the taxed property. However, the special tax should be based on a benefit received by property, the cost of providing the facilities or services, or some other reasonable basis for assigning the special tax, as determined by the legislative body.
To establish a CFD, the 1982 Act requires two-thirds approval of the registered voters, residing within the proposed CFD boundary, voting in the special tax election. If there are less than 12 registered voters within the proposed CFD boundaries, then a landowner special tax election can take place. In the case of a landowner special tax election, a two-thirds approval is still required, and each landowner receives one vote per acre or portion of an acre of land owned. It should be noted that if a CFD is approved via a landowner special tax election, the CFD is only authorized to fund additional services. In Building Industry Association of the Bay Area v. City of San Ramon, the California Appellate Court held that a landowner approved CFD can only fund the increase in demand for pre-existing services, so long as the special tax revenue is not available for general government purposes. The additional services funded by the CFD shall not replace services already available and provided within the boundaries of the CFD.
PROJECT AREA SPECIFIC COSTS
In addition to using a CFD to mitigate negative fiscal impacts, the CFD can also fund authorized services that are provided at an enhanced level or are unique to the projected future development. These services would be in addition to the previously identified negative fiscal impacts placed upon the City in providing the existing level of Public Safety Services. Funding for any enhanced and/or additional recurring public service costs, including repairs and replacements, reserves and administration can be accomplished through a CFD.
City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 28
BENEFITS TO CITY
Through the formation of a CFD, the City can establish an ongoing funding source that mitigates the negative fiscal impacts created by projected future development within the City. The CFD’s maximum special tax rate can include an annual escalation factor, to keep pace with changing costs, that is based upon an annual fixed amount or is tied to a specific inflation index. Further, the CFD special tax can be established without a sunset date so that the CFD special tax can be levied in perpetuity.
Recommendation
For the City to continue to provide necessary Public Safety Services to its population base, the City needs to ensure that developing property pays its fair share as a result of any additional financial burdens placed upon the City’s Public Safety Services operational budget due to the new development. It has been determined that the projected future development will produce an overall negative fiscal impact of approximately $4.58 million. To mitigate this negative fiscal impact, the City could consider establishing a CFD.
If the City elected to establish a CFD, the levy and collection of the special tax could generate sufficient revenue to offset the negative fiscal impact to the City of approximately $4.58 million, as well as provide the flexibility to generate additional revenue to fund any enhanced or new project specific costs desired by the projected future development. The CFD’s Rate and Method of Apportionment (RMA) establishes the special tax formula and sets the initial maximum special tax rates. A benefit of the CFD is that it allows for a great deal of flexibility in structuring the special tax formula so that the formula and maximum special tax rates best fit and accomplish the specific needs of the project. In this case, the CFD special tax rates could be sized to not only recover the annual negative fiscal impact, but the special tax rates could be structured to recover the initial costs associated with the formation of the CFD, as well as the ongoing administrative costs to the City.
Based on the negative fiscal impacts created by future residential and non-residential development identified in Table 39, the total amount to be recovered from a CFD is presented in the following table.
Commercial development is excluded due to its projected positive fiscal impact.
TABLE 40. PROPOSED INITIAL CFD SPECIAL TAX RATES
Development
Type
Projected
Development CFD Rate Revenue
SFR 4,631 Units $770 per Unit $3,565,206
MFR 1,139 Units 616 per Unit 701,289
Industrial 137.39 Acres 2,310 per Acre 317,343
Total: $4,583,838
The CFD special tax rates presented in Table 40 would represent the initial CFD maximum special tax rate to fund the identified negative fiscal impacts. The City could also increase the initial CFD maximum special tax rates to cover the added costs for administering the CFD, as well as establish any reserves or contingency funds. Furthermore, the CFD would be structured to include a special tax escalation factor, which would allow for an increase to the annual maximum special tax. For a CFD that only funds authorized services, there are no restrictions on the establishment of the special tax escalation factor. However, it is City of Patterson
2021 Comprehensive Public Safety Feasibility Study and Service Level Analysis 29 recommended that the special tax escalation factor be tied to a specific cost index and perhaps also include a minimum annual increase to the maximum special tax. As an example, the City may want to consider a special tax escalation factor that is tied to the annual change in the Consumer Price Index (CPI) for All Urban Consumers for the San Francisco-Oakland-San Jose area Region as published by the Department of Labor’s Bureau of Labor Statistics, with a minimum increase of 5%. This would ensure that the maximum special tax increases at a minimum of 5% annually. While the maximum special tax increases on an annual basis, the City is not required to levy the special tax at the maximum rates each year. To meet the CFD annual special tax requirement, authorized services, and administrative costs, the City has the flexibility to levy a special tax amount that is less than or equal to the annual maximum special tax.
Funding the negative fiscal impact with a CFD special tax provides a great deal of flexibility for the City. If structured correctly, the CFD could establish a long-term funding solution that will remain in place regardless of future ownership and land use changes.