Richmond City Council
February 24, 2022

30 YEARFISCALIMPACTPROJECTIONSFORPT. MOLATEPROJECTIONSANDPOSSIBLERISKMITIGATION February 24, 2022
2 30YearCashFlowProjectionsofFiscalImpact–The Assumptions}Use the EPS/BAE peer reviewed study as a basis}UpdatetheEPS/BAE assumptions basedonthe most recent proposed dwelling unit mix and non-residential development from SunCal}Updatetheassumptions for dwelling unit sales prices using the Integra study}Prorateprojectedrevenuesandexpenses at build out bydwellingunit}Showproratedexpenses both with and without police and fire expenses}PoliceandfireexpensescannotbegraduallyincreasedasPt.Molatebuildsout}Full operating costs must be shown from the first occupancies}Threebuildoutscenarios: 7 years (SunCal), 15 years and 30 years}Assumenon-residential builds out at same pace as residential 3 Scenario 1 –7 Year Build OutFY Ending
CFD Formation 2022
First Series of Bonds 2023
First Year of Home Construction 2025
FY Ending
New Units
Per Year
Cumulative
Total
2025 207.4 207.4
2026 207.4 414.9
2027 207.4 622.3
2028 207.4 829.7
2029 207.4 1,037.1
2030 207.4 1,244.6
2031 207.4 1,452.0
This represents SunCal’scurrentbuildoutprojection for Pt. MolateFirst occupied homes projected for 2025 4 Scenario 2 -15 Year Build OutFY Ending
CFD Formation 2022
First Series of Bonds 2024
First Year of Home Construction 2026
FY Ending
New Units
Per Year
Cumulative
Total
2025 - -
2026 96.8 97
2027 96.8 194
2028 96.8 290
2029 96.8 387
2030 96.8 484
2031 96.8 581
2032 96.8 678
2033 96.8 774
2034 96.8 871
2035 96.8 968
2036 96.8 1,065
2037 96.8 1,162
2038 96.8 1,258
2039 96.8 1,355
2040 96.8 1,452
The first series of bonds and first home construction is delayedoneyearcomparedwithScenario1 Scenario 2 is a conservative scenario for build out of amajorproject in the Bay Area 5 Scenario 3 –30 Year Build OutFY Ending
CFD Formation 2022
First Series of Bonds 2024
First Year of Home Construction 2026
FY Ending
New Units
Per Year
Cumulative
Total
2025 - -
2026 48.4 48.4
2027 48.4 96.8
2028 48.4 145.2
2029 48.4 193.6
2030 48.4 242.0
2031 48.4 290.4
2032 48.4 338.8
2033 48.4 387.2
2034 48.4 435.6
2035 48.4 484.0
2036 48.4 532.4
2037 48.4 580.8
2038 48.4 629.2
2039 48.4 677.6
2040 48.4 726.0
2041 48.4 774.4
2042 48.4 822.8
2043 48.4 871.2
2044 48.4 919.6
2045 48.4 968.0
2046 48.4 1,016.4
2047 48.4 1,064.8
2048 48.4 1,113.2
2049 48.4 1,161.6
2050 48.4 1,210.0
2051 48.4 1,258.4
2052 48.4 1,306.8
2053 48.4 1,355.2
2054 48.4 1,403.6
2055 48.4 1,452.0
Same assumptions on bond issuanceandfirsthome construction as Scenario2 Scenario3isaveryconservativescenario for build out of a major project in the BayArea 6 ProRated Fiscal Impact by Dwelling Unit
With Police and
Fire Expenses
Without Police
and Fire Expenses
Total Projected Annual General Fund Revenues at
Build Out 13,739,524 13,739,524
Total Projected Annual General Fund Expenses at
Build Out 6,173,182 818,200
Net Annual General Fund Revenue at Build Out 7,566,342 12,921,324 Net Annual General Fund Revenue at Build out Pro
Rate Per Housing Unt 5,211 8,899
BoththeEPSandBAEpeerreviewprojectedthatthebulkofGeneral Fund expenses for Pt. Molate would be for police and fire services 7 Scenario1(7Year Build Out) –Interim Fiscal Impact
FY Ending
Cumulative
Units
Net
Revenues
without
Police and
Fire
Police and
Fire
Expenses
Net
Revenues
with Police
and Fire
Expenses
2025 207.4 1,845,903 (5,355,000) (3,509,097) 2026 414.9 3,691,807 (5,355,000) (1,663,193) 2027 622.3 5,537,710 (5,355,000) 182,710
2028 829.7 7,383,614 (5,355,000) 2,028,614 2029 1,037.1 9,229,517 (5,355,000) 3,874,517
2030 1,244.6 11,075,421 (5,355,000) 5,720,421
2031 1,452.0 12,921,324 (5,355,000) 7,566,324
Full police and fire services are shown from the beginning of home construction The “crossover point”, where revenues exceed expenses, occurs in FY 2027 8 Scenario 2 (15 Year Build Out) –Interim Fiscal Impact FY Ending
Cumulative
Units
Net Revenues
without Police
and Fire
Police and
Fire Expenses
Net
Revenues
with Police
and Fire
Expenses
2025 - - - - 2026 96.8 861,422 (5,355,000) (4,493,578) 2027 193.6 1,722,843 (5,355,000) (3,632,157) 2028 290.4 2,584,265 (5,355,000) (2,770,735) 2029 387.2 3,445,686 (5,355,000) (1,909,314) 2030 484.0 4,307,108 (5,355,000) (1,047,892) 2031 580.8 5,168,530 (5,355,000) (186,470) 2032 677.6 6,029,951 (5,355,000) 674,951 2033 774.4 6,891,373 (5,355,000) 1,536,373 2034 871.2 7,752,794 (5,355,000) 2,397,794 2035 968.0 8,614,216 (5,355,000) 3,259,216 2036 1,064.8 9,475,638 (5,355,000) 4,120,638 2037 1,161.6 10,337,059 (5,355,000) 4,982,059 2038 1,258.4 11,198,481 (5,355,000) 5,843,481 2039 1,355.2 12,059,902 (5,355,000) 6,704,902 2040 1,452.0 12,921,324 (5,355,000) 7,566,324 Scenario 2 projects 6 years of negative fiscal impact on City, with ”cross-overinFY2032 9 Scenario 3 (30 Year Build Out) –Interim Fiscal Impact FY Ending
Cumulative
Units
Net
Revenues
without
Police and
Fire
Police and
Fire
Expenses
Net
Revenues
with Police
and Fire
Expenses
2025 - - - -
2026 48.4 430,711 (5,355,000) (4,924,289) 2027 96.8 861,422 (5,355,000) (4,493,578) 2028 145.2 1,292,132 (5,355,000) (4,062,868)
2029 193.6 1,722,843 (5,355,000) (3,632,157)
2030 242.0 2,153,554 (5,355,000) (3,201,446)
2031 290.4 2,584,265 (5,355,000) (2,770,735)
2032 338.8 3,014,976 (5,355,000) (2,340,024)
2033 387.2 3,445,686 (5,355,000) (1,909,314)
2034 435.6 3,876,397 (5,355,000) (1,478,603)
2035 484.0 4,307,108 (5,355,000) (1,047,892)
2036 532.4 4,737,819 (5,355,000) (617,181)
2037 580.8 5,168,530 (5,355,000) (186,470)
2038 629.2 5,599,240 (5,355,000) 244,240
2039 677.6 6,029,951 (5,355,000) 674,951
2040 726.0 6,460,662 (5,355,000) 1,105,662
2041 774.4 6,891,373 (5,355,000) 1,536,373
2042 822.8 7,322,084 (5,355,000) 1,967,084
2043 871.2 7,752,794 (5,355,000) 2,397,794
2044 919.6 8,183,505 (5,355,000) 2,828,505
2045 968.0 8,614,216 (5,355,000) 3,259,216
20461,016.4 9,044,927 (5,355,000) 3,689,927
20471,064.8 9,475,638 (5,355,000) 4,120,638
20481,113.2 9,906,348 (5,355,000) 4,551,348
20491,161.6 10,337,059 (5,355,000) 4,982,059
20501,210.0 10,767,770 (5,355,000) 5,412,770
20511,258.4 11,198,481 (5,355,000) 5,843,481
20521,306.8 11,629,192 (5,355,000) 6,274,192
20531,355.2 12,059,902 (5,355,000) 6,704,902
20541,403.6 12,490,613 (5,355,000) 7,135,613
20551,452.0 12,921,324 (5,355,000) 7,566,324
Scenario 12 projects 12 years of negativefiscalimpactontheCity,with ”cross-over” in FY 2038 10 Mitigation for Interim Negative Fiscal Impact: A Security Fund}The Security Fund would be comprised of the following:}CashreceivedfromSunCalorother developers through special tax levies intended to mitigate the interim fiscal impact}SunCalhasoffered up to $2 million per year for up to 5 years }Cashreceivedfromrealestatetransfers taxes on the $45 million sale of the property to SunCal as provided for in the DDA and future inter-developer transfers}SunCalsells property to merchantbuilderswhoactuallybuildthehomes}The EPS/BAE fiscal impact study includes real estate transfer taxes from sales to home buyers, but not for sales to merchant builders or other developers}AttheoptionoftheCity,theCity’s$22.5millionshareofthe $45 million payment from SunCal provided for in the DDA 11 Scenario 1 (7 Year Build Out) –Security Fund Projection, Counting $22.5 Million SunCal Payment FY Ending
Beginning Fund
Balance
Initial Deposit
from SunCal DDA
Payment
CFD Special Fiscal
Impact Tax on SunCal
and other developer
property
Property Transfer Tax on
SunCal DDA Payment and
Inter developer land sales
Draws to
mitigate
Adverse Fiscal
Impact
Ending Fund
Balance
2022 - 22,500,000 - 562,500 - 23,062,500 2023 23,062,500 - - - - 23,062,500 2024 23,062,500 - - - - 23,062,500 2025 23,062,500 2,000,000 129,643 (3,509,097) 21,683,046 2026 21,683,046 1,663,193 129,643 (1,663,193) 21,812,689 2027 21,812,689 - 129,643 182,710 22,125,042 SunCal pays $3.6+ million towards the City’s interim negativefiscalimpactbefore the “cross-over” point City is made whole in this scenario
12 Scenario 1 (7 Year Build Out) –Security Fund Projection, Not Counting $22.5 Million SunCal Payment on Title Transfer FY Ending
Beginning Fund
Balance
Initial Deposit
from SunCal DDA
Payment
CFD Special Fiscal
Impact Tax on SunCal
and other developer
property
Property Transfer Tax on
SunCal DDA Payment and
Inter developer land sales
Draws to
mitigate
Adverse Fiscal
Impact
Ending Fund
Balance
2022 - - - 562,500 - 562,500 2023 562,500 - - - - 562,500 2024 562,500 - - - - 562,500 2025 562,500 2,000,000 129,643 (3,509,097) (816,954) 2026 (816,954) 1,663,193 129,643 (1,663,193) (687,311) 2027 (687,311) 687,311 129,643 182,710 312,353 SunCal pays $3.6+ million towards the City’s interim negativefiscalimpactbefore the “cross-over” point City is made whole in this scenario. No difference from Scenario 1 withthe$22.5million 13 Scenario 2 (15 Year Build Out) –Security Fund Projection, Counting $22.5 Million SunCal Payment on Title Transfer FY Ending
Beginning Fund
Balance
Initial Deposit
from SunCal DDA
Payment
CFD Special Fiscal
Impact Tax on SunCal
and other developer
property
Property Transfer Tax on
SunCal DDA Payment and
Inter developer land sales
Draws to
mitigate
Adverse Fiscal
Impact
Ending Fund
Balance
2022 - 22,500,000 - 562,500 - 23,062,500 2023 23,062,500 - - - - 23,062,500 2024 23,062,500 - - - - 23,062,500 2025 23,062,500 - - - - 23,062,500 2026 23,062,500 - 2,000,000 60,500 (4,493,578) 20,629,422 2028 20,629,422 - 2,000,000 60,500 (3,632,157) 19,057,765 2029 19,057,765 - 2,000,000 60,500 (2,770,735) 18,347,530 2030 18,347,530 - 1,909,314 60,500 (1,909,314) 18,408,030 2031 18,408,030 - 1,047,892 60,500 (1,047,892) 18,468,530 2032 18,468,530 - - 60,500 (186,470) 18,342,559 2033 18,342,559 - - 60,500 674,951 19,078,010 SunCal pays $8.95 million over 5 years to mitigate negative fiscal impact$5.1 million is drawn from the Security Fund before “cross-over” is reached 14 Scenario 2 (15 Year Build Out) –Security Fund Projection, Not Counting $22.5 Million SunCal Payment on Title Transfer SunCal pays $8.95 million over 5 years to mitigate negative fiscal impactAggregatenegativefiscalimpactonCitypriorto“cross-overis$14+million FY Ending
Beginning Fund
Balance
Initial Deposit
from SunCal DDA
Payment
CFD Special Fiscal
Impact Tax on SunCal
and other developer
property
Property Transfer Tax on
SunCal DDA Payment and
Inter developer land sales
Draws to
mitigate
Adverse Fiscal
Impact
Ending Fund
Balance
2022 - - - 562,500 - 562,500 2023 562,500 - - - - 562,500 2024 562,500 - - - - 562,500 2025 562,500 - - - - 562,500 2026 562,500 - 2,000,000 60,500 (4,493,578) (1,870,578) 2028 (1,870,578) - 2,000,000 60,500 (3,632,157) (3,442,235) 2029 (3,442,235) - 2,000,000 60,500 (2,770,735) (4,152,470) 2030 (4,152,470) - 1,909,314 60,500 (1,909,314) (4,091,970) 2031 (4,091,970) - 1,047,892 60,500 (1,047,892) (4,031,470) 2032 (4,031,470) - 60,500 (186,470) (4,157,441) 2033 (4,157,441) - 60,500 674,951 (3,421,990) 15 Scenario 3 (30Year Build Out) –Security Fund Projection, Counting $22.5 Million SunCal Payment on Title Transfer FY Ending
Beginning Fund
Balance
Initial Deposit
from SunCal DDA
Payment
CFD Special Fiscal
Impact Tax on SunCal
and other developer
property
Property Transfer Tax on
SunCal DDA Payment and
Inter developer land sales
Draws to
mitigate
Adverse Fiscal
Impact
Ending Fund
Balance
2022 - 22,500,000 - 562,500 - 23,062,500 2023 23,062,500 - - - - 23,062,500 2024 23,062,500 - - - - 23,062,500 2025 23,062,500 - - - - 23,062,500 2026 23,062,500 - 2,000,000 60,500 (4,924,289) 20,198,711 2028 20,198,711 - 2,000,000 60,500 (4,493,578) 17,765,632 2029 17,765,632 - 2,000,000 60,500 (4,062,868) 15,763,265 2030 15,763,265 - 2,000,000 60,500 (3,632,157) 14,191,608 2031 14,191,608 - 2,000,000 60,500 (3,201,446) 13,050,662 2032 13,050,662 - - 60,500 (2,770,735) 10,340,427 2033 10,340,427 - - 60,500 (2,340,024) 8,060,902 2034 8,060,902 - - 60,500 (1,909,314) 6,212,089 2035 6,212,089 - - 60,500 (1,478,603) 4,793,986 2036 4,793,986 - - 60,500 (1,047,892) 3,806,594 2037 3,806,594 - - 60,500 (617,181) 3,249,913 2038 3,249,913 - - 60,500 (186,470) 3,123,943 2039 3,123,943 - - 60,500 244,240 3,428,683 SunCal pays full $10 million to mitigate fiscal impact $30+ million in draws on Security Fund prior to”cross-over” point 16 Scenario 3 (30Year Build Out) –Security Fund Projection, Not Counting $22.5 Million SunCal Payment on Title Transfer FY Ending
Beginning Fund
Balance
Initial Deposit
from SunCal DDA
Payment
CFD Special Fiscal
Impact Tax on SunCal
and other developer
property
Property Transfer Tax on
SunCal DDA Payment and
Inter developer land sales
Draws to
mitigate
Adverse Fiscal
Impact
Ending Fund
Balance
2022 - - - 562,500 - 562,500 2023 562,500 - - - - 562,500 2024 562,500 - - - - 562,500 2025 562,500 - - - - 562,500 2026 562,500 - 2,000,000 60,500 (4,924,289) (2,301,289) 2028 (2,301,289) - 2,000,000 60,500 (4,493,578) (4,734,368) 2029 (4,734,368) - 2,000,000 60,500 (4,062,868) (6,736,735) 2030 (6,736,735) - 2,000,000 60,500 (3,632,157) (8,308,392) 2031 (8,308,392) - 2,000,000 60,500 (3,201,446) (9,449,338) 2032 (9,449,338) - - 60,500 (2,770,735) (12,159,573) 2033 (12,159,573) - - 60,500 (2,340,024) (14,439,098) 2034 (14,439,098) - - 60,500 (1,909,314) (16,287,911) 2035 (16,287,911) - - 60,500 (1,478,603) (17,706,014) 2036 (17,706,014) - - 60,500 (1,047,892) (18,693,406) 2037 (18,693,406) - - 60,500 (617,181) (19,250,087) 2038 (19,250,087) - - 60,500 (186,470) (19,376,057) 2039 (19,376,057) - - 60,500 244,240 (19,071,317) SunCal pays full $10 million to mitigate fiscal impact Aggregatenegative fiscal impactonCityis$30+million prior to “cross-over”point 17 Conclusions}In order to protect it self from adverse interim negative fiscal impact the City needs to “escrow” the $22.5 million million payment from SunCal until the “cross-over” point is reached}Withoutthisformofprotection, slow absorption for the Pt. Molate project will result in significant interim negative fiscal impact}TheSunCal$10million special tax levy for fiscal impact mitigation is very helpful, but without other support, is not sufficient to protect the City from the impact of slow absorption}TheRateandMethodofApportionment (special tax formula) needs to accommodate the SunCal offer, and the City would need to formalize the “Security Fund” to provide adequate fiscal impact risk mitigation 18 Next Steps}City policy decision: Does the City want to “escrow” $22.5 million payment from SunCal as security for potential future negative fiscal impact?}If so, what is the release test for the “escrow”?}Future determination of ”cross-over” point in fiscal impact being reached?}Incorporate SunCal $10 million offer in Rate and Method of Apportionment