San Luis Obispo City Council
December 10, 2024

3940-7 Broad Street, #139
San Luis Obispo, CA 93401
(805) 471-2948
[email protected]
3 parameters The final number of inclusionary affordable units will be determined by the People’s Self-Help Housing funding source. Across Froom Ranch Way from the Agricultural Heritage Center’s local eateries and markets, Lot 7 will be one of the most walkable neighborhoods in San Luis Obispo. The plan also contains a community gathering center, privately maintained public park, and the multimodal connectivity envisioned in the Specific Plan.

The proposed mixed-use project on San Luis Ranch Lot 7 (SLR7) will offer a dynamic and engaging new neighborhood of 276 market rate apartment residences designed and constructed by Williams Homes, with a mix of studios, one-bedroom and two-bedroom homes on roughly 9-acres. These homes are designed in two different three-story building types, a 12-plex building and a 30-plex, with units ranging in size from 594 SF - 896 SF.

This mix of home types will be attractive to a variety of interested renters including singles, couples and small families who want to live close to all of the amenities that San Luis Ranch provides. The buildings are creatively situated on the site to respect the surrounding context and maximize the livability and pedestrian connectivity of the community.

Attractive, modern farmhouse elevations in great color palettes will make the neighborhood a well sought after place to live.

San Luis Ranch and Williams Homes are honored to partner with People’s Self-Help Housing to provide a minimum of 69 and up to 77 deed-restricted inclusionary affordable rental units. These 1, 2, and 3-bedroom units will range in size from 650 SF – 1,150 SF, and will include indoor and outdoor amenities, along with the wraparound services for which People’s Self-Help Housing is so well recognized. Just like the market rate product, these units will have access to all of the park and open space resources, shopping and onsite agriculture at San Luis Ranch.

Located in the middle of the new neighborhood and over existing drainage improvements is the nearly 1-acre Central Park, envisioned as an open area for programmed activities such as sand volleyball, picnic area, outdoor gym, bocci ball courts and open areas.

Adjacent to the multi-modal path, Central Park will be interconnected with extensive walking paths and will be open to the public. Given its proximity to the locally produced food at the Agricultural Heritage Center across Froom Ranch Way, this central park will offer lots of seating to enjoy offerings of the day.

The residents of the neighborhood will also enjoy a private recreation amenity (Central Amenity) which will include a pool and spa area, sunbathing areas, BBQs and gathering space and restroom buildings. Together, the Central Amenity (private) and the Central Park (public) will provide the community with active and welcoming open spaces within the higher density neighborhood. With a focus on bike trails throughout the neighborhood

3940-7 Broad Street, #139
San Luis Obispo, CA 93401
(805) 471-2948
[email protected]
4 and the community, 55 open bike racks for guests and 3 bike barns for residents, along with in-home bike racks will further support and encourage the use of bikes of all sizes and styles.

One exciting feature of this bicycle-centric neighborhood will be the vibrant commercial building, sensibly located at the corner of Froom Ranch Way and Dalidio Drive. Designed to reinforce the agricultural setting of the area, this space will feature an attractive habitable silo structure, recognizable as a landmark for the community. This structure is envisioned to may contain a bike shop for service, repair, and rentals, a deli/café, a small, locally sourced coffee/sweets shop for locals and visitors alike, and a mailroom/leasing office for the residents. A grand second floor multi-purpose space will could offer additional retail space, along with flexibility in programming of events, social gatherings or simply relaxing and enjoying the views and delightful weather of San Luis Ranch.

Entitlements to Implement the Project
Entitlement processing is expected to include Development Plan with ARC review, General and Specific Plan Amendments with ALUC referral, Zoning Amendment, Vesting Tentative Tract Map conformance evaluation, and environmental review. Removed per 10/24/24 email from Craig Steele.

General and Specific Plan Conformance and Requested Modifications General Plan:

The San Luis Ranch Specific Plan Area is governed in the City’s 2014 Land Use Element Section 8.1.4. That section identifies 14 goals, objectives, and requirements for the entire San Luis Ranch planning area. These include:
a. Provide land and appropriate financial support for development of a Prado Road connection. Appropriate land to support road infrastructure identified in the Final Project EIR (overpass or interchange) at this location shall be dedicated as part of any proposal and any area in excess of the project’s fair share of this facility shall not be included as part of the project site area used to calculate the required 50% open space.
b. Circulation connections to integrate property with surrounding circulation network for all modes of travel.
c. Connection to Froom Ranch and Calle Joaquin, if proposed, shall not bifurcate onsite or neighboring agricultural lands. Any connection to Calle Joaquin shall be principally a secondary / emergency access by design.

3940-7 Broad Street, #139
San Luis Obispo, CA 93401
(805) 471-2948
[email protected]
5 d. Development shall include a transit hub. Developer shall work with transit officials to provide express connections to Downtown area.
e. Maintain agricultural views along Highway 101 by maintaining active agricultural uses on the site and maintain viewshed of Bishop Peak and Cerro San Luis. f. Maintain significant agricultural and open space resources on site (see Policy

1.13.8.B). Land dedicated to Agriculture shall be of size, location, and configuration appropriate to maintain a viable, working agricultural operation. g. Where buffering or transitions to agricultural uses are needed to support viability of the agricultural use, these shall be provided on lands not counted towards the minimum size for the agriculture / open space component. Provide appropriate transition to agricultural uses on-site.
h. Integrate agricultural open space with adjacent SLO City Farm and development on property.
i. Site should include walkable retail and pedestrian and bicycle connections to surrounding commercial and residential areas.
j. Commercial and office uses shall have parking placed behind and to side of buildings so as to not be a prominent feature.
k. Neighborhood Commercial uses for proposed residential development shall be provided.
l. Potential flooding issues along Perfumo Creek need to be studied and addressed without impacting off-site uses.
m. All land uses proposed shall be in keeping with safety parameters described in this General Plan or other applicable regulations relative to the San Luis Obispo Regional Airport.
n. Historic evaluation of the existing farm house and associated structures shall be included.

All of these goals, objectives, and requirements continue to be met with the proposed Lot 7 mixed-use project.

Additionally, the Land Use Element specifies the following performance standards for the San Luis Ranch Specific Plan Area:

3940-7 Broad Street, #139
San Luis Obispo, CA 93401
(805) 471-2948
[email protected]
6 (Please note that Specific Plan Table 2-1 replicates this General Plan Table.) While the proposed Lot 7 mixed-use project meets all other Land Use Element performance standards, it will require two modifications:
1) Increasing the maximum number of residential units from 500 to 930.

The new maximum residential reflects:
• 577 market rate residential units, and up to 77 deed-restricted inclusionary units, for a total of 654 residential unit approved as part of a Specific Plan Amendment by City Council in November 2020. (Please note that 654 units the currently approved with the 2020 Specific Plan Amendment are not reflected in the City’s General Plan.)
• 276 Williams Homes market rate rental units, at 30 units per acre density allowed by the Specific Plan in the Neighborhood Commercial (NC) zone, and • A minimum of 69 and up to 77 low-income affordable units to be provided by Peoples Self-Help Housing on a parcel donated by San Luis Ranch.

This residential density will generate projected traffic counts and VTM below the levels contemplated with the originally proposed retail development in the San Luis Ranch certified Final Environmental Impact Report (July 2017) and the Final Supplemental Environmental Impact Report (July 2018) as well as the Addendum to the certified Final Environmental Impact Report (August 2020).
* Inclusionary housing - the change in use from 114,300 square feet of commercial to an additional 296 market rate multifamily residential units changes the calculation in required affordable units. The 2020 Specific Plan Amendment allowed 26-low-income affordable 930 units

3940-7 Broad Street, #139
San Luis Obispo, CA 93401
(805) 471-2948
[email protected]
7 units to be transferred from the existing multi-family site to the proposed Lot 7. The proposed Lot 7 mixed use development, along with the remaining affordable units to be constructed for other uses in the Specific Plan Area will result in a requirement for 69 affordable units on the Lot 7 site:

Lot 7 Retail 1 units (2/acre)
Hotel 7 units (2/acre)
Office 7.4 units (2/acre)
Lot 7 MFR 27.6 units (10%)
Transferred 26 units
Total 69 units
2) Decreasing the minimum square footage of Commercial from 50,000 square feet to 38,000 square feet.

The new minimum reflects the commercial uses available to San Luis Ranch and City residents, as well as visitors, in the Agricultural Heritage Center, as well as the neighborhood serving commercial uses proposed on Lot 7. See discussion pertaining to the challenges of retail development above, under “Background”.

Below is an approximate timeline of changes to the SLRSP’s total commercial square footage:
• The City’s 2014 General Plan Land Use Element establishes a performance standard/commercial minimum of 50,000 square feet for the SLRSP. This aligns with SLRSP Table 2-1 (General Plan San Luis Ranch Performance Standards). • Council Resolution No. 11192 (November 2020) approved up to 114,300 square feet of commercial.
• As reported in the 2024 Annual Monitoring staff report (April 2024), the 53-acre AG-zoned portion of the Specific Plan currently includes 31,236 square feet of commercial buildings, including retail, restaurant, a market, and agricultural processing uses.

The Project proposes a 2-story15,000 7,000 square foot feet of commercial structure space, bringing the total commercial square footage within the SLRSP area to 46,236 38,236 square feet, which is below the performance standard minimum of the 2014 adopted General Plan. However, the final square footage of retail will be determined at the time of building permit application. In order to allow Williams Homes flexibility in designing the commercial component, the project is proposing that the General Plan identify 38,000 square feet as the minimum retail square footage on the Specific Plan area. This would

3940-7 Broad Street, #139
San Luis Obispo, CA 93401
(805) 471-2948
[email protected]
8 include the existing 31,236 square feet of retail uses at the Agricultural Heritage Center, as well as a minimum 7,000 square foot, 1-story, up to 15,000, 2-story retail building on Lot

7. Specific Plan:

The San Luis Ranch Specific Plan allows for a wide range of potential land uses, including multifamily residential. That document also establishes a variety of standards and requirements for development within the Neighborhood Commercial (NC) zone.

Specific Plan Table 2-3 identifies the maximum land area and number of units or square footage allowed within the Specific Plan area, and will be adjusted to comport with the General Plan table:

Table 3-3 identifies multifamily dwellings as uses allowed by right, citing the City of San Luis Obispo Zoning Code Section 17.22.010, which states the goal of allowing “dense housing close to concentrations of employment and college enrollment, in the Downtown core, along transit corridors and nodes, and in areas largely committed to high-density residential development”. Table 3-7 establishes the development standards for development within the NC zone.
572 units
69-77 units

3.8 acres

3940-7 Broad Street, #139
San Luis Obispo, CA 93401
(805) 471-2948
[email protected]
9 Section 3.7.1 (Residential Design Guidelines) apply to residential projects regardless of zone designation. Residential development standards are found in Table 3-3. Section 3.7.2 guidelines apply only to commercial development.

The proposed mixed-use Lot 7 project conforms to Specific Plan requirements and standards, including lot coverage, building height and design features, setbacks, landscaping, automobile and bicycle parking, and public improvements (Transit Center).

Zoning Amendment
The application includes a request to update the Lot 7 SLR Neighborhood Commercial zoning to allow residential density of up to 30 dwelling units per acre (gross). Removed per 10/24/24 email from Craig Steele.

VTTM 3142 Conformance and Development Agreement Status:

With this application, San Luis Ranch is submitting an application for review and approval of a proposed final map for Lot 7 of Tract Map 3142. As approved initially, the Lot 7 was proposed to be subdivided into 11 lots, including the affordable housing lot to be donated granted to People’s Self-Help Housing (PSHH), which is identified as Lot 11 on the Map. Recordation of this final phase of Tract 3142 is necessary to be able to convey Lot 11 to PSHH.

We are requesting that the City find the current proposed final map to be in substantial compliance with the previous approved tentative map. Per Section 66474.1 of the Subdivision Map Act, the City shall not deny the recordation of a final map where it finds that “the final … map is in substantial compliance with the previously approved tentative map.” Here, the proposed final map is in substantial compliance with the approved tentative map. Both maps result in the same number of lots and identical locations of ingress and egress to adjacent public streets. The internal configuration of several lots has changed in order to provide more logical lot lines to run through the middle of drive aisles, as opposed to the original parcel lines that now cross yards, drainage features, and areas occupied by structures.

We also note that the City has requested confirmation as to whether San Luis Ranch is amenable to discussing changes to certain portions of the previously approved Development Agreement. San Luis Ranch is willing to discuss changes to the Development Agreement in the event that legislative amendments, such as approval of an amendment to the Specific Plan, is required in conjunction with the approved project.

3940-7 Broad Street, #139
San Luis Obispo, CA 93401
(805) 471-2948
[email protected]
10 Please let me know if you have any preliminary questions regarding this application package. Thanks so much for your time and consideration. We look forward to working with you on this exciting project.

Very best regards,
Rachel Kovesdi
Cc: Timmi Tway, City of SLO Community Development Director John Rickenbach, City of SLO Contract Planner
Josh Bivin, San Luis Ranch COO
Glenn Adamick, Williams Homes Entitlement Manager
Ken Triguiero, People’s Self-Help Housing CEO

TERM SHEET
DEVELOPMENT OF LOT 7 – SAN LUIS RANCH SPECIFIC PLAN
Williams Homes (Williams) is proposing to develop Lot 7 of the San Luis Ranch Specific Plan with up to 276 market rate rental apartments and up to 15,000 square feet of neighborhood commercial. A 1.88-acre parcel within Lot 7 would be created and given to People’s Self-Help Housing (People’s) for the development of at least 69, and up to 77 affordable units. Consistent with the existing Development Agreement, San Luis Ranch is dedicating the parcel and will provide a $500,000.00 contribution to People’s for use in construction of the affordable units.

During discussions with City staff, it has become clear there are concerns about the timing of the construction of the affordable units. Presently, the City is requiring construction of the affordable units in conjunction with the market rate units. As People’s competes for grant funding from a number of private and public programs potentially over multiple years to construct their projects, tying the affordable and market rate units together makes it very difficult if not impossible to finance the market rate apartments.

To address this issue initially, San Luis Ranch and Williams Homes offered to post a bond with the City in an amount equal to the extension of utilities and access to the People’s parcel. City staff is still concerned with this “bond offer” as there can be difficulties and costs, along with timing issues associated with calling a bond and obtaining the funding from the bonding company.

To address this issue and allow the affordable and market rate units to move forward independently Williams is proposing the following:
• As a condition of the formal project entitlement for the market rate units, Williams within 30 days of approval would post a cash Letter of Credit in favor of the City in an amount equivalent to the costs associated with the extension of utilities and access to the People’s parcel (presently it is estimated that those costs are approximately $1.5 million). This along with providing People’s with their parcel will allow People’s to start securing grant funding for their project. This Letter of Credit would be released to Williams upon completion of the access and utility extension to People’s parcel. If for some reason the Williams market rate project is delayed for an extended period the City would have the ability to use the cash Letter of Credit funds to complete the improvements for People’s if they are in a position to move forward. We can work with staff on a recommended “delay” time frame during the formal entitlement process. A Letter of Credit in favor of the City is basically cash sitting in an account that the City can obtain much quicker and easier than calling a bond.
• As a condition of the formal project entitlements for the market rate units, Williams within 30 days of approval would post a second Letter of Credit in favor of the City in the amount of $1.5 million to motivate Williams to assist People’s to ensure completion of the People’s project. The

Letter of Credit would be reduced to $750,000 at such time that People’s confirms to the City in writing that they have secured the necessary funding for their project. The Letter of Credit would be completely released at such time People’s commences construction of their project. • Willams and San Luis Ranch agree to amend the Development Agreement to pay impact fees to the City in an amount equal to the fees in effect in December 2024, rather than the 2018 fees locked in by the approved Development Agreement. This results in an additional approximately $5.5 million to the City.
• Williams has also confirmed to City staff that as a condition of the formal entitlement approvals Williams would complete any additional landscape improvements within the parkway along the project frontage as well as maintaining those ultimate parkway improvements.

Williams would like to thank City staff for continuing to collaborate with us on this exciting project. They have provided great feedback and direction as we have moved through the conceptual plan for Lot 7. We strongly believe we will be able to work with the City and People’s to make this project happen. Finally, it is Williams intent to develop and hold the market rate units for the long-term and we have no intent or interest to sell the market rate units to Cal Poly.

Thanks for your consideration and we look forward to working with the City through the entitlement and development process.

P.O. Box 273
Pismo Beach, CA 93448
(805) 471-2948

A CALIFORNIA CORPORATION
“Building Legacies”
November 13, 2024
Timmi Tway, Community Development Director
City of San Luis Obispo County
919 Palm Street
San Luis Obispo, CA 93401
Via email
Re: San Luis Ranch Lot 7 Amendments GPA/SPA Authorization Dear Timmi,
Thank you for forwarding your memo to Council of 10/31/24.

In preparation for the December 10, 2024 City Council authorization hearing, please find the following documents related to the construction of inclusionary units on Lot 7 and the fiscal effects of the requested General and Specific Plan amendments:
• Operating Memorandum Number One Between the City of San Luis Obispo and MI San Luis Ranch, LLC, signed by City Manager on May 8, 2019; • Operating Memorandum Number Two Between the City of San Luis Obispo and MI San Luis Ranch, LLC, signed by City Manager on August 20, 2020; • First Administrative Amendment to Development Agreement, recorded on February 23, 2021;
• ADE Revised Fiscal Impact Analysis of the Proposed San Luis Ranch Project, revised October 31, 2024 (revised to omit nano units transferred to Cal Poly.

We respectfully request that these documents be included in the Council staff report package.

Please let me know if you have any questions. Best regards, Rachel Kovesdi

OPERATING MEMORANDUM NUMBER ONE

BETWEEN

THE CITY OF SAN LUIS OBISPO

AND MI SAN LUIS RANCH, LLC
The Development Agreement by and among the City of San Luis Obispo ( the " City") and MI San Luis Ranch LLC (" SLR") adopted by the City Council by Ordinance No. 1649 ( 2018 Series) ( the " Development Agreement'), provides in Section 9. 03 of the Development Agreement that compliance with the requirements of the San Luis Ranch Specific Plan ( the Specific Plan"), the Conditions of Approval ( the " Conditions of Approval") for the San Luis Ranch Project ( the " Project"), the conditions of approval for Vesting Tentative Tract Map. No. 3 096 ( the " VTTM"), and provisions of the Development Agreement ( collectively, the Specific Plan, the Conditions of Approval, the VTTM, and the Development Agreement may be referred to collectively as the " Project Approvals") require a close degree of cooperation between the City and SLR and refinements and further development of the Project may demonstrate that clarifications are appropriate with respect to the details of performance. The Development Agreement further provides that if and when City and Owner agree that such clarifications are necessary or appropriate, they may effect such clarifications through operating memoranda approved by the City and SLR.

With this Operating Memorandum, City and SLR wish to clarify certain conditions in the Project Approvals in order to carry out the intent of the City and SLR with respect to the design and development of the Project. Capitalized terms used in this Operating Memorandum shall carry the same definitions as those set forth in the Development Agreement.

A. PURPOSE.

The purpose of this Operating Memorandum is to identify a basic framework between the City and SLR, for allowing SLR to proceed with the recording of a Final Map with respect to the VTTM and to facilitate the construction of the improvements as contemplated under the terms of the Development Agreement. This Operating Memorandum will reduce certain uncertainties associated with the orderly development of the Project, provide for the effective and efficient development of public facilities, infrastructure and services, a wide range of housing types, densities and affordable housing options, and provide significant public benefits to the City and its residents. The parties acknowledge that a credit and reimbursement agreement will be duly approved and executed between the parties prior to the recording of the Final Map.

B. CLARIFICATIONS:
1) The Intersection of Dalidio Drive and:
a) Froom Ranch Wav - In accordance with Section 6. 03. 1( c) of the Development Agreement, the City hereby allows as an interim design alternative the conceptual intersection as depicted in the attached Exhibit A. The interim design alternative will be shown as an acceptable alternative on the Final Map prior to recording. 071928\ 10447582vlA 1

Followin rr January and upon 60 -day notice agrees I r
complete necessary acquisitions and begin construction of the Multilane Roundabout at Prado & Froom as approved in the Public Improvement Plans, prior to City Submission of Draft Determination
Following the 60 -day notice from City, SLR agrees to substantially complete construction of 1 iI!'! ut ( such that there are o conflicts with interchange 1 on before October
The City' s agreement hereunder shall be conditioned upon. SLR. posting a bond with the City in the amount reasonably estimated for the acquisition and construction of the ultimate roundabout improvements contemplated for said location. Nothing herein shall relieve SLR of the responsibility of constructing such improvements, including any costs associated with removal of any interim improvements, if necessary. b} AdjacentOff- Site Par - The City and SLR contemplate that off-site right of way acquisitions from either or both of the adjacent Embassy Suites and Madonna Plaza properties may impact existing parking on such properties, and the parties anticipate currently that such acquisitions are not likely to create a conflict with current zoning code minimum parking space requirements. In the event that a future conflict is identified, the City shall diligently review a Minor Use Permit submitted to i) reduce the parking requirements for such properties and/ or Lot 9 of the VTTM and/ or ii) allow shared parking between such properties with the goal that such off- site acquisitions will not inhibit future development of those properties or otherwise affect their development value. Nothing herein shall be deemed to be a pre -committal on the part ofthe City to approval such Minor Use Permit.

C) Madonna Road - The City will allow interim improvements to be constructed at the intersection of Dalidio Drive and Madonna Road that do not require off- site acquisitions from the adjoining U.S. Postal Office as the processing time for acquisition of federal property could unreasonably delay the project. Prior to approval of such interim improvements SLR shall complete the intersection design in accordance with its mitigation measures and conditions of approval and enter into an off-site acquisition agreement with the City which shall include an estimated schedule on --time performance measures.

Nothing herein shall relieve SLR of the responsibility for construction of its mitigation and conditions of approval requirements, including any costs associated with removal of any such interim improvement, if actually constructed and shall post bonds in an amount sufficient to construct SLR' s approved PIP improvements. d} Prado Road Interchange: Various Access/ Drainage/ Aesthetic area reservations on Hotel and office Lots - There shall be a reservation of easements, both temporary and permanent, to construct and maintain necessary structures, access easements, maintenance easements, flood control and treatments infrastructure and the Prado Road interchange, which shall minimize to the greatest extent feasible any permanent easements on the Hotel ( VTTM Lot ) and Office ( VTTM Lot 9) Lots. No slopes shall be constructed and no slope easements shall be reserved or required on VTTM Lots 8 or 9 with respect to the support of the contemplated Prado interchange/ bridge improvements. SLR shall work cooperatively with the City and 071928110447582vl4 2

CalTrans for the design and construction of the structures required for the Prado interchange/bridge improvements,, which such costs shall be included in the cost of the bridge and overpass ' improvements. The City shall reasonably consider SLR' s reservation of parking and access easements to Lot 303 under the proposed overpass unless the area is needed for implementation of the Prado Road Interchange or if such reservations would impair necessary flood conveyance/ treatment,, and subject to approval by CalTrans. SLR shall have the right to reserve easements for parking and access to Lot 303 under the proposed overpass ifreasonably feasible.

Regarding the Prado Road Interchange, the City agrees to notify and meet with SLR if any material changes occur that may affect the interface between the 'interchange and SLR properties, at key project mile stones, and City shall include SLR in the review of the Draft Environmental Determination, Draft Project Report, and Project Plans & Specification materials. The City agrees to accommodate meeting,, status updates, and information requests from SLR that are within its authority. The City will endeavor to include SLR in all relevant meetings it hosts with CalTrans, however nothing in this agreement should be construed to commit or obligate the State to attendance. 2) Left Turn Access to Retail and Hotel Lots - Mitigation measure T 1( i} requires access restrictions on Prado/Dalidio and Map Condition # 10 requires dedication of access rights to the City along Madonna, Dalidio, Prado, and Froom Ranch Way. The City agrees to reasonably consider the approval of design exceptions for left turn in only lanes/ pockets submitted by SLR, which shall not be unreasonably withheld, delayed, or conditioned except as required within the context of public health and safety and applicable standards and design guidelines. ul
16 3) Oversizing of Facilities & Infrastructure, including Off -Site and On -Site Roundabout Design and Protected Bike Intersections: Per Section 6. 02. 2 Oversizim4 o project Facilities & Infrastructure of the San Luis Ranch Development Agreement, the City will reasonably consider reimbursement and/ or fee credits for costs & expenses associated with oversized - public facilities including without limitation, Roundabouts and/ or Protected Bike Intersections design elements required by the City that are above and beyond the applicable express standards and/ or design guidelines.

For each design element, request for reimbursement and/ or fee credits shall be made in writing and include the following:
a. Identify FMAP #, Submittal #, & City Comment #.
b. Identify the applicable mitigation measure/ condition of approval, and the standard and/ or design guideline document associated with the oversized design element.

C. Identify the FMAP #, Page #, and provide a brief description of where and how the associated changes have been made.
d. Provide supporting explanation on how the design element is oversized. e. Provide a line item accounting of the cost difference between baseline requirement and oversized requirement.
4) Reimbursement of excess costs above SLR Fair Share Obligations I FL, OVR/Froom Ranch Way and Tank Farm and Higuera Right Turn — Section 5. 03. 2( e 071928\ 10447582v14 3

provides that in the event that SLR installs infrastructure improvements beyond its " fair share" obligations, then the City would " provide credits against any fees charged by the City for such improvements beyond the Project' s " fair share" obligation and to provide reimbursements, funded by Development Impact Fees paid by other developers, including traffic impact fees, or funded from other sources, but excluding sewer and water connection fees." With regard to Froom Ranch Way and LOVR Intersection Widening, SLR' s fair share is 20%, and with regard to Higuera & Tank Farm Road, SLR' s fair share is 5%. With respect to Higuera & Tank Farm Road, Mitigation measure T -1( g} requires a channelized 230' NB right turn pocket to be constructed as part of SLR offsite mitigation requirements. The parties acknowledge that it is unlikely that others shall construct such improvements. SLR has agreed that it will design, acquire right- of-way, and construct such improvements. The City, however, has concluded that these improvements were not included within the City' s Citywide Transportation Impact Fee in a manner that would allow the City to provide fee credits as contemplated by Section 5. 03. 2( e) of the Development Agreement. In light of the foregoing the parties agree as follows:
a) With the exception of Improvements at Froom & LOVR, the City shall present to City Council for consideration an update of the Citywide Transportation Impact Fee program 'incorporating the above described improvements and their costs, currently scheduled for July 2, 2019.
i) Costs for consideration of inclusion in the fee program shall be 0 limited to engineering, right of way acquisitionand construction. ii) Any general fund reimbursements that may arise as a result of inclusion in the fee program shall not be recommended for appropriation before fiscal year 2024- 25.
b) For Improvements at Froom & LOVR the City shall prepare the necessary Travel demand modeling & AB 1600 nexus studies and present to Council for consideration of inclusion into the fee program and corresponding development agreement amendments, currently scheduled for October 1, 2019, to include the following:
i) Costs for consideration of inclusion in the fee program shall be limited to only engineering, construction, and right of way acquisition of mitigation measure T -2( f). All costs associated with the protected bicycle intersection elements shall not be considered for inclusion in the fee program. ii) SLR shall provide line 'item construction cost estimates and corresponding schematic of improvements specific to mitigation measure T -2( f) excluding bicycle protected intersection elements.
iii) SLR shall fund, via a development services agreement, the necessary travel demand modeling & AB 1600 nexus studies. iv) Any general fund reimbursements that may arise as a result of inclusion in the fee program shall not be recommended for appropriation before fiscal year 202425.
071928\ 10447582v14 4

c) Ifthe Council Adopts the impact fee amendments as described above, SLR agrees to process an amendment of Sections 5. 03. 2( b)( 1)( i) and 5. 03. 2( b)( 2)( i) of the Development Agreement to include the amount of the increase in the Transportation DIF fee resulting from the City' s inclusion of such improvements in the Citywide Transportation Impact Fees as contemplated in section 4( a) ofthis Operating Memorandum ( i.e., the amount of change in the Transportation Impact Fees from the 2018 DIF Update to the amount of the new Transportation Impact Fees resulting from the City' s inclusion of such 'improvements in the Transportation Impact Fees) as an element of the Vested DIF ( i.e., the amount of the Vested DIF shall be increased by the change resulting from the inclusion of such improvements in the Citywide Transportation Fees). d) Ifthe Council Adopts the transportation impact fee amendment as described above SLR shall be entitled to transportation impact fee crediting for project costs as adopted within the updated transportation impact fee program. e) Any further requests for additions of eligible costs into the Citywide Transportation Impact Fee program shall require renegotiation of the Development Agreement.
5) Off -Site Dedications: The City agrees that the completion, bonding, or waiver, as provided in the Development Agreement, of Off -Site Dedications for purposes of the contemplated construction of improvements at the property shall be deemed, in all instances, to be a condition for the issuance of occupancy permits, and not building or construction permits as allowed under the Development Agreement, and to avoid undue delay, prejudice and additional costs to SLR. Further,, for purposes of completion of such Off -Site Dedications, SLR shall be deemed to have satisfied the same if: (i) the Off -Site areas to be acquired for dedication have been appraised; ( ii) a reasonable purchase offer has been made to the landowner based upon such appraisal-, and ( iii) the purchase offer has been rejected, refused or ignored. For avoidance of doubt, SLR agrees that ( 1) no rental units shall be rented and ( ii) there shall be no close of escrow to a future homebuyer of any for sale residential unit until the construction of such improvements has been completed, bonded for, or waived in accordance with the Development Agreement.

SLR shall include such restriction in any sales of undeveloped land to any future builders. 6) Extension of 101 off -ramp at LOVR: SLR EIR mitigation measure T -2( g) requires the extension of the SB left turn pocket at LOUR & US 101 SB Ramps, as described in the EIR. SLR has agreed to submit to CalTrans an alternative configuration of a two- lane offramp configuration in lieu of mitigation measure T -2( g) provided CalTrans accepts design exceptions as necessary to make a two- lane offramp configuration cost comparable to the improvements contemplated by mitigation measure T -2( g). If CalTrans does not accept the design exceptions necessary to make the two-lane offramp configuration cost comparable to the improvements described in mitigation measure T -2( g) as submitted by SLR (the " Submission"), the City shall accept implementation of the Submission as SLR' s full and complete satisfaction of such mitigation measure.
7) Relocation of Small Billboards for Prado Interchange: SLR and City agree that under the terms of the Agricultural Conservation Easement approved by the City, that the small billboards located at the site of the proposed Prado Interchange are Improvements which the terms of the easement allowed to be relocated. To the extent that such relocation requires further review and approval of the City under City Ordinance Section 15. 40. 600, the City shall 071928\ 10447582vl4 5

not unreasonably delay such review by the Community Development Director under Section 15. 40.480 and/or the Architectural Review Commission if so required. 8) Offer of Dedication Large Billboard Location: SLR shall dedicate the portion of Lot 309 required for the Prado Interchange/ Southbound ramp in accordance with the express provisions of Section 6. 02. 3( b) of the Development Agreement. SLR agrees to submit a draft ordinance for City Attorney and City Manager review, and for Council consideration for the sole and limited purpose of relocating the Large Billboard on the Dalidio property. 9) Relocation of Very Low Income Residential Units: SLR proposes to work with Peoples' Self -Help Housing for construction of the Project' s affordable housing units, as follows: the 26 units proposed to be located on NG -30 would be relocated to VTTM Lot 7 and constructed in conjunction with 34 units proposed thereon as part of mixed use project on VTTM Lot 7. The City shall reasonably consider and diligently process an application to facilitate such proposal. In the event that SLR determines that such proposal is infeasible or ifthe City does not approve the moving of the 26 affordable units from the NG -30 site, then SLR will build the 26 affordable units on NG -30 and shall either ( i) pay the affordable housing fee in lieu of construction of the 34 units or ( ii) construct the 34 units on or offsite as allowed by the Development Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the last written date below.

MESM
Date:

Date:

Derek" Jol J ( son City Manager
g,
Walter Heiberg, Manager
071928\ 10447582v14 6

RECORDING REQUESTED BY AND WHEN
RECORDED MAIL TO:

City of San Luis Obispo
c/o City Clerk
990 Palm Street
San Luis Obispo, CA 93401
Recording Fees Exempt Pursuant to
Government Code§ 27383
2021014110
Tommy Gong San Luis Obispo - County Clerk-Recorder
02/23/2021 11:11 AM

CONFORMED COPY
Copy of document recorded.

Has not been compared with original.

SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S E

FIRST ADMINISTRATIVE AMENDMENT

TO DEVELOPMENT AGREEMENT

THIS FIRST ADMINISTRATIVE AMENDMENT TO DEVELOPMENT
AGREEMENT (the' First Administrative Amendment") is made in San Luis Obispo County, California as of February 17, 2021, by and between the City of San Luis Obispo, a California general law city ("City"), and MI San Luis Ranch LLC ("SLR"). The City and SLR may be referred to herein as a "Party" or, collectively, as the "Parties."

RECITALS
A. The City and SLR entered into that certain Development Agreement dated on or about September 18, 2018 (the "Development Agreement"), which was recorded against certain real property located within the City as described in the Development Agreement (the "Property") as Instrument No. 2018039139 in the San Luis Obispo Recorder's Office. All terms not specifically defined in this First Administrative Amendment shall have the meanings ascribed to them in the Development Agreement.

B. Section 9.04 of the Development Agreement provides that minor modifications to any Project Approval may be approved by the Planning Director through an Administrative Amendment where such amendments or modifications are both minor and substantially conform to the material terms of the Development Agreement.

C. In addition, Section 9.03 of the Development Agreement provides that because the implementation of the Project requires a close degree of cooperation between the Parties certain refinements and clarifications may be appropriate to facilitate the proposed development and that when the Parties agree that such clarifications are necessary or appropriate, the Parties may effect such clarifications through operating memoranda approved by the Parties. The Parties entered into two prior Operating Memoranda setting forth clarifications to the Project Approvals.

D. The Parties desire to enter into this Administrative Amendment to set forth the Parties' understanding and agreement with regard to changes in the location and quantity of affordable housing units within the Project, as approved by the Planning Commission (Resolution #PC-I 006-20) and City Council (Resolution # 11192), which changes the Planning Director has determined are minor and substantially conform to the material terms of the 071928112224873v3

Development Agreement and the Applicable Law and are appropriate to be memorialized in an Administrative Amendment.

NOW, THEREFORE, in consideration of the foregoing Recitals, which are hereby incorporated into the operative provisions of this First Administrative Amendment by this reference and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City and the SLR agree as follows:

Section 1. Affordable Housing Development:
(a) As of the date of this First Administrative Amendment, SLR has caused the Final Map for Tract 3150 (NG-30) to be recorded as Instrument No. 2020064761 in the San Luis Obispo Recorder's Office, and the City has approved a re-subdivision of VTTM Lot 7 as Tentative Tract Map 3142 ("TTM 3142").
(b) Tract 3150 Obligations. As described in the prior Operating Memoranda, with the approval of TTM 3142, the obligation to develop 26 very-low income units within Tract 3150 has been transferred to TTM 3142. The 26 units within Tract 3150 previously contemplated as affordable units may now be offered as market rate units. Tract 3150 shall continue to include I 0 workforce housing units, as follows: (1) 6 efficiency units, of which two shall be ready for occupancy prior to the completion of the 60th unit (in building #3 ), one shall be included in each of building #4, building #5, and building #6; (2) 2 units in the stacked flat units, of which one will be ready for occupancy prior to the completion of the 48th unit (in building #4) and the second in the last building; and (3) 2 units in the town home units, of which one will be ready for occupancy prior to completion of the 60th unit and the last by completion of the 75th unit. ( c) Tract 3142 Obligations. Tract 3142 shall contain a minimum of 64 affordable housing units with a mix of affordability at both the low- and very low-income levels. The timing and other development requirements shall be as set forth in an Affordable Housing Regulatory Agreement, which the Parties shall negotiate in good faith prior to recordation of the Final Map for Tract 3142. As set forth in Operating Memorandum Number 2, SLR agrees that it will transfer the Affordable Lot to the Affordable Developer subject to a deed restriction consistent with Operating Memorandum Number 2 and the Project Approvals. The Affordable Housing Regulatory Agreement will include a performance schedule for the Affordable Developer and limitations on the amount of commercial square footage that can be occupied within Tract 3142 prior to securing of financing for such affordable housing units.

Section 2. Miscellaneous Provisions.
(a) Entire Agreement. Except for the Development Agreement which this First Administrative Amendment amends, and the prior Operating Memoranda, this First Administrative Amendment represents the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether oral or written, between the Parties with respect to the matters contained in this First Administrative Amendment.
2 07!928\12224873v3

(b) Section Headings. The section headings contained in this First Administrative Amendment are for convenience and identification only and may not be deemed to limit or define the contents to which they relate.
(c) Counterparts. This First Administrative Amendment may be executed in any number of counterparts, each of which will have the same force and effect as if executed in the form of an original single document.
(d) Waiver. No waiver of any provision of this First Administrative Amendment will be effective unless in writing and signed by a duly authorized representative of the Party against whom enforcement of a waiver is sought.
(e) everability. If any term, covenant, condition or provision of this First Administrative Amendment, or the application thereof to any person or circumstance, is held by a court of competent jurisdiction or rendered by the adoption of a statute by the State of California or the United States invalid, void or unenforceable, the remainder of the terms, covenants, conditions or provisions of this First Administrative Amendment, or the application thereof to any person or circumstance, will remain in full force and effect and will in no way be affected, impaired or invalidated thereby; provided that the invalidity or unenforceability of such provision does not adversely affect the benefits accruing to, or the obligations imposed upon, any Party to this First Administrative Amendment of the Development Agreement. (f) No Reliance on Other Parties. All Parties to this First Administrative Amendment declare that, prior to the execution of this First Administrative Amendment, they have informed themselves of sufficient relevant data, either through experts or other sources of their own selection, and have sought and obtained legal counsel, in order that they might intelligently exercise their own judgment in evaluating the contents of this First Administrative Amendment and making the decision to execute it. The Parties each represent and acknowledge that in executing this First Administrative Amendment, they do not rely and have not relied upon any representation or statement not set forth herein made by any other Party to this First Administrative Amendment or their respective legal counsel with regard to the subject matter, basis or effect of this First Administrative Amendment. (g) Con truction. The provisions of this First Administrative Amendment will be liberally construed to effectuate its purpose. The language of this First Administrative Amendment will be construed according to its plain meaning and may not be construed for or against any Party, as each Party has participated in the drafting of this First Administrative Amendment and has had its legal counsel review it. Whenever the context and construction so require, all words used in the singular will be deemed to be used in the plural and vice versa. (h) uccessors and Assigns. This First Administrative Amendment and the Development Agreement that it amends are binding on and inure to the benefit of the Parties and their respective legal representatives, successors and assigns. (i) Governing Law. The validity and interpretation of this First Administrative Amendment is governed by the laws of the State of California without giving effect to the principles of conflict of laws.
3 071928112224873v3

U) Authorizations. Each Party certifies and warrants that all individuals executing this First Administrative Amendment and other related documents on its behalf have the capacity and have been duly authorized to do so.
(m) Impact of first Administrative Amendment on Development Agreement. Unless otherwise specifically amended by this First Administrative Amendment, all provisions of the Development Agreement and the Operating Memoranda are hereby ratified and remain in full force.

IN WITNESS WHEREOF, the Parties to this First Administrative Amendment have each executed this First Administrative Amendment as of the date first written above.

CITY:

CITY OF SAN LUIS OBISPO,
a municipal corporation of the State of California
~?/)- By: ~
Michael Codron
~
Community Development Director
DEVELOPER:

MI SAN LUIS RANCH LLC
a Delaware limited liability company
By: MI ENTITLEMENT IV, LLC
a Delaware limited liability company
Its: Sole Mer,' and Manager
By, M~k- ?-w
Donald R. Faye
Its: Authorized Agent
4 071928\ 12224873v3

A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.

ST A TE OF CALIFORNIA
coUNTY oF otu') D /eqo ._,
)
) s:
)
On F-e-bvwary J'1 2021 before me, _J;;;......;;_U.....;.h---'-in=----=&~_F_:_ri----"'~=----1_- _______ _ Notary Public (insert name and title of the officer),
personally appeared -- /)onald- ll, Fay<? --- . who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature:--~-,---------~~~--------
[Seal]
eeee+oeeooooi
JANINE FREI J i ~•"'. ··· '""' San Diego County '""' ""'"'"" : ! • . Commission~ 2205527 My Comm. Expires Jul 16, 1021
071928112224873v3
5

A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.

ST A TE OF CALIFORNIA )
COUNTY OF S,11\1) Wb 0bi::717O ~ ss:

On 1---l 1,,'1---}1--\ , 2021 before me, _f?,_._L-_· _(A)_.,_)( ________ _ Notary tublic (insert name and title of the officer), personally appeared Hi v:V\t?l--c.A Cod YO n . who proved to me on the basis of satisfactory evidence to be the person( s) whose name( s) isYare subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
oaoooooooooor • , , R. L. COX f • .... , • • Notary Public• caltfornia ~ :· ~ San Luis Obispo County ~
•• Commission# 2299253 I Signatur : -++---l-'---=----+-"<-----1------ ,. My Comm, Expires Jul 29, 2023 , [Seal]
6 07!928112224873v3

Exhibit F
Affordable & Workforce Housing Plan
Affordable Housing Plan
The San Luis Ranch project will encourage long term housing affordability by including design and development strategies that provide lower cost housing, by including a range of housing sizes and types that are not typically provided in the community, including deed-restricted workforce units, and by providing lower income inclusionary units as required by the City Inclusionary Housing Ordinance. Since the price of houses over time is most closely related to the size of the dwelling unit, the size of the lot, and costs of maintenance, the project has concentrated on lowering the overall size of marketrate dwelling units, and reducing lot size for market rate units.

Within each of the residential zones there will be dwelling unit sizes ranging from 220 square foot studios to 2,200 square foot single family detached units. Lot sizes range from air-space studios to 3,200 square feet. Consequently, the average size of the units and lots across the development is far smaller (less than the size) of existing residential housing stock in the City.

Maintenance expenses, to the extent feasible, may be included inaCommunity Facilities District toreduce the necessity for Homeowner’s Association fees and other costs associated with that maintenance and governance structure. Landscape maintenance and cost of water and utilities will also be reduced through the use of drought tolerant landscaping, smaller lots and other sustainable and cost reducing features.

The City’s Housing Element provides incentives to develop housing in a denser pattern, with smaller unit sizes to encourage affordability across the low, moderate and workforce income ranges. These incentives include reduced inclusionary housing requirements for denser projects and for projects with lower dwelling unit square footages. Conversely, more inclusionary housing is required for projects with dwelling units that exceed unit sizes of 2,000 square feet. Table 2A of the Housing Element contains these adjustment factors.

According to the City’s Inclusionary Housing Ordinance and Table 2A, the inclusionary housing requirement for the residential component of the San Luis Ranch project is a total of 34 units, with 26 very low, 4 low, and 4 moderate income units. These inclusionary units will be integrated throughout the project in the single-family detached, townhome, studio, 1 and 2-bedroom condominium products. In addition, the commercial component of the project requires a total of 34 inclusionary units. The project proposes to meet the commercial component requirement by either constructing these units on-site or paying an affordable housing in-lieu fee.

City Residential Requirements
The San Luis Ranch Specific Plan includes locations for on-site units to fulfill the affordable housing requirement for the residential development planned for the Specific Plan Area. Including residential uses only, theSpecificPlanArea must provide a total of 34 deed restricted affordable units in the development, and must provide at least 5% low and 10% moderate income affordability per Table 2 of the Housing

San Luis Ranch March 6, 2018
Affordable & Workforce Housing Plan Page 2 of 7
Element. Any additional units provided above the inclusionary requirement could be sold or rented at market rate. See residential calculation below.

Residential Inclusionary Requirement Calculation
of
Units
Density
units/acre)
Unit
S.F.

Build 5%
very low
income)
Build 10%
moderate
income)
Total Base
Required
Adjust
Factor
Required
Inclusionary
Units
200 NG-30 1,000 10 20 30 0 0
100 NG-23 1,300 5 10 15 0.25 3.75
200 NG-10 1,500 10 20 30 1 30
80 NG-30 NA
Total 34
City Commercial Requirements
The commercial uses envisioned in the SpecificPlanArea will be required toprovide an additional 34 units of affordable housing. The commercial inclusionary calculations for the San Luis Ranch Specific Plan are as follows:

Commercial Inclusionary Requirement Calculation
Use Acreage x 2
Required
Inclusionary
Retail 9.45 2 18.9
Hotel 3.5 2 7
Office 3.7 2 7.4
Total 34

San Luis Ranch March 6, 2018
Affordable & Workforce Housing Plan Page 3 of 7
The San Luis Ranch project will address housing affordability in several ways, most notably through the design itself, which includes medium and high-density housing with lot sizes and floor areas that are well below the typical average for existing single-family detached units in the community.

The City’s Inclusionary Housing Requirement will be addressed through deed restrictions on very low, low income and moderate-income units to be constructed by San Luis Ranch, and/or provided by dedicating and donating improved land to a non-profit affordable housing provider. However, should an affordable housing provider fail to construct the units, the obligation to provide for the 34 deed-restricted affordable housing units remains with San Luis Ranch to complete. The following highlights are summarized from the Specific Plan:

Mix of Residential Densities and Small Lots. There is an intentional mix of residential densities in the San Luis Ranch project that includes a range of small lot sizes, attached townhomes, and multifamily dwellings, with an emphasis on higher density units. Floor plans ranging from 220 to 2,200 square feet in studio, 1 BR/ 1BA, 2BR/1BA, 2BR/ 2BA and 3BR/2BA configurations. The average unit size across the entire project is less than 1,330 square feet.

NG-10 Zoning. The San Luis Ranch Specific Plan includes 200 small-lot, single family units, which are intended to meet the needs of young professionals, empty nesters and young families. These smaller units, ranging in size from 1,300 square feet to 2,150 square feet, have one-or two car garages with limited guest parking spaces. This parking reduction is justified by the lower expected occupancy for these smaller units and the multimodal features of the overall development. The four inclusionary moderate-income units will be provided on in Phase 1 of the project on Lots 53, 64, 174, and 191.

NG-23 Zoning. TheSan Luis Ranch SpecificPlan includes 100 attached and detached townhome units, close to services and open spaces. Units will range in size from 1,300 square feet to 2,110 square feet.

Four of these 2- bedroom units will be deed restricted forlow-income families. The inclusionary units will be provided on Lots 261, 267, 283, and 293.

NG-30 Zoning. Finally, the San Luis Ranch Specific Plan includes 272 studio, one to three-bedroom multi-family units adjacent to open space and Madonna Road. Like other portions of the project, this multi-family zone will be directly served by an on-street transit stop and located within easy walking distance of nearby shopping. 26 of these units will be deed restricted as inclusionary housing for very low income families. Inclusionary and other multi-family units may be either dedicated to an affordable housing provider or managed by the San Luis Ranch. Multi-family unit sizes will range from 220 square foot studios to 1,100 square foot units for larger families.

Neighborhood Commercial. The 19.6-acre Neighborhood Commercial portion of the Specific Plan area will generate a requirement for 34 additional inclusionary units. Development of this portion of the project site will be based on market demand. Approximately half of the NC area is currently located in ALUP Safety Zone S1-b that precludes residential development; however, the area outside of the S1-b zone can accommodate the required 34 units. Alternatively, the project may pay an affordable housing in-lieu fee per the Inclusionary Housing Ordinance and Table 2 of the Housing Element to satisfy this requirement.

Overall, the project will provide a total of twenty-six (26) very low, four (4) low, and four (4) moderate Income inclusionary units. The inclusionary housing product mix has been intentionally skewed toward

San Luis Ranch March 6, 2018
Affordable & Workforce Housing Plan Page 4 of 7
very low-income units to ensure that this income group is adequately represented in the project, and to recognize that the moderate-income groups have adequate market rate opportunities in the NG-10, NG23 and NG-30 neighborhoods. Table 2 shows the distribution of the affordable units, and Exhibit 1 shows the location of the moderate and low-income units. Distribution of the 26 very low-income units will be included in NG-30 neighborhood as described below.

Inclusionary Housing Phasing Plan
Neighborhood Distribution
Program NG-10 NG-23 NG-30 Commercial Total
Moderate Income (Sale) 4 4 8
Low Income (Sale) 4 4 8
Very Low Income (Rental) 26 26 52
Units in Phase 4 4 26 34 68
Total - Inclusionary Very Low 52
Total - Inclusionary Low 8
Total - Inclusionary Moderate8
Total 68
The Commercial Development and associated Inclusionary Housing Requirement will be determined by the Community Development Department of the time of submittal of detailed plans for that component of the project. This requirement will be met either by development of units within the commercial project, off-site construction, or by payment of affordable housing in-lieu fee, or a combination thereof.

Inclusionary Housing Program Synopsis:

The affordable housing located within the residential portion of the San Luis Ranch Specific Plan Area will provide 34 units on site for very low, low, and moderate income households. The applicant is committed to including at least 5% very low income units in the project. Per Section 17.90.040.D of the City's Affordable Housing Incentives which follows State law, a developer that agrees to construct 5% of the total units of a housing development for very low income households qualifies for a 20% density bonus. In this case, 5% of the allowed 500 units under the LUCE requires 25 very low income units. The project is proposing 26 very low income units.

The tables above show the required inclusionary units as well as the proposed density bonus units. Median and low income units (SFR and Townhomes) are intended to be for sale units. The applicant willretain the flexibility to either rent or sell the very low income units.

Deed-restricted, affordable units will be located throughout the residential portion of the Specific Plan Area, as illustrated in the above table.

San Luis Ranch March 6, 2018
Affordable & Workforce Housing Plan Page 5 of 7
Workforce Housing Plan
The City of San Luis Obispo has a recognized need for workforce housing (121-160 of Area Family Median Income). The San Luis Ranch Specific Plan aims to help meet the City’s housing needs by providing a highly desirable new home type to the San Luis Obispo housing market: small lot (1,000 to 3,200 square feet) single family and multi-family housing types.

A primary goal of the City of San Luis Obispo, realized and implemented through the San Luis Ranch project, is to create workforce housing and increase the supply of housing available to local employees. A special five-point program will be provided to create workforce housing and increase the supply of housing available to local employees. This program includes 1) 14 deed-restricted workforce housing units for eligible households earning 121-160% of the Area Median Income. Two of these workforce housing deedrestricted units will be located in the NG10 Zone on Lots 105 and 121, two will be located in the NG23 Zone on Lots 251 and 257, and ten will located in the NG30 Zone (See Exhibit 1 for unit locations); 2) providing local priority preferences forindividuals who work within the City of San Luis Obispo to purchase or rent a residence within the Project; 3)) Owner Occupied Restrictions; 4) “Local Heroes” discount for public safety, hospital workers and teachers; and 5) participation in the City Equity Share program, These housing programs seeks to target the Project to local employees, reduce the influence of investors in the limitation of housing choice and availability, and provide for 14 deed-restricted units.

Notwithstanding anything set forth below, all preferences and/or priorities for workforce housing units will be administered in accordance with, and subject to, all applicable federal, state and local laws and regulations, including Fair Housing rules.

Subject to applicable law, the elements of the workforce housing programs are as follows:

Local Preference (“SLO Workers First”). Program 10.4 of the City’s Housing Element encourages residential developers to “…sell orrent their projects to those residing or employed in the City first before outside markets.” Further, the City and project applicants recognize that one of the principal reasons for the designation of additional residential land in the community in the 2014 Land Use and Circulation Element update was to address the current jobs-housing imbalance. One direct and effective way ofachieving this is toprovide priority forexisting employees torent or purchase residenceswithin the Project. To that end, San Luis Ranch will give first preference to rent or purchase a residence within the Specific Plan area to local employees identified on the interest list. These areas include the City’s corporate limits and areas outside the City limits such as Cal Poly, California Men’s Colony, Cuesta College, agricultural lands within the Edna Valley area and business parks on South Broad Street. Specifically, for purposes of this program, the term “local employees” shall include individuals who are employed in business that are located in geographic areas that are customarily included in the City’s annual jobs-housing balance analysis in its General Plan Status Report, including the following zip codes: 93401, 93405 and 93407. New employees to businesses in these geographic areas with bona fide employment offers will be considered “local employees” as well. San Luis Ranch will maintain and update the interest list through full build-out of the Project. San Luis Ranch will operate and administer this program as follows:
a. San Luis Ranch shall maintain the interest list and shall separate and prioritize names of local employees based on interest in product type.

San Luis Ranch March 6, 2018
Affordable & Workforce Housing Plan Page 6 of 7
b. When product becomes available, usually 270-360 days prior to certificate of occupancy assuming a 180-day construction period), San Luis Ranch shall notify those individuals of the opportunity to purchase a residence on a lottery basis. Once notified, those individuals shall have approximately 60 days to get pre-qualified to purchase the residence and to provide San Luis Ranch with proof that the individual is a local employee and the time notice (i.e. paycheck or bona fide offer of employment from a local employer.) c. If an individual fails to get pre-qualified or fails to provide San Luis Ranch with proof of local employment within the time periods above, then San Luis Ranch may remove or put that name at the end of the interest list.
d. San Luis Ranch agrees not to sell any units within the Project to any individual without first offering the unit to a local employee who is on the interest list for that product type.

Upon exhausting all local employees on the interest list for a product type, San Luis Ranch agrees to give priority in the sale of such units to individuals employed in the County, and finally to individuals from outside the county.

Nothing herein shall preclude San Luis Ranch from notifying multiple individuals with the opportunity to purchase a residence and prioritizing the purchase and sale based on a lottery basis. Nothing herein shall preclude San Luis Ranch from taking all reasonable actions necessary in order to facilitate the sale of units within the Project provided such actions are consistent with the “ SLO Workers First” program described herein. San Luis Ranch shall, upon request, update the City on its implementation of this program and provide City with the interest list and proof of employment for all sales made under this program.

City and San Luis Ranch acknowledge that this program described above will accomplish three important objectives: 1) use new housing to address the current imbalance between existing jobs and housing; 2) ensure that, to the maximum extent practicable, that the increased housing in San Luis Obispo results in a decline in the current commute traffic; and, 3) reduce competition from outside buyers in the initial offering and sales.

Owner-Occupancy Restrictions. San Luis Ranch agrees to include restrictions in the purchase agreement and Covenants Conditions and Restrictions (CC& Rs) for all single family detached units (NG-10) and (NG-23) (total of 300 dwelling units) requiring these units to be restricted to owner-occupants for the first five years after sale. In the case of units with Accessory Dwelling Units (ADUs), the Principal Dwelling or the ADU will need to be occupied by the property owner. The final form of these agreements will be determined at the time of development of the first final map, and will provide for appropriate monitoring and enforcement. Enforcement and monitoring of the owner occupancy requirement on all single-family dwellings will be controlled by the San Luis Ranch Owners’ Association, or in coordination with a qualified housing non-profit.

Local Heroes: San Luis Ranch will offer a special program for buyers who are considered “Local Heroes.” These Local Heroes are Police, Firefighters, Active and Retired Military, Teachers, EMTs, Nurses and City or County Employees. Qualification for this incentive is verified on the loan application reviewed by our Preferred Lender. (This provision is included to ensure consistent review parameters.

Buyers are not obligated to finance home purchase with Preferred Lender.) Military, Active or

San Luis Ranch March 6, 2018
Affordable & Workforce Housing Plan Page 7 of 7
Veterans submit separate evidence. San Luis Ranch will provide a minimum $1,500 incentive that is credited to the buyer at closing and can be used at the design center for upgrades and/or closing costs.

Revised Report
Fiscal Impact Analysis
of the Proposed
San Luis Ranch Project
Prepared for:

City of San Luis Obispo
Prepared by:

Applied Development Economics, Inc.
3527 Mt. Diablo Blvd. #248, Lafayette, CA 94549 n 925.934.8712 www.adeusa.com
April 26, 2024 (rev. October 31, 2024)

Applied Development Economics , Inc.

TABLE OF CONTENTS
SUMMARY................................................................................................................ 1 PROJECT DESCRIPTION ............................................................................................. 5 FISCAL ANALYSIS ..................................................................................................... 8 CITY BUDGET AND COST/REVENUE FACTORS.......................................................................... 8 PROJECT REVENUES .......................................................................................................... 11 PROJECT SERVICES COSTS................................................................................................. 15 COMPARISON with 2017 PROJECT............................................................................. 16 APPENDIX.............................................................................................................. 19

LIST OF EXHIBITS AND TABLES
Exhibit A: Project Impact by Land Use………………………………………………………………………………………………………3 Exhibit B: Project Impact by Phase……………………………………………………………………………………………………………4 Table 1: San Luis Ranch Project Description…………………………………………………………………………….………………6 Table 2: Affordable Units…………………………………………………………………………………………………………………………..6 Table 3: City of San Luis Obispo FY 2016-2017 Revised General Fund Budget………………………………………8 Table 4: Fiscal Model Revenue and Expenditure Adjustments………………………………………………………………….9 Table 5: Per Capita Revenue and Cost Factors……………………………………………………………………………………….11 Table 6: Retail Taxable Sales Calculations………………………………………………………………………………………………13 Table 7: Conceptual Estimate of Proposed Project Retail Center and Onsite Household Spending………14 Table 8: San Luis Ranch Project Description (2017)………………………………………………………………………………16 Table 9: Project Impact by Phase for 2017 Project………………………………………………………………………………..17 Table 10: Cumulative Project Impact by Phase for 2017 Project………………………………………………………….18

Applied Development Economics | Page 1

SUMMARY
The fiscal analysis of the San Luis Ranch Development Project (Proposed Project) has been prepared on behalf of the developers to determine if the project would negatively impact the City of San Luis Obispo operating costs and revenues and what level of mitigation would be needed to address the impacts. The project design has gone through several iterations and was originally analyzed in a fiscal report in 2017, which was revised in 2018 following renegotiation of the City/County Master Tax Sharing Agreement. This prior project design (2017 Project) included 580 dwelling units and 370,000 sq. ft. of commercial space. The Proposed Project now includes 923 units and 238,100 sq. ft. of commercial development. In addition, the Agricultural Heritage site is now anticipated to be run as a private business rather than a non-profit activity, which affects the tax status of that portion of the development.

The analysis is focused on annual General Fund operating revenues and costs as shown in the FY 2023-25 City Financial Plan, and does not address capital costs, one-time entitlement fees, or impacts to the City’s enterprise funds. The cost analysis reflects levels of service funded in the FY 2023-24 budget and represents citywide cost averages. The analysis distinguishes impacts by phase, but does not include inflationary adjustments for changes in costs and revenues over time.

The project’s residential units would be built at three density levels, designated Low-Medium Density, Medium Density and High Density. The Proposed Project would provide 92 affordable units, mostly in the High Density category. In addition, the project includes a commercial center with 7,000 sq. ft. of building space, an office development of 80,000 sq. ft. and a 200-room hotel, as well as 7.4 acres of active park space and 7.4 acres of natural open space. The site would also retain 52.7 acres of agricultural land, including an Agricultural Heritage Center maintained by a private lessee. The project is estimated to house 2,058 residents at full build out and support 446 jobs onsite. The project would be built in six phases over approximately a ten year period.

At full build out, the project is estimated to generate about $3.43 million per year in General Fund revenues and $2.67 million per year in municipal service costs ($2023). The annual cost/revenue surplus of about $758,440 averages $653 per unit (including the 238 equivalent dwelling units (EDU) in the non-residential development) (Exhibit A). (Note: As of 10/31/24, 120 multifamily units are planned to be owned by Cal Poly and would not generate property tax for the City or County. This would reduce the total revenues and net fiscal gain to the City by $75,300). It should be noted that the City has made investments and anticipates additional future investments in circulation infrastructure and other public facilities that benefit the proposed project site. At the discretion of the City Council, any positive net revenue generated by the project may be used to service debt for these public investments that are not funded through direct development impact fees.

Most of the residential units would be built in the first three phases, with an additional multifamily rental complex in Phase 6. The ownership units at all densities show a small positive fiscal impact while the rental units create a negative impact. The hotel would be built in Phase 4 and represents the single highest fiscal net revenue of any of the land uses in the project. The office development would

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be built in Phase 5 and produces a neutral fiscal impact (Exhibit A). The retail commercial development in Phase 6 would also produce a positive fiscal benefit. Exhibit B shows the cumulative impact of the project as the phases progress.

In 2017, this project was estimated to generate just less than $1 million in fiscal gain for the City annually. One difference in the approach is that the larger retail center is estimated draw sales away from existing centers in San Luis Obispo, based on the retail analysis conducted in 2014 and 2017.

Therefore, the net sales taxes are lower per sq. ft. than would otherwise be expected. However, the land owner has also indicated that they have been unable to find a retail developer willing to construct such a large center on the site. If so, the full fiscal benefit from the 2017 project design is likely not attainable.

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Exhibit A: Project Impact by Phase
BUDGET CATEGORY TOTAL PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5 PHASE 6

REVENUES
Taxes
Property Tax $605,026 $159,463 $61,096 $153,807 $51,927 $28,989 $149,744 Property Tax in lieu of VLF $349,060 $93,163 $35,741 $85,087 $30,226 $17,005 $87,838 Sales Tax: General $395,808 $47,881 $18,987 $123,141 $124,684 $2,168 $78,948 Sales Tax: Measure G $593,712 $71,821 $28,480 $184,712 $187,026 $3,252 $118,422 Sales Tax: Public Safety $8,747 $1,058 $420 $2,721 $2,756 $48 $1,745 Use Tax: County Pool $57,194 $6,919 $2,744 $17,794 $18,017 $313 $11,408 Transient Occupancy Tax $679,010 $0 $0 $0 $679,010 $0 $0 Utility Users Tax $194,521 $34,673 $14,535 $54,272 $19,481 $10,470 $61,090 Franchise Fees $63,160 $11,258 $4,719 $17,622 $6,325 $3,400 $19,835 Business Tax Certificates $39,157 $0 $0 $0 $10,648 $27,211 $1,299 Real Property Transfer Tax $35,244 $9,642 $3,699 $9,447 $2,190 $1,232 $9,033 Cannabis Tax $47,396 $10,167 $4,262 $15,199 $0 $0 $17,767 Service Charges
Recreation Fees $87,090 $18,682 $7,832 $27,929 $0 $0 $32,647 Other Charges for Services $68,166 $11,173 $4,684 $27,929 $1,320 $3,374 $19,686 Other Revenue
Fines and Forfeitures $4,802 $929 $390 $1,455 $110 $281 $1,638 Interest Earnings and Rents $7,247* $1,088 $430 $1,650* $2,413 $234 $1,432 Other Revenues $191,469 $36,512 $15,306 $57,546 $4,976 $12,717 $64,412 Transfers in $0 $0 $0 $0 $0 $0 $0
TOTAL REVENUES $3,426,809* $514,431 $203,323 $780,311* $1,141,108 $110,694 $676,942

EXPENDITURES
General Government $356,666 $68,681 $26,856 $100,631 $40,214 $14,597 $105,686 Police $742,094 $132,685 $55,620 $212,352 $74,550 $32,154 $234,732 Fire $602,374 $129,754 $51,907 $162,185 $56,313 $30,836 $171,379 Community Services Admin $32,666 $6,398 $2,682 $9,565 $2,839 $0 $11,181 Parks & Rec $243,099 $47,617 $19,961 $71,185 $21,127 $0 $83,209 Community Development $68,706 $12,247 $5,134 $19,169 $6,881 $3,698 $21,577 Public Works $456,371 $81,347 $34,100 $127,330 $45,706 $24,565 $143,324 Park and Open Space Maintenance $57,023 $23,983 $0 $33,040 $0 $0 $0 Utilities - Solid Waste $46,806 $2,073 $869 $3,245 $36,338 $626 $3,653 Transfers Out $62,564 $9,048 $3,793 $14,162 $16,888 $2,732 $15,941 TOTAL EXPENDITURES $2,668,369 $513,833 $200,922 $752,865 $300,858 $109,208 $790,683 TOTAL BUDGET NET (DEFICIT)/ SURPLUS $758,440* $598 $2,400 $27,446* $840,251 $1,486 ($113,741) TOTAL BUDGET NET (DEFICIT) PER UNIT $653* $3 $29 $84* $7,002 $19 ($322) Source: ADE, Inc. *If 120 units are owned by Cal Poly, revenue figures in Phase 3 and the total would be reduced by about $75,300.

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Exhibit B: Cumulative Project Impact by Phase
BUDGET CATEGORY PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5 PHASE 6

REVENUES
Taxes
Property Tax $159,463 $220,559 $374,366 $426,293 $455,282 $605,026 Property Tax in lieu of VLF $93,163 $128,904 $213,991 $244,217 $261,222 $349,060 Sales Tax: General $47,881 $66,867 $190,009 $314,692 $316,860 $395,808 Sales Tax: Measure G $71,821 $100,301 $285,013 $472,038 $475,290 $593,712 Sales Tax: Public Safety $1,058 $1,478 $4,199 $6,955 $7,003 $8,747 Use Tax: County Pool $6,919 $9,662 $27,456 $45,473 $45,786 $57,194 Transient Occupancy Tax $0 $0 $0 $679,010 $679,010 $679,010 Utility Users Tax $34,673 $49,208 $103,480 $122,961 $133,432 $194,521 Franchise Fees $11,258 $15,977 $33,599 $39,925 $43,324 $63,160 Business Tax Certificates $0 $0 $0 $10,648 $37,858 $39,157 Real Property Transfer Tax $9,642 $13,342 $22,789 $24,979 $26,211 $35,244 Cannabis Tax
Service Charges $0 $0 $0 $0 $0 $0
Recreation Fees $18,682 $26,514 $54,443 $54,443 $54,443 $87,090 Other Charges for Services $11,173 $15,857 $43,786 $45,106 $48,480 $68,166 Other Revenue $0 $0 $0 $0 $0 $0
Fines and Forfeitures $929 $1,319 $2,774 $2,884 $3,165 $4,802 Interest Earnings and Rents $1,088 $1,518 $3,168 $5,581 $5,815 $7,247 Other Revenues $36,512 $51,818 $109,364 $114,340 $127,057 $191,469 Transfers in $0 $0 $0 $0 $0 $0
TOTAL REVENUES $514,431 $717,754 $1,498,065* $2,639,173 $2,749,867 $3,426,809*

EXPENDITURES
General Government $68,681 $95,537 $196,169 $236,383 $250,980 $356,666 Police $132,685 $188,305 $400,658 $475,208 $507,362 $742,094 Fire $129,754 $181,661 $343,847 $400,160 $430,996 $602,374 Community Services Admin $6,398 $9,080 $18,646 $21,485 $21,485 $32,666 Parks & Rec $47,617 $67,577 $138,762 $159,890 $159,890 $243,099 Community Development $12,247 $17,380 $36,549 $43,430 $47,128 $68,706 Public Works $81,347 $115,447 $242,777 $288,482 $313,047 $456,371 Park and Open Space Maintenance $23,983 $23,983 $57,023 $57,023 $57,023 $57,023 Utilities - Solid Waste $2,073 $2,943 $6,188 $42,527 $43,153 $46,806 Transfers Out $9,048 $12,841 $27,003 $43,891 $46,623 $62,564 TOTAL EXPENDITURES $513,833 $714,755 $1,467,621 $1,768,478 $1,877,686 $2,668,369 TOTAL BUDGET NET (DEFICIT)/ SURPLUS $598 $2,998 $30,444* $870,695 $872,181 $758,440* TOTAL BUDGET NET (DEFICIT) PER UNIT $3 $11 $50* $1,196 $1,079 $653* Source: ADE, Inc. *If 120 units are owned by Cal Poly, revenue figures in Phase 3 and the total would be reduced by about $75,300.

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PROJECT DESCRIPTION
The San Luis Ranch Development Project (Proposed Project) would develop a 131-acre site into 923 residential units, a 7,000 sq. ft. commercial center, a 200-room hotel and 80,000 sq. ft. of office space and an Agricultural Heritage Center encompassing about 31,100 sq. ft. The project includes a

3.4 acre park, 7.4 acres of natural open space and would retain 52.7 acres of agricultural land, as well as related circulation and utilities. The dwelling units would be developed at three different densities as shown in Table 1. The latest population figures from the State Department of Finance show an average household size of 2.23 persons per household for all unit types, for a total project population of 2,048 persons. The assessed values for the units are projected to range from $900,000 for the larger units to $555,600 for the more dense housing. For the High Density units in Phase 3, the developer has provided the following unit types and values:

Townhomes $695,000
Condos $580,000
Nano Units $440,000
The High Density units in Phase 6 will be rentals and the developer anticipates the following unit types:

Studio 72 units
1 bd/1bath 90 units
2 bd/2 bath 114 units
276 units
ADE researched market rental rates and capitalization rates1 for similar rental units that have sold in the San Luis Obispo market and estimates that the average assessed values would be similar to the for-sale units, at $555,600.

The project proposes to include 74 units for a combination of low income and very low income families, 4 for moderate income households and 14 for Workforce level household incomes. The affordable ownership units are estimated to have an average value of about $210,800 while the rental units would be valued at an average of $120,700 (Table 2). Qualifying household incomes for these units range from $40,550 for a Very Low Income Studio rental to $162,880 for a Workforce level twobedroom for-sale unit.

Overall, the residential component of the project would generate $564.5 million in assessed value. As of October 2024, the 120 “Nano” units are expected to be owned by Cal Poly, which is a tax exempt 1 In investment terms, the rental projects create a stream of revenue for the building owner and the capitalization rate calculates how much an investor would be willing to pay for that income stream. ADE derived a rate of 5.8% for this analysis.

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institution. This would reduce the assessed value by $50.9 million (114 units at $440,000 and 6 affordable units at $120,700).

Table 1: San Luis Ranch Project Description

LAND USE UNITS PHASE POPULATION

ASSESSED

VALUE PER
UNIT
TOTAL

ASSESSED
VALUE
Residential
Low-Medium Density 192 Ph 1 428 $900,000 $172,800,000
Medium Density 77 Ph 2 172 $850,000 $65,450,000
High Density 562 Ph 3,6 1,253 $555,600 $312,247,200
Very Low Income* 70 Ph 6 156 $138,500 $8,449,000
Low Income 4 Ph 2 9 $92,650 $780,000
Moderate Income 4 Ph 1 9 $372,000 $1,488,000
Workforce 14 Ph 1,2,3 31 232,900 $3,263,000
Total Residential 923 2,058 $564,477,200
Non-Residential Sq. Ft. Employment Per Sq. Ft.

Hotel 120,000 Ph 4 104 $474 56,888,889
Office 80,000 Ph 5 267 $400 $32,000,000
Commercial 20,398 Ph 6 37 $500 $10,199,000
Restaurant 4,695 Ph 6 19 $500 $2,347,500
Light Industrial 9,641 Ph 6 13 $135 $1,328,535
Public/Institutional 3,208 Ph 6 6 $400 $1,283,400
Parks 6.8 ac Ph 1,3
Total 238,142 446 $104,038,235
Grand Total $668,515,435
Source: San Luis Ranch DEIR, San Luis Ranch Project Developer, ADE, Inc.*Note: some of these units may be provided at the Low Income level.

Table 2: Affordable Units
UNIT TYPE NO. RENT

ASSESSED
VALUE

HOUSEHOLD
INCOME
Affordable Units in Phases 1, 2 and 3
Moderate 2 bd 4 $372,000 $135,700
Low 2 bd 4 $195,000 $92,650
Workforce Studio 6 $395,000 $126,640
Workforce 1 bd 2 $455,000 $144,800
Workforce 2 bd 6 $514,000 $162,880
Total Average 22 $210,800 $133,600
Affordable Units in Phase 6
Very Low Income*
Studios 18 $989 $100,000 $40,550
1 bedroom 23 $1,131 $120,000 $46,350
2 bedroom 29 $1,273 $134,000 $52,150
Total Average 70 $1,200 $120,700 $47,300
Source: ADE, Inc., based on 2023 Affordable Housing Standards from the San Luis Obispo County Department of Planning and Building. *Note: Some of these units may be provided at higher incomes and units values than shown, which would increase the resulting property and sales tax estimates.

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The non-residential uses are estimated to support 446 jobs and generate about $104 million in assessed value. In addition to conventional business uses including a hotel, an office complex and a small retail center, the proposed project includes an Agricultural Heritage site than encompasses historic farming structures on the site along with new construction to create both a cultural as well as commercial experience for visitors. In earlier iterations of the project design, this facility was envisioned to be operated by a non-profit entity and was not included in the fiscal impact analysis due to its largely non-taxable status. However, the current proposal anticipates this site will be run by forprofit businesses. It includes the following elements:

Use Sq. Ft. _____Business Activity Land Use in Table 1
Market 4,529 Market/Grocery, Deli, Lite Retail Retail
Restaurant 4,695 Restaurant, Bar/Brewery/Tap Room Restaurant Ag Processing 9,841 Food and Drink Production/Processing, Light Industrial Food Service
Retail 8,869 Retail, Merchandise, Retail
(6,531 new retail, Pre-Made Food Sales
2,338 historic hay barn)
glass atrium 600 Gallery exhibit space Public/Institutional Historic House 2,608 Day care, lite retail, museum Public/Institutional Table 1 also shows the planned phasing for the development. The phases are anticipated to occur over a ten year period between 2023 and 2033.

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FISCAL ANALYSIS

CITY BUDGET AND COST/REVENUE FACTORS
The City of San Luis Obispo adopts biennial budgets, with Mid-Year Reviews every six months. The fiscal analysis is based on the Financial Plan for Fiscal Years (FY) 2023-2025 (Table 3). The analysis is primarily focused on the General Fund, which supports general government services largely from general tax revenues.

Table 3: City of San Luis Obispo FY 2023-2024 General Fund Budget

BUDGET CATEGORY CITY BUDGET

FISCAL ANALYSIS
ADJUSTMENTS [A]

FISCAL ANALYSIS

NET BASIS
Revenues
Taxes
Property Tax $15,524,886 $15,524,886
Property Tax in lieu of VLF $6,475,114 $6,475,114
Sales Tax: General $22,579,000 $22,579,000
Sales Tax: Measure G $30,262,000 $30,262,000
Sales Tax: Public Safety $499,000 $499,000
Transient Occupancy Tax $10,704,000 $10,704,000
Utility Users Tax $5,710,000 $5,710,000
Franchise Fees $1,854,000 $1,854,000
Business Tax Certificates/Licenses $3,711,000 $3,711,000 Cannabis Tax/Licenses $1,308,000 $207,600 $1,100,400
Subventions and Grants $665,000 $665,000 $0
Service Charges
Development Review Fees $6,276,000 $6,195,919 $80,081
Recreation Fees $2,022,000 $2,022,000
Other Charges for Services $2,190,000 $350,000 $1,840,000 Other Revenue $0
Fines and Forfeitures $153,071 $153,071
Interest Earnings and Rents $230,000 $230,000
Other Revenues $6,012,939 $6,012,939
Transfers in $0 $0
Total Revenues $116,176,010 $7,418,519 $108,757,491
Expenditures
General Government $11,167,307 $1,517,723 $9,649,584
Police $22,086,053 $235,259 $21,850,794
Fire $15,273,559 $556,329 $14,717,230
Community Services Admin $740,534 $740,534
Parks & Rec $5,706,331 $195,245 $5,511,086
Community Development $8,212,711 $6,195,919 $2,016,792
Public Works $13,591,608 $195,245 $13,396,363
Park and Landscape Maintenance $4,126,438 $4,126,438
Utilities - Solid Waste $341,459 $341,459
Capital Improvements $34,228,000 $34,228,000 $0
Debt Service $1,854,000 $1,854,000 $0
Transfers Out $1,490,000 $1,490,000
Total Expenditures $118,818,000 $44,977,721 $73,840,279 Total Net ($2,641,990) ($38,224,202) $35,582,212
Source: City of San Luis Obispo 2023-25 Financial Plan Notes: [a] See Table 3 below for adjustment detail.

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In order to develop revenue and cost factors for the fiscal analysis relevant to the San Luis Ranch project, we have made a number of adjustments to the City budget figures, which are shown in the second column of Table 3 and detailed further in Table 4. The right-hand column in Table 3 reflects the basis for calculating per capita revenues and cost factors for the fiscal analysis, as shown in Table 5 below.

Table 4: Fiscal Model Revenue and Expenditure Adjustments

BUDGET CATEGORY AMOUNT ITEM
Revenues
Subventions $665,000 Subventions and Grants
Services Charges $6,195,919 Development Review Fees (except code enforcement) Service Charges $350,000 Fire Plan Check Fees
Licenses $207,600 Cannabis Operators License Fees
Expenditures
General Government ($145,089) City Council
General Government ($195,245) IT/Finance Dir
General Government ($338,100) City Manager
General Government ($195,245) Human Res Dir
General Government ($310,552) City Attorney
General Government ($125,891) City Clerk
Public Safety ($235,259) Police Chief
Public Safety ($206,329) Fire Chief
Public Safety ($350,000) Fire Plan Check Fees
Transportation/Maintenance ($195,245) Public Works Dir
Leisure ($195,245) Parks & Rec Dir
Community Development ($195,245) CD Director
Community Development ($6,195,919) Development Review Fees (except code enforcement) Debt Service/CalPers ($1,854,000) Debt Service
Total ($3,318,847)
Source: ADE, Inc. based on City of San Luis Obispo budget data as shown in Table 2.

In the revenue adjustments, we have deducted Subventions and Grants, which are generally one-time revenues. We have also deducted one-time development review fees, which are typically paid during the entitlement phase for new development but are not ongoing revenues paid by project residents once the project is built. These fees include building permits, planning fees and various plan check fees, including fire inspection and plan check fees. An equivalent amount of expenditure budget is deducted from the Community Development Department and the Fire Department in the lower portion of Table 3. The remaining $80,081 shown in this category is ongoing code enforcement.

In the expenditure categories, as detailed in Table 4, we have deducted costs that are unlikely to be increased with new development and growth in the City. This includes mainly the City Council expenditures and the major City Department Directors. The figures include both direct salary and benefits.

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In the FY 2023-24 budget, the City Council has allocated about $34.2 million in General Fund reserves to complete one-time capital improvement projects, which includes emergency storm repairs from last year’s storms. This is not included in the analysis. In addition, the portion of Transfers Out that go to debt service has also been deducted for purposes of the fiscal analysis.

In fiscal impact methodology, different assumptions for these types of budget adjustments are sometimes used. For example, ADE’s adjustments to the General Government category result in a

13.5 percent reduction in the cost of these services compared to the figures shown in the budget. In other fiscal studies, analysts sometimes assume that as much as 50 percent of this cost category is fixed, and therefore make a higher adjustment to the cost basis for the analysis. One rationale for this approach would be that the maintenance of existing City facilities such as City Hall and other administrative buildings is largely fixed and does not increase with added growth. This approach would tend to reduce the estimated costs for municipal services compared to the analysis presented in this report. On the other side of the spectrum, over the very long term, all City costs increase with inflation and as cities increase in size. This would argue for an approach that treated all City costs as variable and would increase the service cost estimates. However, the approach used in this analysis is consistent with the methodology used in the LUCE fiscal analysis, which evaluated the overall impact of all new development permitted under the approved General Plan.

A portion of the costs and revenues in the fiscal analysis are allocated based on per capita factors derived from the budget data in Tables 3 and 4 as well as socioeconomic data for the City of San Luis Obispo as a whole. As of January 2023, the California Department of Finance (DOF) reports that the City population was 47,788. The City’s recently adopted Economic Strategic Plan provides data indicating the City supports 43,221 jobs, including both private sector and public sector employment.

It is a generally accepted fiscal methodology that jobs-based land uses exert half the demand for municipal services as does the residential population. In addition, visitors generate some service impacts, particularly for police protection and emergency medical services. ADE had previously estimated in 2014 that visitors to San Luis Obispo equated to a full time population of more than 3,000 residents (1.1 million visitor days/365 days per year). Since that time Transient Occupancy Taxes (TOT) have grown roughly at the same rate as inflation, so we assume the number of visitors has remained steady. On a full-time equivalent basis for the services they impact, visitors are estimated to have the same impact as the residential population.

Based on these data and assumptions about relative fiscal impact, we have assigned relative proportions of certain revenues and costs to each major land use group as shown in Table 5.

Generally, the residential population generates about 61 percent of the demand for services while non-residential land uses generate about 34 percent.2 Visitors equate to about four percent of service demand for a limited number of revenues and service categories. Some exceptions to these percentages exist in that non-residential development does not contribute significantly to subventions, recreation fees or gas tax revenues. Conversely, all business tax revenues are assigned to the nonresidential sector, although it is likely some home occupancy businesses also pay this tax. On the 2 Note that these percentages are skewed more toward non-residential uses than was the case in the LUCE fiscal analysis, mainly because the Beacon estimate of jobs in the City is much higher than the data available in 2014.

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expenditure side, non-residential development is not assumed to utilize recreation and leisure services to a significant degree. Other significant revenues in the analysis, including property tax, and sales tax are calculated using different formulas, as discussed further below.

Table 5: Per Capita Revenue and Cost Factors

BUDGET CATEGORY

LAND USE

RESIDENTIAL BUSINESS VISITORS

PROPORTION
PER

CAPITA PROPORTION
PER

EMPLOYEE PROPORTION
PER

VISITOR
Revenues
Utility Users Tax 66% $78.53 30% $39.26 4% $73.98
Franchise Fees 66% $25.50 30% $12.75 4% $20.71
Business Tax Certificates/Licenses 0% $0.00 100% $102.04 Service Charges
Recreation Fees 100% $42.31 0% $0.00
Other Charges for Services 66% $25.30 30% $12.65 4% $23.28 Other Revenue
Fines and Forfeitures 66% $2.11 30% $1.05 4% $2.07
Other Revenues 66% $82.69 34% $47.69
Expenditures
Police 66% $300.51 30% $150.25 5% $300.51
Fire 66% $135.61 30% $67.80 5% $135.61
Community Services Admin 94% $14.49 0% $0.00 6% $14.49
Parks & Rec 94% $107.84 0% $0.00 6% $107.84
Community Development 66% $27.74 30% $13.87 5% $27.74
Public Works 66% $184.23 30% $92.12 5% $184.23
Park and Landscape Maintenance 94% $80.75 0% $0.00 6% $80.75 Utilities - Solid Waste 66% $4.70 30% $2.35 5% $4.70
Transfers Out 66% $20.49 30% $10.25 5% $20.49
Source: ADE, Inc.

PROJECT REVENUES

PROPERTY TAX

MASTER TAX SHARING AGREEMENT
The San Luis Ranch property will need to be annexed into the City of San Luis Obispo before development can occur. The City and County of San Luis Obispo have negotiated a Master Tax Sharing Agreement to address the distribution of property tax revenues for this project. The prior Master Tax Sharing Agreement treated residential and non-residential property differently, but the current Agreement treats all land uses equally in terms of future property tax distribution. The County receives its existing property tax (in this case based on the raw land assessed value) and then receives two-thirds of its normal property tax share for incremental assessed value (AV) generated by future development. As shown in Table 1, the developed portion of the project is estimated to have an assessed value of $668.5 million ($2023) when fully built out.

The project is located in Tax Rate Area (TRA) 113-002, in which the County receives 27.6 percent of property tax revenues. For incremental AV generated by the proposed project, the County would receive 18.4 percent of the property tax and the City would receive 9.2 percent. The total AV from the

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completed project, less the existing assessed value on the 52.7 developed acres, would generate $605,026 for the City. These calculations are outlined below.

Projected Total Assessed Value: $668,515,435
Existing Assessed Value: $ 10,861,030
Incremental Increase in Assessed Value: $657,654,405
Total property tax @ 1%: $ 6,576,544
City’s share @ 9.2%: $ 605,026
If Cal Poly owns the 120 Nano units, it would reduce the taxable assessed value by $50,884,200. The City’s share of property tax foregone would be $46,800.

PROPERTY TAX IN LIEU OF VEHICLE REGISTRATION FEES
The City receives an additional property tax allocation directly from the State in lieu of vehicle license fees that were formerly distributed to cities prior to 2004. This allocation is distributed based on annual increases in assessed value within the jurisdiction. The current AV for the City as a whole is $12.18 billion, generating $6.47 million in property tax in-lieu revenues. The project would increase total AV in the City by about 5.5 percent and generate $349,060 per year at build out.

If Cal Poly owns the 120 Nano units, the City’s share of foregone property tax in lieu of VLF would be $27,000.

SALES TAX
Household spending by project residents would increase sales tax revenues for the City. ADE has estimated household retail spending for typical households in each residential unit type in the project based on the minimum income required to purchase the units at the prices shown in Table 1 above.

The analysis is shown in Table 6.

The assumptions for the monthly housing cost and minimum qualifying income are shown in the footnotes to the table. The taxable sales for households in each residential unit type are estimated using ADE’s retail demand model, which correlates consumer expenditure patterns for households at every income level in $10,000 increments. This model has been updated to reflect the latest data available for the Bureau of Labor Statistics and the Census of Retail Trade. Taxable purchases represent nearly 70 percent of total retail/services spending, with mainly food, pharmaceuticals and services labor being non-taxable. The taxable spending in the Table reflects the total for the number of households in each unit type. (See Tables A-1 to A-6 in the Appendix for detailed household expenditure estimates). The sales tax is one percent of taxable sales and is shown both per-unit and per-person.

As part of the LUCE analysis in 2014, ADE conducted a retail market analysis for the City. San Luis Obispo has the second highest taxable sales per capita of any jurisdiction in the County and sales in the City are twice the County average. Comparing local retail demand to actual sales for each store type category, the City captures sales in excess of its own internal demand in virtually every retail store category. Therefore, it is likely that most of the household spending from project residents would occur in San Luis Obispo. However, households do comparison shop for large items and spend a

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portion of their budget out of town while on vacation or other entertainment trips. This analysis assumes 20 percent of household spending will not occur in San Luis Obispo, represented as a leakage factor in Table 6.

Since the project also includes a retail center, it is necessary to analyze how much of the project households’ spending would occur at that center vs. other retail locations in the City. The retail center in the project would be 7,000 sq. ft., and is expected to include a mixture of quick serve restaurants and personal services such as hair salons (Table 7). We estimate the food service would generate about $578.00 in taxable sales per sq. ft. Considering the likely rates at which the project’s onsite households would patronize such a center, in relation to competitive centers elsewhere in the City, we estimate that the onsite center could capture about 3.2 percent of total spending from project residents. The other 96.8 percent of household spending would occur elsewhere in the City and also at other retail centers outside of San Luis Obispo.

Table 6: Household Retail Taxable Sales Calculations

STEPS IN THE ANALYSIS

RESIDENTIAL UNIT DENSITIES AND TYPES
LOWMEDIUM MEDIUM
HIGH

DENSITY

OWNERSHIP

HIGH DENSITY
RENTAL
PHASE 6

AFFORDABLE
LOWMODERATEWORKFORCE
Housing Price per Unit $900,000 $850,000 $555,600 $554,200 $120,700 $210,800 Monthly Housing Costs [a] $5,951 $5,640 $3,808 $2,700 $1,200 $3,340 Minimum Qualifying Income [b] $219,700 $208,200 $140,600 $108,000 $47,300 $133,600 Households 192 77 286 276 70 22
Total Taxable Spending $5,825,909 $2,214,134 $7,968,132 $6,023,212 $912,986 $583,681 Leakage Factor 20% 20% 20% 20% 20% 20%
Taxes per Unit $243 $230 $223 $175 $104 $212
HHS 2.23 2.23 2.23 2.23 2.23 2.23
Taxes per person $109 $103 $100 $78 $47 $95
Source: ADE, Inc.

Notes: [a] Housing costs for Low and Medium Density reflect mortgage payment at 6.5 percent interest for 30 years, 20% down payment and about 2.0% costs for taxes and insurance. Housing costs for High Density and Affordable Units reflect anticipated rent levels.
[b] Housing costs assumed to be a maximum of 32.5 % of income for market rate units, 30% for affordable units.

The LUCE analysis also estimated taxable purchases for office space and hotel visitors, which has been updated for the present study to reflect current sales tax revenues in the City and the current number of employees and visitors. In office space, very few businesses conduct point-of-sale transactions, but office employees make taxable expenditures for lunch and other incidental items. This generates about $8.13 in sales tax per employee annually. Hotel visitors spend approximately $174 per day on taxable items, mostly in restaurants and gift shops. Using these factors, we estimate that the proposed hotel will generate about $124,700 per year in sales tax but the office space would generate only $2,200 per year.

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Table 7: Conceptual Estimate of Proposed Project Retail Center and Onsite Household Spending

STORE TYPE
BLDG.

SQ. FT.

SALES/
SQ. FT.
(2024$)
%

TAXABLE
TOTAL

TAXABLE
SALES

TAXABLE

PROJECT

HOUSEHOLD

SPENDING

PROJECT

HOUSEHOLDS

CAPTURE
RATE

PROJECT

HOUSEHOLDS
ONSITE

SPENDING
Food service 5,000 $577.72 100.0% $2,888,600 $4,918,925 10.0% $596,553 Personal Services 2,000 $251.23 0.0% $0 $0 10.0% $0
Total 7,000 $2,888,600 $4,918,925 $596,553
Total Household Spending in SLO $18,822,427 3.2%
Total Household Spending $23,528,034 2.5%
Per Total Sq. Ft. $420.34
Source: ULI, Dollars and Cents of Shopping Centers, 2008, Bureau of Labor Statistics, All Urban Consumers Price Index, April 2017, ADE, Inc. – See Appendix for detailed household taxable sales estimates.

In addition to the base sales tax of one percent of taxable sales, the City receives a share of the state Proposition 172 Public Safety sales tax revenue as well, which represents about 2.5 percent of base sales tax.

The City also has a Local Measure sales tax override (Measure G) which generates an additional 1.5 percent of sales tax.

Finally, in addition to these various sources of sales tax, the City receives a share of the County pool of use taxes that are collected mainly from non-point source transactions such as internet sales. Each City receives a share of the County pool revenue based on its share of point-of-sale transactions. San Luis Obispo’s current share is 14.45 percent of its base sales tax. This is shown as an additional line item in Exhibits A and B in the Summary above.

TRANSIENT OCCUPANCY TAX
The City receives a ten percent transient occupancy tax on hotel room revenues. The project would include a 200 room hotel. For this analysis, we have used a projected room rate of $200 per night and an average occupancy rate of 68.9 percent.

OTHER REVENUES
Most other revenues are calculated on a per capita basis using the factors shown in Table 4 above, with certain exceptions. The Real Property Transfer Tax is calculated on the assumption that ten percent of the homes in the project will be resold annually and that the non-residential properties will turn over once every fifteen years. This does not account for the initial transfer tax that the City will receive when the development is initially sold. That revenue would be approximately $367,700 on a one-time basis.

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The interest earnings and rents are calculated as a percent of other revenues generated by each Phase in the project, using the same rate of return the City receives on its other General Fund revenues. If Cal Poly owns the 120 Nano units, the lost interest on foregone property tax revenues for the City would be about $1,500.

PROJECT SERVICES COSTS
As with the Other Revenues, the Service Costs are generally calculated on a per capita basis using the factors in Table 5. However, General Government is calculated as an overhead factor on the other costs generated by each Phase and unit type in the project. Based on the adjusted budget figures from Table 3 (Net Basis column), General Government costs represent about 15.4 percent of direct services costs for the City.

The per capita factor for fire protection shown in Table 5 reflects the emergency medical function of the Fire Department, estimated to consume two-thirds of the departmental budget.3 The remaining one-third is allocated to fire suppression and prevention and is distributed to the land uses in each Phase based on the assessed value of their improvements.

The park maintenance costs are estimated on a per acre basis using a factor of $7,054 per acre, based on the current average expenditure from the Financial Plan. Maintenance of the natural open space is estimated to cost $4,465 per acre. No costs have been estimated for the Agricultural preserve, as this would likely be operated by a farm lessee.

Road maintenance and other transportation costs are estimated on a per capita basis and do not reflect specific analysis of the proposed roads and streets in the San Luis Ranch development. 3 ADE, Inc., LUCE Fiscal Impact Analysis and Public Facilities Plan, August 2014. p. 10.

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COMPARISON WITH 2017 PROJECT
In 2017, this project was estimated to generate just less than $1 million in fiscal gain for the City annually. One difference in the approach is that the larger retail center is estimated draw sales away from existing centers in San Luis Obispo, based on the retail analysis conducted in 2014 and 2017.

Therefore, the net sales taxes are lower per sq. ft. than would otherwise be expected. However, the land owner has also indicated that they have been unable to find a retail developer willing to construct such a large center on the site. If so, the fiscal benefit from this project design is likely not attainable.

Table 8: San Luis Ranch Project Description, 2017

LAND USE UNITS PHASE POPULATION

ASSESSED

VALUE PER
UNIT
TOTAL

ASSESSED
VALUE
Residential
Low-Medium Density 220 Ph 1 504 $700,000 $154,000,000
Medium Density 120 Ph 2 275 $500,000 $60,000,000
High Density 206 Ph 3 472 $325,000 $66,950,000
Affordable Housing 34 Ph 3 78 $118,700 $4,035,100
Total Residential 580 1,328 $284,985,100
Non-Residential Sq. Ft. Employment Per Sq. Ft.

Hotel 120,000 Ph 4 104 $320 $38,400,000
Office 100,000 Ph 5 333 $254 $25,420,000
Commercial 150,000 Ph 6 273 $300 $45,000,000
Parks 3.4 ac Ph 1
Total 370,000 710 $108,820,000
Grand Total $393,805,100
Source: San Luis Ranch DEIR. ADE, Inc., Fiscal Analysis of the Proposed San Luis Ranch Project, May 25, 2017.

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Table 9: Project Impact by Phase, 2017 Analysis
BUDGET CATEGORY TOTAL PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5 PHASE 6

REVENUES
Taxes
Property Tax $257,424 $139,393 $54,225 $63,805 $0 $0 $0 Property Tax in lieu of VLF $279,393 $109,258 $42,568 $50,362 $27,244 $18,035 $31,926 Sales Tax: General $658,450 $51,052 $21,215 $30,047 $175,992 $2,396 $377,746 Sales Tax: Measure G $329,225 $25,526 $10,608 $15,023 $87,996 $1,198 $188,873 Sales Tax: Public Safety $16,309 $1,265 $525 $744 $4,359 $59 $9,357 Transient Occupancy Tax $569,400 $0 $0 $0 $569,400 $0 $0 Utility Users Tax $147,665 $37,269 $20,328 $40,657 $26,994 $12,329 $10,088 Franchise Fees $41,347 $10,435 $5,692 $11,384 $7,559 $3,452 $2,825 Business Tax Certificates $38,101 $0 $0 $0 $5,596 $17,878 $14,627 Real Property Transfer Tax $19,864 $8,470 $3,300 $3,904 $1,478 $979 $1,733 Service Charges
Recreation Fees $47,412 $17,984 $9,809 $19,619 $0 $0 $0 Other Charges for Services $39,192 $11,729 $6,398 $12,795 $1,215 $3,880 $3,175 Other Revenue
Fines and Forfeitures $3,493 $1,045 $570 $1,140 $108 $346 $283 Interest Earnings and Rents $12,941 $2,220 $948 $1,369 $4,741 $318 $3,346 Other Revenues $2,422 $706 $385 $770 $82 $263 $216
Transfers in
Gas Tax/TDA $28,976 $10,991 $5,995 $11,990 $0 $0 $0
Other $30,983 $9,027 $4,924 $9,848 $1,055 $3,371 $2,758 TOTAL REVENUES $2,522,597 $436,370 $187,492 $273,459 $913,821 $64,504 $646,951

EXPENDITURES
General Government $335,797 $103,984 $44,092 $90,340 $52,885 $19,633 $24,864 Police $410,202 $100,442 $54,787 $109,574 $77,953 $26,666 $40,780 Fire $374,938 $122,853 $54,607 $83,881 $51,181 $27,449 $34,967 Transportation $61,881 $15,618 $8,519 $17,038 $11,312 $5,167 $4,227 Leisure, Cultural and Social Services $129,875 $39,874 $21,750 $43,499 $24,752 $0 $0 Park and Open Space Maintenance $93,081 $60,041 $0 $33,040 $0 $0 $0 Community Development $128,175 $32,350 $17,645 $35,291 $23,431 $10,702 $8,756 Transfers Out $2,673 $675 $368 $736 $489 $223 $183
TOTAL EXPENDITURES $1,536,621 $475,837 $201,767 $413,398 $242,003 $89,839 $113,777 TOTAL BUDGET NET (DEFICIT)/ SURPLUS $985,976 ($39,467) ($14,275) ($139,939) $671,818 ($25,335) $533,174 TOTAL BUDGET NET (DEFICIT) PER UNIT $1,038 ($179) ($119) ($583) $5,598 ($253) $3,554 Source: ADE, Inc., Fiscal Analysis of the Proposed San Luis Ranch Project, May 25, 2017.

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Table 10: Cumulative Project Impact by Phase, 2017 Analysis BUDGET CATEGORY PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5 PHASE 6

REVENUES
Taxes
Property Tax $139,393 $193,619 $257,424 $257,424 $257,424 $257,424 Property Tax in lieu of VLF $109,258 $151,827 $202,188 $229,432 $247,467 $279,393 Sales Tax: General $51,052 $72,268 $102,315 $278,307 $280,703 $658,450 Sales Tax: Measure G $25,526 $36,134 $51,157 $139,154 $140,352 $329,225 Sales Tax: Public Safety $1,265 $1,790 $2,534 $6,893 $6,953 $16,309 Transient Occupancy Tax $0 $0 $0 $569,400 $569,400 $569,400 Utility Users Tax $37,269 $57,597 $98,254 $125,249 $137,578 $147,665 Franchise Fees $10,435 $16,127 $27,512 $35,070 $38,522 $41,347 Business Tax Certificates $0 $0 $0 $5,596 $23,474 $38,101 Real Property Transfer Tax $8,470 $11,770 $15,674 $17,153 $18,131 $19,864 Service Charges
Recreation Fees $17,984 $27,793 $47,412 $47,412 $47,412 $47,412 Other Charges for Services $11,729 $18,127 $30,922 $32,137 $36,017 $39,192 Other Revenue
Fines and Forfeitures $1,045 $1,615 $2,756 $2,864 $3,210 $3,493 Interest Earnings and Rents $2,220 $3,168 $4,537 $9,278 $9,595 $12,941 Other Revenues $706 $1,090 $1,860 $1,943 $2,206 $2,422
Transfers in
Gas Tax/TDA $10,991 $16,986 $28,976 $28,976 $28,976 $28,976 Other $9,027 $13,951 $23,799 $24,855 $28,225 $30,983
TOTAL REVENUES $436,370 $623,863 $897,321 $1,811,142 $1,875,646 $2,522,597

EXPENDITURES
General Government $103,984 $148,077 $238,416 $291,301 $310,933 $335,797 Police $100,442 $155,229 $264,803 $342,756 $369,421 $410,202 Fire $122,853 $177,460 $261,341 $312,522 $339,971 $374,938 Transportation $15,618 $24,137 $41,175 $52,487 $57,654 $61,881 Leisure, Cultural and Social Services $39,874 $61,624 $105,123 $129,875 $129,875 $129,875 Park and Landscape Maintenance $60,041 $60,041 $93,081 $93,081 $93,081 $93,081 Community Development $32,350 $49,995 $85,286 $108,717 $119,419 $128,175 Transfers Out $675 $1,043 $1,779 $2,267 $2,490 $2,673
TOTAL EXPENDITURES $475,837 $677,605 $1,091,002 $1,333,005 $1,422,845 $1,536,621 TOTAL BUDGET NET (DEFICIT)/ SURPLUS ($39,467) ($53,742) ($193,681) $478,137 $452,801 $985,976 TOTAL BUDGET NET (DEFICIT) PER UNIT ($179) ($158) ($334) $683 $566 $1,038 Source: ADE, Inc., Fiscal Analysis of the Proposed San Luis Ranch Project, May 25, 2017.

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APPENDIX

TAXABLE SALES ESTIMATES
The following tables show the estimates of retail/services spending and taxable sales for each of the four income levels modeled for the project. The figures reflect the aggregate total spending from the number of households in each density category, not per household values.

Table A-1: Taxable Household Spending, Low-Medium Density Units 192 HOUSEHOLDS WITH AVERAGE INCOME
OF $219,700 TOTAL

HOUSEHOLD

SPENDING

TAXABLE
SALES

TAXABLE

PERCENT

TOTAL SALES

AS PERCENT

OF INCOME

TAXABLE

SALES AS

PERCENT OF

STORE CATEGORY INCOME
RETAIL
Apparel Store Group $381,350 $381,350 100.0% 0.9% 0.9%
General Merchandise Group $1,130,403 $755,978 66.9% 2.7% 1.8% Department Stores/Other General Merch. $267,471 $242,463 90.7% 0.6% 0.6% Other General Merchandise $684,319 $442,070 64.6% 1.6% 1.0% Drug & Proprietary Stores $178,613 $71,445 40.0% 0.4% 0.2% Specialty Retail Group $310,602 $310,602 100.0% 0.7% 0.7% Food, Eating and Drinking Group $2,145,013 $1,452,548 67.7% 5.1% 3.4% Grocery Stores $891,834 $222,958 25.0% 2.1% 0.5%
Specialty Food Stores $28,681 $7,170 25.0% 0.1% 0.0%
Liquor Stores $49,469 $47,391 95.8% 0.1% 0.1%
Eating Places $1,175,029 $1,175,029 100.0% 2.8% 2.8%
Building Materials And $0 $0 0.0% 0.0% 0.0%
Homefurnishings Group $427,067 $427,067 100.0% 1.0% 1.0% Automotive Group $2,327,958 $2,268,691 93.3% 5.5% 5.4%
Sub-Total Retail $6,722,393 $5,596,237 83.2% 15.9% 13.3%

SERVICES
Rental Services $77,577 $0 0.0% 0.2% 0.0%
Professional Services $26,082 $0 0.0% 0.1% 0.0%
Medical Services
Eyecare $241,884 $120,942 50.0% 0.6% 0.3%
Other Medical $721,214 $0 0.0% 1.7% 0.0%
Repair Services
Auto Repair $177,159 $70,864 40.0% 0.4% 0.2%
Other Repair $83,840 $0 0.0% 0.2% 0.0%
Personal Services
Personal Care Services $167,242 $16,724 10.0% 0.4% 0.0% Other Personal $105,709 $0 0.0% 0.3% 0.0%
Entertainment/Recreation
Movie, Theater, Opera, Ballet $161,876 $16,188 10.0% 0.4% 0.0% Sporting Events $49,545 $4,955 10.0% 0.1% 0.0%
Other Entertainment $343,516 $0 0.0% 0.8% 0.0%
Sub-Total Services $2,155,644 $229,672 10.7% 5.1% 0.5%
GRAND TOTAL $8,878,037 $5,825,909 65.6% 21.0% 13.8%
Source: ADE, Inc.; retail demand model derived from U.S. Economic Census, Bureau of Labor Statistics Consumer Expenditure Survey and PUMS database.

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Table A-2: Taxable Household Spending, Medium Density Units 77 HOUSEHOLDS WITH AVERAGE INCOME
OF $208,200 TOTAL

HOUSEHOLD

SPENDING

TAXABLE
SALES

TAXABLE

PERCENT

TOTAL SALES

AS PERCENT

OF INCOME

TAXABLE

SALES AS

PERCENT OF

STORE CATEGORY INCOME
RETAIL
Apparel Store Group $144,932 $144,932 100.0% 0.9% 0.9%
General Merchandise Group $429,609 $287,309 66.9% 2.7% 1.8% Department Stores/Other General Merch. $101,652 $92,148 90.7% 0.6% 0.6% Other General Merchandise $260,075 $168,009 64.6% 1.6% 1.0% Drug & Proprietary Stores $67,882 $27,153 40.0% 0.4% 0.2% Specialty Retail Group $118,044 $118,044 100.0% 0.7% 0.7% Food, Eating and Drinking Group $815,211 $552,040 67.7% 5.1% 3.4% Grocery Stores $338,941 $84,735 25.0% 2.1% 0.5%
Specialty Food Stores $10,900 $2,725 25.0% 0.1% 0.0%
Liquor Stores $18,801 $18,011 95.8% 0.1% 0.1%
Eating Places $446,569 $446,569 100.0% 2.8% 2.8%
Building Materials And $0 $0 0.0% 0.0% 0.0%
Homefurnishings Group $162,307 $162,307 100.0% 1.0% 1.0% Automotive Group $884,739 $862,215 93.3% 5.5% 5.4%
Sub-Total Retail $2,554,842 $2,126,847 83.2% 15.9% 13.3%

SERVICES
Rental Services $29,483 $0 0.0% 0.2% 0.0%
Professional Services $9,912 $0 0.0% 0.1% 0.0%
Medical Services
Eyecare $91,928 $45,964 50.0% 0.6% 0.3%
Other Medical $274,097 $0 0.0% 1.7% 0.0%
Repair Services
Auto Repair $67,329 $26,932 40.0% 0.4% 0.2%
Other Repair $31,863 $0 0.0% 0.2% 0.0%
Personal Services
Personal Care Services $63,560 $6,356 10.0% 0.4% 0.0%
Other Personal $40,175 $0 0.0% 0.3% 0.0%
Entertainment/Recreation
Movie, Theater, Opera, Ballet $61,521 $6,152 10.0% 0.4% 0.0% Sporting Events $18,830 $1,883 10.0% 0.1% 0.0%
Other Entertainment $130,553 $0 0.0% 0.8% 0.0%
Sub-Total Services $819,252 $87,287 10.7% 5.1% 0.5%
GRAND TOTAL $3,374,094 $2,214,134 65.6% 21.0% 13.8%
Source: ADE, Inc.; retail demand model derived from U.S. Economic Census, Bureau of Labor Statistics Consumer Expenditure Survey and PUMS database.

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Table A-3: Taxable Household Spending, High Density Ownership Units 286 HOUSEHOLDS WITH AVERAGE INCOME
OF $140,600 TOTAL

HOUSEHOLD

SPENDING

TAXABLE
SALES

TAXABLE

PERCENT

TOTAL SALES

AS PERCENT

OF INCOME

TAXABLE

SALES AS

PERCENT OF

STORE CATEGORY INCOME
RETAIL
Apparel Store Group $451,448 $451,448 100.0% 1.1% 1.1%
General Merchandise Group $1,607,441 $1,066,237 66.3% 4.0% 2.7% Department Stores/Other General Merch. $346,820 $314,392 90.7% 0.9% 0.8% Other General Merchandise $1,006,487 $650,190 64.6% 2.5% 1.6% Drug & Proprietary Stores $254,134 $101,654 40.0% 0.6% 0.3% Specialty Retail Group $459,392 $459,392 100.0% 1.1% 1.1% Food, Eating and Drinking Group $3,189,188 $2,114,833 66.3% 7.9% 5.3% Grocery Stores $1,383,293 $345,823 25.0% 3.4% 0.9%
Specialty Food Stores $45,209 $11,302 25.0% 0.1% 0.0%
Liquor Stores $70,915 $67,936 95.8% 0.2% 0.2%
Eating Places $1,689,772 $1,689,772 100.0% 4.2% 4.2%
Building Materials And $0 $0 0.0% 0.0% 0.0%
Homefurnishings Group $631,216 $631,216 100.0% 1.6% 1.6% Automotive Group $3,111,550 $3,026,065 93.3% 7.7% 7.5%
Sub-Total Retail $9,450,235 $7,749,191 82.0% 23.5% 19.3%

SERVICES
Rental Services $73,989 $0 0.0% 0.2% 0.0%
Professional Services $24,863 $0 0.0% 0.1% 0.0%
Medical Services
Eyecare $230,583 $115,291 50.0% 0.6% 0.3%
Other Medical $687,518 $0 0.0% 1.7% 0.0%
Repair Services
Auto Repair $168,882 $67,553 40.0% 0.4% 0.2%
Other Repair $79,923 $0 0.0% 0.2% 0.0%
Personal Services
Personal Care Services $159,428 $15,943 10.0% 0.4% 0.0% Other Personal $100,770 $0 0.0% 0.3% 0.0%
Entertainment/Recreation
Movie, Theater, Opera, Ballet $154,313 $15,431 10.0% 0.4% 0.0% Sporting Events $47,231 $4,723 10.0% 0.1% 0.0%
Other Entertainment $327,467 $0 0.0% 0.8% 0.0%
Sub-Total Services $2,054,968 $218,942 10.7% 5.1% 0.5%
GRAND TOTAL $11,505,203 $7,968,132 69.3% 28.6% 19.8%
Source: ADE, Inc.; retail demand model derived from U.S. Economic Census, Bureau of Labor Statistics Consumer Expenditure Survey and PUMS database.

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Table A-4: Taxable Household Spending, High Density Rental Units 276 HOUSEHOLDS WITH AVERAGE INCOME
OF $108,000 TOTAL

HOUSEHOLD

SPENDING

TAXABLE
SALES

TAXABLE

PERCENT

TOTAL SALES

AS PERCENT

OF INCOME

TAXABLE

SALES AS

PERCENT OF

STORE CATEGORY INCOME
RETAIL
Apparel Store Group $338,895 $338,895 100.0% 1.1% 1.1%
General Merchandise Group $1,217,151 $807,068 66.3% 4.1% 2.7% Department Stores/Other General Merch. $261,526 $237,073 90.7% 0.9% 0.8% Other General Merchandise $763,190 $493,021 64.6% 2.6% 1.7% Drug & Proprietary Stores $192,435 $76,974 40.0% 0.6% 0.3% Specialty Retail Group $348,424 $348,424 100.0% 1.2% 1.2% Food, Eating and Drinking Group $2,419,346 $1,602,943 66.3% 8.1% 5.4% Grocery Stores $1,051,153 $262,788 25.0% 3.5% 0.9%
Specialty Food Stores $34,375 $8,594 25.0% 0.1% 0.0%
Liquor Stores $53,715 $51,459 95.8% 0.2% 0.2%
Eating Places $1,280,103 $1,280,103 100.0% 4.3% 4.3%
Building Materials And $0 $0 0.0% 0.0% 0.0%
Homefurnishings Group $478,730 $478,730 100.0% 1.6% 1.6% Automotive Group $2,349,622 $2,284,854 93.3% 7.9% 7.7%
Sub-Total Retail $7,152,168 $5,860,915 81.9% 24.0% 19.7%

SERVICES
Rental Services $54,792 $0 0.0% 0.2% 0.0%
Professional Services $18,431 $0 0.0% 0.1% 0.0%
Medical Services
Eyecare $170,926 $85,463 50.0% 0.6% 0.3%
Other Medical $509,643 $0 0.0% 1.7% 0.0%
Repair Services
Auto Repair $125,189 $50,075 40.0% 0.4% 0.2%
Other Repair $59,245 $0 0.0% 0.2% 0.0%
Personal Services
Personal Care Services $118,181 $11,818 10.0% 0.4% 0.0% Other Personal $74,699 $0 0.0% 0.3% 0.0%
Entertainment/Recreation
Movie, Theater, Opera, Ballet $114,389 $11,439 10.0% 0.4% 0.0% Sporting Events $35,011 $3,501 10.0% 0.1% 0.0%
Other Entertainment $242,744 $0 0.0% 0.8% 0.0%
Sub-Total Services $1,523,249 $162,297 10.7% 5.1% 0.5%
GRAND TOTAL $8,675,417 $6,023,212 69.4% 29.1% 20.2%
Source: ADE, Inc.; retail demand model derived from U.S. Economic Census, Bureau of Labor Statistics Consumer Expenditure Survey and PUMS database.

Applied Development Economics | Page 23
Table A-5: Taxable Household Spending, Phase 6 Affordable Units 70 HOUSEHOLDS WITH AVERAGE INCOME
OF $47,300 TOTAL

HOUSEHOLD

SPENDING

TAXABLE
SALES

TAXABLE

PERCENT

TOTAL SALES

AS PERCENT

OF INCOME

TAXABLE

SALES AS

PERCENT OF

STORE CATEGORY INCOME
RETAIL
Apparel Store Group $54,349 $54,349 100.0% 1.6% 1.6%
General Merchandise Group $205,108 $134,951 65.8% 6.2% 4.1% Department Stores/Other General Merch. $41,521 $37,639 90.7% 1.3% 1.1% Other General Merchandise $129,583 $83,710 64.6% 3.9% 2.5% Drug & Proprietary Stores $34,004 $13,602 40.0% 1.0% 0.4% Specialty Retail Group $52,210 $52,210 100.0% 1.6% 1.6% Food, Eating and Drinking Group $405,914 $259,524 63.9% 12.3% 7.8% Grocery Stores $188,435 $47,109 25.0% 5.7% 1.4%
Specialty Food Stores $6,253 $1,563 25.0% 0.2% 0.0%
Liquor Stores $8,895 $8,521 95.8% 0.3% 0.3%
Eating Places $202,331 $202,331 100.0% 6.1% 6.1%
Building Materials And $0 $0 0.0% 0.0% 0.0%
Homefurnishings Group $74,786 $74,786 100.0% 2.3% 2.3%
Automotive Group $329,941 $319,139 93.3% 10.0% 9.6%
Sub-Total Retail $1,122,307 $894,959 79.7% 33.9% 27.0%

SERVICES
Rental Services $6,089 $0 0.0% 0.2% 0.0%
Professional Services $2,047 $0 0.0% 0.1% 0.0%
Medical Services
Eyecare $18,986 $9,493 50.0% 0.6% 0.3%
Other Medical $56,610 $0 0.0% 1.7% 0.0%
Repair Services
Auto Repair $13,906 $5,562 40.0% 0.4% 0.2%
Other Repair $6,581 $0 0.0% 0.2% 0.0%
Personal Services
Personal Care Services $13,127 $1,313 10.0% 0.4% 0.0%
Other Personal $8,297 $0 0.0% 0.3% 0.0%
Entertainment/Recreation
Movie, Theater, Opera, Ballet $12,706 $1,271 10.0% 0.4% 0.0% Sporting Events $3,889 $389 10.0% 0.1% 0.0%
Other Entertainment $26,963 $0 0.0% 0.8% 0.0%
Sub-Total Services $169,202 $18,028 10.7% 5.1% 0.5%
GRAND TOTAL $1,291,509 $912,986 70.7% 39.0% 27.6%
Source: ADE, Inc.; retail demand model derived from U.S. Economic Census, Bureau of Labor Statistics Consumer Expenditure Survey and PUMS database.

Applied Development Economics | Page 24
Table A-6: Taxable Household Spending, Low, Moderate, Workforce Households 22 HOUSEHOLDS WITH AVERAGE INCOME
OF $133,600 TOTAL

HOUSEHOLD

SPENDING

TAXABLE
SALES

TAXABLE

PERCENT

TOTAL SALES

AS PERCENT

OF INCOME

TAXABLE

SALES AS

PERCENT OF

STORE CATEGORY INCOME
RETAIL
Apparel Store Group $35,842 $35,842 100.0% 1.2% 1.2%
General Merchandise Group $120,378 $80,212 66.6% 4.1% 2.7% Department Stores/Other General Merch. $26,658 $24,166 90.7% 0.9% 0.8% Other General Merchandise $75,442 $48,736 64.6% 2.6% 1.7% Drug & Proprietary Stores $18,278 $7,311 40.0% 0.6% 0.2% Specialty Retail Group $34,207 $34,207 100.0% 1.2% 1.2% Food, Eating and Drinking Group $236,504 $156,652 66.2% 8.0% 5.3% Grocery Stores $102,811 $25,703 25.0% 3.5% 0.9%
Specialty Food Stores $3,368 $842 25.0% 0.1% 0.0%
Liquor Stores $5,205 $4,986 95.8% 0.2% 0.2%
Eating Places $125,121 $125,121 100.0% 4.3% 4.3%
Building Materials And $0 $0 0.0% 0.0% 0.0%
Homefurnishings Group $47,218 $47,218 100.0% 1.6% 1.6%
Automotive Group $219,891 $213,548 93.3% 7.5% 7.3%
Sub-Total Retail $694,040 $567,678 81.8% 23.6% 19.3%

SERVICES
Rental Services $5,409 $0 0.0% 0.2% 0.0%
Professional Services $1,817 $0 0.0% 0.1% 0.0%
Medical Services
Eyecare $16,854 $8,427 50.0% 0.6% 0.3%
Other Medical $50,253 $0 0.0% 1.7% 0.0%
Repair Services
Auto Repair $12,344 $4,938 40.0% 0.4% 0.2%
Other Repair $5,842 $0 0.0% 0.2% 0.0%
Personal Services
Personal Care Services $11,653 $1,165 10.0% 0.4% 0.0%
Other Personal $7,366 $0 0.0% 0.3% 0.0%
Entertainment/Recreation
Movie, Theater, Opera, Ballet $11,279 $1,128 10.0% 0.4% 0.0% Sporting Events $3,452 $345 10.0% 0.1% 0.0%
Other Entertainment $23,936 $0 0.0% 0.8% 0.0%
Sub-Total Services $150,205 $16,003 10.7% 5.1% 0.5%
GRAND TOTAL $844,245 $583,681 69.1% 28.7% 19.9%
Source: ADE, Inc.; retail demand model derived from U.S. Economic Census, Bureau of Labor Statistics Consumer Expenditure Survey and PUMS database.

Applied Development Economics | Page 25
Table A-7: Taxable Household Spending, High Density Units, 2017 Project 277 HOUSEHOLDS WITH AVERAGE INCOME
OF $133,300 TOTAL

HOUSEHOLD

SPENDING

TAXABLE
SALES

TAXABLE

PERCENT

TOTAL SALES

AS PERCENT

OF INCOME

TAXABLE

SALES AS

PERCENT OF

STORE CATEGORY INCOME
RETAIL
Apparel Store Group $418,961 $418,961 100.0% 1.1% 1.1%
General Merchandise Group $1,502,669 $996,444 66.3% 4.1% 2.7% Department Stores/Other General Merch. $323,084 $292,876 90.7% 0.9% 0.8% Other General Merchandise $942,010 $608,538 64.6% 2.6% 1.6% Drug & Proprietary Stores $237,575 $95,030 40.0% 0.6% 0.3% Specialty Retail Group $430,046 $430,046 100.0% 1.2% 1.2% Food, Eating and Drinking Group $2,986,003 $1,978,652 66.3% 8.1% 5.4% Grocery Stores $1,297,011 $324,253 25.0% 3.5% 0.9%
Specialty Food Stores $42,411 $10,603 25.0% 0.1% 0.0%
Liquor Stores $66,312 $63,526 95.8% 0.2% 0.2%
Eating Places $1,580,270 $1,580,270 100.0% 4.3% 4.3%
Building Materials And $0 $0 0.0% 0.0% 0.0%
Homefurnishings Group $590,880 $590,880 100.0% 1.6% 1.6% Automotive Group $2,902,038 $2,822,085 93.3% 7.9% 7.6%
Sub-Total Retail $8,830,599 $7,237,068 82.0% 23.9% 19.6%

SERVICES
Rental Services $67,940 $0 0.0% 0.2% 0.0%
Professional Services $22,831 $0 0.0% 0.1% 0.0%
Medical Services
Eyecare $211,732 $105,866 50.0% 0.6% 0.3%
Other Medical $631,310 $0 0.0% 1.7% 0.0%
Repair Services
Auto Repair $155,075 $62,030 40.0% 0.4% 0.2%
Other Repair $73,389 $0 0.0% 0.2% 0.0%
Personal Services
Personal Care Services $146,394 $14,639 10.0% 0.4% 0.0% Other Personal $92,532 $0 0.0% 0.3% 0.0%
Entertainment/Recreation
Movie, Theater, Opera, Ballet $141,697 $14,170 10.0% 0.4% 0.0% Sporting Events $43,369 $4,337 10.0% 0.1% 0.0%
Other Entertainment $300,695 $0 0.0% 0.8% 0.0%
Sub-Total Services $1,886,964 $201,042 10.7% 5.1% 0.5%
GRAND TOTAL $10,717,563 $7,438,110 69.4% 29.0% 20.1%
Source: ADE, Inc.; retail demand model derived from U.S. Economic Census, Bureau of Labor Statistics Consumer Expenditure Survey and PUMS database.

Applied Development Economics | Page 26
Table A-8: Taxable Household Spending, Affordable Units, 2017 Project 34 HOUSEHOLDS WITH AVERAGE INCOME
OF $54,600 TOTAL

HOUSEHOLD

SPENDING

TAXABLE
SALES

TAXABLE

PERCENT

TOTAL SALES

AS PERCENT

OF INCOME

TAXABLE

SALES AS

PERCENT OF

STORE CATEGORY INCOME
RETAIL
Apparel Store Group $26,954 $26,954 100.0% 1.5% 1.5%
General Merchandise Group $100,288 $65,954 65.8% 5.4% 3.6% Department Stores/Other General Merch. $20,678 $18,745 90.7% 1.1% 1.0% Other General Merchandise $62,463 $40,351 64.6% 3.4% 2.2% Drug & Proprietary Stores $17,146 $6,858 40.0% 0.9% 0.4% Specialty Retail Group $26,156 $26,156 100.0% 1.4% 1.4% Food, Eating and Drinking Group $195,508 $127,676 65.3% 10.5% 6.9% Grocery Stores $87,372 $21,843 25.0% 4.7% 1.2%
Specialty Food Stores $2,835 $709 25.0% 0.2% 0.0%
Liquor Stores $4,222 $4,045 95.8% 0.2% 0.2%
Eating Places $101,079 $101,079 100.0% 5.4% 5.4%
Building Materials And $0 $0 0.0% 0.0% 0.0%
Homefurnishings Group $36,749 $36,749 100.0% 2.0% 2.0%
Automotive Group $166,643 $161,509 93.3% 9.0% 8.7%
Sub-Total Retail $552,297 $444,997 80.6% 29.8% 24.0%

SERVICES
Rental Services $3,418 $0 0.0% 0.2% 0.0%
Professional Services $1,148 $0 0.0% 0.1% 0.0%
Medical Services
Eyecare $10,645 $5,323 50.0% 0.6% 0.3%
Other Medical $31,740 $0 0.0% 1.7% 0.0%
Repair Services
Auto Repair $7,797 $3,119 40.0% 0.4% 0.2%
Other Repair $3,690 $0 0.0% 0.2% 0.0%
Personal Services
Personal Care Services $7,360 $736 10.0% 0.4% 0.0%
Other Personal $4,652 $0 0.0% 0.3% 0.0%
Entertainment/Recreation
Movie, Theater, Opera, Ballet $7,124 $712 10.0% 0.4% 0.0% Sporting Events $2,180 $218 10.0% 0.1% 0.0%
Other Entertainment $15,118 $0 0.0% 0.8% 0.0%
Sub-Total Services $94,871 $10,108 10.7% 5.1% 0.5%
GRAND TOTAL $647,169 $455,105 70.3% 34.9% 24.5%
Source: ADE, Inc.; retail demand model derived from U.S. Economic Census, Bureau of Labor Statistics Consumer Expenditure Survey and PUMS database.

M EMORANDUM
To: Callie Taylor
From: Teifion Rice-Evans and Russ Powell
Subject: San Luis Ranch Fiscal Impact Analysis Peer Review; EPS #242055
Date: August 14, 2024
The City of San Luis Obispo (City) has engaged Economic & Planning Systems, Inc. (EPS) to provide a peer review of fiscal impact analyses prepared by Applied Development Economics, Inc. (ADE) for the San Luis Ranch project (Project). The initial fiscal impact analysis (FIA) was prepared by ADE in 2017, and the most recent update to the FIA was prepared in 2024.

The City asked EPS to review the FIAs. The City was, in particular, interested in understanding the impact of the proposed land use changes in Lot 7 on the expected fiscal outcomes. To isolate changes to fiscal impacts associated with Lot 7 land use changes, EPS developed a simplified version of the 2024 FIA calculations. It may be beneficial for the City to ask the developer to run this same analysis using its full model.

As part of its review, EPS found an inconsistency between the developer’s proposed development program and that evaluated in their 2024 analysis that ought to be corrected. For the purposes of the Lot 7 assessment, EPS used the developer’s proposed development program.

The developer is proposing substantial changes from the 2017 land use development program. The 2024 land use
program reduces the scale of commercial development and increases the scale of residential development. As shown in the table below, the largest changes include (1) reduction of the originally proposed 150,000-square-foot commercial center to a 7,000-square-foot commercial development, and (2) an
expansion of the residential program from 580 units
to 923 units.

Memorandum
August 14, 2024
Economic & Planning Systems, Inc. (EPS) 2
The changes in the land use program were primarily driven by the proposed changes in Lot 7. The proposed Lot 7 land use changes include: (1) a reduction in the commercial program from 150,000 square feet to 7,000 square feet, and (2) an addition of 276 multifamily for-rent residential uses and 67 affordable units.

EPS used a simplified version of the 2024 FIA model to compare three different Lot 7 land use programs. The three land use programs assessed included: (1) the 2024 land use program assuming the 7,000 commercial space is all taxable retail space; (2) the 2024 land use program assuming that the commercial space is for services and does not generate taxable sales; and (3) the 2017 land use program. EPS identified general or simplified assumptions from the 2024 FIA and applied them to the three land use programs. Key 2024 FIA assumptions applied included assessed value for residential and commercial uses, sales tax per square foot for retail, and multipliers for “persons served” to derive “Other Revenue” and “Expenditures”. For the 150,000 square foot commercial program under the 2017 land use program, EPS assumed an average of $348 per square foot (equivalent to the inflated number of $260 per square foot used in the 2017 FIA).

The change in the Lot 7 land use program substantially changes the fiscal impact picture for the City. Lot 7 fiscal impacts are estimated to shift from $1.38 million in net annual revenues to the City’s General to between $160,000 and $240,000 in net annual costs to the City’s General Fund. As shown, the main drivers of the estimated reduction in revenues are from both the general and 2017 Land Use and 2024 Land Use Revision
Residential 2017 Units 2024 Units
Low Density 220 192
Medium Density 120 77
High Density 206 562
Affordable Housing
Very Low Income 34 70
Low Income 4
Moderate Income 4
Work Force 14
Residential Totals 580 923
Non-Residential Bldg. SF Bldg. SF
Hotel 120,000 120,000
Office 100,000 80,000
Commercial 150,000 7,000
Non-Residential Totals 370,000 207,000

Memorandum
August 14, 2024
Economic & Planning Systems, Inc. (EPS) 3
Measure G sales tax revenues. The new Lot 7 residential uses increase the annual property tax and other revenues, but not sufficiently to counterbalance the loss in sales tax revenue. On the cost side, the 2024 land use program addition of new residential development substantially adds to the level of public service costs to support the development.

Fiscal Impact Comparison under Current Measure G Tax Rate 2024 FIA 2024 FIA 2017 FIA
Land Uses No Sales Tax Land Uses
Property Tax $151,738 $148,518 $69,000
Sales Tax $29,976 $553 $522,129
Measure G $44,965 $829 $783,194
Property Tax In Lieu of VLF $87,681 $85,821 $39,871
Other Revenue $202,192 $196,091 $58,602
Total Revenues $516,553 $431,811 $1,472,796
Expenditures $679,660 $670,123 $91,595
Surplus/(Deficit) ($163,107) ($238,312) $1,381,201

September 24, 2024
TO: Mayor and City Council
FROM: Timmi Tway, Community Development Director
SUBJECT: San Luis Ranch Proposed Lot 7 Amendments
Approved SLR Specific Plan – Lot 7
Lot 7 of the San Luis Ranch Specific Plan (SLRSP) is a 11.44-acre commercial parcel that was originally approved in 2017 for 150,000 sq. ft. of commercial uses. It was intended to be a major tax revenue source for the City, as required by the City’s General Plan1 and was meant to complement the hundreds of housing units approved in the SLRSP. In November 2020, the City Council approved a Specific Plan amendment to increase the number of allowed residential units in the SLRSP from 580 to 654 and to transfer the majority of SLR’s inclusionary affordable housing requirements to Lot 7. This amendment added 64-77 affordable housing units to a 1.85-acre section of Lot 7. SLR proposed to have People’s Self Help Housing (PSHH) construct the units to fulfill the inclusionary housing requirements of the SLRSP and Development Agreement. Per the November 2020 approval, the remaining 9.59 acres on Lot 7 was to be developed with 114,300 sq. ft. of commercial uses. The location of Lot 7 is shown in Figure 1 on page 4 of this memo.

SLR Current Proposal
San Luis Ranch submitted a proposal for General Plan and Specific Plan amendments on April 29, 2024, which proposes developing Lot 7 with an additional 276 market rate residential units inlieu of the previously approved commercial development. In order to comply with the Neighborhood Commercial zoning, the site is designed as horizontal mixed-use with potential for 7,000 sq. ft. of commercial. Upon submittal of the proposal, City staff requested additional information, including a peer review of the fiscal impact analysis that was provided by the applicant. SLR provided additional information regarding the application and responses to staff’s questions on 7/18/24, and the fiscal analysis peer review was completed on 8/14/24.

Fiscal Impact Analysis
While the proposed additional housing units would help fulfil the City’s goals for housing production, fiscal impact to the City’s revenues and preservation of prime commercial sites are key factors for Council to consider in conjunction with amendments to the City’s General Plan and the SLR Specific Plan. SLR’s consultant, Applied Development Economics (ADE), has provided a fiscal impact analysis (FIA) which compares the 2017 estimated fiscal impact of the original project to the 2024 fiscal impact of the revised project proposal. A summary of the SLR produced FIA is as follows:
1 General Plan Section 8.1.4. identifies Performance Standards for the San Luis Ranch Special Focus Area.

The General Plan requires between 50,000 to 200,000 sq. ft. of commercial to be constructed in the SLRSP area. The stated purposes of the SLRSP include providing a commercial/office transition to the existing adjacent commercial areas and providing walkable and neighborhood commercial uses in SLRSP.

Memorandum
San Luis Ranch Proposed Lot 7 Amendments

• SLR’s FIA analyzes the entire SLRSP as a whole, comparing the 2017 fiscal impact of the original project to the 2024 fiscal impact of the proposal, and does not isolate the specific impacts of the requested changes on Lot 7.
• SLR’s FIA shows the SLR specific plan area would not be fiscally negative as a project overall, but it would create less revenue than originally identified in 2017 with the proposed change.
• ADE’s analysis shows that the overall SLR Specific Plan area at full buildout, including the proposed Lot 7 residential project, is estimated to generate about $3.43 million per year in General Fund revenues and $2.67 million per year in municipal service costs. This totals an annual cost/revenue surplus of about $758,440.
• SLR’s FIA applies market changes that make the overall SLR project appear to be fiscally positive despite the increased service costs associated with additional housing development and loss of commercial revenues that would result from the proposed amendment. The applicant’s FIA compares the revised project in 2024 dollars (taking into account increased property values and Measure G) to the original project in 2017 dollars.

In order to gain a more accurate picture of the fiscal impact of the proposed amendments to help inform future decisions on the project, the City asked its fiscal consultant, EPS, to isolate the proposed land use changes on Lot 7 and identify the fiscal impact in 2024 dollars that would result from the proposed amendments. EPS used ADE’s fiscal model to calculate the fiscal impact of the currently approved commercial project in 2024 dollars and compare it to the proposed project in 2024 dollars, which was missing from the ADE report.
• EPS’s fiscal impact calculations show that the proposed Lot 7 land use change from commercial to residential would create a net fiscal loss to the City of $1.54-$1.62 million annually when comparing Lot 7 as previously approved and Lot 7 as currently proposed in 2024 dollars.
• There are several factors that contribute to this identified shortfall in revenues which were not taken into account in the applicant’s FIA. Measure G, a 2020 voter approved initiative to increase local sales tax revenues, would have been expected to account for $783,194 annually from the previous approved commercial development at this location. Changes in market conditions, inflation, and increases in the sales and use tax rates between 2017 and 2024 improve the overall SLR project’s fiscal performance and make the applicant’s 2024 FIA appear to close much of the gap caused by the change in the land use program. • EPS also identified data errors in fiscal model used in the applicant’s 2024 FIA. The applicant’s current project description proposes 923 units, while the applicant’s fiscal model included only 853 residential units.

SLR provided a follow-up memo to City staff on September 12, 2024, describing the difference in methodology between the ADE and EPS reports. The SLR memo suggests that retail space is overdeveloped in the City of San Luis Obispo, leading SLR to being unsuccessful in attempts to find a buyer or operator for commercial on Lot 7. The applicant argues that a fiscal impact study that assumes 100% absorption (no vacancy) of the commercial component is not realistic given the current commercial climate. While the applicant and staff may not agree on the methodology of the fiscal impact analysis, both studies are valuable, and staff intends to include all fiscal studies and memos produced by the applicant in the City Council initiation for this item for City Council’s consideration.

Memorandum
San Luis Ranch Proposed Lot 7 Amendments

Affordable Housing Requirements
Affordable and inclusionary housing are key components of the SLRSP and are identified in the Development Agreement. While construction of the market rate units at SLR is currently nearing completion, the majority of SLR’s inclusionary housing requirements have not been fulfilled. SLR has not made efforts to record the Tentative Map approved by City Council in November 2020, and therefore SLR has not been able to provide People’s Self Help Housing (PSHH) with site control to apply for grant funding to develop the 64-77 low and very low-income units which were required on a portion of Lot 7.

SLR’s current proposal includes increasing the affordable units of the PSHH site to allow up to 82 units; however, the proposal does not include any guarantee or timing for construction of the affordable units in relation to the existing project or the additional 276 market rate units that are proposed. City staff has had multiple meetings with SLR and PSHH in attempt to facilitate construction of the development of the affordable units as quickly as feasible. However, until SLR records the 2020 map and transfers the 1.85 acre affordable housing property to PSHH, PSHH cannot acquire funding for construction and development of the site cannot move forward. Staff continues to work with all parties involved to determine how to best move the affordable housing components to change the remainder of Lot 7 from commercial to residential.

Next Steps
As required by Municipal Code Section 17.130.020, General Plan and Specific Plan amendments shall be referred to City Council for initiation and early consideration prior to staff processing any applications. To prepare for the initiation, city staff have been working with the developer to address outstanding items needed to move the item forward, including discussions about whether the Development Agreement needs to be amended and to what extent, what fees would apply to the project, the timing of the affordable housing development, and what the fiscal impact of the land use change may be. City staff had planned to take the initiation request to Council on September 17, 2024, however, the SLR applicant requested additional time to address the fiscal impact and other project components prior to Council review. City staff met with SLR representatives on September 12, 2024. City staff is currently planning to reschedule the item for Council consideration as soon as an opening on a Council agenda is available (agendas are currently full and closed to additional items for the remainder of 2024.) If authorized by Council to proceed, the project would require a Specific Plan Amendment (SPA), a General Plan Amendment (GPA), and potentially a Zone Change (ZCH), a modification to the approved Development Agreement, as well as a Vesting Tentative Tract Map and Development Plan. Environmental review under the California Environmental Quality Act (CEQA) will be required, as well as review by San Luis Obispo County Airport Land Use Commission (ALUC).

Memorandum
San Luis Ranch Proposed Lot 7 Amendments

Figure 1. San Luis Ranch Specific Plan Area – proposed project area (Lot 7) noted in blue outline Lot 7

Memorandum
San Luis Ranch Proposed Lot 7 Amendments

Figure 2. Currently Entitled Lot 7 Site Plan (Commercial Use) Figure 3. Applicant’s Proposed Lot 7 Site Plan (Residential Use)

October 31, 2024
TO: Mayor and City Council
FROM: Timmi Tway, Community Development Director
SUBJECT: San Luis Ranch Proposed Lot 7 Amendments
The proposed San Luis Ranch Lot 7 General Plan and Specific Plan amendments have been scheduled for City Council review of initiation on December 10, 2024. A complete agenda report with current project description, fiscal impact analysis considerations, and staff analysis will be provided prior to the meeting.

City staff is providing this memo to address specific points identified in San Luis Ranch’s October 9, 2024 letter to City Council and provide additional context for Council’s benefit. 70 Affordable Units by PSHH
The 70 affordable units noted in the SLR Lot 7 project description for construction by People’s Self Help Housing (PSHH) are an existing project requirement which are necessary to fulfill SLR’s inclusionary housing requirement.

The originally approved 2017 Specific Plan and Development Agreement required SLR to construct either a total of 68 affordable units, or 34 affordable units and payment of in-lieu fees for the commercial development. These calculations were based on the Inclusionary Ordinance in place in 2017:
2017
Approval
Number of Affordable
Units
Location & Requirement Status
4 low-income units Required in single-family
Zoning NG-23
Completed by SLR
4 moderate income
units
Required in single-family
Zoning NG-10
Completed by SLR
26 very-low-income
units
Required in multi-family
Zoning NG-30
Not yet constructed
34 inclusionary housing
units or payment of inlieu fees
Required to fulfill commercial
inclusionary requirement
Based on amount of commercial
acreage
Not yet constructed
2017
Total:
68 affordable units or
34 affordable units and payment of in-lieu fees
- 8 constructed
- 60 units not
constructed
A Specific Plan amendment was approved in November 2020 to transfer the 26 required verylow-income affordable units from the multi-family portion of SLR to a mixed-use project on Lot 7 (which, at the time, was a mixed-use site proposed as a majority commercial). As a project benefit

Memorandum
San Luis Ranch Proposed Lot 7 Amendments

proposed in exchange for the City allowing the transfer of the units to Lot 7, the developer offered to deliver at least four and potentially up to 17 additional very-low-income housing units with the 2020 Specific Plan amendment, thereby bringing the total affordable housing units in the PSHH project on Lot 7 to between 64-77 units. 4 low-income and 4 moderate-income units were constructed in the single-family residential area, as required. Therefore, with the 2020 Specific Plan amendment plus the 8 units that were constructed in the single-family area, the total number of required affordable units have now reached 72-85 within the SLR Specific Plan area. SLR has, to date, constructed 8 of these units, leaving a remaining requirement of 64-77 units. The following table illustrates the affordable units currently required in the project and the current status of construction:
2020
Approval
Number of
Affordable units
Location & Requirement Status
4 low-income units Required in single-family
Zoning NG-23
completed
4 moderate income
units
Required in single-family
Zoning NG-10
completed
26 very-low-income
units
Previously required within multi-family
development - Transferred in 2020
from multi-family to Lot 7
Not constructed
* Planned to be
developed by PSHH
34 inclusionary
housing units or
payment of in-lieu fees
Required to fulfill commercial
inclusionary requirement
Not constructed
* Planned to be
developed by PSHH
Between 4 to 17
additional very-lowincome units
Project benefit in exchange for
transfer of 26 very-low-income units
from multi-family site to Lot 7
Not constructed
* Planned to be
developed by PSHH
2020 Total: 72-85 affordable units (total units within SLR) Of this total, 64-77 are to be constructed on Lot 7 by PSHH - 8 constructed
- 64-77 units
unfulfilled
The October 9, 2024 letter from SLR to Council members stated that PSHH will provide at least 70 inclusionary units for low and very-low income tenants. In a July 18, 2024 response to City staff, the applicant included the following affordable housing proposal. Levels of affordability (very-low, low, or moderate income) have not been identified for units on Lot 7. SLR’s current proposal includes:
2024 SLR
Proposal
Number of Affordable
units
Location & Requirement Status
4 low-income units Required in single-family
Zoning NG-23
completed
4 moderate income units Required in single-family
Zoning NG-10
completed
26 very-low-income
units
Previously required within multi-family
development - Transferred in 2020
from multi-family to Lot 7
Not constructed
* Planned to be
developed by PSHH

Memorandum
San Luis Ranch Proposed Lot 7 Amendments

15 inclusionary housing
units
Proposed for commercial inclusionary,
based on 2017 Inclusionary
Ordinance:
• 0.5 acre Lot 7 Commercial – 1 unit
• 3.5 acre Hotel – 7 units
• 3.7 acre Office use – 7 units
Not constructed
* Planned to be
developed by PSHH
28 affordable units 10% of the additional 276 market rate units proposed on Lot 7 required to be
affordable, based on current
Inclusionary Ordinance requirement
Not constructed
* Planned to be
developed by PSHH
Potentially between 0 to
13 additional affordable
units if PSHH can
secure funding
Additional units beyond required
minimums no longer guaranteed in
current proposal
Not constructed
* Planned to be
developed by PSHH
2024
Proposed
Total:
77-90 affordable units (total units within SLR)
Of this total, 69-82 are proposed to be constructed on Lot 7 by PSHH
- 8 constructed
- 69-74 remaining
units unfulfilled
Timing of Affordable Unit Construction
Currently, San Luis Ranch has an outstanding obligation for 26 very-low-income units that has not been fulfilled, that are required due to the existing development of the multi-family portion of the SLR project which was completed in September 2024. The SLR Affordable Housing Agreement, which was recorded in September 2020 (prior to Council approval of the transfer of the 26 very-low-income units) states that the 26 very-low-income units “shall be constructed in proportion to the construction of the other units in the NG-30 Zone, or as stated in condition of approval of future NG-30 Zone development approval.”
At the time of the 2020 Specific Plan amendment and the NG-30 development approval, SLR was resistant to a timing condition for construction of the affordable units. City ordinance requires that inclusionary units “be constructed concurrently with market rate units, unless an alternative development schedule is otherwise stipulated by the applicable review authority.” City ordinance also requires inclusionary units to be dispersed throughout the residential development project to prevent a concentration of affordable units and ensure concurrent construction of affordable units, and requires that the affordable units be consistent with the design of market rate units in terms of exterior appearance, materials, and finished quality. SLR was provided some relief from strict adherence to the Inclusionary Ordinance, including the dispersed location and design of the units, in 2020 in exchange for 4 to 17 additional affordable housing units. A construction timing condition was not included in the resolution of approval with the 2020 amendment or the NG-30 development approval. However, the recorded Affordable Housing Agreement still states that the 26 very-low-income units shall be constructed in proportion to the construction of the other units in the NG-30 Zone. See Attachment 1, SLR Affordable Housing Agreement, and the following link to the November 2020 Council Agenda Report.

City staff has concerns that the applicant has not made sufficient effort to facilitate construction of the affordable units required as part of the 2020 Lot 7 project approval and Specific Plan amendment. Site control of the PSHH parcel on Lot 7 is necessary for PSHH to apply for grant funding for project construction. San Luis Ranch has expressed concern that recording the tract map for this lot would trigger improvement requirements that will change with the new lot

Memorandum
San Luis Ranch Proposed Lot 7 Amendments

configuration in the proposal that is currently being processed. In their October 9, 2024 letter, San Luis Ranch proposes to bond for the site improvements associated with providing utilities and access to the PSHH lot. City staff is agreeable to this and has been recommending that SLR record the final map (or a portion of the map as a phased map) and bond for improvements to facilitate a shovel ready project for PSHH. Tract 3142 can be recorded by SLR at any time (in whole or as a phased final map) to facilitate this transfer of ownership. An amendment to Lot 7 is not needed to complete this map recordation or bonding.

In their October 9th letter, SLR proposes dedication of the recorded legal parcel to PSHH and payment to PSHH of $500,000, and in exchange requests that Lot 7 be free of any construction start or occupancy restrictions related to the affordable component of the project. Staff has concerns that this proposal does not ensure the project obligations to provide affordable housing are fulfilled, and does not meet the intent of the DA or the City’s Inclusionary Ordinance. City staff strongly recommends that any Specific Plan amendment to increase the market rate units on Lot 7 should also include a condition for timing of construction of any required affordable housing units in order to ensure that those units are constructed.

Impact Fees
The 2018 Development Agreement for SLR included provisions to lock in development impact fees for construction of 580 units. These fees are substantially lower than impacts fees charged on permits today. It is City staff’s position that the provision for lower fees does not extend to the additional 276 market rate units currently proposed for entitlement on Lot 7, as they were not contemplated during the development and approval of the Development Agreement. Based on the 2018 DA, SLR has paid permit and impact fees of approximately $21,000 per multi-family unit.

Current fees for multi-family units would be approximately $41,000 per unit. The difference in fees between what the DA locked in for the original 580 units and current fees today equates to a total of about $5.5 million in permit and impact fees for the additional 276 housing units proposed.

The $5.5 million in additional fees that is identified by SLR in the October 9, 2024 letter reflects the standard development fee payment for any residential project submitted under the 2024 fee schedule. These fees are adopted by City Council to cover the cost of development, including impacts to citywide transportation, fire and police, parks, and other City facilities. The City is currently working on an impact fee update, which is expected to go to Council for adoption in 2025. Payment of current fees is a standard project requirement. If the Developer wishes to negotiate the payment of fees that are different from the now current fees, staff recommends that this be considered through an amendment to the Development Agreement.

Fiscal Impact Analysis
The October 9th SLR letter is correct in its statement that as identified in the ADE Fiscal Impact Analysis, the overall SLR Specific Plan area remains fiscally positive for the City even with the proposed changes to Lot 7. The City’s consultant, EPS, has confirmed ADE’s overall projection.

However, this positive fiscal projection is a result of other variables, including Measure G, inflation, and increased home values which have occurred in the past few years. The currently proposed project amendment would create a project that is not as fiscally positive as initially conceived in 2017, even with those factors considered, and the proposed amendment removes the fiscal gains that the City has made in recent years by increasing City expenses and removing tax generating uses. The City has asked EPS to look into the additional issues raised by SLR, including loss of

Memorandum
San Luis Ranch Proposed Lot 7 Amendments

property tax that will result from the sale of 120 units to Cal Poly (Harvest Lofts), and the updated commercial and residential unit counts currently proposed and previously approved on Lot 7. The City is actively working with Cal Poly to determine the amount of lost property tax revenue and to attempt to negotiate alternative methods of payment. Additional fiscal impact calculations are currently being developed and will be provided in the agenda report prior to the December 10th City council meeting,
The Lot 7 commercial development has been a major project component since the project’s initial conception. It was included in the 2014 General Plan Land Use update, and was a major consideration during the tax negotiations with the County prior to annexation of the SLR site. The tax revenue expected from the originally approved 150,000 square foot commercial development within SLR was a factor in the Development Agreement negotiations and the establishment of the Community Facilities District special taxes. The loss of expected tax revenue changes the outcome of all of these previously negotiated agreements. The subject Lot 7 11.44-acre parcel is uniquely positioned on a future major highway interchange, in which the City is investing substantial tax dollars to install.

As noted in SLR’s project summary, commercial development at this location prior to construction of highway interchange has not had much interest. The current site plan was approved by City Council in November 2020, and SLR’s discussions with the City for the proposal to convert to the remaining commercial property to residential began in 2022. If a General Plan amendment is approved to allow residential at this location, future tax dollars will be impacted and the City will not be able to replace the loss of prime commercial land. As the Council reviews this proposed General Plan amendment, the competing Council goals of providing additional housing and future fiscal sustainability for the City will be considered.

Required Applications for Processing Proposed Amendment The currently proposed San Luis Ranch Lot 7 development will require the following applications if Council authorizes the project to proceed:
• General Plan Amendment – Amend Section 8.1.4 “Special Focus Area #2” to reduce required commercial square footage and increase allowable number of residential units.

Amend General Plan land use designation from Neighborhood Commercial (maximum 12 dwelling units per acre) to General Retail (maximum 36 dwelling units per acre.) 1 • Specific Plan Amendment – SLR Specific Plan to be updated to reflect proposed Lot 7 changes, proposed land use plan, and update development standards. • Development Agreement Amendment – Current DA is for 580 units. Update DA to incorporate additional 276 market rate units and affordable housing provisions. 1 City staff originally advised SLR to submit a zoning designation amendment, as the current Neighborhood Commercial zoning limits residential density to a maximum 12 dwelling units per acre. However, following review by counsel, it has been determined that the Specific Plan overlay supersedes the underlying zoning.

The zoning can remain as is, provided that the Specific Plan is updated to reflect the proposed density and development standards.

Memorandum
San Luis Ranch Proposed Lot 7 Amendments

• Affordable Housing Agreement Amendment – The SLR AHA was recorded September 2020. Does not address Lot 7 affordable housing units.
• Tentative Tract Map – Tract 3142 was approved in 2020 for an 11-lot primarily commercial development. New tentative map required to correspond to proposed residential development, including lot configuration, grading and drainage, and site improvements. • Development Plan – ARC and PC review of proposed site development plan and architectural review.
• Environmental review – Per the California Environmental Quality Act (CEQA). Appropriate approach to CEQA has not yet been determined.
• ALUC review – Because there would be General Plan and Specific Plan Amendments, the project would be referred to the San Luis Obispo County Airport Land Use Commission (ALUC) to determine conformity with the adopted Airport Land Use Plan (ALUP).

Attachment 1: SLR Affordable Housing Agreement
Attachment 2: DA Financing Plan, Community Benefits

Memorandum May 17, 2018
San Luis Ranch Financial Feasibility Page 5
Community Benefits
The San Luis Ranch Project, by virtue of its development and conforming to City planning policies, regulatory standards, and mitigating potential environmental impacts, will confer a range of community benefits in the City of San Luis Obispo. These positive effects of the project including community development objectives or social, economic and/or fiscal benefits, while a precondition for a development agreement, are considered as extraordinary community benefits:

1. Creating a new residential neighborhood and commercial district in the City consistent with General Plan policies.

2. Providing a range of housing prototypes that include small, higher density units that will be affordable by design”.

3. Providing new housing targeted at the City’s lower income and working families and including 34 contractually price-restricted affordable (inclusionary) housing units, and an additional 14 price-restricted workforce housing units.

4. Achieving “net-zero” energy consumption and other energy efficiency standards.

5. Generating employment opportunities for the City’s construction-related companies and workers.

6. Financing infrastructure that in addition to meeting travel demands created by the Project relieves existing congestion and provides additional capacity for other future development.

7. Providing more than 50 acres of open space including land set aside for continued agricultural use preserving the area’s agricultural heritage.

Extraordinary Community Benefits
Extraordinary” community benefits of a development project are public improvements or other material offerings that cannot be required by the City based on its code requirements or CEQA mitigation, each which must meet Constitutional statutory standards to achieve the “rational nexus” test. A complete listing of the extraordinary community benefits being offered by the San Luis Ranch Developer is shown in Table 2. Specifically, the developer has committed to constructing or funding improvements or mitigating impacts that exceed the mitigation measures specified in the project environmental impact report or other City-determined requirements. The developer has also agreed to build a public improvement in advance of when it might otherwise be required. For example, an intersection improvement that may not be required to mitigate project-induced congestion until five years in the future could be built in advance, assuring that the improvement is constructed and conferring congestion reduction immediately. These improvements include the following:

1. Land and Building Dedications

2. Multi-Modal Transportation Improvements and Programs

3. Energy and Water Conservation Features

4. Affordable and Workforce Housing Programs
Taken as a whole these cited community benefits total $14.25 million. The estimates were prepared by the Developer’s financial consultant, Kosmont Companies, and have been reviewed for the reasonableness of the assumptions used and computational accuracy by EPS.

Memorandum May 17, 2018
San Luis Ranch Financial Feasibility Page 6
Table 2 Summary of Extraordinary Community Benefits
Comparing the Value of Community Benefits with Value Received by Developer As part of reaching a Development Agreement it is customary that the community benefits offered by the Developer meet or exceed the value(s) conferred on the Developer by the City. As a general measure the extraordinary community benefits offered should meet or exceed the estimated value of the vested entitlement to the developer combined with the additional benefit to the developer from other special terms granted by the City (e.g., infrastructure financing contributions, formation of financing districts, etc.).

Value of Vesting the Entitlement
As a part of this effort a review of the Developer’s pro forma financial analysis was conducted by EPS, subject to the terms of a non-disclosure agreement. Applying the standard method of measuring a reduction in the “threshold IRR” associated with reduced risks and costs to the San Luis Ranch project associated with two vesting assurances: 1) elimination of future planning or regulatory changes (i.e., rezoning of the Project area) and 2) assuring project development phasing through a fixed allocation of housing units pursuant to City’s Growth Management Ordinance. These two considerations are estimated to confer a value of approximately

2.75 million to the Developer.

Dollar Value Beyond
SLR's Fair Share

1.0 Land and Building Dedications

1.1 Agricultural Heritage and Learning Center - Building Costs (Net of Mitigation Requirements)$ 2,025,000

2.0 Multi-Modal Transportation

2.1 Bike Share/Rental $ 290,000

2.2 Car Sharing/Park & Ride $ 290,000

2.3 Electric Car Charging Stations $ 240,000

3.0 Energy and Water Conservation Features

3.1 Solar PV [1]$ 3,204,500

3.2 Building Efficiency/Net Zero $ 725,000

4.0 Affordable and Workforce Housing Programs

4.0 Priority for SLO Residents, Workers (1.5% of Initial Sales Value)$ 4,468,875

4.2 Owner Occupancy Restriction on NG-10 and NG-23 Units (1.5% of Initial Sales Value)$ 2,703,000

4.3 Local Heroes Program - Minimum of $1,500 Incentive per Home (Assuming Approx. 200 Homes)$ 300,000 14,250,000
1]
Sources: San Luis Ranch; City of San Luis Obispo; Kosmont Companies; Economic & Planning Systems, Inc.

Extraordinary Community Benefit Items Offered by San Luis Ranch Total Extraordinary Community Benefits (Rounded)
Total cost of Item 3.1 is $4,930,000. San Luis Ranch's fair share is 35%, or $1,725,500. The balance of $3,204,500 represents value to the City beyond San Luis Ranch's fair share.

M EMORANDUM
To: Callie Taylor, City of San Luis Obispo
From: Russ Powell and Teifion Rice-Evans
Subject: San Luis Ranch Fiscal Impact Analysis Peer Review; EPS #242055
Date: October 30, 2024
The City of San Luis Obispo (City) has engaged Economic & Planning Systems, Inc. (EPS) to provide a peer review of fiscal impact analyses prepared by Applied Development Economics, Inc. (ADE) for the San Luis Ranch project (Project). The initial fiscal impact analysis (FIA) was prepared by ADE in 2017, and the most recent update to the FIA was prepared in 2024.

The City asked EPS to review the FIAs. EPS has prepared a series of analyses as requested by the City. The most recent EPS analysis focused on the isolated fiscal impacts of land use changes for Lot 7. ADE FIAs focused on the net overall fiscal impacts for the Project.

The 2017 ADE FIA estimated a net positive fiscal impact of approximately $986,000, while the 2024 ADE FIA shows a net positive fiscal impact of approximately $758,000. The City is concerned about the reduction of the total retail space proposed for the 2024 land use plan for Lot 7.

This memorandum resummarizes the proposed developer land use program changes and addresses the:
 Fiscal impacts of reduction of allowed retail square footage on Lot 7 from 150,000 to 114,300 building square footage.  Development team’s recommendations for retail market
analysis.
 Property tax implications of the Cal Poly purchase of the 120-unit Harvest Lofts for student housing.

Memorandum
October 30, 2024
Economic & Planning Systems, Inc. (EPS) 2
Developer-Proposed Land Use Program Changes
The developer is proposing substantial changes from the 2017 land use development program. The 2024 land use program reduces the scale of commercial development and increases the scale of residential development.

As shown in the table below, the largest changes include (1) reduction of the originally proposed 150,000-square-foot commercial center to a 7,000-squarefoot commercial development and (2) an expansion of the residential program from 580 units to 923 units.

The changes in the land use program were primarily driven by the proposed changes in Lot 7. The proposed Lot 7 land use changes include (1) a reduction in the commercial program from 114,300 square feet to 7,000 square feet and (2) addition of 276 multifamily for-rent residential units and 67 affordable units. 2017 Land Use and 2024 Land Use Revision
Residential 2017 Units 2024 Units
Low Density 220 192
Medium Density 120 77
High Density 206 562
Affordable Housing
Very Low Income 34 70
Low Income 4
Moderate Income 4
Work Force 14
Residential Totals 580 923
Non-Residential Bldg. SF Bldg. SF
Hotel 120,000 120,000
Office 100,000 80,000
Commercial 114,300 7,000
Non-Residential Totals 334,300 207,000

Memorandum
October 30, 2024
Economic & Planning Systems, Inc. (EPS) 3
Fiscal Impacts of Retail Space Reduction on Lot 7
A land use change adopted for Lot 7 in 2020 reduced the entitled retail space from 150,000 building square foot to 114,300 building square foot. The FIA from 2017 was not updated to reflect this reduction in retail space. The City has requested that EPS update the Lot 7 analysis of fiscal impacts shown in our memorandum dated Augst 14, 2024.

In addition to addressing the fiscal impacts related to the reduction of retail space, the City asked EPS to estimate the fiscal impacts of the total number of proposed units on Lot 7. As noted in the August 2024 memo by EPS, the applicant's fiscal model included 853 total units in error, while the project description includes 923 units as the current proposal. The 70-unit very low affordable housing project for Lot 7 is assumed to be tax-exempt. EPS reduced assessed valuation for the year 2020 based on reduced retail space and 70-units of very low affordable housing. Sales tax, Measure G sales tax, and property tax in-lieu of VLF have been adjusted incorporating the results of the identified land use changed as of 2020.

The table below shows net fiscal impacts of the land use changes for Lot 7.

Development Team Recommendation for Additional Lot 7/Retail Analysis
In response to EPS’s analysis focused on net fiscal impacts for the land use changes proposed for Lot 7, the development team noted that consumer spending habits have changed since 2017, creating less demand in the current real estate market for bricks-and-mortar retail space. They note that while demand for retail space has shrunk, there is an increased demand for residential uses, as noted by significant increases in the sales prices for new housing. 2024 FIA 2024 FIA 2020 2017 FIA
Land Uses No Sales Tax Land Uses Land Uses
Property Tax $143,965 $140,745 $52,578 $69,000
Sales Tax $29,976 $553 $307,467 $522,129
Measure G $44,965 $829 $461,201 $783,194
Property Tax In Lieu of VLF $87,681 $85,821 $30,382 $39,871 Other Revenue $202,192 $196,091 $44,655 $58,602
Total Revenues $508,780 $424,038 $896,282 $1,472,796
Expenditures $679,660 $670,123 $69,795 $91,595
Surplus/(Deficit) ($170,880) ($246,085) $826,487 $1,381,201 8/14/2024 Results ($163,107) ($238,312) n/a $1,381,201

Memorandum
October 30, 2024
Economic & Planning Systems, Inc. (EPS) 4
The developer states that they have not been able to find a buyer for Lot 7, which is entitled for up to 114,300 building square foot of retail space. The development team suggests that the following retail analyses should be included when determining the impacts of the 2024 proposed land use plan change:
 Feasibility analysis of additional retail space in the City.  Absorption analysis for new retail.
 Appropriately gauged vacancy factor.

EPS Input on Potential Retail Market Analysis
Context
The retail market has long been a highly competitive and dynamic industry.

Recent shifts to online shopping (accelerated by the pandemic) have reduced demand for some types of retail stores/formats and led to the closure or underutilization of many retail sites throughout U.S. jurisdictions.

EPS agrees that a retail market study could help determine the viability of a new neighborhood shopping center or other retail configuration on the areas of the site originally envisioned for retail development. To the extent there is no, limited, or less demand for new retail development than originally envisioned, it would be appropriate to adjust the assessment of expected fiscal impacts under the original land use plan to recognize such market realities.

EPS Recommendation
EPS recommends that a qualified retail market specialist be hired to assess the market prospects for new retail development at the Project site under the original land use plan. This would be a site-specific market study that would likely take account of primary and secondary market area demand, competitive retail supply from existing or planned retail, as well as site location and characteristics.

Existing residential development in the market areas, as well as planned new development in the site and market areas, would be taken into account.

Memorandum
October 30, 2024
Economic & Planning Systems, Inc. (EPS) 5
This type of analysis would be expected to provide insight into these questions:
 Is there demand for retail at the current time or would it require residential buildout/other factors, if any, to drive demand?
 What type and amount of retail space would be in demand at the site in the short, medium, and long terms?
 Would retail development be expected to occur in one phase or in multiple phases?
It is important to note that many viable retail sites do not generate the same land value for an owner as proposed housing developments under a residential zoning.

It will be important to clarify the definition of “viable retail” in this context.

Overall, the retail study should inform the City of the viable retail program for the site (if any) and its expected timing. This retail program could then be compared to what was expected under the original plan and what is proposed under the new plan. The viable retail program could then be analyzed from a fiscal impact perspective to assess the impact of the new land use plan relative to a “markettested” version of the original land use plan.

EPS Assessment of Fiscal Revenue Impacts of Harvest Lofts Ownership Change
Cal Poly has purchased the 120-unit Harvest Lofts for student housing. As a result, the lofts will become tax-exempt uses owned by the university. EPS estimated the net loss of revenues resulting from the conversion of previously taxable residential units to tax-exempt uses owned by the university. The 2024 FIA assumed these units had an assessed value of $555,600 per unit. Using this same assumption, the reduction in annual property tax revenue to the City’s General Fund, relative to when it was for-profit ownership, would be approximately $60,000.

The current assessed value for these units for Fiscal Year 2024-25, based on current property tax bills, an average of about $150,000 per unit. Relative to the existing assessed value, EPS estimates the net loss of annual property tax revenues would be $16,000.