Attachment J
Economic Impact Analysis
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ECONOMIC IMPACT STUDY
NORTH CITY - UNIVERSITY DISTRICT,
SPECIFIC PLAN AMENDMENT
SAN MARCOS, CALIFORNIA
M AY 23 , 2022
www.FinanceDTA.com 5000 Birch Street, Suite 6000
Newport Beach, CA 92660
ECONOMIC IMPACT REPORT
NORTH CITY - UNIVERSITY DISTRICT
SPECIFIC PLAN AMENDMENT
Prepared for:
City of San Marcos
1 Civic Center Drive
San Marcos, CA 92069
Attention: Arthur Pinon, Senior Planner
TABLE
OF CONTENTS
SECTION
I EXECUTIVE SUMMARY ................................ ............ 1 A Purpose of the Study ................................ ................... 1 B Types of Economic Impacts Evaluated in
the Study ................................ ................................ ....... 1 C Economic Impact Conclusions ................................ . 2 D Market Considerations ................................ ................ 4 II INTRODUCTION ................................ ..................... 5 A Scope and Methodology ................................ ............ 5 B Limitations – Accuracy of Information .................. 8 III ECONOMIC IMPACTS ................................ ............ 9 A Recurring Economic Impacts ................................ .... 9 B One -Time Employment and Output
Impacts (Construction) ................................ ............ 12 C Market Considerations ................................ .............. 14
APPENDICES
APPENDIX A ECONOMIC IMPACT MODEL,
CURRENT PLAN
APPENDIX B ECONOMIC IMPACT MODEL,
PROPOSED PLAN
1 SECTION I
EXECUTIVE SUMMARY
City of San Marcos – University District, Specific Plan Amendment May 23, 2022 Economic Impact Study
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I EXECUTIVE SUMMARY
A Purpose of the Study
The objective of this Fiscal Impact Study (the “Study”) is to analyze the economic impacts to the City of San Marcos (the “City”) from the zoning and land use change proposed for North City University District, Specific Plan Amendment. (the “Project”).
The University District Specific Plan (also known as “North City”) is a 195-acre site located south of Route 78, north of Barham Drive and overlaps Twin Oaks Valley Road to the east and west. It is east of the Creek District and is envisioned as a “vibrant, urban and pedestrian friendly downtown area” near CSUSM. The site is surrounded by several retail locations, Cal State University, San Marcos and the Cal State San Marcos Light Rail Station. The University District Specific Plan (“UDSP”) was adopted in 2009 to create a downtown area centrally located within San Marcos with residential units, student housing units, hotel rooms, office space, retail/commercial space, civic/community spa ce, parks, trails/paths, habitat preservation and public streets.
The University District Specific Plan is being updated to amend building height regulations, mix of land uses, additions to the Specific Plan area and redistribution of housing units and commercial space (the “Proposed Plan”). This amendment includes requesting approval to develop: a 12-story mixed-use project with 484 apartments and 20,000 square feet of commercial space, a 25,000-sf grocery store with 55,000 square feet of office space, a 5- story mixed use project with 73 apartments and 6,000 square feet of commercial space, a five-lot subdivision with 23 commercial condo units and three residential units and removal of two planned bridges from Johnson Lane over the SR-78 and over Discovery on the west side of the UDSP.
Currently, the Existing UDSP Plan (the “Existing Plan”) consists of 300,000 square feet of medical office, 652,000 square feet of general office, 700,000 square feet of mixed retail / commercial, 2,600 mixed use residential units, 800 student housing units, and 450 hotel rooms. If the proposed North University District, Specific Plan Amendment is adopted, the Proposed Plan will consist of 200,000 square feet of medical office, 920,000 square feet of general office, 345,000 square feet of mixed retail / commercial, 2,600 mixed use residential units, 800 student housing units and 250 hotel rooms. Consequently, the Study estimates the economic impacts of the Existing Plan and Proposed Plan (collectively, the “Scenarios”) and provides a side-by-side comparison of both Scenarios.
B Types of Economic Impacts Evaluated in the Study
The Study identifies the general economic impacts that would occur due to the Project and quantifies these impacts wherever possible. General economic impacts include additions to employment (number of average annual full- and part-time jobs) and economic output (e.g., gross receipts) in the City.
The Study also distinguishes between one-time impacts and permanent impacts. One-time 2 SECTION I
EXECUTIVE SUMMARY
City of San Marcos – University District, Specific Plan Amendment May 23, 2022 Economic Impact Study
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impacts include benefits that occur on a non-recurring basis as a result of construction activity, while permanent impacts refer to benefits that occur on a continuing basis, year after year. Generally, first, there is a one-time impact from the construction of a facility.
Then, after the construction phases are complete, firms have a recurring impact on the economy through their ongoing operations.
Economic impact studies also operate under the basic assumption that any increase in spending has three effects: direct, indirect, and induced. First, there is a direct effect caused by the additional output of goods or services. Second, there is a ripple of indirect effects on all of the industries whose outputs are used by various industries and by a firm’s supply chain. Third, there are induced effects that arise when employment increases in the region and stimulates greater household spending.
C Economic Impact Conclusions
The economic impact of the Current Plan and the Proposed Plan are analyzed separately within the Study. In order to quantify the findings, the Study has evaluated the following elements as the major indicators of the economic impact: (i) Permanent Employment – direct-on-site and indirect/induced (which supplies or supports direct employment), (ii) Permanent Output (Gross Receipts) – total direct output plus output produced by suppliers and employee spending, and (iii) One-Time Construction Impacts.
C.1 Recurring Impacts
As illustrated in Tables ES -1 and ES -2 below, both Permanent Employees and permanent Gross Receipts are slightly higher under the Proposed Plan. The number of employees listed in the Tables below; three thousand seven hundred and seventy six (3,776) for the Current Plan and three thousand seven hundred and sixty one (3,761) for the Proposed Plan refer solely to Direct Employment as opposed to the Employment totals presented in Tables ES-3 and ES-4, which refer to both Direct and Indirect/Induced Total Employees.
Table ES -1: Permanent (Recurring) Employment and Overall Econom ic Output Current Plan
Recurring Impacts Direct Indirect /
Induced Total
Employees
City of San Marcos 3,776 1,486 5,262
Overall Output
City of San Marcos $452,952,562 $192,029,300 $644 ,981,862
3 SECTION I
EXECUTIVE SUMMARY
City of San Marcos – University District, Specific Plan Amendment May 23, 2022 Economic Impact Study
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Table ES -2: Permanent (Recurring) Employment and Overall Econom ic Output Proposed Plan
Recurring Impacts Direct Indirect /
Induced Total
Employees
City of San Marcos 3,761 1,732 5,493
Overall Output
City of San Marcos $517,881,818 $191,202,118 $709,083,936 In addition, DTA has estimated that the direct and indirect/induced effects on the City to total $644,981,862 for the Current Plan and $709,083,936 for the Proposed Plan.
C.2 One -Time Impacts
In addition, the number of one-time construction employees is slightly higher under the Current Plan as the residential and non-residential development square foot total is similar in size, with the planned current total development square footage only
3.0% larger than the scenario in the Proposed Plan. In addition, the Gross receipts are also expected to be somewhat higher under the C urrent Plan. The tables presented in this section summarize the major conclusions related to the One-Time economic impacts of both the Current Plan and the Proposed Plan.
Table ES -3: Construction (One -Time) Employment and Overall Economic Output Current Plan
One -Time Impact Direct Indirect / Induced Total
Employees
City of San Marcos 12,143 6,833 18,975
Overall Output
City of San Marcos $2,047,760,000 $927,478,655 $2,975,238,655
Table ES -4 : Construction (One -Time) Employment and Overall Economic Output Proposed Plan
One -Time Impact Direct Indirect/Induced Total
Employees
City of San Marcos 11,078 6,421 17,499
Overall Output
City of San Marcos $1,888,725,000 $863,959,699 $2,752,684,622 4 SECTION I
EXECUTIVE SUMMARY
City of San Marcos – University District, Specific Plan Amendment May 23, 2022 Economic Impact Study
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D Market Considerations
The results summarized above assume build-out and full occupancy for each Scenario.
According to the Zonda Report, the adoption of the zoning and land use change proposed for North University District, Specific Plan Amendment resulted in a number of key findings.
The main advantages for redistribution are as follows: (1) The introduction of more Mixed Use Residential will create a true Town Center. It should be noted that though the high density and large massing of the 12-story apartment may be somewhat premature relative to the existing densities on campus, this is somewhat mitigated by the attractive design which pulls back on the upper floors; (2) The denser Residential in turn allows for the densification of the Central Commercial Core Neighborhood, creating a true sense of place at the nexus of Campus Way and North City Drive. The critical residential mass has been altered most significantly by the proposed 12-story apartment with 484 units and is an essential element of support for the planned Retail infrastructure, which is sizeable. The 25,000 square foot Grocery should be welcomed at ground level beneath the proposed 73 apartments; (3) The introduction of significant Office space will create a daytime population for the restaurant and service-based retail components – however, the proposed increase in General Office (which has suffered during the pandemic and is not recovering as smartly as other commercial sectors), may produce an oversu pply. In contrast, Medical Office Buildings (which have been reduced the UDSP) are currently in high demand. Coworking Office Condos are achieving very high rents around the campus $10 per square foot compared with $4.50 or less elsewhere). However, Zonda advised caution on the appetite for this land use in large quantities; and (4) according to Zonda, the reduction in the number of hotel rooms from 450 to 250 makes sense. Smaller scale hotels of between 120 and 150 units are customary in North County, and one on either side of Twin Oaks Valley Road of this size should do well. Please refer to the Zonda Analysis for a summary of the market considerations associated with the Existing Plan and Proposed Plan.
5 SECTION II
INTRODUCTION
City of San Marcos – University District, Specific Plan Amendment May 23, 2022 Economic Impact Study
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II INTRODUCTION
The objective of this Fiscal Impact Study (the “Study”) is to analyze the economic impacts to the City of San Marcos (the “City”) from the zoning and land use change proposed for North City University District, Specific Plan Amendment. (the “Project”).
The University District Specific Plan (also known as “North City”) is a 195-acre site located south of Route 78, north of Barham Drive and overlaps Twin Oaks Valley Road to the east and west. It is east of the Creek District and is envisioned as a “vibrant, urban and pedestrian friendly downtown area” near CSUSM. The site is surrounded by several retail locations, Cal State University, San Marcos and the Cal State San Marcos Light Rail Station.
The University District Specific Plan (“UDSP”) was adopted in 2009 to create a downtown area centrally located within San Marcos with residential units, student housing units, hotel rooms, office space, retail/commercial space, civic/community space, parks, trails/paths, habitat preservation and public streets.
The University District Specific Plan is being updated to amend building height regulations, mix of land uses, additions to the Specific Plan area and redistribution of housing units and commercial space (the “Proposed Plan”). This amendment includes requesting approval to develop: a 12-story mixed-use project with 484 apartments and 20,000 square feet of commercial space, a 25,000-sf grocery store with 55,000 square feet of office space, a 5-story mixed use project with 73 apartments and 6,000 square feet of commercial space, a five-lot subdivision with 23 commercial condo units and three residential units and removal of two planned bridges from Johnson Lane over the SR-78 and over Discovery on the west side of the UDSP.
Currently, the Existing UDSP Plan (the “Existing Plan”) consists of 300,000 square feet of medical office, 652,000 square feet of general office, 700,000 square feet of mixed retail / commercial, 2,600 mixed use residential units, 800 student housing units, and 450 hotel rooms. If the proposed North University District, Specific Plan Amendment is adopted, the Proposed Plan will consist of 200,000 square feet of medical office, 920,000 square feet of general office, 345,000 square feet of mixed retail / commercial, 2,600 mixed use residential units, 800 student housing units and 250 hotel rooms. Consequently, the Study estimates the economic impacts of the Existin g Plan and Proposed Plan (collectively, the “Scenarios”) and provides a side-by-side comparison of both Scenarios.
A Scope and Methodology
A.1 Approach
The Study identifies the general economic impacts that would occur with the development of the Current Plan and the Proposed Pl an individually and quantifies these impacts wherever possible. General economic impacts include additions to employment (number of average annual full- and part-time jobs), and economic output (e.g., gross receipts). The Study also distinguishes between one- time economic impacts and permanent economic impact s. One-time impacts 6 SECTION II
INTRODUCTION
City of San Marcos – University District, Specific Plan Amendment May 23, 2022 Economic Impact Study
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include benefits to the community that occur on a non-recurring basis as a result of construction and development activity, while permanent, recurring impacts refer to benefits that occur on a continuing basis, year after year. Additionally, for purposes of the Study, all economic impacts are stated in constant (un-inflated) 2022 dollars, based on the assumption that the relative impacts of inflation in future years may be difficult to gauge.
Furthermore, in evaluating economic impacts, the Study quantifies both direct and indirect/induced economic impacts on the City. Direct economic impacts reflect the initial or first-round increases in jobs and output, all of which occur directly on-site. Indirect/induced economic impacts are the secondary and other additional rounds of economic activity that occur as a consequence of the direct impacts and can occur elsewhere within the City. The indirect impacts represent the economic activity – buying and selling of goods and services – of suppliers to the land use types analyzed. In this Study, suppliers to the Proposed Plan would likely include maintenance and repair professionals, utilities’ providers, wholesale trade companies, commercial and business support services; while suppliers to the Current Plan may include construction supply firms, computer and other technology firms, accounting and bookkeeping profes sionals, and utilities’ providers. Additionally, the suppliers representing the indirect one-time impacts would likely include heavy industrial and construction suppliers for the actual development of buildings and facilities. Finally, the induced impacts represent the economic activity that results from household spending by employees of all companies directly and indirectly affected by the construction and operation of the land uses analyzed in the Study.
A.2 North American Industry Classification
Indirect and induced impacts can occur throughout all industries of the economy and have been categorized using the North American Industry Classification System (“NAICS”). Adopted by the Office of Management and Budget (“OMB”) in 1997 to replace the Standard Industrial Classification System (“SIC”), NAICS is a widely-used system to classify business establishments for the collection, analysis, and publication of statistical data in Canada, Mexico, and the United States. NAICS industries are identified using a 6-digit coding system to classify all economic activity into twenty broad sectors, five of which are mainly goods-producing sectors and fifteen of which are services-providing sectors. This 6-digit hierarchical structure allows for the identification of nearly 1,170 industries. The broad NAICS sectors include the Retail/Commercial, Business Park, Industrial/Warehousing, and Construction, which are the focal NAICS categories analyzed within this Study to determine the indirect and induced economic impacts generated under both Scenarios.
7 SECTION II
INTRODUCTION
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A.3 IMPLAN Multiplier Method
Although there is a consensus among economists that indirect and induced, or “multiplier” effects exist, most economists also agree that such effects are difficult to measure. Patterns on spending and employment am ong suppliers and employee households often vary over time and from o ne region to another.
Nevertheless, there are certain input-output models that can be used to estimate indirect and induced effects.
In quantifying the indirect and induced economic impacts for the Study, DTA utilized the Impact Analysis for Planning (“IMPLAN”) Input/output Modeling System, a type of quantitative economic model that provides an approximate measure of the “multiplier effect” of a firm’s spending on payroll and the purchasing of goods and services. In this study, DTA used Version 3 of the IMPLAN economic modeling system.
Like similar econometric models, IMPLAN helps to calculate the flow of payments for goods and services across different industry sectors, and between households and industries. The IMPLAN model can be envisioned simply as a large spreadsheet with hundreds of industries (plus the household sector) arrayed across the top as producers, and the same industries and households listed down the side as consumers. Each million dollars (output) in spending by any one consumer (i.e., within the Current Plan or the Proposed Plan) is allocated across the producing industries from which that consumer buys goods and services.
These producing industries, in turn, spend money buying goods and services from their own distinct sets of suppliers. Thus, the IMPLAN multiplier model allows one to gauge the effect on each dollar an industry spends as it diffuses through a regional economy. Furthermore, it allows one to translate the overall regional impact of spending into jobs and employee compensation. Please refer to the example presented in
Figure 1 for a graphical representation of the multiplier effect in development.
8 SECTION II
INTRODUCTION
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Figure 1: Example of the Multiplier Effect (Direct, Indirect and Induced Output)
Source: DTA, 2019
B Limitations – Accuracy of Information
The economic models presented in this Study contain analysis of revenues and impacts resulting from the Current Plan and the Proposed Plan. These models are based on both (i) information provided to DTA by the City and its consultants, Applicant of the Proposed Plan, and (ii) certain DTA assumptions taken from DTA’s proprietary databases, as compiled by DTA from previous studies prepared by the firm. The sources of information and basis of the estimates calculated in the Study are stated herein. While DTA is confident that the sources of information are reliable, DTA does not express an opinion or any other form of assurance on the accuracy of such information. The analysis of economic impacts contained in the Study is not considered to be a “financial forecast” or a “financial projection” as technically defined by the American Institute of Certified Public Accountants. The word “projection” used within the Study relates to broad expectations of future events or market conditions. Since the analyses contained herein are based on estimates and assumptions that are inherently subject to uncertainty and variation depending on evolving events, DTA cannot represent that such estimates will definitely be achieved. Some assumptions inevitably will not materialize, and unanticipated events and circumstances may occur. Therefore, the actual results achieved may vary from these projections stated throughout the Study.
9 SECTION III
ECONOMIC IMPACTS
City of San Marcos – University District, Specific Plan Amendment May 23, 2022 Economic Impact Study
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III ECONOMIC IMPACTS
The Study identifies the general economic impacts that would occur under the Current Plan and compares them to the impacts under the Proposed Plan, quantifying the impacts of each Scenario wherever possible. General economic impacts include additions to employment (number of average annual full- and part-time jobs) and economic output (e.g., gross receipts). The Study also distinguishes between one-time economic impacts and permanent economic impacts. One-time impacts include benefits to the community that occur on a non-recurring time basis as a result of construction and development activity, while permanent, recurring impacts refer to benefits that occur on a continuing basis, year after year.
A Recurring Economic Impacts
A.1 Assumptions
Information provided to DTA indicates that the Current Plan is expected to include 300,000 square feet of medical office, 652,000 square feet of general office, 700,000 square feet of mixed retail / commercial, 2,600 mixed use residential units, 800 student housing units, and 450 hotel rooms. Based on the Zonda Analysis, the Study assumes that, under the current plan, in addition to hotel and office space the Project site would likely be occupied by sales tax generating mixed retail / commercial development. As seen in the table below, the current plan also includes mixed use residential and student housing,
Under the proposed plan, The University District Specific Plan is being updated to amend building height regulations, mix of land uses, additions to the Specific Plan area and redistribution of housing units and commercial space. This would facilitate the development of 200,000 square feet of medical office, 920,000 square feet of general office, 345,000 square feet of mixed retail / commercial, 2,850 mixed use residential units, 550 student housing units and 250 hotel rooms. Please see Table
1, presented below, for a general summary of the built-out projection on the Current Plan and the Proposed Plan.
10 SECTION III
ECONOMIC IMPACTS
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Table 1: Assumptions – Current Plan vs. Proposed P lan Assumptions Current
Plan
Proposed
Plan
Residential Land Use Units Units
Mixed Use Residential 2,600 2,600
Student Housing 800 800
Residential Land Use Sq. Ft. Sq. Ft.
Mixed Use Residential 2,790,917 2,790,917
Student Housing 292,800 292,800
Residential Land Use Residents Residents
Residents 7,996 7,996
Non -Residential Land Use Sq. Ft. Sq. Ft.
Hotel 315,000 175,000
Medical Office 300,000 200,000
General Office 652,000 920,000
Mixed Retail / Commercial 700,000 345,000
Employment
Direct
Employees
Direct
Employees
Hotel 497 276
Medical Office 827 551
General Office 1,880 2,652
Mixed Retail / Commercial 573 283
A.2 Job Creation
As indicated in the Table below, full development and build-out of both the Current Plan and proposed Plan is expected to be substantial, resulting in 5,262 and 5,493 new jobs respectively in the City. This total includes combined direct and indirect/induced employment. The combined direct a nd indirect/induced employment due to the mixed use residential and student housing of the Proposed Plan is not projected to generate any recurring new jobs in the City. Although the specific location of the additional indirect jobs created cannot be identified in this Study, most of these jobs will likely be support service jobs in retail, transportation, and similar areas.
Tables 2 and 3 presented below , as well as Exhibit 1 of Appendices A and B, summarize the direct and indirect/induced employment impacts of the Current Plan and the Proposed Plan.
11 SECTION III
ECONOMIC IMPACTS
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Table 2: Current Plan – Recurring Employment
Recurring Impacts Direct Indirect /
Induced Total
Total Output
City of San Marcos 3,776 1,486 5,262
Table 3: Proposed Plan – Recurring Employment
Recurring Impacts Direct Indirect /
Induced Total
Total Output
City of San Marcos 3,761 1,732 5,493
Since the analyses contained herein are based on estimates and assumptions that are inherently subject to uncertainty and variation depending on evolving events, DTA cannot represent that such estimates will definitely be achieved. Some assumptions inevitably will not materialize, and un anticipated events and circumstances may occur. Therefore, the actual results achieved may vary from these projections stated throughout the Study.
A.3 Overall Economic Output
In addition to the Employment projections presented in the previous section, Total Output (i.e., total expenditures including sales or gross receipts, or other operating income) within the City will increase noticeably under both development Scenarios.
However, as indicated below in Tables 4 and 5 presented below, total output projections under the Proposed Plan exceed those of the Current Plan. Total output is estimated based on the different types of development projected to occur. As stated in Section I, this Study analyzes direct and indirect/induced impacts.
Regarding gross receipts, the direct impact reflects the initial or first-round increases in output (total spending/gross receipts, including payroll), all of which occur directly on the either the Current Plan site or the Proposed Plan site.
Table 4 : Current Plan – Recurring Total Output
Recurring Impacts Direct Indirect /
Induced Total
Overall Output
City of San Marcos $452,952,562 $192,029,300 $644 ,981,862
Table 5 : Proposed Plan – Recurring Total Output
Recurring Impacts Direct Indirect /
Induced Total
Overall Output
City of San Marcos $517,881,818 $191,202,118 $709,083,936 12 SECTION III
ECONOMIC IMPACTS
City of San Marcos – University District, Specific Plan Amendment May 23, 2022 Economic Impact Study
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$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
Current Plan ,
$644,981,862
Proposed Plan
$709,083,936
Indirect/induced economic impacts are the secondary effects, and other additional rounds of economic activity that occur as a consequence of the direct output impacts can occur outside of the Current Plan and the Proposed Plan. The indirect impacts represent the economic activity – buying and selling of goods and services – of suppliers and/or supporting businesses. The induced impacts represent the economic activity that results from household spend ing by employees of all companies directly and indirectly affected by the Project.
Based again on IMPLAN Version 3 multipliers and other assumptions utilized in the Study, DTA has estimated that the direct and indirect/induced effects on the City to total $644,981,862 for the Current Plan and $709,083,936 for the Proposed Plan.
As shown in the tables above, DTA estimates that the direct and indirect/induced effects on the City resulting from the Proposed Plan (including employees and residents) are greater than those under the Current Plan. The side-by-side comparison of recurring Total Output can be seen in the graphical representation of presented in Figure A below.
Figure A : Current Plan vs. Proposed Plan – Recurring Total Output
B One -Time Employment and Output Impacts (Construction) According to IMPLAN, development of the Current Pla n area is projected to create approximately eighteen thousand nine hundred and se venty-five (18,975) one-time 13 SECTION III
ECONOMIC IMPACTS
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construction jobs in the City of San Marcos. This total includes combined direct and indirect/induced employment. For the Proposed Plan, eighteen thousand four hundred and twenty six (18,426) one-time construction jobs are expected to be created. Again, one-time construction and development costs will also have multiplier effects on the economy, generating one-time increases in output from construction of the non-residential buildings and all related site improvements. Table s 6 and 7 below summarize the projected increases in employment resulting from construction activities, under each Scenario.
Table 6: Current Plan – One -Time Employment
One -Time Impacts Direct Indirect /
Induced Total
Employees
City of San Marcos 12,143 6,833 18,975
Table 7: Proposed Plan – One -T ime Employment
One -Time Impacts Direct Indirect /
Induced Total
Employees
City of San Marcos 11,078 6,421 17,499
As with recurring economic impacts, experience and modeling indicate that a large percentage of these jobs will be support service and construction jobs in industries currently occupying the current area. These jobs are likely to be located close to either the Current Plan or the Proposed Plan. The tables presented above summarize the projected increases in employment to be generated directly from construction of the Project land uses, based on DTA construction cost assumptions.
Table 8: Current Plan – One -time Total Output
One -Time Impacts Direc t Indirect /
Induced Total
Output
City of San Marcos $2,047,760,000 $927,478,655 $2,975,238,655
Table 9: Proposed Plan – One -time Total Output
One -Time Impacts Direct Indirect /
Induced Total
Output
City of San Marcos $1,888,725,000 $863,959,622 $2,752,684,622 14 SECTION III
ECONOMIC IMPACTS
City of San Marcos – University District, Specific Plan Amendment May 23, 2022 Economic Impact Study
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$0
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
$3,000,000,000
Approved Plan ,
$2,975,238,655
Proposed Plan
$2,752,684,622
Notably, projected one-time Total Output is expected to increase considerably under both the Current and Proposed scenarios, as illustrated in
Tables 8 and 9 above. DTA estimates
that the direct and indirect/induced effects on the City total over $2.97 billion in One-Time Total Output for the Current Plan and over $2.75 billion for the Proposed Plan. A side-by- side comparison of both Scenarios can be seen graphically in Figure B presented below.
Figure B: Current Plan vs. Proposed Plan – One -Time Total Output
C Market Considerations
The results summarized above assume build-out and full occupancy for each Scenario.
According to the Zonda Report, the adoption of the zoning and land use change proposed for North University District, Specific Plan Amendment resulted in a number of key findings.
The main advantages for redistribution are as follows: (1) The introduction of more Mixed Use Residential will create a true Town Center. It should be noted that though the high density and large massing of the 12-story apartment may be somewhat premature relative to the existing densities on campus, this is somewhat mitigated by the attractive design which pulls back on the upper floors; (2) The denser Residential in turn allows for the densification of the Central Commercial Core Neighborhood, creating a true sense of place at the nexus of Campus Way and North City Drive. The critical residential mass has been altered most significantly by the proposed 12-story apartment with 484 units and is an essential element of support for the planned Retail infrastructure, which is sizeable. The 25,000 square foot Grocery should be welcomed at ground level beneath the proposed 73 15 SECTION III
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apartments; (3) The introduction of significant Office space will create a daytime population for the restaurant and service-based retail components – however, the proposed increase in General Office (which has suffered during the pandemic and is not recovering as smartly as other commercial sectors), may produce an oversu pply. In contrast, Medical Office Buildings (which have been reduced the UDSP) are currently in high demand. Coworking Office Condos are achieving very high rents around the campus $10 per square foot compared with $4.50 or less elsewhere). However, Zonda advised caution on the appetite for this land use in large quantities; and (4) according to Zonda, the reduction in the number of hotel rooms from 450 to 250 makes sense. Smaller scale hotels of between 120 and 150 units are customary in North County, and one on either side of Twin Oaks Valley Road of this size should do well. Please refer to the Zonda Analysis for a summary of the market considerations associated with the Existing Plan and Proposed Plan.
APPENDIX A
City of San Marcos
North City – University District, Specific Plan Amendment Economic Impact Study
ECONOMIC IMPACT
MODEL , CURRENT PLAN
EXHIBIT 1
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
RECURRING EMPLOYMENT - CURRENT PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY UNITS
MIXED USE RESIDENTIAL 2,600
STUDENT HOUSING 800
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY1 EMPLOYEES/1,000 SQ. FT.2 SQ. FT.1
HOTEL 1.58 315,000
MEDICAL OFFICE 2.75 300,000
GENERAL OFFICE 2.88 652,000
MIXED RETAIL / COMMERCIAL 0.82 700,000
1,967,000
RECURRING EMPLOYMENT
III. CITY
DIRECT EMPLOYEES3 INDIRECT EMPLOYEES4 INDUCED EMPLOYEES4 TOTAL EMPLOYEES HOTEL 498 85 85 668
MEDICAL OFFICE 826 108 215 1,149
GENERAL OFFICE 1,879 450 423 2,752
MIXED RETAIL / COMMERCIAL 573 44 76 693
MIXED USE RESIDENTIAL 0 0 0 0
STUDENT HOUSING 0 0 0 0
TOTAL RECURRING EMPLOYMENT 3,776 687 799 5,262
NOTES:
* All figures subject to rounding
4 Source: San Marcos City IMPLAN multipliers.
1 Source: City of San Marcos.
2 Commercial Buildings Energy Consumption Survey (CBECS), 2012. 3 Based on multiplying Category SF by Employees/1,000 SF metric.
EXHIBIT 2
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
RECURRING ECONOMIC IMPACTS - CURRENT PLAN
ASSUMPTIONS
% INCOME SPENT TOTAL RESIDENT
I. RESIDENTIAL SPENDING ASSUMPTIONS HOUSEHOLD INCOME IN CITY SPENDING / YR.
MIXED USE RESIDENTIAL $78,979 28.07% $28,823,307
STUDENT HOUSING $0.0 28.07% $0.0
II. NON-RESIDENTIAL OUTPUT ASSUMPTIONS AVERAGE OUTPUT / EMPLOYEE1 OUTPUT / YR.1 HOTEL $109,966 $54,762,895
MEDICAL OFFICE $110,513 $91,284,096
GENERAL OFFICE $127,446 $239,470,390
MIXED RETAIL / COMMERCIAL $67,385 $38,611,874
RECURRING OUTPUT
III.CITY
DIRECT OUTPUT INDIRECT OUTPUT 1 INDUCED OUTPUT 1 TOTAL OUTPUT HOTEL $54,762,895 $10,453,725 $11,450,364 $76,666,984
MEDICAL OFFICE $91,284,096 $16,338,577 $29,021,007 $136,643,680 GENERAL OFFICE $239,470,390 $22,216,527 $61,314,454 $323,001,370 MIXED RETAIL / COMMERCIAL $38,611,874 $16,984,919 $10,400,642 $65,997,435 MIXED USE RESIDENTIAL $28,823,307 $7,757,393 $6,091,692 $42,672,393 STUDENT HOUSING $0.0 $0.0 $0.0 $0.0
TOTAL RECURRING OUTPUT $452,952,562 $73,751,141 $118,278,159 $644,981,862 NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers.
EXHIBIT 3
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
ONE-TIME EMPLOYMENT - CURRENT PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND ASSUMPTIONS UNITS
MIXED USE RESIDENTIAL 2,600
STUDENT HOUSING 800
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS SQ. FT.
HOTEL 315,000
MEDICAL OFFICE 300,000
GENERAL OFFICE 652,000
MIXED RETAIL / COMMERCIAL 700,000
III. PUBLIC FACILITIES TOTAL COST
PROJECT INFRASTRUCTURE NA
ONE-TIME EMPLOYMENT
IV. CITY
DIRECT EMPLOYEES 1 INDIRECT EMPLOYEES 1 INDUCED EMPLOYEES 1 TOTAL EMPLOYEES HOTEL 502 85 124 711
MEDICAL OFFICE 788 137 198 1,123
GENERAL OFFICE 1090 185 270 1,545
MIXED RETAIL / COMMERCIAL 2025 286 491 2,802
MIXED USE RESIDENTIAL 7289 2726 2037 12,052
STUDENT HOUSING 449 168 125 742
TOTAL ONE-TIME EMPLOYEES 12,143 3,587 3,245 18,975
NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures).
EXHIBIT 4
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
ONE-TIME IMPACTS - CURRENT PLAN
ASSUMPTIONS
ESTIMATED
I. RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS UNITS COST PER SQ. FT. COST PER UNIT MIXED USE RESIDENTIAL 2,600 $404 $500,000
STUDENT HOUSING 800 $280 $100,000
II. NON-RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS IMPROVEMENT VALUE1 CONSTRUCTION COST PER SQ. FT.
HOTEL $76,500,000 $243
MEDICAL OFFICE $127,500,000 $425
GENERAL OFFICE $166,260,000 $255
MIXED RETAIL / COMMERCIAL $297,500,000 $425
III. PUBLIC FACILITIES TOTAL COST
PROJECT INFRASTRUCTURE NA
ONE-TIME OUTPUT
IV. CITY
DIRECT OUTPUT INDIRECT OUTPUT 2 INDUCED OUTPUT 2 TOTAL OUTPUT HOTEL $76,500,000 $14,346,458 $16,785,772 $107,632,230
MEDICAL OFFICE $127,500,000 $23,836,296 $26,652,388 $177,988,683 GENERAL OFFICE $166,260,000 $28,700,599 $36,481,077 $231,441,676 MIXED RETAIL / COMMERCIAL $297,500,000 $51,355,878 $66,254,756 $415,110,634 MIXED USE RESIDENTIAL $1,300,000,000 $349,876,977 $274,749,878 $1,924,626,855 STUDENT HOUSING $80,000,000 $21,530,891 $16,907,685 $118,438,576 TOTAL ONE-TIME OUTPUT $2,047,760,000 $489,647,099 $437,831,556 $2,975,238,655 NOTES:
1 Assumes that improvement value is approximately 85% of total valuation. 2 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures).
EXHIBIT 5
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
JOBS-HOUSING BALANCE - CURRENT PLAN
ASSUMPTIONS
I. EXISTING DEMOGRAPHICS
CITY OF SAN MARCOS
HOUSING UNITS 1 32,700
EMPLOYEES 2 37,500
II. JOB IMPACTS 3
CITY OF SAN MARCOS
DIRECT IMPACT 3,776
ADDITIONAL INDIRECT 687
ADDITIONAL INDUCED 799
TOTAL 5,262
III. CUMULATIVE PROJECT DEMOGRAPHICS
EXISTING HOUSING UNITS PLUS PROJECT - CITY OF SAN MARCOS 36,100 PERCENTAGE INCREASE 10.40%
EXISTING EMPLOYEES PLUS PROJECT - CITY OF SAN MARCOS 42,762 PERCENTAGE INCREASE 14.03%
JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE
CITY OF SAN MARCOS
EXISTING 1.15
EXISTING WITH PROJECT 1.18
PERCENTAGE INCREASE 3.29%
NOTES:
1 Source: State of California, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties, and the State (2020). * All figures subject to rounding
2 Source: California Employment Development Department ("EDD") - Labor Market Information Division. 3 Please see Exhibit B-1: Recurring Jobs.
EXHIBIT 6
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
SUMMARY - CURRENT PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS UNITS
MIXED USE RESIDENTIAL 2,600
STUDENT HOUSING 800
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS EMPLOYEES/1,000 SQ. FT. SQ. FT.
HOTEL 1.58 315,000
MEDICAL OFFICE 2.75 300,000
GENERAL OFFICE 2.88 652,000
MIXED RETAIL / COMMERCIAL 0.82 700,000
ECONOMIC IMPACTS CONCLUSIONS
RECURRING IMPACTS
III. JOB CREATION DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 3,776 1,486 5,262
IV. TOTAL OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $452,952,562 $192,029,300 $644,981,862
ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 12,143 6,833 18,975
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $2,047,760,000 $927,478,655 $2,975,238,655
OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.14679 1.18454 3.29%
APPENDIX B
City of San Marcos
North City – University District, Specific Plan Amendment Economic Impact Study
ECONOMIC IMPACT
MODEL , PROPOSED PLAN
EXHIBIT 1
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
RECURRING EMPLOYMENT - PROPOSED PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY UNITS
MIXED USE RESIDENTIAL 2,600
STUDENT HOUSING 800
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS
LAND USE CATEGORY1 EMPLOYEES/1,000 SQ. FT.2 SQ. FT.1
HOTEL 1.58 175,000
MEDICAL OFFICE 2.75 200,000
GENERAL OFFICE 2.88 920,000
MIXED RETAIL / COMMERCIAL 0.82 345,000
1,640,000
RECURRING EMPLOYMENT
III. CITY
DIRECT EMPLOYEES3 INDIRECT EMPLOYEES4 INDUCED EMPLOYEES4 TOTAL EMPLOYEES HOTEL 276 47 47 370
MEDICAL OFFICE 551 83 166 800
GENERAL OFFICE 2,651 635 597 3,883
MIXED RETAIL / COMMERCIAL 283 57 100 440
MIXED USE RESIDENTIAL 0 0 0 0
STUDENT HOUSING 0 0 0 0
TOTAL RECURRING EMPLOYMENT 3,761 822 910 5,493
NOTES:
2 Commercial Buildings Energy Consumption Survey (CBECS), 2012. 3 Based on multiplying Category SF by Employees/1,000 SF metric. 1 Source: City of San Marcos.
EXHIBIT 2
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
RECURRING ECONOMIC IMPACTS - PROPOSED PLAN
ASSUMPTIONS
% INCOME SPENT TOTAL RESIDENT
I. RESIDENTIAL SPENDING ASSUMPTIONS HOUSEHOLD INCOME IN CITY SPENDING / YR.
MIXED USE RESIDENTIAL $78,979 28.07% $28,823,307
STUDENT HOUSING $0 28.07% $0
II. NON-RESIDENTIAL OUTPUT ASSUMPTIONS AVERAGE OUTPUT / EMPLOYEE1 OUTPUT / YR.1 HOTEL $61,248 $30,501,708
MEDICAL OFFICE $85,015 $70,222,557
GENERAL OFFICE $179,808 $337,858,437
MIXED RETAIL / COMMERCIAL $88,090 $50,475,810
RECURRING OUTPUT
III.CITY
DIRECT OUTPUT INDIRECT OUTPUT 1 INDUCED OUTPUT 1 TOTAL OUTPUT HOTEL $30,501,708 $5,822,491 $6,377,597 $42,701,795
MEDICAL OFFICE $70,222,557 $12,568,856 $22,325,130 $105,116,543 GENERAL OFFICE $337,858,437 $17,090,615 $86,505,916 $441,454,968 MIXED RETAIL / COMMERCIAL $50,475,810 $13,066,070 $13,596,357 $77,138,237 MIXED USE RESIDENTIAL $28,823,307 $7,757,393 $6,091,692 $42,672,393 STUDENT HOUSING $0.0 $0.0 $0.0 $0.0
TOTAL RECURRING OUTPUT $517,881,818 $56,305,425 $134,896,692 $709,083,936 NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers.
EXHIBIT 3
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
ONE-TIME EMPLOYMENT - PROPOSED PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND ASSUMPTIONS UNITS
MIXED USE RESIDENTIAL 2,600
STUDENT HOUSING 800
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS SQ. FT.
HOTEL 175,000
MEDICAL OFFICE 200,000
GENERAL OFFICE 920,000
MIXED RETAIL / COMMERCIAL 345,000
III. PUBLIC FACILITIES TOTAL COST
PROJECT INFRASTRUCTURE NA
ONE-TIME EMPLOYMENT
IV. CITY
DIRECT EMPLOYEES 1 INDIRECT EMPLOYEES 1 INDUCED EMPLOYEES 1 TOTAL EMPLOYEES HOTEL 279 47 69 395
MEDICAL OFFICE 526 91 132 749
GENERAL OFFICE 1,539 261 382 2,181
MIXED RETAIL / COMMERCIAL 998 141 242 1,381
MIXED USE RESIDENTIAL 7,289 2,726 2,037 12,051
STUDENT HOUSING 449 168 125 742
TOTAL ONE-TIME EMPLOYEES 11,078 3,433 2,987 17,499
NOTES:
* All figures subject to rounding
1 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures).
EXHIBIT 4
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
ONE-TIME IMPACTS - PROPOSED PLAN
ASSUMPTIONS
ESTIMATED
I. RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS UNITS COST PER SQ. FT. COST PER UNIT MIXED USE RESIDENTIAL 2,600 $357 $500,000
STUDENT HOUSING 800 $280 $100,000
II. NON-RESIDENTIAL CONSTRUCTION COST ASSUMPTIONS IMPROVEMENT VALUE1 CONSTRUCTION COST PER SQ. FT.
HOTEL $42,500,000 $243
MEDICAL OFFICE $85,000,000 $425
GENERAL OFFICE $234,600,000 $255
MIXED RETAIL / COMMERCIAL $146,625,000 $425
III. PUBLIC FACILITIES TOTAL COST
PROJECT INFRASTRUCTURE NA
ONE-TIME OUTPUT
IV. CITY
DIRECT OUTPUT INDIRECT OUTPUT 2 INDUCED OUTPUT 2 TOTAL OUTPUT HOTEL $42,500,000 $7,970,255 $9,325,429 $59,795,683
MEDICAL OFFICE $85,000,000 $15,890,864 $17,768,258 $118,659,122 GENERAL OFFICE $234,600,000 $40,497,778 $51,476,367 $326,574,145 MIXED RETAIL / COMMERCIAL $146,625,000 $25,311,111 $32,654,130 $204,590,241 MIXED USE RESIDENTIAL $1,300,000,000 $349,876,977 $274,749,878 $1,924,626,855 STUDENT HOUSING $80,000,000 $21,530,891 $16,907,685 $118,438,576 TOTAL ONE-TIME OUTPUT $1,888,725,000 $461,077,875 $402,881,747 $2,752,684,622 NOTES:
1 Assumes that improvement value is approximately 85% of total valuation. 2 Source: San Marcos City IMPLAN multipliers (IMPLAN Sector 58: Construction of new non-residential structures). * All figures subject to rounding
EXHIBIT 5
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
JOBS-HOUSING BALANCE - PROPOSED PLAN
ASSUMPTIONS
I. EXISTING DEMOGRAPHICS
CITY OF SAN MARCOS
HOUSING UNITS 1 32,700
EMPLOYEES 2 37,500
II. JOB IMPACTS 3
CITY OF SAN MARCOS
DIRECT IMPACT 3,761
ADDITIONAL INDIRECT 822
ADDITIONAL INDUCED 910
TOTAL 5,493
III. CUMULATIVE PROJECT DEMOGRAPHICS
EXISTING HOUSING UNITS PLUS PROJECT - CITY OF SAN MARCOS 36,100 PERCENTAGE INCREASE 10.40%
EXISTING EMPLOYEES PLUS PROJECT - CITY OF SAN MARCOS 42,993 PERCENTAGE INCREASE 14.65%
JOBS-HOUSING BALANCE
IV. JOBS-HOUSING BALANCE
CITY OF SAN MARCOS
EXISTING 1.15
EXISTING WITH PROJECT 1.19
PERCENTAGE INCREASE 3.85%
NOTES:
1 Source: State of California, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties, and the State (2020). * All figures subject to rounding
2 Source: California Employment Development Department ("EDD") - Labor Market Information Division. 3 Please see Exhibit B-1: Recurring Jobs.
EXHIBIT 6
NORTH CITY UNIVERSITY DISTRICT, SPECIFIC PLAN
SUMMARY - PROPOSED PLAN
ASSUMPTIONS
I. RESIDENTIAL LAND USE ASSUMPTIONS UNITS
MIXED USE RESIDENTIAL 2,600
800
II. NON-RESIDENTIAL LAND USE ASSUMPTIONS EMPLOYEES/1,000 SQ. FT. SQ. FT.
HOTEL 1.58 175,000
MEDICAL OFFICE 2.75 200,000
GENERAL OFFICE 2.88 920,000
MIXED RETAIL / COMMERCIAL 0.82 345,000
ECONOMIC IMPACTS CONCLUSIONS
RECURRING IMPACTS
III. JOB CREATION DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 3,761 1,732 5,493
IV. TOTAL OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $517,881,818 $191,202,118 $709,083,936
ONE-TIME IMPACTS
V. CONSTRUCTION JOBS DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE 11,078 6,421 17,499
VI. CONSTRUCTION OUTPUT DIRECT INDIRECT/INDUCED TOTAL
CITYWIDE $1,888,725,000 $863,959,622 $2,752,684,622
OTHER IMPACTS
BALANCE BALANCE % INCREASE/
VII. JOBS-HOUSING BALANCE EXISTING WITH PROJECT (DECREASE) CITYWIDE 1.15 1.19 3.85%
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