South Lake Tahoe City Council
September 12, 2023

4. Conduct at least 20 high-visibility General Enforcement operations.

5. Conduct at least four (4) plain-clothes operations targeting licensed premises.

6. Conduct at least one (1) Task Force operation/training.

7. Conduct at least four (4) brief trainings on ABC laws/enforcement strategies.

8. Host at least two (2) TRACE trainings.

9. Provide press/social media releases on grant enforcement activities.

A. To announce the start of the program;
B. At the conclusion of each Minor Decoy Operation has been held (to announce the number of licensed premises who sold to the minor decoy) C. At the conclusion of each Shoulder Tap Operation has been held (to announce the number of adults arrested for purchasing alcoholic beverages for the decoy).

10. Contractor will fax (916) 419-2599 or email each press release to the Department’s Public Information Officer ([email protected]) as soon as it is released.

11. Contractor agrees in all press releases, in addition to any credits the agency wishes to give, will include the following statement: “This project is part of the Department of Alcoholic Beverage Control’s Alcohol Policing Partnership.”
Contractor agrees to complete and submit monthly reports, on a format designed and provided by the Department of Alcoholic Beverage Control due no later than 15th of the following month.

III. PROJECT REPRESENTATIVES
The project representatives during the term of this agreement will be:

South Lake Tahoe Police Department
Doug Sentell, Sergeant
1352 Johnson Blvd.

South Lake Tahoe, CA 96150
(530) 542-6100
[email protected]
Department of Alcoholic Beverage Control
Brandon Shotwell, Supervising Agent in Charge
3927 Lennane Drive, Suite 100
Sacramento, CA 95834
(916) 419-2329
[email protected]
Direct all fiscal inquiries to:

South Lake Tahoe Police Department
Lori Marino, Associate Management Analyst
1901 Lisa Maloff Way
South Lake Tahoe, CA 96150
(530) 542-7410
[email protected]
Department of Alcoholic Beverage Control
Kristine Okino, Grant Coordinator
3927 Lennane Drive, Suite 100
Sacramento, CA 95834
[email protected]
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Agreement Number: 23-APP47
City of South Lake Tahoe through South Lake Tahoe Police Department

EXHIBIT B

BUDGET DETAIL AND PAYMENT PROVISIONS
I. INVOICING AND PAYMENT
• For services satisfactorily rendered and upon receipt and approval of the invoice, the Department of Alcoholic Beverage Control agrees to pay a monthly payment of approved reimbursable costs per the Budget Detail of personnel overtime and benefits (actual cost) and/or allowable costs. • Invoices shall clearly reference this contract number (23-APP47) and must not exceed the contract total authorized amount of $98,136.00. Invoices are to be submitted by the 15th of every month, on the prescribed form designed by the Department of Alcoholic Beverage Control.

Submit to: Department of Alcoholic Beverage Control
Attn: Kristine Okino, Grant Coordinator
3927 Lennane Drive
Sacramento, California 95834
• Payment shall be made in arrears within 30 days from the receipt of an undisputed invoice. Nothing contained herein shall prohibit advance payments as authorized by Item 2100-101-3036, Budget Act, Statues of 2023.
• Contractor understands in order to be eligible for reimbursement; cost must be incurred on or after the effective date of the project, July 1, 2023 and on or before the project termination date, June 30, 2024. • Revisions to the “Scope of Work” and the “Budget Detail” may be requested by a change request letter submitted by the Contractor. If approved, the revised Grant Scope of Work and/or Budget Detail supersedes and replaces the previous grant and will initiate an amendment. No revisions can exceed allotted amount as shown on the Budget Detail. The total amount of the grant must remain unchanged. • Contractor agrees to refund to the State any amounts claimed for reimbursement and paid to Contractor which are later disallowed by the State after audit or inspection of records maintained by the Contractor.
• Only the costs displayed in the Budget Detail are authorized for reimbursement by the State to Contractor under this agreement. Any other costs incurred by Contractor in the performance of this agreement are the sole responsibility of Contractor.
• Title shall be reserved to the State for any State-furnished or State-financed property authorized by the State which is not fully consumed in the performance of this agreement. Contractor is responsible for the care, maintenance, repair, and protection of any such property. Inventory records shall be maintained by Contractor and submitted to the State upon request. All such property shall be returned to the State upon the expiration of this grant unless the State otherwise directs. • Prior approval by the State in writing is required for the location, costs, dates, agenda, instructors, instructional materials, and attendees at any reimbursable training seminar, workshop or conference, and over any reimbursable publicity or educational materials to be made available for distribution.

Contractor is required to acknowledge the support of the State whenever publicizing the work under this grant in any media.
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II. BUDGET DETAIL

COST CATEGORY TOTAL COST
A. Personnel Services
Overtime
Officer ($86.13/hour @ 900 hours) $87,196.00
Benefits – (7.5%) $6,540.00
TOTAL Personnel $93,736.00
B. Operating Expenses (receipts required)
Buy Money $300.00
Decoy Meals $200.00
TOTAL Operating $500.00
C. Equipment (receipts required, must be purchased by 12/31) ID Scanner $950.00
Intoximeter PAS Device $450.0
TOTAL Equipment $1,400.00
D. Travel Costs
Hotel, per diem, registrations $2,500.00
TOTAL Travel $2,500.00
GRANT TOTAL $98,136.00
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III. BUDGET CONTINGENCY CLAUSE
• It is mutually agreed that if the Budget Act of the current year and/or any subsequent years covered under this Agreement does not appropriate sufficient funds for the program, this Agreement shall be of no further force and effect. In this event, the State shall have no liability to pay any funds whatsoever to Contractor or to furnish any other considerations under this Agreement and Contractor shall not be obligated to perform any provisions of this Agreement.

• If funding for any fiscal year is reduced or deleted by the Budget Act for purposes of this program, the State shall have the option to either cancel this Agreement with no liability occurring to the State, or offer an agreement amendment to Contractor to reflect the reduced amount.

IV. PROMPT PAYMENT CLAUSE
• Payment will be made in accordance with, and within the time specified in, Government Code Chapter

4.5, commencing with Section 927.
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City of South Lake Tahoe through South Lake Tahoe Police Department

EXHIBIT C

GENERAL TERMS AND CONDITIONS

1. APPROVAL: This Agreement is of no force or effect until signed by both parties and approved by the Department of General Services, if required. Contractor may not commence performance until such approval has been obtained.

2. AMENDMENT: No amendment or variation of the terms of this Agreement shall be valid unless made in writing, signed by the parties and approved as required. No oral understanding or Agreement not incorporated in the Agreement is binding on any of the parties.

3. ASSIGNMENT: This Agreement is not assignable by the Contractor, either in whole or in part, without the consent of the State in the form of a formal written amendment.

4. AUDIT: Contractor agrees that the awarding department, the Department of General Services, the Bureau of State Audits, or their designated representative shall have the right to review and to copy any records and supporting documentation pertaining to the performance of this Agreement. Contractor agrees to maintain such records for possible audit for a minimum of three (3) years after final payment, unless a longer period of records retention is stipulated. Contractor agrees to allow the auditor(s) access to such records during normal business hours and to allow interviews of any employees who might reasonably have information related to such records. Further, Contractor agrees to include a similar right of the State to audit records and interview staff in any subcontract related to performance of this Agreement. (Gov. Code §8546.7, Pub. Contract Code §10115 et seq., CCR Title 2, Section 1896).

5. INDEMNIFICATION: Contractor agrees to indemnify, defend and save harmless the State, its officers, agents and employees from any and all claims and losses accruing or resulting to any and all contractors, subcontractors, suppliers, laborers, and any other person, firm or corporation furnishing or supplying work services, materials, or supplies in connection with the performance of this Agreement, and from any and all claims and losses accruing or resulting to any person, firm or corporation who may be injured or damaged by Contractor in the performance of this Agreement.

6. DISPUTES: Contractor shall continue with the responsibilities under this Agreement during any dispute.

7. TERMINATION FOR CAUSE: The State may terminate this Agreement and be relieved of any payments should the Contractor fail to perform the requirements of this Agreement at the time and in the manner herein provided. In the event of such termination the State may proceed with the work in any manner deemed proper by the State. All costs to the State shall be deducted from any sum due the Contractor under this Agreement and the balance, if any, shall be paid to the Contractor upon demand.

8. INDEPENDENT CONTRACTOR: Contractor, and the agents and employees of Contractor, in the performance of this Agreement, shall act in an independent capacity and not as officers or employees or agents of theState. 172
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9. RECYCLING CERTIFICATION: The Contractor shall certify in writing under penalty of perjury, the minimum, if not exact, percentage of post-consumer material as defined in the Public Contract Code Section 12200, in products, materials, goods, or supplies offered or sold to the State regardless of whether the product meets the requirements of Public Contract Code Section 12209. With respect to printer or duplication cartridges that comply with the requirements of Section 12156(e), the certification required by this subdivision shall specify that the cartridges so comply (Pub. Contract Code §12205).

10. NON-DISCRIMINATION CLAUSE: During the performance of this Agreement, Contractor and its subcontractors shall not deny the contract’s benefits to any person on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status, nor shall they discriminate unlawfully against any employee or applicant for employment because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status. Contractor shall insure that the evaluation and treatment of employees and applicants for employment are free of such discrimination.

Contractor and subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Gov. Code §12900 et seq.), the regulations promulgated thereunder (Cal.

Code Regs., tit. 2, §11000 et seq.), the provisions of Article 9.5, Chapter 1, Part 1, Division 3, Title 2 of the Government Code (Gov. Code §§11135-11139.5), and the regulations or standards adopted by the awarding state agency to implement such article. Contractor shall permit access by representatives of the Department of Fair Employment and Housing and the awarding state agency upon reasonable notice at any time during the normal business hours, but in no case less than 24 hours’ notice, to such of its books, records, accounts, and all other sources of information and its facilities as said Department or Agency shall require to ascertain compliance with this clause. Contractor and its subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement. (See Cal. Code Regs., tit. 2,§11105.) Contractor shall include the nondiscrimination and compliance provisions of this clause in all subcontracts to perform work under the Agreement.

11. CERTIFICATION CLAUSES: The CONTRACTOR CERTIFICATION CLAUSES contained in the document CCC 04/2017 are hereby incorporated by reference and made a part of this Agreement by this reference as if attached hereto.

12. TIMELINESS: Time is of the essence in this Agreement.

13. COMPENSATION: The consideration to be paid Contractor, as provided herein, shall be in compensation for all of Contractor's expenses incurred in the performance hereof, including travel, per diem, and taxes, unless otherwise expressly so provided.

14. GOVERNING LAW: This contract is governed by and shall be interpreted in accordance with the laws of the State of California.

15. ANTITRUST CLAIMS: The Contractor by signing this agreement hereby certifies that if these services or goods are obtained by means of a competitive bid, the Contractor shall comply with the requirements of the Government Codes Sections set out below. 173
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a. The Government Code Chapter on Antitrust claims contains the following definitions:

1) "Public purchase" means a purchase by means of competitive bids of goods, services, or materials by the State or any of its political subdivisions or public agencies on whose behalf the Attorney General may bring an action pursuant to subdivision (c) of Section 16750 of the Business and Professions Code. 2) "Public purchasing body" means the State or the subdivision or agency making a public purchase. Government Code Section4550.
b. In submitting a bid to a public purchasing body, the bidder offers and agrees that if the bid is accepted, it will assign to the purchasing body all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act (15 U.S.C. Sec. 15) or under the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code), arising from purchases of goods, materials, or services by the bidder for sale to the purchasing body pursuant to the bid. Such assignment shall be made and become effective at the time the purchasing body tenders final payment to the bidder. Government Code Section 4552.
c. If an awarding body or public purchasing body receives, either through judgment or settlement, a monetary recovery for a cause of action assigned under this chapter, the assignor shall be entitled to receive reimbursement for actual legal costs incurred and may, upon demand, recover from the public body any portion of the recovery, including treble damages, attributable to overcharges that were paid by the assignor but were not paid by the public body as part of the bid price, less the expenses incurred in obtaining that portion of the recovery. Government Code Section 4553. d. Upon demand in writing by the assignor, the assignee shall, within one year from such demand, reassign the cause of action assigned under this part if the assignor has been or may have been injured by the violation of law for which the cause of action arose and (a) the assignee has not been injured thereby, or (b) the assignee declines to file a court action for the cause of action. See Government Code Section 4554.

16. CHILD SUPPORT COMPLIANCE ACT: For any Agreement in excess of $100,000, the contractor acknowledges in accordance with Public Contract Code 7110, that:
a. The contractor recognizes the importance of child and family support obligations and shall fully comply with all applicable state and federal laws relating to child and family support enforcement, including, but not limited to, disclosure of information and compliance with earnings assignment orders, as provided in Chapter 8 (commencing with section 5200) of Part 5 of Division 9 of the Family Code; and b. The contractor, to the best of its knowledge is fully complying with the earnings assignment orders of all employees and is providing the names of all new employees to the New Hire Registry maintained by the California Employment Development Department.
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City of South Lake Tahoe through South Lake Tahoe Police Department

17. UNENFORCEABLE PROVISION: In the event that any provision of this Agreement is unenforceable or held to be unenforceable, then the parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby.

18. PRIORITY HIRING CONSIDERATIONS: If this Contract includes services in excess of $200,000, the Contractor shall give priority consideration in filling vacancies in positions funded by the Contract to qualified recipients of aid under Welfare and Institutions Code Section 11200 in accordance with Pub. Contract Code §10353.

19. SMALL BUSINESS PARTICIPATION AND DVBE PARTICIPATION REPORTING REQUIREMENTS:
a. If for this Contract Contractor made a commitment to achieve small business participation, then Contractor must within 60 days of receiving final payment under this Contract (or within such other time period as may be specified elsewhere in this Contract) report to the awarding department the actual percentage of small business participation that was achieved. (Govt. Code § 14841.)
b. If for this Contract Contractor made a commitment to achieve disabled veteran business enterprise (DVBE) participation, then Contractor must within 60 days of receiving final payment under this Contract (or within such other time period as may be specified elsewhere in this Contract) certify in a report to the awarding department: (1) the total amount the prime Contractor received under the Contract; (2) the name and addressof the DVBE(s) that participated in the performance of the Contract; (3) the amount each DVBE received from the prime Contractor; (4) that all payments under the Contract have been made to the DVBE; and (5) the actual percentage of DVBE participation that was achieved. A person or entity that knowingly provides false information shall be subject to a civil penalty for each violation. (Mil. & Vets. Code § 999.5(d); Govt. Code § 14841.)

20. LOSS LEADER: If this contract involves the furnishing of equipment, materials, or supplies then the following statement is incorporated: It is unlawful for any person engaged in business within this state to sell or use any article or product as a “loss leader” as defined in Section 17030 of the Business and Professions Code. (PCC 10344(e).) 175
Agreement Number: 23-APP47
City of South Lake Tahoe through South Lake Tahoe Police Department

EXHIBIT D

SPECIAL TERMS AND CONDITIONS

1. Disputes: Any disputes concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Director, Department of Alcoholic Beverage Control, or designee, who shall reduce his decision in writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Department shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the State a written appeal addressed to the Director of the Department of Alcoholic Beverage Control. The decision of the Director of Alcoholic Beverage Control or his duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, capricious, arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause, the contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, Contractor shall proceed diligently with the performance of the contract and in accordance with the decision of the State.

2. Cancellation/Termination: This agreement may be cancelled or terminated without cause by either party by giving thirty (30) calendar days advance written notice to the other party. Such notification shall state the effective date of termination or cancellation and include any final performance and/or payment/invoicing instructions/requirements. No penalty shall accrue to either party because of contract termination.

3. Contract Validity: This contract is valid and enforceable only if adequate funds are appropriated in Item 2100-101-3036, Budget Act of 2023, for the purposes of this program.

4. Contractor Certifications: By signing this agreement, Contractor certifies compliance with the provisions of CCC 04/2017, Standard Contractor Certification Clauses. This document may be viewed at: https://www.dgs.ca.gov/OLS/Resources/Page-Content/Office-of-Legal-ServicesResources-List-Folder/Standard-Contract-Language

5. If the State determines that the grant project is not achieving its goals and objectives on schedule, funding may be reduced by the State to reflect this lower level of project activity and/or cancel the agreement.
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177

SCOPE OF WORK
Summary
Project Personnel
178

SCOPE OF WORK
Problem Statement
179

SCOPE OF WORK
Project Description section 1 of 2
180

SCOPE OF WORK
Project Description section 2 of 2
181

SCOPE OF WORK
Additional Information
182

BUDGET DETAIL WORKSHEET
A. Personnel Services
Salaries
Classification/Positions Computation Total Cost
1 2
3 SUBTOTAL
Overtime
Classification/Positions Computation Total Cost
1 2
3 4
5 6

SUBTOTAL
Benefits
Classification/Positions Computation Total Cost
1 2
3 4
5 B. Operating Expenses and Equipment SUBTOTAL
Computation Total Cost
1 2

SUBTOTAL
Computation Total Cost
1 2
3 SUBTOTAL
C. Travel Expenses *
Description Computation Total Cost
1 2
3 4
SUBTOTAL *APP Conference only. All travel cannot exceed current state rates.

GRANT TOTAL
Operating Expenses*
Description
*maximum of $2,500.00
Operating Expenses*
Description
*maximum of $2,500.00
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OTHER FUNDING SOURCES
Complete the following to report the total funds available to support the activities related to accomplishing the goals and objectives of the contract. In the "Grant Funds" column, report the ABC funds requested by category. In the "Other Funds" column, report all other funds available to support the project by category (if none, leave blank). Then calculate the totals by category in the "Program Total" column. Total each column down to arrive at the total program funds available.

Note: Round all budget amounts to the nearest dollar—no cents.

Budget Category Grant Funds Other Funds Program Total
A. Personnel Services
B. Operating Expense
C. Travel/Registration Fees
D. Equipment
TOTALS
This form does not become part of the contract but is required in the Request for Proposal package.
*Disclaimer—Please complete only if your department will contribute funds. 184
Fiscal Year 2022 23 Annual Budget City of South Lake Tahoe, CA Administration
100 02110
The Administrative Division is responsible for the overall leadership andmanagerial duties at the Police Department i.e. policy, budget, recruitment, payroll, training, travel, and human resource functions. The Administration Division is currently staffed with the Chief of Police, and an Administrative Assistant.

For FY 2022/23 we are requesting to add an Administrative Lieutenant funded through Measure S Sales Tax funds for public safety. Workload has greatly increased at the administrative level with new State and Federal mandates along with increased training, transparency, and accountability efforts. This new administrative lieutenant position would assist with new State Law mandates, Policy Manual updates, Internal Affairs investigations, Community Service Officers, Parking Garage Management, training compliance, and other duties.

Operations
100 02120
The Operations Division encompasses the basic patrol functions of the police department. During this fiscal year the division will consist of 27 patrol officers. This includes one (1) traffic (motor) officer, two (2) canine officers, one (1) School Resource Officer assigned to South Tahoe Highschool (paid in part by the Lake Tahoe Unified School District), one (1) School Resource Officer assigned to South Tahoe Middle School (temporary full time tobacco grant funded), and one (1) officer assigned to the STACS program. In addition to the line level staff, this division has four (4) Reserve Officers (Part time Marine Unit Officers), Five (5) Patrol Sergeants, and one (1) Patrol Lieutenant.

Note: At the time of this report 7 of the 41 Sworn Officer positions (17%) are off work on long term injuries, and one Officer is off on long term military leave (frozen position).

In FY 2019/20 one (1) FTE police officer position was frozen but funded due to possible budget concerns around COVID. In FY 2021/22 that position remained frozen and was unfunded. The long term military leave Officer was moved to that frozen/unfunded position. That officer is scheduled to complete his military service in August of 2023.

The main service provided in this division is uniformed patrol. In addition to patrol level functions, this division develops, manages, and executes special event planning, a canine program, field training program, officer in charge program, marine program, crisis negotiations, SWAT, STACS, traffic, and a reserve program.

Joint Dispatch
100 02160
The Joint Dispatch account handles all costs associated with the dispatch center located in the Police Department.

We provide dispatch services to the City Police Department, the City FireDepartment, Lake Valley Fire Department, Fallen Leaf Fire, and Cal Tahoe JPA Ambulance Service.

The Dispatch Center is currently allocated with (1) Full time Dispatch Supervisor, (9) Full time Public Safety Dispatchers.

Support
100 02180
The Police Support Division budget handles all the positions within the Police Department that are not covered in Administration, Operations, or the Joint Dispatch Center. The area of responsibility is primarily Detectives, Property and Evidence, Records, and Building Maintenance.

Detectives are staffed with one (1) lieutenant, one (1) Detective Administrative Sergeant, five (5) investigative detectives, one (1) Cannabis Investigator, and two (2) evidence technicians.

The Records Division is staffed with one (1) records supervisor and two (2) records technicians. 116 185
City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
__________________________________
Meeting Date: September 12,
2023
Agenda Item #:12
Agenda Item: Appropriation for Airport Maintenance and Repairs of Pavement and Facilities Executive Summary: During the 2022-2023 winter season the airport sustained significant damage to pavement and other facilities. Heavy use of snow plows and other winter equipment has damaged the pavement at the airport. Also, the airport facilities need maintenance due to wear and tear over time.

Requested Action / Suggested Motions: Pass a Resolution authorizing the Finance Director to appropriate $150,000 from airport available fund balance into the airport expenditures for winter repair and general facilities maintenance.

Responsible Staff Member: John Dickinson, Airport Manager Reviewed and Approved By: Anush Nejad, Director of Public Works Susan Blankenship, City Clerk Olga Tikhomirova, Finance Director Heather Stroud, City Attorney Attachments:
01-Staff Report - Airport Maintenance Pavement and Facilities.docx 02-Resolution-Budget Appropriation for Airport Maintenance 186
Council Agenda Report- September 12, 2023 Page 1 of 1
City of South Lake Tahoe
Report to City Council
Meeting Date: September 12, 2023
Title: Airport Maintenance of Pavement and Facilities
Application Location: City Airport
Responsible Staff Member: John Dickinson, Airport Manager (530) 542-6182 Background: During the 2022-2023 winter season the airport sustained significant damage to pavement and paint striping. The damages caused by snow plows and other winter equipment requires immediate attention due to foreign debris (FOD) and other FAA regulatory concerns.

Also, numerous airport facilities are in need of repair.

Issue and Discussion: The airport is looking to appropriate $150,000.00 from its cash balance on hand to fix pavement and other issues. These projects are intended to be divided into two segments utilizing two different contractors.
 $110,000.00 Pavement
 $40,000.00 Facilities
Contractors will be utilized for these two projects due to the nature of the repair.

If these issues are not addressed, it will lead to further deterioration of the pavement and possible FAA compliance issues.

Financial Implications: Airport cash balance will be allocated to fund the repairs. No general funds will be utilized. These funds will be placed into account number 501-05130-43025 and 501- 05120-43025.

Environmental Considerations: The project is exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15301(d) (Existing Facilities – restoration or rehabilitation of deteriorated or damaged facilities to meet current standards of public health and safety).

Policy Implications: The contracts will be procured based on requirements outlined in the City’s purchasing policy and procedures.
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Resolution 2023-XXX September 12, 2023 Page 1 of 1
Resolution 2023-XXX
Adopted by the City of South Lake Tahoe
City Council
September 12th, 2023
Appropriating $150,000.00 from Airport Available Fund Balance for Airport Maintenance needs

BACKGROUND
A. On October 4, 2022, and November 15, 2022, the City Council approved new rates for certain fees to help eliminate subsidies from the General Fund. This has allowed the Airport to increase revenues, maintain financial balance for the Airport, and allocate these funds for additional Airport projects and needs.

B. There is approximately $500,000 in Airport fund balance currently available that can be utilized for additional Airport maintenance needs and capital projects.

C. The 2022-23 Winter Season has caused damages to the hangars and the airfield. As a result, repairs are required to maintain the Airport in a satisfactory manner.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:

1. Authorizes the Finance Director to Appropriate $150,000.00 into the expense line items 501-05130- 43025 and 501-5120-43025
Adopted by the City of South Lake Tahoe City Council on September 12, 2023, by the following vote:

Yes:

No:

Absent:

Abstain:
________________________ Date:_________
Cristi Creegan, Mayor
Attest:
________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
__________________________________
Meeting Date: September 12,
2023
Agenda Item #:13
Agenda Item: Fire Station 3 Renovation or Replacement Options Executive Summary: The Public Works and Fire Department will provide an update on options to upgrade, remodel or construct a new Fire Station 3. Staff recommends implementing Options A and D.

Requested Action / Suggested Motions: Pass a Motion to provide direction to the City Manager on whether to (A) Make minor renovations to 2nd floor only of Fire Station 3 for an estimated cost of $500,000; (B) Renovate Fire Station 3 to update living quarters including Building Code and ADA upgrades for an estimated cost of $3.5 million; (C) Begin planning to construct a new two-story fire station behind Fire Station 3 for an estimated cost of $19.25 million; or (D) Begin planning to construct a new one-story fire station on the adjacent Bank of Montreal site for an estimated cost of $19.75 million.

Responsible Staff Member: Anush Nejad, Director of Public Works and Jim Drennan, Fire Chief Reviewed and Approved By: Susan Blankenship, City Clerk Olga Tikhomirova, Director of Finance Heather Stroud, City Attorney
Attachments:
01-Staff_Report_-_Fire_Station_3_Options.docx
02 - Fire Station 3 Condition Assessment.pdf
03 - Fire Station 3 2nd Story Renovation Estimate Nov 22.pdf 04 - Fire Station 3 Space Needs.pdf
05 - South Lake Tahoe Site Layout Options C and D Floor Plans.pdf 06 - Estimates of Probable Cost - Option D.pdf
07 - Bank of Montreal Property.pdf
08- Fire_Station_3_Update_Presentation.pptx
189
Council Agenda Report September 12, 2023 Page 1 of 5
City of South Lake Tahoe
Report to City Council
Meeting Date: September 12, 2023
Title: Fire Station 3 Renovation or Replacement Options Location: 2101 Lake Tahoe Boulevard
Responsible Staff Member: Anush Nejad, Director of Public Works (530) 542-6031 and Jim Drennan, Fire Chief (530) 542-6152
Background: The building housing Fire Station 3 was originally built in 1957 with a minor remodel in the 1970s. In 1982, there was an addition and remodel again. The building has not been remodeled or improved since the 1982 project. The original building was not designed as a fire station and has never been designed with essential service standards in mind.

The roughly 3,310 SF building consists of two levels: living and administration on the second level and apparatus, medical storage, restroom, generator, SCBA/compressed air, and general storage on the first level. The building does not have a fire sprinkler system. A HazMat report has been completed, and no asbestos or hazardous material concerns exist. The facility has a single-ply membrane flat roof with parapet walls. The Fire Station also has a single-level outbuilding in the North/East that houses a gym/exercise facility and some mixed storage.

On October 19, 2021, the City Council appropriated $171,000 for design services for the renovations of the fire station. JK Architecture of Santa Rosa, CA (now DBA COAR Group) was tasked with assessing the facility and working with staff to provide design and bid documents for a renovation via the typical design, bid, build project delivery method. On December 22, 2021, JK Architecture provided a Condition Assessment Report for the facility (Attachment 02). The report showed that the facility often does not meet the current code and has structural, mechanical, and electrical infrastructure issues. Additionally, and most importantly, the facility does not provide an adequate operational, administrative, and housing environment for the Fire Department staff and equipment.

Shortly after the assessment report, Public Works and Fire Department staff worked with the architect to develop floor plan options that would accommodate the issues presented in the report, including repairing structural, mechanical, and electrical items. Additionally, staff directed the architect to plan for a total conversion of HVAC and gas appliances to electric for a future (not part of this scope) net zero project in coordination with the City’s greenhouse gas and Climate Action Plan goals and objectives.

In May 2022, staff received the estimated project costs resulting from the initial conceptual planning and design process, totaling approximately $4.9 million for the renovation, not including the soft costs of relocating the staff and equipment during the renovations. Staff estimated an additional $150,000 for temporary housing and staff relocation, bringing the preliminary project estimate to roughly $5,045,000.
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Initially, the project started as the Fire Department personnel requested to remodel and upgrade the living quarters and administrative areas, primarily on the second floor. However, the condition assessment revealed numerous building and code deficiencies that required mitigation with the basic remodel, thus increasing the scope significantly. ADA Accessibility issues alone require significant work, including installing an elevator/lift, and the current fire apparatus's size requires the equipment bay's extension (significant structural work).

In June 2022, FD and PW staff met with Senior staff to discuss the estimated project costs and the potential to fund the project at the time. It was decided to work with the architect to reduce costs to roughly $2,000,000. After this discussion, staff and the architect revisited the project's conceptual floor plans and work and eliminated the scope consisting of exterior renovations, some site improvements, lower floor renovations, sustainability improvements, and some structural renovations with the intent of maintaining the second-floor renovations of living and administrative space the priority for the crew and staff. Unfortunately, regardless of the scope reduction, permitting the remodel will require the code upgrades mentioned in the report, including accessibility upgrades.

In November 2022, the architect provided a revised floor plan and estimated approximately $2,300,000 for the construction work only (Attachment 03). An additional $1,000,000 would be required for the soft costs such as furniture and fixtures, construction administration and management, third-party inspection and testing, and the relocation of Fire Department personnel and equipment during the renovations. It is important to recognize that this revised estimate does not include the full facility net zero or EV Infrastructure scope. Shortly after the revised estimate was received, Fire Department and Public Works staff again met with Senior staff to request the feasibility of a $3.5 million appropriation for the project.

On March 28, 2023, City staff updated the City Council on the renovation of Fire Station 3, with an estimated cost of $3.5 million. At this meeting, the Council directed City staff to consider four options and return for additional direction from the Council. Specifically, the Council directed staff to consider these options:
 Option A: Internal renovation of the fire station to improve the living conditions for the firefighters.
 Option B: Renovation of the existing fire station per the March 28th option to address living conditions and ADA requirements within the current structure at approximately $3.5 million.  Option C: Addition of a new 2-story fire station behind the existing fire station on James Avenue. The existing structure is to be demolished upon completion of the new fire station.  Option D: A new one-story fire station on the Bank of West (now Bank of Montreal) property.

The existing structure is to be demolished upon completion of the new fire station or potentially sold for other uses.

Issue and Discussion: Based on Council direction, staff retained the services of RMM consultants, which specialize in fire station design and construction. Fire department and Public Works staff developed a list of requirements for the new fire station. These requirements were presented to RRM, and based on their experience, the consultant provided a detailed size of each component of the new fire station (See Attachment 04). RMM also evaluated options C and D, developed schematic drawings, and estimated probable costs for each option (See Attachments 05 and 06).
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At the same time, City’s Facilities Maintenance Manager discussed the costs and options for Option A, which entails minor renovations to the internal building envelope on the second story that do not trigger Building Code or ADA upgrades, including 1) new flooring on the second floor, 2) HVAC upgrade, 3) a kitchen upgrade, 4) interior painting on the second floor, and 5) roof leakage report and replacement of heat tape.

Finally, staff initiated a discussion with Bank of West (now Bank of Montreal) to evaluate land acquisition for Option D. Based on City staff discussion with Bank of Montreal staff and their real estate department, they are amenable to selling their property for the Fire Station 3 expansion.

An initial appraisal was conducted for an approximate size of 0.52 acres. However, based on subsequent discussions with the bank staff, they have expressed a desire to sell approximately

1.53 acres of the current site. (See Attachment 07). City staff also evaluated the coverage areas related to TRPA requirements and found that it is feasible to expand into this area.

Staff recommends implementing Option A and Option D.

Financial Implications: The following are estimated probable costs for each option. These costs are in 2024 dollars and are at planning-level estimates:
 Option A: Renovation of existing building structure: $500,000  Option B: Renovation of existing structure and ADA upgrades: $3.5 million  Option C: New two-story structure behind existing fire station (excluding demolition cost):
$19.25 million.
 Option D: New one-story structure on the Bank of Montreal site (excluding demolition cost: 19.75 million.

Options C and D have no significant cost difference, except for right-of-way acquisition costs.

Between Option C and D, Option D is the preferred option, given additional spacing and land usage. Below is the estimate for Option D for each component of the project:

Options C and D include all electric equipment, solar panels, propane backup generator, passive heating/cooling design, solar potential maximization, pitched roof, and compliance with a potential new Reach Code (to be brought to council in late fall). 192
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LEED Gold certification and a new flashing beacon on US 50 will add an additional cost of $1.1 million to either options C or D. Option D also includes additional land to accommodate a future battery backup space for backup power once the technology is reliable for essential services standards or space for a state-of-the-art biomass heat/energy facility to complement the City’s chipping program and help meet the SB1383 organic material procurement mandate while providing round-the-clock reliable renewable energy on-site (pending TRPA lifting the moratorium).

Options B, C, and D are good candidates for a Design-Build delivery method, which can help keep costs down. Option A can be handled internally through the Maintenance Division with several trade contractors.

Option D allows the city to sell the land and existing structure without additional demolition costs.

Additionally, there could be a credit of approximately $37,000 for ground coverage from TRPA that can be applied to the project.

The current available cash on hand in Measure S Sales Tax fund that can be allocated towards the Fire Station 3 upgrades is approximately $2.5m-$3.0m. Selecting Option C or D will require bond financing of approximately $17m in project funding at the approximate cost shown in the table below. These cost estimates were obtained using a debt service calculator tool and will differ due to changing market conditions and based on the type of bond issuance (premium or discount).

Term (years) Interest Rate Approximate Annual
Debt Service Payment
Approximate Total
Interest Cost
10 5% $2.20 million $5.0 million
15 5% $1.6 million $7.6 million
20 5% $1.3 million $10.3 million
Prior to selecting Option C or D, the City Council should discuss and identify the potential and/or preferred funding sources for the annual debt service payments. This is also an opportunity to remind the Council that the Fire Station 2 upgrade project has been identified previously to be funded by Measure S Sales Tax, and $500,000 is being set aside annually for that project. The accumulated balance in the Fire Station 2 project account, including FY 2023-2024 appropriations, is $1.5 million. If Measure S is selected as a funding source for the Fire Station 3 upgrades, it will further delay the Fire Station 2 upgrade project which, for discussion purposes, will require approximately the same level of funding as Fire Station 3 upgrades if Option C or D are selected.

Sustainability Implications: The facility utilized for Fire Station 3 was not designed originally as a fire station, and the minor remodel in the 1970s and again in 1982 did not create a facility strictly designed for fire department operations. The facility is not an Essential Services facility and cannot become one without completely replacing the facility, and the current site is likely not sized appropriately for a new facility and required site improvements.

With Options A and B, sustainability is a major challenge in mitigating the effects of deferred maintenance, ADA accessibility, and operational program evolution while implementing regulatory compliance, energy sustainability, and carbon reduction. Although this project upgrades outdated 193
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living and administration quarters and complies with building, mechanical, and electrical codes where dictated, these options do not contain scope for net zero implementation.

With Option B, any work contemplated in the design/build scope will, of course, meet current Title 24 requirements, and the current estimate includes a Variable Refrigerant Flow HVAC System (electric), but scope such as full building electric, solar power generation, battery storage systems, and electric vehicle charging infrastructure are not contemplated in this scope. Option B, conceptually scoped to date, represents a tenant improvement of an existing facility with an expected lifespan of 10-12 years for renovations before another improvement is due.

Options C and D include sustainability and net zero goals, as listed above. The facility will be designed as an Essential Services Building, with an average life of 40-50 years. EV charging stations are included in the design costs. Grants could be attained to help with that cost.

Environmental Considerations: For Options A and B, this project is categorically exempt from review under the California Environmental Quality Act (CEQA) under CEQA Guidelines 15301 (Existing Facilities) because it consists of the repair or minor alteration of an existing public structure involving negligible or no expansion of existing or former use. For Options C and D, a CEQA environmental clearance will be required. Direction to move forward with planning for Options C and D are statutorily exempt from CEQA under CEQA Guidelines section 15262 (feasibility and planning studies for possible future actions which the City has not yet approved, adopted, or funded).

Policy Implications: City Council Strategic Priority 5 – Continuous Improvement.  Goal 5.1 Public Safety “Ensure substantial investment in public safety by investing in police, fire and snow removal operations and equipment needs…”
 Goal 5.3 Infrastructure and Maintenance “Ensure our City has sustainable funding sources to properly maintain infrastructure including roads, snow removal, facilities, recreation sites and trails.”
City Council Strategic Priority 1 – Built Environment
 Goal 1.5 Carbon Neutrality and Grid Reliability “Implement a variety of projects to reach the City’s 100% renewable energy and Climate Action Plan goals, eventually achieving carbon neutrality. Initiatives include, but are not limited to, power City facilities and fleet with renewable energy. Support community wide deployment of solar, and pursue opportunities for electrification, including transitioning fleet vehicles to electric and building robust EV charging infrastructure by 2025.
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SITE AND FACILITY ASSESSMENT
SOUTH LAKE TAHOE FIRE STATION 3
2101 Lake Tahoe Blvd. South Lake Tahoe, CA 96150
12/24/2021
Prepared by:

Jeff Katz Architecture
200 E Street Santa Rosa, CA 95404
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200 E Street Santa Rosa, CA 95404 | 707.544.3920 | www.jeffkatzarchitecture.com TABLE OF CONTENTS:

1. Existing Floor Plans

2. Architectural Site Assessment/JKA

3. Structural Site Assessment/ZFA

4. Mechanical and Plumbing Site Assessment/McParlane

5. Electrical Site Assessment/ ELEN
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UP
UP
UP
UP

APP BAY
5 COMPRESSED

AIR/GENERATOR
6 GARAGE/HOSE
7 MED/ICE
8 LAUNDRY
9 ENTRANCE
10 RR
11 HALL
12 STORAGE
13 VESTIBULE
30 GEN AIR
25 SF
IT
14 375 SF

CONC DECK
15 337 SF

KITCHEN/DINING
16 88 SF
RR
17 83 SF

SHOWER ROOM
18 62 SF
HALL
19 441 SF
DORM
20 235 SF

DAYROOM
21 313 SF
ADMIN
22 51 SF
STOR
23 178 SF

TURNOUT
24 124 SF
OFFICE
209 SF 25
OFFICE
26 131 SF
OFFICE
27 130 SF
OFFICE
28 66 SF
HALL
29 SCALE: 1/4" = 1'-0"

EXISTING FLOOR PLANS
South Lake Tahoe FS 3 Remodel
Project Status 12/23/21

EXISTING FIRST FLOOR PLAN EXISTING SECOND FLOOR PLAN
197
200 E Street Santa Rosa, CA 95404 | 707.544.3920 | www.jeffkatzarchitecture.com I. Building History and Background
The station was originally built in the 1950s with an addition and remodel in the 1970s.

The original building was constructed primarily of CMU, and the remodel augmented this structure with timber framing in the expansion. The original building was not designed as a fire station and has never been designed with Essential Service standards in mind.

The building consists of two levels, with Living and Administration on the second level and Apparatus, Medical Storage, Restroom, Generator, SCBA/Compressed Air and Storage generally on the first level. The building is not sprinklered. A HazMat report has been done and there are no asbestos or hazardous material concerns. The Fire Station also has a single level outbuilding located to the North/East that currently houses a Gym facility and some mixed storage.

II. Scope and Program
To minimize required seismic and functional requirements, the current remodel will not be designed to Essential Service standards. The following are some basic outlines of recommended program, scope and functional upgrades:

1. Phasing of the project needs to be assessed to determine viability of keeping portions of the station operational. Due to the extensive systems upgrades recommended it is unlikely that partial operation of the building will be practical.

2. Circulation upgrades: to comply with accessibility requirements an elevator to the second floor will be required. Also, the stairways do not comply with code and will need to be revised. A fire pole from second floor Bunk Rooms to the App Bay is being proposed to increase response times in addition to the stairways.

3. Building exterior: minor modifications to siding and roofing to update the building and remove aging, deteriorating finish materials are being proposed. Due to the age of the last remodel it is likely that the building envelope will need to be updated. This would include roof and wall insulation and windows updated to meet current acoustic and energy standards.

4. Building interior: functional spaces to be updated and modified to make the building more functional and serve the needs of the crew more effectively, as well as respond to current best practices for operational fire stations. See following section for a space by space assessment and recommended upgrades.
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200 E Street Santa Rosa, CA 95404 | 707.544.3920 | www.jeffkatzarchitecture.com III. Space by Space Assessment

1. Exterior Outbuilding: While functional as a small gym and cardio equipment facility, some upgrades are advisable. Evidence of water damage and caulking failing are apparent in the image below. We recommend replacing damaged windows and doors. Also, below image shows crowded conditions in the cardio room. Moving this storage to the main building would make the exercise space more functional.

2. Apparatus Bay: Currently the station is barely adequate for equipment used given the length of the apparatus and bay. Space could be more flexible in redesign if one of the App Bays was expanded internally 4 to 6 feet to accommodate current and future equipment needs. Expansion outside of building footprint not recommended due 199
200 E Street Santa Rosa, CA 95404 | 707.544.3920 | www.jeffkatzarchitecture.com to cost and complexity. Structural limitations could provide challenges to this upgrade.

Minor finish upgrades here will be incorporated to update the space. 200
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3. Compressed Air/Generator: this room currently houses the compressed air, generator and doubles as office space. Redesign will include removing any office function to avoid noise and smells from compressed air system. Generator is being relocated outside in a separate contract and will alleviate any interior noise and air contaimination concerns.

4. Hose and Trailer Garage: Adequate in function but will be reconsidered in redesign if space is needed for higher priority station programming and functions. 201
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5. Level 1 Restroom/Med Storage/Laundry: Inadequate as currently designed and will be revised in redesign to meet accessibility and functional requirements.

6. Stairways: step rise is too steep to comply with current code. Code compliant stairways to be incorporated into redesign. An elevator will be included to meet accessibility requirements.
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200 E Street Santa Rosa, CA 95404 | 707.544.3920 | www.jeffkatzarchitecture.com

7. Kitchen/Dining/Dayroom: Current facilities are undersized. Recommended redesign and upgrade to provide functional, updated facilities for 4 to 8 staff. Dining to accommodate seating for 8. Current Dayroom location is remote from Kitchen/Dining which is not recommended.
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8. Bunk Rooms: The current accommodations to not meet current best practices for separate sleeping accommodations for staff. Recommend redesign to include 4 individual bunk rooms to replace current partitioned Bunk Dorm. New Bunk rooms will be sized to accommodate one Twin XL bed, 3 lockers and desk space. Egress windows and a 1 hour rated corridor and egress path to be included. Proposed design will locate Bunk Rooms on North side of second level to avoid street noise and lights from Lake Tahoe Blvd.
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9. Second Level Restrooms: current design does not meet accessibility compliant requirements and lacks privacy for toilet and showers. Recommend redesign to incorporate updated individual restroom facilities to include two restrooms to serve the 4 bunk rooms. One of the two restrooms to be ADA compliant. Both restrooms to contain sink, toilet and shower. Recommend also providing an additional restroom containing toilet and sink to serve the Administrative office area.

10. Administrative Offices: new design to incorporate spaces for 4 to 6 offices. 205
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11. IT Room: upper level IT room adequate for current needs but to be enlarged for likely upgraded IT needs. Recoemnd that the IT Room be relocated to first level to create more design opportunities/space for Admin and Living quarters. New IT Room to have stand alone Cooling system for the room.
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12. Turnout and Space Gear Storage Room: Existing storage room can be relocated to first level. A separate Turnout Room to be provided including turnout lockers for 12 firefighters will be included in redesign at this new location. 207
Conditions Assessment Report
South Lake Tahoe - FS III Crew Quarters
2101 Lake Tahoe Boulevard (US 50)
South Lake Tahoe, CA 96150
ZFA Project: 21689.00
December 22, 2021
Prepared For:

Jeff Katz
Jeff Katz Architecture
200 E Street
Santa Rosa, CA 95404
Prepared By:

Kevin Zucco, Principal in Charge
Draft 12/22/2021 12:22:33 PM
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CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 1 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA

INTRODUCTION
A general conditions assessment structural review of two buildings located at South Lake Tahoe FS III at 2101 Lake Tahoe Boulevard (US 50) in South Lake Tahoe, CA (see Appendix A: Location Map and Site Map) was performed as requested by Jeff Katz Architecture as part of due diligence. One site visit was completed on December 03, 2021 to visually review the general condition of the structures; however, no destructive testing or removal of finishes was performed or included in scope. Non-structural elements such as Mechanical, Electrical, Plumbing, Equipment Anchorage or Architectural elements were not included within the scope of this review.

The following documents were provided for review:
• South Lake Tahoe FS III - Remodel Drawings dated 09/02/81 • No other relevant documents were provided
The American Society of Civil Engineers (ASCE) 41-17 Standard for Evaluation and Retrofit of Existing Buildings provides a “Tier 1” checklist format which was used as a guide for this assessment which helps to identify points of review and potential deficiencies. This assessment does not constitute a seismic evaluation. In a complete seismic evaluation, Tier 1 individual checklists and analysis would be completed for the original structures and any renovations or additions in conjunction with detailed Tier 2 and/or 3 analyses as required.

The following is grouped into two buildings as designated on the site plan provided (Appendix A: Site Map) and site structures.
• Firehouse 3,310sf:
o Apparatus Bay & Support (lower level)
o Living Quarters (upper level)
• Storage Building/Gymnasium <2,000sf

STRUCTURE OVERVIEW
General Site Description
The buildings are located on a flat city lot on the North side of Highway US 50. The original firehouse structure was constructed in 1957 and was remodeled in 1982. Since this remodel, several code updates have occurred with increases made to seismic requirements. Additionally, the Essential Service Act of 1986 was established resulting in additional design parameters for Essential Service Structures. Overall, CMU construction requirements have significantly improved since construction. It is not likely that the structure meets ALL current code requirements, and some deficiencies are expected when compared to current code. For optimal Essential Service building performance, it is recommended that a full seismic evaluation be completed. Any seismic evaluation/code analysis renovations or additions shall be in conjunction with detailed Tier 2 and/or 3 analyses as required.

The storage building/gymnasium is a single-story wood building. The structure has been modified over many years with part of the building being enclosed later. It is not likely that the structure meets current code requirements with increases to seismic requirements, and several deficiencies are expected when compared to current code. Ideal or target code performance is not probable without improvements. This structure is less than 2,000sf and therefore is exempt from the 1986 Essential Service Act. A full evaluation of the structure and use occupancy is recommended.

Modifications to exterior wall openings of these structures will result in a code upgrade to each affected element and the respective foundations.
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CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 2 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Structural System and Materials Description
General
The original structures are rectangular in plan. The firehouse building is two-stories while the storage building/ gymnasium is one-story. The two structures are separate making them structurally independent of one another.

Roof and Floor Framing
Both structure’s roofs are generally wood framed with sawn lumber wood rafters and joists. Roofs have plywood sheathing for diaphragms. The floor of the firehouse is sawn lumber joists and plywood sheathing.

Walls
The firehouse building is primarily concrete masonry unit CMU walls and structural and non-structural wood walls. The storage building/gymnasium consists of wood walls.

Seismic Force-Resisting System
The primary lateral (seismic and wind) force resisting system is CMU shear and wood shear walls at the firehouse building. The system at the storage building/gymnasium is wood shear walls.

Ground Floor and Foundations
The ground floor and foundation of all buildings are concrete shallow footing and slab on grade.

Field Verification and Condition Assessment
Based on the site visit, the buildings have been constructed with at least one phase/remodel. However, the structures have been in the current condition for many years. Typically, these conditions do not exhibit immediate signs of danger or collapse. However, several conditions warrant repairs or attention.

FINDINGS AND RECOMMENDATIONS
The buildings were constructed under various older buildings codes or construction techniques. It is not expected that the structures would meet current code standards; however, all buildings should have been permitted and constructed to meet construction standards and codes at the time. The firehouse was constructed and remodeled prior to the 1986 Essential Service Act and therefore would not comply. The storage/gymnasium is exempted from the Essential Service by size.

The following structural items were observed during the site visit (see Appendix B: Images). Items are listed in order of exterior approximately from the top of structure down to the interior separated by level. Modifications to the structural systems or changes to the structural risk category or occupancy increases would trigger compliance with current code.

Alternatively, voluntary structural improvements can be implemented to mitigate issues or improve performance. All new construction should meet current code requirements.

Firehouse Exterior:

Findings and Recommendations:
a. ROOF: Per occupants and maintenance staff, there is leakage through the existing roof. See Images 5 & 6. 210
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 3 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA RECOMMENDATION: Review roof framing members in detail. Repair any damaged conditions in members or connections. New roof framing may need to be considered for positive drainage at an appropriate slope. A 10% increase in roof weight will trigger full seismic current code compliance. b. PILASTERS: The CMU pilasters/‘frame’ at the apparatus bay openings likely do not meet code requirements for lateral resistance to wind and seismic lateral forces. Also, the CMU veneer is damaged. See Images 1, 7, & 8.

RECOMMENDATION: Remove the stone veneer and potentially the CMU pilasters/’frame’. Extend the apparatus bay towards the street to gain apparatus depth. At new apparatus bay entry, install a new structural steel moment frame and foundations. Alternatively, perform extensive inspections and testing of existing construction and analysis of the existing CMU frame to strengthen or verify meets current code. c. HEAVY VENEER: Per ASCE 41-17, Table 4-1 Patterns of Defects and Deterioration, veneer typically shows evidence of deterioration, damage, or corrosion in connections RECOMMENDATION: Review all veneer components in detail. Remove veneer or strengthen and provide components to meet current code as required.
d. SECOND FLOOR GUARD RAIL: In some locations, guardrails do not meet code requirements. See Images 9 &

10. RECOMMENDATION: Review/analyze all guardrail conditions. Provide guardrail to meet current construction standards.
e. DECK BRACING: The framing lacks an adequate system to resist wind and seismic lateral forces. See Image 11.

RECOMMENDATION: Provide a comprehensive wind/seismic analysis and code compliant wind/seismic force resisting system to foundations.
f. DAMAGED FRAMING/SHEATHING: In multiple exterior exposed locations wood framing/sheathing was noted with damage and staining and could be compromised in some locations – see framing, siding, trim, etc. See Images 10, 11, & 12.

RECOMMENDATION: Review all conditions in detail. Repair any damaged conditions in members or connections.
g. TYPICAL WOOD: Per ASCE 41-17, Table 4-1 Patterns of Defects and Deterioration, wood components typically show evidence of decay, shrinkage, splitting, fire damage or sagging. Their connections are typically deteriorated, broken, or loose.

RECOMMENDATION: Review all wood members and their connections in detail. Strengthen and provide members and connections to meet current code as required. 211
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 4 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Firehouse Apparatus Bay & Support (lower level):

Findings and Recommendations:
h. CMU SHEAR WALLS: The exterior CMU shear walls likely do not meet code requirements. See Image 13.

RECOMMENDATION: Review all CMU shear wall conditions. Provide strengthening and structure to reinforce the walls as required or replace to meet current code.
i. CMU WALL ANCHORAGE: The exterior CMU walls likely do not meet code requirements for connections to the floor framing. In an earthquake, heavy walls can pull away from floor framing members causing collapse. This is a common deficiency for old CMU buildings with light wood framed floors.

RECOMMENDATION: Review all CMU to floor connections conditions. Provide strengthening and structure to reinforce the connection as required to meet current code. j. NTERIOR BEARING/SHEAR WALLS: Interior CMU wall between apparatus bay and rear support rooms is a bearing and shear wall. See Image 14.

RECOMMENDATION: Review contribution of this wall to support additional framing above. Any modifications to this wall will result in a code upgrade to this element and the respective foundations. k. INTERIOR NON-BEARING WALLS: Interior wood walls do not likely contribute to bearing of the system or lateral resistance. See Image 15.

RECOMMENDATION: Review contribution of this wall to support additional framing above. Modifications to this wall could potentially result in a code upgrade to this element and the respective foundations. l. BEAMS: Where the large beams are supported at the CMU pilaster, it is unclear if the wall anchorage meets code requirements. The beam and CMU pilaster could separate in a seismic event and cause collapse. See Images 16 & 17.

RECOMMENDATION: Review existing beam to CMU pilaster connection in detail and provide connections to meet current standards. Strengthen CMU for connection or remove CMU pilasters and provide new steel moment frame in its place per recommendation b.
m. CONCRETE SLAB: Significant slab cracks were noted at multiple locations. See Images 18 & 19.

RECOMMENDATION: Rout and clean and fill small cracks with epoxy grout. At large crack locations, some removal and concrete patching may be required for more durable repairs. 212
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 5 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Firehouse Living Quarters (upper level):

Findings and Recommendations:
n. INTERIOR WALLS/FRAMING: The framing on this level does not match previous plans: interior walls have been moved or completely removed and columns have been added in their place. See Image 21.

RECOMMENDATION: Review contribution of this wall to support additional framing above. Existing conditions or modifications to this wall could potentially result in a code upgrade to this element and supporting elements (walls below and foundations).
o. CMU WALL ANCHORAGE: The exterior CMU walls likely do not meet code requirements for connections to the roof framing. In an earthquake, heavy walls can pull away from roof framing members causing collapse. This is a common deficiency for old CMU buildings with light wood framed roofs.

RECOMMENDATION: Review all CMU to roof connections conditions. Provide strengthening to reinforce the connection as required to meet current code.

Storage Building/Gymnasium:

Findings and Recommendations:
p. DAMAGED FRAMING/SHEATHING: In multiple exterior exposed locations wood framing was noted with moisture damage and staining and could be compromised in some locations – see framing, siding, trim, etc. See Images 22, 23, 24, 25 & 27.

RECOMMENDATION: Review all conditions in detail. Repair any damaged conditions in members or connections.
q. SETTLEMENT: Slight differential settlement was apparent where building was enclosed in different phases. See Image 26.

RECOMMENDATION: Review framing members and foundations in detail. Provide compatibility between different framing and foundations which meet current code requirements. r. WOOD POST: The wood post and post base do not meet code requirements. The post appears to be embedded in the ground. See Image 27.

RECOMMENDATION: Review all post and post base conditions. Revise or strengthen posts and post base connections to meet current standards. Revise foundation supports for durability and strengthen for adequate load as required.
s. INTENDED USE: This building appears to be used for a gymnasium/activities and storage. See Image 28. 213
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 6 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA RECOMMENDATION: Review the structure occupancy requirements and performance goals. Modifications could potentially result in code upgrades to the structure. See i. and j. above.

Proposed Modifications Firehouse:

Proposed Modification and Recommendations:
t. ADD ELEVATOR: Add elevator (assumed exterior) for code compliance RECOMMENDATION: The elevator should be added to exterior and be completely seismically separated from the structure and self-supporting to avoid seismic upgrades to the existing structure. These type of elevator structures are structural steel frames with infill wood framing. u. RECONSTRUCT STAIRS: Demolish and reconstruct existing stairs for code compliance RECOMMENDATION: Remove and re-frame second floor framing at openings and support walls and foundations below.
v. ADD FIRE POLE: Add a new fire pole between dorms and apparatus bay below RECOMMENDATION: Consider firepole added to building exterior existing opening to avoid floor and wall framing modifications. Interior addition will require new opening and re-framing at floor and support walls and foundations below.
w. REVISE UPPER FLOOR PLAN: revise/relocate day room, bunk rooms, restrooms, and administration offices RECOMMENDATION: Remove and re-frame second floor wall framing including exterior and interior bearing and shear walls. Modifications to interior structural walls and new/revised exterior openings will require current code compliance for gravity and seismic. See i. and m. above. x. EXPAND APPARATUS BAY: Extend at least one apparatus bay 4-6ft.

RECOMMENDATION: Extend both bays and add structural moment frame per b. above. Modification to the interior CMU bearing and shear wall at the rear of the apparatus bay will require current code compliance for gravity and seismic including foundations.
y. REVISE LOWER FLOOR PLAN: Relocate IT room to lower floor and add turnout lockers.

RECOMMENDATION: Modification to the interior CMU/Wood bearing and shear wall at the rear of the apparatus bay will require current code compliance for gravity and seismic including foundations. See i. and j. above. z. ADD GENERATOR: Add new exterior generator (separate contract).

RECOMMENDATION: Provide new structural concrete pad and code compliant anchorage for new generator 214
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 7 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA

CLOSING
The structural review is based on that which was and available original structural drawings. No attempt was made to uncover hidden conditions or perform any destructive or non-destructive testing. The items discussed in this report are subject to revision should more information become available. No structural analysis for loads or capacities was performed under the scope of this review.

We understand you may have questions regarding this evaluation and are available for comment and explanations.

Please call with any questions you may have. Thank you for choosing ZFA Structural Engineers to assist you with this building condition assessment.

Kevin Zucco
Executive Principal
ZFA Structural Engineers
Dezire Perez
Designer
ZFA Structural Engineers
Draft 12/22/2021 12:23:04 PM
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CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 8 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA APPENDIX A – LOCATION MAP AND SITE MAP
216
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 9 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA 217
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 10 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA 218
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 11 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA APPENDIX B – IMAGES

FIREHOUSE EXTERIOR
219
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 12 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 1: South Elevation
Image 2: East Elevation
220
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 13 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 3: North Elevation
Image 4: West Elevation
221
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 14 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 5: Roof Overview
Image 6: Roof Slope
222
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 15 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 7: Pilaster
Image 8: Spalling Veneer
223
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 16 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 9: Deck Overview
Image 10: Guardrail Connection
224
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 17 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 11: Deck Supports
Image 12: Damaged Framing
225
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 18 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA APPENDIX B – IMAGES

FIREHOUSE APPARATUS BAY & SUPPORT
(Lower Level)
226
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 19 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 13: Exterior CMU Wall
Image 14: Interior CMU Wall
227
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 20 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 15: Interior Wood Wall
Image 16: CMU Pilaster or ‘Frame’
228
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 21 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 17: Beam to CMU Pilaster Connection
Image 18: Interior CMU Wall Foundation
229
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 22 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 19: Slab Cracks
230
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 23 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA APPENDIX B – IMAGES

FIREHOUSE LIVING QUARTERS
(Upper Level)
231
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 24 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 20: Living Quarters Overview
Image 21: Interior walls and steel column
232
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 25 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA APPENDIX B – IMAGES

STORAGE BUILDING/GYMNASIUM
233
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 26 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 22: North Elevation
Image 23: East Elevation
234
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 27 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 24: South Elevation
Image 25: West Elevation
235
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 28 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 26: Differential Settlement
Image 27: Post Base
236
CONDITIONS ASSESSMENT REPORT- South Lake Tahoe – FS III Crew Quarters | 29 2101 Lake Tahoe Boulevard (US 50), South Lake Tahoe, CA Image 28: Interior Storage Building/ Gymnasium
237

P R I N C I P A L S
P A U L F . M c P A R L A N E , P . E . | D O U G L A S R . I S A A K S , P . E .

J A V I E R R . A R E S | C H R I S T O P H E R L . J A C K S O N San Diego Orange County
4830 Viewridge Avenue, Ste A, San Diego, California 92123 2 S Pointe Drive, Ste 180, Lake Forest, California 92630 P (858) 277-9721 | F (858) 277-9760 | [email protected] P (949) 296-3136 | F (949) 296-3137 | [email protected] December 22, 2021 via email: [email protected] Mr. Jeff Bousfield

JEFF KATZ ARCHITECTURE
200 E Street
Santa Rosa CA 95404
Re: South Lake Tahoe Fire Station No. 3 Site Assessment Our Proposal Number: P21131SD
Dear Jeff:

McParlane & Associates, Inc. visited the above-referenced project on Friday, December 3, 2021, to conduct a limited review of the existing mechanical and plumbing systems installations on the South Lake Tahoe Fire Station No. 3 project located in South Lake Tahoe, California. The limited review conducted did not include testing of systems or a detailed examination of system conditions but only a visual observation conducted in accordance with our professional standard of care. In addition, staff personnel provided a history of past challenges with the HVAC & Plumbing systems operating to help our team get a better read on the overall functionality and dependability of the installed systems. At the time of the visit, the HVAC and Plumbing systems were in operation and the station was occupied.

As a result of our observations, the following general items observed, and noted:

I. MECHANICAL
➢ Existing gas/electrical rooftop unit are functioning, however are reportedly problematic. ➢ Existing conditioning systems utilize a combination of above ceiling and below floor air distribution.
➢ Existing HVAC controls are conventional (non-programmable) type. ➢ Existing IDF room unit is nearing end of its useful life. ➢ Exhaust fans in restrooms/shower rooms are weak at best. ➢ Thermal controllability of systems is difficult to staff. ➢ Apparatus bay is served from below floor heating system. ➢ Plymovent exhaust to apparatus is functioning satisfactorily to staff, although discharge duct may require relocation
238
Mr. Jeff Bousfield December 22, 2021
Our Proposal No.: P21131SD

________________________
➢ Due to extent of anticipated remodel, it was concluded that the HVAC scope would include a complete gut and integration of new systems.
➢ Due to mention of a desired future zero-net-energy goal, team is looking strongly at a VRF system to give improved efficiency and better individual thermal comfort. ➢ New exhaust for restrooms/shower rooms and kitchen area anticipated to meet and/or exceed code required exhaust rates.
➢ New duct systems are anticipated to accommodate area modifications and minimize future duct air leakage.
➢ New outside air provisions are recommended to maintain code required ventilation rates. ➢ New IDF cooling only unit.
➢ New heaters for apparatus bays and adjacent support areas. ➢ New turnout exhaust, dryer exhaust and area
➢ New DDC controls systems
➢ New turnout exhaust is recommended.
➢ Generator location may need to be reevaluated.
➢ As a follow up to our site visit, I have contacted our VRF suppliers and confirmed the VRF system type can operate satisfactorily in temperatures anticipated for this area – so we should be good with the VRF all electric option. I am also looking into electrical heaters for the apparatus bay with minimal clearance requirements and electrical water heating options.

II. PLUMBING
➢ Existing plumbing fixtures are mis-matched and in poor visual condition. ➢ Kitchen appliances (gas cooktop/over and coffee makers) are in need of replacement. ➢ No gas solenoid shutoff valves existing in our building. ➢ Sewer lines are reported in need of inspection, hydro jetting, repair and/or replacement.

Station staff recommends connection to existing site sewer. ➢ Water line enters building through the apparatus bay and should be re-piped to maximize system longevity, isolation capabilities and future leaks due excessive velocity. ➢ Gas may be considered for reuse; however, elimination may be needed to meet net-zero goals, however meter and main appear in good condition. ➢ Water heater should be changed to an electric heat pump water to help support net-zero goals.
➢ No backflow preventor exists on building main water line. One should be added for public and occupant safety. Device should be protected from freezing ➢ New condensate pipe should be added.
➢ All new hot, cold and recirculation pipe should be provided. All water piping should be insulated.
➢ All new soil, wase and vent piping (conventional) should be provided. ➢ Roof drains and overflow currently sheet flow off from building. ➢ Evaluate and rework drain system in apparatus bay (including sand-oil interceptor if needed).
239
Mr. Jeff Bousfield December 22, 2021
Our Proposal No.: P21131SD

________________________
➢ New sewer extension to the building (from existing site main). ➢ We shall be excluding gas modifications to fitness building. ➢ We shall be excluding site drainage modifications)
➢ New compressed air systems (piping only from relocated air compressor). ➢ New turnout discharge pit is recommended.

Respectfully,
MCPARLANE & ASSOCIATES, INC.

Doug Isaaks, P.E
Principal
DRI/kr
z:\01 mpa\administration department\proposals\p21-sd\p21131sd south lake tahoe fs 3\(2021-12-22) south lake tahoe fs no.3 site assessment.docx 240
Electrical Assessment
December 22, 2021
South Lake Tahoe Fire District
Fire Station 3
Lake Tahoe, California
Prepared by:

ELEN Consulting, Inc.
9150 Chesapeake Drive, Suite 220
San Diego, CA 92123
Ph: 619-550-1085
241
Contents

1. General Overview .................................................................................................................................2

2. Electrical Systems..................................................................................................................................3

2.1. Existing Electrical and Telecom Services.......................................................................................3

2.2. Existing Electrical...........................................................................................................................3

2.3. Existing Exterior Lighting...............................................................................................................3

2.4. Existing Interior Lighting ...............................................................................................................3

3. Recommendations:...............................................................................................................................4

3.1. Building Service.............................................................................................................................4

3.2. Electrical Load Summary...............................................................................................................4

3.3. Panelboards and Switchboards.....................................................................................................4

3.4. Exterior Lighting ............................................................................................................................5

3.5. Interior Lighting.............................................................................................................................5

3.6. Interior Telecom and Low Voltage................................................................................................5

4. Exhibits..................................................................................................................................................6

1. General Overview
The existing building area is approximately 5,000 total sq.ft. of indoor conditioned space. Facility has been in use and relatively well maintained.

Observations based on field walk Friday Dec 3, 2021.

Codes and Criteria
• CBC 2019, California Building Code
• CEC 2019, California Energy Code.
• 2019 Building Energy Efficiency Standards, including Title 24 part 6. • ASTM, American Society of Testing and Materials
• ANSI, American National Standards Institute
• UL, Underwriters Laboratories
242

2. Electrical Systems

2.1. Existing Electrical and Telecom Services

2.1.1. The main building is supplied with a single utility transformer serving an existing 400A 240V/120V 1-Phase 3 Wire switchboard board “MSB”.

2.1.2. MSB contains the main breaker/ service disconnect only.

2.1.3. A separate meter and overhead service have been provided to the work out building.

2.1.4.Existing transformer pole mounted, located in the rear of the station.

2.1.5.Multiple panels are located through the building on the first floor providing distribution to devices and equipment.

2.1.6.Existing AT&T point of connection is located adjacent to the utility transformer, pole mounted in the rear of the station.

2.1.7.Telecom service stubs up into building storage closet and terminates into 110 blocks and owner provided router/switch.

2.2.Existing Electrical

2.2.1. There is a combination of grounded and ungrounded (2 pin) electrical receptacles located throughout the station.

2.2.2. The existing receptacles in the kitchen area do not have GFCI protection.

2.2.3. Bunk room areas do not have AFCI receptacles, and there are no AFCI circuit breakers located within the panel boards.

2.2.4. The existing receptacles in the restrooms do not have GFCI protection.

2.3.Existing Exterior Lighting

2.3.1.Existing exterior lighting is a combination of LED, CFL and Metal Halide or HPS.

2.3.2.Exterior under canopy lights are recessed CFL downlights.

2.3.3.The building exterior has flood lights in several locations mounted to provide illumination for the playground and patio area.

2.4.Existing Interior Lighting

2.4.1. Existing interior lighting consists of predominantly surface mounted linear fluorescent wrap around fixtures, and recessed T8 fluorescent.

2.4.2.Illumination levels were not measured; however, it was observed that they are consistent with the type of construction, and level of maintenance typical for the building.

2.4.3.Existing controls are localized wall stations. There does not appear to be a central lighting control system for interior lighting.
243

3. Recommendations:

3.1. Building Service

3.1.1.Building Service is recommended to be upgraded to an 800A 208Y/120V 3PH 4W service.

3.1.2.Maximum allowable service per SDG&E in 208/120V 1PH 2W is 600A and would not be sufficient for a modern facility. (Refer to calculations below)

3.2.Electrical Load Summary

3.2.1. New preliminary load calculations are based on 5,000 sq. ft. CEC minimum requirements, and the desire to go 100% electric for appliance and heating loads.

Load description VA/SF Total kVA Demand Factor Total kVA Lighting 1VA/SF 5 125% 6.25
Receptacles 4VA/SF 20 first 10kVA @ 100% 10.00
Remainder @ 50% 5.00
HVAC Equipment 10VA/SF 50 100% 50.00
Equipment and Appliances 150 100% 150.00
Grand Total: 221.25
+20% Spare Capacity: 256.5kVA
737.5 Amp @ 208Y/120V-3Ph- 4W

3.3.Panelboards and Switchboards

3.3.1.Provide new 208V 3PH 4W panels for the following loads:

3.3.1.1. General Power

3.3.1.2. Interior and Exterior lighting

3.3.1.3. HVAC and Plumbing Equipment.

3.3.1.4. Telecom Room/Equipment

3.3.1.5. Station equipment

3.3.2. Power and Lighting panels should be located centrally within the building.

3.3.3. HVAC panel should be located near the rooftop mechanical equipment or new mechanical equipment of highest load.

3.3.4.Telecom panel should be located near or within the telecom room.

3.3.5.All panelboards to have main breakers and copper bussing.

3.3.6.All electrical gear shall be fully rated and coordinate to the fullest extent possible.

3.3.7.Building and exterior wire and cables shall copper and be rated at 600V or less. Refer to construction documents for electrical feeder schedule for conduit and wire sizes and quantity.

3.3.8. AFCI breakers shall be provided for all bunk room loads.

3.3.9. New propane generator shall be provided. Size pending programming requirements. 244

3.4.Exterior Lighting

3.4.1.New full cut off LED lighting shall be provided at all exterior landings, walkways and patio areas.

3.4.2.The exterior lighting systems shall be in accordance with the IES recommendations and shall exceed the requirements of California title 24 Energy Code and of Cal Green.

3.4.3.The lighting design will create a visual environment suited to the functions of each space.

Energy efficient lighting utilizing LED lamps throughout will be used.

3.4.4.Illumination levels to be accordance with the IESNA and values and Local guidelines.

3.4.5.All products will have established reliability, maintenance and performance records.

3.5.Interior Lighting

3.5.1.The interior lighting systems shall be in accordance with the IES recommendations and shall exceed the requirements of California title 24 Energy Code and of Cal Green. The lighting design will create a visual environment suited to the functions of each space.

Energy efficient lighting utilizing LED lamps throughout will be used. All products will have established reliability, maintenance and performance records.

3.5.2.All spaces shall be provided with ceiling and wall mounted dual technology occupancy sensors for control of lighting to shut “OFF” in not occupied spaces. Daylighting controls shall be provided wherever possible to take full advantage of natural lighting in spaces and will provide dimming control of lighting.

3.5.3.The lighting control system will be capable to monitor/meter and store power consumption for each circuit/relay, alert maintenance department as soon as circuit ampacity depreciate and compatible with the power provider demand response program.

3.5.4.LED source with a color temperature of 4000 K and a minimum CRI of 80 and extended life of 50,000hours with a minimum of 5 year industry standard warranty from the manufacturer.

3.5.5.Illumination levels to be accordance with the IESNA and values and Local guidelines.

3.6.Interior Telecom and Low Voltage

3.6.1.There Should be a new MDF room located within the building in accordance with BICSI and I3A standards. Runs of category cable run length shall be no greater than 100m.

3.6.2.A fully automatic addressable fire alarm system shall be installed with alarm and audio visual notification devices as required. An annunciator panel shall be provided at the main reception desk area. A Supplemental Notification Appliance Control panel will be provided to power all notification appliances. All cables will be label “Fire Alarm” and color–coded. 245

3.6.3. 4. Exhibits
This page intentionally left blank.
246
UP UP APP BAY COMPRESSED AIR/GENERATOR GARAGE/HOSE MED/ICE LAUNDRY ENTRANCE RR HALL STORAGE VESTIBULE GEN AIR OFFICE BUNK MEETING ADMIN DAYROOM BUNK BUNK CAPT. OFFICE COPY UPPER LOBBY KITCHEN DINING DN STORAGERR ADA RR I.T. CLOSET BUNK WORK STORAGE TURNOUTS STOR SOUTH LAKE TAHOE FIRE STATION III OPTION D SCALE: 316" = 1'-0" REF NORTH LOWER LEVEL · REBUILD BOTH STAIRS TO ACHIEVE CODE MIN. RISE AND RUN FOR CODE COMPLIANT EXITING. · TURNOUT GEAR LOCATED ON FIRST LEVEL ADJACENT TO FIRE POLE AND APPARATUS BAYS FOR IMPROVED RESPONSE TIME. · I.T. CLOSET LOCATED TO THE LOWER LEVEL TO INCREASE SIZE AND FREE UP SPACE ON UPPER LEVEL. · FUTURE ELEVATOR SHOWN DASHED. UPPER LEVEL · REBUILD BOTH STAIRS TO ACHIEVE CODE MIN. RISE AND RUN FOR CODE COMPLIANT EXITING. · 4 NEW RECONFIGURED PRIVATE BUNK ROOMS. · ADMINISTRATION AREA RECONFIGURED TO ACCOMMODATE 2 PRIVATE OFFICE, 1 MEETING ROOM, ADMIN. RECEPT., WORK AREA AND STORAGE. · FUTURE ELEVATOR SHOWN DASHED. LOWER LEVEL FLOOR PLAN UPPER LEVEL FLOOR PLAN 10/31/22 200 E STREET, SANTA ROSA, CA 95404 619.698.9177 | www.coargroup.com 247
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22-10-11 South Lake Tahoe Fire Station 3Assessment Estimate - R1

ESTIMATE SUMMARY

CITY OF SOUTH LAKE TAHOE, CALIFORNIA
PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BLDG: SUMMARY
PHASE: 2ND LEVEL ONLY BLDG SF: 6,065
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

BLDG COST PER TOTAL

BASE QTY UNIT BUILDING DIRECT COST
ARCHITECTURAL 1 EA $1,357,372 $1,357,372
STRUCTURAL 1 EA $82,653 $82,653
MECHANICAL 1 EA $416,422 $416,422
ELECTRICAL 1 EA $444,108 $444,108
EXCLUDES NON-CONSTRUCTION COSTS, FF&E, DESIGN FEES, FEES, ETC.

TOTAL ESTIMATE: $2,300,554
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ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST

ARCHITECTURAL
1 EXTERIOR OUTBUILDING

NO WORK
2 APPARATUS BAY

NO WORK
3 COMPRESSED AIR / GENERATOR

NO WORK
4 HOSE AND TRAILER GARAGE

NO WORK
5 LEVEL 1

NO WORK

MEDICAL STORAGE REDESIGN / REMODEL
6 STAIRWAYS
DEMOLISH (E) STAIR, HANDRAIL 1 FLT $5,150.00 $5,150
NEW STAIR 1 FLT $1,030.00 $1,030
NEW HANDRAIL 50 LF $87.55 $4,378
NEW ELEVATOR, WALL FRAMING, FINISHES 2 STOP 1 EA $206,000 $206,000 NEW WALL FRAMING, FINISHES FOR ELEVATOR 900 SF $46.35 $41,715 ROOF FOR NEW ELEVATOR 54 SF $30.90 $1,669
7 KITCHEN / DINING / DAYROOM

KITCHEN / DINING
DEMOLITION 331 SF $12.36 $4,091
NEW FLOORING 331 SF $25.75 $8,523

NEW CABINETS
UPPER 38 LF $360.50 $13,699
LOWER 35 LF $515.00 $18,025
COUNTERTOPS 35 LF $51.50 $1,803

NEW APPLIANCES
REFRIGERATOR 1 EA $2,060.00 $2,060
OVEN / RANGE 1 EA $1,545.00 $1,545
DISHWASHER 1 EA $927.00 $927
NEW CEILING 331 SF $12.36 $4,091

FF&E EXCLUDED

DAYROOM (REDESIGN FOR ADJACENCY)
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22-10-11 South Lake Tahoe Fire Station 3Assessment Estimate - R1

ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST
DEMOLITION 413 SF $5.00 $2,065
NEW FLOORING 413 SF $15.45 $6,381
NEW CEILING 413 SF $12.36 $5,105

FF& E EXCLUDED
8 BUNK ROOMS
DEMOLISH (E) ITEMS 838 SF $5.00 $4,190
NEW WALLS 1,478 SF $13.39 $19,790
NEW FLOORING 838 SF $15.45 $12,947
NEW CEILING 838 SF $12.36 $10,358
NEW DOORS 8 EA $2,575.00 $20,600
NEW PAINT 2,956 SF $2.06 $6,089
9 LEVEL 2 RESTROOMS 902 SF $150.00 $135,300
10 ADMINISTRATIVE OFFICES
DEMOLISH (E) ITEMS 943 SF $12.36 $11,655
NEW WALLS 1,039 SF $13.39 $13,912
NEW FLOORING 943 SF $15.45 $14,569
NEW CEILING 943 SF $12.36 $11,655
NEW DOORS 5 EA $2,575.00 $12,875
NEW PAINT 2,078 SF $2.06 $4,281
LOWER CABINET 24 LF $515.00 $12,360
COUNTERTOP 24 LF $51.50 $1,236
11 IT ROOM
RELOCATE TO LEVEL 1 143 SF $103.00 $14,729
12 TURNOUT & SPACE GEAR STORAGE ROOM
RELOCATE TO LEVEL 1 365 SF $128.75 $46,994
13 MISCELLANEOUS (2ND LEVEL ONLY)
REMOVE (E) GYP BOARD WALLS FOR ELECTRICAL 3,086 SF $2.00 $6,172 NEW GYP BOARD WALLS / PAINT 3,086 SF $15.00 $46,290
SUBTOTAL HARD COSTS $734,259

CONTINGENCY
ESTIMATING CONTINGENCY 20.00% $146,852
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ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST
PHASING 0.00% $0
SUBTOTAL CONSTRUCTION COSTS $881,111

MARK-UPS
GENERAL CONDITIONS 18.00% $158,600
OVERHEAD & PROFIT 12.00% $124,765
INSURANCE & BONDS 2.25% $26,201
SUBTOTAL MARK-UPS $309,566
SUBTOTAL CONSTRUCTION COSTS & MARK-UPS $1,190,677

ESCALATION
ESCALATION (ASSUME 2 YEARS AT 7% ANNUAL) 14.00% $166,695 TOTAL ESTIMATE: $1,357,372
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ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST

STRUCTURAL
1 FIREHOUSE EXTERIOR
ROOF

NO WORK

PILASTERS

EXTEND APPARATUS BAY

NO WORK
VENEER

NO WORK

SECOND FLOOR GUARD RAIL
REMOVE (E) GUARD RAIL 52 LF $10.30 $536
NEW GUARD RAIL 52 LF $25.75 $1,339

DECK BRACING
PROVIDE ADDITIONAL DECK BRACING TO MEET CODE 447 SF $6.70 $2,989

TYPICAL LUMBER
REMOVE/REPLACE WOOD MEMBERS/CONNECTIONS 1 LS $5,150.00 $5,150

AS NECESSARY
2 FIREHOUSE APPARATUS BAY & SUPPORT LEVEL 1

CMU SHEAR WALLS

NO WORK

CMU WALL ANCHORAGE

NO WORK

INTERIOR BEARING / SHEAR WALLS

NO WORK
BEAMS

NO WORK

CONCRETE SLAB

NO WORK
3 FIREHOUSE LIVING QUARTERS LEVEL 2

INTERIOR WALLS / FRAMING
CODE UPGRADES AT WALLS NOT ON ORIGINAL PLANS 5,879 SF $2.06 $12,111

CMU WALL ANCHORAGE
STRENGTHENING TO REINFORCE CONNECTIONS TO 5,879 SF $2.32 $13,625 252
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22-10-11 South Lake Tahoe Fire Station 3Assessment Estimate - R1

ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST

CURRENT CODE
4 STORAGE BUILDING / GYMNASIUM

NO WORK
5 FIREHOUSE: PROPOSED MODIFICATIONS

ADD ELEVATOR ARCHITECTURAL

ELEVATOR ARCHITECTURAL

STRUCTURAL STEEL ARCHITECTURAL

WOOD STUDS ARCHITECTURAL

FINISHES ARCHITECTURAL
STAIRS

DEMO / REPLACE FOR CODE COMPLIANCE ARCHITECTURAL

ADD FIRE POLE
DEMO UPPER FLOOR 1 LS $772.50 $773
DEMO LOWER FLOOR 1 LS $772.50 $773
FOUNDATION 1 LS $721.00 $721
STRUCTURE AT SECOND LEVEL CEILING 1 LS $1,545.00 $1,545 NEW POLE 1 EA $5,150.00 $5,150
EXPAND APPARATUS BAY (4'-6')

EXTEND BAYS ARCHITECTURAL

MOMENT FRAME ARCHITECTURAL

FOUNDATIONS ARCHITECTURAL

CMU WALL ARCHITECTURAL

FINISHES ARCHITECTURAL
REVISE LEVEL 1 FLOOR PLAN

FOUNDATIONS ARCHITECTURAL

SEE ARCHITECTURAL ARCHITECTURAL

ADD GENERATOR

EXCLUDED - SEPARATE CONTRACT
SUBTOTAL HARD COSTS $44,710

CONTINGENCY
ESTIMATING CONTINGENCY 20.00% $8,942
PHASING 0.00% $0
SUBTOTAL CONSTRUCTION COSTS $53,652

MARK-UPS
253
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22-10-11 South Lake Tahoe Fire Station 3Assessment Estimate - R1

ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST
GENERAL CONDITIONS 18.00% $9,657
OVERHEAD & PROFIT 12.00% $7,597
INSURANCE & BONDS 2.25% $1,595
SUBTOTAL MARK-UPS $18,850
SUBTOTAL CONSTRUCTION COSTS & MARK-UPS $72,502

ESCALATION
ESCALATION (ASSUME 2 YEARS AT 7% ANNUAL) 14.00% $10,150 TOTAL ESTIMATE: $82,653
254
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22-10-11 South Lake Tahoe Fire Station 3Assessment Estimate - R1

ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST

MECHANICAL
1 HVAC (2ND LEVEL ONLY)
DEMO ENTIRE EXISTING HVAC SYSTEM 2,940 SF $8.00 $23,516 NEW HVAC SYSTEM - VRF SYSTEM 3,033 SF $35.00 $106,138

NEW EXHAUST SYSTEM
RESTROOMS /SHOWERS 2 EA $875.50 $1,751
KITCHEN 1 EA $875.50 $876
DDC CONTROLS 3,033 SF $3.00 $9,098
NOTE: GENERATOR LOCATION MAY HAVE TO CHANGE
(NOT CONSIDERED HERE)
2 PLUMBING (2ND LEVEL ONLY)
REMOVE & REPLACE (E) PLUMBING FIXTURES 6 EA $3,605.00 $21,630

REMOVE & REPLACE (E) KITCHEN APPLIANCES ARCHITECTURAL

DEMO (E) UTILITIES (INTERIOR)
WATER 3,033 SF $2.00 $6,065
GAS 3,033 SF $2.00 $6,065
SEWER / VENT 3,033 SF $2.00 $6,065

NEW UTILITIES (INTERIOR)
WATER 3,033 SF $5.00 $15,163
GAS 3,033 SF $3.00 $9,098
SEWER / VENT 3,033 SF $5.00 $15,163

NEW COMPRESSED AIR SYSTEM
NEW WATER HEATER 1 EA $4,635.00 $4,635

ADD BACKFLOW PREVENTOR (FREEZE PROTECTION)

REWORK DRAINAGE SYSTEM IN APPARATUS BAY

ADD SAND-OIL INTERCEPTOR

NEW SITE SEWER EXTENSION

NEW TURNOUT DISCHARGE PIT
SUBTOTAL HARD COSTS $225,260

CONTINGENCY
ESTIMATING CONTINGENCY 20.00% $45,052
PHASING 0.00% $0
SUBTOTAL CONSTRUCTION COSTS $270,312

MARK-UPS
GENERAL CONDITIONS 18.00% $48,656
255
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22-10-11 South Lake Tahoe Fire Station 3Assessment Estimate - R1

ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST
OVERHEAD & PROFIT 12.00% $38,276
INSURANCE & BONDS 2.25% $8,038
SUBTOTAL MARK-UPS $94,970
SUBTOTAL CONSTRUCTION COSTS & MARK-UPS $365,282

ESCALATION
ESCALATION (ASSUME 2 YEARS AT 7% ANNUAL) 14.00% $51,140 TOTAL ESTIMATE: $416,422
256
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22-10-11 South Lake Tahoe Fire Station 3Assessment Estimate - R1

ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST

ELECTRICAL
1 BUILDING SERVICE
DEMO (E) SERVICE 1 LS $5,150.00 $5,150
NEW 800A 208/120 SERVICE 1 EA $15,450.00 $15,450
2 PANELBOARDS & SWITCHBOARDS
DEMOLISH (E) PANELS / CONDUIT & WIRING 2,940 SF $4.00 $11,758 NEW PANELS 5 EA $4,635.00 $23,175
FEEDERS FROM SERVICE TO PANELS 5,879 SF $9.27 $54,498
3 EXTERIOR LIGHTING

DEMO (E) EXTERIOR LIGHTING

NEW EXTERIOR LIGHTING

NEW CONDUIT / WIRING
4 INTERIOR LIGHTING (2ND LEVEL ONLY)
DEMO (E) INTERIOR LIGHTING 2,940 SF $2.58 $7,569
NEW INTERIOR LIGHTING 2,940 SF $7.21 $21,194
NEW CONDUIT / WIRING 2,940 SF $7.47 $21,951
LIGHTING CONTROLS 2,940 SF $3.09 $9,083
5 INTERIOR TELECOM & LOW VOLTAGE
RELOCATE IT 1 LS $36,050.00 $36,050
NEW FIRE ALARM SYSTEM - COMPLETE 6,065 SF $5.67 $34,358 SUBTOTAL HARD COSTS $240,236

CONTINGENCY
ESTIMATING CONTINGENCY 20.00% $48,047
PHASING 0.00% $0
SUBTOTAL CONSTRUCTION COSTS $288,284

MARK-UPS
GENERAL CONDITIONS 18.00% $51,891
OVERHEAD & PROFIT 12.00% $40,821
INSURANCE & BONDS 2.25% $8,572
SUBTOTAL MARK-UPS $101,284
257
11 of 11
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22-10-11 South Lake Tahoe Fire Station 3Assessment Estimate - R1

ESTIMATE WORKSHEET
CITY OF SOUTH LAKE TAHOE, CALIFORNIA BUILDING: FIRE STATION 3 - 2ND LEVEL ONLY PROJECT: FIRE STATION 3 - 2ND LEVEL ONLY BUILDING GSF: 6,065 PHASE: 2ND LEVEL ONLY
ESTIMATE DATE: OCTOBER 10, 2022
REVISED DATE:

PREPARED BY: J.R. CONKEY & ASSOCIATES

UNIT TOTAL

ITEM DESCRIPTION QTY UNIT PRICE COST
SUBTOTAL CONSTRUCTION COSTS & MARK-UPS $389,568

ESCALATION
ESCALATION (ASSUME 2 YEARS AT 7% ANNUAL) 14.00% $54,540 TOTAL ESTIMATE: $444,108
258

SPACE ATTRIBUTES

1.0 Fire Dept Parking

2.0 Reserve App Bay

3.0 Wash Rack/Hose Rack

4.0 Ancillary Site Storage

5.0 Outdoor Storage

6.0 Vehicle Wash

7.0 Visitor and Public Parking

8.0 9.0 Fire Fighter Patio

10.0 Emergency Generator

11.0 Fire Department Fuel Refill

12.0 Security Fence

13.0 Trash and Recycling

14.0 Radio Tower/WIP Provide mounting point for WIP Antenna on building Possible Conex type containers on base rock for PPE, hose, tools, paint, flammable cabinets and supplies. 8' x 20.' Power not required.

EV parking to be provided within the secured lot.

Not Requested if provided in station.

SOUTH LAKE TAHOE FIRE STATION 3

SPACE NEEDS OUTLINE
August 14, 2023
COMPANY PERSONNEL:

Station to accommodate current personnel, one company, including:

Ground-mounted if provided. Gear Grid type on apron Possible Drying Tower/hanging rack in apparatus bay .

Department uses synthetic hoses which can be loaded wet. Hoses will need to be dried inside during winter months.

In City Yard, no refueling onsite.

Rear yard enclosed by secure fencing. Concrete paving. Scissor gate with operators, key pad Exterior lighting to be on a geosynchronous time clock
Hose Bib
Concrete paving to match Rear Apron material and thickness Captain and minimum 5 Firefighters per Shift, three shifts.

City to consider both one and two story options on existing parcel or adjacent parcel.

SITE OPERATIONS
Provide sound enclosure built around generator
Area to be secured and screened
Prefer to explore option other than diesel fuel, i.e. Propane or Natural Gas Gate Operator. Keypad and remote control. Provide Knox Box. Keypad with Intercom 2-3 Spaces at front of Station - 1 ADA Accessible
At Rear apron, connect to clarifier, provide hose bib
Generator sized to support whole station - Provide 72 hour run time Secured yard with fencing
Protected in secure enclosure, minimal visibility to public .

Adjacent to kitchen/dining room. Prefer full or partially covered to minimize snow removal needs.

Exterior door chime from station front door.

Not Requested
Pneumatic attached to hose bib is best to ensure it is used May be done inside during the colder months.

Hose Bib plus Gas for grill
12 Crew spaces is target minimum within secured fenced area Preference is for scissor style gate to ensure no issues with winter operation.

Front + Rear Aprons + Yard
Enclosure in secure area, place for front loading truck access 11' x 22' footprint. Sized for 5-person crews.

Sprinklers not required. Other specifications as required by city, waste provider, and Fire Marshal. Bear Proof Full length apron, front and rear. 45'. No fencing needed at front apron

15.0 Outdoor Training Areas

16.0 Fire Hydrants

17.0 Site Lighting

18.0 Site Garden

19.0 Landscaping

20.0 Signalization / Off Site
Requirements
LEED Gold as an Additive Alternative

OTHER FACILITIES CONSIDERATIONS
Energy goals or accreditations - as required by CA
Fire Department Goals for facilities:
1) Sustainability Specs for equipment and elements
2) Attic Space for storage in pitched Roof areas - 6:12 slope

GENERAL FACILITIES CHARACTERISTICS
On Front Apron with existing hydrant
Desired, not required
Native Plants, MWELO Compliance, design for defensible space around station.

Lots of lighting - Security lighting at exterior fencing, controlled lighting at rear apron Low landscaping to minimize hiding places in landscape, Fire Hydrant or FDC for truck fill. 50' from station FDC.

Potential PV canopies over parking as a consideration
Mountain Design with Pitched Roof to fit community and allow for snow shed - Prefer 6:12 slope Battery Storage and Resiliency Goals - Will Need to meet city climate action goals for Net Zero Energy and Carbon - Look into alternative generator to diesel
Regrade driveway for smooth transition onto US HW 50, or pull station further back from street.

Consider Signalization with Emergency Signal on US HW 50 Cellular and Digital - City Upgrading
No Grass

FINISH LEGEND
A. Simple/Durable
Finishes
B. Standard Office Type Finishes

QTY TOTAL SF
Apparatus Bay 3 Drive Thru Apparatus Bays - first out 20' x 69' 1,380 3.00 4,140 A Two stacking app bays
CMU Wall construction
Ceiling height should allow cabs to tilt for maintenance - 18' or higher.

Slope floor to trench drains in each bay
Control joints at drains and at 10' intervals
Plymovent vehicle exhaust system
Gang control door operators
Red/Green light overhead door status indicator
Bi-fold doors on front of app bay.

Sectional/Coiling Overhead app doors at rear of station with as much light/vision panels as possible. Preference for doors to not be over the apparatus Concern for
snow accumulation -Bi-fold doors to open inwards
Person-door to App Bay with vision panel and panic
hardware
VEHICLES Radios are charged on rigs
31' engine Air drops toward middle of App Bay and quick connects on perimeter walls
26' brush rig (4) Electrical drops at each bay, to 4' A.F.F.

Hose bibs - Garden Valve 3/4" Opening 2 on each wall
(6 total) and at rear for washdown
Two (2) high access drops for wireless access points
over the engines
Phone and data outlets
Conduits across Apparatus Bay for data - overhead is
preferred. Conduits to be concealed.

Map and Monitor in adjacent vestibule
Will need space in the apparatus bay to store rolling
tables used for box checks
Good drainage required
Some Indoor washing in winter months ensure "wet
area" provisions in apparatus bay
Work- Shop Bench vise and hard wired grinder. 12' x 12' 144 1.00 144 A Open Alcove preferred. Most truck maintenance
currently at station 1. or double doors
Built-in workbench with galvanized top with base cabinet (some open, some with doors).

Freestanding 30" Shop Sink
Tool chest area
Rolling Work Table for flexibility, layout equipment bags, conduct morning check to go over equipment together
Flammable Liquids Cabinet - with legs to raise above
ground
Mop sink and mop rack with shower head with hose.

Upper cabinet storage with under cabinet light
(3) duplex outlets min. above bench and (2) duplex
outlets min. below at each wall.

Tool charging
Evidence Storage Cabinet - Flammable cabinet
Eye Wash station
Wash Alcove Handwashing sink near entrance to living area from app bay
3' x 2' 6 2.00 12 A
Hose Bib
Proposed

21.0 23.0
DIMS.

22.0 STATION BUILDING
C. Intense Finish Systems

APPARATUS BAYS / APPARATUS BAY SUPPORT AREAS
SF Finish
Type

SCBA and Bottle Storage SCBA Air Fill Equipment - Bauer System 10' x 13' 130 1.00 130 A Bottles on apparatus
Racks to store 15 bottles

25.0 Hose Rack Storage (3), 8' long racks, 3 reels high 8' x 3' 24 3.00 72 A Near Shop/Apparatus Bay
Need to store 400'-600' of hose
Can be on apparatus floor

26.0 Janitor/Mechanical Cleaning Supplies and Equipment 12' x 10' 120 1.00 120 A Space for mechanical depending on design

27.0 App Bay Restrooms (1) Sink and Toilet 8' x 12' 96 1.00 96 C Shower
Plus 1 toilet, 1 unisex shower rooms
Sauna/Detox 8' x 12' 96 1.00 96 C

28.0 Vestibule Transition zone 5' x 8' 40 2.00 80 A
Positive ventilation
Shoe changing/shoe cubbies

29.0 Medical Supply Storage shelving, some of which is lockable 12' x 10' 120 1.00 120 B Vending Style Dispensing with lock box
Response/Charging Located in the App Bay/vestibule 2' x 8' 16 2.00 32 A Alcove Battery charging, radios and cell phones. Three (3) fourplex outlets minimum above casework, Two (2)
fourplex outlets within casework below
Laptop, Radio, Tick, Lights, Defib, Jaws
Wall Monitor and Map
Phone and data outlets
Built-in casework on both sides of space uppers and
lowers
Shelf for spare radios (DC also has 10 spares) and
radios are assigned/dedicated to individuals

31.0 Clean Up / Wash Room Direct access from the App. Bays with connecting door into station
10' x 12' 120 1.00 120 A
Freestanding stainless steel sink with drain board and
faucet
Drying rack above sink drain board
Gear Drying Cabinet
Bio Hazard Bin/Closet
Shelving for cleaning supplies
Exterior Shower adjacent to this room for gross
decon/clean up
Communication Room Wall space for backboards for phone system - 3/4" plywood face out on all walls 8' high
12' x 10' 120 1.00 120 A
provide separate AC system
Utility/Water Heater HVAC Equipment 10' x 10' 100 1.00 100 A Room Water Heater with recirculation pump. investigate
possibility of tankless units.

Yard Storage Yard maintenance and tool storage 0' x 0' 0 0.00 0 A Should be in new outside Storage Building but exterior
door from Storage Building

33.0 24.0

30.0 34.0

32.0

Locker Turnout Room (24) firefighter turnout full height storage lockers (30" wide x 24" deep)
12' x 24' 288 1.00 288 A
24 total, each person gets one wide full height plus 1/2 locker for Type 3 Wildland gear, Lite "Go" bag
Hanging pole for 8-10 hangers
Lockers to have 45% minimum ventilation
Turnout Cleaning Room Extractor possible 10' x 13' 130 1.00 130 A Drying rack with floor drain for turnouts
Floor drains throughout
Gear Drying Fan System
Gear grid type lockers, 30" wide
Need storage for additional uniforms and gear
Need Biohazard Pick Up Closet - service picks up

36.0 Cache Storage Protect from app bay contamination 12' X 12' 144 1.00 144 A Ice Machine if not in vestibule
Need Gatorade and water storage as well + MRE,
sleeping bags and coolers

37.0 Compressor Room Air compressor and equipment storage Provide acoustical control to adjacent spaces
8' X 12' 96 1.00 96 A
Apparatus Bays / Apparatus Bay Support Area
Subtotal:

35.0 TBD by room/locker
layout
6,040 SF

QTY TOTAL SF

38.0 Kitchen (3) 36" wide refrigerators, one per shift 14' x 19' 266 1.00 266 C Gas Range with 6 burners and griddle
Pot filler at range
Double wall oven
One dishwasher -- commercial quality, stainless steel - with heating element
One Microwave on counter, One on shelf
Upper and Lower Cabinets, general shared storage
(3) pantries - (1) per shift
Island with a ADA counter section with prep sink
Trash containers exposed in plain view
Ice Machine in the kitchen

39.0 Dining Area Table and seating to accommodate 10-15 people 13' x 19' 247 1.00 247 B Space to allow a longer table for holiday family meals
Typically crew all eats breakfast & dinner together
Prefer flexibility of open Lunch is on their own
flow kitchen-dining Smart Board or Marker Board
Monitor on Wall plus phone and data outlets
Direct access to patio

40.0 Day Room Sized to accommodate 5 lounge chairs 19' x 16' 304 1.00 304 B Prefer closed off day room configuration
Wired for surround sound speakers (by Association)
Built-in Base Cabinet with shelf for AV equipment
3'x6' Bulletin Board and 4'x8' Dry Erase Board
TV/Speakers, provide blocking and power/data wall
mounted outlet unit for flat screen TV
Phone and data outlets
CAD status, pre/post ~40" monitor-HDMI drop

41.0 Janitor/Utility/Laundry Storage for living quarter cleaning supplies 10' x 12' 120 1.00 120 C Roof Access Ladder (as needed)
Storage for brooms, vacuum, etc
Deep Utility Sink with cabinets above
Water Heater (Placeholder-alternate location preferred, separate metal) tankless preferred if recharge rate is
high enough
Full Height Storage Cabinet
Mop sink and Mop Bucket space
Mop hooks over floor drain
Washer/Dryer for Household laundry

42.0 Exercise Room 3/4" plywood under gyp. Board, typ. 18' x 24' 432 1.00 432 B Protective material up the wall 30" high
Mirror wall near elliptical machines
Provide sound insulation in walls
If near sleeping areas, provide sound resistive gyp.

Elliptical (1)
Treadmill (1)
Multi-Use Exercise Machine (1)
Operable windows double door to exterior
CAD Display - HDMI drop Phone and data outlets
Ceiling Fans
If two story, exercise room to be on first floor
Provide bottle fill station in exercise room
Dims/size TBD by table
size
Proposed
SF Finish
Type DIMS.

Dims./size TBD by lounge
chairs type and layout

FIREFIGHTER LIVING AREA
Equipment by FF Assoc
relocated from current
station
SF/dims. TBD by layout

43.0 Classroom Space Space for 4 FF - in house training and conference 16' x 21' 336 1.00 336 B Modular furniture set up to allow for reconfiguration
Provide AV equipment for projection needs
White board/smart board and tackable wall space
Should be able to also accommodate modular office
spaces for 3-4 people at 8'x8' work stations
Firefighter Living Area Subtotal: 1,705 SF

QTY TOTAL SF

44.0 Firefighter Dorm Rooms (1) Extra long twin bed, standard frame w/ drawers below 10 x 12' 120 4.00 480 B Avoid adjacent beds with other dorm rooms
Four (4) wardrobes lockers (24" x 24" double-door) in
each room with enough space for Bed roll storage.

Storage above lockers for linens
One dorm room to be accessible and be set up for a
second bed for upstaffing
14 x 12' 168 1.00 168 B
One (1) built-in counter 30" min. wide desk area w/
pencil drawer with desk light above
Sound separation from living areas
Separate response light and speaker to home run to
Communications Room
Ceiling fan
Wall mount CAD display monitor with video
Night table. USB plug-ins
Reading light 42" above bed with switch
Operable egress window
Sound Rated windows with Blackout Shades
Volume controlled speaker.

45.0 Firefighter's Toilet/Shower
Room
Separate area with shower and bench and changing
area. Shower curtain, no door
8' x 12' 96 3.00 288 C
One (1) accessible height toilet
Corner bench at shower
Access Panel for Shower Plumbing
One (1) sink with base cabinet w/ no base + floor drain below for cleaning supply storage
Response Strobe. Provide volume controlled speaker
near shower

Mirror over sink and counter
Floor drains
One (1) FF Toilet shower room shall be ADA compliant,
with bench in shower and grab bars and lavatory in place of sink cabinet.

Firefighter Quarters Area Subtotal: 936 SF
Finish
Type SF

FIREFIGHTER QUARTERS AREA
Proposed
DIMS.

QTY TOTAL SF

46.0 Crew Office Adjacent to entry with non-operable window with line of sight into entry vestibule
14' x 13.0' 182 1.00 182 B
(3) standard built-in 30" x 60" desks with counter space for (3) computer workstations
Lateral files below work counter
Area for copier / FAX / printer
One (1) wireless access point in hallway outside of
station office
Tackable wall surface between the counter and upper
cabinets or bulletin board
(4) Phone/data outlets
Release button for Lobby front doors - Verify location
with Fire Department Center conference table.

Mail alcove with cork boards in hall/central location 2.0' x 4' 8 1.00 8 Study Space/Library storage for training materials -
should be adjacent to classroom space

2.0' x 4' 8 1.00 8

47.0 Reception Area/Lobby 911 Phone at Exterior near Front Doors 10' x 10' 100 1.00 100 B Metal Doors with Glazing at Entry
Exterior Door bell and intercom to Crew Office next to
front door w/ video camera
Buzzer system with locked door
Display Area - Cabinets and Wall Space
Medical Walk-ins so needs easy access to restroom

48.0 Captain's Office CAD Display - HDMI drop 12' x 10.0' 120 1.00 120 B Adjacent to Crew Office

49.0 General Storage For files, supplies 8' x 12' 96 1.00 96 A

50.0 Public Restroom Unisex accessible restroom 8' x 8' 64 1.00 64 C Accessible grab bars and toilet accessories
One lavatory and one toilet
Adjacent to Front Entry Lobby
Fire Station Office and Reception Area Subtotal:

BUILDING TOTAL:

APP. BAYS / APP.

SUPPORT: Area Subtotal 6,040 SF
FIREFIGHTER LIVING: Area Subtotal 1,705 SF
FIREFIGHTER QUARTERS: Area Subtotal 936 SF

FIRE STATION OFFICE &
RECEPTION: Area Subtotal 578 SF
Building Subtotal 9,259 SF
Structure and Circulation (23%) - Includes Stairs and
Elevator 2,130 SF
GRAND TOTAL 11,389 SF

CONCEPTUAL SPACE NEEDS SUMMARY
Finish
Type
Proposed
578 SF
SFDIMS.

Dims/size tbd by
preferred layout for 3
Workstations

268
269
270
271
South Lake Tahoe FS 3
Conceptual Construction Budget
8/24/2023
A. Building
Type A: Simple Finishes QUANT UNIT BASE COST TOTAL SOURCE 4,140 SF
Shop 144 SF
Wash Sink Alcove 12 SF
Hose Rack Storage 72 SF
Vestibule 80 SF
Response Alcove/Radio Charging (2) 32 SF
Clean Up 120 SF
T.O. Cleaning 130 SF
SCBA and Bottle Storage 130 SF
Utility/Water Heater Room 100 SF
Communications Room 120 SF
Locker Room 288 SF
Medical Supply 120 SF
Janitor Mechanical 120 SF
Cache Storage 144 SF
Compressor Room 96 SF
Type A Total Area: 5,848 $940 $5,497,120 Recent Bids
51%
Type B: Standard Office Type Finishes QUANT UNIT BASE COST TOTAL SOURCE Dining 247 SF
Dayroom 304 SF
Firefighter Dorm Rooms (5) 648 SF
Crew Office 182 SF
Reception Area / Lobby 100 SF
General Storage 96 SF
Mail Alcove/Library 16 SF
Captians Office 120 SF
Classroom Space 336 SF
Exercise Room 432 SF
Type B Total Area: 2,481 $950 $2,356,950 Recent Bids
22%
Type C: Intense Finish Systems QUANT UNIT BASE COST TOTAL SOURCE App Bay Restroom (1) 96 SF
Sauna/Detox 96 SF
Kitchen 266 SF
Janitor/Utility/Laundry 120 SF
Firefighter Restroom (3) 288 SF
Public Restrooms 64 SF
Type C Total Area: 930 SF $960 $892,800 Recent Bids
8%
Type D: Unfinished Attic - NOTE: Not in Total Area QUANT UNIT BASE COST TOTAL SOURCE Structural Upgrade Over House Side of Station 2,500 SF
Type C Total Area: 2,500 SF $85 $212,500 Recent Bids
22%
Building Square Footage Subtotal 9,259 SF $8,959,370
Circulation and Structure 23% 2,130 SF $950 $2,023,092
Building Square Footage Total: 11,389 SF $10,982,462
cost per square foot: $964
B. Equipment and Furnishings

QUANT UNIT COST TOTAL SOURCE
Building and Site Equipment 1 LS $160,000 $160,000 Budget Building and Site Furnishings 1 LS $240,000 $240,000 Budget FF&E Design Contingency (10% of budget) 10% % $400,000 $40,000 % Equipment and Furnishings Subtotal: $440,000
C. On-Site Improvements

QUANT UNIT COST TOTAL SOURCE
Site Paving - Drive Area 16,610 SF $37 $614,570 Budget
Site Paving - Pedestrian 3,500 SF $25 $87,500 Budget
Site Improvements Including: 16,011 SF $25 $400,275 Budget Site Final Grading and Pad Preparation
Site Drainage
Hose layout Area
Fuel Refil area
Utilities and Lighting
Landscape and Irrigation
Perimeter Site Walls - Masonry/Decorative Fencing
Site/Swing Gate (two - automatic)
Trash Enclosure 200 SF $230 $46,000 RRM
Generator Enclosure 300 SF $230 $69,000 RRM
Radio Tower Structure 0 LS $150,000 $0 Budget
Flag Pole 1 LS $10,000 $10,000 RRM
Above Ground Fuel Tank - 1,000 Gallons 1 LS $100,000 $100,000 RRM Emergency Generator 1 LS $150,000 $150,000 RRM
Solar Panels - Per Code 1 LS $450,000 $450,000 RRM
On-Site Design Contingency (10% of budget) 10% % $1,927,345 $192,735 % $1,150 On-Site Improvements Subtotal: $2,120,080
Apparatus Bays - (3)bays
272
South Lake Tahoe FS 3
Conceptual Construction Budget
8/24/2023
D. Off-Site Improvements - Site Specific

QUANT UNIT COST TOTAL SOURCE
Street Frontage Improvements -Curb and Gutter in front of Site Only 1 LS $250,000 $250,000 Budget Off-Site Contingency (10% of budget) 10% % $250,000 $25,000 % Off-site Improvements Subtotal: $275,000
E. Fees

QUANT UNIT COST TOTAL SOURCE
Arch/Engineering 8% % $13,377,541 $1,070,203 Budget
Comissioning Agent 1 LS $40,000 $40,000 Req. if over 10,000 SF Utility Hook-up Fees 1 LS $75,000 $75,000 Utility Budget Impact Fees:

Storm Draing Dev. Fee - Estimate 1 LS $50,000 $50,000 Estimated Sewer Dev. Fee - Estimate 1 LS $60,000 $60,000 Estimated Water Dev. Fee - Estimate 1 LS $50,000 $50,000 Estimated Traffic Impact Fee 1 LS $25,000 $25,000 Estimated
Geotechnical Investigation 1 LS $30,000 $30,000 Budget
Site Survey 1 LS $25,000 $25,000 Budget
Materials Testing and Special Inspection 1 ls $45,000 $45,000 Budget Fee Contingency (5%) 10% % $1,470,203 $147,020 %
Fees Subtotal: $1,617,224
F. Owner Systems, Administration, ROW and Contingency

QUANT UNIT COST TOTAL SOURCE
City Admin Cost 1 LS $180,000 $180,000 Estimated
City Finance Cost (Not Anticpated, 10% of const. cost) 0 LS $1,310,254 $0 Estimated Fire Administration Cost 1 LS $90,000 $90,000 By Fire
Planning Dept.- CUP, Design Review, CEQA 1 LS $40,000 $40,000 Estimated 0 LS $0 $0 NA
0 LS $0 $0 NA
Building Dept.-Permit Fees/Costs 1 LS $80,000 $80,000 Estimated School Impact Fees-(Commercial) 11,389 SF $0.00 $0 Not Anticipated Site Acquisition Costs 1 LS $500,000 $500,000 Procured Separately Traffic Report 1 LS $15,000 $15,000 For Signalization
Moving Costs 1 LS $5,000 $5,000 Budget
Neighborhood Meeting/Dedication Ceremony 1 LS $3,000 $3,000 Budget Communications
Phone System 1 LS $75,000 $75,000 Budget
Alerting 1 LS $110,000 $110,000 Budget
Radio System 1 LS $120,000 $120,000 Budget
Data Systems 1 LS $120,000 $120,000 Budget
Security System/ Cameras 1 LS $50,000 $50,000 Budget
Owner System Contingency (10% of budget) 10% % $1,388,000 $138,800 Budget Construction Contingency (10% of A, C, D) 10% % $13,377,541 $1,337,754 % Owner Systems, Administration and Contingency Subtotal: $2,864,554 Contract Division Totals:

A. Main Building: $10,982,462
B. Equipment and Furnishings $440,000
C. On-Site Improvements $2,120,080
D. Off-site Improvements $275,000
E. Fees $1,617,224
F. Owner Systems, Administration, ROW and Contingency $2,864,554 Contract Division Subtotal: $18,299,319
G. Market Escalation (7% per year) to mid-point of Construction - 18 mo. $1,450,842 Timeframe to be confirmed Conceptual Construction Budget: $19,750,161
Optional Tasks
Signalization 1 LS $200,000 $200,000 Budget
LEED™ Design, Certification - Gold Level 1 LS $60,000 $60,000 Budget LEED™ Commissioning- Gold Level 1 LS $40,000 $40,000 Budget Construction Management 6% % $13,377,541 $802,652 Budget, Anticipated Optional Tasks Subtotal: $1,102,652
CEQA - processing
CEQA - Support Reports Budget
273
274
Fire Station 3
Update
Council Presentation – September 12, 2023
275
Background
1957
Existing FS 3 was built in 1957
•The building was not originally designed as a
Fire Station
•The structure is NOT designed as an essential
service building
2021
In 2021, the City conducted a
conditions assessment study.
•Report showed that the facility does not
meet current codes and has structural,
mechanical, and electrical infrastructure
issues
2022
In 2022, staff initiate a planning and
design process to upgrade the existing
facility. The study identified a cost of
$4.9 million for renovation plus
$150,000 for staff relocation.

Nov. 2022
In November 2022, the City directed
the architect to develop a plan for a
not-to-exceed $3.5 million for the
upgrade project.
28 Mar. 2023
On March 28, 2023, staff presented this
option to City Council
•Council directed staff to develop four
alternatives for further evaluation
276
Four Alternatives Analyzed
Option A: Internal
renovation of the
fire station to
improve the living
conditions for the
firefighters.
01 Option B: Renovation of
the existing fire station per
the March 28th option to
address living conditions
and ADA requirements
within the current structure
at approximately $3.5
million.
02 Option C: Addition of
a new 2-story fire
station behind the
existing fire station on
James Avenue. The
existing structure is to
be demolished upon
completion of the new
fire station.
03 Option D: A new one-story
fire station on the Bank of
West (now Bank of
Montreal) property. The
existing structure is to be
demolished upon
completion of the new fire
station or potentially sold
for other uses.
04 277
Option A – Short Term Upgrades

MET WITH

FACILITIES

MAINTENANCE

STAFF AND FIRE

DEPARTMENT TO

REVIEW UPGRADE
NEEDS

NEW FLOORING

ON THE SECOND
FLOOR
2HVAC

UPGRADE

KITCHEN

UPGRADE

INTERIOR

PAINTING ON

THE SECOND
FLOOR

ROOF LEAKAGE

REPORT AND

REPLACEMENT
OF HEAT TAPE.

Estimated Costs: $500,000
Work can be done by specialty
contractors managed by in-house staff
278
Option B –
Renovation of
Existing Facility
to upgrade living
quarters and
Code/ADA
Issues
Option B –
Renovation of
Existing Facility
to upgrade living
quarters and
Code/ADA
Issues
 The estimated budget allocation
capped at $3.5 million (Architect’s
estimate is $5.0 million)
 Would address living quarters
 Code and ADA issues
 Will not address apparatus Bay, energy
savings concepts, or fundamentally
change the character of the building
 Expected Project Life: 10
279
Options C and D – New Facility to meet Essential
Services Standards and FD Requirements

MET WITH FIRE

DEPARTMENT STAFF

TO DOCUMENT

PROJECT

REQUIREMENTS

RETAINED THE

SERVICES OF RRM

DESIGN GROUP,

WHICH SPECIALIZES

IN FIRE STATIONS

CONFIRMED THE

REQUIREMENTS

BETWEEN FIRE

DEPARTMENT STAFF

AND THE

CONSULTANT TEAM

DEVELOPED SIZE
AND

FUNCTIONALITY

REQUIREMENTS
280
Summary of Requirements
281
Option
C:
2 Story
Structure
282
Option C:
2 Story
Structure
283
Option D:

New
Structure
on the
Bank of
Montreal
site
Option D:

New
Structure
on the
Bank of
Montreal
site
284
Option D:

New
Structure
on the
Bank of
Montreal
site
Option D:

New
Structure
on the
Bank of
Montreal
site
285
Parcel
for
Options
C and D
286
Estimate of Probable Costs
 Option C: New two-story structure behind
existing fire station (excluding demolition
cost): $19.25 million.
 Option D: New one-story structure on the
Bank of Montreal site (excluding
demolition cost: 19.75 million.
 LEED Gold, plus a traffic signal at US 50,
will add $1.1 million
 Option C: New two-story structure behind
existing fire station (excluding demolition
cost): $19.25 million.
 Option D: New one-story structure on the
Bank of Montreal site (excluding
demolition cost: 19.75 million.
 LEED Gold, plus a traffic signal at US 50,
will add $1.1 million
287
Breakdown of Costs
288
Options for Next Steps
Staff Recommends:
• Options A + D
• Option D is a better choice from a functionality perspective • It meets all of the Essential Services Requirements
• It meets the Climate Action Goals of the City
• A Design-Build will be a good delivery method
• Staff can bring the Option A funding request and implement the upgrades within the next 6-months • Staff can initiate negotiations with Bank of Montreal for property acquisition • Staff can request funding for the D-B process
289
Project Financing
 Current Measure S Sales Tax Funds: $2.5 to 3.0 M
 Project will require a bond financing in the amount of $17 M  Options for bond financing:
 Current Measure S Sales Tax Funds: $2.5 to 3.0 M
 Project will require a bond financing in the amount of $17 M  Options for bond financing:

Term (years) Interest Rate Approximate Annual Debt
Service Payment Approximate Total Interest Cost
10 5% $2.20 million $5.0 million
15 5% $1.6 million $7.6 million
20 5% $1.3 million $10.3 million
290
Questions
291
City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
__________________________________
Meeting Date: September 12,
2023
Agenda Item #:14
Agenda Item: Chateau at the Village and Zalanta Project Update Executive Summary: City Council Strategic Plan Action Item 4.2.2 prioritizes the development of the “Hole in the Ground†site as a way of supporting and attracting visitors to the Stateline core. The site was originally planned as “Redevelopment Project 3†and has been partially developed as the “Chateau at the Village†and “Zalanta†projects. The City Council will hear a report on project background and discuss potential options to prioritize full development of the site.

Requested Action / Suggested Motions: Receive presentation and pass a motion to provide direction to the City Manager regarding potential public financing options (direct financial contributions, commitment to fee reductions, creation of a Mello-Roos Community Facilities District and special tax assessment to support bond sales, tax increment financing (TIF) district, enhanced Infrastructure Financing District (EIFD), and Infrastructure and Revitalization Financing District (IRFD).

Responsible Staff Member: Hilary Roverud, Director of Development Services Reviewed and Approved By: Susan Blankenship, City Clerk Olga Tikhomirove, Director of Finance Heather Storud, City Attorney
Attachments:
01-Staff Report - Chateau.docx
02 - Presentation.pdf
03-Market conditions and project challenges summary
292
Council Agenda Report- September 12, 2023 Page 1 of 10
City of South Lake Tahoe
Report to City Council
Meeting Date: September 12, 2023
Title: Chateau at the Village and Zalanta project update Location: 4101-4139 Lake Tahoe Blvd
Responsible Staff Member: Hilary Roverud, Director of Development Services Background:

City Council Strategic Plan Action Item 4.2.2 prioritizes the development of the “Hole in the Ground” site as a way of supporting and attracting visitors to the Stateline core. The site was originally planned as “Redevelopment Project 3” and has been partially developed as the “Chateau at the Village” and “Zalanta” projects. This report will provide background information on the project area and potential discussion topics to prioritize full development of the site.

Project History
South Lake Tahoe Redevelopment Project 3 was originally approved by the City Council and the Tahoe Regional Planning Agency (TRPA) in 1998 as a mixed-use development consisting of two condominium-hotel structures, a publicly owned assembly and entertainment venue, general retail stores, a below grade parking structure, a 1.5 acre public park, a pedestrian tunnel under US Highway 50 to connect to Heavenly Village, and stormwater facilities. An Environmental Impact Report (EIR) and TRPA Environmental Impact Statement (EIS) was prepared to analyze potential impacts of the project. The EIR/EIS found that the additional daily vehicle miles traveled could not be mitigated to a level that was less than significant. Therefore, a Statement of Overriding Considerations was required. After making the required statement, the City certified the EIR in October 1998, and the EIS was approved by the TRPA the same month. The EIR/EIS also analyzed potential impacts of “no action,” “reduced project,” and “rehabilitation” alternatives.
293
Council Agenda Report- September 12, 2023 Page 2 of 10
1998 South Lake Tahoe Redevelopment Project 3
In 2006, the South Tahoe Redevelopment Agency entered into an Owner Participation Agreement (OPA) with Lake Tahoe Development Company, LLC (LTDC) to develop Project 3.

The methods of financing attached to the OPA included the use of tax allocation bonds supported by property tax increment revenues, Mello-Roos bonds supported by tax increment, project generated transient occupancy taxes and a community facilities district secured by Mello-Roos special taxes. The approved OPA did not include a requirement for a construction performance bond. The City Council also adopted resolutions to establish the Community Facilities District and authorization to incur bonded indebtedness to finance the project’s public facilities.

At that time the project developer modified the project design and an EIR/EIS Addendum was prepared to analyze the environmental effects of the proposed changes. The revisions scaled down the project to include only the Project A and B sites, eliminating redevelopment of the properties at the corner of Lake Tahoe Blvd and Park Avenue (Project C) and reducing the project area from 19.42 acres to 11.53 acres. The modification also reduced the number of hotel/condominium units and commercial areas in Projects A and B. The EIR/EIS Addendum analysis found that the proposed scaled down project would not have significant traffic impacts, however parking impacts during peak times when large local concerts are offered would require implementation of a parking management plan that utilizes off-site parking.

Project A Project B
Project C
Lake Tahoe Blvd
294
Council Agenda Report- September 12, 2023 Page 3 of 10
2006 South Lake Tahoe Redevelopment Project 3
In 2007, the project developer proposed further revisions that required the preparation of a second EIR/EIS addendum. Revisions included changing the Hwy 50 underpass to an overpass, an increase in hotel/condominium units and adjustments in the floor area programing for the hotel accessory uses, convention center, and commercial spaces. However, the project area and building footprint were not revised. The addendum analysis concluded that the proposed 488 hotel/condominium Tourist Accommodation Units was inconsistent with allowable mixeduse density of the TRPA Code of Ordinances and the ultimately approved project revision included a total of 477 TAUs. In 2007 the City Council also approved the project subdivision map and directed City staff to issue a “foundation only” permit with conditions related to Caltrans approval of an encroachment permit and developer accepting risk associated with issuing the foundation permit without a Caltrans approved encroachment permit.

Project A
Project B
Lake Tahoe Blvd
295
Council Agenda Report- September 12, 2023 Page 4 of 10
Project A
Project B
Lake Tahoe Blvd
296
Council Agenda Report- September 12, 2023 Page 5 of 10
Project Component
1998
Project1
2006
Project
2007
Project
Project A
Hotel units (Units/TAUs) 532 130/287 268/3652
Hotel area (square feet) 303,713 334,404 345,879
Parking spaces 786 495 535
Multi-purpose meeting facility
(sq. ft.) 100,020 93,448 95,302
Conference capacity (people) 1500 1600 1600
Concert capacity (people) 2,700 4,400 4,400
Hotel accessory uses (sq. ft.) 65,225 85,677 75,480
Recreation and spa (sq. ft.) 16,293 16,193
Commercial/food services (sq.
ft.) 23,910 19,582 20,415
Night Club 10,000 10,732 9,035
Project B
Hotel units (Units/TAUs) 177 46/99 85/1232
Hotel area (square feet) 136,922 136,922 132,014
Parking spaces 193 135 182
Hotel accessory uses (sq. ft.) 9,011 9,011 6,298
Commercial/food services (sq.
ft.) 21,301 26,944 27,057

1. This scope reflects the “reduced project alternative” analyzed in the 1998 EIR. The project included Project C which was dropped from the 2006 and 2007 projects. Project C is not included in this table.

2. Total number of TAUs required to be reduced to 477.

Construction began in 2007 with the demolition of most of the existing buildings within the overall project area and excavation of the Project A underground parking garage. Construction was halted in late 2007 due to the loss of construction funding. These initial Project A improvements are now known as Chateau Phase 1.

In 2009 the City Council directed staff to abandon consideration of issuing Mello Roos bonds for the purpose of restructuring existing debt that the developer had incurred. At that time the developer was unable to secure construction financing to continue construction and repay lien holders on parcels that had been assembled for the project. Subsequently, due to foreclosures by multiple lenders, ownership of Project A and Project B became divided.

On June 11, 2013, the City Council approved a Design Review Permit allowing construction of the Project A (Chateau) ground floor retail space fronting Lake Tahoe Boulevard (Phase 2). The permit also identified Phase 3 of Project A as the second and third-floor condo-hotel units and Phase 4 as the completion of the hotel/condominium, accessory spaces, and multi-purpose meeting facility (full build-out). At that time the City Council found the phased project to be consistent with the original EIR/EIS and both subsequent addendums, pursuant to the California Environmental Quality Act, and therefore no additional environmental review was required. The 297
Council Agenda Report- September 12, 2023 Page 6 of 10
City Council also approved allocation of 8,847 square feet of Commercial Floor Area (CFA) for Phase 2, accepted relinquished right of way from Caltrans for the frontage improvements, and approved abandonment of the portions of Laurel and Poplar. 2013 Approved Phasing
In April 2015 the City Planning Commission approved a Major Design Review permit for Project B (Zalanta), Phase 1 for the construction of 30 hotel/condominium units and the ground floor retail space along Lake Tahoe Boulevard. That approval also included removal of the pedestrian overpass from the project. In June 2015 the City Council approved an allocation of 6,307 square feet of CFA for this phase of the project.

In 2016 the Planning Commission approved a Major Design Review permit for Phase 2 of Zalanta, which consists of 60 hotel/condominium units, streetscape improvements along Friday Ave and Cedar Ave., 109 underground parking spaces and 4 surface parking spaces and associated hotel amenities.

After the dissolution of the South Tahoe Redevelopment Agency associated extinguishment of the OPA in 2012, in May 2016, the Redevelopment Successor Agency approved the release of certain covenant, conditions and restrictions associated with development of the Convention Center component.

In 2017 the City Council approved the final map for the Chateau property dividing the 2.6 acre parcel into five parcels. This subdivision created parcels that includes the underground parking garage under the retail space, the exposed underground parking garage, retail level parcels, and airspace parcels above the retail.

Chateau
Phase 1 - foundation
Phase 4 - Hotel/Condo, accessory,
meeting facility
Chateau
Phase 2 - commercial
Phase 3 - Hotel/Condo
Zalanta
Phase 1 – commercial,
Hotel/Condo
Zalanta Phase 2 – Hotel/Condo
298
Council Agenda Report- September 12, 2023 Page 7 of 10
In 2018, a Major Design Review Permit was approved for Phase 3 of Project A (Chateau), which included construction of 16 hotel/condominium units in the second and third story above the existing retail space. A Building Permit for Chateau Phase 3 was issued in 2019 and the permit has remained active due to COVID impact related permit extensions and construction activities pursuant to CA Building Code section 105.5.1. The most recent extension request indicated an anticipated completion date of July 2024.

Issue and Discussion:

Current Parcel Status
The subdivision map approved by the City Council in 2007 was never recorded however, consolidation of parcels and creation of airspace parcels has occurred with each phase of the Chateau and Zalanta projects. There are currently 74 parcels within the Project 3 area (See Attachment 02).

The Zalanta project area contains 30 individually owned condominium parcels, eleven parcels that include the retail spaces and common areas, and five parcels where Phase 2 is expected to be developed. Development of Zalanta Phase 2 will require consolidation of those parcels.

In the Chateau project area there are five parcels that contain the existing retail space and are owned by Imperium Blue Tahoe Holdings DE, LLC. The rest of the project area contains 23 parcels owned by Tahoe Chateau Land Holdings CA, LLC.

Current Permit Status
City Planning entitlements and a Building Permit have been issued for Phase 3 of the Chateau (16 hotel/condominium units above existing retail) and construction of this project is underway.

City Planning entitlements have been issued for Zalanta Phase 2 (60 hotel/condominium units) and in December 2022, a building permit application was submitted for construction, however, the building permit application is pending submittal of a revised plan set and responses to corrections.

The TRPA permit issued for Redevelopment Project 3 in 2007 remains active as a phased construction project.

Development Challenges
The current state of the original Redevelopment Project 3 area no longer under common ownership and being constructed in phases presents a multitude of challenges. The original EIR/EIS was adopted in 1998 with addendums prepared in 2006 and 2007. Any subsequent changes to the scope of the project analyzed within the existing environmental record would require discretionary approval potentially be subject to additional and current environmental analysis. As set forth in California Environmental Quality Act (CEQA) Guidelines a subsequent or supplemental EIR must be prepared when the following conditions occur after an EIR is certified by a lead agency:
(1) Substantial changes are proposed in the project which will require major revisions of the previous EIR or negative declaration due to the involvement of new significant 299
Council Agenda Report- September 12, 2023 Page 8 of 10
environmental effects or a substantial increase in the severity of previously identified significant effects;
(2) Substantial changes occur with respect to the circumstances under which the project is undertaken which will require major revisions of the previous EIR or Negative Declaration due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects; or (3) New information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the previous EIR was certified as complete or the Negative Declaration was adopted, shows any of the following:
(A) The project will have one or more significant effects not discussed in the previous EIR or negative declaration;
(B) Significant effects previously examined will be substantially more severe than shown in the previous EIR;
(C) Mitigation measures or alternatives previously found not to be feasible would in fact be feasible, and would substantially reduce one or more significant effects of the project, but the project proponents decline to adopt the mitigation measure or alternative; or
(D) Mitigation measures or alternatives which are considerably different from those analyzed in the previous EIR would substantially reduce one or more significant effects on the environment, but the project proponents decline to adopt the mitigation measure or alternative.

Additional environmental analysis may also be required by TRPA regulations. Preparation of an EIR/EIS is costly, takes time, and requires an uncertain public review process.

There are also physical and logistical challenges to developing the project. The Project 3 area either shares or has a mutual reliance on a significant amount of infrastructure and improvements. Development of each phase of the project has required coordination and mitigation of potential impacts to adjacent properties.

The long-term viability of the foundation and underground parking garage infrastructure, having been exposed for fifteen years has been questioned due to visible rust on unprotected rebar.

Although a structural engineer’s analysis would be required to verify the current conditions, it would be common for that analysis to be conducted as construction plans for future development are prepared. Sandblasting existing rebar and the addition of structural support measures may be needed but would not likely be an impediment to future development.

Potential Project Development Incentives
The Chateau project area is within the boundaries of a designated qualified opportunity zone.

Opportunity Zones are census tracts that are economically-distressed communities where new investments may, under certain conditions, be eligible for preferential federal tax treatment or preferential consideration for federal grants and programs. They were added to the Internal Revenue Service tax code in 2017. Opportunity Zones incentivize investment and economic development in distressed communities by providing a temporary deferral on federal capital gains tax and, where the investment is held for at least ten years, the potential to eliminate federal capital gains taxes on any realized gains from the investment. Investment in an opportunity zone is made through a Qualified Opportunity Fund (QOF), an investment vehicle that files either a corporate or partnership federal income tax return which must be established 300
Council Agenda Report- September 12, 2023 Page 9 of 10
specifically for the purpose of investing in Opportunity Zone assets. For a real estate project to qualify for Opportunity Fund financing, the investment must result in the property being “substantially improved.” Opportunity Zones can be utilized to finance commercial and industrial real estate, housing, infrastructure, and existing or start-up businesses. While city governments have no direct role in the opportunity zone program, cities do have the power to influence development via other tools to increase the likelihood of investment. These tools may include establishment of financing districts, as discussed below, zoning to accommodate desired projects and streamlined approval processes. Some local governments are using social media, presentations, and prospectus sheets to help market their regions and share what types of investments their communities are seeking.

If the City Council wishes to explore opportunities to incentivize the completion of the original project or a revised project on the Chateau site options may include:
 Direct financial contributions,
 Commitment to fee reductions,
 Creation of a Mello-Roos Community Facilities District and special tax assessment to support bond sales,
 Tax increment financing (TIF) district
o Enhanced Infrastructure Financing District (EIFD)
o Infrastructure and Revitalization Financing District (IRFD) While direct contributions and fee reductions would be straightforward options, they are not likely to provide a significant enough contribution to spur development.

TIF districts work by freezing the property tax revenues that flow from a designated project area to the city, county, and other taxing entities at the “base level” in the current year. Additional tax revenue in future years (the “increment”) is diverted into a separate pool of money, which can be used either to pay for improvements directly or to pay back bonds issued against the anticipated TIF revenue. In California, TIF has historically been used by redevelopment agencies to raise funding for infrastructure improvements, land assembly, housing, and other projects in redevelopment areas. However, redevelopment agencies in California were required by state law to dissolve as of February 1, 2012. Beginning in 2014 the California legislature began passing bills to create new TIF opportunities for cities and counties. TIFs can provide a commitment of future revenues (versus existing revenues) to catalyze economic development that would not occur as quickly without the TIF commitment.

EIFDs are a type of TIF district cities and counties could form to help fund economic development projects. EIFDs are currently able to fund infrastructure maintenance and housing development, economic development, transportation infrastructure, sewage treatment, and climate adaptation projects, among other uses. EIFDs do not increase property taxes and they cannot pull property taxes from school districts. EIFDs are governed by a Public Financing Authority (PFA) made up of 5 members of at least 3 elected officials and 2 local community members who live or work in the district area. The PFA oversees the creation of the District’s Infrastructure Financing Plan (IFP), which outlines the specific projects the District will fund. Additionally, while EIFDs are not required to set aside a specific percentage of affordable housing, all housing that is developed must be affordable. Although public hearings and opportunities to protest are required, EIFDs do not require voter approval to form, however, a 55% voter approval is required for the EIFDs issuance of bonds. Thus, they have the greatest potential for success in projects where multiple layers of taxing authorities (Cities and Counties) are highly motivated to move such projects forward and have strong community support.
301
Council Agenda Report- September 12, 2023 Page 10 of 10 IRFDs are districts that finance housing development and other development projects of communitywide significance in current and former redevelopment project areas. IRFDs fund many of the same types of projects as EIFDs, including affordable housing, highways and transit facilities, industrial structures, sewage treatment, etc. IRFDs do not have an affordable housing set-aside requirement, however any district that does develop housing must have at least 20% low- and moderate-income housing. Differing from EIFDs, IRFDs required 2/3 voter approval for formation and to issue bonds. IRFDs are governed by the same governing body as the city or county creating the district.

City pursuit of any of the incentives and programs discussed above would require a partnership with a motivated property owner and developer to develop a project that meets goals of the City and provides community benefits.

Financial Implications: This agenda item is for discussion only.

Environmental Considerations: This is not a project under CEQA, because it does not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment, as contemplated by Title 14, California Code of Regulations, Sections 15378(b)(2) and 15378(b)(4) and is, therefore, not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).

Policy Implications:

The following adopted policies support this discussion topic:

General Plan Economic Development Element
Policy ED‐1.17: Convention Center. The City shall prioritize assistance with completion of Redevelopment Project 3 and the public amenities and environmental improvements associated with it.

General Plan Land Use Element
Policy LU‐2.12: Stateline Node Purpose. The City shall ensure that the Stateline Node will be an area in the city for tourist‐ serving commercial uses, Tourist Accommodation Units, workforce housing (e.g., housing affordable to local workers in all industries), and affordable housing. The City should work with property owners to transform the Node into a pedestrian center served by transit that connects community resources, visitor facilities, recreation, and Lake Tahoe.

Tourist Core Area Plan
Goal LU-1 Land Use. Continue to shape the Tourist Core into a pedestrian-oriented destination center for tourist and permanent residents that provide high quality services, accommodations, and recreational experiences.
302
City Council
September 12, 2023
1 Chateau at the Village and Zalanta
Project Update
303
Chateau at the Village and Zalanta Project Update
2 • South Tahoe Redevelopment
Demonstration Plan for the Ski
Run and Stateline Areas (1989)
• Stateline/Ski Run Community
Plan (1994)
• Embassy/Ski Run Marina Project
• Park Avenue Project
• Project 3
304
Chateau at the Village and Zalanta Project Update
3 Project A
Project B
Project C
1998 EIR/EIS
305
Chateau at the Village and Zalanta Project Update
4 Project A
Project B
2006
• RDA and Lake Tahoe
Development Company Owner
Participation Agreement (OPA)
• Tax Increment Financing,
Mello-Roos special taxes,
Community Facilities Districts
• Project revisions
• EIR/EIS Addendum
306
Chateau at the Village and Zalanta Project Update
5 Project A
Project B
Lake Tahoe Blvd
2007
• Project revisions
• EIR/EIS Addendum
• Demolition, utility relocation and
foundation construction
• 488 Hotel/Condominium Units
• 95,000 sf Multi-purpose
Conference Facility
• 56,500 sf Commercial
• 98,000 sf hotel
accessory/recreation/spa
307
Chateau at the Village and Zalanta Project Update
6 2013
• Phased Project
• Allocation of 8,847 sf CFA
• Abandonment of Laurel
and Poplar
Chateau
Phase 2 - commercial
Phase 3 - Hotel/Condo
Chateau
Phase 1 - foundation
Phase 4 - Hotel/Condo, accessory,
meeting facility
Zalanta
Phase 1 – commercial,
Hotel/Condo
Zalanta
Phase 2 – Hotel/Condo
308
Chateau at the Village and Zalanta Project Update
7 309
8 Chateau at the Village and Zalanta Project Update
2007 Subdivision – final map not recorded
310
Chateau at the Village and Zalanta Project Update
9 Tahoe Chateau Land Holdings, LLC
Garage level – Tahoe Chateau Land Holdings, LLC
Retail level – Imperium Blue Tahoe Holdings, LLC
Upper levels – Tahoe Chateau Land Holdings, LLC
Johl Harinder & Baljit
Retail level – Johl Harinder & Baljit
Residential condominiums – 30 individual ownership parcels General Site Ownership
311
10 Chateau at the Village and Zalanta Project Update
Development Challenges
• Separate ownership
• Entitlements and
Environmental Review
• Physical and Logistical
• Market
312
11 Chateau at the Village and Zalanta Project Update
Incentive Opportunities
• Opportunity Zone
• Community Facilities District
• Tax Increment Financing District
• Entitlement streamlining
313
QUESTIONS?
12 314
  
JohnsonValuation Group, Ltd.

Post Office Box 11430 124 McFaul Way, Ste. 201 Lake Tahoe, Nevada 89448 (775) 588-4787 www.johnsonvaluationgroup.com
California / Nevada
23-025
September 6, 2023
Via Electronic Mail: [email protected]
Ms. Hilary Roverud, AICP
Director of Development Services
City of South Lake Tahoe
1052 Tata Lane
South Lake Tahoe, CA 96150
Re: Undeveloped portions of the Chateau Site, South Lake Tahoe, El Dorado County, California
Dear Ms. Roverud:

This is in response to your request for a preliminary letter addressing the opportunities and challenges associated with the vacant portion of the Chateau Site in South Lake Tahoe, El Dorado County, California.

Background of Site
The subject is a portion of the larger Chateau Site, which involves the assemblage of four city block and was formerly composed of twenty-nine separate parcels and two interior streets (all of which have now been abandoned). The larger site is located on the southwest corner of the Nevada/California Stateline and Lake Tahoe Boulevard (U.S. Highway 50).

Harvey’s Hotel/Casino is located immediately north across Stateline Avenue from the larger Chateau Site. Harrah’s Hotel/Casino is located catty corner from the Chateau property, and the Lake Tahoe Resort Hotel (Under renovation to become Margaretville Resort Lake Tahoe) is located immediately across Lake Tahoe Boulevard from the Chateau property to the east.

The assembled project area was previously improved with a number of older motels, a number of older retail commercial buildings, several restaurants, a service station and several 315
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single family residences. The prior developers (Lake Tahoe Development Company) of the proposed project demolished the former above ground improvements.

It is my understanding the utility infrastructure that is necessary to develop the project as planned has been installed to the perimeter of the site with appropriate utility stubs installed to service the proposed development. Additionally, a concrete foundation and a concrete slab for most of the basement level of Phase A were partially installed in the summer/fall of 2007.

Also, in the summer/fall of 2007, a vast majority of the on-site drainage improvements required for the proposed project have been installed.

In 2014, a 23,644± square foot (rentable) retail center was constructed at the southwest corner of Lake Tahoe Boulevard and Stateline Avenue, extending to the south along the frontage of Lake Tahoe Boulevard. The retail center is divided into nine suites. The center has been well received in the market area. The air rights associated with this improved retail center are under separate ownership, but the subterranean parking level and the air rights to construct up to 16 residential condominiums above the existing retail center are part of the subject property.

In late 2015, on the Phase B site (not part of the subject property), construction commenced on 30 residential condominiums at the southwest corner of Lake Tahoe Boulevard and Friday Avenue. The building was completed in 2017. The site on which the 30 residential condominiums are located is not included as part of the subject property. The balance of the larger development site is vacant with the exception of the horizontal infrastructure installed for future development.

The undeveloped portion of the Chateau site (“subject property”) is composed of 8.0± acres of land area (348,301± square feet) and is conditionally approved for development with up to 387 residential condominiums.
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Market Demand For Site
The subject features a walkable location in the heart of the tourist core of South Lake Tahoe. The market demand for the subject site will be driven by residential condominium sales and tourist occupancy units. A high level overview of the market for each of these two components will be discussed in the following section
Residential Component
Development of the subject site will be largely driven by the economics of resort residential condominiums similar to what was constructed in Phase 1 of the Zalanta Site (30 residential condominiums). In order to gauge the demand for new residential development on the site, the trailing three year (September 1, 2020 to August 31, 2023) sales history of the Phase 1 Zalanta residential condominiums have been considered as follows:

Zalanta Phase 1 Residential Condominiums
Trailing 3 Year Sales History
Unit Bed Bath
Sq.

Ft. Sale Date Sale Price Price/SF
225 3 3 1803 10/21/2020 $1,600,000 $887.41
317 4 4 2291 12/11/2020 $2,700,000 $1,178.52
213 3 3 1616 1/8/2021 $1,400,000 $866.34
323 2 2 1154 6/24/2021 $1,450,000 $1,256.50
312 2 2 1235 11/1/2021 $1,325,000 $1,072.87
212 2 2 1228 11/17/2021 $1,325,000 $1,078.99
228 3 3 1674 12/24/2021 $1,700,000 $1,015.53
213 3 3 1616 4/3/2023 $1,720,000 $1,064.36
311 2 2 1273 4/28/2023 $1,500,000 $1,178.32
219 2 2 1147 6/29/2023 $1,550,000 $1,351.35
As indicated, sale price per square foot of living area have ranged from $866.34 to $1,351.35 per square foot over the last three years with most sales being within the $1,000 to $1,200 per square foot range. There were a total of ten sales over the most recent 36 month (3 year) period, which indicates a sales pace of 3.34 units per year. 317
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The market for newer residential units in South Lake Tahoe has also been considered, this is defined as single-family residences and residential condominiums with a year of construction of 2005 to newer. The sales history for the City of South Lake Tahoe for these parameters are presented as follows:

City of South Lake Tahoe
Residential Units Constructed 2005 to Present
Time Period 09/01/2020 to 8/31/2021 09/01/2021 to 8/31/2022 09/01/2022 to 8/31/2023 Sales 154 88 78
Sales Volume $183,376,710 $131,796,270 $92,305,300
Average Sale
Price/SF $437 $516 $474
Median sale price/SF $412 $494 $453
Max sale price sf $1,257 $1,452 $1,351
Average Sale Price $1,190,758 $1,497,685 $1,183,401
Median sale price $1,099,500 $1,300,000 $1,200,000
Average Square Feet 2,712 2,798 2,528
As indicated, total sales volume for newer residential properties in South Lake Tahoe has declined over the most recent three years. The sales volume for the trailing 12 months is $92,305,300, which is a 99% decline from the same time period two years before and a 43% decline from the same time period one year before. The median sale price is down 8% to $1,200,000 from the same time period one year before, but remains 8% above the median sale price from the same time period two years before.

An important element for driving development of the subject property will be sale price and sales volume of finished residential product. The most recent trailing three year data indicates that total sales volume is roughly half for the most recent trailing 12 months versus what it was for the same time period two years prior and has decreased 43% from the same time period one year prior.
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On the other hand, median sales price of newer inventory is down a modest 8% over the last year and remains 8% above the median sales price for the same time period two years ago.

Sales velocity will be greatly impacted by general economic conditions and interest rates during the absorption period, to the extent that economic uncertainty persists and interest rates remain elevated, the absorption period for finished residential condominiums will be extended.

Lodging Component
The second component of the subject property that will drive demand and developer interest is the potential to construct a lodging component. This would likely be in the form of a condominium hotel as was completed for the 30 units in the Zalanta Phase 1.

Demand for lodging units in the tourist Ccore of South Lake Tahoe has been positively impacted by the implementation of Measure T throughout 2022. As vacation rental permits have been non-renewed, visitors have been increasing demand for transient occupancy units in the tourist core area.

The Tahoe Blue Event Center (formerly Tahoe South Event Center) is a new 6,000± person capacity special event and meeting venue that is scheduled to open later this month.

The approvals for the property limit special events during the peak periods of the year and focus on attracting visitors during non-peak periods. This property is expected to assist lodging operators in increasing occupancy and average daily rate during traditional non peak periods.

The combination of Measure T’s implementation and the new Events Center have spurred investments in lodging properties in the immediate vicinity and are expected to drive additional investment going forward. The Chateau Site is ripe to capitalize on the future demand for lodging in the Tourist Core of South Lake Tahoe. 319
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Headwinds for Development
Construction Costs
One of the most significant barriers to development of the Chateau site is the high cost of commercial construction in the subject market area. The rate of increase of construction costs is reported by contractors to have slowed in 2023, but remains significantly elevated versus the time period prior to the COVID pandemic. The high costs of commercial construction has challenged the economic feasibility of most larger scale projects at Tahoe over the past few years and would be a significant challenge for development of the subject property.

Construction Financing
The increase in interest rates and the decrease in appetite for risk by potential construction lenders will create headwinds for development of the subject property in the near term. The more onerous terms of debt will constrain the economic feasibility of development of the site.

Fragmented Ownership of Chateau/Zalanta Site
The fragmented ownership of the Chateau/Zalanta site will increase the complexity of development. The subject’s undeveloped 8± acres is owned separate from the operating retail component, the 30 finished residential condominiums and the 60 potential residential units at the Zalanta Phase 2 site. Due to the creation of the various components and their separate ownership, decision making is more complex. This is evidenced by the current construction of 16 residential units above the retail component. The fragmented ownership precludes unilateral control of the site during development and would act to make construction more complex and challenging.

TRPA Approvals
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It is my understanding the TRPA approvals of the subject site remain valid as long as diligent pursuit of construction on the site is ongoing. The foundational environmental documents underlying the subject’s TRPA approvals may be stale and if the approvals were to lapse an unknown cost and risk would be incurred to achieve new TRPA approvals.

A developer of the subject site would likely seek to work within the framework of the existing TRPA approvals, which may limit design flexibility and the ability to substantially modify the development plan for the site to match a developer’s preferences.

Summary
The 8.0± acres subject site is one of the best locations in the Tahoe Basin for tourist related development. Significant capital has been spent in the Tourist Core to update older structures and complete new buildings over the last decade. The opening of the Tahoe Blue Event Center will further increase the overall desirability of the area. On the other hand, the headwinds for development of the site are substantial and will act to limit the potential for near term development of the site.

I hope this preliminary letter is of assistance to you.

Respectfully Submitted,

Benjamin Q. Johnson, MAI
California Certified General Appraiser
License Number AG043925
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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
__________________________________
Meeting Date: September 12,
2023
Agenda Item #:15
Agenda Item: Supplemental Commercial Linkage Fee Analysis Executive Summary: The City Council requested completion of additional analysis of a commercial linkage fee to supplement information contained in the previously completed Analysis of Local Funding Sources for Housing Initiatives (Report). The additional analysis, along with the previously completed Report, is being presented to City Council to inform decisions about the potential creation of a commercial linkage fee ordinance. Staff does not recommend implementing a commercial linkage fee at this time because it is only feasible for a small number of commercial projects and is not likely to provide a reliable funding source for affordable housing.

Requested Action / Suggested Motions: Pass a Motion providing direction to the City Manager to not prepare a commercial linkage fee ordinance at this time.

Responsible Staff Member: Zach Thomas, Housing Manger
Reviewed and Approved By: Susan Blankenship, City Clerk Olga Tikhomirova, Director of Finance Heather Stroud, City Attorney
Attachments:
02-Supplemental_Linkage_Analysis.pdf
03-Local Housing Funding Feasibility Study.pdf
01-Staff_Report_-_Commercial_Linkage.docx
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Council Agenda Report- September 12, 2023 Page 1 of 3
City of South Lake Tahoe
Report to City Council
Meeting Date: September 12, 2023
Title: Supplemental Commercial Linkage Fee Analysis
Location: City-wide
Responsible Staff Member: Zach Thomas, Housing Manager
Background: At its January 24, 2023 meeting, the City Council was presented the Analysis of Local Funding Sources for Housing Initiatives report (Report) that analyzed eight different local discretionary funding sources that could provide revenue to fund the City’s housing initiatives.

Upon receiving the presentation, the Council provided direction to staff to conduct further stakeholder outreach on the potential implementation of a Transient Occupancy Tax (TOT) and a Real Estate Vacancy Tax. The Council also requested that additional nexus and feasibility analysis be completed to further inform discussion about a potential inclusionary housing percentage and in-lieu fee.

The supplemental nexus and feasibility analysis was presented to the City Council on May 2. After receiving the presentation, holding public comment and engaging in Council discussion, direction was provided for staff to conduct enhanced analysis of inclusionary housing and commercial linkage fee policies.

At its June 6, 2023 meeting the City Council approved a consultant scope of work and budget to include the following:
 Enhanced Residential Nexus and Feasibility Analysis
 Coordination with HCD for Regulatory Compliance
 Enhanced Commercial Linkage Fee Nexus and Feasibility Analysis  Additional Meeting Attendance
The tiered inclusionary analysis was presented to the City Council on August 8. At which time the City Council was informed that the enhanced commercial linkage fee analysis would be presented at the September 12 meeting.

Issue and Discussion: A commercial linkage fee is an impact fee to offset the induced workforce demand created by new commercial development. The initial analysis presented in January considered the induced workforce housing demand created by a stand-alone retail pad as well as for a tourist mixed-use project that included condotel units and ancillary ground floor retail.

The additional analysis presented here further analyzes the nexus between new retail development and induced workforce housing demand by considering the housing demand created by development of a larger lifestyle shopping center similar to the Bijou Marketplace at the intersection of Lake Tahoe Boulevard and Ski Run Boulevard. Consistent with the initial Report 323
Council Agenda Report- September 12, 2023 Page 2 of 3
presented to Council, a feasibility study was also conducted to determine the extent to which such a project would be financially able to absorb the maximum justifiable linkage fee within the current market. The additional analysis also updated the financial feasibility analysis prepared for the tourist mixed-use condotel with retail development presented in the original Report.

Analysis Summary and Recommendation: In additional to the nexus analysis, the additional analysis reviews the feasibility of a commercial linkage fee applied to commercial prototypes under current economic conditions. For several factors, commercial real estate, is in general, showing a diminished ability to absorb a commercial linkage fee that would be reasonably aligned with the cost necessary to mitigate the impacts of the induced workforce generation. Determining prototype feasibility is largely based on an analysis of the market capitalization, or CAP, rate. The additional analysis has been attached to this report to provide further detailed information.

Current analysis indicates that commercial development consisting of either a smaller individual retail pad or a larger retail shopping center would be unlikely to absorb additional commercial linkage fee of any size within the current market condition. However, the analysis does indicate that a larger tourist mixed-use condotel with retail would have a lower maximum justifiable linkage fee (based on a lower induced employment generation) and would likely be able to absorb it.

It is important to note that the retail component associated with a mixed-use condotel is likely subsidized by the condotel component of the development. As such, a linkage fee applied to the retail component would likely impact the overall feasibility of the development and could potentially influence the holistic design of the project. This could potentially lead to less retail incorporated into the project in order to avoid the associated linkage fees. Such a design alteration could have the unintended consequence of discouraging the walkable mixed-use development concept that is otherwise encouraged within Town Centers. While it is impossible to know the feasibility considerations associated with every potential future project, this potential consequence is worth noting in this instance. It is also important to note that condotels are regulated under section

6.55.270 of the City Code and are considered a commercial tourist accommodation use and would not be subject to any future inclusionary housing ordinance that would apply to residential uses.

Another reality to consider is that large tourist mixed-use retail developments occur seldomly. So, while there is a potential to generate revenue, it would be highly inconsistent and would not constitute a reliable funding source.

While the additional analysis focused on commercial linkage fees associated with retail uses, the initial Report (attached here) analyzed the feasibility of a commercial linkage fee associated with stand-alone hotel developments. The analysis considered two prototypes modeled after a smaller boutique hotel based roughly on the Desolation hotel property and a larger hotel based roughly on the Hampton Inn redevelopment. The analysis indicated that neither prototype would be likely to absorb much in the way of a linkage fee. Furthermore, any available capacity to absorb any fees would be further reduced by additional costs associated with the acquisition of commodities or the applicability of additional mitigation fees. Given that the market conditions have grown more challenging since that time, it is now even more unlikely that such development prototypes could absorb a linkage fee.

The additional commercial linkage fee nexus analysis clearly demonstrates an induced workforce impact generated by commercial development. However, the feasibility study suggests that current market conditions make the ability for commercial development to absorb a new linkage fee unlikely. As such, staff does not recommend the imposition of a commercial linkage fee 324
Council Agenda Report- September 12, 2023 Page 3 of 3
currently. This recommendation is based on the challenging market conditions currently facing commercial development as well as the low potential that a commercial linkage fee would be a consistent and reliable funding source for the City’s housing programs.

Market conditions, however, are dynamic and will no doubt change in the future. Conditions such as lower interest rates or lower construction costs may significantly influence future linkage fee feasibility analysis. Much like any other economic or housing policy, it is may be reasonable to explore additional analysis at a future date.

Financial Implications: The current staff recommendation would not have any financial implications. Should direction be given to implement a commercial linkage fee, additional analysis would be necessary to determine financial implications.

Environmental Considerations: The recommendation in this report is not a project under CEQA, because it does not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment, as contemplated by Title 14, California Code of Regulations, Sections 15378(b)(2) and 15378(b)(4) and is, therefore, not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).

Policy Implications: This analysis and discussion is consistent with City Strategic Plan Action Item 1.3.4: Establish a local discretionary funding source to leverage access to and increase competitiveness for outside funds, and implement Council direction to conduct outreach to analyze vacancy tax and transient occupancy tax funding sources The following adopted policies and programs are applicable to this discussion:

City General Plan Housing Element
Policy 1-1. The City shall adopt programs, ordinances, incentives, land use plans and other regulatory mechanisms that provide opportunities for the private sector to address the housing needs of citizens of all economic levels.

Policy 2-5. The City shall recognize that it will become difficult to attract employees if they cannot afford to purchase or rent housing in South Lake Tahoe. The City shall encourage and support programs and activities that create a robust local economy that provides residents with good paying employment and the means to purchase and/or rent housing in the City. 325
bae urban economics
San Francisco Sacramento Los Angeles Washington DC Atlanta New York City www.bae1.com
Memorandum

To: Hilary Roverud, Development Services Director, City of South Lake Tahoe Zachary Thomas, Housing Manager, City of South Lake Tahoe Jessica Wackenhut, Associate Housing Planner, City of South Lake Tahoe From: Aaron Nousaine, MCRP, Principal, BAE Urban Economics Date: August 30, 2023
Re: Supplemental Analysis for a Commercial Linkage Fee
Following completion of the revised Analysis of Local Funding Source(s) for Housing Initiatives report on January 20, 2023, and the Supplemental Residential Nexus analysis memorandum on March 2, 2023, the City of South Lake Tahoe commissioned additional analysis regarding options for establishing commercial linkage fee to help support housing programs.

The prior analysis prepared for the City of South Lake Tahoe considered the nexus between new retail development and new workforce housing demand for a stand-alone retail pad, as well as for a tourist mixed-use project that included condotel units and ancillary ground floor retail. That analysis found that small-scale high-end retail development could potentially support a linkage fee of up to $90 per square foot, while less well positioned retail projects were unlikely to support any additional linkage fee burden. BAE estimated that the tourist mixed-use prototype could potentially absorb a condotel linkage fee of up to $44 per square foot, or a retail linkage fee of up to $239 per square foot, but generally not both.

This supplemental analysis considers the nexus between new retail development and workforce housing demand associated with development of a larger lifestyle shopping center similar to the Bijou Marketplace located on Lake Tahoe Boulevard near Ski Run Boulevard.

The shopping center is assumed to include approximately 43,000 square feet of built space, including a 25,000 square foot grocery anchor and 18,000 square feet of ancillary retail. BAE then tested the maximum justifiable linkage fee using a pro forma financial feasibility model to identify the extent to which such a project would be financially feasible within the current market and the extent to which the prototype could absorb imposition of the new linkage fee.

This analysis also includes an abbreviated update of the financial feasibility analysis prepared for the tourist mixed-use prototype presented in the original January 2023 report. This includes testing the extent to which that prototype could absorb imposition of a new linkage 326
2 fee, recognizing that the City has elected not to impose an inclusionary housing requirement on condominium units in the central tourist core.

Lifestyle Shopping Center
The following section summarizes the results of the nexus and financial feasibility analysis for a hypothetical lifestyle shopping center modelled loosely on the Bijou Marketplace project.

Commercial Nexus Analysis
Table 1 shows the assumed distribution of the newly built retail space by use type, including 25,000 square foot grocery store anchor space, as well as 6,000 square feet of fast casual restaurant space, 4,250 square feet of appliance and electronics store space, etc. The table also reports the assumed employment density associated with each use type and the total estimated direct employment associated with the newly built shopping center.

Table 1: Lifestyle Shopping Center Development Prototype Note:
(a) Based on the Bijous Market Place, assuming the center is 100 percent leased.

Sources: City of South Lake Tahoe; BAE, 2023.

Table 2 reports the distribution of direct employment by North American Industry Classification System (NAICS) industry sector and assumed income level. The distribution of jobs by industry sector and income level is based on analysis of data from the 2016-2020 Public Use Microdata Sample (PUMS) published by the U.S. Census Bureau (Census) and reflects household incomes associated with persons employed in each industry sector within eastern El Dorado County. BAE also used the PUMS data to estimate the average number of workers per household by income level, which is used to convert from jobs to workforce households.

The table then divides the total number of new workforce households associated with direct employment at the newly developed shopping center by 1,000 to identify an impact coefficient reflecting the number of new workforce households per 1,000 square feet of new retail space.

Table 3 calculates the commercial linkage fee that would reflect an economic value equivalent to providing workforce housing equal to the direct employment associated with the project.

This is done by multiplying the impact coefficients identified in Table 2 by the net and total financing gap associated with providing workforce housing at each income level, excluding Tenant Type
Square
Feet
Square
Feet per
Employee Employees
Grocery 25,000 200 125
Restaurant 6,000 125 48
Personal Services 1,750 500 4
Appliances/Electronics 4,250 500 9
Bank 3,000 500 6
Specialty Retail 3,000 500 6
Total 43,000 198
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3 high-income households who are presumed to be able to afford market rate housing. Based on this approach, BAE estimates that the commercial linkage fee that would provide revenue adequate to provide housing to meet direct workforce housing needs would equal $434 per square foot if based on the net financing gap or $1,245 per square foot if based on the total cost of providing housing. These figures reflect the high cost of housing in South Lake Tahoe.

Table 2: Direct Jobs and Workforce Households by Industry and Income-Level Notes:
(a) Based on 2020 Income Limits in order to match PUMS data vintage. (b) Direct job estimates are based on the assumed mix of tenants in the hypothetical center. (c) Average number of workers per worker household by income category calculated based on the PUMS data.

Sources: American Community Survey, 2016-2020 Public User Microdata Sample; HCD; HUD; BAE, 2023.

Table 3: Equivalent Commercial Linkage Fee
Source: BAE, 2023.

Financial Feasibility Analysis
The following section summarizes key assumptions and findings from financial feasibility testing to assess the ability of higher-end commercial development to absorb imposition of commercial linkage fee requirement. Prior analysis found that a smaller retail pad positioned towards the top of the market could likely support a linkage fee up to $90 per square foot.

Estimated Jobs by Percent of AMI (a)
NAICS
Code Industry
Total
Jobs (b)
Extremely
Low
(30% AMI)
Very
Low
(50%
AMI)
Low
(80%
AMI)
Moderate
(120%
AMI)
MF
Achievable
(125%
AMI)
SF
Achievable
(180% AMI)
Higher
Income
(>180%
AMI)
Private Sector
44-45 Retail Trade Except Supermarkets 15 0.6 0.9 2.4 3.8 0.0 2.4 4.9 44511 Supermarkets and Other Grocery
(except Convenience) Stores
125 5.9 8.3 12.8 31.7 - 22.0 44.3
52-53 Finance, Insurance, & Real Estate 6 0.2 0.2 0.3 1.2 0.1 1.2 2.8 722Z Restaurants and Other Food Services
48 1.5 6.7 6.1 10.8 1.0 4.8 17.0
81 Other Services Except Public Admin 4 0.3 0.2 1.0 0.9 0.1 0.5 0.9 Total Jobs 198 8.6 16.3 22.5 48.5 1.2 30.9 70.0
Workers per Households (c) 1.7 1.1 1.3 1.5 1.7 1.8 1.8 1.9 Number of Households 118 8.0 12.8 15.1 27.9 0.7 17.2 36.4 Per 1,000 Sq. Ft. 2.7 0.2 0.3 0.4 0.6 0.0 0.4 0.8
New Workforce Estimated Cost Equiv. Linkage Fee
Housing Demand Per Per Workforce Unit (b) Per Market Rate Unit (c) Household Income Level 1,000 Sq. Ft. (a) Net Gap Total Cost Net Gap Total Cost Extremely Low (30% AMI) 0.19 $551,912 $825,227 $102,303 $152,964 Very Low (50% AMI) 0.30 $489,556 $825,227 $145,474 $245,221 Low (80% AMI) 0.35 $395,346 $825,227 $139,173 $290,503
Moderate (120% AMI) 0.65 $58,805 $450,000 $38,213 $292,424 MF Achievable (125% AMI) 0.02 $41,693 $450,000 $658 $7,101 SF Achievable (180% AMI) 0.40 $20,200 $642,500 $8,061 $256,386 Total 1.90 $433,881 $1,244,600
Per Sq. Ft. (d) $434 $1,245
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4 However, market conditions have changed somewhat since that analysis was originally conducted, with interest rates increasing significantly and economic uncertainty putting upward pressure on market capitalization rates, resulting in reduced development feasibility.

Development Cost and Revenue Assumptions
The cost and revenue assumptions used for the following financial feasibility analysis are based on those developed for use in the Analysis of Local Funding Source(s) for Housing Initiatives report. Adjustments were made to account for changes to the development prototype, market rents, vacancy rate, and investor return expectations.

Development Prototype
The original retail prototype used for the prior analysis included one 12,000 square foot building on 1.6 acres, with 100 surface parking spaces. The revised retail prototype includes 43,000 square feet of retail space, including a 25,000 square foot grocery store, 6,000 square feet of fast casual dining, and 12,000 square feet of ancillary retail space, on 6.3 acres, with 300 parking spaces.

Market Rate Rents
The prior analysis assumed market rate rents of $4.15 per square foot. Due to the more diverse tenant mix associated with the revised prototype, the current analysis assumes market rate rents of $3.75 per square foot for the grocery store anchor, $4.15 per square foot for ancillary retail uses, and $5.00 per square foot for the upscale fast casual restaurant uses.

Vacancy Rate
The prior analysis assumed a 10 percent vacancy rate, recognizing that at that time the nearest comparable project in South Lake Tahoe was struggling to fill its last vacancies.

Evaluation of the current state of the Bijou Marketplace indicates that the project is fully leased. Therefore, this analysis uses an assumed five percent vacancy rate in order to reflect the impact of normal turnover on financial feasibility.

Investor Return Expectations
When the Bijou Marketplace was built in 2019, the project achieved a market capitalization, or CAP, rate of 4.3 percent.1 Evaluation of current listings for strip commercial properties in South Lake Tahoe indicate that CAP rates can vary widely, from as low as two percent, to as high as seven percent. Conversations with local commercial real estate brokers indicate that the likely CAP rate that investors may reasonably expect when pricing a project similar to the Bijou Marketplace within the current market may equal closer to 5.5 or 6.0 percent.
1 A market capitalization, or CAP, rate is equal to net operating income (NOI) divided by project cost or value. The lower the CAP rate, the higher the estimated project value, and vis-a-versa. However, a lower CAP rate also reflects higher risk to the developer in times of economic uncertainty. 329
5 Hurdle Price of Land
The land cost associated with construction of the Bijou Marketplace in 2019 was approximately $2.8 million per acre. Evaluation of current listings for commercially zoned land indicate prices closer to $2.0 million per acre, though there are only a few listings which are not located in as prime of locations compared to Bijou Marketplace.

Estimated Financial Feasibility
Table 4 reports that a project similar to the Bijous Marketplace would be only borderline feasible within the current market. At a 6.0 percent CAP rate, the estimated residual land value associated with the project would equal approximately $335,000 million per acre, which is well below the estimated current price of commercially zoned land. At a 4.5 percent CAP rate, the residual land value would increase to just over $2.0 million per acre, which is in line with current asking prices for sub-prime commercial land in South Lake Tahoe. However, the market rate rents used in the pro forma financial model assume a premium location.

Therefore, while the prototype may be borderline feasible, it is unlikely that the project could absorb an additional commercial linkage fee burden within the current market.

Tourist-Mixed Use Condotel with Retail
The following section summarizes the results of the financial feasibility analysis for a hypothetical tourist mixed-use project modelled loosely on the Zalanta project.

Financial Feasibility Analysis
Prior analysis found that the project may likely be feasible before the addition of fees, yielding a positive residual land value of approximately $8.01 million per acre compared to prevailing land costs of $3.5 to $5.3 million for this property type. With such a high residual land value, BAE estimated that the project could support a linkage fee of up to $239 per square foot, which was equal to the maximum justifiable linkage fee under the prior analysis.

BAE recommends that the City of South Lake Tahoe continue to consider the maximum linkage fee identified in the prior analysis of $239 as the maximum justifiable fee amount for a tourist mixed-use prototype, compared to the much higher linkage fee of $434 per square foot evaluated above, due to differences in employment impacts between the two prototypes. BAE estimates that the update tourist mixed-use proforma provided in Table 5 could likely absorb a commercial linkage fee of $239 per square foot while still allowing for an adequate residual land value, which would generate an estimated $4.4 million in one-time linkage fee revenue.

Note that the retail component is likely subsidized by the condotel component, meaning that a linkage fee on the retail component will impact feasibility of the condotel. Also, the City should consider that imposition of a commercial linkage fee may provide an incentive to limit the amount of ground floor retail that some developers incorporate into new proposed projects. 330
6 Table 4: Pro Forma Financial Feasibility Analysis, Lifestyle Shopping Center, South Lake Tahoe Source: BAE, 2023.

Development Program Assumptions Cost and Income Assumptions Development Cost Analysis Residual Land Value Analysis Lot Size (acres/sf) 6.3 274,428 Construction Fees and Exactions Commercial Total Building Area (sf) 43,000 Site Preparation Costs (per site sf) $25 Linkage Fees $3,870,000 Gross Scheduled Comm'l Rents $2,082,600 Retail Hard Costs $150 Land Use Commodities Cost $4,573,570 Less Vacancy ($104,130) Building Restaurant Hard Costs $175 Less Operating Expenses ($624,780) Grocery Store (sf) 25,000 Soft Cost, (% of Hard Costs) 20% Construction Costs Plus CAM Reimbursables $593,541 Food and Beverage 6,000 Site Prep Costs $6,860,700 Net Operating Income (NOI) $1,947,231 Other Retail 12,000 Operations
Circulation Factor (1) 0% Average Rental Rate Grocery (per sf NNN $3.75 Retail Hard Costs $5,550,000 Total Project Value $32,453,850 Comm'l Gross Area (sf) 43,000 Average Rental Rate F+B (per sf NNN) $5.00 Restaurant Hard Costs $1,050,000 Residual Land Value $2,111,567 Average Rental Rate Retail (per sf NNN) $4.15 Planning and Building Permits $703,480 Residual Land Value/Acre $335,169 Parking Operating Costs (% of Gross) 30.0% Soft Costs $2,692,140 # Total Vacancy Rate 5% Subtotal Construction Cos $16,856,320 Parking Configuration Stalls Parking sf
Surface Parking (Residential) 0 0 Financing Financing Costs Surface Parking (Commercial) 300 112,500 Loan to Cost Ratio 65% Interest on Construction Loan $920,355 Total Required Parking 300 112,500 Initial Construction Loan Fee (points) 1.5% Points on Construction Loan $164,349 Interest Rate 7.00% Subtotal Financing Costs $1,084,704 Average sf per space 375 Period of Initial Loan (Months) 24 Draw dow n Factor 60% Developer Profit (15%) $3,957,689 Total Hard + Soft Costs + Land $16,856,320
Total Loan Amount $10,956,608 Total Project Costs $30,342,283 Cap Rate 6.0%
331
7 Table 5: Pro Forma Financial Feasibility Analysis, High-End Condominium/Tourist Mixed-Use Development Program Assumptions Cost and Income Assumptions Development Cost Analysis Feasibility Analysis Lot Size (acres/sf) 1.5 65,340 Construction Fees and Exactions Total Revenues Total Building Area (sf) 136,750 Site Preparation Costs (per site sf) (d) $20 Residential Linkage Fee $0 Hotel Revenues Hotel Hard Costs (per key) $330 Land Use Commodities Cost $4,033,350 Room Revenues $4,415,040 # of Avg. Total Condo Hard Costs (per sf) $375 Total Fees and Exactions $4,033,350 Food and Beverage Revenues $2,034,403 Hotel Keys sf sf. Restaurant Hard Costs (per sf) $175 Other Operating Department Revenues $250,334 Hotel Room Characteristics 72 350 25,200 Conference Space Hard Costs (per sf) $150 Construction Costs Miscellaneous Income $263,199 Parking Podium Hard Costs (per space) $50,000 Site Prep Costs $1,306,800 Subtotal Hotel Revenues $6,897,285 % sf Soft Cost, (% of Hard Costs) 20% Hotel Hard Costs $11,642,400 Circulation 25% 6,300 Condo Hard Costs $31,151,250 Condo Revenues Walls and Shafts 15% 3,780 Revenues Restaurant Hard Costs $0 Room Revenues $3,303,300 Hotel Gross Area 35,280 Hotel Revenues Conference Space Hard Costs $0 Food Revenues $1,681,256 Average Daily Room Rate (per night) $240 Retail Hard Costs $2,400,000 Other Operating Department Revenues $263,920 Hotel Operations Room Revenues (% Total Hotel Rev.) 64.0% Parking Podium Hard Costs $6,000,000 Miscellaneous Income $208,227 Days Open per Year 365 Food and Beverage Revenues (% of Total Hotel Rev.) 29.5% Permit and Impact Fees $2,006,242 Subtotal Condo Revenues $5,456,703 Available Room Nights 26,280 Other Operating Department Revenue (% of Total Hotel Rev.) 3.6% Soft Costs $10,500,090 Retail Revenues $66,400 Average Annual Occupancy 70.0% Miscellaneous Income (% of Total Hotel Rev.) 2.9% Subtotal Construction Costs $65,006,782 Total Revenues $12,420,389 Occupied Room Nights 18,396
Condo Revenues (e) Construction Financing Costs Expenses Condo # of Avg. Sale Price (per sf) $625 Interest on Construction Loan $3,549,370 Hotel Expenses Condo Unit Types Units sf Res. sf Average Daily Room Rate (per night) $350 Points on Construction Loan $845,088 Room Expenses ($1,138,968) 1-Bed 23 800 18,400 Room Revenues (% of Total Condo Rev.) 60.5% Subtotal Const. Financing Costs $4,394,458 Food Expenses ($1,400,821) 2-Bed 33 1,000 33,000 Food Revenues (% of Total Condo Rev.) 30.8% Developer Profit (15% Costs) $11,015,188 Other Operated Department Expenses ($162,264) 3-Bed 10 1,250 12,500 Other Operating Department Revenue (% of Total Condo Rev.) 4.8% Total Project Costs $84,449,778 Undistributed Operating Expenses ($1,682,806) Total 66 63,900 Miscellaneous Income (% of Total Condo Rev.) 3.8% Less Condo Sales ($39,937,500) Management Fee ($200,835) Plus Marketing Costs $1,198,125 Replacement Reserves ($132,478) % sf Expenses Insurance ($69,079)
Circulation 20% 12,780 Hotel Expenses Project Costs Net of Sales Revenue $45,710,403 Real Estate Taxes ($502,814) Walls and Shafts 10% 6,390 Room Expenses (% of Room Revenues) 25.8% Condo Expenses Condo Gross Area 83,070 Food Costs (% of Food Revenues) 68.9% Room Expenses ($495,495) Other Operating Department Expenses (% or OODR) 64.8% Food Expenses ($1,157,656) Condo Operations Undistributed Operating Expenses (% of Total Rev.)(g) 24.4% Ow ners' Revenues ($1,403,903) Average Annual Occupancy 65.0% Management Fee (% of Total Rev.) 2.9% Retail Expenses ($23,240) Days Available per Year (Ow ner) 90 Replacement Reserves (FF&E) (% of Total Hotel Rev.) 1.9% Total Expenses ($8,370,359) Available Room Nights Per Year (Ow ners) 5,940 Insurance (% Total Hotel Rev.) 1.0% Occupied Room Nights Per Year (Ow ner) 3,861 Real Estate Taxes (% of Project Costs Net Sales Rev.) 1.1% Net Operating Income (NOI) $4,050,030 Days Available Per Year (Guest) (b) 275 Retail Expenses 35.0% % of Condo Units in Hotel Pool 80% Project Value $57,857,565 Available Room Nights Per Year (Guests) 14,520 Condo Expenses Residual Land Value $12,147,161 Occupied Room Night Per Year (Guests) 9,438 Sales Marketing (% of Room Revenues) 3.0% Land Value/Acre $8,098,107 Room Expenses (% of Room Revenues) 15.0%
Hotel Amenities Food Costs (% of Food Revenues) 68.9%
Conference/Event Space (sf) 0 Ow ner's Revenue Share (% of Total Revenues) 50.0% Restaurant (sf) 0
Financing
Commercial Space Loan to Cost Ratio 65%
Gross Retail 18,400 Initial Construction Loan Fee (points) 2.00% Interest Rate 7.00%
Parking # Avg Total Period of Initial Loan (Months) 24
Parking Configuration Stalls sf Parking sf Draw dow n Factor 60% Surface Parking 0 375 0 Total Hard + Soft Costs + Land $65,006,782 Podium Parking 120 375 45,000 Total Loan Amount $42,254,408 Total 120 45,000
332

bae urban economic
Analysis of Local Funding Source(s) for Housing Initiatives Prepared for the City of South Lake Tahoe
January 13, 2023
333
bae urban economics
San Francisco Sacramento Los Angeles Washington DC New York City 2560 9th St., Suite 211 803 2nd St., Suite A 448 South Hill St., Suite 701 1140 3rd St. NE, 2nd Floor 234 5th Ave.

Berkeley, CA 94710 Davis, CA 95616 Los Angeles, CA 90013 Washington, DC 20002 New York, NY 10001 510.547.9380 530.750.2195 213.471.2666 202.588.8945 212.683.4486 www.bae1.com
January 13, 2023
Hilary Roverud, Development Services Director
Zachary Thomas, Housing Manager
Jessica Wackenhut, Associate Housing Planner
City of South Lake Tahoe
1052 Tata Lane
South Lake Tahoe, CA 96150
Dear Director Roverud:

We are pleased to provide the attached Analysis of Local Funding Source(s) for Housing Initiatives, prepared on behalf of the City of South Lake Tahoe. It has been a pleasure working with you and your staff on this important initiative.

We look forward continue working with the City of South Lake Tahoe to further understand the extent to which the funding sources analyzed here may assist the community in meeting its urgent community and housing needs.

If you have any questions or concerns, please do not hesitate to contact me by email at [email protected] or by phone at (530) 574-9285.

Sincerely,
Aaron Nousaine
Principal
BAE Urban Economics
13170 Stockholm Way
Truckee, CA 96161
334
Table of Contents
EXECUTIVE SUMMARY ................................................................................................................ i INTRODUCTION .......................................................................................................................... 1 Projected Revenue Requirements ..............................................................................................1 SPECIAL TAX REVENUE SOURCES ............................................................................................. 3 Transient Occupancy Tax (TOT)...................................................................................................3 Real Estate Transfer Tax..............................................................................................................6 Sales and Use Tax..................................................................................................................... 12 Real Estate Vacancy Tax........................................................................................................... 14 Alternative Business Taxes....................................................................................................... 22 DEVELOPMENT DEPENDENT REVENUE SOURCES ................................................................. 28 Inclusionary Housing In-Lieu Fee ............................................................................................. 28 Commercial Linkage Fee .......................................................................................................... 34 APPENDIX A: RESIDENTIAL NEXUS ANALYSIS ........................................................................ 39 APPENDIX B: PROFORMA FINANCIAL FEASIBILITY TESTING .................................................. 45 335
List of Tables
Table 1: Projected Annual Programmatic Funding Needs ............................................................ 2 Table 2: Residential Sales Activity, 2017 to 2022 YTD ................................................................ 8 Table 3: Non-Residential Sales Activity, 2017 to 2022 YTD......................................................... 9 Table 4: Estimated Revenue Generation from Increased Real Estate Transfer Tax, Flat Rate Per $1,000 of Value .......................................................................................................10 Table 5: Estimated Revenue Generation from Increased Real Estate Transfer Tax, Percent of Sale Value .....................................................................................................................11 Table 6: Housing Units by Vacancy Status and Tenure, 2020....................................................18 Table 7: Commercial Vacancies, City of South Lake Tahoe, December 2022 ..........................19 Table 8: Estimated Revenue Generation, Commercial Vacancy Tax..........................................21 Table 9: Establishments, Jobs, and Annual Wages by Industry Sector, South Lake Tahoe, 2021....................................................................................................................................24 Table 10: Estimated Revenue from Payroll Expense Tax, 0.1-1.0 Percent Rates.....................25 Table 11: Estimated Revenue from Employee Headcount Tax, $25-$75 Rates.......................26 Table 12: Financing Gap Analysis, Tax Credit Affordable Multifamily ........................................32 Table 13: Financing Gap Analysis, Non-Tax Credit Workforce Multifamily.................................32 Table 14: Induced Demand for Workforce housing and Equivalent Linkage Fee .....................35 List of Figures
Figure 1: Transient Occupancy Tax (TOT) Collections, FY 15-15 to FY 20-21.............................. 4 Figure 2: Total Taxable Sales, City of South Lake Tahoe 2015-2021........................................13 Figure 3: Housing Vacancy by Type, 2020 5-Year ACS ...............................................................17 336
i

EXECUTIVE SUMMARY
The City of South Lake Tahoe is considering possibilities for establishing locally controlled, dedicated, and permanent funding sources that can be used to advance new programs and projects with the intent of making a meaningful impact on the state of the housing crisis. The local housing funding study report provides an overview of seven different potential local funding sources, including revenue generation potential, procedures for establishing each funding source, and a high-level assessment of potential impacts to stakeholders.

The funding sources considered for this research include five special taxes, including increases to existing rates for transient occupancy tax (TOT), real estate transfer tax, and sales and use tax. The analysis also considers the creation of new vacant real estate taxes, including for both residential and non-residential uses, as well as alternative business tax and license fee structures, including a business payroll expense tax and an employee headcount tax. In addition, the analysis also evaluates the potential for an inclusionary housing in-lieu fee and commercial linkage fee that may be imposed on new development projects, including consideration of the impact of such fees on the financial feasibility of new development.

The 2022-2027 Housing Element of the General Plan functions as the community’s main strategic planning document for housing and outlines a variety of policies and programs that the City is committed to implementing. The cost associated with implementing the programs and actions may be covered in a variety of ways, including the use of General Fund revenues, special tax revenues, and one-time grand funding, among other approaches. According to City staff, there are seven categories of housing programs and actions that would benefit from creation of dedicated local funding sources with a total annual funding need of $3.35 million.

Exhibit A on the following pages provides a summary of key information pertaining to each of the potential funding sources evaluated as part of this research. 337
ii
Exhibit 1: Summary of Potential Funding Sources (Page 1 of 2) Source: BAE, 2022
Existing Taxes in
Funding Source Type Voter Approval? Nearby Jurisdictions Evaluated Change Revenue Generation Stakeholder Impacts Transient Occupancy General - Simple Majority; Placer County - 10% 2% Rate Increase $2.8-$3.3 million per year Overnight Visitors; Tax (TOT) Special - 2/3rds Majority South Lake Tahoe 12%-14% Accommodations Providers El Dorado County - 14%
Douglas County - 14%
Real Estate Transfer Charter Cities Only; $1.10 per $1,000 of assessed Variable Rates Residential Uses - $164,340 Buyers and sellers of real Tax General - Simple Majority; value, split betw een South Lake Up To $15 per $1,000 (at existing $0.55 rate) to $4.5 property; low er-income Special - Not Authorized Tahoe and El Dorado County of Assessed Value million (at $15 per $1,000) buyers (if not assumed by Under Prop. 13 Non-Residential Uses - $5,572 seller, as this is negotiable) (at existing $0.55 rate) to
$151,959 (at $15 per $1,000)
Sales and Use Tax General - Simple Majority; South Lake Tahoe - 8.75% 0.5% Rate Increase $2.5 Million Per Year Low er-income resident Special - 2/3rds Majority Tow n of Truckee - 8.75% households purchasing El Dorado County - 7.25% goods in South Lake Tahoe
Placer County - 7.25%
Carson City - 7.6%
Douglas County - 7.1%
Washoe County - 8.27%
Real Estate Vacancy Special - 2/3rds Majority; Residential Residential Residential Residential Tax General Tax Authority Vancouver - 3% of Ass. Value $3,000 Per Unit Held $11.4 Million Per Year Second Home Ow ners; Unsetttled Under Prop 218 Oakland - $3,000 Flat Vacant for Seasonal Short-Term Rental Ow ners/ Berkeley - $3,000 Flat on SFR or Occasional Use Managers; Other Ow ners $6,000 Flat on MFR of Seasonal Use Property
San Francisco - $2,500 to $5,000
Flat; Escallates
Commercial Commercial Commercial Commercial
Oakland - $6,000 Flat $1,000 to $10,000 per $335,000 to $3.4 Million Per Year Ow ners and Lessee's of San Francisco - $250 Per Linear 1,000 Square Feet of Commercial Property Foot of Frontage; Gross Leasable Area
Escalates
- Continued on Next Page -
338
iii
Exhibit 1: Summary of Potential Funding Sources (Page 2 of 2) Source: BAE, 2022
Existing Taxes in
Funding Source Type Voter Approval? Nearby Jurisdictions Evaluated Change Revenue Generation Stakeholder Impacts Alternative Business General - Simple Majority; San Francisco - 0.38 Percent on Pay Payroll Expense Tax Payroll Expense Tax Business Ow ners and Taxes Special - 2/3rds Majority Santa Clara - $45 per employee and 0.1 to 1.0 percent $474,808 to $4.8 million Per year Operators; Employees $15 per rental unit
Employee Headcount Tax Employee Headcount Tax
$25 to $75 Per Employee $238,125 to $714,375 Per Year
Inclusionary Housing Council l Legislative Action; Placer County - $2.45 Per Habitable Up to $59,000 Per Market Up to Betw een $1.2 and $1.5 Residential Real Estate In-Lieu Fee Voter Approval Not Required Square Foot of Market Rate Rate Unit Proposed; Million Per Year (Applied to All Developers, Buyers, and Tow n of Truckee - $134,413 Per Does Not Limit Feasibility New SFR Units); or $177,000 Occupants Affordable Unit Required per Year (Applied to 5k SF Units) Commercial Linkage Council l Legislative Action; Placer County - $2.45 Per Habitable Retail/Restaurant Retail/Restaurant Non-Residential Real Fee Voter Approval Not Required Square Foot of Market Rate Up to $239 Per Square Foot; $1.8 Million at $90 per Leasable Estate Developers, Buyers, Tow n of Truckee - $134,413 Per Only Marginally Feasible Square Foot for High-End Retail and Occupants Affordable Unit Required at up to $9.38 Projects; Up to $5.2 million for High-End Tourist Mixed-Use
When Combined w ith Hotel Fee
Hotel/Motel
Up to $99 Per Square Foot; Hotel/Motel
Only Feasible at $5.00 per Up to $5.2 Million at $44 for square foot w ith full retail Tourist Mixed-Use
linkage fee
339
1 INTRODUCTION
The availability and affordability of housing for full-time residents and workers within the greater Lake Tahoe region has been an issue of increasing urgency for many years. The recent impacts of the Coronavirus pandemic have stretched many to a breaking point, with businesses struggling to remain in business/provide adequate services under the combined weight of housing induced worker shortages, supply chain disruptions, and increasing inflation.

Recognizing these drivers, along with concern for the wellbeing of the community, the City of South Lake Tahoe is considering possibilities for establishing locally controlled, dedicated, and permanent funding sources that can be used to advance new programs and projects with the intent of making a meaningful impact on the state of the housing crisis.

The following report provides an overview of seven different potential local funding sources, including five special taxes, including increases to existing rates for transient occupancy tax (TOT), real estate transfer tax, and sales and use tax. The analysis also considers the creation of new vacant real estate taxes, including for both residential and non-residential uses, as well as alternative business tax and license fee structures, including a business payroll expense tax and an employee headcount tax. In addition to these seven special tax categories, the analysis also evaluates the potential for establishing an inclusionary housing in-lieu fee and commercial linkage fee that may be imposed on new development projects, including consideration of the impact of such fees on the financial feasibility of new development.

Please note that the revenue generation estimates provided in this report are point-in-time estimates, representing estimated revenue generation in a single given year versus over time.

They are based on specific assumptions regarding tax rates and economic conditions. As a result, the figures presented in this report should be interpreted with caution. In addition to providing estimates of potential revenue generation, this memo also outlines key considerations for establishing or increasing each funding source, such as voter approval requirements. The evaluation also identifies stakeholder groups likely to be impacted by implementation of each funding source, such as property owners or businesses.

Projected Revenue Requirements
The City of South Lake Tahoe published the draft 2022-2027 Housing Element in December 2021, which was found in compliance with applicable state law by the California Department of Housing and Community Development (HCD) in August of 2022. The Housing Element of the General Plan functions as the community’s main strategic planning document for housing and outlines a variety of policies and programs that the City is committed to implementing through 2027. The cost associated with implementing the programs and actions outlined in the Housing Element may be covered in a variety of ways, including the use of General Fund revenues, special tax revenues, and one-time grand funding, among other approaches. 340
2 According to City staff, there are seven categories of housing programs and actions that would benefit from identification of dedicated local funding sources, summarized in Table 1, below.

Table 1: Projected Annual Programmatic Funding Needs
Sources: City of South Lake Tahoe; BAE, 2022.

Annual Funding
Priority Housing Programs Requirements
New Construction Program $1,000,000
Locals Rental Incentive Program (Lease-to-Locals) $300,000 Rental/Deposit Assistance Program $200,000
Multifamily Acquisition and Rehab Program $1,000,000
Rehabilitation Loan Program $200,000
Housing Issues Hotline and Fair Housing Programs $150,000 Special Needs Housing Programs $500,000
Total, Priority Housing Programs $3,350,000
341
3 SPECIAL TAX REVENUE SOURCES
Under existing state law, local jurisdictions and special districts may levy a variety of special taxes, either for general or special purposes. The following section reviews the basic structure and procedures for establishing and changing local special tax rates and provides examples of how much revenue may be generated as a result of implementation in South Lake Tahoe.

Voter Approval of Tax Measures (Prop 13 and Prop 218)
Proposition (Prop) 218 was passed by voters in 1996, resulting in an amendment to the California Constitution that requires that new local property-related tax measures be approved by public vote.1 A general tax, which generates revenues which are available for all general governmental purposes at the discretion of the governing body, must be approved by a simple majority vote of the electorate. Under Proposition 13, a special tax, which generates revenues that are reserved for a specified purpose, must be approved by a two-thirds vote. State law also requires that votes regarding new or increased general taxes must be “…consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body.”2 These requirements apply to all of the local taxes discussed below. Additional requirements may also apply and are identified, as appropriate, in the relevant subsections.

Transient Occupancy Tax (TOT)
California Revenue and Taxation Code, section 7280, authorizes cities and counties to levy a tax on the “privilege” of occupying a room, or rooms, in a hotel, inn, tourist home or house, motel, or other lodging establishment for less than 30 days, excluding the right of an owner of a time-share or membership camping contract to occupy their respective unit or space.3 Establishing or Changing a TOT
Transient Occupancy Taxes (TOTs) are typically structured as a percentage of the gross nightly room rent collected by the lodging provider. The California Revenue and Taxation Code authorizes all general law cities to institute a TOT.4 The authority of a charter city to adopt a TOT is not preempted. While the Revenue and Taxation Code broadly defines the basic levy and exemption framework for a TOT, the specifics of the levy, any additional exemptions, and local administrative procedures are left to local government to define as part of the ordinance 1 California Legislative Analyst’s Office. (December 1996). Understanding Proposition 218. Available at:
https://lao.ca.gov/1996/120196_prop_218/understanding_prop218_1296.html 2 California Constitution, Article XIIIC, Section 2. Available at:
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=CONS&division=&title=&part=&chapter =&article=XIII%20C. 3 State of California. (August 2022). California Revenue and Taxation Code, Chapter 1, Section 7280. Available at:
http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=7280. 4 Ibid. 342
4 adoption process. The establishment, or increase, of a TOT is required to receive necessary voter approval.

Existing TOT in South Lake Tahoe
Data produced by the California State Controller and published by CaliforniaCityFinance.com indicate that TOT revenue accounts for around nine percent of total General Fund revenue among cities that impose a TOT levy within their jurisdiction.5 Within the City of South Lake Tahoe, TOT revenues represent the single largest revenue source for the City, accounting for more than 35 percent of the total General Fund budget, followed by property tax and sales and use tax at 19 and 13 percent, respectively.6
Figure 1: Transient Occupancy Tax (TOT) Collections, FY 15-15 to FY 20-21 (a) Note:
(a) Excludes audited collections and supplemental two percent Measure P collections.

Sources: City of South Lake Tahoe, Transient Occupancy Tax Report, Revenue Collected in January 2022 for the Month of December 2021; BAE, 2022.

As of the 2021-2022 fiscal year, the City budget assumed $16.97 million in total TOT revenue.7 The City budget narrative also acknowledges that TOT revenue in a visitor-oriented economy like that of South Lake Tahoe can be quite volatile. For example, the City received $18.1 million in TOT revenue in the 2018-2019 fiscal year, which dropped to $14.4 million during the 2019-2020 fiscal year due to onset of the COVID-19 pandemic, as well as the ongoing impacts of Measure T,8 which phased out vacation home rental (VHR) permits in residential areas and multifamily properties over three-years ending in December 2021. As of 5 California State Controller. (2022). Transient Occupancy Tax Revenues as a Percentage of General Revenues – California Cities. Sacramento, CA: CaliforniaCityFinance.com Available at:
http://californiacityfinance.com/TOT19p.xlsx 6 Finance Department. (August 17, 2021). 2022 Annual Budget: Fiscal Year 2021-2022. South Lake Tahoe, CA:

City of South Lake Tahoe. Available at: https://cityofslt.us/595/City-Budget 7 Ibid. 8 For more information on Measure T, please visit the City’s website at: cityofslt.us/1157/Measure-T $12.5
$15.5
$16.6
$17.4
$18.1
$14.4
$16.9
$10
$11
$12
$13
$14
$15
$16
$17
$18
$19
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Millions
Fiscal Year
343
5 fiscal year 2022, TOT revenue has not yet recovered to pre-pandemic levels.9 Absent the impacts of the pandemic and restrictions on VHRs, however, TOT revenues accruing to the City of South Lake Tahoe have increased steadily since at least the 2014-2015 fiscal year, as illustrated in Figure 1.

The City of South Lake Tahoe has two different TOT rates. There is a base rate of 10 percent that applies throughout the city, with a rate of 12 percent applying to specific properties in the tourist core associated with past redevelopment activity.10 Measure P, passed in November 2016, added an additional two percent, with revenue set aside for a new recreation complex.11 This brings the combined TOT rate to 12 citywide and 14 percent in redevelopment areas.

Comparison with Nearby Jurisdictions
According to the California State Controller, TOT rates among jurisdictions in California in 2020 ranged from a minimum of only four percent to a maximum of 15.5 percent and an average of

10.2 percent.12 The City of South Lake Tahoe falls towards the upper end of this range with 12 percent (citywide) to 14 percent (redevelopment only). TOT rates in surrounding Lake Tahoe Basin jurisdictions, including those in both California and Nevada, range from a low of 10 percent in Placer County to 14 percent in parts of South Lake Tahoe and in Douglas County. As of November 2022, voters in El Dorado County approved an increase in the TOT rate from 10 percent to 14 percent. Therefore a two percent increase of the general TOT rate in the City of South Lake Tahoe would bring the jurisdiction in line with the maximum for adjoining jurisdictions.

Estimated Revenue Potential
Evaluation of historical TOT collections data indicate that the City’s base 10 percent TOT rate (excluding the Measure P enhancement) generated an average of $16.7 million in revenue per year over the last five fiscal years (i.e., 2016-2017 to 2020-2021).13 14 This translates to a 9 Finance Department. (2022). Transient Occupancy Tax Report: Revenue Collected in June 2022 for the Month of May 2022. South Lake Tahoe, CA: City of South Lake Tahoe. Available at: https://www.cityofslt.us/452/TransientOccupancyTax#:~:text=The%20Transient%20Occupancy%20Tax%20(TOT,12%25%20at%20specific%20redevelopment%20pr operties. 10 City of South Lake Tahoe. (2022). Transient Occupancy Tax and SLT Tourism Improvement District. Available at:
https://www.cityofslt.us/452/Transient-OccupancyTax#:~:text=The%20Transient%20Occupancy%20Tax%20(TOT,12%25%20at%20specific%20redevelopment%20pr operties. 11 City of South Lake Tahoe. (2022). Measure P Report. Available at: https://cityofslt.us/972/Measure-P-Report 12 California City Finance. (November 2020). Transient Occupancy Tax by City. Available at:
http://californiacityfinance.com/TOT19p.xlsx
13 City of South Lake Tahoe. (April 2022). Transient Occupancy Tax Report. Available at:
https://cityofslt.us/DocumentCenter/View/17109/TOT-Web-Pub-Apr-2022-PDF?bidId=. 14 This includes the most recent market peak in the 2018-2019 fiscal year, when the City collected $18.2 million in base 10 percent TOT revenue, as well as the most recent trough in the market during the 2019-2020 fiscal year, when the City collected $14.4 million in base 10 percent TOT revenue. 344
6 five-year average of roughly $167 million in gross revenue to lodging providers. Assuming that the City were to adopt an additional two percent TOT add-on to the general TOT rate, in addition to Measure P, the City could expect to collect approximately $2.8 to $3.3 million in annual TOT revenues that could be dedicated to affordable and workforce housing programs.

If the increase were limited to areas outside of the tourist core only (i.e., increasing the Tot rate to 14 percent citywide), the City could expect to receive approximately $1.8 to $2.2 million in additional TOT revenue per year.

Assessment of Stakeholder Impact
The burden associated with an increase in the effective TOT rate lays primarily with persons visiting from outside the area who are in need of short-term overnight accommodations. Local residents and employees will not be directly impacted, unless they need temporary short-term overnight accommodations in a local hotel, motel, or VHR. Local lodging businesses may be impacted to the extent that an increase in the local TOT rate increases the combined cost of lodging in South Lake Tahoe. To the extent that consumers set the price for lodging based on their willingness to pay (i.e., the intersection of pricing and vacancy), lodging providers may, in some cases, need to reduce their nightly rates to compensate; however, in instances where vacancy is low, the cost imposed by the increased TOT rate would be borne by the consumer.

Also, to the extent that the cost of overnight accommodations impacts visitors’ willingness to select South Lake Tahoe as a tourism destination, the increased TOT rate may also impact other businesses and employees that are reliant upon overnight visitor spending.

Real Estate Transfer Tax
The California Documentary Transfer Tax Act of 1967 authorized jurisdictions to impose an excise tax on the privilege of transferring ownership or leasehold rights to real property,15 which is also commonly known as a real estate or property transfer tax or a documentary transfer tax. The maximum real estate transfer tax that may be levied under General Law is $1.10 per $1,000 of assessed value.16 This is typically levied at the county level, though general law cities are entitled to share evenly in the proceeds resulting from transfers of real property located within their jurisdiction. Charter cities in California have the ability to impose additional real estate transfer or conveyance taxes without special authorizing legislation.

Changing the Real Estate Transfer Tax
To impose a supplemental real estate transfer tax, an incorporated jurisdiction must be, or become, a charter city. To become a charter city, the governing board of a jurisdiction, or an elected charter commission, must draft and adopt a charter, which must then be ratified by a 15 State of California. (August 2022). California Revenue and Taxation Code, Chapter 2, Section11911-11930.

Available at: https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=RTC&division=

2.&title=&part=6.7.&chapter=2.&article=. 16 The California Revenue and Taxation Code identifies the maximum real estate transfer tax as being equal to $0.55 per $500 of assessed value, which is equal to $1.10 per $1,000 of assessed value. The higher denominator is commonly used, presumably, to simplify calculation of tax liabilities. 345
7 majority vote of the electorate.17 A charter may be wide ranging in its scope, availing upon all of the rights afforded to cities to manage ‘municipal affairs,’18 or may be more limited.19 While charter cities may enjoy broader taxation powers compared to general law cities, they are still subject to Proposition 218, Article XIIIC of the California Constitution, and any limitations imposed by their charter. This means that a new or increased tax must receive voter approval.

Charter City Real Estate Transfer Taxes
According to data published by CaliforniaCityFinance.com, 22 of the 125 charter cities in California imposed supplemental real estate transfer taxes as of March 2022.20 The method for calculating the tax varies by jurisdiction. A flat tax per $1,000 of assessed value is most common, with tax rates ranging from $1.10 to $15.00 per $1,000 of value. Some jurisdictions alternatively structure the transfer tax on an ad valorem basis (i.e., as a percent of assessed or market value), with tax rates ranging from 0.45 to 4.45 percent. Some jurisdictions also apply different tax rates based on the assessed value of the property. For example, Oakland charges a one percent property transfer tax on properties valued at less than $300,000, which increases progressively up to 2.5 percent for properties valued at more than five million dollars.

Existing Transfer Tax in South Lake Tahoe
Based on data presented in Table 2, there were a total of 394 residential sales in South Lake Tahoe between January and December 15th of 2022, with an average sale price of just under $792,000. This overall sales volume is consistent with average annual sales documented in 2017, 2018, and 2019, but is notably below the annual sales volumes during the pandemic period, which included 625 sales in 2020 and 513 sales in 2021 (i.e., well above the historical average). The average sales price in 2022, however, remained well above the market average for the pre-pandemic period, and is more in line with the 2021 average.

Home sales in South Lake Tahoe in 2022 grossed approximately $312 million in sales revenue. At a rate of $0.55 per $1,000 of value, the existing real estate transfer tax 17 State of California. (2022). California Constitution, Article XI, Section 1-15. Available at: https://leginfo. legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CONS&sectionNum=SEC.%203.&article=XI 18 The home rule provision of the California Constitution authorizes a charter city to exercise plenary authority over municipal affairs over which a city has sovereignty, free from any constraint imposed by general law and subject only to constitutional limitations. Whether a given activity is a municipal affair or a statewide concern is not clearly defined in the law and is therefore a legal determination that is settled by the courts on a case-by-case basis. 19 For example, the City of San Bruno is pursing placement of a new city charter on the November 2022 ballot. The charter is specifically intended to allow the City the right to impose a real estate transfer tax on residential properties with five units or more, and on all non-residential property (e.g., commercial, industrial, etc.), at a rate of one percent of assessed value. The current draft charter was narrowly written using the following language:
“…Limitation on Powers. (a) The City shall exercise only the rights, powers and authority granted to a city under the general laws of the State of California, unless otherwise provided in this Charter…” 20 CaliforniaCityFinance.com. (July 2020). Property Transfer Tax / Documentary Transfer Tax Rates. Available at:
http://californiacityfinance.com/PropTransfTaxRates.pdf 346
8 applicable in the City of South Lake Tahoe likely generated approximately $171,600 in gross tax revenue to the City.

Table 2: Residential Sales Activity, 2017 to 2022 YTD
Note:
(a) As of December 15, 2022.

Sources: ListSource; BAE, 2022.

Non-residential sales volumes in the South Lake Tahoe have been historically slow, with relatively low valuations, though there was a considerable uptick in sales volumes and pricing following onset of the pandemic and the VHR moratorium. As shown in Table 3, the period from 2017 to 2019 averaged 13 sales per year, which increased to 33 in 2020 and 43 in 2021. There were a total of 25 transactions between January 2st and December 15th of 2022. The average value per transaction also increased significantly over the past few years from only $226,233 in 2019 to $1.05 million as of December 2022. BAE estimates that as of 2019, non-residential sales generated approximately $1,866 in transfer taxes to the City. As of 2021, that value increased to an estimated $9,758. BAE estimates that non-residential sales in 2022 may gross the City upwards of $14,400 in calendar year 2022. 2022
All Residential Units 2017 2018 2019 2020 2021 YTD (a) All Sales Number of Sales 348 341 389 625 513 394 2,610
Median Sale Price $385,000 $420,000 $435,000 $500,000 $602,000 $642,500 $500,000 Ave. Sale price $462,097 $514,954 $557,259 $624,223 $765,300 $791,868 $631,386 Ave. Size (sq. ft.) 1,494 1,495 1,552 1,626 1,561 1,548 1,556 Ave. Sale Price per sq.ft. $311 $345 $365 $384 $493 $521 $408 Maximum Sale Price $2,337,500 $2,450,000 $5,300,000 $5,200,000 $5,550,000 $5,300,000 $5,550,000 Minimum Sale Price $71,000 $100,500 $46,000 $3,500 $50,000 $75,000 $3,500 2022
Single Family Homes 2017 2018 2019 2020 2021 YTD (a) All Sales Number of Sales 333 322 368 585 483 367 2,458
Median Sale Price $389,000 $425,000 $440,000 $505,000 $613,000 $650,000 $505,000 Ave. Sale price $462,217 $525,288 $563,064 $632,835 $783,050 $809,834 $641,131 Ave. Size (sq. ft.) 1,505 1,512 1,577 1,659 1,585 1,579 1,580 Ave. Sale Price per sq.ft. $310 $349 $362 $381 $496 $522 $408 Maximum Sale Price $2,200,000 $2,450,000 $5,300,000 $5,200,000 $5,550,000 $5,300,000 $5,550,000 Minimum Sale Price $71,000 $100,500 $46,000 $3,500 $75,000 $75,000 $3,500 2022
Condominiums 2017 2018 2019 2020 2021 YTD (a) All Sales Number of Sales 15 19 21 40 30 27 152
Median Sale Price $295,000 $265,000 $346,500 $354,250 $417,500 $480,000 $363,750 Ave. Sale price $459,433 $339,816 $455,524 $498,275 $479,533 $547,667 $473,803 Ave. Size (sq. ft.) 1,236 1,203 1,106 1,144 1,171 1,118 1,156 Ave. Sale Price per sq.ft. $328 $289 $421 $417 $445 $505 $414 Maximum Sale Price $2,337,500 $799,000 $1,250,000 $2,700,000 $1,180,000 $1,349,000 $2,700,000 Minimum Sale Price $180,000 $168,000 $97,500 $165,000 $50,000 $232,500 $50,000 347
9 Table 3: Non-Residential Sales Activity, 2017 to 2022 YTD Note:
(a) As of December 15, 2022.

Sources: ListSource; BAE, 2022.

Estimated Revenue Potential
Revenue generation associated with imposition of a local real estate transfer tax above and beyond that authorized under State law for general law cities is highly dependent on three key factors. These include the applicable tax rate(s), as well as the number and pricing of sales or transfers that occur within the jurisdiction, which can vary significantly from year to year. Table 4 and Table 5 report the estimated revenue that may be generated through imposition of an increased local real estate transfer tax, under specific sales volume and pricing assumptions, which is structured either as a flat rate per $1,000 of value or as a percent of the sale value.

For residential uses, the analysis assumes an average of 390 sales per year, which is consistent with the average sales volume in 2019 and 2022, both pre- and post-pandemic.

This value is used to reflect a more ‘typical’ sales volume after accounting for the significant increase in activity experienced since the onset of the pandemic in 2020. The assumed average sales price is based on the average sale price for sales that occurred between January 1st to December 15th of 2022 to reflect the recent state of the market.21 Based on these assumptions, the City may expect to gross around $171,600 in a typical year as a result of imposing the existing $0.55 transfer tax on residential sales. Table 4 then illustrates the potential revenue that could be generated through an increase to the real estate transfer tax in increments up to $15 per $1,000 of value, which is equal to the highest local real estate transfer tax currently in place in California. The table also identifies the estimated cost to the buyer of residential real estate on a per sale basis. Table 5 shows similar data, however the tax rate is expressed as a percent of the sale value.
21 BAE anticipates that while sales volumes have already begun to slow due to the impacts of return to work and increasing interest rates, sales prices appear more resistant to rapid adjustment; though that does not preclude the possibility of a downward adjustment in the future due to changing macroeconomic conditions. 2022
All Non-Residential 2017 2018 2019 2020 2021 YTD (a) All Sales Number of Sales 6 18 15 33 43 25 140
Median Sale Price $6,250 $115,000 $85,000 $160,000 $209,000 $1,025,000 $204,500 Ave. Sale price $305,000 $268,289 $226,233 $470,335 $412,581 $1,050,140 $496,916 Ave. Land Size (sq. ft.) 35,864 16,988 34,064 10,336 11,143 12,424 15,448 Ave. Sale Price per sq. ft. $12 $19 $27 $113 $77 $355 $119 Ave. Land Size (acres) 0.82 0.39 0.78 0.24 0.26 0.29 0.35 Ave. Sale Price per acre $501,156 $830,597 $1,159,517 $4,925,097 $3,334,407 $15,463,529 $5,198,903 Maximum Sale Price $1,750,000 $1,200,000 $890,000 $3,550,000 $2,275,000 $2,200,000 $3,550,000 Minimum Sale Price $3,500 $500 $3,000 $3,500 $13,000 $130,000 $500 348
10 For non-residential uses, the analysis is based on the average number of sales per year from 2017 to December 2022, as well as the weighted average sale price per transaction. Note that this approach places greater weight on recent transactions compared to the assumptions used for the residential transfer tax revenue estimates. This is due to increased activity in the non-residential market resulting from imposition of the VHR moratorium and renewed investment activity in commercial real estate in the tourist core area.

Table 4: Estimated Revenue Generation from Increased Real Estate Transfer Tax, Flat Rate Per $1,000 of Value
Notes:
(a) Based on the average number of sales per year in 2019 and 2022, both pre- and post-pandemic. This equals a value that is higher than the historical average between 2017 and 2019, but below the pandemic induced highs in 2020 and 2021. (b) Based on the average price per transaction from January to December of 2022. (c) Based on the average sales per year from 2017 to December 2022. (d) Based on the weighted average price per transaction 2017 to December 2022. (e) Based on the difference between estimated gross receipts and gross receipts under the existing transfer tax.

Sources: ListSource; BAE, 2022.

RESIDENTIAL NON-RESIDENTIAL
Ave. Number of Sales 360 (a) 23 (c)
Ave. Sale Price $830,000 (b) $440,460 (d)
Gross Sales Value $298,800,000 $10,130,584
Transfer Tax Rate Revenue Revenue
(Per $1,000 of Value) Gross Add-On (e) Gross Add-On (e) $0.55 (Existing) $164,340 $0 $5,572 $0
$1.00 $298,800 $134,460 $10,131 $4,559
$2.00 $597,600 $433,260 $20,261 $14,689
$3.00 $896,400 $732,060 $30,392 $24,820
$4.00 $1,195,200 $1,030,860 $40,522 $34,951
$5.00 $1,494,000 $1,329,660 $50,653 $45,081
$10.00 $2,988,000 $2,823,660 $101,306 $95,734
$15.00 $4,482,000 $4,317,660 $151,959 $146,387
Transfer Tax Revenue Revenue
(Ave. Per Sale) Gross Add-On (e) Gross Add-On (e)
$0.55 (Existing) $457 $0 $242 $0
$1.00 $830 $374 $440 $198
$2.00 $1,660 $1,204 $881 $639
$3.00 $2,490 $2,034 $1,321 $1,079
$4.00 $3,320 $2,864 $1,762 $1,520
$5.00 $4,150 $3,694 $2,202 $1,960
$10.00 $8,300 $7,844 $4,405 $4,162
$15.00 $12,450 $11,994 $6,607 $6,365
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11 Table 5: Estimated Revenue Generation from Increased Real Estate Transfer Tax, Percent of Sale Value
Notes:
(a) Based on the average number of sales per year from 2017 to 2021. (b) Based on the average price per transaction from January 1st to December 15th of 2022. (c) Based on the average sales per year from 2017 to December 2022. (d) Based on the weighted average price per transaction 2017 to December 2022. (e) Based on the difference between estimated gross receipts and gross receipts under the existing transfer tax.

Sources: ListSource; BAE, 2022.

Assessment of Stakeholder Impact
The burden associated with an increase in the local real estate transfer tax rate would fall to the buyers and sellers of real property. It is customary in most markets, though not all, for the seller to pay the county portion of the real estate transfer tax and the buyer and seller to split the city portion. However, this division is negotiable, and in tight housing markets that favor sellers, such as the recent market in South Lake Tahoe, it is not uncommon for the buyer to pay most of the required taxes and fees. To the extent that the buyer must pay a portion, if not all, of the tax, a significant increase in the local real estate transfer tax rate may function to make home ownership less affordable (i.e., higher up-front cost) for existing and new residents. However, this risk may be mitigated to some extent through the use of a tiered rate structure, like that in use in communities like Oakland, Richmond, and San Francisco.

RESIDENTIAL NON-RESIDENTIAL
Ave. Number of Sales 390 (a) 23 (c)
Ave. Sale Price $800,000 (b) $500,000 (d)
Gross Sales Value $312,000,000 $11,500,000
Transfer Tax Rate Revenue Revenue
(Percent of Value) Gross Add-On (e) Gross Add-On (e)

0.055% (Existing) $171,600 $0 $6,325 $0

0.10% $312,000 $140,400 $11,500 $5,175

0.50% $1,560,000 $1,388,400 $57,500 $51,175

1.00% $3,120,000 $2,948,400 $115,000 $108,675

2.00% $6,240,000 $6,068,400 $230,000 $223,675

3.00% $9,360,000 $9,188,400 $345,000 $338,675

4.00% $12,480,000 $12,308,400 $460,000 $453,675

5.00% $15,600,000 $15,428,400 $575,000 $568,675
Transfer Tax Rate Revenue Revenue
(Percent of Value) Gross Add-On (b) Gross Add-On (b)
$0.55 (Existing) $440 $0 $275 $0

0.10% $800 $360 $500 $225

0.50% $4,000 $3,560 $2,500 $2,225

1.00% $8,000 $7,560 $5,000 $4,725

2.00% $16,000 $15,560 $10,000 $9,725

3.00% $24,000 $23,560 $15,000 $14,725

4.00% $32,000 $31,560 $20,000 $19,725

5.00% $40,000 $39,560 $25,000 $24,725
350
12 Sales and Use Tax
The Bradley-Burns Uniform Local Sales and Use Tax Law of 1955 formally authorized local jurisdictions to impose local sales and use taxes on the privilege of selling tangible property at retail, as well as on the storage, use, or other consumption of tangible personal property purchased from a retailer.22 This authority was subsequently augmented by Senate Bill (SB) 566 in 2003.23 While sales tax is imposed on retailers, and then often passed through to consumers, the use tax is imposed directly on the purchaser. The State of California imposes a sales and use tax rate of six percent and a supplemental uniform local tax of 1.25 percent that is split between the city and county, for a combined rate of 7.25 percent. SB 566 legally authorized all cities in California to levy additional local sales taxes, also known as district taxes, but established a cap on the combined value at two percent over the statutory 7.25 percent. While passage of SB 566 theoretically caps the combined sales and use tax rate at

9.25 percent, the California legislature has routinely allowed local governments to petition for special legislation authorizing local sales taxes above that authorized by SB 566.24 25 Changing the Sales and Use Tax
Passage of a new local sales and use tax measure is subject to the same voter approval requirements as other local tax measures. Increasing the local sales tax rate beyond the statutory two percent requires the passage of special state legislation.

Existing Sales Tax in South Lake Tahoe
In November 2020, a new general sales tax measure was approved by voters in the City of South Lake Tahoe called Measure S. The measure increased the local sales and use tax by one percent from 7.75 to 8.75 percent. The measure went into effect on April 1, 2021 and is projected to generated between $5.9 and $6.2 million annually. The City Council began allocating these funds in the second half of the 2021 fiscal year for several critical projects, including Fire Station II Rehabilitation, Public Safety Radio Communication System Replacement, Road Rehabilitation and Computer Aided Dispatch System upgrades.

Recognizing passage of Measure S, the City of South Lake Tahoe could increase the local sales tax by up to 0.5 percent before reaching the statutory limit of 9.25 percent. 22 State of California. (August 2022). California Revenue and Taxation Code, Chapter 1, Section 7200-7212.

Available at: https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=RTC&division=2.&title =&part=1.5.&chapter=1.&article=. 23 State of California. (2022). Revenue and Taxation Code, Chapter 1, Sections 7251.1-7251.4. Available at:
https://www.cdtfa.ca.gov/lawguides/vol1/tutl/transactions-and-use-tax-law-ch1-all.html 24 According to the California Department of Tax and Fee Administration (CDTFA), there are 328 jurisdictions, out of 1,786 reported, or around 18 percent, that have combined sales tax rates of more than 9.25 percent with a maximum of 10.75 percent. Most of these jurisdictions are located in large metropolitan areas, including jurisdictions located in the counties of Alameda, Contra Costa, Los Angeles, Monterey, San Mateo, Santa Clara, Santa Cruz, and Sonoma.
25 California Department of Tax and Fee Administration. (April 1, 2022). California City and County Sales & Use Tax Rates. Available at: https://www.cdtfa.ca.gov/taxes-and-fees/rates.aspx 351
13 Comparison with Nearby Jurisdictions
According to data published by the California Department of Tax and Fee Administration (CDTFA), the City of South Lake Tahoe and the Town of Truckee are the only jurisdictions in the Lake Tahoe region to levy supplemental sales taxes.26 All other jurisdictions in the counties of Alpine, Placer, and El Dorado charge the statewide base rate of 7.25 percent. Communities located in the unincorporated area of Nevada County charge 7.5 percent, while the incorporated cities of Nevada City and Grass Valley charge 8.38 and 8.5 percent, respectively.

The applicable rates in nearby parts of Nevada range from 7.1 percent in Douglas County to

7.6 percent in Carson City, and 8.27 percent in Washoe County, including Incline Village.

Estimated Revenue Potential
According to the CDTFA, taxable sales originating with outlets located in the City of South Lake Tahoe totaled $489 million in 2021. Figure 2 illustrates the overall trend in taxable sales in South Lake Tahoe from 2015 to 2021. The figure clearly shows the decrease in taxable sales experienced in 2020 as a result of decreased tourist visitation; however, the data indicate that as of 2021, taxable sales had nearly returned to the growth trend indicated during the 2015 to 2019 period. More specifically, the average growth rate in taxable sales from 2015 to 2019 was 3.1 percent, while the average growth rate between 2019 and 2021 was 4.0 percent.

This suggests that taxable sales have largely recovered from pandemic induced impacts. At current taxable sales levels (i.e., $490.7 million per year), the imposition of an additional 0.5 percent sales tax would generate approximately $2.5 million per year in revenue to the City.

Figure 2: Total Taxable Sales, City of South Lake Tahoe 2015-2021 Sources: California Department of Taxation and Fee Administration (CDTFA), Taxable Sales – Cities by Type of Business (Taxable Table 4); BAE, 2021.

Assessment of Stakeholder Impact
Sales tax measures are generally considered regressive in that they proportionately impact lower-income households to a greater extent than higher income households. This is because lower-income households spend a greater proportion of their total income each year and 26 The current sales tax rate in the Town of Truckee is 8.25 percent. The data indicate that Nevada City and Grass Valley also impose supplemental sales taxes with effective rates of 8.38 and 8.5 percent, respectively. -10.0%
-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%
$300
$350
$400
$450
$500
2015 2016 2017 2018 2019 2020 2021
Millions
Year
Taxable Sales, Total Year-Over-Year Change
352
14 subsequently pay more of their income to taxes. In the case of an increased sales and use tax in a visitor-oriented market like South Lake Tahoe, a majority of the burden would fall to out of town visitors (both overnight and day-trippers) who account for a greater proportion of the local taxable sales. However, to the extent that full-time residents and workforce households purchase retail goods and services within the community (e.g., persons with more limited access to transportation), versus in other nearby consumer markets like Minden or Carson City, these households would be impacted by increased taxation.

Real Estate Vacancy Tax
As the severity of California’s housing crisis continues to escalate, cities like Berkeley and San Francisco have recently joined the likes of Oakland and Vancouver, B.C., with imposition of real estate vacancy taxes. Vacancy taxes may target residential or non-residential uses, or both.

The ordinances establishing vacancy taxes clearly specify procedures for identifying properties that were unoccupied during the fiscal year for a specified length of time (often 60 to 90 days) and impose a financial penalty on the property owner. The intent of a vacancy tax is to encourage the active use of vacant property and, as a secondary objective, to generate revenue that can be used for specific purposes. Vancouver, British Columbia, and Oakland, California, are two examples of jurisdictions that have successfully implemented residential vacancy tax policies. New residential vacancy taxes were also recently approved by voters in San Francisco and Berkeley. Non-residential vacancy taxes are much less prevalent, with San Francisco currently being the only jurisdiction known to implement such a policy.

Establishing a Vacancy Tax
Vacancy tax policies are most often structured as excise or flat taxes but are in some cases levied on an ad valorem basis. For example, the residential vacancy tax model being used in Oakland, as well as those recently approved by voters in Berkeley and San Francisco, applies a flat fee per housing unit per year, while the Vancouver residential vacancy tax is based on assessed value. San Francisco’s commercial vacancy tax is also structured as an excise tax that is set at a flat rate per linear foot of frontage. Under California law, the ordinance implementing a vacancy tax must identify relevant exemptions. Passage of a vacancy tax measure would be subject to the same voter approval requirements as other local taxes.

Vacancy Taxes in Other Jurisdictions
Vancouver B.C. (Residential) - In 2018, the City of Vancouver in British Columbia instituted the first real estate vacancy tax in North America. In Vancouver, the vacancy tax is ad valorem (i.e., assessed value in the previous tax year). The rate was initially set at 1.0 percent between 2017 and 2019, then stepped up to 1.25 percent in 2020 and 3.0 percent in 2021.27 Under 27 City of Vancouver. (2022). Empty Homes Tax FAQ. Available at: https://vancouver.ca/home-propertydevelopment/empty-homes-tax-frequently-asked-questions.aspx#:~:text=The%20Empty%20Homes%20Tax%20is ,Homes%20Tax%20rate%20is%203%25.&text=For%20more%20information%2C%20review%20the,)%20PDF%20fi le%20(127%20KB)
353
15 the ordinance, properties are vacant if they are unoccupied for more than six months during the tax year. Property owners must file a property status declaration each year or be deemed vacant and subject to the tax. According to the City of Vancouver, the tax generated approximately $106 million in revenue to the municipal government between 2017 and 2021 (i.e., between $21 and 34 million per year).28 The program reportedly cost $7.5 million in onetime startup costs, as well as $2.5 million per year in ongoing operating costs. The remaining proceeds are used for multi-year housing capital grants and other housing initiatives. The City of Vancouver reports an overall five percent increase in the number of residential units in the city between 2017 and 2020, with a 20 percent increase in the number of tenanted properties, a 26 percent decrease in the number of vacant properties, and a 23 percent decrease in the number of exempt properties.

Oakland, CA (Residential and Commercial) - In November 2018, voters in the City of Oakland approved Measure W, which instituted a special use vacant property tax of $3,000 for residential units and vacant ground floor commercial spaces, and $6,000 for non-residential and undeveloped parcels. According to Measure W, the City of Oakland estimated in 2018 that, once implemented, the tax would generate roughly $10 million per year in revenue. The measure authorized the tax for a 20-year term. Revenue from the tax is deposited into a vacant property tax fund. Key authorized uses of funds include code enforcement and remediation of illegal dumping, homeless service provision, preservation and production of affordable housing, and administrative costs from implementation of the vacancy tax.

A property is “vacant” if it is “in use less than fifty days in a calendar year.” The exact method that the City uses to determine use status is unclear. For parcels with multiple units, the parcel is not vacant if at least one unit is occupied; however, condominium, duplex, and townhome units under separate ownership are treated as separate parcels for the purposes of the vacancy tax. There are ten categories of exemption under the ordinance, including:
- Very low-income owner
- Low-income senior owner
- Disabled owner
- Non-profit organization owner
- Property otherwise exempt from ad valorem tax
- Substantially complete planning application
- Active construction
- Demonstrated financial hardship
- Demonstrated other hardship (unrelated to finances)
- Exceptional specific circumstances
28 City of Vancouver. (November 1, 2021). Empty Homes Tax Annual Report: 2020 Vacancy Reference Year (January 1, 2020 to December 31, 2020). Available at: https://vancouver.ca/files/cov/vancouver-2021-emptyhomes-tax-annual-report.pdf 354
16 The City of Oakland began distributing notices of vacancy to property owners in February of 2022. Property owners are then offered the opportunity to submit a Petition of Vacancy if they believe the property was incorrectly identified as vacant, or if they believe that the property is eligible for one of the ten allowable exemptions.

Berkeley, CA (Residential) - The ballot initiative approved by Berkeley voters in November 2022 imposes a $3,000 to $6,000 tax on single-family and apartment units, respectively, which sit vacant for at least six months. The tax doubles in the second tax year. Owners of apartments with fewer than five units who live on the property (and don’t own other homes), will be exempt. The city expects roughly 700 homes to be returned to the rental market in the first year, with the tax generating between $3.9 and $5.9 million per year in general tax revenue.

San Francisco, CA (Residential) - The San Francisco ballot measure approved by voters in November 2022 is based on those adopted in Vancouver and Oakland, but controversially excludes single-family homes. The new vacancy tax will apply a tiered structure that imposes a $2,500 flat tax on smaller units and $5,000 flat tax for larger units, which escalates to $10,000 and $20,000, respectively, over three years if the unit(s) remains vacant.29 The City projects that the tax could bring 4,500 units back onto the rental market and generate as much as $38 million per year in revenue to the City.30
San Francisco, CA (Commercial) – Voters in the City and County of San Francisco approved a commercial vacancy tax in March 2020, which went into effect as of January 1, 2022. For most entities, filing ad payment of the commercial vacancy tax will begin in 2023. The tax applies to ground floor commercial (i.e., non-residential) space that is vacant for 182 days or more in the calendar year. Spaces must be located in one of the Named Neighborhood Commercial Districts (NCDs) or Named Neighborhood Commercial Transit Districts (NCTs) that are adjacent or tangent to a public right of way. The cost associated with the tax is to be paid by the property owner, or may be passed through to the lessee or sublessee. The tax is unsecured with rates starting at $250 per linear foot of frontage on the public right of way, which escalates to $500 in year two and $1,000 per year thereafter.

Other Jurisdictions – Recognizing the escalation of the housing crisis that has occurred in recent years, a variety of communities throughout California placed vacancy tax measures on November 2022 ballots, including Berkeley, San Francisco, and Santa Cruz. Vacancy tax measures were approved by voters in both Berkeley and San Francisco, but failed to garner necessary voter approval in Santa Cruz. Additional communities elected not to place vacancy 29 Schneider, B. (February 28, 2022). S.F.’s plan to tax 40,000 empty homes under scrutiny. San Francisco Examiner. Available at: https://www.sfexaminer.com/the_fs/fixes/s-f-s-plan-to-tax-40-000-empty-homes-underscrutiny/article_386da20e-0215-59a9-96a4-7c4396c17cc6.html 30 City of San Francisco, Budget and Legislative Analyst’s Office. (January 31, 2022). Policy Analysis Report:

Residential Vacancies in San Francisco. Available at: https://sfbos.org/sites/default/files/BLA.Residential% 20Vacancies.013122_final.pdf
355
17 tax measures on the ballot in 2022, including Napa County and the City of Los Angeles. New York State also considered statewide legislation during the 2021-2022 legislative session that would allow jurisdictions with more than one million residents to institute commercial vacancy taxes, though the legislation remains under committee review.

Estimated Revenue Potential
The revenue generation potential of a possible vacancy tax within the City of South Lake Tahoe is contingent on the way that the tax is structured and the properties to which it applies.

Residential Vacancy Tax
BAE assumes that a residential tax would exempt properties that are vacant as a result of being actively sold or rented, or held vacant for later occupancy by seasonal workers, and would be targeted towards properties held vacant for seasonal or occasional use.

To estimate the number of vacant units in the City of South Lake Tahoe, BAE applied the distribution of housing units by vacancy status reported in the 2020 five-year American Community Survey (ACS), illustrated in Figure 3, with the total number of vacant housing units reported in the 2020 Census.31 Additional data on vacancy by unit type indicates that 67 percent of all vacant housing units in the city (inclusive of those vacant but for lease or sale, or vacant and intended for seasonal workforce occupancy) were detached single-family homes.

Figure 3: Housing Vacancy by Type, 2020 5-Year ACS
Source: U.S. Census Bureau, 2020 American Community Survey 5-Year, Table B25004; BAE, 2022. 31 While these estimates fail to capture the impacts of the coronavirus pandemic, they represent the most recent available data on residential vacancy. Using this approach, BAE estimates that as of 2020 there were approximately 5,629 housing units held vacant for seasonal or occasional use. 6%
1% 1% 2%
84%
0%
5%
For rent
Rented, not occupied
For sale only
Sold, not occupied
For seasonal, recreational, or
occasional use
For migrant workers
Other vacant
356
18 To estimate the possible order of magnitude of the revenue that may be generated under a likely residential vacancy tax scenario, BAE assumed a tax of $3,000 per vacant unit, which is generally consistent with the tax being charged in Oakland. Assuming that all housing units held vacant for seasonal or occasional use would be subject to the tax, BAE estimates that a vacancy tax could theoretically generate up to around $16.8 million per year.

Table 6: Housing Units by Vacancy Status and Tenure, 2020 Source: U.S. Census Bureau, 2020 Decennial Census, Table H1; U.S. Census Bureau, 2020 American Community Survey 5-Year, Tables B25024 and B25032; BAE, 2022.

This report also considered applying the residential vacancy tax only to single-family properties held for seasonal or occasional use. While the Census Bureau does not specifically report the required statistic, the available data does indicate that there were around 4,500 single-family homes that were vacant for any reason as of the 2020 Decennial Census (i.e., roughly 47 percent of the single-family housing stock).32 Assuming that the vacancy tax applies to singlefamily properties only, that are vacant for any reason, the tax could yield roughly $13.5 million per year in revenue.

Applying the citywide seasonal vacancy rate of 84 percent (i.e., the percent of vacant units held for seasonal or occasional use) to the 2020 vacant single-family inventory produces a conservative estimate of around 3,800 single-family units held for seasonal or occasional use.

If the vacancy tax is applied only to single-family units held vacant for seasonal or occasional use, the tax may generate approximately nearly $11.4 million per year in revenue. 32 Preliminary estimates published as part of the 2021 5-year American Community Survey (ACS) suggest a nine percent increase in overall residential vacancy between 2020 and 2021, which was likely induced by the COVID-19 pandemic. It is not clear how this development will translate into future residential vacancy rates in South Lake Tahoe; however a significant increase in residential vacancy would theoretically translate into increase revenue from a residential vacancy tax.

Occupied
Units in Structure Vacant Renter Ow ner Total
1, detached 4,507 1,751 3,314 9,609
1, attached 175 396 73 636
2 292 526 162 971
3 or 4 566 729 17 1,315
5 to 9 397 750 3 1,144
10 to 19 161 575 13 738
20 to 49 197 319 21 536
50 or more 296 89 34 428
Mobile home 103 254 240 585
Boat, RV, van, etc. 0 0 0 0
Total, All Units 6,695 5,390 3,876 15,961
Percent 42% 34% 24% 100%
357
19 Commercial Vacancy Tax
The only known contemporary example of a commercial vacancy tax is in San Francisco, which applies the tax on vacant commercial frontage on a per square foot basis. This makes sense in San Francisco, which features a dense urban streetscape. The goal of the tax is to encourage property owners to maintain active streetscapes to avoid the appearance of urban blight. This model does not translate easily to the South Lake Tahoe context, which features an urban fabric that is much less dense. Therefore, BAE recommends that the City consider applying a potential vacancy tax not on commercial street frontage, but rather based on the gross square footage of the vacant commercial property.

Table 7: Commercial Vacancies, City of South Lake Tahoe, December 2022 (a) Notes:
(a) Based on anecdotal observations made by City staff, as well as a review of current listings on CoStar. Data may exclude vacant properties not current listed for-sale or for-lease. (b) Based on reported gross building square footage, as reported by the El Dorado County Assessor and CoStar.

Sources: City of South Lake Tahoe; El Dorado County Assessor; CoStar; BAE, 2022.

Only limited information currently exists regarding the prevalence of vacant commercial property in South Lake Tahoe (See Table 7). City staff provide BAE with a list of assessor’s parcel numbers (APNs) associated with vacant commercial properties that were identified by City staff on an anecdotal basis. To supplement this data, BAE also reviewed data from CoStar regarding commercial properties that are currently listed for-lease or for-sale to identify Estimated
Vacant
Former Occupant APN Address Sq. Ft. (b) Source
Winters Electric 23251008 2280 Lake Tahoe Blvd. 3,073 City of South Lake Tahoe Unknow n 27040007 Unknow n 25,089 City of South Lake Tahoe Carrow s 31290039 2375 Lake Tahoe Blvd. 24,050 City of South Lake Tahoe Teps 27090022 3450 Lake Tahoe Blvd. 11,520 City of South Lake Tahoe Runnels 23523013 986 Emerald Bay Rd. 1,568 City of South Lake Tahoe Ahern Rentals 31091005 2724 Lake Tahoe Blvd. 5,275 City of South Lake Tahoe Verizon 23251017 2230 Lake Tahoe Blvd. 5,841 City of South Lake Tahoe Lily's Tire 31258019 2635 Lake Tahoe Blvd. 6,472 City of South Lake Tahoe Sunray 31257007 2659 Lake Tahoe Blvd. 20,996 City of South Lake Tahoe Hair Salon 31241011 2634 Lake Tahoe Blvd. 850 City of South Lake Tahoe Bagan Toyota 31041009 2296 Lake Tahoe Blvd. 288 City of South Lake Tahoe Chevy's 27071030 3678 Lake Tahoe Blvd. 10,114 City of South Lake Tahoe Avalon Lodge 29041061 4075 Manzanita Ave. 8,084 City of South Lake Tahoe Don Cheepo 27010002 3349 Lake Tahoe Blvd. 240 City of South Lake Tahoe Ambassador 29051020 4130 Manzanita Ave. 22,794 City of South Lake Tahoe Chateau 29690002 4139 Lake Tahoe Blvd. 15,247 City of South Lake Tahoe Kmart Garden Center 32299102 1030 Tata Ln. 12,852 City of South Lake Tahoe Kmart 23430032 1020 Lake Tahoe Blvd. 144,117 City of South Lake Tahoe Sato Japanese Rest. 27090006 3430 Lake Tahoe Blvd. 8,215 City of South Lake Tahoe Humane Society 23182005 884 Emerald Bay Rd. 1,139 City of South Lake Tahoe Unknow n 27361005 3331 Sandy Way 3,000 CoStar
Unknow n 32291023 1030 Tata Ln. 1,200 CoStar
Unknow n 27361005 3331 Sandy Way 3,000 CoStar
Total Est. Vacant Sq. Ft. 335,024
358
20 properties with no existing tenant (i.e., did not add properties to the vacant commercial inventory if they were listed for-lease or for-sale but had identifiable tenants already occupying the space). Please note that the inventory reported in Table 7 may exclude some properties that are vacant but which are not actively being listed for-lease or for-sale. Based on this approach, BAE estimates that there is roughly 335,000 square feet of vacant commercial real estate in South Lake Tahoe.

As there are no known commercial vacancy taxes applied on the basis of gross leasable area, there are no comparable tax rates to use as the basis for estimating potential revenue generation. Table 8 illustrates the hypothetical revenue that could be generated through imposition of a commercial vacancy tax at various tax rates ranging from $1,000 to $10,000 per 1,000 square feet of vacant gross leasable area. At these rates and estimated current vacancy levels, a commercial vacancy tax could potentially generate anywhere from $335,000 to upwards of $3.35 million per year in revenue to the City of South Lake Tahoe.

Table 8 also highlights the estimated tax burden that would accrue to each identified vacant property. Even at the lowest estimated tax rate, some properties may be subject to a very high relative tax burden. For example, the 144,117 square foot former Kmart space on Lake Tahoe Boulevard could be subject to an annual commercial vacancy tax burden of upwards of $144,000, which could increase to more than $1.4 million per year under the higher tax rate scenarios. For this reason, BAE would recommend placing a cap on the gross tax amount that may apply to any given property, though such a cap may limit revenue generation. 359
21 Table 8: Estimated Revenue Generation, Commercial Vacancy Tax Notes:
(a) Based on anecdotal observations made by City staff, as well as a review of current listings on CoStar. Data may exclude vacant properties not current listed for-sale or forlease. (b) Based on reported gross building square footage, as reported by the El Dorado County Assessor and CoStar. (c) The reported tax rates are intended to be representative only. Additional analysis and community outreach may be necessary prior to establishing the applicable tax rate.

Sources: City of South Lake Tahoe; El Dorado County Assessor; CoStar; BAE, 2022.

Estimated
Vacant Revenue Generation by Tax Rate (Per 1,000 Sq. Ft.)(c) Former Occupant APN Address Sq. Ft. (b) $1,000 $2,500 $5,000 $7,500 $10,000 Winters Electric 23251008 2280 Lake Tahoe Blvd. 3,073 $3,073 $7,683 $15,365 $23,048 $30,730 Unknow n 27040007 Unknow n 25,089 $25,089 $62,723 $125,445 $188,168 $250,890 Carrow s 31290039 2375 Lake Tahoe Blvd. 24,050 $24,050 $60,125 $120,250 $180,375 $240,500 Teps 27090022 3450 Lake Tahoe Blvd. 11,520 $11,520 $28,800 $57,600 $86,400 $115,200 Runnels 23523013 986 Emerald Bay Rd. 1,568 $1,568 $3,920 $7,840 $11,760 $15,680 Ahern Rentals 31091005 2724 Lake Tahoe Blvd. 5,275 $5,275 $13,188 $26,375 $39,563 $52,750 Verizon 23251017 2230 Lake Tahoe Blvd. 5,841 $5,841 $14,603 $29,205 $43,808 $58,410 Lily's Tire 31258019 2635 Lake Tahoe Blvd. 6,472 $6,472 $16,180 $32,360 $48,540 $64,720 Sunray 31257007 2659 Lake Tahoe Blvd. 20,996 $20,996 $52,490 $104,980 $157,470 $209,960 Hair Salon 31241011 2634 Lake Tahoe Blvd. 850 $850 $2,125 $4,250 $6,375 $8,500 Bagan Toyota 31041009 2296 Lake Tahoe Blvd. 288 $288 $720 $1,440 $2,160 $2,880 Chevy's 27071030 3678 Lake Tahoe Blvd. 10,114 $10,114 $25,285 $50,570 $75,855 $101,140 Avalon Lodge 29041061 4075 Manzanita Ave. 8,084 $8,084 $20,210 $40,420 $60,630 $80,840 Don Cheepo 27010002 3349 Lake Tahoe Blvd. 240 $240 $600 $1,200 $1,800 $2,400 Ambassador 29051020 4130 Manzanita Ave. 22,794 $22,794 $56,985 $113,970 $170,955 $227,940 Chateau 29690002 4139 Lake Tahoe Blvd. 15,247 $15,247 $38,118 $76,235 $114,353 $152,470 Kmart Garden Center 32299102 1030 Tata Ln. 12,852 $12,852 $32,130 $64,260 $96,390 $128,520 Kmart 23430032 1020 Lake Tahoe Blvd. 144,117 $144,117 $360,293 $720,585 $1,080,878 $1,441,170 Sato Japanese Rest. 27090006 3430 Lake Tahoe Blvd. 8,215 $8,215 $20,538 $41,075 $61,613 $82,150 Humane Society 23182005 884 Emerald Bay Rd. 1,139 $1,139 $2,848 $5,695 $8,543 $11,390 Unknow n 27361005 3331 Sandy Way 3,000 $3,000 $7,500 $15,000 $22,500 $30,000 Unknow n 32291023 1030 Tata Ln. 1,200 $1,200 $3,000 $6,000 $9,000 $12,000 Unknow n 27361005 3331 Sandy Way 3,000 $3,000 $7,500 $15,000 $22,500 $30,000 Total Est. Vacant Sq. Ft. 335,024 $335,024 $837,560 $1,675,120 $2,512,680 $3,350,240 360
22 Assessment of Stakeholder Impact
The burden associated with imposition of a vacancy tax would fall on owners and lessees of real property.

Residential property owners that occupy the subject property as their primary residence or rent out the unit for more than the minimum statutory time period would be exempt from a residential vacancy tax. The City may identify other categories of exemption, like in Oakland (lower-income property owners) and San Francisco (single-family homes). The property owners most likely to be impacted include owners of second homes that do not rent out their property for at least the minimum term. The extent to which short-term rental and multifamily property owners would be impacted is contingent on how the tax is structured.

Owners and lessees of commercial property would be subject to an applicable commercial vacancy tax in cases where the vacancy exceeded the allowable timeframe. The tax may be particularly onerous for owners of properties that are significantly dilapidated, and which would require significant renovation to make them attractive to new prospective occupants.

The financial penalty may induce some property owners to make the sites available for redevelopment, or other forms of reinvestment; though the ability to pass the tax penalty through to lessee’s who aren’t currently occupying the space may mute this effect.

In either taxation scenario, residential or commercial, allowances should also be considered for properties that are actively being leased, sold, renovated, or redeveloped, with limitations imposed on those exemptions to discourage bad actors (e.g., applying for a building permit only to never complete the described renovations as a way to defer payment of the tax).

Alternative Business Taxes
Local jurisdictions in California apply various approaches to generating revenue through taxation of local business activity. Some local governments shy away from taxes that expressly penalize revenue generation and/or jobs creation, others more open recognize the relationship between business activity, employment generation, and local efforts to address workforce housing and related infrastructure needs. As a result, some local governments levy minimal business license fees intended to offset administrative costs associated with license issuance and compliance monitoring, while others levy other supplemental business taxes.

El Dorado and Placer counties currently only administer nominal flat rate business license fees. Douglas Counties in Nevada does not issue business licenses, while Carson City charges a nominal flat fee based on the type of business. The City of South Lake Tahoe currently levies 361
23 business license fees based on gross receipts using a graduated rate scale ranging from $1.07 to $2.69 per 1,000 of gross receipts.33 Washoe County uses a similar model.

Other jurisdictions utilize still other taxation models. The City of Santa Clara, for example, levies a tax of $45 per employee, and $15 per rental unit for landlords. Until recently, San Francisco levied both a gross receipts tax and what is known as a payroll expense tax.

The City of South Lake Tahoe, therefore, has the option of updating the business license fee ordinance to include alternative revenue models. The following subsection reviews revenue generation potential associated with a potential payroll expense or employee headcount tax.

Establishing a Payroll or Headcount Tax
Business license fees levied by local jurisdictions with the express goal of offsetting the cost of providing services to businesses in the form of license issuance and compliance monitoring are considered administrative fees, rather than taxes, and may be instituted by ordinance without a public vote. Supplemental business taxes intended to generate general or special purpose revenue to a jurisdiction, such as a business payroll or employee headcount tax, are subject to the same voter approval requirements as other local taxes.

Existing Payroll and Headcount Taxes
San Francisco, CA - As noted above, prior to 2020 the City and County of San Francisco levied both a gross receipts and a payroll expense tax. Under the Business and Tax Regulations Code, ‘payroll expense’ was defined to include all salaries, wages, bonuses, commissions, stock options, and other compensation for services to owners of pass-through entities.34 There were a variety of business categories that were exempt based on applicable state and federal law, including for non-profits, skilled nursing facilities, and certain banks, insurance companies, and financial corporations, among other categories. There were also local exclusions and incentives aimed at facilitating economic development and job creation, including for businesses active in clean technology and film production, as well as for businesses located in the Central Market Street and Tenderloin area. The applicable payroll expense rate as of 2018 was 0.38 percent. With passage of Proposition F in November 2020, voters repealed the payroll expense tax and increased the gross receipts tax rate across most industries, while providing more relief to small businesses.

Santa Clara, CA – The City of Santa Clara hosts offices for a variety of large tech companies, including Applied Materials, Intel, Advanced Micro Devices, and Nvidia, among others. Prior to 33 City of South Lake Tahoe. (FY 2022-2023). City of South Lake Tahoe Business and Professions Tax: New Application Form. Available at: https://www.cityofslt.us/DocumentCenter/View/16968/BLN-Packet-22-23- PDF?bidId=
34 For more information on the San Francisco payroll expense tax prior to it’s repeal in 2020, please visit:
https://sftreasurer.org/media/513/download?attachment and https://sftreasurer.org/files/ 2019- 08/BT_Payroll%20Expense%20Tax%20Rate%20Memeo_07.01.19.pdf 362
24 voter approval of new business tax reforms in late 2022, the City’s business license structures had not been updated since 1992. The existing tax structure charged between $15 and $500 based on a business’s industry sector and number of employees. With the maximum payment for businesses with 500 or more employees capped at $500, local tax reform advocates argued that the existing tax structure did not require the city’s largest companies to pay their fair share for City services and infrastructure. With voter approval of Measure H in November 2022, the business license tax was increased to $45 per employee and $15 per rental unit for landlords. The revised tax structure is projected to generate around six million dollars per year until ended by voters, with periodic independent financial audits.

Estimated Revenue Potential
Table 9 reports the estimated number of business establishments, as well as average annual employment and annual average wages by industry sector for the City of South Lake Tahoe, as reported in the Quarterly Census of Employment and Wages (QCEW) published by the California Employment Development Department (EDD).

Table 9: Establishments, Jobs, and Annual Wages by Industry Sector, South Lake Tahoe, 2021
Note:
(a) Data for this sector was suppress by the California Employment Development Department (EDD) to protect against disclosure of potentially confidential employment and wage information.

Source: California Employment Development Department (EDD), Quarterly Census of Employment and Wages (QCEW); BAE, 2022.

Annual
Industry Sector Establishments Jobs Wage
11 Agriculture, Forestry, Fishing and Hunting 2 (a) (a) 22 Utilities 8 151 $138,057
23 Construction 80 262 $52,060
31 Manufacturing 12 60 $45,994
42 Wholesale Trade 18 108 $51,193
44 Retail Trade 122 1,433 $36,405
48 Transportation and Warehousing 11 174 $44,628
51 Information 11 56 $56,066
52 Finance and Insurance 28 137 $50,592
53 Real Estate and Rental and Leasing 59 306 $47,913
54 Professional, Scientific, and Technical Services 58 152 $51,812 55 Management of Companies and Enterprises 2 (a) (a)
56 Administrative and Support and Waste Management 55 488 $64,248 61 Educational Services 4 (a) (a)
62 Health Care and Social Assistance 154 1,198 $76,657
71 Arts, Entertainment, and Recreation 22 (a) (a)
72 Accommodation and Food Services 164 2,706 $30,583
81 Other Services (except Public Administration) 72 366 $42,422 92 Public Administration 15 1,343 $73,274
Total, All Industries 895 9,525 $49,849
363
25 According to this data, there were 895 business establishments in 2021 which employed an annual average of 9,525 persons. Average annual wages vary by industry, ranging from $30,583 per year in the Accommodation and Food Services industry to $138,057 in the Utilities industry, with an average of $49,849 per year across all industry sectors.

The four reported industry sectors with the most employees on average include Accommodation and Food Services (2,706 jobs; average annual wage of $30,583), Retail Trade (1,433 jobs; average annual wage of $36,405), Public Administration (1,343 jobs; average annual wages of $73,274); and Healthcare and Social Assistance (1,198 jobs; average annual wages of $76,657). Please note that data for some sectors is suppressed.

Payroll Expense Tax Revenue
Table 10 reports the estimated revenue that could potentially be generated through institution of a payroll expense tax at rates ranging from 0.1 to 1.0 percent of total annual wages.

Table 10: Estimated Revenue from Payroll Expense Tax, 0.1-1.0 Percent Rates Notes:
(a) These figures illustrate the potential revenue that may be generated through institution of a payroll expense tax at rates ranging from 0.1 to 1.0 percent of total annual wages.
(b) Data for this sector was suppress by the California Employment Development Department (EDD) to protect against disclosure of potentially confidential employment and wage information.

Source: California Employment Development Department (EDD), Quarterly Census of Employment and Wages (QCEW); BAE, 2022.

Total
Annual' Payroll Expense Tax Revenue (a)
Industry Sector Wages 0.1% 0.5% 1.0%
11 Agriculture, Forestry, Fishing and Hunting (b) (b) (b) (b) 22 Utilities 20,846,556 20,847 104,233 208,466
23 Construction 13,639,665 13,640 68,198 136,397
31 Manufacturing 2,759,633 2,760 13,798 27,596
42 Wholesale Trade 5,528,821 5,529 27,644 55,288
44 Retail Trade 52,168,360 52,168 260,842 521,684
48 Transportation and Warehousing 7,765,243 7,765 38,826 77,652 51 Information 3,139,723 3,140 15,699 31,397
52 Finance and Insurance 6,931,057 6,931 34,655 69,311
53 Real Estate and Rental and Leasing 14,661,337 14,661 73,307 146,613 54 Professional, Scientific, and Technical Services 7,875,412 7,875 39,377 78,754 55 Management of Companies and Enterprises (b) (b) (b) (b) 56 Administrative and Support and Waste Management 31,353,066 31,353 156,765 313,531 61 Educational Services (b) (b) (b) (b)
62 Health Care and Social Assistance 91,834,540 91,835 459,173 918,345 71 Arts, Entertainment, and Recreation (b) (b) (b) (b)
72 Accommodation and Food Services 82,757,252 82,757 413,786 827,573 81 Other Services (except Public Administration) 15,526,345 15,526 77,632 155,263 92 Public Administration 98,406,808 98,407 492,034 984,068 Total, All Industries 474,808,424 474,808 2,374,042 4,748,084 364
26 At a rate of 0.1 percent, the tax would generate nearly 475,000 in annual revenue. If increased to 0.5 percent, the tax would generate almost $2.4 million per year. If set at 1.0 percent, the tax would generate $4.7 million per year. For comparison, the 2018 payroll expense rate for the now repealed payroll expense tax in San Francisco was 0.38 percent, which would yield around 1.8 million per year if instituted in South Lake Tahoe.

These estimates are based on total annual wages paid to persons employed in the City of South Lake Tahoe in 2021. The data notably exclude self-employed persons. To the extent that a payroll expense tax excludes certain types of businesses or industry sectors, the revenue generation potential would decrease accordingly. Table 10 provide additional estimates by industry to facilitate additional analysis. Resulting revenues may also be less in the event that the total tax payment assigned to any given business is capped.

Employee Headcount Tax Revenue
Table 11 reports the estimated amount of revenue that could potentially be generated through creation of an employee headcount tax, similar to that recently instituted in Santa Clara.

Table 11: Estimated Revenue from Employee Headcount Tax, $25-$75 Rates Notes:
(a) These figures illustrate the potential revenue that may be generated through institution of a employee headcount tax at rates ranging from $25 to $75 per employee per year.
(b) Data for this sector was suppress by the California Employment Development Department (EDD) to protect against disclosure of potentially confidential employment and wage information.

Source: California Employment Development Department (EDD), Quarterly Census of Employment and Wages (QCEW); BAE, 2022.

Average Employee Headcount Tax Revenue (a)
Industry Sector Employment $25 $50 $75
11 Agriculture, Forestry, Fishing and Hunting (b) (b) (b) (b) 22 Utilities 151 $3,775 $7,550 $11,325
23 Construction 262 $6,550 $13,100 $19,650
31 Manufacturing 60 $1,500 $3,000 $4,500
42 Wholesale Trade 108 $2,700 $5,400 $8,100
44 Retail Trade 1,433 $35,825 $71,650 $107,475
48 Transportation and Warehousing 174 $4,350 $8,700 $13,050 51 Information 56 $1,400 $2,800 $4,200
52 Finance and Insurance 137 $3,425 $6,850 $10,275
53 Real Estate and Rental and Leasing 306 $7,650 $15,300 $22,950 54 Professional, Scientific, and Technical Services 152 $3,800 $7,600 $11,400 55 Management of Companies and Enterprises (b) (b) (b) (b) 56 Administrative and Support and Waste Management 488 $12,200 $24,400 $36,600 61 Educational Services (b) (b) (b) (b)
62 Health Care and Social Assistance 1,198 $29,950 $59,900 $89,850 71 Arts, Entertainment, and Recreation (b) (b) (b) (b)
72 Accommodation and Food Services 2,706 $67,650 $135,300 $202,950 81 Other Services (except Public Administration) 366 $9,150 $18,300 $27,450 92 Public Administration 1,343 $33,575 $67,150 $100,725 Total, All Industries 9,525 $238,125 $476,250 $714,375
365
27 At a rate of $25 per employee, the employee headcount tax could generate approximately $238,000 per year in revenue. If the rate were increased to $75 per employee, the revenue would similarly increase to approximately $714,400 per year. For comparison, the City of Santa Clara employee headcount tax rate is $45 per employee, which would yield around $476,250 per year in revenue if instituted in South Lake Tahoe.

These estimates are based on average annual employed in the City of South Lake Tahoe in 2021. The data notably exclude self-employed persons. To the extent that an employee headcount tax excludes certain types of businesses or industry sectors, the revenue would decrease accordingly. Table 11 provides additional estimates by industry to facilitate analysis.

Resulting revenues may also be less in the event that the total tax payment assigned to any given business is capped, as is the case in some jurisdictions.

Assessment of Stakeholder Impact
The burden associated with imposition of a payroll expense or employee headcount tax would fall to business owners and operators. A payroll tax would impact businesses with large number of employees, as well as smaller businesses with higher paying jobs. An employee headcount tax would be more targeted, having a larger impact on businesses with more employees. As a tourism-based economy, many of the businesses in South Lake Tahoe with the largest employee counts are associated with lower margin and lower wage industries like Accommodations and Food Service and Retail Trade. Institution of payroll expense and employee headcount taxes function to increase the relative cost of labor. This may limit businesses’ ability to increase wages in response to changes in the cost of living (e.g., housing costs, consumer inflation, etc.) and may induce some businesses to reduce staffing levels. 366
28 DEVELOPMENT DEPENDENT REVENUE

SOURCES
Under California law, local governments may establish requirements that new housing developments set aside a specified share of the total housing inventory for occupancy by households with incomes at or below specified thresholds. These requirements are exercised under a jurisdiction’s general police power to regulate land use and development to promote the public welfare. Jurisdictions are required to provide alternative means of compliance, which often includes the option to pay a fee in-lieu of building the required housing units.

These requirements are legally differentiated from housing impact fees intended to mitigate the specific impacts of a project. Inclusionary housing requirements, as they are known, are alternatively designed to serve a constitutionally permissible public purpose other than mitigating the impact of the proposed development project. As such, California law no longer requires inclusionary housing policies to be based on an essential nexus or to reflect rough proportionality between the requirement and the estimated impact on the community.

Alternately, many jurisdictions also impose housing impact fees on non-residential development. These requirements are legally differentiated from inclusionary housing requirements in that they are functionally designed to mitigate a projects’ estimated impacts on the community at large. Commercial linkage fee requirements, as they are often termed, must be based on an established essential nexus between the proposed project and the impacts being mitigated. The law also requires that the actions being taken to mitigate the impacts of the project must be roughly proportional to the impact being mitigated. Therefore, a commercial linkage fee for housing must be based on the workforce housing demand generated by the project as well as the relative cost of providing that housing.

The following section reviews the basic structure and procedures for establishing inclusionary housing policies (including in-lieu fees) and commercial linkage fees and provides examples of how much revenue may be generated as a result of implementation in South Lake Tahoe.

Inclusionary Housing In-Lieu Fee
California law authorizes jurisdictions to impose requirements that new residential developments set aside a specified share of the total new housing inventory for occupancy by households with incomes at or below specified thresholds. The ordinance specifies the expected term of affordability and outlines alternative options for complying with the ordinance, such as paying an in-lieu fee.

Applicable Legal Framework (AB 1505 and Related Legal Precedent) The 2009 California Court of Appeals decision in Palmer/Sixth Street Properties, L.P., et al. v.

City of Los Angeles affirmed a Superior Court decision that struck down elements of the City of Los Angeles inclusionary housing policy that required residential and mixed-use projects with 367
29 10 or more dwelling units per lot to set aside a portion of the units for occupancy by lowincome households. The Court of Appeals found that requiring a newly constructed rental housing project to provide affordable housing units at restricted rents conflicted with the rights afforded to developers under the Costa-Hawkins act, which sets limits on municipal rent control ordinances and enshrined a developers’ right to establish the initial rental rate for a new housing unit.

Assembly Bill (AB) 1505 was drafted and approved by the legislature in 2017 in response to the Palmer decision. The legislation authorizes local governments to adopt ordinances that require, as a condition of development of residential rental units, that the development set aside a specified share of the total housing inventory for occupancy by households with incomes at or below specified thresholds. AB 1505 requires jurisdictions to provide alternative compliance options, potentially including in-lieu fees, land dedication, off-site construction, or acquisition and rehabilitation of existing units. In cases where the applicable jurisdiction has not submitted their annual housing element report(s), or has not met at least 75 percent of their regional housing needs allocation (RHNA), AB 1505 authorizes the California Department of Housing and Community Development (HCD) to review ordinances that require more than 15 percent of the total housing inventory in a project to be affordable.

Jurisdictions may adopt requirements in excess of 15 percent, but must provide an economic feasibility study that demonstrates that the ordinance does not “unduly constrain” housing production.

Prior to the passage of the ‘Palmer Fix’ in 2017, the 2015 ruling in the California Building Industry Association (CBIA) v. City of San Jose by the Supreme Court of California determined that the adopted inclusionary housing requirement on for-sale housing was designed “to serve a constitutionally permissible public purpose other than mitigating the impact of the proposed development project.” As a result, the Court concluded that the ordinance was neither an exaction, nor a taking, under the Nolan/Dolan line of decision and, therefore, need not demonstrate that an essential nexus or rough proportionality exists between the requirement and the projected impact of the proposed land use.

Establishing an Inclusionary Housing Ordinance
The authority of local governments to establish inclusionary housing policies, as codified by AB 1505, is grounded in a jurisdictions constitutional police power which permits local governments to regulate the use of land in such a way as to advance the public welfare.

Establishment of an inclusionary housing policy may, therefore, be accomplished through legislative action of the applicable governing body and does not require a voter approval.

Comparison with Nearby Jurisdictions
Neither the City of South Lake Tahoe, nor El Dorado County, currently have inclusionary housing ordinances.
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30 Placer County adopted an updated Affordable Housing and Employee Accommodation Ordinance and fee as of April 19, 2022.35 36 The ordinance requires projects with more than 100 units to set aside at least 10 percent of the units for sale or rent at affordable prices.

Projects with between eight and 200 units have the option to pay an in-lieu fee of $2.45 per habitable square foot of each market rate housing unit. The ordinance also establishes a commercial linkage fee, which is discussed in more detail in a later section.

The Town of Truckee applies a 15 percent inclusionary housing requirement.37 For inclusionary units offered as rental housing, either 100 percent of the units must be affordable to low-income households, or one-third may be very low-income, one-third may be low-income, and one-third may be moderate-income. For inclusionary housing units offered for-sale, all units maybe affordable to moderate-income households, or one-third may be low-income, onethird may be moderate-income, and one third may be above moderate-income. Projects with fewer than eight units, the developer may elect to pay the in-lieu fee of $134,413 per required affordable housing unit at their discretion without additional review or approval from either staff or the Town Council. There are also a variety of exemptions, including for individual single-family dwelling units on single-family lots.

Establishing an Inclusionary Housing Percentage
As discussed above, AB 1505 and applicable case law eliminated the requirement for local governments to establish a nexus between the impacts created by a project and any mitigating requirements, such as the creation of affordable and workforce housing units. While AB 1505 authorizes HCD to review inclusionary housing policies with percentages greater than 15 percent, it does not prohibit jurisdictions from establishing higher rates, but rather imposes a requirement that the jurisdiction potentially demonstrate that such a rate does not unduly hinder the financial feasibility of new development. Therefore, the City of South Lake Tahoe may establish an inclusionary housing percentage at the discretion of the City Council.

Appendix A provides the results of an abbreviated affordable and workforce housing nexus analysis for residential development. The analysis found that development of a typical newly constructed single-family home priced at $815,000 would generate demand for 0.9 workforce housing units, including 0.03 units at low- to extremely low-incomes, 0.02 at moderate incomes, and 0.02 at achievable incomes. Excluding the highest income category (i.e., greater than single-family achievable at 180 percent of AMI), the effective multiplier is 0.06. The 35 County of Placer. (July 1, 2020). Affordable Housing and Employee Accommodation Ordinance and Fee.

Available at: https://www.placer.ca.gov/DocumentCenter/View/62116/AH-and-EH-Accommodation-Ordinanceand-Fee-Fact-Sheet-Updated-070122 36 County of Placer. (October 6, 2020). An Ordinance to repeal and replace Placer County Code, Chapter 15, Article 15.65 (Affordable Housing). Available at: https://www.placer.ca.gov/DocumentCenter/View/48557/Ord6050-B_BOS-approved-10-27-20?bidId= 37 Town of Truckee. (May 3, 2007). Ordinance 2007-05. Available at:
https://portal.laserfiche.com/Portal/DocView.aspx?id=36704&repo=r-6a91ddbc 369
31 analysis also found that for high-end luxury single-family homes, the impacts are higher at

0.17 across all income levels, or 0.12 covering extremely low-income through single-family achievable (i.e., up to 180 percent of AMI)
Equivalent Fee In-Lieu of Development
There are different philosophies regarding identification of a justifiable fee to be applied in-lieu of developing required inclusionary housing units. Some jurisdictions, seeking to limit the potential impact on development feasibility, limit the in-lieu fee to be equivalent to the anticipated contribution from local government in support of affordable housing development.

Other jurisdictions set the in-lieu fee amount based on the full cost, more or less, of providing the required housing unit, recognizing that the in-lieu fee is intended to be equivalent to construction of the unit on-site as part of the planned market rate development.

According to an October 4, 2022, staff report to City Council, the City of South Lake Tahoe contributed $2.44 million towards construction of the Sugar Pine affordable housing development, which began site preparations in fall 2022. With a total of 248 units planned, this equals a subsidy amount of $9,845 per unit in direct city subsidy.

Alternatively, Table 12 identifies the approximate financing gap associated with low-income housing units built with the use of low-income housing tax credit (LIHTC) equity, excluding the remaining funding sources used in projects like Sugar Pine. The intent of these calculations is to illustrate the financing gap that the City may need to help close in the event that other special funding programs, such as Multifamily Housing Program (MHP), Affordable Housing and Sustainable Communities (AHSC), Infill Infrastructure Grant (IIG), and other similar programs, are no longer available. The calculations illustrate that affordable multifamily housing projects using tax credits without supplemental subsidy sources may have funding gaps ranging from more than $395,000 per low-income unit (i.e., 80 percent of AMI) to nearly $552,000 per extremely low-income unit (i.e., 30 percent of AMI).

Table 13 highlights the potential funding gap that may exist for non-tax credit rental housing restricted to occupancy by households in the moderate-income (i.e., 120 percent of AMI) and multifamily achievable (125 percent of AMI) categories. The cost basis for these units is much less compared to tax credit projects due to reduced regulation, but nonetheless range from nearly $42,000 per multifamily achievable unit to almost $59,000 per moderate-income unit.

The analysis summarized in Appendix A indicates that the minimum in-lieu fee that would align with estimated workforce housing demand induced by new single-family development, as documented in the nexus analysis would range from just under $15,000 to nearly $29,000 per unit. That assumes an inclusionary percentage of between nine and 12 percent and that each project proportionately accounts for its impacts across all income levels. However, under state law, the City may establish a percentage up to 15 percent, which if requiring delivery of all low-income housing could justify an in-lieu fee of up to $59,300 per market rate unit. 370
32 Table 12: Financing Gap Analysis, Tax Credit Affordable Multifamily Notes:
(a) Based on a 3-person Household
(b) Affordable rents equal to 30 percent of gross monthly income, minus a utility allowance. (c) Data from 2018 tax credit funding applications for affordable housing projects in Placer and Sacramento Counties. (d) Based on the standard required assumption for affordable housing financing and tax credit applications. (e) Affordable monthly rent minus operating expenses and vacancy. (f) Operating subsidy is necessary for units with a negative net operating income based on the restricted rent level. (g) Net operating income plus operating subsidy, divided by the debt coverage ratio: 1.15 (h) Assumes an interest rate of 6.0 percent and a 30-year loan term. (i) Assumes 90% of total cost are eligible for LIHTC. Assumes the 4-percent LIHTC program. Assumes $0.92 per tax credit. (j) Based on the Sugar Pine Affordable Housing average construction cost. (k) Total development cost per unit minus the per unit supportable loan amount.

Sources: CTCAC, 2022; City of South Lake Tahoe, 2022; BAE, 2022.

Table 13: Financing Gap Analysis, Non-Tax Credit Workforce Multifamily Notes:
(a) Based on a 3-person Household
(b) Rents are equal to 30 percent of gross monthly income, minus a utility allowance. (c) Assumes operating costs are equal to 33 percent of gross income. (d) Based on the standard assumption by market-rate developers. (e) Monthly rent minus operating expenses and vacancy.
(f) Estimates the market value by dividing the Net Operating Income by the market capitalization rate. (g) Based on the estimated development cost for market-rate multifamily developments in the Tahoe area. (h) Total development cost per unit minus the per unit supportable loan amount.

Sources: City of South Lake Tahoe, 2022; BAE, 2022.

Extremely Low Very Low Income Low Income
Income (30% AMI) (50% AMI) (80% AMI)
Household Income Limit (a) $27,400 $45,600 $72,950
Maximum Affordable Monthly Rent Per Unit (b) $554 $1,009 $1,693 Monthly Operating Expenses (c) $529 $529 $529
Vacancy (d) 5% 5% 5%
Net Operating Income Per Unit (e) ($2) $430 $1,079
Net Operating Subsidy from Other Sources (f) $2 $0 $0
Permanent Financing
Monthly Supportable Debt Service Per Unit (g) $0 $374 $939 Loan Amount (h) $0 $62,356 $156,566
LIHTC Equity (i) $273,315 $273,315 $273,315
Affordable New Unit Development Cost (j) $825,227 $825,227 $825,227 Financing Gap Per New Unit (k) ($551,912) ($489,556) ($395,346) Income Level
Moderate Income MF Achievable
(120% AMI) (125% AMI)
Household Income Limit (a) $110,400 $115,000
Maximum Affordable Monthly Rent Per Unit (b) $2,629 $2,744 Monthly Operating Expenses (c) $868 $906
Vacancy (d) 5% 5%
Net Operating Income Per Unit (e) $1,630 $1,701
Capitalization Rate 5.00% 5.00%
Market Value (f) $391,195 $408,307
Affordable New Unit Development Cost (g) $450,000 $450,000 Financing Gap Per New Unit (h) ($58,805) ($41,693)
Income Level
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33 Financial Feasibility Testing
Appendix B provides detailed static proforma financial worksheets outlining the costs and revenues associated with construction of a luxury single-family residential property valued at approximately $3.125 million. Based on this analysis, such a project would have no difficulty absorbing the highest identified potential in-lieu fee amount of $59,000 per market rate unit, without overly impacting the developers anticipated return requirements.

Estimated Revenue Potential
Based on the nexus analysis calculations provided in Appendix A, the City should consider setting an in-lieu fee amount(s) of not less than $15,000 per median priced single-family unit or $29,000 per luxury unit.38 These values represent the minimum that the City should consider to ensure that new developments are required to offset their estimated impacts on the community at large. If adopted at these levels, the residential in-lieu fee could generate somewhere between $300,000 and $720,000 per year in revenue to the City of South Lake Tahoe, assuming between 20 and 25 new single-family homes per year. If the City elects to pursue a more rigorous inclusionary housing policy (i.e., at least a 15 percent inclusionary requirement) and an in-lieu fee of no less than $59,000 per market rate unit, the residential in-lieu fee could generate between $1.2 and $1.5 million per year, assuming 20 to 25 new single-family homes built per year on average (i.e., equal to the average number of newly completed single-family homes per year over the past five years). If the City elects to apply a policy that only applies to large luxury single-family homes over 5,000 square feet in size, the City may reasonably expect to receive around $177,000 per year in revenue, assuming an average of three new luxury single-family homes over 5,000 square feet per year.

Assessment of Stakeholder Impact
The burden associated with imposition of a new inclusionary housing requirement is primarily borne by the development community and by buyers of newly built residential properties.

Inclusionary housing requirements and associated in-lieu fees effectively increase the cost of new development by either requiring a developer to build units that require subsidy (i.e., for rental or sale at below market rates) or to pay a fee in-lieu. The increased cost increases the price point at which the unit must be sold or rented in order for the developer to achieve the same return. Therefore, either the developer must accept a lesser return, or the price is increased to the extent that the market will bear. However, as is noted in the financially feasibility analysis later on in this report, it appears likely that higher-end luxury single-family development may readily absorb the added cost imposed by a new inclusionary requirement. 38 Figures are rounded to the nearest $1,000.
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34 Commercial Linkage Fee
Many jurisdictions also impose housing impact fees on non-residential development. These requirements are legally differentiated from inclusionary housing requirements in that they are functionally designed to mitigate a projects’ estimated impacts on the community at large.

Commercial linkage fee requirements, as they are often termed, must be based on an established essential nexus between the proposed project and the impacts being mitigated.

The law also requires that the actions being taken to mitigate the impacts of the project must be roughly proportional to the impact being mitigated.

Establishing a Commercial Linkage Fee Ordinance
Unlike inclusionary housing policies, which are permitted under local police powers, business linkage fees are intended to offset the estimated impact(s) imposed on the community by a newly proposed non-residential development project. Such policies are, therefore, subject to the provisions of the California Mitigation Fee Act (Government Code Section 66000 et seq.), which requires local governments to prepare a nexus study that demonstrates a reasonable relationship between the impacts of new development, the facilities needed to address those impacts, and the fees that the jurisdiction intends to charge. Assembly Bill (AB) 602 further requires that nexus studies “identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is appropriate.”39 Therefore, prior to adopting a business linkage fee, the City would need to go through the exercise of documenting the level of service, which in this case would be equal to the current inventory of publicly-assisted affordable and workforce housing in South Lake Tahoe and must demonstrate that construction of new non-residential space creates additional demand for affordable and workforce housing that cannot be met with existing resources (e.g., very low vacancy rates). Once the nexus study is completed, the commercial linkage fee may be adopted by the governing body by ordinance and does not require a vote.

Comparison with Nearby Jurisdictions
Neither the City of South Lake Tahoe, nor El Dorado County, currently have commercial linkage fee ordinances. Placer County imposes an “Employee Accommodation” fee of $2.45 per net building square foot which applies to all new non-residential (i.e., commercial) development in the Sierra Nevada and Lake Tahoe Basin. The Town of Truckee requires that non-residential developments construct housing equivalent to accommodate between 3.5 and 14 percent of the estimated employment generated directly by the project itself, with units being rented directly by persons employed at the development or to low-income households in the community. In Truckee, developers may also pay a fee in-lieu of building required units of $134,413 per housing unit required.
39 See Government Code Section 66016.5(a)(2).
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35 Table 14: Induced Demand for Workforce housing and Equivalent Linkage Fee Notes:
(a) Based on the 2022 Tahoe Regional Planning Agency (TRPA) Residential Bonus Unit Program income limits. (b) As calculated based on data reported in the U.S. Census Bureau’s Public Use Microdata Sample (PUMS) dataset. (c) Based on an assumed 500 square feet per employee for retail uses and 1,500 square feet per employee for tourist accommodation use, distributed based on the proportion of total jobs at each income level reported in the line above. (d) Based on the estimated jobs per 1,000 sq. ft. reported for each land use divided by the estimated average number of workers per workforce household by income level. (e) Based on the net cost to provide housing at each income level as reported in Tables 12 and 13.

Sources: Census, American Community Survey Public-Use Microdata Sample (PUMS) 2016-2020; California Department of Housing and Community Development (HCD), Section 8 Income Limits; Tahoe Regional Planning Agency (TRPA), Residential Bonus Unit Program income limits; BAE, 2022.

Estimated Household Income as a Percent of AMI (a)
Land Use Type
Extremely Low
(30% AMI)
Very Low
(50% AMI)
Low
(80% AMI)
Moderate
(120% AMI)
MF Achievable
(125% AMI)
SF Achievable
(180% AMI)
Higher Income
(>180% AMI) Total, All
Retail/Restaurant
Proportion of Total Jobs (b) 6.3% 7.9% 17.7% 24.5% 0.1% 14.9% 28.5% 100% Estimated Jobs Per 1,000 Sq. Ft. (c) 0.13 0.16 0.35 0.49 0.00 0.30 0.57 2.00 Worker Households Per 1,000 Sq. Ft. (d) 0.12 0.12 0.24 0.28 0.00 0.17 0.30 1.22 Net Cost Per Unit Provided (e) $551,912 $489,556 $395,346 $58,805 $41,693 20,200.00 n.a. n.a.

Equivalent Fee Amount $64,092 $60,443 $94,366 $16,602 $65 $3,352 n.a. $238,920 Per Square Foot $64 $60 $94 $17 $0.06 $3.35 n.a. $239
Hotel/Motel
Proportion of Total Jobs (b) 6.1% 16.4% 17.1% 21.7% 1.6% 10.6% 26.5% 100% Estimated Jobs Per 1,000 Sq. Ft. (c) 0.04 0.11 0.11 0.14 0.01 0.07 0.18 0.67 Worker Households Per 1,000 Sq. Ft. (d) 0.04 0.09 0.08 0.08 0.01 0.04 0.09 0.42 Net Cost Per Unit Provided (e) $551,912 $489,556 $395,346 $58,805 $41,693 $20,200 n.a. n.a.

Equivalent Fee Amount $20,859 $42,199 $30,333 $4,906 $246 $790 n.a. $99,333 Per Square Foot $21 $42 $30 $4.91 $0.25 $0.79 n.a. $99
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36 Essential Nexus and Maximum Justifiable Fee
Table 14, above, identifies induced employment associated with retail/restaurant and hotel/motel type uses in South Lake Tahoe. The analysis assumes an average of 500 square feet per employee for retail/restaurant uses and 1,500 square feet per employee for hotel/motel uses. The induced employment per 1,000 square feet of development is distributed by income level and household size based on analysis of information contained in the U.S. Census Bureau’s Public Use Microdata Sample (PUMS) dataset. The analysis then applies the net cost to provide housing at each income level to identify the equivalent fee amount per 1,000 square feet of new development and subsequently per square foot of new development. Based on this approach, BAE estimates that the maximum legally justifiable commercial linkage fee that may be applied to retail/restaurant uses is $239 per square foot, and $99 per square foot for hotel/motel uses.

As discussed in the following section, it is unlikely that new developments can absorb the full legally justifiable fees. Recognizing that linkage fees are “ride along” fees (i.e., are only generated as a result of new development), most jurisdictions adjust the applicable fee downwards as to not unduly constrain desirable new development. There are two approaches that the City may consider to identify an acceptable fee level. First, the City may consider whether they want to craft the ordinance to only require mitigation for workforce housing demand that falls into specific income categories, such as extremely low- through low-income, or whether the ordinance should account for all induced demand. Second, the City may simply consider the fee that may be reasonably absorbed by new development, regardless of whether it covers the full impacts within a given income category.

Financial Feasibility Testing
Appendix B provides detailed static proforma financial worksheets outlining the costs and revenues associated with construction of stand-alone retail, hotel, and tourist mixed-use developments in South Lake Tahoe.

Overall, the financial feasibility testing exercise found that neither of the pure hotel prototypes are likely to be able to absorb much in the way of an additional linkage fee burden.

The retail prototype may likely be able to absorb imposition of a linkage fee, though only because it’s positioned at the top of the local retail real estate market. Retail projects that are less well positioned are unlikely to be able to absorb imposition of a commercial linkage fee.

The tourist mixed-use prototype is likely to be able to absorb imposition of a potentially significant commercial linkage fee, with options available for how the fee is applied across the various retail versus condotel project components.
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37 Tourist Mixed-Use
The development type with the greatest potential for feasibility is the high-density tourist mixed-use prototype, which includes 72 hotel units and 66 for-sale condominium units, with 18,400 square feet of ground floor retail and structured parking on 1.5 acres of land. Based on current listings for land available for purchase in the tourist core, the project may face land costs between $3.5 and $5.0 million per acre. With a residual land value of nearly $8.1 million per acre, BAE estimates that a project of this type could potentially support imposition of a hotel linkage fee of up to $44 per square foot, or the retail linkage fee of $239 plus a hotel linkage fee of $7 per square foot. In either scenario, the City would be imposing a fee burden equal to approximately $5.2 million. Note however, that the retail component of the project is likely being subsidized by the condotel component; therefore, an impact fee imposed on the condotel component would be more efficient and less likely to be impacted by adjustments in the ancillary aspects of the project design. In terms of revenue generation potential, the potential value capture is significant, though projects such as this are relatively infrequent.

Traditional Hotel Uses
This analysis includes evaluation of two different hotel prototypes. The first is a smaller boutique hotel, similar to the Desolation property, while the second is based roughly on the Hampton Inn redevelopment. The analysis indicates that the smaller boutique hotel prototype is marginally feasible without imposition of linkage fees, while the larger hotel prototype is more challenged (i.e., only feasible with minimal land use commodity costs and relatively aggressive assumptions regarding occupancy and average daily rates). At current land prices, neither project is likely able to absorb much in the way of additional linkage fee burden. While economic theory suggests that imposition of fees would put downward pressure on land values, land values tend to be resistant to such forces in practice and it can often take numerous economic cycles to realize the anticipated effects.

Lifestyle Retail Center
The financial feasibility analysis included one retail prototype, which was modelled off the Building A retail pad located on part of the Whole Foods shopping center property at 3640 Lake Tahoe Boulevard. This represents a premium new build retail property. The proforma model assumes a 12,000 square foot standalone building on 1.6 acres. Based on an evaluation of the subject property, the analysis assumes relatively high rents and an aggressive capitalization rate, which nets a residual land value of approximately $3.6 million per acre, which notably above the $2.8 million that was paid for the land in 2019. As such, the retail prototype is expected to be feasible under current market conditions, with the potential to absorb a small commercial linkage fee of up to $90 per square foot, equal to approximately $1.08 million in total additional project cost. However, please note that this represents a very high-end retail project and that less well positioned projects may not be able to absorb the same additional impact fee burden. Also, the city may be challenged to apply 376
38 linkage fees to existing buildings undergoing tenant improvements (TI), as an argument can be made that the impacts of the development have already accrued within the community.

Estimated Revenue Potential
Based on the financial feasibility analysis, as described above on pages 36 and 37 and in Appendix B, BAE does not expect that the City could feasibly impose a hotel linkage fee on smaller to medium sized hotel projects without impacting development feasibility, though the tourist mixed-use could likely absorb an impact fee up to $44 per square foot for the hotel component only, or $239 per square foot for the retail component plus up to $7 per square foot for the hotel component.

It is also likely feasibly impose a linkage fee on new retail uses, except for projects positioned at the very highest-end of the market. For example, the retail prototype used for this analysis could potentially absorb a linkage fee of up to $90 per square foot, or approximately $1.08 million for a 12,000 square foot building. Also, the city may be challenged to apply linkage fees to existing buildings undergoing tenant improvements (TI), as an argument can be made that the impacts of the development have already accrued within the community.

It is likely that the City may impose either a retail linkage fee or a hotel linkage fee on high-end tourist mixed use development in the tourist core. Assuming a land cost of $3.5 million per acre, the modeled development could potentially absorb roughly $5.2 million in total linkage fees, applied to the hotel component only or divided between the retail and hotel project components respectively, as discussed on page 36.

Assessment of Stakeholder Impact
The burden associated with imposition of a new commercial linkage requirement is primarily borne by the development community and potentially by tenants of the new project.

Commercial linkage fees effectively increase the cost of new development, which must either be absorbed by the developer in terms of a reduced return or passed on to tenants in the form of higher rental rates (to the extent that the market will absorb such an increase without a commensurate increase in vacancy).
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39 APPENDIX A: RESIDENTIAL NEXUS ANALYSIS
The following represents an abbreviated nexus analysis that identifies the minimum inclusionary housing percentage that would offset the impacts imposed by new single-family housing development. This information is provided to help inform potential deliberations regarding an appropriate inclusionary housing percentage and should not be interpreted as legal direction recognizing that state law does not require establishment of an essential nexus.

Rather, BAE recommends that the City use this information to inform the minimum inclusionary percentage that can be expected to offset the direct impacts of a project and that a higher percentage may be considered to provide a supplemental benefit to the community.

Establishing an Informational Nexus
To provide a representative analysis illustrating the impact of new single-family development on demand for local workforce housing in South Lake Tahoe, BAE evaluated two alternative scenarios. The first scenario considers the workforce housing demand that is induced based on household spending associated with full-time occupancy of a typical newly constructed single-family home. The second scenario considers the impacts of a high-end luxury property.

Under both scenarios, BAE reviewed the available information on assessed value for properties with building permits issued within the last five years with construction having been completed in 2022. BAE’s assessment indicates that an average new build single-family home is valued at approximately $815,000, while a typical luxury housing unit is valued at roughly $3.125 million. Exhibits A1 and A2 roughly illustrate the income needed to purchase properties at these price points, indicating that the purchase of a median priced newly built unit would require an income of roughly $205,000 per year, while a luxury property would require an income of roughly $786,000 per year, assuming the properties were financed.40 Based on the estimated household incomes needed to afford newly constructed single-family housing in South Lake Tahoe, either at the median price or a luxury unit, BAE then estimated the number of jobs that would be supported based on household spending associated with the occupant household. This analysis assumes that the units are occupied full time. This is a simplifying assumption recognizing the observed variation in how second homes are used; however, it reflects the likely high-end potential impacts associated with a property that may be used as a primary residence or as a second home with varying occupancy levels. 40 Incomes associated with buyers of second homes in South Lake Tahoe likely exceed these estimates, recognizing that these households would also own a primary residence. However, it is not possible to estimate the actual household income of second home buyers without having access to private income tax data, which is not available.

Therefore, this analysis uses the minimum income needed to purchase the properties, which is likely conservative. 378
40 Exhibit A1: Household Income Required to Purchase a Typical New Single-Family Home in South Lake Tahoe, 2022
Notes:
(a) Represents the estimated value of a typical newly constructed single-family home in South Lake Tahoe in 2022. (b) Monthly ownership costs are based on the following assumptions:

Annual Interest Rate 6.6%
Loan Term (Years) 30 years
Down Payment (% of Sale Price) 20%
Property Tax (Annual) 1.0%
Homeowners Insurance (% of Sale Price) 0.4%
(c) Assumes that housing costs do not exceed 30 percent of household income.

Sources: ListSource; Local Mortgage Brokers; California Department of Insurance, Homeowners Premium Survey; BAE, 2022.

Exhibit A2: Household Income Required to Purchase a New Luxury Single-Family Home in South Lake Tahoe, 2022
Notes:
(a) Represents the estimated value of a newly constructed luxury single-family homes in South Lake Tahoe as of 2022. (b) Monthly ownership costs are based on the following assumptions:

Annual Interest Rate 6.6%
Loan Term (Years) 30 years
Down Payment (% of Sale Price) 20%
Property Tax (Annual) 1.0%
Homeowners Insurance (% of Sale Price) 0.4%
(c) Assumes that housing costs do not exceed 30 percent of household income. (d) This assumes that the hypothetical development project contains a total of 10 units. This assumption provides for ease of analysis and does not impact the results of the analysis.

Sources: ListSource; Local Mortgage Brokers; California Department of Insurance, Homeowners Premium Survey; BAE, 2022.

Exhibit A3 reports the estimated induced employment generated by occupancy of new singlefamily homes in South Lake Tahoe within both the median and luxury markets. The estimates were generated using the Impacts for Planning (IMPLAN) economic impact model. Due to the limited impacts per household, the analysis calculates impacts assuming a total of 100 households at each income level, then coverts the estimates to reflect the total impact per Estimated Sale Price, New Units (a) $815,000
Monthly Housing Cost, New units (b) $5,122
Annual Housing Cots $61,460
Household Income Required (c) $204,867
Estimated Sale Price, New Units (a) $3,125,000
Monthly Housing Cost, New units (b) $19,638
Annual Housing Cots $235,660
Household Income Required (c) $785,534
379
41 household. Based on this approach, BAE estimates that occupancy of a typical newly built single-family home in South Lake Tahoe may generate demand for 15 new jobs for every 100 households, which represents a jobs multiplier of 0.15 per household. Occupancy of 100 luxury single-family homes would generate demand for 28 new jobs, or .28 jobs per household. To the extent that these units are occupied less than full-time, the impacts would be reduced.

Exhibit A3: Estimated Economic Impacts Per 10 New Households Notes:
(a) Based on estimated household spending associated with 100 households earning approximately $204,867 per year. (a) Based on estimated household spending associated with 100 households earning approximately $785,534 per year.

Sources: Impacts for Planning (IMPLAN) Economic Impact Model; BAE, 2022.

Exhibit A4, on the following page, further breaks down the induced jobs estimates from Exhibit A3 by income level and convers jobs to workforce households based on the average number of workers per household within each income category. Based on this data, occupancy of newly constructed single-family homes in South Lake Tahoe likely generates demand for approximately one new workforce housing unit for every ten median priced units constructed.

Excluding higher income workforce housing demand (i.e., greater than 180 percent of AMI), this ratio decreases to one workforce unit for every 15 median priced market rate units.

Meanwhile, occupancy of newly constructed luxury single-family homes likely generates demand for one new workforce housing unit for every six new luxury properties, or for every eight luxury properties if excluding higher income (i.e., greater than 180 percent of AMI) workforce housing demand. Note that if the City of South Lake Tahoe were to establish an inclusionary policy at these levels, it would be well below the allowable 15 percent.

Typical New Single-Family Homes (a)
Impact Type Employment Labor Income Value Added Output
Direct 0.0 $0 $0 $0
Indirect 0.0 $0 $0 $0
Induced 15 $729,648 $1,261,719 $2,114,969
Total 15 $729,648 $1,261,719 $2,114,969
Per Job 1 $49,081 $84,871 $142,267
Per Unit 0.15 $7,296 $12,617 $21,150
New Luxury Single-Family Homes (b)
Impact Type Employment Labor Income Value Added Output
Direct 0 $0 $0 $0
Indirect 0 $0 $0 $0
Induced 28 $1,271,001 $2,345,086 $3,807,455
Total 28 $1,271,001 $2,345,086 $3,807,455
Per Job 1 $44,925 $82,889 $134,578
Per Unit 0.28 $12,710 $23,451 $38,075
380
42 Based on the distribution of workforce housing demand by income level illustrated in Exhibit A4, BAE then calculated the estimated cost associated with bringing those units to market.

Exhibit A5 reports the estimated total cost associated with building housing units at each income level as well as the net funding gap that would need to be closed to bring these units to market.41
Exhibit A4: Induced Employment and Workforce Housing Demand by Income Level Notes:
(a) Based on estimated household spending associated with 10 households earning approximately $204,867 per year. (b) Based on the distribution of induced jobs industry sector, as reported by IMPLAN, combined with the distribution of workers by industry and household income, as reported in the Public Use Microdata Sample (PUMS) for the greater South Lake Tahoe area.
(c) Based on the distribution of workers by industry sector and household income level, as reported in the PUMS. (d) Based on estimated household spending associated with 10 households earning approximately $785,534 per year.

Sources: IMPLAN; U.S. Census Bureau, Public Use Microdata Sample (PUMS); BAE, 2022. 41 The analysis assumes that housing targeted towards households earning less than 80 percent of the area median income (AMI) would be funded in part by state and federal tax credits. As such, the cost to deliver those units is quite elevated at more than $825,000 per unit. Housing targeted towards moderate income households (i.e., 81-120 percent of AMI) and multifamily achievable (i.e., 120-125 percent of AMI) are assumed to be market rate multifamily rental units, with an estimated total development cost of $450,000 per unit. Housing targeted towards households in the single-family achievable income (i.e., 125-180 percent of AMI) category are assumed to be detached single-family homes. Where the analysis assumes new construction for units serving the multifamily achievable income category and below, BAE assumes that households in the single-family achievable income category would be purchasing existing housing units at market rates.

Typical New Single-Family Homes (a)
Ave. Workers Est. Worker Per
Household Income Level Jobs (b) Per Household (c) Households New unit Extremely Low (30% AMI) 0.7 1.1 0.6 0.01
Very Low (50% AMI) 1.0 1.3 0.8 0.01
Low (80% AMI) 2.3 1.5 1.6 0.02
Moderate (120% AMI) 3.4 1.7 2.0 0.02
MF Achievable (125% AMI) 0.3 1.8 0.1 0.00
SF Achievable (180% AMI) 2.6 1.8 1.4 0.01
Higher Income (>180% AMI) 4.6 1.9 2.4 0.02
Total, All Income Levels 14.9 1.7 8.9 0.09
Per New Unit 0.15 0.02 0.09
New Luxury Single-Family Homes (d)
Ave. Workers Est. Worker Per
Household Income Level Jobs (a) Per Household (b) Households New unit Extremely Low (30% AMI) 1.3 1.1 1.2 0.01
Very Low (50% AMI) 1.9 1.3 1.5 0.02
Low (80% AMI) 4.6 1.5 3.1 0.03
Moderate (120% AMI) 6.5 1.7 3.8 0.04
MF Achievable (125% AMI) 0.5 1.8 0.3 0.00
SF Achievable (180% AMI) 4.8 1.8 2.7 0.03
Higher Income (>180% AMI) 8.7 1.9 4.5 0.05
Total, All Income Levels 28.3 1.7 17.0 0.17
Per New Unit 0.28 0.02 0.17
381
43 Exhibit A5: Estimated Funding Gap and Equivalent In-Lieu Fee Amount Notes:
(a) Based on estimated household spending associated with 10 households earning approximately $204,867 per year. (b) Represents the estimated new workforce housing demand by income level generated by household spending associated with a newly constructed single-family housing unit. (c) Reflects the estimated total cost and net financing gap associated with providing housing at each income level. Housing targeted for occupancy at 80 percent of AMI or below is assumed to be new construction funded using state and federal tax credits. Housing occupied by households in the moderate-income (81-120 percent of AMI) and multifamily achievable (121- 125 percent of AMI) income categories is assumed to be newly constructed market rate multifamily rental housing. Housing occupied by households in the single-family achievable (126-180 percent of AMI) income category is assumed to be existing single-family resale inventory.
(e) Based on estimated household spending associated with 10 households earning approximately $785,534 per year.

Sources: IMPLAN; U.S. Census Bureau, Public Use Microdata Sample (PUMS); BAE, 2022.

Typical New Single-Family Homes (a)
New Workforce Equiv. In-Lieu
Housing Demand Per Estimated Cost Per Workforce Unit (c) Fee Per Market Household Income Level New M arket Rate Unit (b) Total Cost Net Gap Rate Unit (d) Extremely Low (30% AMI) 0.01 $825,227 $551,912 $3,333
Very Low (50% AMI) 0.01 $825,227 $489,556 $3,718
Low (80% AMI) 0.02 $825,227 $395,346 $6,228
Moderate (120% AMI) 0.02 $450,000 $58,805 $1,167
MF Achievable (125% AMI) 0.00 $450,000 $41,693 $62
SF Achievable (180% AMI) 0.01 $642,500 (e) $20,200 $286 Higher Income (>180% AMI) 0.02 n.a. n.a. n.a.

Total, All Income Levels 0.09 $14,794
Excluding Higher Income
(>180% AMI)

0.06 New Luxury Single-Family Homes (e)
New Workforce Equiv. In-Lieu
Housing Demand Per Estimated Cost Per Workforce Unit (c) Fee Per Market Household Income Level New M arket Rate Unit (b) Total Cost Net Gap Rate Unit (d) Extremely Low (30% AMI) 0.01 $825,227 $551,912 $6,380
Very Low (50% AMI) 0.02 $825,227 $489,556 $7,355
Low (80% AMI) 0.03 $825,227 $395,346 $12,181
Moderate (120% AMI) 0.04 $450,000 $58,805 $2,207
MF Achievable (125% AMI) 0.00 $450,000 $41,693 $123
SF Achievable (180% AMI) 0.03 $642,500 $20,200 $536
Higher Income (>180% AMI) 0.05 n.a. n.a. n.a.

Total, All Income Levels 0.17 $28,782
Excluding Higher Income
(>180% AMI)

0.12 382
44 Estimated Revenue Potential
Based on the nexus analysis discussed above, BAE recommends that the minimum inclusionary housing percentage that the City might consider as part of a potential inclusionary housing policy would range from six percent for typical newly built single-family homes to 12 percent for newly built luxury single-family homes. Note that state law permits establishment of an inclusionary housing percentage up to 15 percent without HCD review and that jurisdictions may set requirements even higher if it can be demonstrated that it would not overly inhibit the financial feasibility of new development. Based on the nexus analysis calculations provided in Exhibits A1 through A5, the City should consider setting in-lieu fee amounts of not less than $15,000 per median priced single-family unit and $29,000 per luxury unit.42 These values represent the minimum that the City should consider to ensure that new developments are required to offset their estimated impacts on the community at large. If the City were to set an inclusionary requirement at 15 percent, a fee up to approximately $59,000 may also be justifiable (i.e., 15 percent of $395,000, which is equal to the net financing gap for multifamily rental units affordable to low-income households). 42 Figures are rounded to the nearest $1,000.
383
45 APPENDIX B: PROFORMA FINANCIAL

FEASIBILITY TESTING
Building on previous sections of this report, this Appendix presents an analysis of the potential financial feasibility of five real estate development prototypes for the purposes of identifying linkage fee amounts that would not negatively affect the feasibility of new development projects in South Lake Tahoe.

Prototype Formulation
For the purposes of this research, City staff requested analysis of five unique development prototypes which are generally representative of the types of development the city has experienced in the recent past and/or expects to see in the near future. Summarized in Exhibit B1 below, the development prototypes include:

Hotel Prototype #1 – Luxury/Boutique
The first of the two hotel prototypes is a small-scale luxury boutique hotel development, similar in scale and finish to the Desolation hotel property. While the Desolation Hotel is a unique condo style hotel, the prototype project would be of similar scale and finish but differs in room design and count. It would be located on a 0.69-acre site, with a 16,640 square foot three story building, with 40 rooms with an average of 300 square feet. This represents a land coverage ratio of 76 percent. The project includes a 1,040 square foot restaurant space that is considered incidental to the primary hotel use on the site. The project is assumed to be surface parked.

Hotel Prototype #2 – Upper Mid-Scale
The second hotel prototype is an upper mid-scale offering with 120 rooms, compared to the 40 in hotel prototype number one. The project includes an approximately 60,000 square foot three story building, located on a 2.3-acre site, which equals a coverage ratio of 73 percent.

The project includes a 2,000 square foot retail/restaurant space that is again considered incidental to the primary hotel use. The project is assumed to be surface parked. This prototype is roughly modelled on the Hampton Inn project, which represented redevelopment of a previously existing hotel property. Therefore, as part of the analysis, BAE tested the extent to which reusing existing land use commodities improved feasibility.

Retail Prototype – Stand-Alone Retail Pad
City staff requested analysis of a stand-alone retail pad development similar to Building A at the Bijou Marketplace at 3640 Lake Tahoe Boulevard. The project includes a 12,000 square foot building located on a 1.6-acre site. Including significant surface parking and hard landscaping, the project has an estimated coverage ratio of 81 percent. The project is assumed to be located in a premium location and subsequently includes premium rental rates and is expected to absorb what is effectively a premium land cost. 384
46 Tourist Mixed-Use Prototype – Condotel and Retail
The fourth commercial prototype is loosely based on the Zalanta project, located in the tourist core. The prototype assumes a 136,750 square foot building on a 1.5-acre site. The project mostly relies on structured parking, though some surface parking is also provided. Including hard landscaping, the approximate coverage ratio is 79 percent. The project includes 72 dedicated hotel rooms, as well as 66 condominium properties. The condominium units are assumed to be used by owners for an average of 90 days per year, with the units being available for rent as tourist accommodations for the remaining 275 days per year. The project assumes 18,400 square feet of retail space on the ground floor fronting the main roadway.

Residential Prototype – Luxury Single-Family
The fifth and final prototype represents a luxury single-family residential project consisting of a single 6,250 square foot home on 0.65 of an acre. Based on a review of recently completed properties in South Lake Tahoe, this project is valued at approximately $3.125 million. As such, the proformas assume relatively high-end finishes. Land costs appear to vary significantly for this type of product and can range from $300,000-$500,000 per acre to upwards of two or three million dollars per acre, depending on the location of the property.

Exhibit B1: Development Prototype Specifications
Sources: City of South Lake Tahoe; BAE, 2022.

Development Cost Assumptions
BAE estimated development costs for each prototype based upon information collected from a variety of sources including research conducted by BAE for other similar projects and key stakeholder interviews, as well as published secondary sources like RS Means. The development costs reported in Exhibit B3, which form the basis for the proformas, represent the middle- to high-end range of comparable costs, meaning that the cost estimates are likely to be conservative and, if anything, overstate the likely costs of development. Key components of the total estimated development cost include:

Parcel Size Building Size Hotel Parking Spaces
Project Type Acres Sq. Ft. Gross Sq. Ft. Hotel Retail Condos Rooms Structured Surface Hotel Prototype #1:

Luxury/High End
Hotel

0.69 30,056 16,640 15,600 1,040 0 40 0 42
Hotel Prototype #2:

Upper Mid-Scale
Hotel

2.3 100,188 60,800 58,800 2,000 0 120 0 124
Retail Prototype 1.61 70,132 12,000 0 12,000 0 n.a. 0 100 Tourist MixedUse/Condotel

1.5 65,340 136,750 35,280 18,400 66 72 120 0
Luxury Residential 0.65 28,314 6,250 0 0 6,250 1 0 0
385
47 Site Preparation Costs
Site preparation costs include costs associated with grading, utility connections, paving and surface parking, and landscaping, among other items. Based on feedback from local developers and real estate professionals active in the greater Lake Tahoe region, this analysis assumes a site preparation cost of $15-$20 per site square foot depending on the prototype.

It should be noted that this analysis assumes the sites to be vacant and relatively flat. This analysis also assumes that all necessary infrastructure is in place to service the prototypes.

Land Use Commodity Acquisition
Projects proposed for development within the Lake Tahoe Basin must acquire necessary land use commodities issued and managed by the Tahoe Regional Planning Agency (TRPA). These include development rights (i.e., tourist accommodation units, commercial floor area, residential units of use, etc.), residential allocations, site coverage, etc. The proformas generally assume that new development will have to acquire necessary development rights and coverage at full market value, without use of multipliers, or reuse of existing rights.

However, in the case of the mid-scale hotel prototype, the analysis does include some sensitivity testing recognizing that recent development of this type reused existing development rights that were previously associated with the site. Pricing for development rights is based on an appraisal conducted by the City of South Lake Tahoe in April 2020.

Planning, Building and other Permit Fees.

Exhibit B2 reports building permit and building permit fee estimates for each of the five prototypes provided by City staff, as well as information on water and sewer connection fees provided by the South Tahoe Public Utility District (STPUD). Fees charged by TRPA were excluded from the analysis at the request of City staff due to the extreme variability that exists in the fees charged based on unique project characteristics. For example, two projects with similar specifications may be proposed on two different sites with fee estimates ranging from the tens of thousands to many millions of dollars.

Soft Development Costs
Soft costs include architecture, engineering, some permit and plan check fees, pre-entitlement costs such as preparation of necessary studies and Environmental Impact Reports, legal costs, permanent financing costs, and miscellaneous developer overhead costs, among others. For all five prototypes, soft costs are estimated at 20 percent of hard costs.

Hard Construction Costs
Hard costs include primarily labor and materials costs and are based both on RS Means and on BAE’s experience with comparable recent projects constructed within the Tahoe region.

Podium Parking Hard Construction Costs
Based on BAE’s professional experience, this analysis assumes podium parking costs of $50,000 per space for a single-level podium structure.
386
48 Exhibit B2: Estimated Planning, Building, and Connection Fees by Prototype Sources: City of South Lake Tahoe; South Tahoe Public Utility District (STPUD); BAE, 2022.

Prototype #1 Prototype #2 Prototype #3 Prototype #4 Prototype #5 Boutique Hotel Upper Mid Hotel Retail Center Mixed Use Condotel Luxury SFR Planning Permits
Design Review $2,921 $2,921 $2,921 $2,921 $2,921
CEQA $74 $74 $74 $74 $74
Subtotal Planning Permits $2,995 $2,995 $2,995 $2,995 $2,995 Building Permit
Administrative Fee $ Hour $0 $0 n.a. $0 $0
Fire Plan Review $3,332 $3,332 $3,332 $3,332 $3,332
Planning Plan Review $232 $232 $232 $232 $232
Technology Fee $11 $11 $11 $11 $11
General Plan Maintenance Fee $1.00 Per $1,000 Value $7,510 $24,293 $3,422 $63,001 $1,660 State Building Standards Fee $1.00 Per $25,000Value $300 $972 $137 $2,520 $66 SMIP Fee $28.00 Per $100,000 Value $6,802 $6,802 $958 $17,640 $465 Building Permit Fee 2.0% of Value $150,209 $485,850 $68,447 $1,260,011 $33,195 Lake Tahoe Unified School District Fee $12,500 $62,000 $9,360 $89,700 $20,625 Subtotal Building Permit Fees $180,897 $583,491 $76,540 $1,436,447 $59,586 PUD Water and Sewer Connection Fees
Water & Sew er Fees $117,979 $556,800 $116,831 $566,800 $34,008 Subtotal Water and Sewer Connection Fees $117,979 $556,800 $116,831 $566,800 $34,008 Total Fees, All Types $301,871 $1,143,286 $196,366 $2,006,242 $96,589 387
49 Exhibit B3: Estimated Development Costs by Prototype Sources: City of South Lake Tahoe; BAE, 2022.

Project Type Hard Costs Site Costs Soft Costs Financing Profit Land Use
Commodities/
Entitlements
Planning &
Building Fees
Linkage
Fees Total Costs
Costs/
Sq. Ft.

Hotel Prototype #1:

Luxury/High End Hotel
$5,657,600 $601,128 $1,251,746 $502,724 $1,362,748 $1,272,641 $301,871 $0 $10,950,458 $658 Hotel Prototype #2:

Upper Mid-Scale Hotel
$18,240,000 $2,003,760 $4,048,752 $1,636,794 $3,099,806 $3,925,470 $1,143,286 $0 $34,097,868 $561 Retail Prototype $1,800,000 $1,051,974 $570,395 $232,866 $956,348 $1,414,704 $196,366 $1,109,348 $7,332,000 $611 Tourist MixedUse/Condotel $51,193,650 $1,306,800 $10,500,090 $4,394,458 $11,015,188 $4,033,350 $2,006,242 $0 $84,449,778 $618 Luxury Residential $1,100,000 $283,140 $276,628 $61,077 $625,000 $22,500 $96,589 $59,000 $2,523,935 $404 388
50 Developer Profit
Measured as a percentage of total development costs, developers typically seek a gross profit of between ten and 15 percent for commercial real estate projects. For single family residential projects, many developers aim for returns equal to 20 percent of gross sales.

Financing Costs
In terms of construction financing costs for commercial real estate projects, this analysis assumes a 65 percent loan-to-cost ratio, and a 7.0 percent annual interest rate over a 24- month period, an upfront 1.5 percent loan fee, and a 60 percent drawdown factor.

Land Acquisition and land residuals
The five proformas presented in this analysis do not include a land cost. Instead, the tables are structured with an assumed developer return and solve for the “land residual” as the bottom-line measure of feasibility after accounting for all other costs and developer profit.

Development Revenue Assumptions
BAE estimated revenue assumptions for each prototype based upon information from a variety of sources including research completed by BAE for other similar projects, stakeholder interviews, other proprietary developer development budgets, and CoStar.

Commercial Rental Revenues
Feedback from local business owners and real estate professionals indicates that premium retail NNN lease rates range from $3.00 to more than $4.00 per square foot depending on location and amenities for more newly developed and well-maintained properties.

Commercial Vacancy Rate
Due to potential turn over and perceived challenges in retrofitting built-out space, this analysis assumes a commercial vacancy rate of ten percent at stabilization.

Condominium Sales Price
Based on feedback from local developers and real estate professionals, this analysis assumes both the townhome-style and condotel condominiums could garner an average of $625 per square foot in sales revenue. Local real estate professionals indicate that the average per square foot sale prices could increase significantly depending on location and views of the lake or other scenic and lifestyle amenities.

Upper Mid-Scale Hotel Room Revenues
This analysis assumes that hotel rooms in the upper mid-scale hotel prototype will capture an average daily room rate (ADR) of $180. Recognizing that newer hotel product will likely capture higher room revenues than the area’s relatively aged existing stock, this assumed rate is on the higher end of ADRs that CoStar reports for this class of properties in the market area. 389
51 Small Luxury/Boutique Hotel Room Revenues
This analysis assumes that hotel rooms in the small luxury/boutique prototype will capture an ADR of $240 per night. Once again, recognizing that newer hotel product will likely capture higher room revenues than the area’s relatively aged existing stock, this assumed rate is generally higher than ADRs reported by CoStar for luxury/boutique hotels in the market area.

Full-Service Hotel Condo Rental Revenues
This analysis assumes that condominium units returned to the hotel pool managed by the hotel operator will capture an ADR of $350. This recognizes that these larger units that have more amenities than a traditional hotel room (i.e., kitchens, living rooms, multiple bedrooms, etc.). Once again, while local hotel developers generally confirmed this analysis’ assumption, it should be noted that ADRs can range widely depending on depending on location and scenic/lifestyle amenities. The ADR used for this analysis does not assume a view premium.

Feasibility Results
Overall, the financial feasibility testing exercise found that neither of the pure hotel prototypes are likely to be able to absorb much in the way of an additional linkage fee burden.

The retail prototype may likely be able to absorb imposition of a linkage fee, though only because it’s positioned at the top of the local retail real estate market. Retail projects that are less well positioned are unlikely to be able to absorb imposition of a commercial linkage fee.

The tourist mixed-use prototype is likely to be able to absorb imposition of a potentially significant commercial linkage fee, with options available for how the fee is applied across the various retail versus condotel project components.

The remainder of this section provides a more detailed discussion of the results of the financial feasibility analysis, with summary tables and detailed proforma worksheets provided as Exhibits B4 through B9.

Hotel Prototype #1: Luxury/Boutique
The feasibility analysis indicates that this prototype would likely be feasible before the addition of new linkage fees. Total residual land value for this property is estimated to be $1.86 million per acre compared to prevailing land cost of roughly $1.7 million for this type of property in the South Lake Tahoe tourist core. Sensitivity testing reveals that adjusting cost and revenue assumptions such as ADRs, the assumed capitalization rate, and other key inputs could significantly improve project performance and yield higher residual land value.

Hotel Prototype #2: Upper Mid-Scale
Of the five prototypes, this project yields the lowest overall residual land values assuming that the development would incur full land use commodity entitlement costs. Without the land use commodity entitlement costs, the prototype may be marginally feasible, yielding a positive land 390
52 value per acre of approximately $850,000 which may be sufficient to cover the cost of land in less prime locations on the edge of the tourist core or along outlaying commercial corridors.

Retail Prototype – Stand-Alone Retail Pad
Assuming premium rents, an aggressive cap rate and relatively modest overall development costs, this prototype would be feasible yielding approximately $3.6 million per acre in residual land value per acre compared to the prevailing market value of $2.8 million per acre for this property type use. At this level of profitability, the project could potentially absorb up to around $90 per square foot in additional commercial linkage fee burden, equal to approximately $1.08 million in total additional project cost. However, please note that this represents a very high-end retail project and that less well positioned projects may not be able to absorb the same additional impact fee burden.

Tourist Mixed-Use Prototype – Condotel and Retail
The preliminary feasibility analysis for the condotel prototype indicates that the project would likely be feasible before the addition of the retail and hotel linkage fees, yielding a positive residual land value of approximately of $8.1 million per acre compared to prevailing land costs of $3.5 to $5.3 million for this property type. It is important to note, however, that a large percentage of the value attributed to this prototype would be generated by very high assumed ADRs for the condotel portion of the project, and is thus highly dependent on the continued strength of this product type in the local lodging market.

With such a high residual land value, BAE estimates that a project of this type could potentially support imposition of a hotel linkage fee of up to $44 per square foot, or the retail linkage fee of $239 plus a hotel linkage fee of $7 per square foot. In either scenario, the City would be imposing a fee burden equal to approximately $5.2 million. Note however, that the retail component of the project is likely being subsidized by the condotel component; therefore an impact fee imposed on the condotel component would be more efficient and less likely to be impacted by adjustments in the ancillary aspects of the project design.

Residential Prototype – Luxury Single-Family
Of all of the prototypes considered in this analysis, the luxury single-family prototype would perform the strongest in terms of its ability to generate a substantial residual land value in excess of prevailing land costs for comparable properties. As shown below, this project would yield nearly in $900,000 per acre in land value per acre compared to an assumed land cost of approximately $500,000 per acre for a comparable parcel of single-family zoned land. This includes imposition of the recommended inclusionary housing in-lieu fee amount of $59,000. 391
53 Exhibit B4: Estimated Residual Value and Value Capture Potential Notes:
(a) A residual value of this magnitude is likely within the margin of error of most proforma financial models. (b) The assumed land cost is based on sites located within the tourist core. Sites on the periphery and some commercial corridors may be available at a lower cost which could prove feasible under some circumstances.

Source: BAE, 2023.

Residual Market Value Value Capture
Land Value/Acre Land Value/ Capture Potential Per
Project Type Adjustments w/o Linkage Fee Acre Potential Sq. Ft./Unit Hotel Prototype #1:

Luxury/High End Hotel
n.a. $1,863,877 $1,700,000 $163,877 $10 (a)
Hotel Prototype #2: w / land use comm. ($1,321,704) $1,700,000 ($3,021,704) ($30) Upper Mid-Scale Hotel w /o land use comm. $850,714 $1,700,000 ($849,286) ($14) (b) Retail Prototype n.a. $2,800,000 $2,800,000 $0 $0 (a)
Tourist MixedUse/Condotel n.a. $8,098,107 $3,500,000 $4,598,107 $34 Luxury Residential n.a. $905,870 $500,000 $405,870 $405,870 392
Exhibit B5: Prototype #1 Pro Forma - Small Luxury/Boutique Hotel Development Program Assumptions Cost and Income Assumptions Development Cost Analysis Residual Land Value AnalysisLot Size (acres/sf) 0.7 30,056 Construction Fees and Exactions Revenues Site Preparation Costs (per site sf) (b) $20 Linkage Fees $0 Room Revenues $2,102,400 Building Hotel Hard Costs (per sq. ft.) $340 Land Use Commodities Cost $1,272,641 Food and Beverage Revenues $176,097 # of Avg. Total Soft Cost, (% of Hard Costs) 20% Other Operated Department Revenues $134,634 Keys sf sf Construction Costs Miscellaneous Income $57,858 Hotel Room Characteristics 40 300 12,000 Revenues Site Prep Costs $601,128 Retail $37,440 Average Daily Room Rate (per night) $240 Hotel Hard Costs $5,657,600 Total Revenues $2,508,430 % sf Room Revenues (% Total Rev.) 87.2% Permit and Impact Fees $301,871 Circulation 20% 2,400 Food and Beverage Revenues (% of Total Rev.) 8.4% Soft Costs $1,251,746 Expenses Walls and Shafts 10% 1,200 Other Operated Department Revenue (% of Total Rev.) 6.4% Subtotal Construction Costs $7,812,345 Room Expenses ($489,917) Hotel Gross Area 15,600 Miscellaneous Income (% of Total Rev.) 2.8% Food Costs ($135,604) Retail NNN $/Sq/ Ft. $3.00 Financing Costs Other Operated Department Expenses ($36,818) Retail 1,040 Interest on Construction Loan $426,554 Undistributed Operating Expenses (d) ($685,970) Expenses Points on Construction Loan $76,170 Management Fee ($84,436) Gross Building Area 16,640 Room Expenses (% of Room Revenues) 23.3% Subtotal Financing Costs $502,724 Replacement Reserves ($63,556) Food Costs (% of Food Revenues) 77.0% Insurance Costs ($22,012) # Avg Total Other Operated Department Expenses 60.9% Developer Profit (15%) $1,362,748 Real Estate Taxes ($120,455) Parking Configuration (a) Stalls sf Parking sf Undistributed Operating Expenses (% of Total Rev.)(c) 27.3% Retail Operating Costs ($13,104) Surface Parking 42 350 14,700 Management Fee (% of Total Rev.) 3.4% Total Project Costs $10,950,458 Total Expenses ($1,651,872) Replacement Reserves (FF&E) (% of Total Hotel Rev.) 2.5% Operations Insurance (% Total Hotel Rev.) 0.9% Net Operating Income (NOI) $856,557 Days Open per Year 365 Real Estate Taxes (% of Project Costs Net Sales Rev.) 1.1% Available Room Nights 14,600 Retail Operating Costs (Percent of Gross Rev) 35.0% Capitalized Total Project Value $12,236,533 Average Annual Occupancy 60.0% Financing
Occupied Room Nights 8,760 Loan to Cost Ratio 65% Residual Land Value $1,286,075 Initial Construction Loan Fee (points) 1.5% Value per Acre $1,863,877Interest Rate 7.00%Period of Initial Loan (Months) 24Drawdown Factor 60%Total Hard + Soft Costs + Land $7,812,345 Total Loan Amount $5,078,024
Source: BAE, 2023.
393
Exhibit B6: Prototype #2 Pro Forma - Upper Mid-Scale Hotel Development Program Assumptions Cost and Income Assumptions Development Cost Analysis Residual Land Value AnalysisLot Size (acres/sf) 2.3 100,188 Construction Fees and Exactions Revenues Site Preparation Costs (per site sf) (b) $20 Linkage Fees $0 Room Revenues $5,518,800 Building Hotel Hard Costs (per sq. ft.) $300 Entitlement Commodities Cost $0 Food and Beverage Revenues $462,255 # of Avg. Total Soft Cost, (% of Hard Costs) 20% Other Operated Department Revenues $353,415 Keys sf sf Construction Costs Miscellaneous Income $151,878 Hotel Room Characteristics 120 350 42,000 Revenues Site Prep Costs $2,003,760 Retail $48,000 Average Daily Room Rate (per night) $180 Hotel Hard Costs $18,240,000 Total Revenues $6,534,348 % sf Room Revenues (% Total Rev.) 87.2% Permit and Impact Fees $1,143,286 Circulation 25% 10,500 Food and Beverage Revenues (% of Total Rev.) 8.4% Soft Costs $4,048,752 Expenses Walls and Shafts 15% 6,300 Other Operated Department Revenue (% of Total Rev.) 6.4% Subtotal Construction Costs $25,435,798 Room Expenses ($1,286,031) Hotel Gross Area 58,800 Miscellaneous Income (% of Total Rev.) 2.8% Food Costs ($355,962) Retail NNN $/Sq/ Ft. $2.00 Financing Costs Other Operated Department Expenses ($96,647) Retail 2,000 Interest on Construction Loan $1,388,795 Undistributed Operating Expenses (d) ($1,786,920) Expenses Points on Construction Loan $247,999 Management Fee ($219,953) Gross Building Area 60,800 Room Expenses (% of Room Revenues) 23.3% Subtotal Financing Costs $1,636,794 Replacement Reserves ($165,561) Food Costs (% of Food Revenues) 77.0% Insurance Costs ($57,341) # Avg Total Other Operated Department Expenses 60.9% Developer Profit (15%) $2,707,259 Real Estate Taxes ($327,578) Parking Configuration (a) Stalls sf Parking sf Undistributed Operating Expenses (% of Total Rev.)(c) 27.3% Retail Operating Costs ($16,800) Surface Parking 124 350 43,400 Management Fee (% of Total Rev.) 3.4% Total Project Costs $29,779,851 Total Expenses ($4,312,793) Replacement Reserves (FF&E) (% of Total Hotel Rev.) 2.5% Operations Insurance (% Total Hotel Rev.) 0.9% Net Operating Income (NOI) $2,221,555 Days Open per Year 365 Real Estate Taxes (% of Project Costs Net Sales Rev.) 1.1%Available Room Nights 43,800 Retail Operating Costs (Percent of Gross Rev) 35.0% Capitalized Total Project Value $31,736,494Average Annual Occupancy 70.0%Occupied Room Nights 30,660 Financing Residual Land Value $1,956,642 Loan to Cost Ratio 65% Value per Acre $850,714Initial Construction Loan Fee (points) 1.5% Value per SF $32.18Interest Rate 7.00%Period of Initial Loan (Months) 24Drawdown Factor 60%Total Hard + Soft Costs + Land $25,435,798 Total Loan Amount $16,533,269
Source: BAE, 2023.
394
Exhibit B7: Prototype #3 Pro Forma - Retail Center
Development Program Assumptions Cost and Income Assumptions Development Cost Analysis Residual Land Value AnalysisLot Size (acres/sf) 1.6 70,132 Construction Fees and Exactions CommercialTotal Building Area (sf) 12,075 Site Preparation Costs (per site sf) (c) $15 Linkage Fees $0 Gross Scheduled Comm'l Rents $597,600 Retail Hard Costs (d) $150 Land Use Commodities Cost $1,414,704 Less Vacancy ($59,760) Building Restaurant Hard Costs (d) $175 Less Operating Expenses ($50,400) Retail (sf) 12,000 Soft Cost, (% of Hard Costs) 20% Construction Costs Plus CAM Reimbursables $45,360 Restaurant 0 Site Prep Costs $1,051,974 Net Operating Income (NOI) $532,800Circulation Factor 0% OperationsComm'l Gross Area (sf) 12,000 Average Rental Rate (per sf NNN) $4.15 Retail Hard Costs $1,800,000 Total Project Value $11,840,000 Operating Costs (35% of Gross) 35.0% Restaurant Hard Costs $0 Residual Land Value $5,783,750 Parking Vacancy Rate 10% Planning and Building Permits $196,366 Residual Land Value/Acre $3,592,391 # Total Soft Costs $570,395
Parking Configuration (b) Stalls Parking sf Financing Subtotal Construction Costs $3,618,735 Surface Parking (Residential) 0 0 Loan to Cost Ratio 65%Surface Parking (Commercial) 100 37,500 Initial Construction Loan Fee (points) 1.5% Financing Costs Total Required Parking 100 37,500 Interest Rate 7.00% Interest on Construction Loan $197,583 Period of Initial Loan (Months) 24 Points on Construction Loan $35,283 Average sf per space 375 Drawdown Factor 60% Subtotal Financing Costs $232,866 Total Hard + Soft Costs + Land $3,618,735
Total Loan Amount $2,352,178 Developer Profit (15%) $789,946 Total Project Costs $6,056,250
Sources: BAE, 2023.
395
Exhibit B8: Prototype #4 Pro Forma - Mixed-Use Condotel Development Program Assumptions Cost and Income Assumptions Development Cost Analysis Feasibility AnalysisLot Size (acres/sf) 1.5 65,340 Construction Fees and Exactions RevenuesTotal Building Area (sf) 136,750 Site Preparation Costs (per site sf) (d) $20 Linkage Fees $0 Hotel Revenues Hotel Hard Costs (per key) $330 Land Use Commodities Cost $4,033,350 Room Revenues $4,415,040 Hotel Condo Hard Costs (per sf) $375 Food and Beverage Revenues $2,034,403 # of Avg. Total Restaurant Hard Costs (per sf) $175 Construction Costs Other Operated Department Revenues $250,334 Keys sf sf. Conference Space Hard Costs (per sf) $150 Site Prep Costs $1,306,800 Miscellaneous Income $263,199 Hotel Room Characteristics 72 350 25,200 Parking Podium Hard Costs (per space) $50,000 Hotel Hard Costs $11,642,400 Subtotal Hotel Revenues $6,897,285 Soft Cost, (% of Hard Costs) 20% Condo Hard Costs $31,151,250 % sf Restaurant Hard Costs $0 Condo Revenues
Circulation 25% 6,300 Revenues Conference Space Hard Costs $0 Room Revenues $3,303,300Walls and Shafts 15% 3,780 Hotel Revenues Retail Hard Costs $2,400,000 Food Revenues $1,681,256Hotel Gross Area 35,280 Average Daily Room Rate (per night) $240 Parking Podium Hard Costs $6,000,000 Other Operated Department Revenues $263,920 Room Revenues (% Total Hotel Rev.) 64.0% Permit and Impact Fees $2,006,242 Miscellaneous Income $208,227 Hotel Operations Food and Beverage Revenues (% of Total Hotel Rev.) 29.5% Soft Costs $10,500,090 Subtotal Condo Revenues $5,456,703 Days Open per Year 365 Other Operated Department Revenue (% of Total Hotel Rev.) 3.6% Subtotal Construction Costs $65,006,782 Retail Revenues $66,400 Available Room Nights 26,280 Miscellaneous Income (% of Total Hotel Rev.) 2.9% Total Revenues $12,420,389Average Annual Occupancy 70.0% Construction Financing CostsOccupied Room Nights 18,396 Condo Revenues (e) Interest on Construction Loan $3,549,370 Expenses Sale Price (per sf) $625 Points on Construction Loan $845,088 Hotel Expenses Condo Average Daily Room Rate (per night) $350 Subtotal Const. Financing Costs $4,394,458 Room Expenses ($1,138,968) # of Avg. Room Revenues (% of Total Condo Rev.) 60.5% Developer Profit (15%) $11,015,188 Food Expenses ($1,400,821) Condo Unit Types Units sf Res. sf Food Revenues (% of Total Condo Rev.) 30.8% Total Project Costs $84,449,778 Other Operated Department Expenses ($162,264) 1-Bed 23 800 18,400 Other Operated Department Revenue (% of Total Condo Rev.) 4.8% Less Condo Sales ($39,937,500) Undistributed Operating Expenses ($1,682,806) 2-Bed 33 1,000 33,000 Miscellaneous Income (% of Total Condo Rev.) 3.8% Plus Marketing Costs $1,198,125 Management Fee ($200,835)3-Bed 10 1,250 12,500 Replacement Reserves ($132,478) Total 66 63,900 Expenses Project Costs Net of Sales Revenue $45,710,403 Insurance ($69,079) Hotel Expenses Real Estate Taxes ($502,814)
% sf Room Expenses (% of Room Revenues) 25.8% Condo Expenses Circulation 20% 12,780 Food Costs (% of Food Revenues) 68.9% Room Expenses ($495,495) Walls and Shafts 10% 6,390 Other Operated Department Expenses (% or OODR) 64.8% Food Expenses ($1,157,656)Condo Gross Area 83,070 Undistributed Operating Expenses (% of Total Rev.)(g) 24.4% Owners' Revenues ($1,403,903) Management Fee (% of Total Rev.) 2.9% Retail Expenses ($23,240) Condo Operations Replacement Reserves (FF&E) (% of Total Hotel Rev.) 1.9% Total Expenses ($8,370,359) Average Annual Occupancy 65.0% Insurance (% Total Hotel Rev.) 1.0% Real Estate Taxes (% of Project Costs Net Sales Rev.) 1.1% Net Operating Income (NOI) $4,050,030 Days Available per Year (Owner) 90 Retail Expenses 35.0%Available Room Nights Per Year (Owners) 5,940 Project Value $57,857,565Occupied Room Nights Per Year (Owner) 3,861 Condo Expenses Residual Land Value $12,147,161 Sales Marketing (% of Room Revenues) 3.0% Land Value/Acre $8,098,107 Days Available Per Year (Guest) (b) 275 Room Expenses (% of Room Revenues) 15.0%% of Condo Units in Hotel Pool 80% Food Costs (% of Food Revenues) 68.9%Available Room Nights Per Year (Guests) 14,520 Owner's Revenue Share (% of Total Revenues) 50.0%Occupied Room Night Per Year (Guests) 9,438 Financing
Hotel Amenities Loan to Cost Ratio 65%
Conference/Event Space (sf) 0 Initial Construction Loan Fee (points) 2.00%Restaurant (sf) 0 Interest Rate 7.00% Period of Initial Loan (Months) 24
Commercial Space Drawdown Factor 60%Gross Retail 18,400 Total Hard + Soft Costs + Land $65,006,782 Total Loan Amount $42,254,408
Parking # Avg Total
Parking Configuration Stalls sf Parking sf
Surface Parking 0 375 0Podium Parking 120 375 45,000
Total 120 45,000
Source: BAE, 2023.
396
Exhibit B9: Prototype #5 Pro Forma - Luxury Single Family Home Development Program Assumptions Cost and Income Assumptions Development Cost Analysis Residual Land Value AnalysisLot Size (acres/sf) 0.650 28,314 Construction Fees and Exactions Revenues Site Preparation Costs (per site sf) (c) $10 Land Use Commodities Cost $22,500 Residential Sales Revenue $3,125,000Residential Hard Costs (per sf) $176 Linkage Fees $0 Less Marketing Costs ($93,750) Residential Unit Type Res. sf Soft Costs (% of Hard Costs) 20% Luxury SFR 6,250 Construction Costs Total Project Value $3,031,250 Residential Gross Area (sf) 6,250 Operations Site Prep Costs $283,140 Less Total Project Costs $1,839,935 Sale Price (per sf) $500 Residential Hard Costs $1,100,000 Less Developer Profit $625,000 Marketing Costs as a % of Sale Price 3% Permit and Impact Fees $96,589 Financing Costs Soft Costs $276,628 Residual Land Value $566,315 Financing Interest on Construction Loan $43,953 Subtotal Construction Costs $1,756,357 Residual Land Value/Acre $871,254 Loan to Cost Ratio 65% Points on Construction Loan $17,124 Initial Construction Loan Fee (points) 1.5% Subtotal Financing Costs $61,077 Financing $61,077Interest Rate 7.00% Period of Initial Loan (Months) 12 Total Project Costs $1,839,935Drawdown Factor 55%Total Hard + Soft Costs $1,756,357 Total Loan Amount $1,141,632
Developer Profit (% of Sales Revenue) 20%
Source: BAE, 2023.
397
City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
__________________________________
Meeting Date: September 12,
2023
Agenda Item #:16
Agenda Item: California Department of Housing and Community Development's Prohousing Designation Program
Executive Summary: The California Department of Housing and Community Development's (HCD’s) Prohousing Designation program is a formal way to recognize the City’s commitment to advance housing affordability, choice, and opportunity throughout the City of South Lake Tahoe.

Becoming a designated Prohousing jurisdiction opens up opportunities for incentive points for competitive grants and the Prohousing Incentive Program grant funding.

Requested Action / Suggested Motions: Pass a Resolution authorizing the City Manager to submit an application for participation in the California Department of Housing and Community Development's Prohousing Designation Program.

Responsible Staff Member: Jessica Wackenhut Lomeli, Associate Housing Planner Reviewed and Approved By: Susan Blankenship, City Clerk Olga Tikhomirova, Director of Finance Heather Stroud, City Attorney
Attachments:
01-Staff Report - Prohousing Designation.docx
02-Prohousing Designation Program Application.pdf
03-Resolution - Prohousing.docx
398
Council Agenda Report- September 12, 2023 Page 1 of 2
City of South Lake Tahoe
Report to City Council
Meeting Date: September 12, 2023
Title: Prohousing Designation Program
Location: City-wide
Responsible Staff Member: Jessica Wackenhut Lomeli, Associate Housing Planner Background: In an effort to further push city and county jurisdictions to address the statewide housing crisis, the Newsom Administration and California Legislature created the Prohousing Designation Program as part of a package of technical assistance, accountability measures, and incentives to address housing and homelessness. The program seeks to encourage jurisdictions to adopt policies and programs that are favorable to the creation of multifamily and affordable housing.

Local Governments with Prohousing Designation are eligible for an additional Prohousing Incentive Program grant. This grant consists of a $26 million state investment from the Building Homes and Jobs Trust Fund. To provide an incentive for local governments to become certified as Prohousing additional competitive scoring is being incorporated into funding programs across public state agencies and departments. Specifically, the additional points are given in competitive program funding applications that support housing, transportation, infrastructure, land use, and related objectives pursuant to Government Code section 65589.9(b). The following grant programs include Prohousing Designation in scoring criteria:
 Affordable Housing & Sustainable Communities (AHSC);
 Infill Infrastructure Grant (IIG);
 Transformative Climate Communities (TCC);
 Solutions for Congested Corridors;
 Local Partnership Program; and
 Transit and Intercity Rail Capital Program.

Issue and Discussion: Consistent with the City Council’s adopted Strategic Plan and General Plan Housing Element, a robust set of housing programs are underway to address the spectrum of housing needs within the City of South Lake Tahoe (City). Additionally, by adopting the Housing Element, the City Council has adopted numerous policies that seek to advance the development of affordable housing. Furthermore, the City Council has taken additional actions that streamline zoning and land use planning, accelerate production, reduce costs, and provide financial subsidies for housing projects.

The state department of Housing and Community Development’s Prohousing Designation program is a formal way to recognize the City’s commitment to advance housing affordability, choice, and opportunity throughout the City of South Lake Tahoe. 399
Council Agenda Report- September 12, 2023 Page 2 of 2
The Prohousing application has been attached to this report and documents the competitive scoring associated with the various policies and programs recognized by the Prohousing program (Attachment 2).

Staff recommends the City Council approve the Resolution authorizing staff to submit an application for the Prohousing Designation. This should be done for the purpose of becoming a designated Prohousing jurisdiction with opportunities for incentive points for competitive grants and the Prohousing Incentive Program grant funding.

Financial Implications: The Prohousing program requires minor annual compliance monitoring and reporting to maintain the designation. Besides staff time, there are not related costs. There is, however, significant financial benefit since it allows the City to be more competitive for a variety of grant programs.

Environmental Considerations: The recommendation in this report is not a project under CEQA, because it does not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment, as contemplated by Title 14, California Code of Regulations, Sections 15378(b)(2) and 15378(b)(4) and is, therefore, not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).

Policy Implications: The recommended action is consistent with the following adopted policies and programs:

City General Plan Housing Element
Policy 1-1 The City shall adopt programs, ordinances, incentives, land use plans and other regulatory mechanisms that provide opportunities for the private sector to address the housing needs of citizens of all economic levels.

Program 1-3 The City shall work with the California Department of Housing and Community Development, the California Legislature, and through other appropriate legal means to remove unreasonable barriers to the implementation of the goals, policies, and programs of the City’s Housing Element and to maintain consistency with state law.

Policy 1-10 The City shall actively seek opportunities to obtain federal, state, and local funding for affordable housing and community development and implementation of General Plan policies and programs to support housing affordability, community development, and safety. 400
Prohousing Designation Program Application
State of California
Governor Gavin Newsom
Lourdes Castro Ramírez, Secretary
Business, Consumer Services and Housing Agency
Gustavo Velasquez, Director
Department of Housing and Community Development
Megan Kirkeby, Deputy Director
Division of Housing Policy Development
2020 West El Camino, Suite 500
Sacramento, CA 95833
Website: https://www.hcd.ca.gov/community-development/prohousing Email: [email protected]
July 2021
401
Prohousing Designation Program Application Package
Instructions
The applicant is applying for a Prohousing Designation under the Prohousing Designation Program (“Prohousing” or “Program”), which is administered by the Department of Housing and Community Development (“Department”) pursuant to Government Code section 65589.9.

The Program creates incentives for Jurisdictions that are compliant with Housing Element requirements and that have enacted Prohousing Policies. These incentives will take the form of additional points or other preference in the scoring of applications for competitive housing and infrastructure programs. The administrators of each such program will determine the value and form of the preference.

In order to be considered for a Prohousing Designation, the applicant must accurately complete all sections of this application, including any relevant appendices. The Department reserves the right to request additional clarifying information from the applicant.

This application is subject to Government Code section 65589.9, and to the regulations (Cal.

Code Regs., tit. 25, § 6600 et seq.) adopted by the Department in promulgation thereof (“Regulations”). All capitalized terms in this application shall have the meanings set forth in Section 6601 of the Regulations.

All applicants must submit a complete, signed application package to the Department, in electronic format, in order to be considered for a Prohousing Designation. Please direct electronic copies of the completed application package to the following email address:

[email protected].

A complete application will include all items identified in the Application Checklist.

In relation to Appendix 1, the Formal Resolution for the Prohousing Designation Program, please use strikethrough and underline if proposing any modifications to the text of the Resolution.

Appendix 2, the Proposed Policy Completion Schedule, applies only if an application includes proposed policies.

Appendix 3, Project Proposal Scoring Sheet and Sample Project Proposal Scoring Sheet, includes a blank template to be completed by the applicant as part of the application, as well as a Sample Project Proposal Scoring Sheet with an example of how this template may be completed.

Appendix 4 lists examples of Prohousing Policies with enhancement factors to aid applicants in understanding how enhancement factors may be applied. 402
Appendix 5 is where the applicant will include any additional information and supporting documentation for the application.

If you have questions regarding this application or the Program, or if you require technical assistance in preparing this application, please email [email protected].
403
Application Checklist
Yes No
Application Information ☒ ☐
Certification and Acknowledgement ☒ ☐
The Legislative Information form is completed. ☒ ☐
The Threshold Requirements Checklist is completed. ☒ ☐
A duly adopted and certified Formal Resolution for the
Prohousing Designation Program is included in the application package.
(See Appendix 1 for the Formal Resolution for the Prohousing Designation Program (New 04/21) form.)
☒ ☐
If applicable, the Proposed Policy Completion Schedule is completed. (See Appendix 2.)
☒ ☐
The Project Proposal Scoring Sheet is completed. (See
Appendix 3 for the Project Proposal Scoring Sheet and the Sample Project Proposal Scoring Sheet)
☒ ☐
Additional information and supporting documentation (Applicant to provide as Appendix 5)
☒ ☐
Application Information
Applicant (Jurisdiction): City of South Lake Tahoe
Applicant Mailing Address: 1052 Tata Lane
City: South Lake Tahoe
ZIP Code: 96150
Website: https://cityofslt.us
Authorized Representative Name Hilary Roverud
Authorized Representative Title: Director of Development Services Phone: 530-542-6024
Email: [email protected]
Contact Person Name: Jessica Wackenhut Lomeli
Contact Person Title: Associate Housing Planner
Phone: 530-542-6158
Email: [email protected]
Proposed Total Score (Based on
Appendix 3):
48 404

CERTIFICATION AND ACKNOWLEDGMENT
As authorized by the Formal Resolution for the Prohousing Designation Program (Resolution No. 2023 - XXX), which is attached hereto and incorporated by reference as if set forth in full, I hereby submit this full and complete application on behalf of the applicant.

I certify that all information and representations set forth in this application are true and correct.

I further certify that any proposed Prohousing Policy identified herein will be enacted within two (2) years of the date of this application submittal.

I acknowledge that this application constitutes a public record under the California Public Records Act (Gov. Code, § 6250 et seq.) and is therefore subject to public disclosure by the Department.

Signature: __________________________________________
Name and Title: _Hilary Roverud, Director of Development Services__ Date: _______________________________________________
405
Legislative Information
District Number Legislator’s Name
Federal
Congressional
District
3 Kevin Kiley (District 3)
State
Assembly
District
1 Megan Dahle (District 1)
State
Senate
District
1 and 4 Brian Dahle (District 1); Marie Alvarado-Gil
(District 4)
Applicants can find their respective State Senate representatives at https://www.senate.ca.gov/, and their respective State Assembly representatives at https://www.assembly.ca.gov/
406
Threshold Requirements Checklist
The applicant meets the following threshold requirements in accordance with Section 6604 of the Regulations:

Yes No
The applicant is a Jurisdiction. ☒ ☐
The applicant has adopted a Compliant Housing Element. ☒ ☐ The applicant has submitted or will submit a legally sufficient Annual Progress Report prior to designation.
☒ ☐
The applicant has completed, on or before the relevant statutory deadlines, any rezone program or zoning that is necessary to remain in compliance with Government Code section 65583, subdivision (c)(1). ☒ ☐
The applicant is in compliance, at the time of the application, with applicable state housing law, including, but not limited to, Housing Element Law; “No Net Loss” Law (Gov. Code, § 65863); the Housing Accountability Act (Gov. Code, § 65589.5); State Density Bonus Law (Gov. Code, § 65915 et seq.); laws relating to the imposition of school facilities fees or other requirements (Gov. Code, § 65995 et seq.); Least Cost Zoning Law (Gov. Code, § 65913.1); the Housing Crisis Act of 2019 (Stats. 2019, ch. 654); and antidiscrimination law (Gov. Code, § 65008).
☒ ☐
The applicant has duly adopted and certified a Formal Resolution for the Prohousing Designation Program, which is hereby incorporated by reference. (A true and correct copy of the resolution is included in this application package.)
☒ ☐
407
Project Proposal
Category 1: Favorable Zoning and Land Use
Category Prohousing Policy Description Points
1A Sufficient sites, including rezoning, to accommodate 150 percent or greater of the current or draft RHNA, whichever is greater, by total or income category.
3 1B Permitting missing middle housing uses (e.g., duplexes, triplexes, and fourplexes) by right in existing low-density, single-family residential zones.
3 1C Sufficient sites, including rezoning, to accommodate 125 to 149 percent of the current or draft RHNA, whichever is greater, by total or income category. These points shall not be awarded if the applicant earns three points pursuant to Category (1)(A) above.
2 1D Density bonus programs which exceed statutory requirements by 10 percent or more.
2 1E Increasing allowable density in low-density, single-family residential areas beyond the requirements of state Accessory Dwelling Unit law (e.g., permitting more than one ADU or JADU per single-family lot).

These policies shall be separate from any qualifying policies under Category (1)(B) above.
2 1F Reducing or eliminating parking requirements for residential development as authorized by Government Code sections 65852.2; adopting vehicular parking ratios that are less than the relevant ratio thresholds at subparagraphs (A), (B), and (C) of Government Code section 65915, subdivision (p)(1); or adopting maximum parking requirements at or less than ratios pursuant to Government Code section 65915, subdivision (p).
2 1G Zoning to allow for residential or mixed uses in one or more nonresidential zones (e.g., commercial, light industrial). Qualifying nonresidential zones do not include open space or substantially similar zones.
1 1H Modification of development standards and other applicable zoning provisions to promote greater development intensity. Potential areas of focus include floor area ratio; height limits; minimum lot or unit sizes; setbacks; and allowable dwelling units per acre. These policies must be separate from any qualifying policies under Category (1)(B) above. 1 1I Establishment of a Workforce Housing Opportunity Zone, as defined in Government Code section 65620, or a housing sustainability district, as defined in Government Code section 66200.
1 1J Demonstrating other zoning and land use actions that measurably support the Acceleration of Housing Production.
1 408
Project Proposal
Category 2: Acceleration of Housing Production Timeframes Category Prohousing Policy Description Points
2A Establishment of ministerial approval processes for a variety of housing types, including single-family and multifamily housing. 3 2B Establishment of streamlined, program-level CEQA analysis and certification of general plans, community plans, specific plans with accompanying Environmental Impact Reports (EIR), and related documents.
2 2C Documented practice of streamlining housing development at the project level, such as by enabling a by-right approval process or by utilizing statutory and categorical exemptions as authorized by applicable law (Pub. Resources Code, §§ 21155.1, 21155.4, 21159.24, 21159.25; Gov. Code, § 65457; Cal Code Regs., tit. 14, §§ 15303, 15332; Pub. Resources Code, §§ 21094.5, 21099, 21155.2, 21159.28).
2 2D Establishment of permit processes that take less than four months.

Policies under this Category (2)(D) must address all approvals necessary to issue building permits.
2 2E Absence or elimination of public hearings for projects consistent with zoning and the general plan.
2 2F Establishment of consolidated or streamlined permit processes that minimize the levels of review and approval required for projects, and that are consistent with zoning regulations and the general plan. 1 2G Absence, elimination or replacement of subjective development and design standards with objective development and design standards that simplify zoning clearance and improve approval certainty and timing.
1 2H Establishment of one-stop-shop permitting processes or a single point of contact where entitlements are coordinated across city approval functions (e.g., planning, public works, building) from entitlement application to certificate of occupancy.
1 2I Priority permit processing or reduced plan check times for ADUs/JADUs, multifamily housing, or homes affordable to lower- or moderate-income households.
1 2J Establishment of a standardized application form for all entitlement applications.
1 2K Practice of publicly posting status updates on project permit approvals on the Internet.
1 2L Limitation on the total number of hearings for any project to three or fewer. Applicants that accrue points pursuant to Category (2)(E) are not eligible for points under this Category (2)(L).
1 2M Demonstration of other actions, not listed above, that quantifiably decrease production timeframes or promote the streamlining of approval processes.
1 409
Project Proposal
Category 3: Reduction of Construction and Development Costs Category Prohousing Policy Description Points
3A Waiver or significant reduction of development impact fees for residential development.
3 3B Adoption of ordinances or implementation of other mechanisms that result in less restrictive requirements than Government Code sections 65852.2 and 65852.22 to reduce barriers for property owners to create ADUs/JADUs. Examples of qualifying policies include, but are not limited to, development standards improvements, permit processing improvements, dedicated ADU/JADU staff, technical assistance programs, and pre-approved ADU/JADU design packages.
2 3C Adoption of other fee reduction strategies separate from Category (3)(A) above, including fee deferrals and reduced fees for housing for persons with special needs.
1 3D Promoting innovative housing types (e.g., manufactured homes, recreational vehicles, park models) that reduce development costs. 1 3E Measures that reduce costs for transportation-related infrastructure or programs that encourage active modes of transportation or other alternatives to automobiles. Qualifying policies include, but are not limited to, publicly funded programs to expand sidewalks or protect bike/micro-mobility lanes; creation of on-street parking for bikes; transitrelated improvements; or establishment of carshare programs. 1 3F Adoption of universal design ordinances pursuant to Health and Safety Code section 17959.
1 3G Establishment of pre-approved or prototype plans for missing middle housing types (e.g., duplexes, triplexes, and fourplexes) in low-density, single-family residential areas.
1 3H Demonstration of other actions, not listed above, that quantifiably reduce construction or development costs.
1 410
Project Proposal
Category 4: Providing Financial Subsidies
Category Prohousing Policy Description Points
4A Establishment of local housing trust funds or collaboration on a regional housing trust fund.
2 4B Provide grants or low-interest loans for ADU/JADU construction affordable to lower- and moderate-income households.
2 4C A comprehensive program that complies with the Surplus Land Act (Gov. Code, § 54220 et seq.) and that makes publicly owned land available for affordable housing, or for multifamily housing projects with the highest feasible percentage of units affordable to lower income households. A qualifying program may utilize mechanisms such as land donations, land sales with significant write-downs, or below-market land leases.
2 4D Establishment of an Enhanced Infrastructure Financing District or similar local financing tool that, to the extent feasible, directly supports housing developments in an area where at least 20 percent of the residences will be affordable to lower income households. 2 4E Directed residual redevelopment funds to affordable housing. 1 4F Development and regular (at least biennial) use of a housing subsidy pool, local or regional trust fund, or other similar funding source. 1 4G Prioritization of local general funds for affordable housing. 1 4H Demonstration of other actions, not listed above, that quantifiably promote, develop, or leverage financial resources for housing. 1 411
Project Proposal
Enhancement Factors
The Department shall utilize enhancement factors to increase the point scores of Prohousing Policies. Each Prohousing Policy will receive extra points for enhancement factors in accordance with the chart below.

Category Prohousing Policy Description Points
1 Policy that represents one element of a unified, multi-faceted strategy to promote multiple planning objectives, such as efficient land use, access to public transportation, affordable housing, climate change solutions, and/or hazard mitigation.
2 2 Policies that promote development consistent with the state planning priorities pursuant to Government Code section 65041.1. 1 3 Policies that diversify planning and target community and economic development investments (housing and non-housing) to improve lower opportunity areas. Such areas include, but are not limited to, Low Resource and High Segregation & Poverty areas designated in the most recently updated TCAC/HCD Opportunity Maps, and
disadvantaged communities pursuant to California Senate Bill 535 (2012).
1 4 Policies that go beyond state law requirements in reducing displacement of lower income households and conserving existing housing stock that is affordable to lower income households. 1 5 Rezoning and other policies that support high-density development in Location Efficient Communities.
1 6 Rezoning and other policies that result in a net gain of housing capacity while concurrently mitigating development impacts on or from Environmentally Sensitive or Hazardous Areas.
1 7 Zoning policies that increase housing choices and affordability in High Resource and Highest Resource areas, as designated in the most recently updated TCAC/HCD Opportunity Maps.
1 8 Other policies that involve meaningful actions towards affirmatively furthering fair housing pursuant to Government Code section 8899.50, including, but not limited to, outreach campaigns, updated zoning codes, and expanded access to financing support.
1 412
Project Proposal Scoring Sheet Instructions
The Department shall validate applicants’ scores based on the extent to which each identified Prohousing Policy contributes to the Acceleration of Housing Production. The Department shall assess applicants’ Prohousing Policies in accordance with Government Code section 65589.9, subdivision (f)(2), and Sections 6605 and 6606 of the Regulations.

The Department shall further assess applicants’ Prohousing Policies using the following four scoring categories: Favorable Zoning and Land Use; Acceleration of Housing Production Timeframes; Reduction of Construction and Development Costs; and Providing Financial Subsidies. Applicants shall demonstrate that they have enacted or proposed at least one policy that significantly contributes to the Acceleration of Housing Production in each of the four categories. A Prohousing Designation requires a total score of 30 points or more across all four categories.

Instructions
Please utilize one row of the Scoring Sheet for each Prohousing Policy. • Category Number: Select the relevant category number from the relevant Project Proposal list in this application. Where appropriate, applicants may utilize a category number more than once. • Concise Written Description of Prohousing Policy: Set forth a brief description of the enacted or proposed Prohousing Policy.
• Enacted or Proposed: Identify the Prohousing Policy as enacted or proposed. For proposed Prohousing Policies, please complete Appendix 2: Proposed Policy Completion Schedule. • Documentation Type: For enacted Prohousing Policies, identify the relevant documentary evidence (e.g., resolution, zoning code provisions). For proposed Prohousing Policies, identify the documentation which shows that implementation of the policy is pending.
• Web Links/Electronic Copies: Insert the Web link(s) to the relevant documentation or indicate that electronic copies of the documentation have been attached to this application as Appendix 5. • Points: Enter the appropriate number of points using the relevant Project Proposal list in this application. • Enhancement Category Number (optional): If utilizing an enhancement factor for a particular Prohousing Policy, enter the appropriate category number using the relevant Project Proposal list in this application. • Enhancement Points (optional): If utilizing an enhancement factor for a particular Prohousing Policy, enter the point(s) for that Prohousing Policy.
• Total Points: Add the enhancement point(s) to the Prohousing Policy’s general point score. 413
Appendix 2: Proposed Policy Completion Schedule
Category
Number
Concise Written Description of
Proposed Policy
Key Milestones and
Milestone Dates
Anticipated
Completion
Date
Notes
1A Proposed amendments to two Area
Plans: The City is proposing an
increase in maximum density from 25
– 65 units per acre for multifamily
development and a minimum density
of 8 units per acre in Town Centers.

Planning Commission,
September 21, 2023;
and City Council
adoption December 7;
TRPA adoption in
January 2024
TRPA:

January
2024
1H Proposed amendments to two Area
Plans. The City is proposing an
increase in maximum density,
modifying development standards to
allow more types of uses, and will
adjust height based on the changes
TRPA is proposing.

Planning Commission,
September 21, 2023;
and City Council
adoption December 7;
TRPA adoption in
January 2024
TRPA:

January
2024
3E Proposed amendments to two Area
Plans: The City is exploring options to
allow development projects to have a
reduced onsite parking requirement in
exchange for contributions to the
implementation of connectivity and
transit initiatives.

Planning Commission,
September 21, 2023;
and City Council
adoption December 7;
TRPA adoption in
January 2024
December
2023 with
City and
January;
2024 at
TRPA
4A Single-family and condominium
projects have an increased ability to
absorb inclusionary requirement as
unit size gets larger associated with
The residential nexus
and feasibility analysis,
coordination with HCD
for regulatory
City Council:

September
26, 2023
414
the “net gap” equivalent. Units les than
2000 square feet and multi-family
rental units are exempt from the
proposed inclusionary fees, in addition
to deed-restricted units for tenants with
income at or below moderate income.
compliance were
completed for a tier
based (on unit size)
inclusionary housing
policy.
415
Appendix 3: Project Proposal Scoring Sheet and Sample Project Proposal Scoring Sheet Project Proposal Scoring Sheet
416
Category
Number
Concise Written
Description of
Prohousing Policy
Enacted
or
Proposed
Documentation Type
(e.g., resolution,
zoning code)
Insert Web
Links to
Documents or
Indicate that
Electronic
Copies are
Attached as
Appendix 5
Points Enhancement
Category
Number
Enhancement
Points
Total Points
1A The City currently has a
RHNA goal of 289 and
the sites unit capacity is
717. This is slightly
below the 150%
threshold by 5 units.

However, with the
proposed density
increases in the area
plan amendments,
focusing on density
increases in Town
Centers (Location
Efficient Communities),
the City will exceed the
150%.

Enacted
and
Proposed
Resolution 2022-086
passed on June 21,
2022
Proposed Area Plan
Amendments for
density
https://www.cit
yofslt.us/Docu
mentCenter/Vi
ew/17094/Co
mplete_Housi
ngElement_C
LEAN_reduce
dsize?bidId=
https://legistar
webproduction.s3.
amazonaws.c
om/uploads/att
achment/pdf/1
932928/01_C
CStaffReport_
AreaPlanAme
ndments_202
30516.pdf
https://legistar
webproduction.s3.
amazonaws.c
om/uploads/att
achment/pdf/1
965936/01_C
CStaffReport_
TCAPAmend
ments_20230
606.pdf
3 1 2 5
417
1D There is a 25% density
bonus program from
TRPA for affordable
housing which exceeds
statutory requirements
by 10 percent. The City
adopted all TRPA
Density code (31.4.1).

Enacted TRPA Code of
Ordinances Section

31.4.1 https://www.tr
pa.gov/wpcontent/upload
s/TRPA-CodeofOrdinances.pd
f
2 2
1F There is a 20% parking
reduction if a deed
restriction is placed on
the property making the
owner responsible for
parking management.

Parking reductions are
also in proposed area
plan amendments.

Enacted City Code 6.85.030
B(c) xiii
https://www.co
depublishing.c
om/CA/SouthL
akeTahoe/#!/S
outhLakeTaho
e06/SouthLak
eTahoe0685.h
tml#6.85.030
2 2
1G Residential and mixeduses are allowed in all
commercial zones per
Area Plans.

Enacted Resolution 2015-27
passed on June 2,
2015