General Fund Revenue Forecast

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5 City of San Mateo General Fund Revenue Forecast FY FY September 2010

6 Table of Contents Executive Summary... 1 Updated Baseline Revenues... 2 Forecast Methodology... 3 Residential and Commercial Development Assumptions... 3 Property Tax... 4 Sales Tax... 6 Property Transfer Tax... 7 Hotel / Motel Tax... 9 General Fund Revenue Forecast Attachment 1 General Fund Revenue Forecast - FY to Attachment 2 Comparison of Current and Previous City Forecast to EPS Consultant Forecast Attachment 3 Status of Residential & Commercial Projects Attachment 4 Historical Sales Tax Revenue Trend Comparison by Business Category Attachment 5 Sales Tax Economic Category Analysis Attachment 6 Trends in Major Revenue Sources... 31

7 Executive Summary The purpose of this document is to provide an understanding of the major revenue sources that fund City of San Mateo services, a historical perspective of the performance of these revenues, and a realistic forecast of how both the major and total General Fund revenues are likely to perform over the next eight years from fiscal years through The reason for selecting the eight-year time frame was because the temporary sales tax measure (Measure L) approved by voters in 2009 is scheduled to expire within this period. This measure increased the sales tax rate within the city by 0.25% and provides approximately $3 million annually in additional funding for essential and basic services through fiscal year The final year of this timeframe ( ) is the first full fiscal year after the expiration of Measure L. This forecast will be an important tool in our efforts to maintain fiscal sustainability and will be updated at least semi-annually and refined over time to reflect current fiscal and economic conditions. It is important to note that this forecast does not factor in any further taking of General Fund revenues by the State to address its budget shortfall. If any additional City revenues are taken by the State, this would impact available revenues for City services. General Fund revenues finance the general operating budget which includes such essential and basic services such as police and fire protection, street maintenance, parks maintenance, recreation programs, and library services. Almost 70% of these General Fund revenues come from four major tax sources. Business license tax is also a significant revenue source, but has been a fairly stable revenue source and is not as impacted by the economy as these four major revenue sources as shown in Chart 1 below. Property Tax Sales Tax Property Transfer Tax Transient Occupancy Tax (i.e. Hotel / Motel Tax) Chart 1 General Fund Revenues FY Revised Other Revenues 24% Other Taxes 1% Business License Tax 5% Property Transfer Tax 5% Hotel Tax 4% Property Tax 38% Property Tax Sales Tax Hotel Tax Property Transfer Tax Business License Tax Other Taxes Other Revenues Sales Tax 23% 1

8 These four major revenue sources are highly dependent upon the local, regional, state, and national economy and have been significantly impacted by the economic recession which began in In , property tax revenue declined by 3% and sales tax revenue declined by almost 2%. In addition, the taking of local funding by the State over the past few years and the offsetting shifts and swaps to fund partial replacement revenue have complicated how and when local revenues are received. The category of Other Revenues in the above chart includes franchise fees, interest income, planning, public works, recreation and library fee revenue, overhead and rental charges to other funds. Given historical and projected trends, General Fund revenues at this time are forecast to increase by an average of 2.5% annually over the eight-year period from to In contrast, the historical annual average increase has been approximately 5%. Annual revenue increases are projected to range from 0.76% in to a high of 3.78% in Updated Baseline Revenues General Fund revenues for , the current fiscal year, form a baseline for this forecast. The original revenue estimates for included in the adopted budget were based on a 4.43% overall increase above the estimated actual amount of $76,105,525. We now have prior year actual revenue data, and revenues for are $74,864,000 or $1,241,525 lower than projected. The actual revenue for was less than estimated primarily due to lower than expected property tax and sales tax. In addition, some of the earlier assumptions for revenue growth in have been revised to be more realistic given the current state of the economy and the lack of any significant rebound to date. The original growth estimates and the revised growth assumptions are shown in Table 1 for each major revenue source and the total General Fund. Table 1 Comparison of Revenue Assumptions Used for Adopted Budget versus Revised Estimate Adopted Budget Revised Baseline Estimate Projected Budget Revised Estimate Property Tax 1.65% -2.00% 2.50% 0.00% Sales Tax 0.00% 0.00% 2.00% 2.00% Property Transfer Tax 18.42% 4.25% 11.10% 6.25% Transient Occupancy Tax 3.00% 2.00% 5.00% 3.00% Total General Fund 4.43% 4.89% 3.16% 0.76% Note: Adopted Budget estimates were based on the percent change from estimated actual prior year figures. Revised figures are based on prior year actual figures now available. 2

9 The combined impact of using actual revenue along with updated revenue growth assumptions leads to lower revised total revenues for and than compared with original estimates. In terms of dollars, the revised baseline estimate is $951,280 lower than budgeted revenues and the revised estimate is $2,865,190 lower than budgeted revenues as shown in Table 2. For , this gap will be closed either by using a portion of the estimated $1.2 million available fund balance and /or further expenditure savings. For , the gap will be addressed during the annual budget process. Table 2 Comparison of Total General Fund Revenues Budget versus Revised Revised Adopted Baseline Projected Revised Budget Estimate Difference Budget Estimate Difference Total General Fund Revenues $ 79,477,000 $ 78,525,720 $ (951,280) $ 81,985,920 $ 79,120,730 $ (2,865,190) Forecast Methodology Revenue forecasting techniques fall under two categories: qualitative or quantitative methods. Qualitative revenue forecasting methods rely on judgments and expert forecasting about future revenue collections while quantitative revenue forecasting methods use statistical analysis of financial and economic data to project future revenue. The methodology used for this forecast is the qualitative method relying on consensus, judgmental, and expert forecasting utilizing staff, data from the County Assessor s Office, and consultants for the baseline forecast. Estimates for revenue from new development, however, were done using a quantitative method time-series analysis. Consultants utilized were The HDL Companies for property tax information, Economic & Planning Systems, Inc. (EPS), a land economics consulting firm, and MuniServices, LLC a local government sales tax revenue audit, collection, and information services consulting firm. EPS prepared the estimates of revenue from new development using the residential and commercial development assumptions itemized in Attachment 3. Residential and Commercial Development Assumptions As part of this forecast, Finance staff worked with Community Development staff, private developers, and EPS to estimate the impact of potential development projects on City revenues. They have all stressed the uncertainty of the market at this time. However, based on these conversations, staff is using a number of assumptions over the next five years to inform this forecast, including a more favorable market for rental apartments compared with ownership units, increased viability for townhouse development, and a continuation of a flat office market. 3

10 Economic & Planning Systems, Inc. (EPS) was commissioned to conduct an independent analysis of projected revenue from new residential and commercial development. This analysis supports the revenue growth assumptions contained in this forecast for sales tax, property tax, and property transfer tax. The listing of the status of specific residential and commercial development projects for a 5-year period can be found in Attachment 3. Property Tax Property tax revenues includes a number of categories including secured property tax, unsecured property tax, homeowners property tax exemption reimbursement, property tax in-lieu of VLF (vehicle license fee), and supplemental assessments. In , property tax was $31.3 million and represented 41% of General Fund revenues. Property tax revenue in was $30.4 million (unaudited), a decrease of 3% over the prior year primarily due to decreases in secured property tax and supplemental property tax categories. The change in assessed value from 2009 to 2010 decreased 2% according to data from the County Assessor. As a result, revenue from property tax is estimated to decrease 2% in to $29.8 million (38% of General Fund revenue) and remain flat for In subsequent years, property tax is expected to increase between 3% to 4% annually and trending up to 4.5% in Assessed valuation is derived from the sum of the prior year s base plus an added annual increment that includes a 2% statutory increase (or CPI - whichever is less), value added from transfers of ownership, and new construction less any re-assessments. The annual inflation adjustment is determined each year by the State Department of Finance which relies on the inflation calculations for all California consumers provided by the Division of Labor Statistics of the State Department of Industrial Relations. For the first time since Proposition 13 went into effect, the annual CPI adjustment was negative at -0.24% for Revenue from supplemental assessments in was $955,000 with revenue estimated to be $946,000 in the adopted budget. However, actual revenue from (unaudited) was only $417,000. For the adopted budget estimate to hold up, supplemental assessment revenue would need to increase 126% over the previous year. As this is unlikely, the baseline estimate for is being revised to $450,000, a 7.91% increase. Table 3 shows the average and median price history of single family homes in the City of San Mateo. Graph 1 shows an historical comparison of both the number of sales of single family homes and the median price in all of San Mateo County in each quarter since

11 Table 3 Average & Median Price History - Single Family Homes in the City of San Mateo 6 months only From The HDL Companies - Data Source: DataQuick Graph 1 Historical Comparison of Sales and Median Price of Single Family Homes in San Mateo County From The HDL Companies - Data Source: DataQuick 5

12 Sales Tax Sales tax revenues are primarily produced from retail business transactions and business to business transactions in the City of San Mateo. Historically, the local share of sales tax the City received was 1% percent of taxes levied by the State of California from sales within the jurisdiction. However, beginning in when the State issued Proposition 57 fiscal recovery bonds, the State traded a portion (one-quarter) of the City s 1% percent local tax rate for an equivalent share of property taxes (also referred to as property tax in-lieu of sales tax or triple flip ). The State took this action to provide a source of repayment for the fiscal recovery bonds that are not expected to be retired until This one-quarter cent replacement revenue is paid to the City differently than the normal portion of sales tax which is received in monthly advances and reconciled quarterly. The property tax in-lieu of sales tax portion (0.25%) received by the City is estimated annually by the State Department of Finance based on projected countywide sales tax and advanced to the City by the County from property tax in two installments in December and April. This estimated amount is then reconciled in September of the following fiscal year and any overpayment or underpayment is added to or subtracted from that subsequent year s property tax in-lieu of sales tax payment. This advance of replacement property tax revenue is distributed from the Educational Revenue Augmentation Fund or ERAF. ERAF is essentially property tax funds previously diverted from local governments by the State which have been used to fund the State s obligation to schools under the Proposition 98 minimum funding guarantee. Any shortfall in school funding is made up from the State s General Fund. In November 2009, San Mateo voters passed Measure L which authorized an additional one-quarter cent tax on sales to be levied within the City of San Mateo. With the passage of Measure L, the total sales tax rate in San Mateo increased from 9.25% to 9.50% effective April 1, The Measure L onequarter cent sales tax is scheduled to expire in eight years on March 31, Table 4 below displays the distribution of the total San Mateo County tax rate. Graph 2 below shows the historical and short term forecast of the six major business segments along with their relative magnitude. Table 4 San Mateo County Sales Tax Distribution State 6.75% Proposition 172 Public Safety Sales Tax 0.50% County Transit Measure A 1.00% City of San Mateo 0.75% Measure L 0.25% County-wide Roads & Transportation 0.25% Total 9.50% 6

13 9,000,000 Graph 2 City of San Mateo Sales Tax Major Business Categories Historical Trend 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 GENERAL RETAIL FOOD PRODUCTS TRANSPORTATION BUSINESS TO BUSINESS CONSTRUCTION MISCELLANEOUS 2,000,000 1,000,000 0 * Forecast In , sales tax was $14.8 million and represented 19% of General Fund revenues. Revenue in was $13.8 million (unaudited) including a partial year of Measure L revenue and represented 19% of General Fund revenues. Year-over-year percentage change comparisons between and are difficult because of the addition of Measure L and a large deduction in the triple flip portion due to an overestimation by the State in revenue received in the prior fiscal year. The local point of sale portion of sales tax in was $10.7 million decreasing 2% to $10.5 million in and is estimated to remain flat in the current fiscal year. A full year of Measure L revenue is expected to generate an additional $3.3 million in The estimate from EPS in their previous forecast for was a low of 0.5%, baseline of 2% and a high of 3.5%. MuniServices suggests 2% as the most likely scenario and this figure is consistent with the staff forecast for In subsequent years, sales tax is expected to increase between 2% and 3.5% and trending up to 4.5% in Attachments 4 and 5 contain additional information and analysis about sales tax revenue. 7

14 Property Transfer Tax Property transfer tax is levied on the sale or transfer of real property at the rate of 0.5% of the value of the transaction in San Mateo. The collection of this tax is administered through San Mateo County. Property transfer tax revenue is affected by (1) the value of each sale and (2) the number of sales. Both of these factors have fallen during the economic downturn, reducing the City s property transfer tax revenue from a high of $10.4 million in to $3.3 million in , approximately a 70% decline. The average residential turnover rate in the City from 1990 to 2008 was 4.8%. This is lower than the Bay Area average turnover rate of 5% to 10%, reflecting the relative stability of the San Mateo housing market. According to the City s Adopted Housing Element, the population of San Mateo is aging, which is likely to continue the low turnover rate as soon-to-be retirees are more likely to stay in their homes as long as they are able. According to DataQuick, a real estate data service, the median price of homes sold in the City is down almost 25% from the 2007 peak of $781,500. For , property transfer tax revenue was originally estimated at $4.5 million. With only $3.8 million collected in , this estimate for would be an increase of 18.4%. Given that an increase of this magnitude is not likely due to current conditions, the revised baseline estimate is being revised down to $4.0 million, an increase of 4.2% over the previous year. For , the adopted budget estimated $5.0 million, which would be a 25% increase over the revised baseline estimate and is also not likely given current conditions. The estimate for is being revised down to $4.2 million, an increase of 6.2%. Property transfer tax is then forecast to be $4.6 million in , an 8.2% increase, and $5.4 million in , a 17.4% increase. Thereafter property transfer tax is capped at $5.4 in the General Fund through Staff is requesting direction from the City Council on whether to pursue this approach. This policy direction would mean that any future revenue received over the $5.4 million cap would be utilized for other purposes such as increasing reserves for service stability or used for capital projects. As shown by recent history, property transfer tax can be a volatile revenue source. Therefore, this cap would set a baseline level that can be relied upon as ongoing operating revenue. The $5.4 million amount for the recommended cap was established by calculating a 10 year rolling average of property transfer tax revenues as shown in Table 5. Table 5 Property Transfer Tax 10-year Rolling Average average 3,922, average 4,345, average 4,795, average 5,425, average 6,154, average 6,375, average 6,185, average 6,087,010 Rolling Average 5,411,303 8

15 Hotel/Motel Tax (Transient Occupancy Tax) Technically, the hotel/motel tax is called the transient occupancy tax, or TOT. The TOT is levied on persons staying 30 days or less in a hotel, inn, motel, tourist home, non-membership campground or other lodging facility. These taxes are collected by the operator of a lodging facility and remitted to the City on a monthly basis. Voters approved Measure M in 2009 increasing the TOT rate from 10% to 12% effective January A total of 10% of the 12% rate is General Fund revenue with the remaining 2% to fund Measure C capital projects (e.g. Police and Fire stations). Currently, 429 jurisdictions in California levy a TOT with most rates being from 9% to 10% as shown in Graph 3 below. Graph 3 California Transient Occupancy Tax Rates Source: Coleman Advisory Services, June 15,

16 Table 6 below reflects the TOT rates of various cities in San Mateo County: Table 6 San Mateo County Transient Occupancy Rate City TOT % Belmont 10% Brisbane 12% Burlingame 12% (effective 1/1/10) Daly City 10% East Palo Alto 12% Foster City 8% Half Moon Bay 12% Menlo Park 10% Millbrae 12% (effective 1/1/10) Pacifica 10% Redwood City 10% San Bruno 12% (effective 1/1/10) San Carlo 10% San Mateo 12% (effective 1/1/10) South San Francisco 10% San Mateo County* 10% *County TOT consists of establishments in unincorporated areas In , General Fund TOT was $2.7 million and represented 3.5% of General Fund Revenues. The total TOT for was $2.8 million including six months of Measure M revenue. The total General Fund TOT for is estimated at $3.2 million including a full year of Measure M revenue. The staff forecast calls for modest increases in transient occupancy tax of 3.0% in with sustained increases of 4.0% in the intervening years trending up to 5.0% percent in both and General Fund Revenue Forecast - FY to Most economists believe that an economic recovery is underway and the rate of economic growth will be either slow or modest, barring the possibility of a double dip recession. In its third quarter report released on September 15, 2010, the UCLA Anderson Forecast (one of the most widely-followed economic forecasts in California) provided its assessment of the current economic recovery: In its third quarterly report of 2010, the UCLA Anderson Forecast calls for very sluggish growth for the foreseeable future as the United States economy continues to recover from the recession that plagued the nation earlier in the decade. As for the California economy, the State is looking at a difficult period ahead as it attempts to generate not only the 1.3 million jobs lost during the 10

17 recession, but also the additional jobs needed for new entrants into the job market over the past two and a half years. Writing about California, UCLA Anderson Forecast Senior Economist Jerry Nickelsburg writes that all the evidence suggests that California is ever so slowly coming out of the recession but, slow growth means that while the groundwork for faster growth is being put down, there is not a lot or perceptible change. The Forecast implies that the weak growth will continue in the absence of any imminent changes in consumer or business behavior. In contrast, a somewhat more optimistic forecast was included in the 2010 Economic Forecast developed by Beacon Economics for the San Mateo County Economic Development Association (SAMCEDA), which stated the following regarding San Mateo County: It s clear that at the national and state levels, the economy has turned the corner and we can safely say the recession is over. This is also true in San Mateo County, where job losses have leveled off over the last few months an indicator that tends to lag behind other components of the economy such as real estate and are projected to reverse in the near future. The turnaround in San Mateo County occurred concomitantly with that in the state, and in the coming years the county is expected to outperform California in recovering total nonfarm employment. While the construction, wholesale trade, and other services industries will continue to shed labor over the course of 2010, the losses this year will be outweighed by stronger performances elsewhere. In particular, we expect financial activities and retail to lead the charge in 2010 and Although this latter forecast is more optimistic, unfortunately, the basis for its confidence has not been substantiated given current information. Given differing opinions and the continued volatility and uncertainty in the economy, developing long-term revenue estimates continues to be challenging. However, after reviewing both outside forecasts and current conditions in San Mateo, this revenue forecast generally mirrors the concept of slow growth beginning in and relatively modest growth through as identified in the Table 7 below: Table 7 Total Revenue Forecast Percentage Change % % % % % % % % average 2.50% 11

18 In , revenues are projected to increase by 3.59% in over the prior year due to property transfer tax achieving the cap at the 10 year rolling average amount in that year and remains level from that point forward for operating budget purposes. However, beginning in , the expiration of Measure L sales tax revenue will result in a percentage increase in total revenues over the prior year of less than 1%. Attachment 1 includes the detailed forecast chart, which includes the major revenue sources as well as assumptions for the remaining General Fund revenue sources such as other taxes, interest income, permits, and fees for services. Attachment 2 includes a graph of revenue projections through In addition, Attachment 6 provides 20-year trend data for each of the four major revenue sources highlighted in this forecast. In general, staff believes this forecast represents a realistic approach in projecting operating revenues over the next eight-year timeframe. While staff will continue to work with outside resources in analyzing City revenues, the protracted economic recovery does not suggest forecasting a robust level of growth to pre-recession levels. Furthermore, overestimating long-term revenues could have a significant impact on funding levels for City services. Staff believes that identifying this new normal of available funding and then adjusting to it is a prudent approach in adapting to these changing times. Attachments Attachment 1 General Fund Revenue Forecast - FY to Attachment 2 Comparison of Current and Previous City Forecast to EPS Consultant Forecast Attachment 3 Status of Residential & Commercial Projects Attachment 4 Historical Sales Tax Revenue Trend Comparison by Business Category Attachment 5 Sales Tax Economic Category Analysis Attachment 6 Trends in Major Revenue Sources. 12

19 ATTACHMENT 1 General Fund Revenue Forecast - FY to

20 ADDITIONAL ASSUMPTIONS FOR REVENUE SOURCES The following is the staff forecast for additional revenue sources: Business license tax is based on annual gross receipts of businesses in the City and is a significant and fairly stable revenue source. The baseline forecast for is $4.1 million which is a 1.6%% increase over prior year actual. Going forward it is expected that business license tax will increase slowly in step with the economy and new businesses that choose to locate in San Mateo. Fees for recreation programs and library fees are forecast to be flat in and then keep pace with inflation at 2% annually. Planning & Zoning fees and Public Works fees are expected to increase 2% and 5% respectively in and increase to 6.0% through reflecting increasing a pent up demand in development activity leveling off to 5.0% for the remainder of the forecast period assuming a healthy increase in development activity is sustained. Indirect cost reimbursement includes reimbursement for General Fund employee charges to other funds and capital projects for non-general Fund work performed. Rental revenue from the golf course and sewer utility includes facility rental for the golf course and land rental for the sewer utility. Income from investments is expected earn 1.2% in increasing to 1.3% in and thereafter increase slowly above 2% and trending to 6.0% in Annual golf rents are fairly stable at $430,000 adjusted annually for the CPI, but rent from the sewer utility only increases every five years looking back on past inflation increases per the CPI retroactively. Funding from gas tax is actually a transfer from the special revenue fund legally required for gas tax received from the State that can only be used for street purposes. A portion of gas tax funds various street maintenance functions in the General Fund freeing up other General Fund revenues for other purposes. Gas tax is at risk as a candidate for a take-away by the State as the Governor and Legislature struggle to balance the State budget. The League of California Cities was successful in the prior fiscal year in fending off a proposal by the State to redirect all gas tax funding currently going to local jurisdictions for street improvements and maintenance to repay State debt obligations. 14

21 ATTACHMENT 2 COMPARISON OF CURRENT AND PREVIOUS CITY FORECASTS TO EPS FORECAST In February 2010 EPS was commissioned to conduct a forecast for Property Tax, Sales Tax, Property Transfer Tax, and Transient Occupancy Tax. Their analysis included a low and high forecast range over an eight year period. This chart then also overlays the original total projected values for these four major revenue sources from the Business Plan and the revised estimates for those two years along with the updated staff revised baseline forecast for that same period. 15

22 ATTACHMENT 3 STATUS OF RESIDENTIAL & COMMERCIAL DEVELOPMENT PROJECTS Projects Under Construction: Verona Ridge 34 single family dwellings. 8 dwellings have been constructed. However, construction has been suspended due to lack of sales. These are large, expensive single family dwellings. There has been no indication that the developer is ready to proceed at this time. It is possible that additional dwellings may be built in Peninsula Station Affordable Housing 68 affordable housing units, 2,900 sq. ft. of commercial space. Presently under construction, occupancy anticipated for October Ben Franklin Hotel Building permits for renovations of the hotel have expired. The lender has taken back the property and is evaluating offers and the property is being auctioned off by the bank. It is assumed it will remain as a hotel, rather than converted to residential. San Mateo area hotels have continued to see revenue per room decline in The Ben Franklin is complicated by the fact that no parking is available, and discussions with the City regarding use of City parking facilities would require changes to the City s management of those facilities, as well as the financial implications of the use of City parking spaces. Even under an optimistic scenario it will be 3 4 years before building permits are reactivated, construction completed and occupancy of the hotel occurs. Peter Pan BMW Site renovation and new 5,100 sq. ft. of additional sales area and project is underway. Anticipate completion of this project in fall Woodlake Shopping Center Renovation of parking area and existing buildings. Project underway, anticipate completion in late Kaiser Medical Office Construction of a 65,000 sq. ft. medical office building. Steel frame under construction, superstructure permit yet to be issued. Anticipate occupancy by late Serra High School - Outdoor pool and construction of a 25,387 square foot educational building, 1,605 square foot swim team support building. Construction underway, anticipate occupancy in mid

23 Projects with Planning Approval, No Building Permit yet issued: Bay Meadows Phase 2 Infrastructure work underway. Residential block 3, consisting of 156 units, construction to start in late 2011, early Complete in Construction of 200 additional townhouse units in the initial phase of this project may start at the end of this cycle, likely 2014 at the earliest. Wilson Meany Sullivan (WMS Partners), the developer of the Bay Meadows project plans on the following phasing of 1,117 residential units: 135 units in , 261 units in , 402 units in , 200 in , and 119 in San Mateo Times Redevelopment 74 townhouse/ attached single family dwellings, 30,000 sq. ft. of self-storage. The applicant has initiated discussions with the City regarding deferral of fees, which would indicate some possibility of construction. However, even at the earliest, 2012 construction would be optimistic. City of San Mateo Fire Station 23 Permits for temporary station issued. Construction on permanent new station to commence, anticipate construction complete in late Magnolia Place The applicant s architect has been pursuing the design of roof mounted solar panels and is presently preparing construction documents for this 52 unit apartment, which was approved by the City in January The applicant is actively seeking financing; however, in this market it is unlikely that construction will take place until the latter part of the 5-year horizon. Other residential projects - There are a number of podium condominium projects which have been approved in the last several years. Even with time extensions automatically granted by the state for most projects, (to the year 2012 for the most part), I doubt they will be built within the next 5 years given economic conditions and the lack of construction financing for these types of market rate projects. These projects include: San Mateo Drive Condominiums, Delaware Place (however, see below), Monte Diablo Condominiums, Mariners Island Condominiums. The applicant for the 30 unit addition to Chesapeake Apartments (Prometheus Development) has indicated that they have abandoned plans for that project. Office projects The two major office projects include Bay Meadows Phase 2 and Hines offices. Given current market conditions it is unlikely that either will be built within the next 5 years. Projects Presently Going Through the Planning Application (PA) Process Station Park Green 599 units, 10,000 45,000 sq. ft. of office, 25,000 60,000 sq. ft. retail. Entitlement process for Specific Plan and Design Guidelines should conclude in early However, there would still remain the need for approval of a Site Plan and Architectural Review (SPAR) for the design of the individual buildings. The fact that there are viable uses on the site, that the property owner is still generating revenue and given the uncertainty of the market, construction of this project is unlikely within the next 5 years. Polo Court 197 apartment units, 128,000 sq. ft. office. Anticipate completion of the entitlement process in early The project consists of relocation of an existing office on site, which 17

24 complicates matters. Best case scenario is that construction of the apartment portion of the project occurs sometime in 2013 at the earliest South Delaware Housing 120 units: 60 moderate income, 60 below market rate units. Anticipate completion of entitlement process in early Construction 2012 as an estimate. Potential Projects Delaware Place The Planning staff has been in contact with a developer interested in townhouse development, approximately 80 units. Even if this project were to be approved by the City, the entitlement process and need to prepare construction documents would lead to construction in 2013/2014. Bay Terrace Apartments - Demolition of an existing 127 unit apartment and construction of a new 255 unit apartment on Casa de Campo. The pre-application process has been completed, and the applicant has met with the Development Review board to discuss some code issues in preparation for submittal of a formal planning application. Likely Planning Application process 2011/12, building permit 2013/14. San Mateo Executive Park New 140,000 sq. ft. office building and 40 sq. ft. addition to an existing building within the San Mateo Executive Park off of Clearview Way. The project completed the preapplication process over 18 months ago, however, has not initiated the formal planning application process. The Foster City firm of SolarCity recently executed a lease for 68,000 sq. ft. within this office park, so there may be renewed interest in pursuing this project. However, construction before 2105 is unlikely given current office market conditions. Fire Station 24 The City initiated a property acquisition to allow for eventual replacement of the existing Fire Station 24 at 4 th and Humboldt. It is likely that the pre-application process will commence in 2011, followed by the formal planning application. North San Mateo Drive property. This is a long dormant application for a 154 unit, 11,600 sq. ft. commercial mixed use project at the northern border of the City, North San Mateo Drive/Peninsula Avenue. The developer for the site recently indicated that they may soon be pursuing a unit apartment project. However, any type of construction permits would be towards the end or outside of the 5 year planning horizon. The projects listed above are the more major projects within the City of San Mateo. Smaller projects have been omitted. 18

25 ATTACHMENT 4 HISTORICAL SALES TAX REVENUE TREND BY BUSINESS CATEGORY 19

26 Source: MuniServices 20

27 Source: MuniServices 21

28 Source: MuniServices 22

29 Source: MuniServices 23

30 Source: MuniServices 24

31 Source: MuniServices 25

32 Source: MuniServices 26

33 Source: MuniServices 27

34 Source: MuniServices 28

35 Source: MuniServices 29

36 ATTACHMENT 5 SALES TAX ECONOMIC CATEGORY ANALYSIS City Of San Mateo CITY OF SAN MATEO BENCHMARK YEAR 2010Q1 COMPARED TO BENCHMARK YEAR 2009Q1 California Statewide ECONOMIC CATEGORY ANALYSIS S.F. Bay Sacramento Central Area Valley Valley Inland Empire General Retail % of Total / % Change Food Products % of Total / % Change Construction % of Total / % Change Transportation % of Total / % Change Business to Business % of Total / % Change Miscellaneous % of Total / % Change Total 47.3 / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / -7.9 General Retail: Apparel Stores, Department Stores, Furniture/Appliances, Drug Stores, Recreation Products, Florist/Nursery, and Misc. Retail Food Products: Restaurants, Food Markets, Liquor Stores, and Food Processing Equipment Construction: Building Materials Retail and Building Materials Wholesale Transportation: Auto Parts/Repair, Auto Sales - New, Auto Sales - Used, Service Stations, and Misc. Vehicle Sales Business to Business: Office Equip., Electronic Equip., Business Services, Energy Sales, Chemical Products, Heavy Industry, Light Industry, and Leasing Miscellaneous: Health & Government, Miscellaneous Other, and Closed Account Adjustments South Coast North Coast Central Coast 30

37 ATTACHMENT 6 TRENDS IN MAJOR REVENUES 31

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