HomeMy WebLinkAbout2010/12/14 Item 13
CITY COUNCIL
AGENDA STATEMENT
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DECEMBER 14, 2010, Item 1,3
ITEM TITLE:
JOINT RESOLUTION OF THE CITY COUNCIL AND
THE REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA ADOPTING THE MEMORANDUM OF
UNDERSTANDING REGARDING PAYMENT FOR
INFRASTRUCTURE OR CONSTRUCTION THEREOF
REVIEWED BY:
ORDINANCE OF THE CITY OF CHULA VISTA
SUSPENDING THE COLLECTION OF FEES
CHARGED PURSUANT TO CHAPTERS 3.50
(DEVELOPMENT IMP ACT FEES TO PAY FOR
VARIOUS PUBLIC FACILITIES), 3.55 (WESTERN
TRANSPORTATION DEVELOPMENT IMPACT FEE),
AND 17.10 (PARKLANDS AND PUBLIC FACILITIES)
OF THE CHULA VISTA MUNICIPAL CODE FOR
DEVELOPMENT IN THE REDEVELOPMENT
PROJECT AREAS, EXCLUDING THE BA YFRONT
PROJECT AREA, FOR A PERIOD OF FIVE (5) YEARS
ASSISTANT CITY MANAG~LOPMENT
SERVICES DrnE"
CITY MANAGER i
SUBMITTED BY:
4J5THS VOTE: YES D NO I X I
SUMMARY
In August 2009, at a Joint Meeting of the Chula Vista Redevelopment Corporation and
the Chula Vista Redevelopment Agency, the CVRC was directed to explore creative
options for incentivizing redevelopment. In order to target its efforts effectively, the City
of Chula Vista hired Economic and Plarming Systems, Inc. (EPS), to review market
conditions for infill deveiopment in western Chula Vista, compare the City's
development impact fees with those of other cities in the region, and develop a model for
evaluating project feasibility for a variety of land uses.
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MEMORANDUM
To: Eric Crockett and Janice Kluth
From: James Musbach, Michael Nimon, and Amanda Moffitt
Subject: City of Chula Vista Westside Infill Market Review and
Feasibility Analysis; EPS #18143
Date: March 17, 2010
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The City of Chula Vista has retained Economic & Planning Systems, Inc.
(EPS) to review the market conditions pertinent to infill development in
the City's redevelopment areas. Additionally, EPS has developed a
financial feasibility model for use by the Chula Vista Redevelopment
Agency and City staff. The financial model is intended to be used as a
tool for analyzing financial feasibility of different types of deveiopment in
evaluation of various development impact fee levels and market factors.
The development types considered in the EPS analysis include:
((I
1. Residential For-Sale
2. Residential Rentai
3. Office and Research & Development (R&D)
4. Retail (in mixed-use format)
5. Industrial
Assumptions for the baseline inputs in the feasibility analysis are based
on current market conditions reflective of the recent downturn in the
real estate market. This memorandum documents the key findings of
the market review and provides the background and support for the
inputs in the feasibility analysis.
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The assumptions described below will change over time as the economy
and the real estate market conditions continue to change and the model
can be easily updated to reflect prevailing or projected market
corrections. It is important that each time the model is used
assumptions and inputs are carefully reviewed for accuracy and
relevance to the specific site being analyzed.
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Memorandum
City of Chula Vista Westside Intilf Market Review and Feasibility Analysis
March 17,2010
Page 2
Key Findings
1. Chula Vista has been significantly affected by the recent economic downturn.
The downturn has resulted in weakening of real estate trends, particularly evident in the
residential sector. These trends are more pronounced in Chula Vista relative to many
comparable jurisdictions in San Diego County.
2. The weakening of the real estate market in Chula Vista has adversely affected land
values and feasibility of new development across land uses.
The decrease in property values has resulted in real estate prices falling below construction
costs I making new development infeasible. Consequently, land values have experienced
significant price depreciation since 2006, while new construction activity has substantially
decreased.
3. The pro forma analysis indicates that none of the development types would be
feasible under current market and economic conditions.
The pro forma analysis for all development types results in a negative residual land value
estimate, significantly below the 15 to 25 percent of the building value considered sufficient
to justify new development. This indicates that no development type evaluated in the pro
forma is feasible under current market conditions.
4. The City of Chula Vista collects development impact fees for residential and
commercial development in the City to fund a number of improvements.
While fee types and scheduies vary by geographic areas within the City, this analysis
evaluates fees charged in Western Chula Vista. The key fees include parks and recreation,
public facilitiesl traffic and transportation, and sewer fees. These fees are also commonly
charged by other jurisdictions in San Diego County.
5. Residential development impact fees in Chula Vista are the second highest among
jurisdictions in San Diego County.
While residential fees in Chula Vista are higher than those of most other cities in the County,
the fees fall within a reasonable range and are less than 11 percent of value. The fees for
garden and high-rise apartments are in the range of 8.9 to 10.9 percent of value, while other
residential uses are significantly below 9 percent of value, which implies a relative balance of
fees compared to value under normalized market conditions. This suggests that fees in
Chula Vista are not the key factor in determining feasibility of residential uses, and new
development could occur with the current level of fees following a market recovery.
However, given the current market downturn, relatively high fees may result in delaying and
redirecting new development in Chula Vista and may adversely impact the City's efforts to
attract new regional housing growth because of relatively high fees compared to other
jurisdictions in the County.
ommercial development impact fees in Chula Vista fall within a reasonable range
and are close to the countywide average.
Development impact fees collected for new commercial development in Chula Vista fall below
10 percent of value. This suggests that feasibility of commercial development is not
significantly affected by the City's impact fee structure. These fees are also comparable to
ot dictions in San Diego County.
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DECEMBER 14, 2010,
Page 2
EPS completed the Memorandum entitled, "City of Chula Vista Westside Infill Market
Review and Feasibility Analysis," in March 2010 (Attachment 1 - Feasibility Study).
Key findings from that memorandum show that Chula Vista has been significantly
affected by the recent economic downturn, especially in the residential sector. The
weakening of Chula Vista's real estate market has resulted in much of western Chula
Vista land values falling below construction costs, severely hampering options for new
development.
EPS' development impact fee research shows Chula Vista's residential development
impact fees rank second highest in the County. The study noted that given current market
conditions, "relatively high [development impact] fees may result in delaying and
redirecting new development in Chula Vista"l The fact that those fees still fall within a
reasonable range (they are less than 11 percent of value), suggests that fees are not the
key factor in determining feasibility; however, a reduction in DIFs could allow certain
projects to become economically viable in the shorter term.
On August 12, 2010, Jim Musbach and Michael Nimon from EPS attended the Chula
Vista Redevelopment Corporation ("CVRC") Workshop, presenting the results of their
feasibility study. EPS noted that the market contraction we have experienced for the last
five years is showing signs of recovery, however, it could be another five years before
Chula Vista experiences a normal economic market.
Following the presentation by EPS, the CVRC directed staff to address some of the
findings in the EPS Memorandum and to provide recommendations to incentivize
redevelopment. In response, staff has prepared a proposal for suspending the collection
of development impact fees from private development in Chula Vista's Redevelopment
Project Areas2 for the next 60 months.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for
compliance with the California Environmental Quality Act (CEQA) and has determined
that the activity is not a "Project" as defmed under Section 15378 of the State CEQA
Guidelines because it involves administrative activities that will not result in direct or
indirect physical changes to the environment. Therefore, pursuant to Section 15060( c )(3)
of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no
environmental review is necessary.
RECOMMENDATION
Council and Agency adopt the Resolution.
Council adopts the Ordinance.
I "City ofChula Vista Westside Infill Market Review and Feasibility Analysis," Economic and Planning
Systems, Inc., 2010.
2 Development Impact Fees would continue to be collected in the Bayfront Redevelopment Project Area.
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DECEMBER 14, 2010,
Page 3
BOARDS/COMMISSION RECOMMENDA nON
On October 14, 2010, the Chula Vista Redevelopment Corporation recommended that
Council adopt the Ordinance.
DISCUSSION
A Five Year Redevelopment Implementation Plan is prepared by the Agency in
accordance with state regulations (Health and Safety Code, Section 33490). This
document is a work plan for the Redevelopment Agency that identitIes specific programs,
including potential projects critical to successful redevelopment: the plan describes
where, how and when tax increment funds should be spent. The goals of the 2010-2014
Five Year Implementation Plan are listed as follows:
. Stimulate Economic Gro"'ih: Attract, expand, and retain desirable business and
industry, which effectively increases local employment opportunities for
community residents, and enhances the local tax base
. Construct Infrastmcture Improvements: Provide needed improvements to the
utility infrastructure and public facilities that serve the Redevelopment Project
Areas. And, provide needed improvements to the community's education,
cultural, and other community facilities to better serve the Project Areas.
. Promote Compatible Development: Upgrade and stabilize existing uses, and
promote and preserve artistically, architecturally, and historically worthwhile
structures and sites to encourage the development of residential, commercial, and
industrial environments which positively relate to adjacent land nses.
. Balanced Housing Opportunities: Increase, improve, and preserve the community's
supply of varied housing opportunities for all persons at all income levels.
The strategic focus ofthe Agency's work program includes leveraging resources and
assets to facilitate high-quality, urban development. That development will in turn
generate significant revenue streams to the City and Agency (e.g., tax increment, sales
tax, transient occupancy ta.x) for public improvements, public services and the creation of
new affordable housing.
In the pursuit of its goals and strategic focus, the Redevelopment Agency IS
implementing the following projects and programs:
Business Improvement Grants (BIG) Program for Broadway and Third Avenue
businesses. The BIG program, administered by the city's Economic Development
Division, provides grants to business and property owners to assist with fayade
renovations. These renovations promote visibility/marketability with the goal of
increased economic prosperity for businesses and increased property/sales ta.x revenue for
the City.
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DECEMBER 14, 2010,
Page 4
Third Avenue Streetscape Program: The Agency has committed $1.2 million to the
enhancement of the public improvements along Third Avenue from E Street to H Street.
Palomar Gateway Improvements: The Agency provided twenty percent matching funds
or approximately $350,000 towards the recently completed improvements at Palomar
Street and Industrial Boulevard.
Main Street Streetscape lvfaster Plan: The Agency is currently providing the funding for
City staff to prepare a master plan for the Main Street Corridor. The Master Plan, like that
of Third Avenue, will provide the engineering drawings necessary to construct sidewalks,
lighting, landscaping, parking and drainage improvements along the Main Street
Corridor. Upon completion of the Master Plan and preparation of construction
documents the Agency anticipates issuing $ 10 million dollars of Tax Allocation Bonds
in 2014 to construct the improvements on Main Street. The improvements will help to
promote the visibility of the area as viable and attractive business/industrial park,
attracting new investment and employment to the area.
The Agency has provided matching funds toward the grant to prepare a Specific Plan for
the Palomar Gateway.
In addition, the Agency is funding city staff time to work with the Southwest working
group on various land use and zoning issues around south Broadway and south Third
Avenue.
The Agency has embarked on the creation of residential rehabilitation grant program for
the two residential neighborhoods located within the redevelopment project area in
Southwest Chula Vista. The neighborhoods of Broderick Acres and Woodlawn Park will
have the opportunity to participate in a no-interest, forgivable loan program that is
designed to promote homeownership and pride in the neighborhood by improving the
overall aesthetics and livability of the housing.
The programs identified above are focused on maintaining, improving and preserving
assets already located throughout the redevelopment project areas. In an effort to further
attract new capital investment within the western Chula Vista project areas, staff
proposes that the City suspend the collection of development impact fees from private
development for a period of 60 months to encourage reinvestment in the community.
Development Impact Fees (DIFs)
Development Impact Fees are collected by the City pursuant to Chapter 66000 of the
California Government Code (also known as the "Mitigation Fee Act") and pursuant to
enabling local ordinances. The Mitigation Fee Act and the associated case law clearly
restrict the City's ability to collect DIFs from applicants in excess of the funds necessary
to mitigate the impacts of their project. For this reason, the City does not have the
authority to simply waive the collection ofDIFs. To do so would invariably result in the
shifting of impact fee program costs to other applicants, thereby increasing their fees due
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DECEMBER 14, 2010,.
Page 5
beyond their fair share. It is therefore necessary to identify alternative funding to replace
those fees which would have been collected by projects receiving building permits during
the proposed DIF suspension. Via a contract between the City and the Redevelopment
Agency, Tax Increment will be used to replace the impact fees ancl/or to build public
improvements listed within the impact fee programs.
Throughout the city, public infrastructure improvements are paid for in part with
development impact fees. These funds provide for transportation improvements;
parkland acquisition and development; and public facilities such as fire stations.
Development impact fees are collected on new development projects and may only be
used to mitigate the impacts created by the new development paying the fee3 Western
Chula Vista development impact fees are currently as follows:
Per Equivalent IAi'ellinz Unit (EDU)
. Western Transportation Development Impact Fee (WTDIF):
. Public Facilities Development Impact Fee (PFDIF):
. (Western) Park Acquisition and Development Fee (PAD):
. Traffic Signal Fee:
$3,243
$8,735
$9,574
$ 307
Total:
$21,859
DIFs and Timing of Improvements
Most of the City's development impact fees are determined by geographic factors -
whether a project lies east or west ofInterstate 805.4 On the eastern side of Chula Vista,
where land is being developed for the first time, new infrastructure must be built to serve
development projects. Developers are likely to build the necessary infrastructure (such as
a road or a small park) as they build their project, receiving credit toward their impact
fees.
On the west side, infrastructure is already in place but may require a capacity increase to
serve new development. Development on the west side involves "infilling" the gaps or
redeveloping existing structures. Projects tend to be small (50 units or less), and
developers on the west side typically pay an in-lieu fee or DIF. As a result of relatively
small revenue increments, infrastructure improvements on the west may take years to
implement.
Examole:
A single transportation improvement project, such as the Alain
Street Streetscape Improvements5, costs an estimated $7,575,9606
3 Improvements to address existing infrastructure deficiencies are funded through a combination of General
Fund, grant, and capital project restricted funding sources (e.g., TransNet, Gas Ta..'\(, Storm Drain Fees,
etc.).
4 Fees for public facilities infrastructure are the same city-wide.
5 The Main Street Streetscape Improvements include the area along Main Street between Interstate 5 and
Interstate 805 - the entire project is within the Southwest Redevelopment Project Area.
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DECEMBER 14,2010,
Page 6
The WTDIF portion (or local share) is 21% or $1.6M So, at
$3,243 per unit, it would take 493 units to pay for the WTDIF
share of the improvement. In 2009, approximately 275 homes
were built in the entire City of Chula Vista (includes east and
west). On(v a small percentage of those homes were west of 1-805,
generating an estimated $20,000 in WTDIF. Even if the market
improves slightly in the near future, it will take years to
accumulate enough DIF funds to build the improvements.
Suspension of Development Impact Fees
Staff recognizes that the cost of development is preventing, or at least delaying,
construction at this time. By suspending the collection of development impact fees from
private development in the redevelopment project areas, the Agency strives to eliminate
some of the financial risk for developers and catalyze development activity in western
Chula Vista. A five-year suspension on DIFs sends a message to the development
community that Chula Vista is encouraging development, especially in defined
redevelopment target areas. Put simply, developers will be able to make projects pencil
sooner in Chula Vista than elsewhere in the region.
By leveraging tax increment funds, the Redevelopment Agency will 'pay it forward,'
either building specific infrastructure' projects now or contributing Tax Increment
directly to the DIF accounts to replace the fees forgone as a result of the fee suspension.
The construction of identified improvements, like the Main Street Streetscape
Improvements, would be used to address some of the impacts of development within the
Redevelopment Project Areas over a five-year period. By the end of the five-year period,
all DIF funds would be made whole, either via construction offacilities or by direct
application of Tax Increment funds. A Memorandum of Understanding between the City
and the Agency establishes the terms of replacement of the suspended fees.
DECISION MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that
Councilmembers Castaneda and Ramirez own properties within the redevelopment
project areas and therefore have a conflict, based on the 500-foot rule found in California
Code of Regulations section I 8704.2(a)(1) applicable to this decision.
CURRENT YEAR FISCAL IMP ACT
The proposal to suspend DIF collection in the City's redevelopment areas is intended to
incentivize development. If successful, the City will see increased development permit
applications, resulting in increased development processing revenues in the General Fund
and Development Servi~es Fund. In the current year, the DIF funds will likely have
6 Typically funding for major infrastructure comes from a number of different public sources, including
State and Federal money.
, The Agency would build infrastructure projects designated in the Development Impact Fee Reports.
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DECEMBER 14,2010,
Page 7
decreased cash flows but the City may see an mcrease in the construction of public
improvements.
ONGOING FISCAL IMPACT
Increased development permit applications in the -redevelopment project areas resulting
from the D IF suspension will result in increased development processing revenues in the
General Fund and Development Services Fund. In the short term, the DIF funds will
likely have decreased cash flows but the City will see an increase in the construction of
public improvements.
At the end of the five-year suspension period, the DIF funds themselves will be made
whole and the action will have no significant impact on fund balance. Overall, increased
investment in the redevelopment area is anticipated to increase general purpose tax
revenues to the City.
ATTACHMENTS
1. Attachment 1 - Feasibility Study
2. Attachment 2 - Redevelopment Area Map
Prepared by: Janice Kluth, AICP, Senior Project Coordinator, Development Services
Department
13-7
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Economic 8i Planning Systems,Jnc..
2501 Ninth Street, Suite. 200
Berkelev, CA 94710-2515
5108419190 tel
510841 9208 fax
Berkeley
Sacramento
Denver
www_epsvs~com-
Attachment 1
MEMORANDUM
To: Eric Crockett and Janice Kluth
From: James Musbach, Michael Nimon, and Amanda Moffitt
Subject: City of Chula Vista Westside Infill Market Review and
Feasibility Analysis; EPS #18143
Date: March 17, 2010
The City of Chula Vista has retained Economic & Planning Systems, Inc.
(EPS) to review the market conditions pertinent to infill development in
the City's redevelopment areas. Additionally, EPS has developed a
financial feasibility model for use by the Chula Vista Redevelopment
Agency and City staff. The financial model is intended to be used as a
tool for analyzing financial feasibility of different types of development In
evaluation of various development impact fee levels and market factors.
The development types considered in the EPS analysis include:
1. Residential For-Sale
2. Residential Rental
3. Office and Research & Development (R&D)
4. Retail (In mixed-use format)
5. Industrial
Assumptions for the baseline Inputs in the feasibility analysis are based
on current market conditions reflective of the recent downturn in the
real estate market. This memorandum documents the key findings of
the market review and provides the background and support for the
inputs in the feasibiiity analysis.
The assumptions described below will change over time as the economy
and the real estate market conditions continue to change and the model
can be easily updated to reflect prevailing or projected market
corrections. It is important that each time the model is used
assumptions and inputs are carefully reviewed for accuracy and
relevance to the specific site being analyzed.
13-8
Memorandum
City of Chula Vista Westside Intill Market Review and Feasibility Analysis
March 17, 2010
Page 2
Key Findings
1. Chula Vista has been significantly affected by the recent economic downturn.
The downturn has resulted in weakening of real estate trends, particularly evident in the
residential sector. These trends are more pronounced in Chula Vista relative to many
comparable jurisdictions in San Diego County.
2. The weakening of the real estate market in Chula Vista has adversely affected land
values and feasibility of new development across land uses.
The decrease in property values has resulted in real estate prices falling below construction
costs, making new development infeasible. Consequently, land values have experienced
significant price depreciation since 2006, while new construction activity has substantially
decreased.
3. The pro forma analysis indicates that none of the development types would be
feasible under current market and economic conditions.
The pro forma analysis for all development types results in a negative residual land value
estimate, significantly below the 15 to 25 percent of the building value considered sufficient
to justify new development. This indicates that no development type evaluated in the pro
forma is feasible under current market conditions.
4. The City of Chula Vista collects development impact fees for residential and
commercial development in the City to fund a number of improvements.
While fee types and schedules vary by geographic areas within the City, this analysis
evaluates fees charged in Western Chula Vista. The key fees include parks and recreation,
public facilities, traffic and transportation, and sewer fees. These fees are also commonly
charged by other jurisdictions in San Diego County.
5. Residential development impact fees in Chula Vista are the second highest among
jurisdictions in San Diego County.
While residential fees in Chula Vista are higher than those of most other cities in the County,
the fees fall within a reasonable range and are less than 11 percent of value. The fees for
garden and high-rise apartments are in the range of 8.9 to 10.9 percent of value, while other
residential uses are significantly below 9 percent of value, which implies a relative balance of
fees compared to value under normalized market conditions. This suggests that fees in
Chula Vista are not the key factor in determining feasibility of residential uses, and new
development could occur with the current level of fees following a market recovery.
However, given the current market downturn, relatively high fees may result in delaying and
redirecting new development in Chula Vista and may adversely impact the City's efforts to
attract new regional housing growth because of relativeiy high fees compared to other
jurisdictions in the County.
6. Commercial development impact fees in Chula Vista fall within a reasonable range
and are close to the countywide average.
Development impact fees collected for new commercial development in Chula Vista fall below
10 percent of value. This suggests that feasibility of commercial development is not
significantiy affected by the City's impact fee structure. These fees are also comparable to
other jurisdictions in San Diego County.
P;\18000S\18143Cl1ula_VJsl<l\Rt!Port\18143mm031710.doc
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Memorandum
City of Chula Vista Westside Infill Market Review and Feasibility Analysis
March 17, 2010
Page 3
Market Review
Chula Vista is a suburban community located on the east shore of San Diego Bay, 10 miles south
of San Diego and north of the Mexican border. Southern San Diego County consists of a wide
range of neighborhoods of different vintage, character, and condition. An abundance of
neighborhoods and communities span the range of mature and healthy, new and stable, and
older areas in need of revitalization.
The current financial crisis, which was driven initially by subprime mortgage defaults and
associated home foreclosures, has resulted in a significant tightening of lending practices and
available capital, thereby reducing demand for homes. This has corresponded to a large number
of homes entering the market, further deflating home prices. Demand for commercial space has
been impacted by falling employment as the financial crisis has developed into the global "Great
Recession." California has the highest number of subprime mortgages in the nation, and San
Diego County has been affected by home foreclosures and the broader economic recession.
Chula Vista Market Performance Trends
The City of Chula Vista has a population of about 230,000 and employment base of about 56,000
(see Table 1). The largest share of employment falls within education services and retail trade,
with significant employment in healthcare and industrial categories. Chula Vista ranges from
rural to urban densities, with most of the City serving as a bedroom community function to the
broader San Diego region. The urban core is located in Western Chula Vista and is the most
urban location in the City.
Similar to the broader regional trends, Chula Vista has been affected by the real estate downturn
in recent years. The weakening of the residential and commercial real estate markets has
resulted in value, rent, and occupancy decreases. Home prices in Chula Vista have fallen
significantly in recent years followed by a period of steady price appreciation from the mid-
1990s. Chula Vista's median housing values peaked in 2005, with median home prices reaching
$617,000 per unit, an increase of over 200 percent since 1993. However, median home values
. have since decreased to $299,000 per unit as of November 2009, a drop of more than 50
percent (see Table 2).
Commercial space has followed similar trends, though in a less pronounced manner. Table 3
shows historic commercial rent and occupancy trends over time. Office rents have decreased by
27 percent since 2005 with vacancies increasing from 12.1 percent in 2006 to 41.4 percent by
the end of 2009. While office vacancies are the highest among all commercial uses, the City
does not contain a significant professional and financial services cluster with only 8 percent of
employment in finance, real estate, management, and professional, scientific, and technical
services categories.
Retail and industrial space have also exhibited declining trends with respective rents decreasing
by 21 and 12 percent since 2005. At the same time, industrial vacancies have increased from
2.1 percent to 5.5 perce'nt, while retail vacancies have increased from 1.5 to 4.1 percent.
Despite the weakening of the reai estate market, retail and industrial space vacancies remain
relatively low relative to some comparable jurisdictions in San Diego County.
Between 6 and 7 percent of the total foreclosure activity in the San Diego metropolitan statistical
area (MSA) occurred in Chula Vista before 2005. However, this share significantly increased
following the downturn, reaching as high as 14 percent of the broader region, or nearly 18,000
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Memorandum
City of Chula Vista Westside Infill Market Review and Feasibility Analysis
March 17, 2010
Page 4"
foreclosures in 2008 (see Table 4). This foreclosure rate translates into nearly lout of every 4
homes being foreclosed in 2008, a rate substantially higher than that of the County or the State,
which had about 1 foreclosure per 54 units. Chula Vista's high foreclosure rate relative to the
broader area indicates its relative weakness in the housing market as well as the nature of many
home buyers who may have barely qualified for mortgages during the pre-recession speculative
conditions. Many of these distressed buyers will not qualify for new mortgages going forward,
which may extend the housing recovery in the City.
New construction activity also provides a useful estimate of real estate market trends. As shown
in Table 5, new construction in Chula Vista has been minimal compared to the historic levels
across various land uses. This indicates that the current real estate market values do not justify
a private sector investment in new construction.
Recent Land Sales
Land values in Chula Vista followed trends similar to the broader region, with prices peaking
around 2006 and decreasing since. During the peak, residential iand typically sold for over
$1.0 million per acre, with some sales as high as nearly $2.0 million per acre. While commercial
land values are typically below residentiai uses, commerciai land sold for approximately
$1.0 million per acre during the peak. Of course, land prices vary significantly because of many
factors, such as rents and property values, the level of infrastructure improvements, building
construction costs, development impact fees, zoning restrictions, and interest rates.
After 2006, land transactions in Chula Vista were minimal and land price comparisons are difficult
to interpret. However, based on the broader trends, land values have been significantly reduced
by the economic downturn, and have considerably decreased from the 2005-2006 levels.
However, as the economy and the real estate markets improve, land prices are likely to recover
and return to historic levels, but that will likely be several years from now.
Feasibility Analysis Inputs
This section provides an overview and support for the key assumptions utilized in the feasibility
model. These assumptions reflect the most up-to-date market trends and are used as inputs in
the EPS analysis (see Table 6). These inputs will need to be updated in the feasibility model as
conditions continue to change. Detailed pro formas by development type are shown in the
Appendix.
Building Values and Rents
The economic downturn resulted in a substantial reduction of building values over the past few
years. Given the volatility of the economy since the downturn, an average of values over the
last few years may not yield the most appropriate estimate of current prices. Instead, this
analysis uses the most up-to-date value estimates based on the current market trends, with
some values less than construction costs. As the market recovers, building values are expected
to increase above construction costs to support new construction.
Residential For-Sale
Residential for-sale values are based on the median sales prices provided by DataQuick for
January through November of 2009. DataQuick provides a database of real estate transactions
from county recorder and assessor's records and is updated monthly. The feaSibility analysis
P:\lBOOOs\18143Chula_Vlsta\RepDft\18143mm031710,dDC
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Memorandum
City of Chula Vista Wests ide Infill Market Review and Feasibility Analysis
March 17, 2010
Page 5
assumes that all residential units are market-rate. The City's affordable housing policy requires
projects above 50 units to provide an affordable component or pay in-lieu fees, established on a
case-by-case basis. To the extent that the project would inciude below market-rate units, land
values in the pro forma would decrease.
As mentioned above, median home prices in Chula Vista have fallen significantly to $299,000 per
unit' as of November 2009. DataQuick reported a median value of $361,000 per unit for new
homes in Chula Vista between January and November 2009, 20 percent over the median for "all
homes" (that consist of predominantly re-sales). As a result, EPS analysis assumes a 20 percent
price increase applied to the citywide median sales price to reflect sales prices for new units.
Given the predominantly single-family character of Chula Vista, most homes sold are single-
family units, which are typically of higher value relative to attached, higher-density homes. The
feasibility analysis inciudes townhomes and higher-density condominiums, as appropriate for the
urban setting. New town homes and high-rise condominiums are assumed to support values
similar to the current citywide median prices as a reduction of "per unit" cost resulting from
higher density (relative to mostly single-family sales) is assumed to be offset by a "new unit"
premium. Podium mid-rise condominiums are assumed to sell at 15 percent below all-homes
median, less than town homes and high-rise condominiums. A precise estimate of the price
differences between these development types will vary on specific characteristics of each project.
Residential Rental
The Colliers International Multifamily Market Report - Fall 2009, lists monthly apartment rents in
the South Bay area at about $1.39 per square foot in September 2009,2 in line with the current
survey of asking rents for various properties in Chula Vista. Because the rents are based on a
range of property ages with most rental inventory in the area developed before the 1980s, rents
for new space in Western Chula Vista are assumed to command a premium because of new
construction and proximity to transit.
As a result, garden apartments are assumed to support a 10 percent rent increase above
citywide rent (a monthly rent of $1,500 per unit) while mid-rise apartment rents are estimated
to support a 20 percent increase because of a higher level of amenities, such as podium parking
and limited views (a monthly rent of $2,200 per unit). High-rise apartment rents are assumed to
generate the highest premium, 30 percent above average market rents (a monthly rent of
$1,800 per unit).3 This price increase is based on a high level of amenities, views, and proximity
to transit as only high-rise apartments are allowed near transit under the City's height limit
ordinance.
1 Home prices in Western Chula Vista are generally below those in other areas of the City.
2 The South Bay market area includes Chula Vista, southeast San Diego, National City, Bonita,
Imperial Beach, San YSidro, Otay Mesa, Palm City, Nestor, Paradise Hills, and Encanto.
3 High-rise units are assumed to be smaller than mid-rise, which results in lower per-unit rent for
high-rise units despite higher per square foot rent.
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Memorandum
City of Chula Vista Westside Intill Market Review and Feasibility Analysis
March 17, 2010
Page 6
Office and R&D
Office and R&D rents are based on the average asking lease rates for the fourth quarter of 2009
reported for South San Diego4 by CBRE, in its market report updated quarterly. Rent ranges
significantly between various types of office and R&D building types, densities, and amenities
(i.e., parking, views, and tenant improvements). It is assumed that R&D space would provide
the most basic amenities, while Class A office would include higher levels of amenities and
improvements. As a result, R&D uses are assumed to generate rents similar to the South San
Diego average as reported by CBRE, while office uses are assumed to result in a rent premium
over the current market rents. Specifically, Class B office is assumed to support a 10 percent
rent increase because of new space and higher-end finishes, while Class A office is assumed to
support a 30 percent rent increase associated with higher levels of amenities and views. Of
course, rent will vary by many site- and building-specific factors and should be adjusted for
evaluation of specific buildings.
Mixed-Use Retail
Retail rents are based on the average asking lease rate for the fourth quarter 2009 reported by
CB Richard Ellis (CBRE) in its Local MarketView report, which is updated quarterly. Based on this
report, retail rents in Chula Vista and Bonita are just under $2.00 per square foot on a triple net
basis. Because these rents generally apply to existing space, it is assumed that new infill retail
with a mixed-use component in Western Chula Vista could support a 20 percent increase for new
space above current rents, a similar assumption as residential uses. This adjustment is
supported by market information obtained through interviews with local brokers. Lease rates for
new retail space in western Chula Vista located in a highly visible shopping center with a strong
anchor tenant could be as high as $2.50 per square foot on triple net basis.
Industrial
Rents for warehouse and distribution uses are based on the average asking lease rates for the
fourth quarter of 2009 reported for South Bay by CBRE. Because these rents mostly apply to
existing space, it is assumed that a 20 percent new space rent increase could be supported by
new industrial development. The CBRE market report is updated quarterly.
While sales/service use trends are not explicitly tracked by market reports, these uses are
assumed to be higher-end, light industrial space compared to warehouse/distribution uses.
Therefore, sales/service space is assumed to command rents 30 percent above warehouse/
distribution rents.
Operating Expenses
It is assumed that retail and industrial leases will be on a triple net basis, while office and R&D
leases will be on a full service basis. Under the terms of the triple net lease, tenants typically
pay all expenses associated with their operation in addition to rent, including property taxes,
insurance, repairs, maintenance, and utilities. While landlords do incur expenses for property
management and accounting, those expenses are minimal. As a result, absorption of all
operating expenses by the tenants is assumed in the feasibility analysis under the triple net lease
terms.
4 The South San Diego market area includes Chula Vista, National City, and Imperial Beach.
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Memorandum
City of Chula Vista Wests/de Infifl Market Review and Feasibility Analysis
March 17, 2010
Page 7
For office, R&D, and residential rental development types, expenses associated with ongoing
operation are paid by landlords under the full service lease structure. For residential rental uses,
these expenses include property management, administration, maintenance, utilities, insurance,
and taxes and are reflected in the "operating expenses" line item in the pro forma. Based on the
mean for the San Diego-Carlsbad, San .Marcos MSA from Urban Land Institute's Dollars & Cents
of Multifamily Housing 2006, an average operating expenses ratio is 37 percent of gross rent for
residential uses. However, new construction is typically more efficient and results in lower
utilities and maintenance costs; therefore, new residential apartment operating costs typically
range between 25 and 35 percent. As a result, operating costs of 30 percent of gross rental
income are assumed for residential rental uses.
Operating expenses for office and R&D uses include cleaning, repair and maintenance, utilities,
security, administration, and parking. According to the data from BOMA International for
downtown San Diego, operating expenses make up about 37 percent of gross office rent. As
described above, newer office space is likely to result in lower operating expenses because of
newer and more efficient building features. Therefore, an average operating cost of 30 percent
of gross rental income is also assumed for office and R&D uses.
Cap Rates
A "cap rate" is applied to the net operating income (NO!) to estimate the potential sales value of
rent-generating properties. Cap rates have historically ranged between 4 and 10 percent, with
residential rental uses and institutional space typically generating lower cap rates (perceived as
lower risk), while industrial and manufacturing uses have typically generated higher cap rates,
associated with riskier investments. Larger building space that could attract institutional
investors typically generates lower cap rates compared to smaller buildings typically purchased
by individuals and small investment companies. Cap rates are highly influenced by a wide
number of factors and should be considered for individual projects based on site-specific factors.
The cap rates utilized in this analysis are based on the current California Real Estate Journal
data, which is updated quarterly.
Residential Rental
According to the California Real Estate Journal data for San Diego County, multifamily cap rates
have been increasing from 5.1 percent during the second quarter of 2008 to 6.3 percent in the
second quarter of 2009. The decompression trend over the last year is consistent with other
California markets, including Los Angeles County, Orange County, and the San Francisco
Bay Area. Given these trends, the cap rate of 6.0 percent is assumed for rental uses in this
analysis. Residential cap rates should be evaluated on a project-specific basis which vary based
on a range of risks associated with development location, density, size, and broader capital
market trends.
Office and R&D
According to the California Real Estate Journal data for San Diego County, office cap rates have
significantly escalated from 5.3 percent in 2008 to 9.5 percent by the end of the second quarter
of 2009. The most recent cap rate of 9.5 percent in San Diego County exceeds the rates in other
comparable counties, which range between 6.8 and 8.0 percent during this time period. Similar
to the risk perception described for retail, higher cap rates are associated with buildings that
contain riskier office tenants, while buildings with higher-quality construction occupied with
stable companies (with high credit ratings) result in lower cap rates because of lower risk. Class
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Memorandum
City of Chu{a Vista Westside Infi{{ Market Review and Feasibility Analysis
March 17, 2010
Page 8
A and B office are assumed to have a comparable level of risk, while R&D space reflects higher
risk because of more speculative tenants. As a result, a cap rate of 7.5 percent is assumed for
office uses and 8.5 percent for R&D uses.
Mixed-Use Retail
Similar to residential rental and office uses, cap rates for retail space have experienced a
decompression trend over the last 12 months, increasing from 6.1 to 6.8 percent in San Diego
County by the end of the second quarter 2009. Retail cap rates in Los Angeles also fall within a
6 to 7 percent range. Retail cap rates are highly dependent on the type of tenant, with lower
cap rates associated with national tenants with good,ratings that are perceived as lower
investment risk. Given the likely nature of small and family-owned retail tenants in Western
Chula Vista, a cap rate of 7.0 percent is assumed. This assumption refl.ects a notion that many
existing retail tenants in downtown may not have recognized credit worthiness and may have
other issues associated with higher risk. This assumption also reflects the higher-risk nature of
ground-floor retail in a mixed-use setting relative to stand-alone retail.
Industrial
Cap rates for industrial uses in San Diego County have ranged between 6.0 and 7.8 percent over
the last three quarters, with the end of the second quarter of 2009 cap rates at 6.8 percent.
This estimate is below the Orange County rate of 8.3 percent and Los Angeles County rate of
9.0 percent. This analysis assumes that industrial uses, including warehouse/distribution and
sales/service, will both have a cap rate of 8.0 percent, a high end of the range in San Diego
County but a low end of the range for the broader Southern California area.
Construction Costs
Building construction costs vary widely based on many factors, such as development location and
use, building type and height, and costs of materials and labor. Direct construction costs
provided in the feasibility analysis assume prevailing wageS and are based on developer
interviews and EPS's experience with comparable projects. These costs will change over time
and should be considered on a site-specific basis for individual projects. A construction cost
index, such as those found in Engineering News-Record (ENR), could be used by the City to
update these costs on an ongoing basis.
Residential
Residential prices range by density, with lower-density wood-frame construction costing less
than higher-density steel-frame construction. Podium parking cost for mid-rise development and
underground parking cost for high-rise development are considered separately under parking
costs. It is assumed that residential for-sale construction ranges between $150 per square foot
for town homes and $330 per square foot for high-rise for-sale development, with mid-rise falling
in between. The same cost distribution between densities also applies to residential rental units,
with a uniform 10 percent decrease in construction costs. This cost reflects a typical difference
in quality and cost of construction between for-sale and rentals units.
5 Prevailing wage labor generally results.in a 20 to 25 percent increase in construction costs.
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Memorandum
City of Chula Vista Westside Inrill Market Review and Feasibility Analysis
March 17, 2010
Page 9
Office and R&D
Office construction costs range by building type and density. A cost of $170 per square foot is
assumed for wood-frame Class B office construction of up to three stories, while a cost of $220 is
assumed for higher-density Class A office construction over podium parking. R&D development
is likely to offer more "shell" fiex space and will result in lower construction cost relative to office
uses. Specifically, this analysis assumes construction cost of $140 per square foot or about 80
percent of Class B office cost.
Mixed-Use Retail
Since the retail uses evaluated in the pro forma are part of higher-density development rather
than stand-alone retail, construction cost is assumed for retail based on costs for other uses that
would be above it. Because ground-floor retail typically results in additional construction costs, a
10 percent cost increase is assumed for mixed-use relative to other uses with no ground-floor
retail.
Industrial
Industrial construction typically requires a minimal level of improvements and is more affordable
because of lower building densities. This analysis assumes $85 per square foot in construction
cost for warehouse/distribution uses and $100 per square foot for sales/service uses.
Tenant Improvements
Tenant improvements apply to interior finishes for commercial space and vary widely based on
specific business needs, condition of shell space, and rent terms and levels. Higher rents
generally require higher-end finishes with a higher share of the cost absorbed by landlords rather
than tenants. The estimates in the feasibility analysis only consider the portion of tenant
improvement costs absorbed by landlords and are based on rent and construction cost
assumptions and interviews with local brokers.
Office and R&D
Tenant improvements for a shell building are typically in the range .of $40 to $50 per square foot,
with the tenant carrying some portion of that cost. Tenant improvements for Class A office
space are typically higher than those for Class B space. Similar to retail trends, the recent
decrease in lease rates and high vacancies resulted in landlords offering a higher level of tenant
improvements to attract good credit tenants for longer leases. The feasibility analysis assumes
tenant improvements of $40 per square foot for stand-alone office and $50 per square foot for
higher-density office. R&D uses are assumed to support start-ups and flex space, with tenant
improvements in the $30 per square foot range.
Mixed-Use Retail
The soft market resuited in an increase in tenant improvement costs, often used to secure good
credit tenants for longer' leases. Broker interviews indicate that while many local tenants are
offered free rent in-lieu of tenant improvements, national or regional chains' rents support an
average of $10 to $20 per square foot in tenant improvements, with some tenant improvements
exceeding this range for premium space. This analysis reflects a tenant improvements cost of
$20 per square foot with any additional costs assumed to be covered by tenants.
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Memorandum
City of Chula Vista Westside Infill Market Review and Feasibility Analysis
March 17, 2010
Page 10
Industrial
Tenant improvements for industrial uses range widely based on tenants and building types.
Landlords have historically provided no or minimal improvements to industrial tenants.
However, given the recent softening in the industrial space market, tenant improvements in the
$1 to $2 per square foot range have become more common. This analysis assumes $1.00 per
square foot for warehouse/distribution uses and $2.00 per square foot for sales/service uses in
tenant improvement costs.
Parking Costs
Based on developer interviews and prior EPS experience, the cost of constructing surface parking
is estimated at about $4,000 per space, the cost of constructing podium or structured parking is
estimated at $20,000 per space, and underground parking cost is estimated at $30,000 per
space. This analysis assumes that surface parking cost is covered by the "site improvements"
cost item, while podium and underground parking result in additional construction costs above
site improvements. While it is likely that a portion of structured parking construction cost may
be recovered by parking revenues, no cost recovery is assumed in this analysis. To the extent
that potential parking revenues could be achieved, residual land values would improve.
An estimate for parking spaces by development type is based on the City's existing parking
ratios. While Chula Vista has specific parking requirements for townhomes, other residential
parking ratios are sized on the number of bedrooms rather than development types. As a result,
it is assumed that a two-bedroom apartment ratio of 2.0 spaces per unit applied to all residential
uses. The City's parking requirements for various deveiopment types are shown in Table 7.
Development Impact Fees
The feasibility analysis considers the key impact fees charged in Western Chula Vista including
Western Transportation Development, Park Development, Public Facilities, Sewer, and Traffic
Signal Participation. Other fees, such as school and affordable housing in lieu are not considered
in this analysis. The most current schedule of the City's fees is used to allocate the scheduie on
a per-unit or per-square foot basis. Park development fees only apply to residential uses.
Mixed-use development is assumed to pay fees separately for each development component,
which results in a higher fee estimate. Key assumptions about the Impact fees are listed below.
.
Western Transportation Development Fee and Public Facilities Fee calculations reflect the
following floor-area ratio (FAR) densities: 2.0 for mid-rise office and mixed-use retail, 0.5 for
stand-alone office, 1.0 for R&D, and 0.3 FAR for industrial uses.
.
Residential Sewer Fee calculations assume a 6-inch lateral per building with an average per
bUilding size of 10 townhomes, 20 apartments, 40 mid-rise units, and 80 high-rise units.
.
Commercial Sewer Fee calculations assume an average of 13 fixtures per building (i.e., sinks,
toilets) with a typical building size of 40,000 square feet for office and R&D, 20,000 square
feet for industrial uses and 10,000 square feet of retail in a mixed-use building.
.
Traffic Signal Participation Fee calculations assume an average of 80 daily trips per 1,000
square feet of retail, 20 daily trips per 1,000 square feet of office, 8 daily trips per 1,000
square feet of R&D, and between 2 and 5 daily trips per 1,000 square feet of industrial uses.
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Memorandum
City of ChuJa Vista Westside InfiJl Market Review and Feasibility Analysis
March 17, 2010
Page 11
Development Returns
Return on development investment varies based on a range of factors such as risk, capital and
real estate market conditions, building uses, and other trends. Real estate development returns
on investment have historically ranged between 8 and 15 percent. Development of residential
uses is considered less risky than commercial space. Lower-density development is considered
less risky than higher-density development and requires lower returns. Mixed-use development
is considered riskier relative to development with no ground-floor retail. This analysis assumes
that return requirements on vertical development reflect only building density and construction
type rather than any other potential risk factors, such as geographic location within the City.
Vertical development returns on development costs ranging between 9 and 14 percent are
assumed in this analysis. Development return for residential uses is assumed to range between
9 and 14 percent depending on density, while industrial uses are assumed to require a return of
10 percent. Office and R&D development are assumed to require a return between 11 and 13
percent, while mixed-use development return is assumed to range between 13 and 14 percent
and reflects a 1 percent increase above similar development type with no ground floor retail.
Other Assumptions
. Efficiency Ratio-Used for various development types to convert gross square footage to net
square footage. An efficiency ratio of 100 percent is assumed for townhomes, 85 percent for
other residential uses, 90 percent for office and R&D, 95 percent for retail, and 80 percent for
industrial USes.
. Options-Used for residential for-sale development types to reflect higher end finishes and
other premium options, such as views, that could result in higher sales prices relative to the
current market. These options are assumed at 3 percent for townhomes and podium mid-
rise condominiums and at 5 percent for high-rise condominiums. While options also apply to
residential rental development types, these options are captured under the rent assumptions.
. Vacancy Rate-Reflects typical levels of vacancy upon stabilization. A vacancy rate of 4
percent is assumed for residential rental and industrial uses, 10 percent for office, and 5
percent for retail in mixed-use format.
. Cost of Sale-Includes marketing and sales commission and is used to reflect a pro forma
cost to distinguish between a capitalized market value and net revenue proceeds. This cost
is assumed at 3 percent for residential uses and 2 percent for commercial uses.
. Site Work Cost-Includes landscaping and surface parking cost; assumed at $5 per square
foot for all development types. This cost does not include demolition of existing space.
. Other Indirect Costs-Reflect soft costs in addition to tenant improvements and development
impact fees not explicitly stated in the pro forma analysis. These costs typically reflect
architecture and engineering, financing, and general and administrative (G&A) and are
assumed at 20 percent for all development types.
. Contingency-Refiects uncertainty associated with potential development cost increase,
market changes, and other risk factors. Development contingencies typically range between
5 and 20 percent and decrease with the level of certainty. Given the small-scale nature and
short development period of most infill projects evaluated in this analysis, development
contingency is assumed at 5 percent for all development types.
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Memorandum
City of Chula Vista Westside Infill Market Review and Feasibility Analysis
March 17, 2010
Page 12
Development Impact Fee Schedule Comparison to
Other Jurisdictions
Various development impact fees are collected by jurisdictions in San Diego County, including
Chula Vista. The types of major development impact fees collected by each city are summarized
in Table S. The most common development impact fees include traffic and transportation,
public facilities, parks, and sewer fees. Other common fees include drainage, affordable housing,
waterl and fire fees.
EPS compared Western Chula Vista's impact fees to the schedule of fees collected by other San
Diego County jurisdictions based on available schedules and interviews. Fee schedules are
converted to a "per building square foot" based on the densities and building sizes,. as shown in
Table 9. Assumptions are made for comparison purposes, as in many cases the fees vary by
project and include a number of site-specific factors such as density, building size, trip
generations, and the number of fixtures. Detailed assumptions are shown in the Appendix.
Residential development impact fees charged in the City of Chula Vista fall within the high end of
the fee range charged by other jurisdictions in San Diego County. While fees vary with specific
project characteristics, the City's per unit fees average approximately $26,000 for Single-family
and $21,900 for multifamily uses. The countywide average for single-family and multifamily
residential uses is about $12,900 and $11,500, respectively. Chula Vista has the highest single-
family residential impact fees while only Del Mar has higher multifamily impact fees than Chula
Vista out of 14 sampled jurisdictions. It is worth noting that Del Mar has higher unit values,
which results in fees being a lower percentage of the overall value (see Table 10).
Development impact fees for nonresidential development in Chula Vista generally fall within the
countywide range and are relatively close to the average, though some of the cities have
stronger commercial real estate markets. Fees for office uses' in Chula Vista range between
$3.22 and $6.40 per square foot, based on density. This falls within the countywide range of
$0.35 to $9.62 per square foot. Development impact fees for industrial uses also fall within the
reasonable range, with fees of $2.38 per square foot in Chula Vista, close to the countywide
average of $1.97 per square foot for industrial uses.
While most of the retail supply in San Diego County consists of traditional lower-density with
surface parking development, this analysis compares higher-density, ground-floor retail uses
typically included in a mixed-use urban setting based on what would likely to be developed in
Western Chula Vista. Because fees are calculated differently in various cities, additional
assumptions are made for density and building space in order to translate fees into a "per
building square foot" basis for cities where fee schedules are not directly comparable.
Feasibility Analysis Results
Several output measures are frequently used to provide development feasibility assessment and
policy considerations for.potential review of the City's development impact fees. These measures
are based on the pro forma analysis for various development types as shown in Table 6 and
described below.
6 Based on assumptions used for development prototypes evaluated in this analysis
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Memorandum
City of Chula Vista Westside Infill Market Review and Feasibility Analysis
March 17, 2010
Page 13
Residual Land Value
The pro formas are structured to solve for the difference between revenues and development
costs, which results in an estimate of residual land value. Improved land values typically range
between 15 and 25 percent of total development value. If the land value does not achieve this
range, the project is not likely to be feasible as values do not support land costs. In the current
analysis, all development types result in negative land value estimates, suggesting that
substantial improvement in the market trends is necessary before new development could be
supported by private investment.
Fees as Percentage of Development Value
Fees as a percentage of value are a common measure to evaluate development feasibility and
the impact of fee costs. During normalized market conditions, a 10 to 15 percent range is
considered reasonable, with fees exceeding 15 percent of development value considered
potentially risky for viability of new residential development. For commercial uses, a 5 to
10 percent range is considered reasonable, with fees above 10 percent of development value
potentially jeopardizing the economics of new development.
Development impact fees in Chula Vista range between 6.7 and 10.9 percent for residential uses
and between 1.8 and 4.7 percent for commercial uses, while mixed-use fees fall in the range of
3.9 to 9.9 percent.' Therefore, the fees would not present a significant feasibility challenge
based on this measure under normalized market conditions. However, given the current market
downturn, the fees may still result in delaying, redirecting, or adversely affecting new
development in Chula Vista. This is especially pronounced among residential uses, where a
relative cost of fees exceeds most jurisdictions in San Diego County. Specifically, only Escondido
has a higher fees-to-value ratio than Chula Vista for residential development as shown in Table
10.
7 The fee estimates in Chula Vista exclude certain fees, such as school district and affordable housing
in-lieu, which would increase the total fees as percentage of value estimated in this analysis.
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13-20
Table 1
Chula Vista Population and Employment by Industry (2008)
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Percent of
Item Total Total
Population 230,397 100.0%
Employment
Agriculture, Forestry, Fishing and Hunting [1] 102 0.2%
Utilities 136 0.2%
Construction 1,760 3.2%
Manufacturing 5,013 9.0%
Wholesale Trade 1,823 3.3%
Retail Trade 9,084 16.3%
Transportation and Warehousing 1,280 2.3%
--' Information 615 1.1%
w Finance and Insurance 1,519 2.7%
I Real Estate and Rental and Leasing 1,068 1.9%
'"
--' Professional, Scientific, and Technical Services 1,720 3.1%
Management of Companies and Enterprises 260 0.5%
Administration & Support, Waste Management and Remediation 1,387 2.5%
Educational Services 10,691 19.2%
Health Care and Social Assistance 7,033 12.6%
Arts, Entertainment, and Recreation 724 1.3%
Accommodation and Food Services 6,010 10.8%
Other Services (excluding Public Administration). 4,348 7.8%
Public Administration 1,164 2.1%
TOTAL 55,737 100.0%
[1] Includes mining, quarrying, and oil and gas extraction.
Sources: OOF; U.S. Census LED; Economic and Planning Systems, Inc.
Economic & Planning Systems, Inc. 3117/2010
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Table 2
Chula Vista Residential Median Housing Price 1996 - 2009 ($ 2009)
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*
New Homes
Median Sales Price $304,498 $311,959 $327,952 $357,750 $367,088 $395,350 $440,043 $575,027 $630,130 $662,075 $471,782 $474,768 $476,921 $360,931
Annual Change na 2.5% 5.1% 9.1% 2.6% 7.7% 11.3',/0) 30.7% 9.6% 5.1% -28.7% 0.6% 0.5% ~24.3%
Existing Homes
Median Sates Price $226,112 $222,197 $233,760 $244,112 $271,297 $297,780 $356,958 $419,599 $535,553 $590,350 $568,476 $481,001 $332,851 $291,855
Annual Change na -1.7% 5.2% 4.4% 11.1% 9.8% 19.9% 17.5% 27.6% 10.2% -3.7% -15.4% -30.8% -12.3%
All Homes
Median Sales Price $252,377 $251,033 $258,493 $279,541 $307,894 $336,854 $387,862 $472,069 $570,428 $616,939 $539,555 $479,186 $349,140 $299,239
Annual Change na -0.5% 3.0% 8.1% 10.1% 9.4% 15.1% 21.7% 20.8% 8.2% -12.5% -11.2% -27.1% -14.30/0
*Through November 2009.
~ Sources: DataQuick, Economic & Planning Systems, Inc.
W
I
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Economic & Planning Systems, Inc. 3/1712010
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Table 3
South County I Chula Vista Commercial Lease and Vacancy Rates 2005 - 2009 (04)
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item 2005 2006 2007 2006 2009
Office
Average Monthly Lease Rate $2.29 $2.24 $2.35 $2.22 $1.66
Average Vacancy 14.2% 12.1%} 20.4% 31.9% 41.4%
Industrial
Average Monthly Lease Rate $0.90 $0.86 $0.87 $0.72 $0.71
Average Vacancy 2.1% 2.6% 5.3% 5.4% 5.5%
Retail
Average Monthly Lease Rate $2.24 $1.54 $2.54 $2.09 $1.98
Average Vacancy 1.5% 0.7% 1.5% 1.6% 4.1%
Sources: CBRE, Economic & Planning Systems, Inc.
E'onomic&P1~nninfJSy.lems,Jnc. 3/1712010
P:118000s118143ChuI8_ VlstaIModel\18143MarketModel1.xls
~
lJ.)
I
'"
"'"
Table 4
Foreclosures Activity (2003.2009)
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item 2003 2004 2005 2006 2007 2008 2009
Chula Vista 11 7 14 196 1,062 2,593 1,378
San Diego MSA 150 123 210 1,622 7,630 17,985 10,209
Chula Vista as % of San Diego MSA 7% 6% 7% 12% 14% 14% 13%
Sources: RAND; Economic & Planning Systems, Inc.
Economic & Planning Systems, Inc. 3/17/2010
P. \ 18000s\18143Chula_ Vista\ModeI\1B143MarkeIModa/1.xls
Table 5
Chula Vista New Construction (2003-2009)
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Land Use 2003 2004 2005 2006 2007 2008 2009
Residential
Single Family 1,683 2,017 2,177 1,283 687 481 203
Multi-Family 1240 690 831 1242 759 350 305
Subtotal 2,923 2,707 3,008 2,525 1,446 831 508
Commercial
Office na na 153,700 18,299 67,820 0 0
Industrial na na 278,277 174,919 183,194 55,312 0
Retail na na 188 000 850 000 85470 Q Q
TOTAL COMMERCIAL (SQ. FT.) na na 619,977 1,043,218 336,484 55,312 0
~ Sources: OOF, CBRE, and Economic & Planning Systems, Inc.
W
I
N
U1
Economic & Planning Systems, Inc. 3/1712010
p_ \18000s\18143Chula_ Vista\lo,tode/\18143MariletMode/1.xls
Table 6
Pro Forma Inputs Database
Chula Vista Wests Ide Infill Market Review and Feasibility Analysis; EPS #18143
Residential For-Sale' Residential Rental' OfflteandR&D Mi~ed-Use IndustrIal
Podium Mid-Rise High-Rise Garden PodiumM'd-Rise High-Rise Class BSland- Class A MId. Research & Podium Mid-Rise Podium Mid-Rise Class A Office Warehouse! Salesl
Townh"mes Rise Condos Over Apartments Over
Condos CMdos Apartments Apartments Apartments Alone (mixed-use) Development Rela~ Retail Over Relall Distrbullon Service
Item
Gloundnoor,olall GroondnoOlrolail Ground~oo"elal
U~1Il3"'crio.: Up III e.k>ne.; wood Abc,ee.bia. Up to S.tcrios: wood Abo,oestori... Up III e.lIlrie",.teel U~103slorie.:wood 'Mthuploe.loriss ..;th up to 6 $jo'ies 'Mthuploe.tor..
woodf,e",. or ste.1Itom. CI...A st.el Up 10 3.torios: orslo..I,""", Cla.sAst..lf,am. Up 10 3 stor es, !ram.con.truction f'am'cDnslnJC~O" ,""odorstoell.am. woodo,.t..ln.m. .Ieelframe 1t02.to,,0.: tt03.to,le.:
Ducrlptlon conslructionbU,t coo.tru.~on over kame woodkem. con.truc~on ov.r c"".truc~on; woodlr.~ O'I.rmasonryOl Hdd~on.r utliti..lor corstruc~on over construc~on 0'.' ccn"ndonov., ca..DorS ca..DorS
(ht>lghl,constfucllonlype,parkingoptfuns) mg.'.900l masonry Ol concr.t. co...tiuo~on oanskuoUon m.""nryo,concr.t. undo,ground oansuuolion: conor.t.podium; lab.peco;su~e"" me.onryo,eo"",oto m..onryo,eorn;,olo m..onryo, construction; cl>nshuclion;
su~acop...ng podjum:podiumo, undOfs'oond s!Jfiaeeporloog podium; podium or p..km9 su~acoparlon~ podumwSHrage p.,ldng podtum podlumo< podium; podium 0' concretopod,um; sUrf.'opar"n9 surloc'parking
~erasoparl<in~ pa,.ing garage p.'Ion~ p.,loog garagopar'ing garagopalktng pOdjumo,ga,aga
parkin~
Unll$ 100 100 100 100 100 100 "' "' "' 100 100 "' "' "'
Rnldenlial Slle (perllnit) 1,700 1.300 1000 1,000 1,300 1,000 "' "' "' 1,30D 1,300 "' "' "'
Commercial Square Feet "' "' "' "' "' "' 10,000 10,000 10,000 10,000 10.000 10000 10000 10.000
Parking Ratio (perunil) 20 2.0 2.0 2.0 2.0 2.0 "' "' "' 2.0 2.0 2.0 "' "'
~ Parking Ralio (per 1,000 sq.tt.) " "' "' "' "' "' ,., ,., 1.3 5.0 5.0 5.0 10 1.0
W Revenue Inputs
I RenlType "A "A "A "A "A "A FS FS FS NAINNN """ """ """ """
Value (perunil) $298000 $254,000 $299,000 "' "' "' "' "' "' 254,000 "' "' "' "'
N Annual Renl (per sq,tl.) " " "' '18 120 ." ." 12' 120 '29 '29 '29 $10 ."
'" OperallngExpenses "' "' "' 30.0% 30.0% 30.0% 300% 30.0% 30.0% 30,0% 30.0% 30.0% 0.0% 0.0%
CapRate "' "' "' 6.0% 6.a% 6,0% 7.5% 7.5% 6.5% 7.0% 7.0% 7.0% 8.0% 8.0%
COil Inputs
BuildingConstrucHon (per sq.ft.) $150 $200 $330 $140 $180 $300 $170 $220 $140 $220 $198 $242 185 $10a
Tenant ImplOvements (per uniVsq.ft.) "' "' "' "' "' "' ." $50 $30 120 120 '29 $1,00 $2,00
Parking Cost (per space) '0 $20,000 $30,000 '0 $20,000 $30,000 '0 $20000 '0 $20,000 $20,00a $20,000 '0 SO
Developmentlmpacl Fees iperuniVsq,tt.)
WeslemTiansportationDevelopmenl $2,584 $1,946 $1,946 $2,594 $1,946 $1,946 $4.47 $2.23 $2.23 $0.60 $0.60 $0.60 $1.49 $4.96
Park Development $7,105 $7,105 $7105 $7,105 $7,105 $7,105 '0 '0 '0 '0 '0 " '0 '0
Public Facilllies $8,268 $8,268 $8,268 $8,268 $8.268 $8,268 $1.26 $0.32 $0.63 $0.32 $0.32 $0.32 $0.66 $aB6
Sev,er $4,180 $3,653 $3,566 $3,829 $3,653 $3,565 $0,06 $0.06 $0,06 $0.24 $0.24 $0.24 $0.t2 $0.12
Traffic Signaf Partie pation llil\ llil\ ill2 11M llli: llli: iQ&1 lQM ~ ~ ~ ill< lQJ1 "-U
Tolal $22,393 $21,218 $21,131 '$21.980 $21.218 $21,131 $640 $3.22 $3.17 $3,61 $3,61 $3,61 $2,36 $5.85
Developer Relurn 9.0% 12.0% 14.0% 10.0% 12,0% 14,0% 11.0% 13.0% 11.0% 13.0% 13.0% 14,0% 10.0% 10.0%
KeyOutpuls
Residual Land Vatue (per~nillperbldg.sq.fl.) ($87,000) {$201,OOO) ($284,230) ($64,920) ($200,590) ($391,860) ($149) ($300) ($121) ($138) ($95) ($218) ($34) ($32)
Residu~rLandValue as % of Building Valua _28,2% -76.9% _90,5% _32.2% .70.1% _164.3% _98.1% .167.4% _99,5% -77.6% -48.7% -125.5% _35.5% -256%
Fees as % olOevelopmeni Value 7.3% 8.1% 6.7% 10.9% 7.4% 8.9% 4.2% 1.8% 2.6% 9.9% 9.0% '" 2.5% 4.7%
OevelopmenICo.l(perunillper.q.ft.) $385,996 $455,151 $589,205 $260,689 $478,235 $623225 $297 $476 $240 $315 $289 $391 $127 $153
"Indudesmarkel-ralaunils,
E"""",,,io'Pi>_gSy".m~1i>o. 3/I1I1D'O
p.\'OIl<l<l.\II'''ChuJ,,-V,..,tAW..,o,..F...Ibilit;-Mod.J5.'''.
Table 7
City of Chula Vista Parking Requirements
Chula Vista Wests ide Infill Market Review and Feasibility Analysis;
EPS #18143
land Use / Development Type
Parking Requirements
Residential
Townhouses
Studio/One-Bedroom Apartment
Two-Bedroom Apartment
Three-Bedroom Apartment or larger
2.0 per unit
1 5 per unit
2.0 per unit
2.0 per unit
Retail
Stores or Shops [1]
5.0 per
1,000 sq. ft.
Business and Professional Offices
3.3 per
1,000 sq. ft.
Research or Testing laboratories
1.3 per
1,000 sq. ft.
Warehouses
1.0 per
1,000 sq. ft.
[1] Excludes furniture stores.
Economic & Planning Systems. Inc. 3/17/2010
P"11 8000s\ 18143Chula _Vista IMode^ 18143FeasibilityMode/5.xls
13-27
Table 8
Development Impact Fee Survey for San Diego County
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Park and Public Cultural Traffic and Affordable
City Recreation Facilities Facilities (Art) Police Fire Transportation Housing Water Sewer Drainage
Chula Vista X X X case by case X
Carls bad X X X X X X
Coronado X X X X X
Del Mar X X X X
EI Cajon City does not charge development impact fees.
Encinitas X X X X
Escondida X X X X X X X
~
W La Mesa X X
I
'" National City X X X X X
CO
Oceanside X X X X X X X
Poway X X X X X X
San Diego X X
San Marcos X X X X X
Vista X X X X X X X
Note: excludes cities with unavailable fee schedules; school district fees are not included.
Source: San Diego County cities; Economic & Planning Systems, Inc.
Economic & Planning Sy~t"ms. In". 3/17/2010
P:\18000s\ f 8143Chulll_ VistalModell 18143Marh-eIModlll1.x/s
Table 9
Development Impact Fee Schedule Comparison by Development Type
Chula Vista Wests ide Infill Market Review and Feasibility Analysis; EPS #18143
Residential Commercial
Single Family Multi-Family High-Density Retail Low-Density Office High-Density Office Industrial
City per unit (1) per unit (2) per sq.ft. (3) per sq.fl. (4) per sq.fl. (5) per sq.fl. (6)
Chula Vista $26,039 $21,866 $3.61 $6.40 $3.22 $2.38
Carls bad $7,003 $5,896 $10.30 $2.79 $2.62 $1.02
Coronado $10,559 $10,209 $0.50 $0.50 $0.50 $0.50
Del Mar $24,208 $23,963 $0.35 $0.35 $0.35 $0.35
EI Cajon City does not charge development impact fees.
Encinitas $16,145 $13,601 $10.60 $9.62 $9.62 $4.42
Escondida $24,873 $19,295 $7.07 $4.55 $4.55 $3.38
La Mesa $7,461 $5,965 nla nla nla nla
~ Lemon Grove $673 $673 nla nla nla nla
w National City $3,514 $3,230 $2.65 $1.37 $1.37 $0.40
I
N Oceanside $16,182 $15,641 $3.89 $1.98 $1.98 $1.19
CD poway $15,958 $15,942 $6.48 $6.48 $6.48 $2.49
San Diego Vary Vary $0.64 $1.06 $1.06 $0.27
San Marcos $16,570 $12,590 $2.32 $7.13 $1.78 $5.07
Vista $11.580 $10.642 $25.51 $6.93 $6.49 $2.57
Average $12,894 $11,470 $6.39 $3.89 $3.35 $1.97
Range $673 - $26,039 $673 - $23,963 $0.35 - $25.51 $0.35 - $9.62 $0.35 - $9.62 $0.27 - $5.07
Vary - fees range based on the geographic location within the City.
(1) Assumes 2,000 square foot units with an average density of 8 units per acre.
(2) Assumes 1,300 square foot units with an average density of 40 units per acre.
(3) Assumes 10,000 square feet of retail space per building with an average FAR of 2.0 as part of higher-density mixed-use development.
(4) Assumes 40,000 square feet of office space per building with an average FAR of 0.5.
(5) Assumes 40,000 square feet of office space per building with an average FAR of 2.0.
(6) Assumes 20,000 square feet of office space per building with an average FAR of 0.3.
Source: San Diego County cities; Economic & Planning Systems, Inc.
Economic & Planning Systems, Inc. 3/1712010
P:118000s\ 18143Chula_ VisIQIMode/\ 18143MarketMode/l.x/s
Table 10
For-Sale Residential Development Impact Fee as Percent of Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Impact Fee New Unit Values (1) Impact Fee as % of Value
Single Family Multi-Family Single Family Multi-Family Single Family Multi-Family
City per unit (2) per unit (3) per unit per unit
Chula Vista $26,039 $21,866 $402,367 $228,955 6.5% 9.6%
Carls bad $7,003 $5,896 $752,549 $431,021 0.9% 1.4%
Coronado $10,559 $10,209 $1,494,000 $1,020,000 0.7% 1.0%
Del Mar $24,208 $23,963 $1,500,000 $852,000 1.6% 2.8%
Encini!as $16,145 $13,601 $825,900 $414,900 2.0% 3.3%
Escondido $24,873 $19,295 $334,162 $122,058 7.4% 15.8%
La Mesa $7,461 $5,965 $437,064 $219,407 1.7% 2.7%
Lemon Grove $673 $673 $286,800 $120,600 0.2% 0.6%
..... National City $3,514 $3,230 $216,000 $126,000 1.6% 2.6%
to) Oceanside $16,182 $15,641 $346,428 $187,844 4.7% 8.3%
I
to) Poway $15,958 $15,942 $555,000 $237,000 2.9% 6.7%
0 San Marcos $16,570 $12,590 $499,531 $276,754 3.3% 4.5%
Vista $11.580 $10,642 $350,040 $183,963 3.3% 5.8%
Average $12,894 $11,470
Range $673 - $26,039 $673 - $23,963 O%R7.4% 0%-15,8%
(1) Assumes re-sale values increased by 20 percent to reflect the difference between new and existing single-family prices.
(2) Assumes 2,000 square foot units with an average density of 8 units per acre.
(3) Assumes 1,300 square foot units with an average density of 40 units per acre.
Source: San Diego County cities; Economic & Planning Systems, Jne.
Economic & Planning Systems, Inc. 3/1712010
P:\18000s\ 18143Chuls_ VistalModefl 18143MarketModel1.xls
Table A-1
New Townhomes Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item
Assumption
Per Unit Total
100
170,000 sq.ft.
170,000 sq.ft.
2.0
$299,000 $29,900,000
$8,970 $897,000
($8 970) ($897000\
$299,000 $29,900,000
$255,000 $25,500,000
$5.00 $850,000
$0 $0
$263,500 $26,350,000
DEVELOPMENT PROGRAM
Units
Gross Area
Efficiency Ratio
Net Area
Parking Ratio (spaces per unit)
1,700 sq.ft. per unit
100%
REVENUE ASSUMPTIONS
Sale Price
Options
(less) Cost of Sale
Total Revenue
$299,000 per unit
3.0%
3.0%
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
Site Improvement Cost
Parking Construction Cost
Total Direct Costs
Indirect Costs
Impact Fees
Western Transportation Development
Park Development
Public Facilities
Sewer
Traffic Signal Participation
Other Indirect Costs (1)
Total Indirect Costs
$150 IGLA sq. ft.
$5.0 IGLA sq. ft.
$0 per space
RESIDUAL LAND VALUE
$2,594 per unit $2,594 $259.400
$7,105 per unit $7,105 $710,500
$8,268 per unit $8,268 $826,800
$4,180 per unit $4,180 $417,980
$246 per unit $246 $24,584
20.0% of direct costs $52 700 $5270 000
28.5% of direct costs $75,093 $7,509,264
$338,593 $33,859,26'
5.0% of direct and indirect costs $9.96 $1,692,963
9.0% of direct and indirect costs $17.93 $3,047,334
$385,996 $38,599,561
($87,000) ($8,700,000)
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
Developer Return (% of direct and indirect costs)
Total Costs
(1) Include architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Systems, Inc.
Econormc & Pfanning Systems. Inc. 3/17/2010
P"I 18000s\ 18143Chula_ VistalModeA 18143Feasibi/ityModel5 J:ls
13-31
Table A-2
Podium Parking Mid-Rise Condo Residual Land Value
Chula Vista Westside Intill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per Unit Total
DEVELOPMENT PROGRAM
Units 100
Gross Area 1,300sq.ft.perunit 130,000 sq.ft.
Efficiency Ratio 85%
Net Area 110,500 sq.ft.
Parking Ratio (spaces per unit) 2.0
REVENUE ASSUMPTIONS
Sale Price $254,000 per unit $254,000 $25,400,000
Options 3.0% $7,620 $762,000
(less) Cost of Sale 3.0% ($7 620) ($762 000)
Total Revenue $254,000 $25,400,000
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost $200 IGLA sq. ft. $260,000 $26,000,000
Site Improvement Cost $5.0 IGLA sq. ft. $5.00 $650,000
Parking Construction Cost $20,000 per space $40 000 $4,000 000
Total Direct Costs $306,500 $30,650,000
Indirect Costs
Impact Fees
Western Transportation Development $1,946 per unit $1,946 $194,600
Park Development $7,105 per unit $7,105 $710,500
Public Facilities $8,268 per unit $8,268 $826,800
Sewer $3,653 per unit $3,653 $365,345
Traffic Signal Participation $246 per unit $246 $24,584
Other Indirect Costs (1) 20.0% of direct costs $61 300 $6130000
Total Indirect Costs 26.9% of direct costs $82,518 $8,251,829
Subtotal, Direct and Indirect Costs $389,018 $38,901,829
Contingency (% of direct and indirect costs) 5.0% of direct and indirect costs $19,451 $1,945,091
Developer Return (0/0 of direct and indirect costs) 12.0% of direct and indirect costs $35.91 $4668219
Total Costs $455,151 $45,515,140
RESIDUAL LAND VALUE ($201,000) ($20,115,000)
(1) Indude architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Systems, Inc.
Economic & Pianning Systems, Inr;. 311712010
P:\18000s\18143Chula_ VistalMod.,,^ 18143FeasibliityModeiS.xls
13-32
Table A-3
High-Rise Condo Residual land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item
Assumption
Per Unit Total
100
100,000 sq.ft.
85,000 sq.ft.
2.0
$299,000 $29,900,000
$14,950 $1,495,000
($8 970) ($897 0001
$304,980 $30,498,000
$330,000 $33,000,000
$5.00 $500,000
$60.000 $6 000 000
$395,000 $39,500,000
$1,946 $194,600
$7,105 $710,500
$8,268 $826,800
$3,566 $356,573
$246 $24,584
$79 000 $7 900 000
$100,131 $10,013,057
$495,131 $49,513,057
$24.76 $2,475,653
$69.32 $6931 828
$589,205 $58,920,537
($284,230) ($28,423,000)
DEVELOPMENT PROGRAM
Units
Gross Area
Efficiency Ratio
Net Area
Parking Ratio (spaces per unit)
1,000 sq.ft. per unit
85%
REVENUE ASSUMPTIONS
Sale Price
Options
(less) Cost of Sale
Total Revenue
$299,000 per unit
5.0%
3.0%
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
Site Improvement Cost
Parking Construction Cost
Total Direct Costs
Indirect Costs
Impact Fees
Western Transportation Development
Park Development
Public Facilities
Sewer
Traffic Signal Participation
Other Indirect Costs (1)
Total Indirect Costs
$330 IGLA sq. ft.
$5.0 IGLA sq. ft.
$30,000 per space
$1,946 per unit
$7,105 per unit
$8.268 per unit
$3,566 per unit
$246 per unit
200% of direct costs
25.3% of direct costs
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
Developer Return (% of direct and indirect costs)
Total Costs
5.00/0 of direct and indirect costs
14.0% of direct and indirect costs
RESIDUAL LAND VALUE
(1) Include architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Systems, Inc.
Er;onomir; So Planmng Systems, Inr;. 3/17/2010
P \ 18000s\ 18143Chula _ Vlsta\Modell"18143Feasibi/ityMode/5.xls
13:"33
Table A-4
Garden Apartments Residual land Value
Chura Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item
Assumption
Per Unit Total
100
100,000 sq.ft.
117,647 sq.ft.
2.0
$18,348 $1,834,800
($5,504) ($550,440)
($734) ($73 392)
$12,110 $1,210,968
$201,828 $20,182,800
($6 055) ($605484)
$195,773 $19,577,316
DEVELOPMENT PROGRAM
Units
Net Area
Efficiency Ratio
Gross Area
Parking Ratio (spaces per unit)
1,000 sq.ft. per unit
85%
REVENUE ASSUMPTIONS
Gross Revenue
(less) Operating Expenses
(less) Vacancy Rate
Subtotal, Annual Net Operating Income
Capitalized Value
(less) Cost of Sale
Total Revenue
$18.35 Inet sq. ft.lyear
30%
4.0%
6.0% cap rate
3.0%
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
Site Improvement Cost
Parking Construction Cost
Total Direct Costs
Indirect Costs
Impact Fees
Western Transportation Development
Park Development
Public Facilities
Sewer
Traffic Signal Participation
Other Indirect Costs (1)
Total Indirect Costs
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
Developer Return (% of direct and indirect costs)
Total Costs
$140 IGLA sq. fl.
$5.0 IGLA sq. fl.
$0 per space
$164,706 $16,470,588
$5.00 $588,235
lQ $0
$170,588 $17,058,824
$2,594 $259,400
$7,105 $710,500
$8,268 $826,800
$3,829 $382,890
$184 $18,438
$34 118 $3411765
$56,098 $5,609,793
$226,686 $22,668,616
$11,334 $1,133.431
$19.27 $2 266 862
$260,689 $26,068,909
($64,920) ($6,492,000)
$2,594 per unit
$7,105 per unit
$8,268 per unit
$3,829 per unit
$184 per unit
20.0% of direct costs
32.9% of direct costs
5.0% of direct and indirect costs
10.0% of direct and indirect costs
RESIDUAL LAND VALUE
(1) Include architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Syste.~s, Inc.
EconomIc & Planning Syslems, Inc. 3/1712010
P:\ 18000s\18143Chula _ VlstaIMode/l18143FlitasiblJrtyMode/5.x/s
13-34
Table A-5
Podium Parking Mid-Rise Apartments Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item
Assumption
Per Unit Total
100
130,000 sq.ft.
152,941 sq.ft.
2.0
$26,021 $2,602,080
($7,806) ($780,624)
($1041) ($104083)
$17,174 $1,717,373
$286,229 $28,622,880
($8.587) ($858686)
$277,642 $27,764,194
DEVELOPMENT PROGRAM
Units
Net Area
Efficiency Ratio
Gross Area
1,300 sq.ft. per unit
85%
Parking Ratio (spaces per unit)
REVENUE ASSUMPTIONS
Gross Revenue
(less) Operating Expenses
(less) Vacancy Rate
Subtotal, Annual Net Operating Income
Capitalized Value
(less) Cost of Sale
Total Revenue
$20.02 Inet sq. ft.lyear
30%
4.0%
6.0% cap rate
3.0%
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
Site Improvement Cost
Parking Construction Cost
Total Direct Costs
$180 IGLA sq. ft.
$5.0 IGLA sq. ft.
$20,000 per space
$275,294
$5.00
$40 000
$322,941
Indirect Costs
Impact Fees
Western Transportation Development
Park Development
Public Facilities
Sewer
Traffic Signal Participation
Other Indirect Costs (1)
Total Indirect Costs
$1,946 per unit
$7,105 per unit
$8,268 per unit
$3,653 per unit
$246 per unit
20 0% of direct costs
26.6% of direct costs
$1,946
$7,105
$8,268
$3,653
$246
$64 588
$85,807
$408,748
$20,437
$32 07
$478,235
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
Developer Return (% of direct and indirect costs)
Total Costs
5.0% of direct and indirect costs
12.0% of direct and indirect costs
$27,529,412
$764,706
$4.000000
$32,294,118
$194,600
$710,500
$826,800
$365,345
$24,584
$6458 824
$8,580,653
$40,874,770
$2,043,739
$4 904.972
$47,823,481
RESIDUAL LAND VALUE
($200,590) ($20,059,000)
(1) Include architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Systems, Inc.
Econom,c & Plannmg Systems, Inc. 3/17/2010
P:\ 180005\ 18143Chula_ VJstalModel\ 18143FeasibilityModelS_xls
13-35
Table A-6
High-Rise Apartments Residual Land Value
Chula Vista Westside Infill Markel Review and Feasibility Analysis; EPS #18143
Item
Assumption
Per Unit Total
100
100,000 sq.ft.
117,647 sq.ft.
2.0
$21,684 $2,168,400
($6,505) ($650,520)
lilliill ($86 736)
$14,311 $1,431,144
$238,524 $23,852,400
($7,156) ($715 572)
$231,368 $23,136,828
DEVELOPMENT PROGRAM
Units
Net Area
Efficiency Ratio
Gross Area
1,000 sq.ft. per unit
85%
Parking Ratio (spaces per unit)
REVENUE ASSUMPTIONS
Gross Revenue
(less) Operating Expenses
(less) Vacancy Rate
Subtotal, Annual Net Operating Income
Capitalized Value
(less) Cost of Sale
$21.68 loet sq. ft./year
30%
4.0%
6.0% cap rate
3.0%
Total Revenue
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
Site Improvement Cost
Parking Construction Cost
Total Direct Costs
$300 fGLA sq. ft.
$5.0 fGLA sq. ft.
$30,000 per space
$352,941
$5.00
$60 000
$418,824
Indirect Costs
Impact Fees
Western Transportation Development
Park Development
Public Facilities
Sewer
Traffic Signal Participation
Other Indirect Costs (1)
Total Indirect Costs
$1,946 per unit
$7,105 per unit
$8,268 per unit
$3,566 per unit
$246 per unit
20.0% of direct costs
25.0% of direct costs
$1,946
$7,105
$8,268
$3,566
$246
$83 765
$104,895
$523,719
$26,186
$62.32
$623,22$
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
Developer Return (% of direct and indirect costs)
Total Costs
5.0% of direct and indirect costs
14.0% of direct and indirect costs
$35,294,118
$588,235
$6 000 000
$41,882,353
$194,600
$710,500
$826,800
$356,573
$24,584
$8376471
$10,489,527
$52,371,880
$2,618,594
$7 332 063
$62,322,537
RESIDUAL LAND VALUE
($391,860) ($39,186,000)
(1) Include architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Syste;ns, Inc.
Economic & Planning Systems, inc. 3/17/2010
13-36
P:\ 18000s\ 18143Chula _ VjsfalModeil 18143F~aSlbilityM0d815 xis
Table A-7
Class B Stand Alone Office Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item
Assumption
Per Bldg. Sq.Ft Per Acre
10,000 sq.ft.
9,000 sq.ft.
3.3
19.96 199,584
(5.99) (59,875)
(0.60) (5.988)
(2.00) (19958)
11.38 113,763
$151.68 $1,516,838
lll.QQl ($30 337)
$149 $1,486,502
$170.00 $1,700,000
$5.00 $50,000
$0.00 .>Q
$175.00 $1,750,000
$40.00 $400,000
$4.47 $44,669
$1.26 $12,608
$0.61 $6,146
$35.00 $350 000
$8140 $814,021
$256 $2,564,021
$12.82 $128,201
$28.20 $282 042
$297 $2,974,264
($149) ($1,488,000)
DEVELOPMENT PROGRAM
Gross Leasable Area (sq.ft.)
Efficiency Ratio
Net Leasable Area (sq.ft.)
Parking Ratio (spaces per 1,000 sq. ft.)
90%
REVENUE ASSUMPTIONS
Gross Office Revenue (FS)
(less) Operating Expenses
(less) Commissions
(less) Vacancy Rate
Annual Net Operating Income
Capitalized Value
(less) Cost of Sale
Total Revenue
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
Site Improvement Cost
Parking Construction Cost
Total Direct Costs
Indirect Costs
Tenant Improvements
Impact Fees
Western Transportation Development
Public Facilities
Traffic Signal Participation
Other Indirect Costs (1)
Total Indirect Costs
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
Developer Return (% of direct and indirect costs)
Total Costs
$22.18 INLA
30%
3.0%,
10.0%
7.5% cap rate
2.0%
$170 IGLA sq. ft.
$5.0 IGLA sq. ft.
$0 Iper space
$40.00 IGLA sq. ft.
$4.47 IGLA sq. ft.
$1.26 IGLA sq. ft.
$0.61 IGLA sq. ft.
20.0% of direct costs
46.5% of direct costs
5.0% of direct and indirect costs
11.0% of direct and indirect costs
RESIDUAL LAND VALUE
(1) Indude architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Systems, Inc.
Economic & Planning Systems, Inc. 311'/2010
P:\18000slf8143Chul,,_ VistaWodel\18143FeasibilityModel5.xls
13-37
Table A-8
Class A Mid-Rise Office Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item
Assumption
Per Bldg. Sq.Ft. Total
10.000 sq.ft.
9,000 sq.ft.
3.3
23.59 235.872
(7.08) (70.762)
(0.71) (7,076)
12.36\ 123 587)
13.44 134.447
$179.26 $1.792.627
~ 1$35 853)
$176 $1,756,775
$220.00 $2,200,000
$5.00 $50,000
$66.67 $666 667
$291.67 $2,916,667
$50.00 $500,000
$2.23 $22,335
$0.32 $3,152
$0.61 $6,146
$58.33 $583,333
$111.56 $1,115,563
$403 $4,032,230
$20.16 $201,611
$52.42 $524 190
$476 $4,758,031
($300) ($3,001,000)
DEVELOPMENT PROGRAM
Gross Leasable Area (sq.ft.)
Efficiency Ratio
Net Leasable Area (sq.ft.)
Parking Ratio (spaces per 1,000 sq.ft.)
90%
REVENUE ASSUMPTIONS
Gross Office Revenue (FS)
(less) Operating Expenses
(less) Commissions
(less) Vacancy Rate
Annual Net Operating Income
Capitalized Value
(less) Cost of Sale
Total Revenue
$26.21 INLA
30%
3.0%
10.0%
7.5% cap rate
2.0%
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
Site Improvement Cost
Parking Construction Cost
Total Direct Costs
Indirect Costs
Tenant Improvements
Impact Fees
Western Transportation Development
Public Facilities
Traffic Signal Participation
Other Indirect Costs (1)
Total Indirect Costs
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
Developer Return (% of direct and indirect costs)
Total Costs
$220 IGLA sq. ft.
$5.0 IGLA sq. ft.
$20,000 Iperspace
$50.00 IGLA sq. ft.
$2.23 IGLA sq. ft.
$0.32 IGLA sq. ft.
$0.61 IGLA sq. ft.
20.0% of direct costs
38.20/0 of direct costs
5.0% of direct and indirect costs
13.0% of direct and indirect costs
RESIDUAL LAND VALUE
(1) Include architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Systems, Inc.
Er;o(IQmir; & Plannmg Systems, Inc. 3/1712010
P. \18000s\18143Chula_ VistaWode^18143F&aSlbilltyMod&IS.Xls
13-38
Table A-9
R&D Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item
Assumption
Per Bldg. Sq.Fl Total
10,000 sq.ft.
9,000 sq.ft.
1.3
18.14 181,440
(5.44) (54,432)
(0.54) (5,443)
~ 118,144)
10.34 103,421
$121.67 $1,216,715
lR1'll 1$24.334)
$119 $1,192,381
$140.00 $1,400,000
$5.00 $50,000
$000 B!
$145.00 $1,450,000
$30.00 $300,000
$2.23 $22,335
$0.63 $6,304
$0.25 $2,458
$29.00 $290 000
$62.17 $621,694
$207 $2,071,694
$10.36 $103,585
$22 79 $227 886
$240 $2,403,166
($121) ($1,211,000)
DEVELOPMENT PROGRAM
Gross Leasable Area (sq.ft.)
Efficiency Ratio
Net Leasable Area (sq.ft.)
Parking Ratio (spaces per 1,000 sq.ft.)
90'%
REVENU~ ASSUMPTIONS
Gross Office Revenue (FS)
(less) Operating Expenses
(less) Commissions
(less) Vacancy Rate
Annual Net Operating Income
Capitalized Value
(less) Cost of Sale
Total Revenue
$20.16 /NLA
30%
3.0%
10.0%
8.5% cap rate
2.0%
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
Site Improvement Cost
Parking Construction Cost
Total Direct Costs
$140 /GLA sq. ft.
$5.0 /GLA sq. ft.
$0 Iper space
Indirect Costs
Tenant Improvements
Impact Fees
Western Transportation Development
Public Facilities
Traffic Signal Participation
Other Indirect Costs (1)
Total Indirect Costs
$30.00 IGLA sq. ft.
$2.23 /GLA sq. ft.
$0.63 IGLA sq. ft.
$0.25 /GLA sq. ft.
20.0% of direct costs
42.9% of direct costs
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
Developer Return (% of direct and indirect costs)
Total Costs
5.0% of direct and indirect costs
11.0% of direct and indirect costs
RESIDUAL LAND VALUE'
(1) Include architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Systems, Inc.
Er;onomlr; & Planning Systems, Inr;. 3/17/ZD1D
P:\18DODs\ 18143Chula VistaIModeI\18143FeasibilityMode/5.xls
13-39
Table A-10
Podium Mid-Rise Condominiums Over Retail Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
'rem
Assumption
Per Bldg. Sq.Ft Total
100
130,000 "'.~
152,941 sq.fl.
2.0
10,000 sq.ft
9,500 sq.ft.
50
162,941
250
5166 525,400,000
$4,98 $762,000
(54981 ($762000\
$166 $25,400,000
$28.51 $270,864
($086) ($8,126)
1$143\ ~
$2623 $249.195
$355.99 $3,559,927
ill.J1l 1..ID..ll1ID
$349 $3,488,728
$177 $28,888,728
$220.00 $35,847,059
$5.00 $814,706
~ $4000000
$249.55 $40,661,765
$1.27 $194,600
$4.65 $710,500
$5.41 $826,800
$2.39 $365,345
1QJ.2 $24584
$13.87 $2,121.829
$20.00 $200,000
$0.60 $5,956
$032 $3,152
$0.24 $2,389
$2.46 $24584
$23.61 $236,081
MZ.JE $471582
$282.95 $2,829,492
$266.91 $43,491,256
$13.35 $V74,563
$34,70 $5653863
$315 $51,319,682
($138) ($22,431,000)
DEVELOPMENT PROGRAM
Residential
Units'
Net Area
Effiejency Ra~o
Gross Area
Parking Ratio {sp..ces per unit)
Retail
Gross Leasable ArBa (sq.ft)
EffiCiency Ratio
Net Leasable Area (sq.ft)
Parkmg Rallo (spaces per 1,000 sq.ft,)
Total Sq.FI.
Total Space.s
1,300sq.ft.perunit
85%
95%
REVENUE ASSUMPTIONS
~
Sale Price
Options
(less) Cost of Sale
ResidentlalRevenue
Retail
Gross Revenue (NNN)
(less) Commissions
(less)VaC<lncy Rate
Subtotal, Armual Net Operating Income
Capitalized Value
(IBSS) Cost of Sale
Retail Revenue
Total Revenue
$254,000 perunit
3,0%
30%
$28.51 INLAsq. ft
3,0%
5.0%
7.0%C<lprate
2.0%
DEVELOPMENT COSTS
DlrectCosts
Building Construction Cost
Site Improvement Cost
Parking Construction Cost(1)
TOlalDirectCosls
IndiroctCosts
ReSidential
Impact Fees
Western Transportation Development
Par\( Development
PubiicFacilities
Sewer
TrafficSignalParticrpallon
Subtotal
Retail
Tenant Improvements
Impact Fees
Western Transportation Development
PubliC Facllilles
Sewer
TrafficSignalPartidpatlon
Subtolai
Other Indirect Costs (2)
TotaJlndirectCosts
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
Developer Return (% of dire eland indirect costs)
Totaleosts
$220 IGLA sq. fl.
55.0 IGLAsq ft
$20,OOO/space
$1,946 per unit
$7,105 per unit
$8,268 perunil:
$3,653 per unit
$246 perunil:
$20 IGLAsq. ft
SO.60 IGLAsq ft
$032 IGLAsq 1t.
$0.24 IGu\'sq.ft.
$2.46 IGLAsq.ft
lQ,Q'&ofdirectcosts
7.0% of direct costs
5,0% of direct and Indirect costs
130% of direct and indirect costs
RESIDUAL LAND VALUE
(1) Only applies to residential parting: retail is assumed to be surface pali<.ed wrth pali<.ing cost cOV<lred under site impro\fflments.
(2) Include archilecture & engineenng, ftnancmg,aodG &Acosts.
Source: Economic & Planning Systems, Inc.
E"'>I>omIc&P!snnmgSY....",../n<:.3/17J'J.1}'O
13-40
P'I'800I!$\'~'43Ch"'s_W...1Mll0'0l\16'43F__blJlryMod8!5.><18
Table A-11
Podium Mid-Rise Apartments Over Retail Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per Bldg.Sq.Ft Total
DEVELOPMENT PROGRAM
~
Units 100
Net Area 1,300 sq,ft.perunit 130,000 ""
Efficiency Ralio 85%
Gross Area 152,941 ,'^
ParllingRalio (spaces per unit) 20
~
Gross leasable Area (sq,ft,) 10,000 sq.ft.
Efficiency Rallo 95%
Net Leasable Area (sq.ft.) 9,500 ""
ParkmgRalio (spaces per 1,000 sq.ft.) 50
Total Sq.Ft 162,941
Total Spaces 250
REVENUE ASSUMPTIONS
Residential
Gross Revenue $20/netsq.ft.Jyear $17,01 $2,602,080
(less) Operatmg Expenses 30.0% (S510) ($780,624)
(less) Vacancy Rate 3.0% ~ ($780621
Subtotal, Annual Net Operallng Income $1140 $1,743,394
Capitalized Value 6,0%caprale $190 $29,056,560
(lesslCostofSale' 3,0% "'" ($871697\
ResidentiatRevenue $184 $28,184,863
Retail
Gross Revenue (NNN) $28,51 INLAsq. ft $28.51 $270,864
(less) Commissions 3.0% ($0.66) ($8,126)
(less) Vacancy Rate 5,0% ill..fIl ~
Subtotal, Annual Net Operating Income $2623 $249,195
Capita!izedValue 7.0% caprate $355.99 $3,559,927
(less) Cost of Sale 2.0% iru1J ill!..12ill
RetadRevenue $349 $3,488,728
Total Revenue $194 $31,673,592
DEVELOPMENT COSTS
Direct Costs
BuildingConstnJctionCost $198 IGLAsq.fl $19800 $32,262,353
Site Improvement Cost $5.0 IGLAsq.ft $5.00 $814,706
ParllingConst!UctionCosl{ll $20,000 Ispace $24,55 $4000000
Total Direct Costs $227.55 $37,077,059
Indirect Costs
Rp.sldenllal
Impact Fees
Western Transportation Development $1,946 per unit $1.27 $194,600
ParllDevelopment $7,105 per unit $4.65 $710,500
Public Facilities $8,268 per unit $5.41 $826,800
Sewer $3,653 peruml $239 5365,345
Traffic Signal Participation $246 per unit $016 $24584
Subtotal $13.87 $2,121,829
Retail
Tenant Improvements $20 IGLAsq. It $20,00 $200,000
ImpaclFees
Western Transportation Development $060 IGLAsq.fl $0,60 $5,956
Public Facilities $032 IGLAsq. fl $0.32 $3,152
Sewer $024 IGLAsq. ft $0.24 $2,389
Traffic Signal Participation $2.46 IGLAsq.lt. $2.46 $24584
Subtotal $2361 $236,081
Other Indirecl Costs (2) 2nO%ofdireclcosts ~ S471582
Total Indirect Costs 76%ofdlrectcosIS $282.95 $2,829,492
Subtotal, Directal1d Il1drrectCosts $244.91 $39,906,550
Contingency (% of direct and Indirect costs) 5,0% of direct and indirect costs $12.25 $1,995,328
Developer Retum (% of direct and indirect costs) 13.0% ofdirectandmdlrectcoslS $3184 $5187852
Total Costs $289 $47,089,730
RESIDUAL LAND VALUE ($95) ($15,416,1l00J
(1) Only applies to reSidential parking: retail,s J%umed to be surface parked wdh parking cost covered under sde improvements.
(2) Include arcMedure & engineenng, financing, and G &Acosts.
Source: Economic & Planning Systems, Inc
l;"""Q""Q8.Pla"","g~vstoms,l"" 31,71W10
1 3-41
P,\18000s\jal'3cll",'~''''sI'''''Od.lI181'3F....b;JIVI'''''''''~
Table A~12
Class A Office Over Retail Residual Land Value
Chula Vista Westside lnfill Market Review and Feasibility Analysis; EPS #18143
Item
Assumption
PerBldg.Sq.Fl Total
10,000
sqJl
9,000
33 sqJt.
10,000 ",A
9,500 sq.ft
5.0
20,000
B3
$23.59 $235,872
($7.08) ($70,762)
($0.71) ($7,076)
~ ($23587\
$13,44 .$134,447
$179.26 $1,792,627
~ 1$35853\
$175.68 $1,7S6,nS
$28.51 $270,864
($0.86) ($8,126)
~ 1513543\
$26.23 $249,195
$355.99 $3,559,927
!.&W 1$711991
$349 $3,488,728
$173 $3,465,141
$242.00 $4,840,000
$5.00 $100,000
$3333 $666667
$280.33 $5,606,667
$50.00 $500,000
$2.23 $22,335
$0.32 $3,152
$0.06 $597
$0.61 $6,146
11,11 $32230
$56.45 $564,460
$20.00 $200,000
$0.60 $5,956
SO.32 $3,152
50.24 $2,389
$2.46 lli2M
523.61 5236,081
$1601 S160108
$96.06 $960,649
$656.73 $6,567,315
$16.42 $328,366
~ S919424
$391 $7,815,105
($218) ($4,350,OOO}
DEVELOPMENT PROGRAM
~
Gross Leasable Area (sq.ft.)
Efficiency Ratio
Net Leasable Area (sq.ft.)
Parking Ratio (spaces per 1,000 sq.ft.)
Retail
Gross Leasable Area (sq.ft.)
Efficiency Ratio
NetLeasableArealsq.ft.)
Parking Ralio (spaces per 1,000 sq.ft.)
TotaISq.Ft.
Total Spaces
90%
95%
REVENUE ASSUMPTIONS
~
Gross Office Revenue (FS) (1)
(less) Operating Expenses
(less) Commissions
(less) Vacancy Rate
Annual Net Operating Income
Capitalized Value
(less) Cost of Sale
Office Revenue
Retail
Gross Revenue (NNN)
(less) Commissions
(less) Vacancy Rate
Subtotal, Annual ~t Operating Income
CapilalizedValue
(less) Cost of Sale
Retail Revenue
Total Revenue
$26.21 INLA
30%
3.0%
10.0%
7.5% caprate
20%
$28,51 INLAsq.fl..
3.0%
50%
7.0% caprate
2.0%
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
Site Improvement Cost
Parkrng Construction Cosl (1)
Total Direct Costs
Indirect Costs
Office
Tenant Improvements
Impact Fees
Western Transportation Development
Park Development
Public Facijities
Sewer
TratficSignal PartiCipation
Subtotal
Retail
Tenant Improvements
ImpadFees
Western Transportation Development
PubhcFacllilles
Sewer
Tr<lfflcSignalPartlcip<ltion
Subtotal
Olher Indirect Costs (2)
Total Indirect Costs
Subtotal, Direct and Indirect Costs
Contingency (% of direct and indirect costs)
DeveloperRetum(%ofdirectandindirectcosts)
TotalCo$ts
$242 fGLAsq,fl..
$5.0 fGLA sq. ft.
$20,000fspace
$50,00 fGLA sq. ft.
$2.23 per unit
$032 per unit
$0.06 per unit
$0.61 perunit
$3.22 perunit
$20 fGLAsq ft.
SO.60 IGLA sq. ft.
$0.32 IGLA sq. ft
$0.24 IGLAsq.fl.
$2.46 fGLAsq,ft.
200% of direct costs
17.1% of direct costs
5,0% of direct and indirect costs
140% of direct and indirect costs
RESIDUAL LAND VALUE
(1) Only applies to residential parl<ing: retail ,s assumed to be surface parl<ed wnh parl<ing cost covered under sne improvements.
(2) Indude arctllteclure & engllleenng, financmg, and G &Acosts.
Sourt:e: Economic & Planning Systems, Inc.
8'''''"O''''O&P/'"ffl"gSysl~ms,I"o. 3117=10
13-42
P:\1800G5Ij8143C1wI'~'''$/.''''o<loll18143F<>a_~5.x15
Table A-13
WarehouselDistribution Residual Land Value
Chula Vista Wests ide Infill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per Bldg. Sq.Ft. Total
DEVELOPMENT PROGRAM ASSUMPTIONS
Gross Building Area (sq.ft) 10,000
Efficiency Ratio 80%
Net Building Area (sq.ft.) 8,000
Parking Ratio (spaces per 1,000 sq.ft.) 1.0
REVENUE ASSUMPTIONS
Gross Revenue (NNN) $10.22 INLA $8.18 $81,792
(less) Operating Expenses 0% $0.00 $0
(less) Commissions 3% ($0.25) ($2.454)
(less) Vacancy Rate 4% ~ ~
Subtotal $7.61 $76,067
Capitalized Value 8.0% cap rate $95.08 $950,832
(less) Cost of Sale 2.0% ill.JillJ ($19017)
Total Revenue $93 $931,815
COST ASSUMPTIONS
Direct Costs
Building Construction Cost $85 lGLA sq. fl. $85.00 $850,000
Site Improvement Cost $5.0 IGLA sq. ft. $5.00 $50,000
Parking Construction Cost $0 Iper space $000 iQ
Total Direct Costs $90.00 $900,000
Indirect Costs
Tenant Improvements $1.00 IGLA sq. ft. $1.00 $10.000
Impact Fees
Western Transportation Development $1.49 iGLA sq. ft. $1.49 $14,890
Public Facilities $0.66 IGLA sq. ft. $0.66 $6,628
Traffic Signal Participation $0.11 IGLA sq. ft. $0.11 $1.076
Other Indirect Costs (1) 20% of direct costs $17.00 $170000
Total Indirect Costs 23% of direct costs $20.38 $203,787
Subtotal, Direct and Indirect Costs $110 $1,103,787
Contingency (% of direct and indirect costs) 5% $5.52 $55,189
Developer Return (% of direct and indirect costs) 10% $1104 $110,379
Total Costs $127 $1,259,355
RESIDUAL LAND VALUE ($34) ($337,540)
(1) Include architecture & engineering, financing, and G & A costs.
Source' Economic & Planning Systems, Inc.
Economic & PlanningSystl:!ms, Inc. 3/1712010
P;\18000sI18143Chula _ VistatModell 1 8143FI:!asib"ityModeI5 xis
13-43
Table A-14
Sales/Service Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per Bldg. Sq. Ft. Total
DEVELOPMENT PROGRAM ASSUMPTIONS
Gross leasable Area (sq.tt.) 10,000
Efficiency Ratio 80%
Net Leasable Area (sq.ft.) 8.000
Parking Ratio (spaces per 1 ,000 sq.ft.) 1.0
REVENUE ASSUMPTIONS
Gross Revenue (NNN) $13.29 INLA $10.63 $106,330
(less) Operating Expenses 0% $0.00 $0
(less) Commissions 3% ($0.32) ($3,190)
(less) Vacancy Rate 4% ($0.43\ ($4 253\
Subtotal $9.89 $98,887
Capitalized Value 8.0% cap rate $123.61 $1,236,082
(less) Cost of Sale 2.0% ($2.47\ ($24722)
Total Revenue $121 $1,211,360
COST ASSUMPTIONS
Direct Costs
Building Construction Cost $100 IGLA sq. ft. $100.00 $1,000,000
Site Improvement Cost $5.0 IGLA sq. ft. $5.00 $50,000
Parking Construction Cost $0 Iper space $0.00 iQ
Total Direct Costs $105.00 $1,050,000
Indirect Costs
Tenant Improvements $2.00 IGLA sq. ft. $2.00 $20,000
Impact Fees
Western Transportation Development $4.96 IGLA sq. ft. $4.96 $49,633
Public F aGilities $0.66 IGLA sq. ft. $0.66 $6,628
Traffic Signal Participation $0.11 IGLA sq. ft. $0.11 $1,076
Other Indirect Costs (1) 20% of direct costs $20.00 $200 000
Total Indirect Costs 27% of direct costs $27.85 $278,530
Subtotal, Direct and Indirect Costs $133 $1,328,530
Contingency (% of direct and indirect costs) 5% $6.64 $66.427
Developer Return (% of direct and indirect costs) 10% $13.29 $132,853
Total Costs $153 $1,527,810
RESIDUAL LAND VALUE ($32) ($316,450)
(1) Include architecture & engineering, financing, and G & A costs.
Source: Economic & Planning Systems, Inc.
Economic & Planning Systems. Inc 3/1712010
P:\18000s\18143Chula_ VistalModel\18143FeasibilityModel5.xls
13-44
Table A-15
Development Impact Fees by City
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Single Family Multi-Family High-Density High-Density Low-Density
Residential Residential Retail Office Office Industrial
City perunit[1] perunit{2] per sq. !t. [3] per sq. ft. [4J per sq. ft. [5] per sq. !t.[6]
Chula Vista
Western Transportation Impact Fee $3,243 $2,594 $0.60 $2.23 $4.47 $1.49
Parkland Development Fee $9,574 $7,105
Traffic Signal Participation [7J $307 $246 $2.46 $0.61 $0.61 $0.11
Public FacilillesFee $8,735 $8,268 $0.32 $0.32 $1.26 $0.66
Sewer [8] $4180 $3653 $0.24 $0.06 $0.06 $0.12
TOTAL $26,039 $21,866 $3.61 $3.22 $6.40 $2_38
Carlsbad
Bndge and Thoroughfare [9] $530 $424 $1.76 $0.44 $0.44 $0.11
Local Facilities Mngt Plan/Amendment NlA NIA NIA NIA NIA NIA
Planned Local Drainage Fees [10] NIA NIA $0.06 $0.06 $0.23 $0.38
Public FacJlities Fee [11] NIA NIA NIA NIA NIA NIA
Sewer Benefit Area Fees [12J NIA NIA NIA NIA NIA NIA
Traffic Impact Fee [131 $265 $265 $8.48 $2.12 $2.12 $0.53
Park In-Lieu Fees [14] $6,208 $5,207
Sewer Connection NIA NIA NIA NIA NIA NlA
Water District Fees [15] NIA NIA NIA NIA NIA NIA
Habitat Mitigation Fee [161 NIA lli8 NIA NIA NIA NIA
TOTAL $7,003 $5,896 $10.30 $2.62 $2.79 $1.02
Coronado
Sewer Connection Fee [17] $2,559 $2,559 NIA NIA NlA NlA
Public Facilities Fee $1,000 $650 $0.50 SO.50 $0.50 $0.50
Affordable Housing {18] $7,000 $7,000
Water Meter/Connection [191 NIA NIA lli8 NIA NIA NIA
TOTAL $10,559 $10,209 $0.50 $0.50 $0.50 $0.50
Del Mar
Construction License Tax (Public Facilities Fee) $700 $455 $0.35 $0.35 $0.35 $0.35
In-Lieu Housing Mitigation Fee $23.508 $23,508
Water[15J NIA NIA NIA NIA NIA NIA
Sewer [15] NIA lli6 NIA NIA NIA NIA
TOTAL $24,208 $23,963 $0.35 $0.35 $0.35 $0.35
EICajon City staff report that EI Cajon does not charge development impact fees.
Encinitas
Sewer [20] $3,178 $3.178 $3.18 $3.18 $3.18 $3.18
Park and Recreation Fee ,$9,220 $7,244
Open Space Land Acquisition $423 $332
Trail Development Fee $108 $85
Community Facilities Fee $571 $449
Flood Control Fee $420 $273 $0.21 $0.21 $0.21 $0.21
Traffic Mitigation Fee [21J $2225 $2040 E1.1 $6.23 $6.23 51.04
TOTAL $16,145 $13,601 $10.60. $9.62 $9.62 $4.42
Escondida
Water Connection Fee [22J $4,690 $3,510 NIA NIA NIA NIA
Wa~tewater Connection Fee [231 $7,500 $5,625 $1.28 $1.28 $1.28 $0.63
Traffic Fee [24] $850 $680 $3.36 $084 $0.84 $0.84
Public FaCIlity Fee $4,533 $4,533 $2.13 $2.13 $2.13 $1.61
Park Fee $4,129 $4,129
Drainage Facilities Fee $1,071 $428
Infrastructure DepOSit Fee $1,500
Art in Public Places Fee $600 5390 $0.30 $0.30 $0.30 SO.30
TOTAL $24,873 $19,295 $7.07 $4.55 $4.55 $3.38
Imperial Beach [25] NIA NIA NIA NIA NIA NIA
La Mesa
Parkland Acquisition and Improvements Fee [26J $5,441 $3,945
Traffic Impact Fee $2020 $2020 =
TOTAL $7,461 $5,965
Lemon Grove
Parkland Fees $673 $673
Sewer NIA NIA NIA NIA ~ NIA
TOTAL $673 $673
I:cono"oc;j.PI'"flllIngSystems,lnc :>'1712010
P:\18000s\IBI43Chwa_VlstaIMod8l\1B143Marl<eIMad8llxls
13-45
Table A-15
Development Impact Fees by City
Chula Vista Impact Fee Feasibility Model; EPS #18143
Single Family Multi-Family High-Density High-Density
Residential Residential Retail Office Office Industrial
City perunit[1] per unit [2] per sq. ft. [3] per sq. ft. [4] per sq. ft. [5] per sq. ft, [6]
National City
Parks and Recreation $858 $692
library $172 $139
Fire/EMS $126 $102 $0.75 $0.39 $0.39 $0.11
Police $318 $257 $1.90 $0.98 $0.98 $0.29
Transportation Development Impact Fee $2040 $2040
TOTAL $3,514 $3,230 $2,65 $1.37 $1.37 $0.40
Oceanside
Public Facility $2,072 $2,072 $0.71 $0.71 $0.71 $0.71
Parks $3,503 $3,503
Traffic $2,707 $2,166 $3.18 $1.27 $1.27 $0.48
Drainage and Flood Control [27] NfA NfA NfA NfA NfA NfA
Wastewater Buy In Fee [221 $3,746 $3,746 NfA NfA NlA NfA
Water Buy-in Fee 122] $4,154 $4,154 NfA NfA NlA NfA
InclusionaryHousing In-lieu Fee [28J NlA NfA lli8 lli8 NfA NfA
TOTAL $16,182 $15,641 $3.89 $1,98 $1.98 $1.19
Poway
Water [29] $3,026 $3,026 NfA NfA NlA NfA
Sewer [30] $6,153 $6,153 $3,08 $3.08 $3.08 $1.03
Traffic Mitigation [31] $2,095 $2,079 $3,33 $3.33 $3.33 $1.39
Park Fees $4,562 $4,562
Habitat Miligation NfA NfA NfA NlA NlA NfA
Fire Protection [31] $122 $122 $0,08 $0.08 $0.08 $0.08
Housing In-Lieu Fee 132] NfA NfA til8 NfA NfA NfA
TOTAL $15,958 $15,942 $6.48 $6.48 $6.48 $2.49
San Diego
Facilllles Benefit Assm't District or Development Impact Fee [33] NfA NfA NfA NlA NlA NfA
Housing Impact Fee (per Sq. Ft.) $0,64 $1.06 $1.06 1Q.1I
TOTAL NfA NfA $0.64 $1.06 $1.06 $0.27
San Marcos
Circulation Streets $6,747 $4,048 $1.45 $1.01 $4.04 $2.40
SR-78 Interchanges $3,204 $1,923 $0.68 $0.58 $2.33 $1.39
NPOES $221 $221 $0.01 $0.01 $0.03 $0.05
Tech Improvements '44 '44 $0.002 $0.002 $0.007 $0.011
Parks $6,251 $6,251
Habitat Conservation NfA NfA NfA NfA NlA NlA
Drainage Basin Area [34] lL.W. ~ $0.18 $0.18 $0.73 llll
TOTAL $16,570 $12,590 $2.32 $1.78 $7.13 $5.07
Santee Fees must be calculated by City staff.
Solana Beach [25) NfA NfA NfA NfA NfA NlA
Vista
Drainage [35] $329 '66 $0.03 $0.03 $012 $0.20
Fire Protection [36] $379 $379 $0.03 $0,03 $0.11 $0.19
Low Income In Lieu NfA NfA NfA NlA NlA NfA
Park Fee $6,484 $6,444
Public Facilities Fee [36] $1,218 $1,218 $0.09 $0.09 $0.36 $0.60
Sewer Fee NfA NfA NfA NlA NlA NlA
Street and Signal Development Impact [37] $3170 $2536 $25.36 $6,34 $6.34 ~
TOTAL $11,580 $10,642 $25.51 $6.49 $6.93 $2.57
E,:a''''lmc&PflJ1ln",gSyst<'lms.lnc 3/1712010
P;\ll:1OOOs\18f43ChuIa V'lStalMoo\oJ\18143/o1armIModfJ/l.xls
13-46
Footnotes for Table A-15
[1] Assumes 2,000 squ3re footunilswith density of S llnitsp8racre .
{2] Mulhfamily is detined as a 1,300 square foot condominIum unttwith density 0140 units per acre.
[3] Assumes 10,QOG square foot retail space with FAR of 2.
[41 Assumes 40,OCO square foot office space with FAR of 2_
[5] Assumes 40,000 square foot offi~ space with FAR of 0.5.
[6JAssumes20,000squarefootwarenousespacewithFA.RotO.3.
[7] Calculated assuming trips per day comparable to a single family detached home (10 trlpS per unit), condo/duplex (8 trips per unit),
ccmmunity sncpprng center {80 tnps per 1,COO sq. fl.). standard comme rcial office buiiding less than 100,000 sql.1are teet (20 trips per 1,000 sq.fl},
or warehouse (5tnps per 1.000 sq. ft.).
[8] Based on sewerage partidpailOnfees ofS3,476 per unit and iaier alfees ofS7,018 {with a6inchiater) per building assumed for res identiaiuses
and 13i1xtures per building assumed for commercial uses.
[9] Calculated per square foot.
[10] Varies by area and runoff. Represents average fee per acre assuming medium runotf.
[11] Not Estlmaled. Calculated based on percentofbllllding value.
[12j Varies by project area. Notestimatad.
[13] Calculated per average daily Inp. Varies based on whether development is locaied inside or outside of CFO. Assumes outSide CFD.
[14] Fee amount vanes by area. Represents average of all areas. Single f<lmily is cefined as single family detached and duplex.
Multifamily is defined as four units or I~ss. High defined as five units or more.
[15jCalculated based on meter size. Not estimated,
[18JVaries by type of habitat land. Notestimated.
{17] Non_Residential sewer fees vary. Not estimated.
[18jWl1erea parcel or subdivision map is required far two or more units oriots, 20 percent of il1e umls shali be atfordable or il1e owner shail oa y the in-lieu fee.
[19jAdministered by District .
[20] For sewer fees, assumes are3scovered by Enclnitas Sanitary DIVIS Ion.
For store an ofliceuses, fees celculated on ~quival"ntdwelllnguniibasis. According to the fee schedule, the first 1,000 square feet of store and
office usesareequival~ntto 1.2 dwelling umts, and each additional 1,000 square feet is equivalent to O.7dweilin gunits.
For the purposes of this analysis, overall, 1,QOO square feet ot store and office space IS equivalent to 1.0equiv alentdwellingunil.
For warehouse uses, each four-unit Increment IS equivalent to 1. o equivalent dwelling unil.
[21] Based on a geneml fee of $2,225 per pe<'tk nourtnp generated. The fee ror single tenant office is $4,873 per thousand square feel.
Fees for specific retaii shops, restaurants, R&D, financial services, and other land uses in fee sc.'"ledule.
[221 Fees for non_residential land uses based on water meter size. Notestlmatoo.
[23] Wastewater connection fees for other land uses are bas'3d on an equivalent dwelling unit oi 250 g:Jllons per day (minimum of one EDU).
Medium and high densilyresic!entl:.ll assumes llnits h,lVe less than lt1 reebedruoms.
Wastewaterccnnectionfeesforret3il,office,andindustnalaremeasuredpersquarefool
[24] Low denSity residentiai includes singie family homes and duplexes. Medium denSity includes townhouses and condos.
Higndensilyindudestnplexesandapartments.
[25j Copy of fee sChedule is rlot available.
[26] indudes Quimby Act Parl<land Dedication In-Ueu Fee and Pari< Improvement impact Fee.
[27] Fee ranges from $2,S43 to S15,964 per acre depending on location. Notestimated.
[28j Fee calcuiaied as S1,OOO per development project plus S100 P erunit plus S10,275 peruni!. Notestimated.
[29] Fees for non-residential uses calr.:ulated based on il.1rblne site. Notestimated.
[30] The City charges different fees cased cn whether new development IS located in the North or South region.
Figures shown represent an average of the fees.
Commercial fees shown are for the first 2,000 square feet. lndustrtalreesareforthefirst5,OOO square feel.
Fees for additional building area may be based on fixture urllls' per Resolution 96-096.
[31] Ught Industrial fe~ used to calculate industrial development impact fee.
[32j Based on zoning and square footage. A base charge perzol1e for the first 1,000 square feet Qf the proposed u nit, plus $100 per square foot
beyond 1,000 square feet, to a maximum iotal of $2,250. Not estimated.
[33] Charged based onarea;note~timated.
[34] Calculated per acre ba:;edon projecticcation. Fee shown represents average of all areas.
[35] Fee snown represents average of tees for each drainage area. Charged on a per acre basis.
[36]Non_residenhaifeeschargedona per acre basis,
[37] Calc:.Jlal1on uses Chula Vista's sc.'1adl.11e for average inpS per day by land use.
Ec01l<JmIc&Planrnngsy,"em",lnc. 31111:2.rJ1D
F>\fSOOOsl18f4JClUJ",_Vi.,alMod.,{\1814JMarkoIIMOOoif,XI2
13-47
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UIIIII!Ul
AGENCY RESOLUTION NO.
AND
COUNCIL RESOLUTION NO.
JOINT RESOLUTION OF THE CITY COUNCIL AND THE
REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA ADOPTING THE MEMORANDUM OF
UNDERSTANDING REGARDING PAYMENT FOR
INFRASTRUCTURE OR CONSTRUCTION THEREOF
WHEREAS, in August 2009, at a Joint Meeting of the Chula Vista Redevelopment
Corporation ("CVRC") and the Agency, the CVRC was directed to explore creative options to
create incentives for redevelopment; and
WHEREAS, in December 2009, the City hired Economic and Planning Systems, Inc.
("EPS") to review the feasibility of infill development in western Chula Vista; and
WHEREAS, in March 2010, the Memorandum entitled, "City of Chula Vista Westside Inlill
Market Review and Feasibility Analysis," was completed, describing current market conditions
in western Chula Vista, analyzing the feasibility of several common development types, and
revealing that none of the development types are feasible under current market and economic
conditions; and
WHEREAS, in August 20 I 0, EPS presented the results of their report at a CVRC Workshop,
noting that Chula Vista's relatively high residential development impact fees could be a deterrent
to new development and could delay economic recovery; and
WHEREAS, at the August Workshop, the CVRC directed staff to come back with a proposal
for addressing certain findings in the Memorandum; and
WHEREAS, on October 14, 2010, the Chula Vista Redevelopment Corporation adopted
Resolution No. 2010-018 recommending that the City Council of the City of Chula Vista
discontinue collecting development impact fees (Western Transportation Impact Fee
("WTDIF"), Public Facilities Financing Development Impact Fee ("PFDIF"), and Park
Acquisition and Development Fee ("PAD")) in the redevelopment project areas, excluding the
Bayfront Project Area, for a period of five years and use tax increment to finance capital
improvement projects identified in the development impact fee program(s); and
WHEREAS, in order to serve new development, whether in redevelopment areas or
otherwise, the City requires developers to pay fees associated with impacts of such development
("DIF Fees") for the design and construction public facilities and has established capital
improvement programs identifying such public facilities; and
WHEREAS, the City would like to suspend the collection of certain DIF Fees, specifically
those charged pursuant to Chula Vista Municipal Code chapters 3.5, 3.55, 17.10 ("Suspended
Fees"), in the redevelopment areas in order to stimulate development, which will ultimately
13-49
Resolution No.
Page 2
provide economic benefit to the City; however, the City cannot bear the cost of the public
facilities required for the development for which the fees would be suspended; and
WHEREAS, in order to ensure the City that such facilities will be provided, the Agency
desires to enter into this MOU with the City guaranteeing either the construction of such
facilities or payment of funds to the City in amounts that would, but for the suspension of the
collection ofDIF fees, have been collected by the City; and
WHEREAS, the Environmental Review Coordinator has reviewed the proposed activity for
compliance with the California Environmental Quality Act (CEQA) and has determined that the
activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because
it involves administrative activities that will not result in direct or indirect physical changes to
the environment. Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the
activity is not subject to CEQA. Thus, no environmental review is necessary; and
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Chula Vista
and the Redevelopment Agency of the City of Chula Vista do, hereby approve the agreement
entitled, "Memorandum of Understanding Regarding Payment for Infrastructure or Construction
Thereof."
-----.---.
Presented by
Gary Halbert
Assistant City Manager/Development
Service Director
13-50
ORDTNANCE NO. 2010-
ORDINANCE OF THE CITY OF CHULA VISTA
SUSPENDING THE COLLECTION OF FEES CHARGED
PURSUANT TO CHAPTERS 3.50 (DEVELOPMENT IMPACT
FEES TO PAY FOR VARIOUS PUBLIC FACILITIES), 3.55
(WESTERN TRANSPORTATION DEVELOPMENT IMPACT
FEES), AND 17.10 (PARKLAND AND PUBLIC FACILITIES)
OF THE CHULA VISTA MUNICIPAL CODE FOR
DEVELOPMENT IN THE REDEVELOPMENT PROJECT
AREAS, EXCLUDING THE BA YFRONT PROJECT AREA,
FOR A PERIOD OF FIVE (5) YEARS
WHEREAS, in August 2009, at a Joint Meeting of the Chula Vista Redevelopment
Corporation ("CVRC") and the Chula Vista Redevelopment Agency ("Agency"), the CVRC was
directed to explore creative options for incentivizing redevelopment; and
'WHEREAS, in December 2009, the City hired Economic and Planning Systems, Inc.
("EPS") to review the feasibility of infill development in western Chula Vista; and
WHEREAS, in March 2010, the Memorandum entitled, "City of Chula Vista Westside
Infill Market Review and Feasibility Analysis," was completed, describing current market
conditions in western Chula Vista, analyzing the feasibility of several common development
types, and revealing that none of the development types are feasible under current market and
economic conditions; and
WHEREAS, in August 2010, EPS presented the results of their report at a CVRC
Workshop, noting that Chula Vista's relatively high residential development impact fees could
be a deterrent to new development and could delay economic recovery; and
WHEREAS, at the August Workshop, the CVRC directed staff to come back with a
proposal for addressing certain findings in the Memorandum; and
WHEREAS, on October 14,2010, the Chula Vista Redevelopment Corporation adopted
Resolution No. 2010-018 recommending that the City Council of the City of Chula Vista
discontinue collecting development impact fees (Western Transportation Impact Fee
("WTDIF"), Public Facilities Financing Development Impact Fee ("PFFDIF"), and Park
Acquisition and Development Fee ("PAD")) in the redevelopment project areas, excluding the
Bayfront Project Area, for a period of five years and use tax increment to finance capital
improvement projects identified in the development impact fee program(s); and
WHEREAS, the Bayfront Project Area shall be excluded from this proposal due to
existing and proposed development plans and agreements, which are structured on and rely upon
funding from future development impact fees; and
13-51
Ordinance No.
Page 2
WHEREAS, the Redevelopment Agency has entered into an agreement with the City Of
Chula Vista ("City") committing its revenues to ensure that the development impact fee accounts
are made whole by either: I) designing and constructing those public facilities and purchasing
certain property required to support such development in the Redevelopment Areas for which
fees are suspended pursuant to this ordinance or 2) paying to the City the dollar amounts of the
fees suspend on or before the expiration of this ordinance at the then current rates; and
WHEREAS, there will be no negative financial impact to the City of Chula Vista or the
development impact funds as a result of suspension of the collection of development impact fees
in the Redevelopment Project Areas; and
WHEREAS, the Environmental Review Coordinator has reviewed the proposed activity
for compliance with the California Environmental Quality Act (CEQA) and has determined that
the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines
because it involves administrative activities that will not result in direct or indirect physical
changes to the environment. Therefore, pursuant to Section 15060(c)(3) of the State CEQA
Guidelines the activity is not subject to CEQA. Thus, no environmental review is necess~ry; and
WHEREAS, staff has reviewed the decision contemplated by this action and has
determined that Councilmembers Castaneda and Ramirez own properties within the
redevelopment project areas and therefore have a conflict, based on the 500-foot rule found in
California Code afRegulations section 18704.2(a)(1) applicable to this decision.
NOW THEREFORE, the City of Chula Vista City Council does hereby ordain as
follows:
1. SUSPENSION OF FEES
The collection of fees charged pursuant to Chapters 3.50 (Development Impact Fees to
Pay for Various Public Facilities), 3.55 (Western Transportation Development Impact Fees), and
17.10 (Parklands and Public Facilities) of the Chula Vista Municipal for development in the
Redevelopment Areas, excluding the Bayfront Project Area, is suspended for a period of five (5)
years.
Gary Halbert, AICP, PE
Assistant City Manager /
Director of Development Services
II. EFFECTIVE DATE
This Ordinance shall take effect and be in full force on the thirtieth da~from and after its
final adoption. 1\ /1 .//1'
P,,=',d by A'7'W' ~,~ YY/ /
01, fJuJ t
jl I
VGyen R. Googins
City Attorney
13-52
THE ATTACHED AGREEMENT HAS BEEN REVIEWED
AND APPROVED AS TO FORM BY THE CITY
ATTORNEY'S OFFICE AND WILL BE
FORMALL Y SIGNED UPON APPROVAL BY
THE CITY COuNCIL
;/I.../--}
-_.~. /(/'
<./' / ...........
.7./"-/.
/
&fA
Glen R. Googms
City Attorney
Dated: /2- /1 / ()
/ I
MEMORANDUM OF UNDERSTANDING
REGARDING PAYMENT FOR INFRASTRUCTURE
OR CONSTRUCTION THEREOF
BETWEEN
THE CITY OF CHULA VISTA AND
THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA
13-53
MEMORANDUM OF UNDERSTANDING
REGARDING PAYMENT FOR INFRASTRUCTURE
OR CONSTRUCTION THEREOF
This Memorandum of Understanding ("MOU") dated , 2010, for
reference only, and effective as of the date last executed by the parties hereto, is by and between
the City of Chula Vista ("City"), a municipal corporation of the State of California, and the
Chula Vista Redevelopment Agency ("Agency"), a public body, corporate and politic, formed
pursuant to California Health and Safety Code Division 24, Part 1. Individually, the City or
Agency may be referred to herein.as "Party" and collectively as "Parties." This MOU is made
with reference to the following facts:
RECITALS
WHEREAS, in August 2009, at a Joint Meeting of the Chula Vista Redevelopment
Corporation ("CVRC") and the Agency, the CVRC was directed to explore creative options to
create incentives for redevelopment; and
WHEREAS, in December 2009, the City hired Economic and Planning Systems, Inc.
("EPS") to review the feasibility of infill development in western Chula Vista; and
WHEREAS, in March 2010, the Memorandum entitled, "City of Chula Vista Westside Infill
Market Review and Feasibility Analysis," was completed, describing current market conditions
in western Chula Vista, analyzing the feasibility of several common development types, and
revealing that none of the development types are feasible under current market and economic
conditions; and
WHEREAS, in August 2010, EPS presented the results of their report at a eVRC Workshop,
noting that Chula Vista's relatively high residential development impact fees could be a deterrent
to new development and could delay economic recovery; and
WHEREAS, at the August Workshop, the CVRC directed staff to come back with a proposal
for addressing certain [mdings in the Memorandum; and
WHEREAS, on October 14, 2010, the Chula Vista Redevelopment Corporation adopted
Resolution No. 2010-018 recommending that the City Council of the City of Chula Vista
discontinue collecting development impact fees (Western Transportation Impact Fee
("WTDIF"), Public Facilities Financing Development Impact Fee ("PFFDIF"), and Park
Acquisition and Development Fee ("PAD")) in the redevelopment project areas, excluding the
Bayiront Project Area, for ,a period of five years and use tiLX increment to finance capital
improvement projects identified in the development impact fee prograrn(s); and
Memorandum of Understanding: DIF Suspension
Page 1
13-54
WHEREAS, in order to serve new development, whether in redevelopment areas or
otherwise, the City requires developers to pay fees associated with impacts of such development
("DIF Fees") for the design and construction of public facilities and the acquisition of parkland
and has established capital improvement programs identifying such public facilities and a fee
structure associated with the acquisition of parkland; and
WHEREAS, the City would like to suspend the collection of certain DIF Fees, specifically
those charged pursuant to Chula Vista Municipal Code chapters 3.5, 3.55, 17.10 ("Suspended
Fees"), in the redevelopment areas in order to stimulate development, which will ultimately
provide economic benefit to the City; however, the City cannot bear the cost of the public
facilities required for the development for which the fees would be suspended; and
WHEREAS, in order to ensure the City that such facilities will be provided, the Agency
desires to enter into this MOU with the City guaranteeing either the construction of such
facilities or payment of funds to the City in amounts that would, but for the suspension of the
collection ofDIF fees, have been collected by the City; and
NOW, THEREFORE, for mutual consideration, the sufficiency of which IS hereby
acknowledged, the City and the Agency agree as follows:
ARTICLE I.
1.1 Definitions. The following terms shall have the defmitions attributed to them below:
Associated Improvement: any improvement required to mitigate the impacts of a specific
development that occurs in a redevelopment area during the period time that DIF Fees are
suspended in the redevelopment area.
Included Development: Development that occurs within a redevelopment area during the
time period that the DIF Fees are suspended
ARTICLE II. CITY OBLIGATIONS
2.1 Compliance with DIF Suspension Ordinance. For five (5) years from the effective date of
the adoption of the ordinance suspending the collection of certain D IF Fees for development
projects in the Redevelopment Areas, City shall not charge Developers and the Developers
shall have no legal obligation to pay the Suspended Fees.
,
Memorandum of Understanding: DIF Suspension
Page 2
13-55
ARTICLE III. AGENCY OBLIGATIONS
3.1 Make City \Vhole. In consideration of the City's adoption of the ordinance suspending
certain DIF Fees in the Redevelopment Areas, Agency shall be directed by the City to and
shall have the obligation to either:
3.1.1 Construct Improvements. Agency shall construct, or have constructed, at its own cost,
the Associated Improvements for Included Development.
A. City Standards and Approval. Associated Improvements shall be designed and
constructed according to City Standards and be subject to City approval, which
will not unreasonably be withheld.
B. Compliance with Laws. In the design and construction of the Associated
Improvements, Agency shall comply with all Laws.
C. Obtain Permits. Agency shall obtain any and all permits required for the
construction of Associated Improvements.
3.1.2 Reimburse the City. Agency shall pay an amount equal to the dollar amount of the
Suspended Fees for Included Development, which amount shall be calculated at the
time of payment ("Amount Payable").
A. Time for Payment. The Amount Payable shall be due and payable on or before
either thirty (30) calendar days from written notice to the Agency that the
Suspended Fees are necessary to initiate planning, design and/or construction of
some or all of the Associated Improvements or 5 years from the execution of this
MOU, whichever occurs first.
ARTICLE IV. ESTIMATED PROJECT COSTS
4.1 Estimated Cost. Each project included in the City's Capital Improvement Program has an
estimated cost and, with respect to parkland acquisition, an estimated cost per acre
("Estimated Cost"). Estimated Costs are identified in one of the following documents:
4.1.1 Public Facilities Development Impact Fee, March 2006 Update. Ordinance 2006-3050,
approved 11/07/2006
4.1.2 Western Transportation Development Impact Fee Report. Ordinance 2008-3105,
approved 03/18/2008
4.1.3 Resolution 2004-222, approved 07/13/2004
4.1.4 CVMC 17.10.120
Memorandum of Understanding: DIF Suspension
Page 3
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4.2 Annual Adjustments to Estimated Cost. Without further amendments to this Agreement,
the Estimated Cost may be adjusted annually by the methods identified in the CVMC
17.10.110, CVMC 3.55.090, CVMC 3.50.090, and/or by subsequent City Council action
approving an adjusted amount.
4.3 Notification of Increased Costs. If, at any time, the Agency anticipates that the amount
expended on an Associated Improvement, which the Agency is constructing pursuant to
section 3.1.1, above, will exceed the Estimated Cost, the Agency shall immediately, not more
than ten (10) Working Days from becoming aware of the potential increase, notify the City in
writing. This written notification shall include an itemized cost estimate and a list of
recommended revisions, which the Agency believes will bring the construction cost to within
the Estimated Costs. The City may either: (i) approve an increase in the amount authorized
for the Project; or (ii) delineate a project, which may be constructed for the budget amount;
or (iii) any combination of (i) and (ii).
ARTICLE V. REIMBURSEMENT TO AGENCY
5.1 Oversized Facility Requirement. In the event that the City requires the Agency to
construct Associated Improvements pursuant to section 3.1, above, the City may require that
such improvements be constructed with supplemental size, length, or capacity (i.e. greater
than that necessary to serve the Included Development) in order to ensure efficient, timely,
and orderly development of the City. In such event, the Agency shall comply with all rules,
regulations, procedures, and ordinances, including Chula Vista Municipal Code sections
3.50.135 and 3.55.150 associated with obtaining reimbursement or credit for such.
ARTICLE VI. USE OF FUNDS COLLECTED
6.1 Placement in Specific Funds. All of the funds collected by the City from the Agency
pursuant to this MOU shall be placed in the related funds (i.e. PAD Fees in the Western Park
Acquisition & Development Fund, PFDIF in the Public Facilities DIF Fund, Western TDIF
in the Western Transportation DIF Fund) in the relative proportion of the amounts collected.
6.2 Not a General Fund Asset. The funds shall not be placed in or become an asset of the
City's General Fund.
6.3 Expenditure of Funds. The funds collected shall be expended solely for those Capital
Improvement Projects that the City would have otherwise had the right to expend such funds
had the DIF Suspension Ordinance not been approved and the Developer(s) had paid such
amounts pursuant to Chula Vista Municipal Code chapters 3.5, 3.55,17.10 as a condition of
the Included Development.
ARTICLE VII. MISCELLANEOUS PROVISIONS
Memorandum of Understanding: DIF Suspension
Page 4
13-57
7.1 Headings. All article headings are for convemence only and shall not affect the
interpretation of this Agreement.
7.2 Gender & Number. Whenever the context requires, the use herein of (i) the neuter gender
includes the masculine and the feminine genders and (ii) the singular number includes the
plural number.
7.3 Reference to Paragraphs. Each reference in this Agreement to a section refers, unless
otherwise stated, to a section this Agreement.
7.4 Incorporation of Recitals. All recitals herein are incorporated into this Agreement and
are made a part hereof.
7.6 Integration. This Agreement and the Exhibits and references incorporated into this
Agreement fully express all understandings of the Parties concerning the matters covered in
this Agreement. No change, alteration, or modification of the terms or conditions of this
Agreement, and no verbal understanding of the Parties, their officers, agents, or employees
shall be valid unless made in the form of a written change agreed to in writing by both
Parties or an amendment to this Agreement agreed to by both Parties. All prior negotiations
and agreements are merged into this Agreement.
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7.5 Covenants and Conditions. All prOVlSlons of this Agreement expressed as either
covenants or conditions on the part of the City or the Agency, shall be deemed to be both
covenants and conditions.
7.7 Severability. The unenforceability, invalidity, or illegality of any provlSlon of this
Agreement shall not render any other provision of this Agreement unenforceable, invalid,
or illegal. In the event that any provision of this Agreement shall for any reason, be
determined to be invalid, illegal, or unenforceable in any respect, the remainder of this
Agreement shall remain in full force and effect and the parties hereto shall negotiate in
good faith and agree to such amendments, moditlcations, or supplements to this Agreement
or such other appropriate action as shall, to the maximum extent practicable in light of such
determination, implement and give effect to the intentions of the parties as reflected herein.
7.8 Drafting Ambiguities. The Parties agree that they are aware that they have the right to be
advised by counsel with respect to the negotiations, terms and conditions of this
Agreement, and the decision of whether or not to seek advice of counsel with respect to this
Agreement is a decision which is the sole responsibility of each Party. This Agreement
shall not be construed in favor of or against either Party by reason of the extent to which
each Party participated in the drafting of the Agreement.
7.9 Conflicts Between T.,rms. If an apparent conflict or inconsistency exists between the
main body of this Agreement and the Exhibits, the main body of this Agreement shall
control. If a conflict exists between an applicable federal, state, or local law, rule,
Memorandum of Understanding: DIF Suspension
Page 5
13-58
regulation, order, or code and this Agreement, the law, rule, regulation, order, or code shall
control. Varying degrees of stringency among the main body of this Agreement, the
Exhibits, and laws, rules, regulations, orders, or codes are not deemed conflicts, and the
most stringent requirement shall control. Each Party shall notify the other immediately
upon the identification of any apparent conflict or inconsistency concerning this
Agreement.
7.10 Prompt Performance. Time is of the essence of each covenant and condition set forth in
this Agreement.
7.11 Good Faith Performance. The Parties shall cooperate with each other in good faith, and
assist each other in the performance of the provisions of this Agreement.
7.12 Further Assurances. City and Agency each agrees to execute and deliver such additional
documents as may be required to effectuate the purposes of this Agreement.
7.13 Exhibits. Each of the following Exhibits is attached hereto and incorporated herein by this
reference:
N/A
7.14 Compliance with Controlling Law. The Agency shall comply with all laws, ordinances,
regulations, and policies of the Federal, State, and local governments applicable to this
Agreement.
7.15 Jurisdiction, Venue, and Attorney Fees. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. Any action arising under
or relating to this Agreement shall be brought only in the federal or state courts located in
San Diego County, State of California, and if applicable, the City of Chula Vista, or as
close thereto as possible. Venue for this Agreement, and performance hereunder, shall be
the City of Chula Vista. The prevailing Party in any such suit or proceeding shall be
entitled to a reasonable award of attorney fees in addition to any other award made in such
suit or proceeding.
7.16 Administrative Claims Requirement and Procedures. No suit shall be brought arising
out of this agreement, against the City, unless a claim has first been presented in writing
and filed with the City of Chula Vista and acted upon by the City of Chula Vista in
accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal
Code, the provisions of which are incorporated by this reference as if set fully set forth
herein.
7.17 Third Party Relationships. Nothing in this Agreement shall create a contractual
relationship between city and any individual, entity, or other not a party to this Agreement.
Memorandum of Understanding: DIP Suspension
Page 6
13-59
7.18 Successors in Interest. This Agreement and all rights and obligations created by this
Agreement shall be in force and effect whether or not any Parties to the Agreement have
b;en succeeded by another entity, and all rights and obligations created by this Agreement
shall be vested and binding on any Party's successor in interest.
7.19 Independent Contractors. The Agency, any contractors, subcontractors, and any other
individuals employed by the Agency shall be independent contractors and not agents of the
City. Any provisions of this Agreement that may appear to give the City any right to direct
the Agency concerning the details of performing any obligations, including the
construction of improvements, or to exercise any control over such action, shall mean only
that the Agency shall follow the direction of the City concerning the end results of such
obligations.
7.20 Agency not authorized to Represent City. Unless specifically authorized in writing by
City, Agency shall have authority to act as City's agent to bind City to any contractual
agreements whatsoever.
7.21 Approval. Where the consent or approval of a Party is required or necessary under this
Agreement, the consent or approval shall not be unreasonably withheld.
7.22 No Waiver. No failure of either the City or Agency to insist upon the strict performance
by the other of any covenant, term or condition of this Agreement, nor any failure to
exercise any right or remedy consequent upon a breach of any covenant, term, or condition
of this Agreement, shall constitute a waiver of any such breach of such covenant, term or
condition. No waiver of any breach shall affect or alter this Agreement, and each and every
covenant, condition, and term hereof shall continue in full force and effect to any existing
or subsequent breach.
7.23 Notices. All notices, demands or requests provided for or permitted to be given pursuant to
this Agreement must be in writing. All notices, demands and requests to be sent to any
party shall be deemed to have been properly given or served if personally served or
deposited in the United States mail, addressed to such party, postage prepaid, registered or
certitied, with return receipt requested, to the individuals and at the addresses identified
below:
Memorandum of Understanding: DIF Suspension
Page 7
13-60
For the City:
Attention: City Manager
City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
For the Agency:
Attention: Executive Director
City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
7.23.1 Entitlement to Subsequent Notices. No notice to or demand on the parties for
notice of an event not herein legally required to be given shall in itself create the
right in the parties to any other or further notice or demand in the same, similar or
other circumstances.
7.24 Remedies. The rights of the parties under this Agreement are cumulative and not exclusive
of any rights or remedies, which the parties might otherwise have, unless this MOU
provides to the contrary.
7.25 Counterparts. This Agreement may be executed in more than one counterpart, each of
which shall be deemed to be an original but all of which, when taken together shall
constitute but one instrument.
7.26 Signing Authority. Each signatory and party hereto hereby warrants and represents to the
other party that it has legal authority and capacity and direction from its principal to enter
into this Agreement; that all resolutions or other actions have been taken so as to enable it
to enter into this Agreement and agrees to hold the other Party or Parties hereto harmless if
it is later determined that such authority does not exist.
Memorandum of Understanding: DIF Suspension
Page 8
1 3- 61
Signature Page
Now therefore, the parties hereto, having read and understood the terms and conditions of
this agreement, do hereby express their consent to the terms hereof by setting their hand hereto
on the date set forth adjacent thereto.
Dated:
City of Chula Vista
by:
Attest:
Donna R. Norris
City Clerk
Approved as to Form:
Glen R. Googins
City Attorney
Dated:
Agency:
by:
Memorandum of Understanding: DIF Suspension
Page 9
13-62
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MEMORANDUM
To: Eric Crockett and Janice Kluth
From: James Musbach, Michael Nimon, and Amanda Moffitt
Subject: City of Chula Vista Westside Infill Market Review and
Feasibility Analysis; EPS # 18143
Date: March 17, 2010
The City of Chula Vista has retained Economic & Planning Systems, Ino.
(EPS) to review the market conditions pertinent to infill development in
the City's redevelopment areas. Additionally, EPS has developed a
financial feasibility model for use by the Chula Vista Redevelopment
Agency and City staff. The financial model is intended to be used as a
tool for analyzing financial feasibility of different types of development in
evaluation of various development impact fee levels and market factors.
The development types considered in the EPS analysis include:
1. Residential For-Sale
2. Residential Rental
3. Office and Research & Development (R&D)
4. Retail (in mixed-use format)
5. Industrial
Assumptions for the baseline inputs in the feasibility analysis are based
on current market conditions reflective of the recent downturn in the
real estate market. This memorandum documents the key findings of
the market review and provides the background and support for the
inputs in the feasibility analysis.
The assumptions described below will change over time as the economy
and the real estate market conditions continue to change and the model
can be easily updated to reflect prevailing or projected market
corrections. It is important that each time the model is used
assumptions and inputs are carefully reviewed for accuracy and
relevance to the specific site being analyzed.
Memorandum
City of Chula Vista Westside Infif/ Market Review and Feasibility Analysis
March 17, 2010
Page 2
Key Findings
1. Chula Vista has been significantly affected by the recent economic downturn.
The downturn has resulted in weakening of real estate trends, particularly evident in the
residential sector. These trends are more pronounced in Chula Vista relative to many
comparable jurisdictions in San Diego County.
2. The weakening of the real estate market in Chula Vista has adversely affected land
values and feasibility of new development across land uses.
The decrease in property values has resulted in real estate prices falling below construction
costs, making new development infeasible. Consequently, land values have experienced
significant price depreciation since 2006, while new construction activity has substantially
decreased.
3. The pro forma analysis indicates that none of the development types would be
feasible under current market and economic conditions.
The pro forma analysis for all development types results in a negative residual land value
estimate, significantly below the 15 to 25 percent of the building value considered sufficient
to justify new development. This indicates that no development type evaluated in the pro
forma is feasible under current market conditions.
4. The City of Chula Vista collects development impact fees for residential and
commercial development in the City to fund a number of improvements.
While fee types and schedules vary by geographic areas within the City, this analysis
evaluates fees charged in Western Chula Vista. The key fees include parks and recreation,
public facilities, traffic and transportation, and sewer fees. These fees are also commonly
charged by other jurisdictions in San Diego County.
5. Residential development impact fees in Chula Vista are the second highest among
jurisdictions in San Diego County.
While residential fees in Chula Vista are higher than those of most other cities in the County,
the fees fall within a reasonable range and are less than 11 percent of value. The fees for
garden and high-rise apartments are in the range of 8.9 to 10.9 percent of value, while other
residential uses are significantly below 9 percent of value, which implies a relative balance of
fees compared to value under normalized market conditions. This suggests that fees in
Chula Vista are not the key factor in determining feasibility of residential uses, and new
development could occur with the current level of fees following a market recovery.
However, given the current market downturn, relatively high fees may result in delaying and
redirecting new development in Chula Vista and may adversely impact the City's efforts to
attract new regional housing growth because of relatively high fees compared to other
jurisdictions in the County,
ommercial development impact fees in Chula Vista fall within a reasonable range
and are close to the countywide average.
Development impact fees collected for new commercial development in Chula Vista fall below
10 percent of value. This suggests that feasibility of commercial development is not
significantly affected by the City's impact fee structure. These fees are also comparable to
ot 1 dictions in San Diego County.
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