HomeMy WebLinkAbout2011/01/11 Item 7CITY COUNCIL &
REDEVELOPMENT AGENCY
AGENDA STATEMENT
`t~^ C1TY OF
-_.._. CHULAVISTA
JANUARY 11, 2011, Item
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
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 FEE), AND
17.10 (PARKLANDS AND PUBLIC FACILITIES) OF THE
CHULA VISTA MUNICIPAL CODE FOR DEVELOPMENT IN
THE REDEVELOPMENT PROJECT AREAS, EXCLUDING THE
BAYFRONT PROJECT AREA, FOR A PERIOD OF FIVE (5)
YEARS
SUBMITTED BY: ASSISTANT CITY MANAGE`@KIJEVELOPMENT SERVICES
DIRECTOR
REVIEWED BY: CITY MANAGER~¢ Gj~
4/STHS VOTE: YES ~ NO ~X
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 tazget its efforts effectively, the City of Chula Vista hired Economic and
Planning Systems, Ina (EPS), to review market conditions for infill development 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.
EPS completed the Memorandum entitled, "City of Chula Vista Westside Infill Mazket Review and
Feasibility Analysis," in Mazch 2010 (Attachment 1 -Feasibility Study). Key findings from that
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JANUARY 11, 2011, Item
Page 2
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 mazket 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"~
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 AreasZ 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
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.
RECOMMENDATION
Council and Agency adopt the Resolution.
Council adopts the Ordinance.
BOARDS/COMMISSION RECOMMENDATION
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
~ "City of Chula Vista Westside Infill Market Review and Feasibility Analysis," Economic and Planning Systems, Inc., 2010.
z Development Impact Fees would continue to be collected in the Bayfront Redevelopment Project Area.
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JANUARY 11, 2011, Item Z
Page 3
Redevelopment Agency that identifies 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 Growth: Attract, expand, and retain desirable business and industry, which
effectively increases local employment opportunities for community residents, and enhances the
local tax base
• Construct Infrastructure 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, azchitecturally, and historically worthwhile structures and sites to encourage
the development of residential, commercial, and industrial environments which positively relate
to adjacent land uses.
• 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 of the 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 tax) 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:
Stimulate Economic Growth:
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 facade
renovations. These renovations promote visibility/marketability with the goal of
increased economic prosperity for businesses and increased property/sales tax revenue for
the City.
Construct Infrastructure Improvements:
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 towazds the recently completed improvements at Palomar
Street and Industrial Boulevard.
Main Street Streetscape Master 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,
li htin landsca ing, azkin and drainage im rovements alon the Main Street
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JANUARY 11, 2011, Item
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Corridor. Upon completion of the Master Plan and prepazation 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,
attractin new investment and employment to the area.
Promote Compatible Development:
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.
Balanced Housing Opportunities:
The Agency has embarked on the creation of residential rehabilitation grant program for
the two residential neighborhoods located within the redevelopment project azea 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 aze 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 aeeas, 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 cleazly 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 of DIFs. To do so would invariably
result in the shifting of impact fee program costs to other applicants, thereby increasing their fees due
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 and/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 fee.3
s 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 Tax, Storm Drain Fees, etc.).
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JANUARY 11, 2011, Item
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Western Chula Vista development impact fees are currently as follows:
Per Equivalent Dwelling Unit (EDU)
• Western Transportation Development Impact Fee (WTDIF): $3, 243
• Public Facilities Development Impact Fee (PFDIF): $$ 735
• (Western) Park Acquisition and Development Fee (PAD): $9,.174
• Traffic Signal Fee: $ 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 of Interstate 805.' 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.
Example:
A single transportation improvement project, such as the Main Street Streetscape
Improvements, costs an estimated $7,575,960.6 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). Only a small
percentage of those homes were west of I-805, generating an estimated $2Q 000 in
WTDIF. Even if the market improves slightly in the near future, it will take years
to accumulate enough DlFfunds 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.
Fees for public facilities infrastructure are [he same city-wide.
s 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.
e Typically funding for major infrastructure comes from a number of different public sources, including State and Federal
money.
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JANUARY 11, 2011, Item
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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 afive-year period. By the end of the five-
year period, all DIF funds would be made whole, either via construction of facilities 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 18704.2(a)(1)
applicable to this decision.
CURRENT YEAR FISCAL IMPACT
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 Services Fund. In
the current year, the DIF funds will likely have decreased cash flows but the City may see an increase in
the construction of public improvements.
ONGOING FISCAL IMPACT
Increased development permit applications in the redevelopment project azeas resulting from the DIF
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-yeaz 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 azea is anticipated to increase general purpose tax revenues to the City.
ATTACHMENTS
1. Attachment 1 -Feasibility Study
2. Attachment 2 -Redevelopment Area Map
3. Attachment 3 -Memorandum
Prepared by: Janice Kluth, AICP, Senior Project Coordinator, Development Services Department
' The Agency would build infrastructure projects designated m the Development Impact Fee Repor[s.
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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 #"18"143
Date: March 17, 2010
Phu E.-nn~mia.-gf'~.r:rzd~icee 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 fnancial 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
emnomlc&a7anning systems, tnc. assumptions and inputs are carefully reviewed for accuracy and
zsol Minch streeq suireloo relevance to the specific site being analyzed.
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Memorandum March 7 Z 2070
City of Chula Vista Westside /nfi// Market Review and Feasibility Ana/ysis 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 Ci[y of Chu/a Vista co//ects deve/opment impact fees for residential and
commercial deve/opment 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, traffc and transportation, and sewer fees. These fees are also commonly
charged by otherjurisdictionsin San Diego County.
5. Residential development impact fees in Chu/a 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 [he 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.
6. Commercial deve/opment impact fees in Chula Vista fa// 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
other jurisdictions in San Diego County.
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Memorandum March 77, 2010
City of Chu/a Vista Wes[side /nfill Market Review and Feasibility Analysis 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-
19905. 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 percent, while retail vacancies have increased from 1 .5 to 4.1 percent.
Despite the weakening of the real 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 March 17, 2070
City of Chula Visa Westside Infill Market Review and Feasibility Analysis Page 4
foreclosures in 2008 (see Table 4). This foreclosure rate translates into nearly 1 out 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 land 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 residential uses, commercial 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-Sa/e
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
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Memorandum March 17, 2010
City of Chula Vista Westside Infill Market Review and Feasibility Analysis 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 include 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
unity 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 includes townhomes and higher-density condominiums, as appropriate for the
urban setting. New townhomes 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 townhomes 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 [o
generate the highest premium, 30 percent above average market rents (a monthly rent of
$1,800 per unit).; 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.
~ Home prices in WesterriChula Vista are generally below those in other areas of the City.
z 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.
s 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 March 77, 2010
City of Chula Vista Westside Infifl Market Review and Feasibility Analysis 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 Diego° 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 Retai/
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 arejust 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 amixed-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.
lndustria/
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.
a The South San Diego market area includes Chula Vista, National City, and Imperial Beach.
P: 11BOCp51191131~u1a_V/a[a1RB0~rtI1B113mm031 JIO.tlOc
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Memorandum March 77, 2010
City of Chula Vista Westside lnfill Market Review and Feasibility Analysis 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 Do//ors & 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 (NOI) 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 Rea/ Estate Journa/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 aproject-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 Journa/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 moss 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
r: naooosi raiasawa_msraiaaoort~ iaia3mmo3mo eoc
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Memorandum March 77, 2070
City of Chula Vista Westside Infi/I Market Review and Feasihi/ity Analysis 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 reflects 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 retailin 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 asite-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 townhomes 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.
s Prevailing wage labor generally results in a 20 to 25 percent increase in construction costs.
P:1 ]8000511811 JClrula_VlstalFeps[IIBI a3mm03I ]IO.tlce
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Memorandum March 17, 2070
City of Chula Vista Westside lnfill Market Review and Feasibility Analysis 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" flex 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 Retai/
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.
/ndustria/
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 constructioncost
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 far 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 Retai/
The soft market resulted 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.
D' 118pWS1 tat43Chula_VistalReportlleM3mmo31 )to.da
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Memorandum March 17, 2010
City of Chula Visia Westside Infill Market Review and Feasibility Analysis Page 70
/ndustria/
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 far 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 atwo-bedroom apartment ratio of 2.0 spaces per unit applied to all residential
uses. The City's parking requirements for various development 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 schedule 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.
F:I1B000511814JLItula_VislalR¢partb Bl43mm031]10 Cac
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Memorandum March 17, 2070
City of Chula Vista Westside Infill Market Review and Feasibility Analysis Page 71
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-1Jsed 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 far 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 Sa/e-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 far all development types. This cost does not include demolition of existing space.
• Other /ndirect 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-Refects 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.
P:Veo00sl teta]Chula_vistalNeportll Bta?mmo]11to.dw
7-17
Memorandum March 17, 2010
City of Chula Vista Westside Infill Marke[ Review and Feasibility Analysis 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 8. The most common development impact fees include traffic and transportation,
public facilities, parks, and sewer fees. Other common fees include drainage, affordable housing,
water, 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,fi 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.
e Based on assumptions used for development prototypes evaluated in this analysis
P:118000z116143Chula_VistalF¢pa[11B143mm03] ]10.~IX
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Memorandum March 17, 2010
City of Chula Vista Westside Infill Market Review and Feasibility Analysis 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 mostjurisdictions in San Diego County. Specifically, only Escondido
has a higher fees-to-value ratio than Chula Vista for residential development as shown in Table
7O.
~ 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.
P:1IB000SI IB 103CI,ule_Vis[a1Fep~tl181 d3mm031 ] 10.OC[
7-19
1
N
O
Table 1
Chula Vista Population and Employment by Industry (2008)
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item
Total Percent of
Total
Population 230,397 100.0%
Employment
Agriculture, Forestry, Fishing and Hunting [1] 102 0.2°/a
Utilities 136 0.2%
Construction 1,760 3.2°/a
Manufacturing 5,013 9.0°/a
Wholesale Trade 1,823 3.3%
Retail Trade 9,084 16.3%
Transportation and Warehousing 1,280 2.3°/a
Information 615 1.1
Finance and Insurance 1,519 2.7%
Real Estate and Rental and Leasing 1,068 1.9°/a
Professional, Scientific, and Technical Services 1,720 3.1°/a
Management of Companies and Enterprises 260 0.5°/a
Administration & Support, Waste Management and Remediation 1,387 2.5°/a
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°/a
Public Administration 1164 2.1°/a
TOTAL 55,737 100.0%
(1] Includes mining, quarrying, and oil and gas extraction.
Sources: DOF; U.S. Census LED; Economic and Planning Systems, Inc.
Economic 8 Planning Systems, Inc. 3/17/2010
P:1IBOOOS11 B743Chula VisfalM°delI1B743MarketM°detl.xls
Table 2
Chula Vista Residential Median Housing Price 1998 - 2009 ($ 2009)
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item 1996 1997 1996 1999 2000 2001 2002 2003 2004 2006 2006 2007 2006 2009'
New Homes
Metlian Sales Price
498
$304
$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
, 2
5% 5
1% 9
1% 2
6% 7.7% 11.3% 30.7% 9.6% 5.1% -28.7% 0.6% 0.5% -24.3%
Annual Change na . . . .
Existing Homes
Median Sales Price
$226
772
$222,197
$233,760
$244,112
$271,297
$297,780
$356,958
$419,599
$535,553
$590,350
$568,476
$461,001
$332,851
$291,855
, 7%
1 2%
5 4
4% 11
1% 9.8% 19.9% 17.5% 27.6% 70.2% -3.7% -15.4% -30.8% -12.3%
Annual Change - . na .
- . . .
All Homes
Median Sales Price
377
$252
$251,033
$258,493
$279,547
$307,894
$336,854
$387,862
$472,069
$570,428
$616,939
$539,555
$479,186
$349,140
$299,239
, 0
5 % 3
0% 1 %
8 10
1 % 4%
9 15.1 °/ 21.7% 20.8 % 6.2 % -72.5 % -11.2 % -27.1 % -14.3
Annual Change na .
- . . . .
Sources. DalaQuick, Economic 8 Planning Systems, Inc.
J
N
J
Economic 8 Plannng Sys(°ms, Inc. Y1 ]!1010
Pi18000s118143C~ula_VisfaLNotleNa193MaikelMOtlelixls
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Table 3
South County I Chula Vista Commercial Lease and Vacancy Rates 2005 - 2009 (Q4)
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item 2005 2006 2007 2008 2009
Offlce
Average Monlhly Lease Rate $2.29 $2.24 $2.35 $2.22 $1.68
Average Vacancy 14.2 % 12.1 % 20.4 % 31.9 % 41.4
Industrial
Average Monihly Lease Rate $0.90 $0.86 $0.87 $0.72 $0.71
Average Vacancy 2.1 % 2.6 % 5.3 % 5.4 % 5.5
Retell
Average Monthly Lease Rale $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 8 Planning Systems, Inc.
Ec°namk 8 Planning Systems, Inc. J/11R010
Pi18000s118f 43Chula_Visla4MotlelV 8143MaAefMOtlell.xla
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°/o 12% 14% 14% 13%
Sources: RAND; Economic & Planning Systems, Inc
J
N
W
Economic B Plannin8 Systems, Inc. 3/772010 P:V8000s118143Chula_VislalMOdelVB143MarkefM°delf.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 2005 2007 2006 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 67,620 0 0
Industrial na na 278,277 174,919 183,194 55,312 0
Retail na na 188.000 850.000 85470 0 0
TOTAL COMMERCIAL (SO.FT.) na na 619,977 1,043,218 336,484 55,312 0
~ Sources: DOF, CBRE, and Economic & Planning Systems, Inc
N
A
Ewnomic B Planning Systems, Inc 3/778010
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Table 7
City of Chula Vista Parking Requirements
Chula Vista Westside Infill Market Review and Feasibility Analysis;
EPS #18143
Land Use !Development Type Parking Requirements
Residential
Townhouses 2.0 per unit
Studio/One-Bedroom Apartment 1.5 per unit
Two-Bedroom Apartment 2.0 per unit
Three-Bedroom Apartment or Larger 2.0 per unit
Reta i I
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] 6ccludes furniture stores.
Economic 8 Planning Systems, Inc 3/17/2070 P:178000s118743Chula_VistalModeN8743FeasibilityMOtlelS.xls
7-2i)
Table 8
Development Impact Fee Survey for San Diego County
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Park and Puhlic 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
Carlsbad 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 K
Escondido X X X X X X X
~ La Mesa X X
v National City X X X X X
Oceanside X X X X X X K
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 no[ included.
Source: San Diego County cities; Economic 8 Planning Systems, Inc.
Ewnomlca Plamm~e Syslema, Inc. Yt ]2010 P'11BOW511B1J3Chula_YSfaVdo0eNB14JMaMe(MOtlelLxlS
Table 9
Development Impact Fee Schedule Comparison by Development Type
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
r
I
N
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.ft. (4) per sq.ft. (5) per sq.ft. (6)
Chula Vista $26,039 $21,866 $3.61 $6.40 $3.22 $2.36
Carlsbad $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 i mpact fees.
Encinitas $16,145 $13,601 $10.60 $9.62 $9.62 $4.42
Escondido $24,873 $19,295 $7.07 $4.55 $4.55 $3.38
La Mesa $7,461 $5,965 n/a n/a n/a n/a
Lemon Grove $673 $673 n/a n/a n/a n/a
National City $3,514 $3,230 $2.65 $1.37 $1.37 $0.40
Oceanside $16,182 $15,641 $3.89 $1.98 $1.96 $1.19
Poway $15,956 $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
Visia 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 o(8 units per acre.
(2) Assumes 1,300 square toot units with an average density of 40 units per acre.
(3) Assumes t0,D00 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 6 Planning Systems, Inc. 3/f 7/2810
P'If 8088s118143Chula VisfelMOde018f43MarkelMOdelf.xls
Table 10
For-Sale Residential Development Impact Fee as Percent of Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
J
N
CO
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°/a 9.6%
Carlsbad $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°/a 2.8%
Encinitas $16,145 $13,601 $625,900 $414,900 2.0°/a 3.3%
Escondido $24,673 $19,295 $334,162 $122,058 7.4% 15.8%
La Mesa $7,461 $5,965 $437,064 $219,407 1.7% 2.7°/a
Lemon Grove $673 $673 $286,800 $120,600 0.2°/a 0.6%
National City $3,514 $3,230 $216,000 $126,000 1.6°/a 2.6%
Oceanside $16,182 $15,641 $346,428 $187,844 4.7% 8 3o/a
Poway $15,958 $15,942 $555,000 $237,000 2.9% 6.7%
San Marcos $16,570 $12,590 $499,531 $276,754 3.3°/a 4.5%
Vista 11 580 10 642 350 040 183 963 3.3% 5.8°/a
Average $12,894 $11,470
Range $673 - $26,039 $673 - $23,963 0°/a-7.4% 0%-15.8°/a
(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 B 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, Inc.
Economic 8 Planning Systems, Inc. 3/1 ]/2010
P:I18000sV 8143Chula VisfalMOtle1118143MarkelMOtlel1.x15
Table A-1
New Townhomes Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per Unit Total
DEVELOPMENT PROGRAM
Uniis 100
Gross Area 1,700 sq.ft. per unit 170,000 sq.ft.
Effciency Ratio 100 % -
Net Area 170,000 sq.ft.
Parking Ratio (spaces per unit) 2.0
REVENUE ASSUMPTIONS
Sale Price $299,000 per unit $299,000 $29,900,000
Options 3.0 % $8,970 $897,000
(less) Cost of Sale 3.0% t$,8 9~ ($897,0001
Total Revenue $299,000 $29,900,000
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost $150 /GLA sq. ft. $255,000 $25,500,000
Site Improvement Cost $5.0 /GLA sq. ft. $5.00 $850,000
Parking Construction Cost $0 per space
Total Direct Costs $263,500 $26,350,000
Indirect Costs
Impact Fees
Western Transportation Development $2,594 per unit $2,594 $259,400
Park Development $7,105 per unit $7,105 $710,500
Public Facilities $8,268 per unit $8,268 $826,800
Sewer $4,180 per unit $4,180 $417,980
Traffic Signal Participation $246 per unit $246 $24,584
Other Indirect Costs (1) 20_0% of direct costs 52 700 $5.270.000
Total Indirect Costs 28.5% of direct costs $75,093 $7,509,264
Subtotal, Direct and Indirect Costs $338,593 $33,859,264
Contingency (% of direct and indirect costs) 5.0% of tlirect and. indirect costs $9.96 $1,692,963
Developer Return (% of direct and indirect costs) 9.0% of direct and indirect costs $17.93 $3,047,334
Total Costs $385,996 $36,599,561
RESIDUAL LAND VALUE ($87,000) ($8,700,000)
(1) Include architecture 8 engineering, fnancing, and G 8 A costs
Source: Economic 8 Planning Systems, Inc.
Economic a FVannin9 Sysbms, Inc YY ]R°t0
P 118000sN B1<3Chula_VistalMatleN B1i3FeasibilifyMOtlNS rls
7-30
Table A-2
Podium Parking Mid-Rise Condo Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per Unit Total
DEVELOPMENT PROGRAM
Units 100
Gross Area 1,300 sq.ft. per unit 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 % rs7.szo1 762 000
Total Revenue $254,000 $25,400,000
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost $200 1GLA sq. ft. $260,000 $2Q000,000
Site Improvement Cosi $5.0 /GLA sq. ft. $5.00 $650,000
Parking Construction Cast $20,000 per space 4$ 0.000 $4.000.000
Total Direct Costs $306,500 $30,650,000
Indirect Costs
Impact Fees
Western Transponation 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 $24,584
Other Indirect Costs (1) 20_0°/ of direct costs 6$ 1,300 $6 130.000
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 $1,945,091
Developer Retum (°/ of direct and indirect costs) 12.0 % of direct and indirect costs 3$ 5.91 54.668.219
Total Costs $455,151 $45,515,140
RESIDUAL LAND VALUE - ($201,000) ($20,115,000)
(1) Include architecture & engineering, financing, and G & A costs
Source: Economic & Planning Systems, Inc.
Ec°n°rr6c a flanning Sysroms, Inc 3fOlL010
P'1180005118103Cbula_Visro0.loDeNB1<3£easidlifyM°Ce3.xls
7-31
Table A-3
High-Rise Condo Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18743
Item Assumption Per Unit Total
DEVELOPMENT PROGRAM
Units 100
Gross Area 1,000 sq.ft, per unit 100,000 sq.R.
Efficiency Ratio 85 %
Net Area 85,000 sq.ft.
Parking Ratio (spaces per unit) 2.0
REVENUE ASSUMPTIONS
Sale Price $299,000 per unit $299,000 $29,900,000
Options 5.0% $14,950 $7,495,000
(less) Cost of Sale 3.0% 8 970 897 000
Total Revenue $304,980 $30,498,000
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost $330 /GLA sq. ft. $330,000 $33,000,000
Site Improvement Cost $5.0 /GLA sq. ft. $5.00 $500,000
Parking Construction Cost $30,000 per space 6$ 0.000 $6.000.000
Total Direct Costs $395,000 $39,500,000
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 $3,566 per unit $3,566 $356,573
Traffic Signal Participation $246 per unit $246 $24,584
Other Indirect Casts (1) 20_0 % of direct costs 79.000 $7.900.000
Total Indirect Costs 25.3% of direct costs $100,131 $10,013,057
Subtotal, Direct and Indirect Costs $495,131 $49,513,057
Contingency (% of direct and indirect costs) 5.0 % of direct and intlirec[ costs $24.76 $2,475,653
Developer Retum (% of direct and indirect costs) 14.0% of tlirect and indirect costs 6$ 9.32 $6.937.828
Total Costs $589,205 $58,920,537
RESIDUAL LAND VALUE ($284,230) ($28,423,000)
(1) Inclutle architecture 8 engineering, financing, and G 8 A msts
Source: Economic & Planning Systems, Inc.
Ecanorroc B Planning Syskms, Irrc. 3H]201n
P'118000s1181i3Chula VisfaVAOrleN810.3FeasihiliryMOCe15 x6
7-32
Table A-4
Garden Apartments Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per Unit Total
DEVELOPMENT PROGRAM
Units 100
Net Area 1,000 sq.ft. per unit 100,000 sq.ft.
Efficiency Ratio 85%
Grass Area 117,647 sq.ft.
Parking Ratio (spaces per unit) 2.0
REVENUE ASSUMPTIONS
Gross Revenue $18.35 /net sq. ft./year $18,348 $1,834,800
(less) Operating Expenses 30% ($5,504) ($550,440)
(less) Vacancy Rate 4.0 % ($734) 7($ 3,3921
Subtotal, Annual Net Operating Income $12,110 $1,210,968
Capitalized Value 6.0°/ cap rate $201,828 $20,182,800
(less) Cost of Sale 3.0°/ j~6 O5~ 605 484
Total Revenue $195,773 $19,577,316
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost $140 /GtA sq. ft. $164,706 $16,470,588
Site Improvement Cost $5.0 /GLA sq. ft. $5.00 $588,235
Parking Construction Cost $0 per space
Total Direct Casts $170,588 $17,058,824
Indirect Costs
Impact Fees
Western Transportation Development $2,594 per unit $2,594 $259,400
Park Development $7,105 per unit $7,105 $710,500
Public Facilities $8,268 per unit $8,268 $826,800
Sewer $3,829 per unit $3,829 $382,890
Traffic Signal Participation $184 per unit $184 $18,438
Other Indirect Casts (1) 20_0 % of direct costs $34 118 $3.411.765
Total Indirect Costs 32.9% of direct costs $56,098 $5,609,793
Subtotal, Direct and Indirect Costs $226,686 $22,668,616
Contingency (% of direct and indirect costs) 5.0% of direct and indirect costs $11,334 $1,133,431
Developer Retum (% of direct and indirect costs) 10.0 % of direct and indirect costs 1$ 9.27 $2 266 862
Total Costs $260,689 $26,068,909
RESIDUAL LAND VALUE ($64,920) ($6,492,000)
(1) Include architecture 8 engineering, fnancing, and G & A costs
Source: Economic 8 Planning Systems, Inc.
Economic B Planning Systems, Irrc. 31p20f0
P:113000s1191C3Cbuk ~lsb1M°baN31J3FeasibilityM°tle15. rls
7-33
Table A-5
Podium Parking Mid-Rise ApaRments Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per Unit Total
DEVELOPMENT PROGRAM
Units 100
Net Area 1,300 sq.ft. per unit 130,000 sq.ft.
Efficiency Ra[io 85 %
Gross Area 152,941 sq.ft.
Parking Ratio (spaces per unit) 2~0
REVENUE ASSUMPTIONS
Gross Revenue $20.02 lnet sq. ft./year $26,021 $2,602,080
(less) Operating Expenses 30% ($7;806) ($760,624)
(less) Vacancy Rate 4.0% 1 041 104 083
Subtotal, Annual Net Operating Income $17,174 $1,717,373
Capitalized Value 6.0 % cap rate $286,229 $28,622,880
(less) Cost of Sale 3.0% ($8.5871 858 686
Total Revenue $277,642 527,764,194
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost $180 /GLA sq. ft. $275,294 $27,529,412
Site Improvement Cost $5.0 /Gt.A sq. ft. $5.00 $764,706
Parking Construction Cost $20,000 per space 4$ 0.000 $4.000.000
Total Direct Costs $322,941 $32,294,118
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 $24,584
Other Indirect Casts (1) 20_0 % of direct costs 6$ 4.588 $6.458,824
Total Indirect Costs 26.6% of direct costs $85,807 $8,580,653
Subtotal, Direct and Indirect Costs $408,748 $40,674,770
Contingency (% of direct and indirect costs) 5.0 % of direct and indirect costs - $20,437 $2,043,739
Developer Return (% of direct and indirect costs) 12.0 % of direct and indirect costs 3$ 2.07 $4.904.972
Total Costs 5478,238 $47,823,481
RESIDUAL LAND VALUE ($200,590) ($20,059,000)
(1) Incluoe architecture 8 engineering, fnancing, and G 8 A costs
Source: Economic 8 Planning Systems, Inc.
Economic 8 Plannirq 8ysrems, Inc. 3!1]2010
Pa8000sO8143Chvla VisfalMadeN8143PeasibiliryMO0e15 s1s
7-34
Table A-6
High-Rise Apartments Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item
Assumption Per Unit Total
DEVELOPMENT PROGRAM
Units 100
Ne[ Area 1,000 sq.ft. per unit 100,000 sq.ft.
Effciency Ratio 85 %
Gross Area 117,647 sq.ft.
Parking Ratio (spaces per unit) 2.0
REVENUE ASSUMPTIONS
Gross Revenue $21.68 /net sq. ft./year $21,684 $2,168,400
(less) Operating Expenses 30 % ($6,505) ($650,520)
(less) Vacancy Rate 4.0% 867 86 736
Subtotal, Annual Net Operating Income $14,311 $1,431,144
Capitalized Value 6.0 % cap rate $238,524 $23,852,400
(less) Cost of Sale 3.0 % L$7 1 ~ ($715.5721
Total Revenue $231,368 $23,136,828
DEVELOPMENT COST5
Direct Costs
Building Construction Cost $300 /GLA sq. ft. $352,941 $35,294,118
Site Improvement Cost $5.0 /GLA sq. ft. $5.00 $588,235
Parking Construction Cost $30,000 per space 6$ 0.000 $6.000,000
Total Direct Costs $418,824 $41,882,353
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 $826,600
Sewer $3,566 per unit $3,566 $356,573
Traffic Signal Participation $246 per unit $246 $24,584
Other Indirect Costs (1) 20_0% of direct costs 8$ 3.765 $8.376 471
Total Indirect Costs 25.0 % of direct costs $104,895 $10,489,527
Subtotal, Direct and Indirect Costs $523,719 $52,371,880
Contingency (% of direct and indirect costs) 5.0%a of direct and indirect costs $26,186 $2,618,594
Developer Retum (% of direct and indirect costs) 14.0 % of direct antl indirect costs 6$ 2.32 $7 332.063
Total Costs $623,225 $62,322,537
RESIDUAL LAND VALUE ($391,860) ($39,186,000)
(1) Include architecture 8 engineering, fnancing, and G & A costs
Source: Economic 8 Planning Systems, Inc.
EconomicB Planning Systems, lnc 3f1)11010 P\1B00 0511 914 3Cbula_WStalMOdeNBf4]FeasibiliNMCtlel5 sls
7-35
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 Bidg. Sq.Ft Per Acre
DEVELOPMENT PROGRAM
Gross Leasable Area (sq.ft.) 10,000 sq.ft.
Efficiency Ratio 90%
Net Leasable Area (sq.ft.) 9,000 sq.ft.
Parking Ratio (spaces per 1,000 sq.ft.) 3.3
REVENUE ASSUMPTIONS
Gross Office Revenue (FS) $22.18 INLA 19.96 199,584
(less) Operating 6cpenses 30% (5.99) (59,875)
(less)Commissions 3.0% (0.60) (5,988)
(less) Vacancy Ra[e 10.0 % (2.001 19 858
Annual Net Operating Income 11.38 113,763
Capitalized Value 7.5°/ cap rate $151.68 $1,516,838
(less) Cost of Sale 2.0% ($3.03) 3(3 0.33
Total Revenue $149 $1,486,502
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost $170 /GlA sq. ft. $170.00 $1,700,000
Site Improvement Cast $5.0 /GLA sq. ft. $5.00 $50,000
Parking Construction Cost $0 /per space $0.00
Total Direct Costs $175.00 $1,750,000
Indirect Costs
Tenant Improvements $40.00 /GLA sq. ft. $40.00 $400,000
Impact Fees
Western Transportation Development
$4.47 /GLA sq. ft.
$4.47
$44,669
Public Facilities $1.2fi /GLA sq. ft. $1.26 $12.608
Traffic Signal Participation $0.61 lGLA sq. ft. $0.61 $6,146
Other Indirect Costs (i) 20_0°/ of direct costs 3$ 5.00 35$ 0.000
Total Indirect Costs 46.5 % of direct costs $81.40 $814,021
Subtotal, Direct and Indirect Costs $256 $2,564,021
Contingency (% of direct and indirect costs) 5.0% of direct and indirect costs $12.82 $128,201
Developer Retum (% of direct and indirect costs) 11.0% of direct and indirect casts 28.20 28$ 2.042
Total Costs $297 $2,97d,264
RESIDUAL LAND VALUE ($149) ($1,488,000)
(1) Inclutle architecture 8 engineering, financing, and G & A costs
Source: Economic 8 Planning Systems, Inc.
Econontlc & Plannirq Sysfams, Inc 3/1>2010
P 118000s11810.3Chula_VishNlar1e0181 d3EeesiNliryModalS.xls
7-36
Table A-8
Class AMid-Rise Office Residual Land Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per eltlg. Sq.Ft. Total
DEVELOPMENT PROGRAM
Gross Leasable Area (sq.ft.) 10,D00 sq.ft.
Efficiency Ratio 90%
Net Leasable Area (sq.ft.) 9,000 sq.ft.
Parking Ratio (spaces per 1,000 sq.ft.) 3.3
REVENUE ASSUMPTIONS
Gross Office Revenue (FS) $26.21 /NLA 23.59 235,872
(less) Operating Expenses 30°h (7.08) (70,762)
(less) Commissions 3.0%a (0.71) (7,076)
(less) Vacancy Rate 10.0 % (2.361 2L3 58~
Annual Net Operating Income 13.44 134'447
Capitalized Value 7.5 % cap rate $179.26 $1,792,627
(less) Cast of Sale 2.0% (~3 5~ 3($ 5.853]
Total Revenue $176 $1,756,775
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost
$220 lGLA sq. ft.
$220.00
$2,200,000
Site Improvement Cost $5.0 /GLA sq. ft. $5.00 $50,000
Parking Construction Cost $20,000 /per space 6S 6.67 66$ 6.667
Total Direct Costs $291.67 $2,916,667
Indirect Costs
Tenant Improvements
$50.00 /GLA sq. ft.
$50.00
$500,000
Impact Fees
Western Transportation Development
$2.23 /GLA sq. ft.
$2.23
$22,335
Public Facilities $0.32 /GLA sq. ft. $0.32 $3,152
Traffic Signal Participation $0.61 IGLA sq. ft. $0.61 $6,146
Other Indirect Costs (1) 20_0°/ of direct costs 5$ 8.33 58$ 3.333
Total Indirect Costs 38.2% of direct costs $111.56 $1,115,563
Subtotal, Direct and Indirect Costs $403 $4,032,230
Contingency (% of direct and indirect costs) 5.0% of direct and indirect costs $20.16 $201,611
Developer Return (% of direct and indirect costs) 13.0% of direct and indirect costs 5$ 2.42 52$ 4.190
Total Costs $47fi $4,758,031
RESIDUAL LAND VALUE ($300) ($3,007,000)
(1) Include architecture & engineering, fnancing, and G 8 A costs
Source- Economic & Planning Systems, Inc.
Economic 8 Planning Syskms, Ir¢. 3fp20f0
P 118000sH81s3C~ula VisteVAOtle1118148FeesiplkyMaEel5.xls
7-37
Table A-9
R8.D Residual Land Value
Chula Vista Westside InTill Market Review and Feasibility Analysis; EPS #18143
Item Assumption Per Bldg. Sq.Ft. Total
DEVELOPMENT PROGRAM
Gross Leasable Area (sq.ft.) 10,000 sq.ft.
Efficiency Ratio 90
Net Leasable Area (sq.ft.) 9,000 sq.ft.
Parking Ratio (spaces per 1,000 sq.ft.) 1.3
REVENUE ASSUMPTIONS
Gross Office Revenue (FS) $20.16 /NLA 18.14 181,440
(less) Operating Expenses 30 % (5.44) (54,432)
(less)Commissions 3.0% (0.54) (5,443)
(less) Vacancy Rate 10.0°~ (1.811 18 144
Annual Net Operating Income 10.34 103,421
Capitalizetl Value 8.5 % cap rate $121.67 $1,216,715
(less) Cost of Sale 2.0 % ($2.431 24 334
Total Revenue $119 $1,192,361
DEVELOPMENT COSTS
Direct Costs
Building Construction Cost $140 /GLA sq. (t. $140.00 $1,400,000
Site Improvement Cost $5.0 /GLA sq. ft. $5.00 $50,000
Parking Construction Cost $0 /per space $0.00 $~
Total Direct Costs $145.00 $1,450,000
Indirect Costs
Tenant Improvements $30.00 /GLA sq. ft. $30.00 $300,000
Impact Fees
Western Transportation Development $2.23 /GLA sq. ft. $2.23 $22,335
Public Facilities $0.63 /GLA sq. ft. $0.63 $6,304
Traffic Signal Participation $0.25 /GLA sq. ft. $0.25 $2,458
Other Indirect Costs (1) 20_0% of direct costs 2$ 9.00 29s a.ooa
Total Indirect Costs 42.9% of direct costs $62.17 $621,694
Subtotal, Direct and Indirect Costs $207 $2,071,694
Contingency (°/ of direct and indirect costs) 5.0% of direct and indirect costs $10.36 $103,585
Developer Retum (% of direct and indirect costs) 11.0°/ of direct and indirect costs 2$ 2.79 22$ 7.886
Total Costs $240 $2,403,16fi
RESIDUAL LAND VALUE ($121) ($1,211,000)
(1) InGUde architecture & engineering, financing, and G 8 A costs
Source: Economic 8 Planning Systems, Inc.
Eroa°rrec5 Planning systems, Irrc. JH>R°f0
P:I1Be00s118fa3Chula VisdVAatleN81G3FeasibililyMOtlNS xls
7-38
Table A-10
Podium Mid-Rise Condominiums Over Retail Residual Lantl Value
Chula Vista Westsitle Infill Market Review and Feasibility Analysis; EPS #18143
ttem Assumption Per Blag. Sq.Ft. ToUI
DEVELOPMENT PROGRAM
Rest anlie
Units 100
Net Area 1 300 sgfl per unit 130.000 sq.ft
Effldency Ratio 65%
Gross Ned 152,961 sq n.
Parking RafiO (spaces per unit) 2.0
Retail
Gross Leasable Area (sq.ft) 10,000 sq.ft.
Effaency Ratio 95%
Na[Leasable Area (sq.X.) 9.500 sq.ft.
Palling Ratio (spams per 1 000 sq.ft.) 5.0
Total Sq_FL 162,941
Total Spaces 250
REVENUE A83UMPTIONB
R4?!g€ U21
Sale Pdce 3254,000 per unit 31fi6 $25,400000
Opdans 30% $4.98 5]82,000
(less) Cast of Sale 3 0% ($4.961 (SL]§j 001
Residential Revenue 5166 528,400,000
Ret i
Gross Revenue (NNN) $28.51 INCA sq. X. E2d51 $2]0,666
(less) COmmsslpns 30% (§O.Bfi) (58,126)
(less) vamnty Rata 5.0% 551 43) 1L13 54~
GuMOtal, Annual Net Operatin9lncome $2623 $249,195
Capi[alizetl Value 70%cap rate $355.99 33,559,92]
pess)Cpst of Sale 2.0% (8].121 16]1.1991
Retail R<venue §349 §3,488,]28
Total Revenue §1R §28,888,]28
OEVELOPMENTCO5T3
direct coats
Building CansWNan Gost $220 ILIA sq. tt. 5220.00 $35,64],059
Site Improvement COS! SBO /GLA Sq. X. 8500 $6141x6
Parking COnatNCllpn COS! (1) 820,000 (Space 24.55 40000
Total Oired COSts 8249.55 $40,fi61 j65
Inairetl costs
Resitlennal
Impa¢ Fees
Westem Transportation Development 81946 per unit $1.2] 8194 fi00
Park Development 8],105 per unit §465 8]10,500
Public Facilities 58288 per unit 85.41 b626.800
Sewer 83,653 per unit 8239 $365,345
TrefOc Signal Paniapa8on 5246 per unit E0.16 E24.SB4
Subtotal 813.6] §2,121,829
Retail
Tenant Improvements 820 /GtA sq. ft. $20.00 $200,000
ImpaG Fees
Westem Transportation Development $0.60 IGIA sq. ft. ED60 85,956
Public Faalities 80.32 /GIA Sq. ft. 80.32 33,152
Sewer 80.24 /GLA Sq_X. 50.24 82,389
Tre%ic Signal PaMCipalion §2.4fi /GtA Sq. ft. 8246 24584
Subtotal 523.61 5236,0!11
Other Indirect Costs (2) 20.0°b of tlirect msis 48 ].16 4§ ]1.582
Total Indirect Costs ]0%of direct costs 5282.95 82,829.492
Subtotal, Dired and Indirect Costs §26fi.91 543,491,288
Condngenty (%INdtred and Indirect vests) 5.0%of direct antl lndiretl costs $1335 82,114,563
Developer Retum(%of tlireG and intlirea mats) 13.0%of tlirect antl indind msls $~.]~ $5,¢,~-$¢$
Total Casts 5318 f51,N9,fi82
RESIDUAL LAND VALUE (5138) (§22.431,008)
(1) Only applies to rtSieential parking retail is assumeE tp Oa surface paAed w4a perking cost cowree uneer Stle impmwmants
(2) IncNde arcniteaure & enBineatln9. flnanunB. enO G a A costs.
Spume: Economic 8 Planning Syztems. Inc.
eo„wM1.a nw,N,zsrcn~a tz. amrzo,a
evemmue,.acwa wm.wwne,u~..mayapewaa
7-39
Table A-11
Podium Mid-Rise Apartments Over Retail Resitlual Lantl Value
Chula Vista Westside Infill Market Review and Feasibility Analysis; EPS #18143
Item Assumpllon Per BICg. Eq.FL Toul
DEVELOPMENT PROGRAM
Relentll
100
units
Net Area 1,300 sq.R. per unit 130,000 sq.ft
Etf¢iency Ratio BS%
152,941 sq fl.
Gross Area ~ 0
Parking RaBO (spares per unit)
Retail
Gross Leasable Area (sq.flJ
10,000 sq.fl.
EfSaency Ratio 95
9
500 snft
Net Leasable Area (sqR.) ,
5
0
Palling Ratio (spaces per 1 000 sq.fl.) .
Total $q.FL 162,941
Total Spaces 250
REVENUE ASSUMPTIONS
Resi~deJli 131
Gross Revenue
520 Met sq. it/year
S1] Ot
82602,060
(less)Operating Expenses 30.0% ($5.10) (5]69 fi24)
(less) Vacancy Rate 30% 0.51 (5]60621
Subtotal, Annual Net Operating Income 811 40 81 ]43.394
Capitalized Valve 64%raD rats 8190 E2gO66.5fi0
(less) COSt of Sale 3.0% (56] 8169]
Residential Revenue 5181 528,184,063
Retail
Gross Revenue (NNN)
828.51 MLA sq. ft
525 51
$2]O,a84
(less)COmmissions 30% (80.86) ($0,126)
(1295) VdeanCy Ra(B 5.9% ~~ (g13.5431
Subotal, Annual Net Operating Income $26.23 8249,195
Capitallzetl Value ].0% rap rote $355.99 43,559,92]
(less)Cpst of Sala 2.0% (5].121 ]t511991
RHail Revenue 5349 E3,d88,T28
TOGI Revenus 5190 531,ST3,592
DEVELOPMENT COST$
Direct casts
Builtling GOnsINL500 Cost
8198 /GtA sq. X.
E19a 00
832,262,353
Site Improvement Cost 85.0 /GLA Sq.K 8500 $814,]Ofi
PaMin9 CgnsWdion DOSt (1) $20,000 ISpaw 284.55 ~aggo oc9
Total Oired Costs $22].55 53],0]],059
malrea cpnra
Residential
Impatl Fees
Western Transpanadpn Development
E1 946 par unit
EL2] _
5194,600
Park Development $],105 per unit 54.65 8]10,500
Public Facilities 58,268 per unit SS di $826,800
Sevrer 53,653 per unit 5239 $365.345
T2ffic Signal Partirlpa5pn 8246 per unit 30.16 245
Subtotal 813.8] 82,121,829
Retail
Tenant Improvements
520 /GLA sq. ft
320.00
8200,000
ImpaG Fees
Western Transportation Development
80 fi0 /GU Sq.ft
EO fiO
85,958
Public Facilities 8032 IGLA Sq. R. 5032 $3,152
Sewer 50.24 IGLA Sq. R. 50.24 52389
Traflic Signal Paniupa6on E2A6 /GIA Sq. fl. 3246 2d 4
Subtotal 823 61 5236,081
Other Indiretl costa (2) 20 o % m direct costs 3-4Z ~e 4]
Total lntlirect l:psL4 ].6%Df tlirecl vests 5262.95 52,629,492
Subtotal, Direct and lndinct COnts 52M.91 839,908,558
Contingency (% of direG and Ntlirem costs) 5 0% of direct antl intlirect vests 512 25 51 995,328
Developer RaWm(%of direct and indir2Gwsts) 13.0%ot tlirecl and indirect costs 351.84 513_„0].052
5289 54],089)30
TWICOats
RESIDUAL LANG VALUE (595) (51 E,d18,80g)
(1) Only applies ro resdential panting; rHail is assumed to be sudaca parked with perking cost coveretl uMer 91e improvements
(2) InGUde arrnitmure 8 engineering. Mooting, antl G 8 A cosh.
Source: Economic a Plannirq Systems, Inc
Emnemza Mamm~pSrym, Irc. 11'!1010
vrrwcontetnGV/~ waawwan+er~xaaadtryuxvvm
7-40
Table A-12
Olass A Office Over Retail Residual Land Value
Chula Vista Westsitle Infill Market Review antl Feasibility Analysis; EPS #18143
Item Asaumption Par Bleg. $q.Fl Total
DEVELOPMENT PROGRAM
Office
Gross Leasable Area (SqR.) 10,000
Effidency Ratio 90 % sq.ft
Nel Leasable Area (sq.ftJ 9,000
Parking Ratio (spaces per 1 000 sq X.) 3.3 sq.ft.
Retail
Gmss Leasable Aree (sq ft.) 10,000 sq ft.
EMaency Ratio 95%
Net Leasable Area (sq R.) 9.500 sqK
Palling Ratio (spaces per 1 000 sq.ftJ 5.0
Totai sRFt 26 o9D
Total Spaces B3
REVENUE ASSUMPTONS
~~
Gmss Office Revenue (F6)(1) $26.21 ML4 823.59 $235,6]2
(less) Operating Expenses 30% ($7.08) ($]0.]62)
(less) Commissions 3.0% (50.71) ($],0]fi)
(less) Vacancy Rale 100% 152 361 (g23 5871
Annual Nel Operating Income $13.0.6 5134,44]
Capitalizetl Value ].5%wp rate 61]928 $1,]92,62]
(less) Cast of Sale 2.0% (53.591 1S38.Q5-~1
Office Revenue (178.68 ft,]56,Tlf
Retail
Gross Revenue (NNN) 528.51 MLA Sq. tt. 82851 $2]0,864
(less) Gpmmisalpns 3.0% (Sd 88) (56,12fi)
(less) vacancy Rate 5 0% f5.L43) 1(E 3.543)
Subtotal, Annual Net Operating Income 52623 5249,195
Capitalizetl Value 7 0% cap 2te 5355.99 $3,559,92]
(less)Cpst of Sale 20% (SZ1z1 ](E 1.1991
Retell Revenue f349 f3,488,728
Total Revenue S17a (3,468,141
DEVELOPMENT COSTS
Direct Costs
Builtlin9 Constmc[ion COS( 8242 IGL4 sq. tt. 524200 54,840,000
Site lmpmvement Cast 55.0 IGLA Sq. tt. $500 8100,000
Peking ConstmaiOn Cost (1) 420,000 (space 53333 6 fi
Total Direct Costs 8280.33 $5,806,66]
Intllrect Costs
Tenant lmpmvemants 850.00 IGLA Sq.ft $5000 $500000
Impact Feas
Westem Transponation Development 52.23 per unit 52.23 522,335
Park Development SD32 per unit $0.32 83.152
Public Fadlities $0.06 per unit 80.06 S59]
Sewer SOfit per unit 5061 $8.146
Traffic Signal PaNCipation 83.22 per unit 5322 32 3
Subtotal 856.45 8584,460
Retail
Tenant lmpmvemants 520 IGLA sq.R 820.00 8200,000
Impact Feas
Westem Transportation Development 80.80 IGIASq.K 8060 85,956
Public Facilities 80.32 IGLASq.ft 80.32 E3,t52
Sewer 50.24 IGL4 sq. R. 50.24 52.389
Traffic Signal Paniupatron 82.46 /Gin sq. tt. 82.46 Szasea
Subtotal 823.81 5236,081
Omer lnatrec(Costs (2) $p-~°/v of tlirec(costs L]fi.41 31G4.799
Total ln4ired DOS[s 11.1%af tlireG costs $98.06 8960,849
Subtotal, Direct antl Intllrect Cast= (688.73 (6,567,315
Contingency(%pt 4ired antl lntlirea cesU) 5.0%of tlirea antl intli2a vests $1642 5328,366
DGVEIOper RBNm (% of (11241 dnd lntllfBCt COel4) I4 r]% Of tlllBtt anC lntlllBQ COSIS yby5 91 $919 <z4
Taal cp=t= s3s1 s7,a1 s,lgs
RESIDUAL LANO VALUE (5218) Ifb,asa,6ool
ryl only apprns Ip rasie=n6al paMin9: Rtan is azsumae m be zurtaca parkeb wkb parkng ws+cpvaretl antler s6a lmpmvemants
(27 mdutle arcneeaa2 a engmeerin9, financing, ana D a A costs.
Spurce: Ecpnpmk & Plannirog 6yslems, Inc.
pttBANnaf~.xnW_NmWawena3autipyMNwsA
7-41
Table A-13
Warehouse/Distribution 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 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 /NLA $8.18 $81,792
(less) Operating Expenses 0 % $0.00 $0
(less)Commissions 3% ($0.25) ($2,454)
(less) Vacancy Rate 4 % .(~0 ~ 3 272
Subtotal $7.61 $76,067
Capitalized Value 8.0 % cap rate $95.08 $950,832
(less) Cost of Sale 2.0 % ($1.901 19 017
Total Revenue 593 5931,815
COST ASSUMPTIONS
Direct Costs
Building ConsVUCtion Cost $85 /GLA sq. ft. $85.00 $850,000
Site Improvement Cost $5.0 /GLA sq. ft. $5.00 $50,000
Parking Construction Cost $0 /per space $220 $4
Total Direct Costs $90.00 $900,000
Indirect Costs
Tenant Improvements $1.00 /GLA sq. ft. $1.00 $10,000
Impact Fees
Western Transportation Development $1.49 /GLA sq. ft. $1.49 $14,890
Public Facilities $0.66 /GLA sq. ft. $0.66 $6,628
Traffc Signal Participation $0.11 /GLA sq. R. $0.11 $1,076
Other Indirect Costs (i) 20°° of direct costs 15 7.00 7 00
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 $55,169
Developer Return (% of direM and indirect costs) 10 % $11.04 $110,379
Total Costs $127 $1,269,355
RESIDUAL LAND VALUE ($34) ($337,540)
(1) Include architecNre 8 engineering, financing, and G & A costs
Source: Economic 8 Planning Systems, Inc.
Ec°nanic & Planting Systems, Inc. Y1]2018
P'118000s11810.3CM1Ula_ViAa UA°tleM810.3Feesi6ilRyM1loEel5 xls
7-42
Table A-14
SaleslService 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.ft.)
Effciency Ratio
Net Leasable Area (sq.ft.)
Parking Ratio (spaces per 1,000 sq.ft.)
80 %
10,000
8,000
1.0
REVENUE ASSUMPTIONS
Gross Revenue (NNN) $13.29 /NLA $10.63 $106,330
(less) Operating Expenses 0 % $0.00 $0
(less) Commissions 3 % ($0.32) ($3,190)
(less) Vacancy Rate 4 % (50 431 4 253
Subtotal $9.89 $98,887
Capitalized Value 8.0 % cap rate $123.61 87,236,082
(less) Cost of Sale 2.0 % fS2 471 24 722
Total Revenue $121 $1,211,360
COST ASSUMPTIONS
Direct Costs
Building Construction Cost $100 /GLA sq. ft. $100.00 $1,000,000
Site Improvement Cost $5.0 /GLA sq. ft. $5.00 $50,000
Parking Construction Cost $0 /per space 30.00
Total Direc[Costs $705.00 81,050,000
Indirect Costs
Tenant Improvements $2.00 /GLA sq. ft. $2.00 $20,000
Impact Fees
Western Transportation Development $4.96 /GLA sq. ft. $4.96 $49,633
Public Facilities $0.66 /GLA sq. ft. $0.66 $6,628
Traffic Signal Participation $0.11 /GLA sq. ft. $0.71 $1,076
Other Indirect Costs (1) ~Q[¢ of direct costs $20.00 $200.000
Total Indirect Costs 27% of direct costs $27.85 $278,530
Subtotal, Direct antl Indirect Costs $133 $1,328,630
Contingency (% of direct and indirect costs) 5 % $6.64 $66,427
Developer Return (% of direct and indirect costs) 10°/ $13.29 $132,653
Total Costs $163 $1,527,810
RESIDUAL LAND VALUE ($32) ($316,450)
(1) Include architecture & engineering, financing, and G & A costs
Source: Economic & Planning Systems, Inc.
Economk6 Planning Systems, Inc. i/1]R010
Pa80WSVB103Chula YsbVAOhN8143FeeaibilRyMOtlel5.xls
7-43
Table A-15
Development Impact Fees by City
Chula Vista Westside Iniill Market Review and Feasibility Analysis; EPS #18149
qty $in91e Family
Residential
per unit (l] Multi-Family
Residential
per unit l2J Hlgh-Density
Retail
per sq. ft. I3] High-Density
OKCe
persq. ft. (4J Law-Density
OfRCe
per sq, ft (5]
Industrial
persq ft (bj
Chula Vista
Western Transportation Impact Fee $3.243 $2,594 $O.fiO E2.23 $4.47 $1.49
Parklantl Development Fee $9,5]4 $7,105 - - - -
Traff<SignalParticipafion~/] $30] $24fi $2.46 $061 $0.81 $0.11
Public Facilities Fee $8,]35 $8,268 $0.32 $032 $1.26 $066
Sewer [el 418Q $~3.fL5~ $934 $0.06 '$4.2 0.12
TOTAL $26,039 $21,866 $3.61 $7.22 $6.60 82.38
Cadsbatl
Badge antl Thoroughfare [9] $530 $424 $1 ]6 $O.db $0.44 80.11
Local Facilities Mngl Plan/Amendment N/A NIA N/A N/A NIA N/A
Plannetl Local Drainage Fees 110] N/A N/A $0.06 $006 $0.23 $0.38
Public Facilities Fee ]11] N/A N/A WA N/A N/A N/A
Seger Beneft Area Fees [12] N/A N/A NIA N/A N/A N/A
Traffic Impact Fee 113] $265 $265 $8.48 $2.12 $2.12 $0.53
Park In-Lieu Fees [141 $6,208 $5,207 - - - -
SewerOonne<ticn N/A N/A N/A NIA WA N/A
Water District Fees 115] N/A NIA WA N/A NIA N/A
Habitat Mitigation Fee [16] N/A WA N/A NIA N/A N/A
TOTAL E7,003 E5,896 $10.30 $2.62 E2.79 $1.02
Coronado
Sewer Connection Fee [171 $2,559 E2559 N/A N/A WA N/A
Public Facilities Fee - $1,000 $650 $0.50 $050 $0.50 $050
Affordable Housing 118] 87,000 $7,000 - - - -
WaterMeter/Connection [19] N/A N/A N/A N/A N/A NNE
TOTAL E10,559 $10,209 §0.50 $0.30 $0.50 $0.50
Del Mar
Constmdion License Tax (Public Fadlities Fee) $]00 $455 $0.35 $0.35 E0.35 $035
In-Lieu Housing Mitigation Fee 823,508 $23,508 - - - -
Water[15] WA N/A N/A N/A WA N/A
Sewer [15] NIA N/A N/A NIA NIA NIA
TOTAL E24,208 $23,963 E0.35 §0.35 50.75 $0.35
EI Cajon Ciry stair report that EI Cajon tloes not charge development impact fees.
Encinitas
Sewer (20] $3,178 $3,178 $3.78 53.18 $3.18 $3.18
Park and Recreation Fee 59,220 $7,244 - - - -
Open Space Lantl Acquisition $423 $332 - - - -
irail Development Fee $108 $85 - - - -
Communiry Facilities Fee $571 §449 - - - -
Flootl Conhol Fee $420 §273 $0.21 $0.21 $0.21 $0.21
Traffic Mitigation Fee [211 $2 225 2 040 $7.21 6. 3 $~
TOTAL $16,145 §13,fi01 $10.60 b9.62 $9.62 $6.62
Escondido
Water Connection Fee [22] $4,690 $3,510 WA N/A N/A N/A
Wastewater Connection Fee [23] $] 500 $5,625 $1.28 $1.26 $1.28 $0.63
Traffic Fee [24] $850 $680 83.36 $0.84 $0.84 $084
Public Faclliry Fee $4,533 $4.533 $2.13 $2.13 $2.13 $1.61
Park Fee $4,129 $4,129 - - - -
Drainage Facilities Fee $1.071 $426 - - - -
Infrashucture Deposit Fee $1,500 - - - - -
Art in Public Places Fee ~ 390 80.30 $0.30 80.30 $0,30
TOTAL §24,877 $19,293 $7.07 $4.55 $6.55 $3.38
Imperial Beach [T5] N/A NIA N/A NIA NIA WA
La Mesa
Parkland Acquisitlon and Improvements Fee [26] $5,441 $3,945 - - - -
Traffc Impact Fee 82.020 32.020 = _ _ _
TOTAL $7,461 $5,966 - - - -
Lemon Grove
Parkland Fees E673 $633 - - - -
Sewer N/A WA N/A NIA WA N/A
TOTAL $677 §673 - -- - -
E<e„amc a n.omoa sr.~.m.. inc. vnaum
7-44
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 Otfice Offte Industrial
City per and (1j per unit (21 per sq..ft (3] per sq ft(4J per sq.ff (5] persq.ft(6]
National Qty
Parks and Recreation $858 $692 - - - -
Library $1]2 $139 - - - -
Fire/EMS $126 $102 $0.]5 $0.39 $0.39 $0.11
Police $318 8257 $7.90 80.98 $0.98 $0.29
Transportation Development Impact Fee $z Sao $2.040 = _ _ _
TOTAL A3,514 $3,230 $2.65 $1.37 $1.37 $O.d0
Oceansitle
Public Facility
$2,0]2
$2.0]2
$e]1
$0.]1
$0]1
$0.]1
Parks 33,503 $3,503 - - - -
Tmffic $2,707 $2,166 $3.18 $1.27 81.27 80.48
Drainage and Fload Control [271 N/A N/A N/A N/A NIA NIA
Wastewater Buy-In Fee [221 $3,]46 $3,746 N/A WA N/A N/A
Water Buy-In Fee [221 $4.154 $4,154 NIA NIA N/A N/A
Inclusionary Housing In-Lieu Fee [281 N/A N/A N/A N/A NIA
98
1 WA
19
b1
TOTAL $16,182 $15,641 $3.69 b1.98 .
$ .
Poway
$3
026
026
$3
NIA
N/A
WA
NIA
Water [29] ,
153
$6 ,
$6
153 $3.08 $3.08 $3.08 $103
Sewer [301
Traffic Mitigation 131] ,
$2,095 ,
$2,0]9 E3.33 E3.33 $3.33 E1.39
Park Fees $4,562 $4,562 - - - -
HabitatMitigation N/A N/A NIA N/A WA NIA
Fire Protection 131] 8122 $122 E0.08 E0.08 $0.08 $0.08
Housing In-Lieu Fee [321 N!A
958
E16 N/A
E15,962 N/A
$6.48 )J%A
$6.48 NIA
$6.d8 NIA
$2.49
TOTAL ,
San Diego
Facilities Beneft Assm't District or Development Impact Fee I33]
N/A
N/A
N/A
N/A
NIA
N/A
Housing Impact Fee (per Sq. Fl.) _ = O.fi4 $1~.Q $11 Ofi 3P3Z
TOTAL WA WA $0.64 E1.06 51.06 $0.27
San Marcos
$6
747
048
$4
$145
$1.01
$404
$240
Circulation Streets ,
$3
204 ,
$1,923 $0.68 $0.58 $2.33 $1.39
SR-781nterchanges ,
$221 8221 $0.01 $0.01 E0.03 $0.05
NPDES $44 $44 Ee002 $0.002 E0.00] $0011
Tech Improvements -
Parks 86,251
WA $6,251
WA -
N/A -
N/A -
N/A N/A
HabitatConserva[ion $1.981 ~ 50.18 $0.18 $0.73 $1.21
Drainage Basin Area [34] $16
570 590
$12 E2.32 $1.78 $7.13 $5.07
TOTAL , ,
Fees m ust be calculated by City staff.
Santee
Solana Beach [25J NIA NIA WA NIA N/A N/A
Vista
$329
S66
80.03.
$0.03
$0.12
$0.20
Drainage [351 $379 $379 E0.03 E0.03 $0.11 $0.19
Fire Protection 1361 N/A N/A N/A N/A N/A N/A
Low Income In-Lieu
Park Fee $6,484
$1
218 86,444
218
$1 -
$0.09 _
E0.09 _
$0.36
SO 80
Public Facilities Fee [36] ,
N/A ,
N/A N/A WA N/A WA
Sewer Fee
Street and Signal Development Impact [3]] #~ 1]0 $3 536 25' $~ ~6"~? ~~
TOTAL E1 1,580 $10,642 $25.51 $6.69 $6.93 E2.57
Ecaamrcequrmmgsni~,. iM. vnrzaia
a:ueooome,asc~,vi. vv,.inrm.n+euwwanxe.ii m
7-45
Footnotes for Table A-~ 5
[1] Assumes 2,000 square fopt units with tlensity of 8 units per aae.
[2] Multifamily is deflnetl as a 1,300 square foot contlgminium unit with tlensity of 40 units per acre.
[3] Assumes ID,DOO square toot retail space with FAR Of 2.
[4] Assumes 40,000 square fool office spaU with FAR of 2.
[5] Assumes 40,000 square foot office space wiN FAR of 0 5.
[6J Assumes 20,000 square foot warehouse space with FAR of 0.3.
[]] Calculated assuming 1dPS per tlay comparable to a single family delaGted home (10 Mps per unit), mntloltluplez (8 taps per uniQ,
community shopping center (80 trips per 1,000 sq. tt.), standard commercial office builtling less than 100,000 square feet (201nps Der 1,000 sq. ft),
or warehouse (6 Mps per 1 000 sq. H.).
[BJ Based On sewerage partidpahon fees of $3,4]0 per unit and lateral fees of 8],010 (wiM a fi inch later) par builtling assumed for resitlential uses
antl 13 (%IURS per builtling assumed far WmmerGal uses.
[9] Calwlatetl per square foot.
[10] Varies by area antl mnott. Represents average fee per acre assuming metlium runoff.
[11[ Not Estimated. Calwlatetl basetl on percent of builtling value.
[t2) Vanes by protect area. Not estimated.
[13) Calculated per average tlaily Mp. Vanes Cased on whether development is loratetl insitle or outside pf CFD. Assumes outsitle CFD.
[14] Fee amount varies by area. Represents average of all areas. Single family Is tlefined as single family tletachetl antl tluplex.
Multrfamily is tlefnetl as four units Dr less. High tlefined as five units or more.
[t5[Calwlatetl Eased on meter size. Not estimated.
[16] Varies Ey type M habitat lantl. Not estimated.
[1 ]7 Non-Residential sewer fees vary. Not estimatetl.
[t B] Yvhere a pa¢el or subdivision map is required for M1vo or more units or lots, 20 percent of the units shall be attprdable or the owner shall pay the in-lieu fee.
[t9] Atlministered by DlstriG.
[20] For sewer fees, assumes areas covered by Enunhas Sanitary Dlvisipn.
For store an office uses, fees calculated on equNalent dwelling unit Easis. According Iq the fee schetlule, the first 1 000 square feel of store and
pRlce uses era equivalent to 1.2 dwelling units, and each atltlitional 1 Oo0 square feet is equivalent to 0.] dwelling units.
For Ne purygses Of Mis analysis, overall, 1 000 square feet W store and office space is equivalent to 1.0 equivalent tlwelling unit
For warehouse uses, each four-unit increment is equivalent l0 1 0 equivalent dwelling unit
[21] BaseO on a general fee of $2,225 per peek hour trip generated The tee for single tenant office is $4 6l3 per Thousand square feet
Fees for specific retail shops, restaurants, R80, financial services, and other lantl uses in tea schetlule.
[22]Fees for non-residential lantl uses based on water meter size. Not estimatetl.
[23] Wastewater cennectlon fees for other land uses are Easetl On an equivalent dwelling unit of 250 gallons per tlay (minimum of one EDU).
Medium antl high density residential assumes units have less than three bedrooms.
Wastewater cpnneGion fees for retail, office, antl IndusMal are measured per square foot.
[24] Low tlensity resitlential indutles single family names and duplexes. Medium density includes Townhouses antl contlgs.
High density Indutles triplexes antl apartments.
[26] Dopy Of fee schetlule is not available.
[26] InGutles Quimby Act Parkland Detlication In-Lieu Fee antl Park Impmvament Impact Fee.
[277 Fee ranges from $2,843 to 815,964 per aae depentling on location. Not estimatetl.
[26]Fee calallated as81,000 per development pmjad plus 8100 per unit plus $10,2]5 per unit Not estimatetl.
[29] Fses for ngn-resitlential uses ralculatatl based on turbine size. Not estimated.
[30] The City charges tlitterent teas based on wheNer new tlevalgpment is Ipcatetl In the North pr South region.
Figures shown represent an average of Me fees.
Commecial fees shown are for the first 2,000 square feet IntlusMal tees are forthe first 6,000 square feet.
Fees for atltli6onal Cuiltling area may be basetl on fixture units per Resolution 96-096.
[31] Light intlustdal fee used to calculate intlusmal development impact tee.
[32]Based pn zonirhg and square footage. Abase charge per zone for the tiro 1,000 square feet of the proposetl unit, plusSIDO per square foot
beygntl 1,000 square feet, to a maximum total of $2,250. Not estimatetl.
[33] Chaged basetl on area; not estimated.
134[ Calwlatetl Der acre basetl on project loratlOn. Fee shown represents average of all areas.
[36] Fee shown represents average of fees for each drainage area. Charged on a per acre Easis.
[36] NomresidenEal teas charged on a par aae basis.
[37] Calculation uses Chula Vista's schedule tot average Mps per day Ey lantl use.
6mwnic6 Plennin95yabms.lrn'. Yf](1010
p 11MM+118f13GUrs_VM~WCOM181UMMNMaM1 yle
7-46
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3
3
N
Attachment 3 - DIF Suspension Options
On December 14, 2010, a proposal was brought to the Council and Redevelopment Agency to
suspend the collection of Development Impact Fees for new development within the
Redevelopment Project areas (excluding the Bayfront Project Area) for a period of five years.
The purpose of the suspension is to incentivize development in accordance with the City's
General Plan vision, hasten economic recovery (create jobs) and send a message to developers
that Chula Vista is a good place to do business.
Earlier in 2010, City Council approved significant changes to the city's review process, with the
intention of streamlining projects, reducing the time it takes to get plans approved, and
increasing predictability. That streamlining effort, coupled with a suspension of fees should get
the attention of the development community and increase economic activity in the city's
redevelopment project areas in the short term.
Chula Vista's redevelopment project areas encompass a total of approximately 3,563 acres of
City territory, and are zoned primarily for commercial and industrial land uses. A portion of the
Merged Chula Vista Project Area (north of L Street and west of Del Mar) also includes mixed-use
residential zoning (MUR), which requires a commercial component to residential development
projects. The Merged Chula Vista Project Area also includes two neighborhoods in southwest
Chula Vista that are zoned for single family residential use. One of the Redevelopment
Agency's strategic goals is to attract, expand, and retain desirable business and industry which
effectively increases local employment opportunities for community residents and enhances
the tax base of local governments. The intention of the suspension proposal is to incentivize all
types of development within the project areas -generating jobs and keeping Chula Vista
competitive in the region.
The redevelopment project areas are made up of mostly urbanized or developed property.
There are a few exceptions, where vacant parcels have never been developed. The urbanized
characteristic of redevelopment land is an important consideration with the calculation of
development impact fees. For new projects that are equal to or less intense than the previous
development on the site, no fees are assessed. It is only when a property is being developed
for the first time or the intensity is increasing (more EDUs or square footage) over the previous
use that a developer would pay impact fees. In the case where EDUs and/or square footage are
being increased, the fees are only calculated for the increase.
The Chula Vista Auto Park is located in the Otay Valley Redevelopment Project Area and is
comprised of 771 acres of commercial/industrial development that offers considerable
opportunity for economic growth. The original land uses in the Auto Park area were industrial
in nature, with low density development and minimal building square footage, so the new auto
dealerships provide a significant increase in development intensity. The General Plan and
specific plans are in place, and the Agency anticipates expansion in the future. The
7-48
development of several new car dealers would be significant for the City in terms of new jobs,
fees generated (which would be replaced by the Agency under the proposal), property tax and
sales tax. Implementation of the DIF suspension proposal could mean significant savings for the
developers of those sites, potentially bringing them online in a shorter timeframe (e.g., Nissan,
BMW).
There are a number of projects pending throughout the redevelopment areas that have been
entitled but have not yet pulled building permits. A few of those projects are residential or
mixed use (Creekside Vistas, Broadway Condos), but others (Broadway Recycling, Fresh and
Easy, Palomar Gas Station, Broadway Liquor Store, Landis Office Building) are commercial or
industrial. The proposal to suspend the collection of DIFs may encourage these developments
to move forward now.
Options:
At the Council meeting on December 14, 2010, staff was directed to come back with options to
move forward with the proposal. It is staff's recommendation that all types of development be
included in the proposal; however, in response to the Council request, staff has prepared the
following options:
1. The proposed fee suspension includes all types of development within all project
areas, except the Bayfront Project Area
2. The proposed fee suspension excludes retail development in all project areas, except
for the Otay Valley Redevelopment Project Area
3. The proposed fee suspension only applies to market-rate residential development in
the project areas and excludes retail development in all project areas, except for the
Otay Valley Redevelopment Project Area
4. The proposed fee suspension excludes office and retail development in all project
areas except for the Otay Valley Redevelopment Project Area
7-49
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 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 ("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 azeas 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
7-50
Resolution No.
Page 2
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 of DIF 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.
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 Regazding Payment for Infrastructure or Construction
Thereof"
Presented by Approved as to form by
Gazy Halbert, AICP, PE
Assistant City Manager/Development
Service Director
\~
tl ~'len R. Goo i
`City Attorney/Agency Counsel
7-51
ORDINANCE 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 BAYFRONT 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
7-52
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: 1) 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 necessary.
NOW THEREFORE, the City of Chula Vista City Council does hereby ordain as
follows:
L 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.
II. EFFECTIVE DATE
This Ordinance shall take effect and be in full force on the thirtieth day from and after its
final adoption.
Presented by Approved as to form by
Gary Halbert, AICP, PE
Assistant City Manager /
Director of Development Services
Glen R. gins
Z-City Attorney
7-53
THE ATTACHED AGREEMENT HAS BEEN REVIEWED
AND APPROVED AS TO FORM BY THE CITY
ATTORNEY'S OFFICE AND WILL BE
FORMALLY SIGNED UPON APPROVAL BY
THE CITY COUNCIL
.~~~ Glen~~t. Cioogins
City Attorney
Dated: ~ ~ ~ ~
MEMORANDUM OF UNDERSTANDING
REGARDING PAYMENT FOR INFRASTRUCTURE
OR CONSTRUCTION THEREOF
BETWEEN
THE CITY OF CHULA VISTA, AND
THE CHULA VISTA REDEVELOPMENT AGENCY
7-54
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 Califomia, and the
Chula Vista Redevelopment Agency ("Agency"), a public body, corporate and politic, formed
pursuant to Califomia Health and Safety Code Division 24, Part 1. Individually, the City or
Agency may be referred to herein as "Parry" 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 hifill
Mazket Review and Feasibility Analysis," was completed, describing current mazket conditions
in westem Chula Vista, analyzing the feasibility of several common development types, and
revealing that none of the development types aze 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 fmdings 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 Pazk
Acquisition and Development Fee (``PAD")) in the redevelopment project azeas, excluding the
Bayfront Project Area, for a period of five yeazs and use tax increment to finance capital
improvement projects identified in the development impact fee program(s); and
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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 pazkland
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 chazged 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 of DIF 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 azea 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 DIF Fees for development
projects in the Redevelopment Areas, City shall not chazge Developers and the Developers
shall have no legal obligation to pay the Suspended Fees.
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ARTICLE III. AGENCY OBLIGATIONS
3.1 Make City Whole. 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 Standazds 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 dollaz 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 necessazy 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 aze 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
4.13 Resolution 2004-222, approved 07/13/2004 ,
4.1.4 CVMC 17.10.120
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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 Westem 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
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7.1 Headings. All article headings are for convenience only and shall not affect the
interpretation of this Agreement.
7? 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.
73 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.
7.5 Covenants and Conditions. All provisions 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.
7.6 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.
7.7 Severability. The unenforceability, invalidity, or illegality of any provision 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, modifications, 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 Terms. 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,.
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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 Califomia. 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 aze 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.
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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
been succeeded by another entity, and all rights and obligations created by this Agreement
shall be vested and binding on any Parry'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 parry, postage prepaid, registered or
certified, with return receipt requested, to the individuals and at the addresses identified
below:
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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, similaz or
other circumstances.
7.24 Remedies. The rights of the parties under this Agreement aze 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.
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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:
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