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CITY OF SAN LEANDI20 <br />MEMORANDUM <br />Date: May 14, 2008 <br />To: City Council Business and Housing Development Committee <br />From: Luke Sims, Community Development Director <br />By: Jeff Kay, Business Development Analyst ~, <br />Subject: Review of Keyser Marston's Proposed Assistance in Negotiating a <br />Municipal Services Agreement with Kaiser Permanence <br />As atax-exempt non-profit entity, the proposed Kaiser Medical Center will not pay <br />property taxes. Accordingly, the City and Kaiser Foundation Hospitals may ultimately <br />enter into a Municipal Services Agreement to fund the municipal costs resulting from <br />the project. At the City's request, Keyser Marston Associates (KMA) has prepared a <br />proposal to evaluate the fiscal impacts of the project. The purpose of the fiscal impact <br />analysis is to estimate the magnitude of General Fund revenues and expenses to be <br />generated by the proposed Medical Center. The results of the study will be used to <br />inform the details of the Municipal Services Agreement. <br />The fiscal impact of a development project can be measured in terms of the true net <br />costs that result from the project or the opportunity cost of not developing alternative <br />uses that could otherwise have existed on the site. Because the Medical Center will <br />require a zoning change from the current retail designation, it is appropriate to consider <br />the opportunity cost of developing a medical facility where retail development could <br />have been possible instead. The KMA proposal covers both approaches to the fiscal <br />-analysis ---- -- ---- ___ ~.__.__ <br />The KMA proposal includes the following tasks: <br />1. Fiscal impact analysis ($22,500): This task involves estimation of the General Fund <br />costs and revenues that will be generated by the project. Fiscal impacts will be analyzed <br />for Phase 1 of the project as well as full build-out. Major revenue sources will include <br />property taxes and property-taxes in-lieu of motor vehicle fees, the City's share of sales <br />and use taxes, and other miscellaneous revenues such as utility user fees, fines, and <br />forfeitures. Major operating costs will consist of police protection, emergency medical, <br />