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II. SUMMARY OF FINDINGS AND CONCLUSIONS A. Net Annual General Fund Impacts — Proposed Phase 1 Medical Center The Project's estimated net annual impacts on the City's General Fund are summarized in Exhibit A and Table 1. As shown, it is estimated that Phase 1 will annually generate a deficit to the General Fund of approximately $429,000. A deficit range of $429,000 to $452,000 has been estimated depending on whether the City is designated as the point of sale for the purpose of receiving annual use taxes generated from Kaiser's purchase of equipment. This projected deficit is driven by Kaiser's tax exempt status. If the Medical Center were subject to property taxes or if Kaiser funded a payment in -lieu of standard property taxes, it is estimated that the Medical Center would generate an annual General Fund surplus of approximately $667,000. Exhibit A: Recurring Annual General Fund Impacts Assume City Receives Use Tax From the Purchase of Equipment Assume City Does Not Receive Use Tax from Purchase of Equipment Estimated Annual General Fund Revenues Upon Completion of Phase 1 $244,000 $221,000 (Less) Estimated Annual General Fund Service Costs ($559,000) ($559,000) (Less) Current Property Taxes ($114,000) ($114,000) Estimated Net Annual General Fund Impact (Deficit) ($429,000) ($452,000) Exhibit A: Recurring Annual General Fund Impacts Keyser Marston Associates, Inc. Page 5 \\Sf-fs1\wp\19\19096\19096.036\003-001.doc; March 2009 $600,000 $559,000 Expense $500,000 $400,000 $429,000 Net Deficit $300,000 $200,000 $100,000 G f i $13Q C1t0 Revenu10,e x, $0 Net new revenue after deducting existing property tax -based revenues eliminated w ith removal of the property from the tax rolls. Keyser Marston Associates, Inc. Page 5 \\Sf-fs1\wp\19\19096\19096.036\003-001.doc; March 2009