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III. METHODOLOGY AND ASSUMPTIONS A. Approach The annual net marginal revenue and cost impacts of the proposed Kaiser Permanente Medical Center have been estimated as of the completion and stabilization of Phase 1. Impacts that have been analyzed include recurring annual impacts, one-time construction tax impacts, and the loss of property taxes that are currently generated from the site. Additional phases of construction beyond Phase 1 have not been evaluated because the timing, nature and scope of those improvements are not yet defined. Future expansion will be driven by the evolving needs of the Medical Center to better serve its members. The fiscal impact analysis evaluates the recurring General Fund revenues and expenses because the General Fund is the major source of discretionary spending for key city services including Police, Parks, Public Works, and General Government. Impacts on other funds, such as the Storm Water Utility Fund and Water Pollution Control Plan Fund have not been included because the services are financed with user fees. The analysis evaluates the major revenue and cost elements, including utility user taxes, sales and use taxes, police and fire protection costs, street right of way maintenance, park maintenance expenses and general government services costs. The analysis does not include impact fees that will be paid by the Medical Center as these fees are dedicated to off -set impacts generated by the Medical Center and therefore do not represent net revenues to the City. Additionally, the analysis does not address any public capital improvement needs as the cost of providing capital improvements is traditionally funded by the private sector and therefore does not impact the City. The analysis focuses on direct on-site impacts generated by the Project, with the exception that the off-site daytime expenditures of employees have also been included as a revenue impact. Indirect and induced impacts on the region have not been addressed as these impacts are not isolated to San Leandro and they are less certain. To estimate the Medical Center's impacts, KMA has: ■ Reviewed the City of San Leandro's 2009/10 Budget and the existing revenue and cost relationships; ■ Discussed with City staff the incremental service needs to be generated by the development; and Collaborated with City staff to obtain needed information from Kaiser Hospitals regarding the proposed project, employment projections, anticipated utility usage, as well as data on actual revenue and expenses generated by its Hayward Hospital, such as sales tax revenues and annual police calls. The empirical data have been extrapolated to generate city revenue and cost estimates for the proposed Medical Center. Keyser Marston Associates, Inc. Page 14 \\Sf-fs1\wp\19\19096\19096.036\003-001.doc; March 2009