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■ Variable versus Fixed Costs — For General Government, Community Development, <br />Engineering and Transportation, and Organizational Services, a portion of the existing <br />expenditures and budget are assumed to be the result of variable costs that increase <br />with additional employment. The remaining expenditures are assumed to be fixed costs <br />of operation that will not increase as a result of the Medical Center. The variable costs <br />are estimated at 25% for General Government, Engineering/Transportation, and <br />Organizational Services. For Community Development, it is estimated that 75% of the <br />budget are variable costs. (Table 6-A). <br />Inflation of Revenue and Expenses — The analysis reflects 2009 revenues and <br />expenses. <br />Continuity of Legal and Institutional Constraints — The cost and revenue experience <br />of the City of San Leandro is based on the 2009-2010 Budget. The estimates of this <br />Report assume that revenue sources will remain constant. <br />Opportunity Cost Development Programs — KMA and City staff collaborated to <br />formulate the retail and office opportunity cost scenarios as well as the retail <br />development program for the northern parcel. The assumptions are provided in <br />Appendix B-2 and C-1. <br />Keyser Marston Associates, Inc. Page 19 <br />\\Sf-fs1\wp\19\19096\19096.036\003-001.doc; March 2009 <br />