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1. Summary of Findings <br />AECOM conducted a peer review of "MainPlace Mixed -Use Project: Apartments, Hotel, and Retail: Net Fiscal Impact <br />& Economic Benefit Analysis Santa Ana, CA;' prepared by Kosmont Companies (hereafter referred to as <br />"Consultant") for Centennial Real Estate Company LLC (Developer) in December of 2018. <br />AECOM generally agrees with the consultant's conclusions. Overall, they are reasonable and consistent with industry <br />practice. In some cases the study contains assumptions and methodologies that could be clarified to give the City of <br />Santa Ana (City) a better understanding of the scope of fiscal and economic impacts of the development. <br />1. The report does not analyze the net new operational impacts of the project. Net new impacts are quantified <br />by subtracting the estimated operational impacts of the existing land uses from the estimated operational <br />impacts of the project. This would allow a more complete assessment of the magnitude the project would <br />potentially put the City on stronger footing compared to the existing land uses. More complete information <br />would help inform the City's decislon-making process. <br />2. Economic Benefits —The application of the IMPLAN model is based on sound methodology and the results <br />appear consistent with other studies involving similar project size. Additional clarity on the study's assumed <br />City capture rates would be helpful for understanding the results. <br />3. Fiscal Revenues — Many of the assumptions about fiscal revenues (Property Tax, Business Tax, etc.) are in <br />line with comparable studies and provide reasonable estimates for the impact of the Development. <br />4. Sales Taxes — The estimates for sales per square foot are optimistic but within the range for comparable <br />properties in Southern California. Capture Rates for employee spending are also near the upper limit for <br />comparable assumptions. <br />5. Hotel Visitors Tax —The Average Daily Rate (ADR) used to approximate tax revenue is derived from the <br />Orange County Market, but the ADR for the sub -region containing the City is notably lower. <br />6. Expenditures for Service Population — While the pro rate expenditure for the new service population is a <br />reasonable application of the City's Adopted Budget, assumptions about a below average household size for <br />new residences could greatly underestimate the actual costs to the City. <br />2. Economic Impacts <br />The Consultant uses an IMPLAN input/output model to estimate the economic impacts of both the construction and <br />stabilized operations of the Development. IMPLAN modeling is a well -established methodology to forecast economic <br />impacts on a regional level that combines direct inputs with localized industry sector and employment data to <br />generate estimates for employment and economic production. While the County -wide measures are largely in line <br />with similar studies in Southern California, the estimated City capture rate of economic benefits could use some <br />clarification. Table 1.1 shows the estimated capture by the City of the employment, labor Income and economic <br />output of the combined direct, indirect and Induced economic benefits for both the Construction and Operations <br />phases of the Development. <br />Table 1.1: Estimated City <br />Capture of Economic Benefits <br />Employment <br />Labor Income Economic <br />Output <br />Phase 1 <br />60% <br />69% <br />66°/n <br />Construction <br />Full Buildout <br />61% <br />70% <br />69% <br />Phase <br />76% <br />68% <br />71% <br />Operations <br />Full Buildout <br />67/0 <br />73/0 <br />64/0 <br />Source: Kosmont Companies <br />Given the peripheral location of MainPlace Mall within the City, the proposed capture rates of 64%-71%forthese <br />economic outputs would need to be substantiated. It is possible that the assumption is well founded or that this is a <br />direct output of the IMPLAN model but this is not detailed in the study. As an illustration, Figure 1.1 shows 5 and 10 <br />minute drive time radii around MainPlace Mall, which include substantial sections of Orange, Anaheim, Garden Grove <br />and Tustin. Similarly, Citywide capture of employment and labor income indicates the place of employment is within <br />the City, and not that jobs would be held and income earned by Santa Ana residents. In fact, the most recent data <br />from the US Census Longitudinal Employer -Household Dynamics Survey (2015) reveal that of the approximately <br />AECOM <br />5 <br />75D-574 <br />