Item 27 - Appeal Application Nos. 2020-03 and 2020-04 - Central Pointe Mixed-Use Development

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1. Summary of Findings At the request of the City of Santa Ana ("City"), AECOM has conducted an independent review of a report ("Report") prepared for Arnel Development Co. by The Concord Group ("TCG") titled Market & Fiscal Impact Analyses fora Mixed -Use Development in Santa Ana, CA (4th & Cabrillo Park Dr). Arnel Development Co. (the "Developer") has proposed a mixed -use project ("Project") for a site in the City with 644 apartment units and 15,200 square feet of commercial space. The Project, located at 411 & Cabrillo Park Drive, is to be located in the MEMU (Metro East Mixed -Use) Overlay District in the City of Santa Ana. The Developer engaged TCG (in association with a second firm RSG) to "conduct market and fiscal feasibility analyses for the project" in order to "identify the highest and best use for the site" and "demonstrate the financial viability of the development." AECOM's findings are summarized below. 1. The Report presents strong evidence for the market feasibility and fiscal impacts of the Project, but it does not clearly establish the highest and best use or financial viability of the Project. 2. The Report's conclusions about support for multi -family residential Market are substantiated by market data. The rents represent the higher end of the potential range but are reasonable based on location, proposed amenities, and unit mix. 3. The Report's retail market analysis concludes that 15,200 retail square feet is supportable in the market based on an assessment of three comparable mixed -use developments. AECOM supplemented this analysis and found further evidence to validate the potential range of supportable retail for the Project. However, neither the Report nor AECOM's analysis can fully forecast whether long-term retail demand patterns may fundamentally change as a result of the pandemic. 4. The estimates for potential property tax, utility users' tax, and business taxes apply commonly accepted methodology, and the estimates are validated in the Report's analysis. 5. In estimating potential sales taxes, the Report assumes different retail capture rates and retail sales yields than used in comparable studies. However, an alternate analysis prepared by AECOM using the adjusted input assumptions validates the Report's estimates, which are slightly lower —and therefore more defensibly conservative —than those calculated in the alternative.' 6. The Report's estimate of City fiscal expenditures that would result from the Project appears low. The Report estimates that on a pro-rata basis, the fiscal expenditure for each member of the service population is approximately $250, while AECOM in a separate report recently estimated such costs at $480 per service population member. Applying the AECOM pro-rata measure results in an estimated 104 percent increase of fiscal expenditures resulting from the Project. 7. Net fiscal revenue is the difference between estimated fiscal revenues and fiscal expenditures. Applying AECOM's adjusted input assumptions for calculating fiscal revenues and fiscal expenditures results in a net present value net fiscal revenue estimate of $10.3 million, which represents a decrease of $5.7 million from the $16 million estimated provided by the TCG Report. 8. The Report's estimate of the Project's economic impacts on employment in the Region use IMPLAN input- output modelling for both the construction and stabilized buildout stages of the project. AECOM reconstructed the model and found no significant deviations in results. ' While not material to overall sale tax estimate, the TCG Report, in Tables 2, 6, and 7 show an inconsistency that should be explained if intended or corrected if in error. This inconsistency is discussed further in the analysis below.