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General Fund Budget: In analyzing the City's General Fund budget, the Related <br />FIA calculated the average revenues/costs per Person Served based on the Fiscal <br />Year ("FY") 2021-22 General Fund budget. As the City's General Fund budget for <br />FY 2022-23 is now available, DTA analyzed the costs and revenues in the latter <br />budget, which represents an update of the budget utilized in the Related FIA <br />Discounted Revenues: The Related FIA made assumptions regarding fixed costs <br />versus variable costs in the City's General Fund budget, based on the premise <br />that certain portions of the City's expenditures are fixed costs that will not vary <br />based on the development of the Project, while other portions of the City's <br />expenditures are variable and will increase as a result of the Project. On the other <br />hand, the Related FIA chose not to discount any General Fund revenues, and <br />therefore did not incorporate potential discounts in revenues that are unlikely to <br />grow on a 1 to 1 basis with the Project's development. DTA took a more realistic <br />approach by applying 15% to 90% discount rates to various General Fund <br />revenues to estimate the ratio of fixed revenues, such as franchise fees and <br />businesses licenses. In addition, a 100% discount was applied to money and <br />property use revenues, miscellaneous revenues, and the commercial <br />cannabis tax, as these revenues are not anticipated to increase significantly <br />as a result of the construction of the Project. The revenue discounts applied in <br />the DTA FIA are listed in Attachment 1-A of this memorandum. As noted <br />previously, these discounted revenue assumptions differ from the revenue <br />assumptions made within the Related FIA, as no City General Fund revenue <br />streams were discounted in the Related FIA. <br />Intergovernmental Revenues: DTA applied a 100% discount to the <br />intergovernmental revenues received by the City. Based on DTA's experience, <br />the allotment of intergovernmental revenues generally involves complex <br />socioeconomic and demographic factors that are difficult to forecast and <br />often have no relationship to the amount of new development that is being <br />constructed. <br />General Government Overhead Costs: As listed in Attachment 1-K the <br />marginal increase in the general government overhead costs associated with <br />the additional non -general government expenditures incurred by new <br />development is assumed to be 75%, which means a 25% discount was applied <br />to these overhead costs. <br />Discounting Expenditures: Certain service costs are not expected to increase <br />one-to-one with new development. Thus, a 15% discount rate was applied to <br />various General Fund expenditures to reflect the estimated ratio of fixed <br />expenditures (not impacted by future development) to variable expenditures, <br />as reflected in Attachment 1-B. Notably, DTA has conservatively assumed <br />that no discount factors would be applied to public safety and public works <br />expenditures as a result of the Project. In contrast, the Related FIA applied <br />10% to 40% discount rates to these expenditures, as well as others. The <br />validity of these DTA's discounts versus Related's discounts could be analyzed <br />by City staff to ensure that they are properly assigned to the City's costs. <br />City of Santa Ana September 27, 2023 <br />Fiscal Impacts Resulting from the Proposed Related Bristol Specific Plan <br />Exhibit 10 3 <br />