Attachment 13 - April 25, 2022 Planning Commission Desk Item Report, with Exhibits 16PREPARED BY: Jennifer Armer, AICP
Planning Manager
Reviewed by: Community Development Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6872
www.losgatosca.gov
TOWN OF LOS GATOS
PLANNING COMMISSION
SPECIAL MEETING REPORT
MEETING DATE: 4/25/2022
ITEM NO: 1
DESK ITEM
DATE: April 25, 2022
TO: Planning Commission
FROM: Joel Paulson, Community Development Director
SUBJECT: Review and Make Recommendations on the Draft 2040 General Plan and
Final Environmental Impact Report to the Town Council.
REMARKS:
Exhibit 16 includes public comment received between 11:01 a.m., Friday, April 22, 2022, and
11:00 a.m. on Monday, April 25, 2022.
EXHIBITS:
Exhibits previously provided: (available online here: http://losgatos2040.com/documents.html)
1.Draft 2040 General Plan
2.Draft EIR
3.Revised NOA and Transportation section
4.Final EIR
Exhibits previously received with the April 13, 2022 Staff Report:
5.Draft Findings of Fact and Statement of Overriding Considerations
6.GPAC Recommended Changes to the Vision and Guiding Principles
7.Modifications Proposed in Public Comment
8.Board of Forestry Recommended Changes
9.Public Comments received between 11:01 a.m., Thursday, May 6, 2021, and 11:00 a.m.,
Monday, September 20, 2021
10.Public Comments received between 11:01 a.m., Monday, September 20, 2021, and 11:00
a.m., Thursday, April 7, 2022
ATTACHMENT 13
PAGE 2 OF 2
SUBJECT: Draft 2040 General Plan and Final EIR
DATE: April 25, 2022
Exhibit previously received with the April 13, 2022 Addendum:
11. Public Comments received between 11:01 a.m., Thursday, April 7, 2022, and 11:00 a.m.,
Monday, April 11, 2022
Exhibits previously received with the April 13, 2022 Desk Item:
12. Planning Commissioner Comments
13. Public Comments received between 11:01 a.m., Monday, April 11, 2022, and 11:00 a.m.,
Wednesday, April 13, 2022
Exhibits previously received with the April 25, 2022 Staff Report:
14. Planning Commissioner Comments
15. Public Comments received between 11:01 a.m., Wednesday, April 13, 2022, and 11:00 a.m.,
Friday, April 22, 2022
Exhibit received with this Desk Item:
16. Public Comments received between 11:01 a.m., Friday, April 22, 2022, and 11:00 a.m. on
Monday, April 25, 2022
EXHIBIT 16
From: Jak Van Nada
Sent: Monday, April 25, 2022 5:05 AM
To: Shelley Neis; Town Manager; Joel Paulson
Subject: Please Include for the Planning Commission Meeting of 4/25/22
The Los Gatos Community Alliance (LGCA) continues to advocate that a Fiscal Impact
Analysis (FIA) of the 2040 General Plan be completed before the Planning Commission
or Town Council take any action. The FIA presented in the Alternative Land Use
study did not evaluate the development in the 2040 General Plan. We have
attached a recent presentation that we gave at the Democracy Tent meeting on 4-18-
22, which outlines our concerns.
Of special note:
• Using the actual historical growth rates in Salaries, Pension and Benefit costs
would add nearly $34 million to the cumulative deficit of the General Fund
Balance over the next 5 years
• The General Fund would be completely wiped out by 2026 and have a deficit
balance greater than -$23 million at the end of 2027
• The potential for driving the deficit even higher with more development than
necessary to meet the RHNA requirement is very high. Without an FIA, the
Town cannot accurately forecast our Financial Future.
• The Town Has Refused To Do A Thoughtful Fiscal Impact Analysis, Yet They
Have Agreed To A “High-Level” Report Based On Faulty Data
• The General Plan is the primary tool for guiding future development in the
Town of Los Gatos for the next 20 years
• The General Plan is the framework of making CHOICES about growth,
housing, transportation, neighborhood improvement and service delivery.
• A Fiscal Impact Analysis documents the General Fund revenues and costs
and capital investment that are attributable to alternative land use scenarios
considered by the General Plan Update process.
• Just like an Environmental Impact report documents the environmental
impacts, a FIA documents the fiscal impacts.
For more information, please review our presentation attached. If you would like more
information, please contact me at the address below, or, have the Town's Finance
Commission do an analysis for you. A three minute speech would not adequately
explain the problems.
--
Jak Van Nada -
Los Gatos Community Alliance
Facts Matter; Transparency Matters; Honesty Matters
www.lgca.town
A F Why A Fiscal Impact Analysis? n B kw S r rLooking Backwards To See ForwardFacts Maer ; Transparency Maers ; Honesty Maers 1
’ N S u W a Y u It’s Not So Much What You See W Y u o t W Y u o t But What You Don’t SeeBut What You Don’t SeeFacts Maer ; Transparency Maers ; Honesty Maers 2
T i e t o h This Presentation Is To Show You What Y u n eY u n eYou Aren’t SeeingYou Aren’t SeeingFacts Maer ; Transparency Maers ; Honesty Maers 3
D se o h R pData Used For This Report• 20 AC 2021 ACFR - l o i n i Annual Comprehensive Financial Report• 0 r PDraft 2040 General Plan•M dMdMidMid-- e u t e u t Year Budget Report Year Budget Report -- J y J y July 1 July 1 ---- e e December 31, 2021December 31, 2021• Fi e tFive Year ForecastFacts Maer ; Transparency Maers ; Honesty Maers 4
5Compound Annual Growth Rate (CAGR) Calculations2016 2018 2021Actual CAGR 2016-2021Actual CAGR 2018-2021Total Growth 2016-2021Salaries & Wages 14.5 16.1 20.3 6.9% 8.1% 40%Retirement Benefits 3.6 4.3 6.4 12.2% 14.2% 78%Other employee benefits 3.2 3.3 5.6 12.0% 19.5% 76%Total Salaries, Wages, Benefits 21.3 23.7 32.3 8.7% 11.0% 52%Full Time Equivalent (FTE) Headcount 144 148 150 0.8% 0.4% 4%Salaries, Wages & Benefits per FTE Head148 160 203 6.5%8.2% 37%Actuals (A) & Town Staff Forecast (F) - Base Case with 2% COLA2016A 2017A 2018A 2019A 2020A 2021A 2022F 2023F 2024F 2025F 2026F 2027FSalaries & Wages 14.5 14.8 16.1 17.9 19.3 20.3 20.6 20.6 21.2 21.8 22.3 22.8 Retirement Benefits 3.6 3.9 4.3 5.3 6.1 6.4 6.6 6.9 7.3 7.7 7.6 7.9 Other employee benefits 3.2 3.2 3.3 3.6 3.6 3.7 3.8 4.0 4.1 4.2 4.3 4.4 Total Salaries, Wages, Benefits 21.3 21.9 23.7 26.8 29.0 30.4 31.0 31.5 32.6 33.7 34.2 35.1 FTE Headcount 144 146 148 149 150 150 150Salaries, Wages & Benefits per FTE head ($k) 148 150 160 180 193 203 207 General Fund Inrease (decrease)3.3 7.5 -8.6 -7.1 -1.5 -1.6 -2.0 -2.4 -2.1 -2.3General Fund Balance27.2 30.4 37.9 29.3 22.2 20.8 19.2 17.2 14.8 12.7 10.4Revised Forecast ($ million)2023F* 2024F* 2025F* 2026F* 2027F*Salaries & Wages - actuals and forecast using 6.9% 5-year actual historical CAGR for 2023 forward22.0 23.6 25.2 26.9 28.8 Pension - actuals and forecast using 12.2% 5-year actual historical CAGR for 2023 forward7.4 8.3 9.3 10.5 11.7 All Other Benefits - actuals and forecast using 6.9% 5-year actual historical CAGR for 2023 forward4.3 4.8 5.3 6.0 6.7 Total Salaries, Pension & Wages - actuals and forecast using 5-year actual historical CAGR for 2023 forward33.7 36.6 39.9 43.4 47.2 Difference from Town staff forecast(2.2) (4.0) (6.2) (9.2) (12.1) Cumulative difference from Town staff forecast(2.2) (6.2) (12.4) (21.6) (33.7) Revised General Fund Balance17.0 10.9 2.4 (8.9) (23.3)
he To F a ing eThe Town Is Forecasting Deficits• t s h T af t e e l d l e In The Next 5 Years The Town Staff Is Forecasting That The General Fund Balance l c e Will Decrease by 50% - 8M t n T From $20.8M At The End Of 2022 To $10.4M At The End Of 2027• ow t f cas As An ow h s 2% For S l , The Town Staff Forecast Assumed An Annual Growth Rate Of Just 2% For Salaries, n i d e iPension and Benefits.Facts Maer ; Transparency Maers ; Honesty Maers 6
•v r r s 5 s a i s ge b n t h v v r r s 5 s a i s ge b n t h v However, over the last 5 years salaries, wages and benefit costs have However, over the last 5 years salaries, wages and benefit costs have t yactually at 8 n lgrown at 8.7% annually• i That is han 4 i smore than 4 times h g r h af s e t ng.the growth rate the Town Staff is forecasting.•e he l y e a u r t c l r d 11e he l y e a u r t c l r d 11Over the last 3 years the actual growth rate has accelerated to 11%Over the last 3 years the actual growth rate has accelerated to 11%• Ar nt r n at ary e odWe Are Entering An Inflationary Period•h p n a T s u i o h p n a T s u i o What Happens If We Change The Forecast Assumption From 2% To 8.7%?What Happens If We Change The Forecast Assumption From 2% To 8.7%?Facts Maer ; Transparency Maers ; Honesty Maers 7
odif ed ec st i t a odif ed ec st i t a Modified Forecast Using Historical Modified Forecast Using Historical h atGrowth Rates• i t ow h e r , n d e i co s d Using the actual historical growth rates in Salaries, Pension and Benefit costs would d e r y on t m at e d e r y on t m at e add nearly $34 million to the cumulative add nearly $34 million to the cumulative i iideficitdeficit e x ye yover the next 5 yearsover the next 5 years• F d l d c The General Fund would be completely wiped out by 2026 and have a deficit a nc g e t n balance greater than - i h e d $23 million at the end of 2027Facts Maer ; Transparency Maers ; Honesty Maers 8
w i g o ea u a I c w i g o ea u a I c Town Spending on Headcount Has Increased Town Spending on Headcount Has Increased c l e eaDramatically in the Last 5 Years•a i r p r 40% i a i r p r 40% i Salaries Have Grown 6.9% per Year (up 40% in 5 years)Salaries Have Grown 6.9% per Year (up 40% in 5 years)• E pe h ow 1 78% i yPension Expense has grown 12.1% per year (up 78% in 5 years)• e i r n 0 y y a )Benefits have grown 12.0 % per year (up 76% in 5 years)• o o e 3 t h 11% p a (u e rTotal of the 3 costs have grown 11% per year (up 52% in 5 years)• n y yWhile headcount has grown by only 0.4% per year (up 4% in 5 years)Facts Maer ; Transparency Maers ; Honesty Maers 9
um sThe NumbersFacts Maer ; Transparency Maers ; Honesty Maers 10Revised Forecast ($ million)2023F* 2024F* 2025F* 2026F* 2027F*Salaries & Wages - actuals and forecast using 6.9% 5-year actual historical CAGR for 2023 forward22.0 23.6 25.2 26.9 28.8Pension - actuals and forecast using 12.2% 5-year actual historical CAGR for 2023 forward7.4 8.3 9.3 10.5 11.7All Other Benefits - actuals and forecast using 6.9% 5-year actual historical CAGR for 2023 forward4.3 4.8 5.3 6.0 6.7Total Salaries, Pension & Wages - actuals and forecast using 5-year actual historical CAGR for 2023 forward 33.7 36.6 39.9 43.4 47.2Difference from Town staff forecast-2.2 -4.0 -6.2 -9.2 -12.1Cumulative difference from Town staff forecast-2.2 -6.2 -12.4 -21.6 -33.7Revised General Fund Balance17.0 10.9 2.4 -8.9 -23.3
o nSome Concerns•e f h A S r I a f P o s f .e f h A S r I a f P o s f .The ACFR of 2021 Said There Was A Salary Increase of 1% Plus A Bonus of 2%.The ACFR of 2021 Said There Was A Salary Increase of 1% Plus A Bonus of 2%.• a rie a d B tu c % v e , c l d TSalaries, Wages and Benefits Actually Increased By 8.7% Over 5 Years, But Accelerated To1 I t 1 I t 11% In The Last 3 Years. 11% In The Last 3 Years. • tu u ’ S e t o d Anyw I F Unfortunately, You Won’t See That Noted Anywhere In The ACFR. • e w R f htf a a e re The Town Has Refused To Do A Thoughtful Fiscal Impact Analysis. Yet They Have Agreed To “A “High-- e ” R t Level” Report Based On lty Faulty Data r l r o l y u m tly. Mr. Koen will tell you more shortly.• e n e e t u t n W n B u tinThe Council Pushed The Mute Button When Brought To A Council MeetingFacts Maer ; Transparency Maers ; Honesty Maers 11
r C tConcerns, Cont’d•T o $4.8 a 64% O P T o $4.8 a 64% O P The 2016 Council Rejected A $4.8M Annual Sales Tax That 64% Of Those Polled The 2016 Council Rejected A $4.8M Annual Sales Tax That 64% Of Those Polled B T n a Ap e By The Town Was Approved –– T u l For L s That Would Total $29M For Los Gatos Today.• I 6, w u h OPE b n no 10 In 2016, we found the OPEB buried in Footnote 10 - $12.5 M• n o h ge ot h f The Town Council Is In Charge, Not The Staff. • a T u l e m s o l e We Gave The Town Council A Finance Commission Available o h m t to Them At Any m m Time. Time. Facts Maer ; Transparency Maers ; Honesty Maers 12
Fa M F T ns n F ; M r Facts MaFer ; Transparency MaFers ; Honesty MaFers 13
Facts Maer ; Transparency Maers ; Honesty Maers 14
W he G a l ost $ What If The General Plan Costs More $$ ?Facts Maer ; Transparency Maers ; Honesty Maers 15
Fiscal Impact AnalysisAPRIL 2022
17●The General Plan is the primary tool for guiding future development in the Town of Los Gatos for the next 20 years●The General Plan is the framework of making CHOICES about growth, housing, transportation, neighborhood improvement and service delivery.●A Fiscal Impact Analysis documents the General Fund revenues and costs and capital investment that are attributable to alternative land use scenarios considered by the General Plan Update process.●Just like an Environmental Impact report documents the environmental impacts, a FIA documents the fiscal impacts.General Plan and Fiscal Impact Analysis
18●The Town provides services and infrastructure to residents and workers as reflected in the Town’s budget●Residents and workers consume services, and pay for those services through taxes and fees●Therefore, new growth will consume additional services and pay additional taxes and fees●Big Question – What is the balance of new costs and revenues from new growth?●A Fiscal Impact Analysis will provide the answerDoes Growth Impact Operations?
19Alternative Population Growth ScenariosThe Draft General Plan contains by far the highest Compound Annual Growth Rate (CAGR) assumption
21●Identifies projected changes to local services and revenues●Helps define achievable levels of service●Projects capital facility needs●Clarifies development policy impacts●Calculates revenues and helps in the development of revenue strategies●Encourages “what if” questions●Promotes public education of the connection between land use and fiscal conditions.A FIA Provides Support To Decision Makers and Community Stakeholders
22What Will The Findings Tell Us?marginally fiscal-$$$+$$$.far outweigh the new revenues from growth-$$0+$.roughly equal the new revenuesThe costs that will be required to scaleoperations and/or provide newinfrastructure to accommodate growth projected in the General Plan..far exceed the new revenues from growth•There aremanypotential interpretationsfor the range offiscal results•The fiscal resultsdo notprovide a projection of future budgetlevels
23Alt. AAlt. BAlt. CAlt. D General PlanNet New Dwellings681 1,416 1,828 2,700 2,763 Pending/Approved Dwelling Units475 475 475 475 475 Subtotal1,156 1,891 2,303 3,175 3,238 Accessory Dwelling Unit(ADU)- - - - 500 Total Residential Units1,156 1,891 2,303 3,175 3,738 Single Family391 328 371 550 550 Multi-Family765 1,563 1,932 2,625 3,188 Below-Market Purchase(BMP) Units149 238 293 464 847 BMP Units: % of Total Residential13%13%13%15%23%Alternative Mix of Housing Analyzed
24FIA Development Assumptions●Redevelopment percentage is the percentage of the total area under each land use designation assumed to be redeveloped within the 2040 planning period
26●Alternative C – 2,303 units – annual revenues exceed annual costs by $300,000●Alternative D – 3,175 units – annual costs exceed annual revenues by $35,000●General Plan – Unknown but must be worse than Alt D given higher growth and housing mix shift Comparison of Alternatives – Net Fiscal ImpactAlt. AAlt. BAlt. CAlt. D General PlanAnnual Revenues4,320,000$ 5,796,000$ 6,564,000$ 8,378,000$ ???Annual Costs(3,710,000)$ (5,280,000)$ (6,264,000)$ (8,413,000)$ ???Net Fiscal Impact610,000$ 516,000$ 300,000$ (35,000)$ ???Residential Net Impact190,000$ 96,000$ (120,000)$ (455,000)$ ???Non-residential Net Impact420,000$ 420,000$ 420,000$ 420,000$ 420,000$
28●The fiscal analysis did not study the 2040 Draft General Plan –○Studied the impact of adding 3,175 total units including 464 BMPunits and 0 ADU’s○2040 GP consists of 3,738 total units including 847 BMP units and 500 ADU’s●No base case or downside case scenarios were presented – consultants stated “consider a best-case scenario over the long run”●Amount of property tax revenues and sales tax is extremely dependent on the mix of units in each land use alternative●The revenue generating potential of development will decline as Prop 13 limits the escalation of assessed values compared to inflation of municipal service costsMajor Shortcomings of The Town’s FIA
29●The analysis is for full buildout at one point in time and does not consider effects of inflation over 20-year period, which will affect the Town’s revenues and costs differently○From FY 2018 -21 total salaries, wages and benefits increased at a 11% CAGR VS Total General Fund Revenues increased at 1.8% CAGR○A 20 year build out of cost/revenue trends by year is required to determine fiscal impacts of inflation and growth●The analysis is based on pre-pandemic financial information and does not reflect the Town’s current budget and most recent five- year outlook○Five-year outlook is projecting annual operative deficits each year and a cumulative deficit of $10.4mMajor Shortcomings of The Town’s FIA
30●Analysis did not evaluate current departmental capacity nor additional staff or facilities needed to support planned growth○Police and Fire safety costs are highly variable with growth●Analysis did not evaluate the Town’s ability to maintain service standards ○A negative fiscal impact would suggest the Town would must reduce service standardsMajor Shortcomings of The Town’s FIA
31●The analysis did not expand beyond the General Fund to the Appropriated Reserves Fund (GFAR) which is used to fund capital projects○Money transferred from the General Fund to GFAR■FY 19 - $2.8m, FY 20 - $8.1m, FY 21 - $3.4m○Ability to fund $80.0m of unfunded capital projects●The analysis did not address cost of increasing facilities and infrastructure capabilities resulting from 2040 GP growth○A 25% growth in VMT will require more street and road maintenance expenditures○Storm water system is outdated, shallow and undersized Major Shortcomings of The Town’s FIA
32●Less residential growth is better – limit to RHNA 1,993 plus required buffer ●Land use mix should be planned to generate a fiscally neutral outcome – will be challenging given mix of BMP to total units●Residential growth focused in Opportunity Areas will have a different fiscal impact than growth Town wide●Commercial growth such as work/live units would appear to have a net positive fiscal impact●Given the difference in historical growth rates in salary, wages and benefits vs total revenues, impact of inflation and large unfunded capital needs, substantial new sources of revenues will need to be found○How much and how quickly can be answered by a proper FIA. But….not all is lost…..some obvious conclusions
33●How do we really know if the 2040 draft General Plan is Fiscally Stable and Responsible?●Who benefits from NOT doing a FIA of the 2040 General Plan ?In Closing – two key questions that need to be asked
Thank you