16. Revenue Analysis of Office Devel.
City Hall
10300 Torre Avenue
Cupertino, CA 95014-3255
Telephone: (408) 777-3220
Fax: (408) 777-3366
DEPARTMENT OF ADMINISTRATIVE SERVICES
CITY OF
CUPEIQ"INO
SUMMARY
Agenda Item No:
Meeting Date: September 19, 2006
SUBJECT AND ISSUE
Consider implementation of General Plan Policy 2-42: Revenue Analysis of Office
Developments and Approve Resolution No. 110 .
BACKGROUND
This year, Council adopted the Fiscal Strategic Plan and the General Plan (GP). Both
documents promote repositioning our General Fund revenue base, protecting existing
revenues and promoting revenue producing land use decisions. Along those lines, GP
Policy 2-42, Revenue Analysis of the Office Development, requires new office
developments greater than 50,000 square feet to provide revenue benefits to the city.
Specific policy language is as follows:
"In reviewing office development proposals, encourage office uses and activities
that generate significant revenues to the City, such as local sales offices,
capturing point of sale Internet transactions and business-to-business tax
revenues. New office development exceeding 50,000 square feet shall be
approved only if one of these or similar benefits are provided. "
Staff was asked at the August 15th Council meeting to bring back to the City Council how
GP Policy 2-42 would be applied to development projects. We propose that new office
development exceeding 50,000 square feet shall be assessed a fee as follows:
~ Properties currently generating sales tax: Assessment would equal ten years of an
average sales tax generated from Cupertino retail business establishments.
Current analysis of our sales tax revenues puts this number at $2/square foot
(successful retail properties generate approximately $4/square foot in this market),
and would be applied to the total square footage of the project. This amount
could be paid annually or as a lump sum, with the present value of the payment
stream calculated using a 6% interest rate.
~ Properties not currently generating sales tax: Assessment would equal ten years
of an average sales tax generated from Cupertino Business-to-Business
establishments. Current analysis of our sales tax revenues puts this number at
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$1/square foot and would be applied to the total square footage of the project.
This amount could be paid annually or as a lump sum, with the present value of
the payment stream calculated using a 6% interest rate.
We propose that the fees be adjusted each year based on the CPI index. To keep the
assessment as simple as possible, we do not advocate prorating the above for a property
that has been used for both retail and other uses within the last ten years.
RECOMMENDATION
Staff recommends that the City Council adopt the criteria for application of General Plan
Policy 2-42: Revenue Analysis of Office Developments and approve Resolution
No. do-I Sf> .
Submitted by:
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Carol A. Atwood
Director of Administrative Services
/s/ Steve Piasecki
Steve Piasecki
Director of Community Development
Approved for submission:
~
David W. Knapp
City Manager
{6 -1-
RESOLUTION NO 06-158
DRAFT
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
APPROVING GENERAL PLAN POLICY 2-42: REVENUE ANALYSIS
OF OFFICE DEVELOPMENTS
WHEREAS, General Plan Policy 2-42, Revenue Analysis of the Office Development,
requires new office developments greater than 50,000 square feet to provide revenue benefits to
the city;
NOW, THEREFORE, BE IT RESOLVED that:
1. For properties currently generating sales tax, an assessment would equal ten
years of an average sales tax generated from Cupertino retail business
establishments. This amount could be paid annually or as a lump sum, with
the present value of the payment stream calculated using a 6% interest rate.
2. For properties not currently generating sales tax, an assessment would equal
ten years of an average sales tax generated from Cupertino Business-to-
Business establishments. This amount could be paid annually or as a lump
sum, with the present value of the payment stream calculated using a 6%
interest rate.
3. Fees shall be adjusted each year based on the CPI index.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Cupertino this 19th day of September, 2006 by the following vote:
Vote
Members of the City Council
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
APPROVED:
City Clerk
Mayor, City of Cupertino
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r=\,qHIB~mY
RESOLUTION NO 06-156 ..v"~ . I W
CL-I q - I q --aCt) j:i ( ts,
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
APPROVING GENERAL PLAN POLICY 2-42: REVENUE ANALYSIS
OF OFFICE DEVELOPMENTS
WHEREAS, General Plan Policy 2-42, Revenue Analysis of the Office Development,
requires new office developments greater than 50,000 square feet to provide revenue benefits to
the city;
NOW, THEREFORE, BE IT RESOLVED that:
1. For properties currently generating sales tax, an assessment would equal ten
years of an average sales tax generated from Cupertino retail business
establishments set at $2/square foot. This assessment shall be applied to the
total square footage of the project. This amount could be paid annually or as a
lump sum, with the present value of the payment stream calculated using a 6%
interest rate.
2. For properties not currently generating sales tax, an assessment would equal
ten years of an average sales tax generated from Cupertino Business-to-
Business establishments set at $l/square foot. This assessment shall be
applied to the total square footage of the project. This amount could be paid
annually or as a lump sum, with the present value of the payment stream
calculated using a 6% interest rate.
3. Fees shall be adjusted each year based on the CPI index.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Cupertino this 19th day of September, 2006 by the following vote:
Vote
Members of the City Council
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
APPROVED:
City Clerk
Mayor, City of Cupertino