Appendix G - School Impact AnalysisVALLCO SPECIFIC PLAN
SCHOOL IMPACT ANALYSIS
Prepared for:
CITY OF
CUPERTINO
Prepared by:
SCHOOLHOUSE SERVICES
Economists and Planners
(650) 373-7373
April 2018
TABLE OF CONTENTS
I. ENROLLMENT IMPACTS.........................................................................1
Background
Residential
Student Generation
Enrollment Impacts
Enrollment Capacity of Cupertino District Schools
Enrollment and Capacity of Fremont Union District Schools
II. CAPITAL FACILITIES COST AND REVENUE IMPACTS................................14
Facilities Costs
Revenue Impacts — Development Fees
Development Subject to Impact Fees
Voluntary Benefits
Comparison of Capital Facilities Costs and Developer Mitigation
III. OPERATING REVENUE AND COST IMPACTS.....................................23
Operating Costs
Operating Revenues
Other CUSD and FUHSD Revenues
Comparison of Operating Costs and Revenues
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I. ENROLLMENT IMPACTS
Background
The City of Cupertino has contracted with Schoolhouse Services to conduct an analysis of the
enrollment and fiscal impacts of development for the Vallco Specific Plan which currently
includes a proposed plan and two alternatives (also referred to as the "Plan" or "Plans" in this
report) on the local school districts. The Specific Plan is for the Vallco Special area, the 58 acre
site of the current Vallco Shopping Center on Wolfe Road at its intersection with the Interstate
280 freeway.
A Specific Plan can be envisioned as a planning document that implements General Plan policies
and may also act as the zoning for an area. A General Plan, and its accompanying zoning map,
assign land use categories usually for all areas of a city specifying the land uses allowed. As its
name implies, a Specific Plan, usually for a relatively small portion of a city, is most often used
for an area where mixed land uses are involved. It is more specific than a General Plan about the
land uses allowed, in this case describing the alternatives primarily in terms of the amount of
each of the four principal land uses included in the Plan. However, a Specific Plan usually is not
as definitive as a project plan, which typically includes, for example, specific buildings and their
locations.
Three scenarios are analyzed and compared in this report: The Proposed Project together with the
General Plan Buildout with Maximum Residential and the Retail and Residential alternatives.
Each of them assumes the construction of a mixed-use development. Each would also require the
demolition of approximately 1.2 million square feet of existing retail space (plus some support
space) on the site, most of it vacant or underutilized, along with associated parking garages. Brief
descriptions of the Proposed Project and the two alternatives follow, together with a table
summarizing the amount of building space for each of the major land uses.
The "Proposed Project". Office space is the largest share of the development,
with commercial and residential uses and a hotel also having a major presence.
The proposed programming in the project is consistent with the General P1an.The
property -owner, Vallco Property Owner, LLC, and a developer, Sand Hill
Property Company, proposed a project, The Hills at Vallco, in late 2015, which
was the subject of an initiative vote in the 2016 ballot with similar programming.
The number of residential units and their average size assumed for the Proposed
Project alternative are consistent with those of The Hills at Vallco project
proposed. However, the Proposed Project for purposes of the Specific Plan is not
that project and the Proposed Project is not as detailed as the Hills at Vallco
project was.
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The first alternative evaluated is the "General Plan Buildout with Maximum
Residential", also referred to in tables as the General Plan Buildout alternative.
This alternative diminishes the amount of office space and increases substantially
the number of residential units.
The "Retail and Residential" alternative" is the second alternative. It eliminates
the office space entirely but includes additional residential units.
The amount of commercial space and the number of hotel rooms are assumed to
be unchanged among the three Specific Plan alternatives discussed above. There
may be up to 65,000 square feet of civic spaces, such as governmental offices,
meeting rooms and community spaces, also included in the Proposed Project and
the General Plan buildout with Maximum Residential alternative.
Land Use Amounts
A fourth alternative, what might be termed the "no project alternative", is also being
analyzed in environmental documents for informational purposes. This alternative would
entail the re -tenanting of the existing 1.2 million square foot mall and would not require
the adoption of a Specific Plan. The General Plan and zoning would remain as they
currently exist. Retail would continue to be the dominant land use in the existing
buildings. Having no housing units, however, it would not directly generate students for
local schools.
Residential
Residential space is potentially the largest amount of space in the Vallco Specific Plan area. It is
also the space that directly affects school enrollment. The number of units varies from the 800
units in the Proposed Project, to 2,460 units in the General Plan Buildout alternative, and 4,000
units in the Retail and Residential alternative. The characteristics of the units will be a major
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Land Use
Commercial
Office
Hotel
Residential
Civic Uses
SF
(SF)
(rooms)
(DU)
(SF)
Proposed Project
600,000
2,000,000
339
800
65,000
General Plan Buildout
600,000
1,000,000
339
2,640
65,000
alternative
Retail and Residential
600,000
0
339
4,000
0
alternative
Re-tenanted/Re-occupied Mall
1,200,000
0
0
0
0
(the No Project alternative)
A fourth alternative, what might be termed the "no project alternative", is also being
analyzed in environmental documents for informational purposes. This alternative would
entail the re -tenanting of the existing 1.2 million square foot mall and would not require
the adoption of a Specific Plan. The General Plan and zoning would remain as they
currently exist. Retail would continue to be the dominant land use in the existing
buildings. Having no housing units, however, it would not directly generate students for
local schools.
Residential
Residential space is potentially the largest amount of space in the Vallco Specific Plan area. It is
also the space that directly affects school enrollment. The number of units varies from the 800
units in the Proposed Project, to 2,460 units in the General Plan Buildout alternative, and 4,000
units in the Retail and Residential alternative. The characteristics of the units will be a major
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determinant in the number of students residing in them. Major considerations are pointed out
here, with more detailed design matters receiving more attention later.
For each of the three scenarios, the residential buildings will be in an urban mixed-use setting,
likely in three to seven or more story buildings with residential over ground floor retail. It is not
known at this stage whether the units will be apartments, i.e. all units in a building constituting a
single property, which would require that the units be rented, or will be condominiums, i.e. with
a plat map that makes the units individual properties that can be bought and sold (or even
rented). The default assumption in this report will be that the units will be apartments, though
any significant differences that would follow from the units being condominiums will be pointed
out and analyzed.
Some of the units will have to be more affordable than the rent levels, or sales prices, the current
market will support; these units are referred to as "Below Market Rate" or "BMR" units. The
City requires a minimum of 15% of the residential units in a development greater than six units,
be set aside as affordable and that percentage is assumed here. The required level of affordability
differs between apartments and condominiums. For sale BMR units have to be provided in a mix
of 50% moderate income and 50% median income and for rent BMR units have to be provided
in a mix of 60% very low income and 40% low income unless the applicant proposes a different
alternative which receives the Council's approval.
While requirements for Below Market Rate units apply to all development, there is no
requirement for age -restricted housing units. None are assumed here, though a developer could
include some in its proposal, as was previously proposed to be included in The Hills at Vallco
project. Having age -restricted units would reduce the students generated by the project, but that
is not assumed in this report.
Some assumptions about probable development for each alternative scenario follow from the
magnitude of the assumed land uses in that scenario. As will be seen later, the total square feet of
space developed varies among the three scenarios, increasing from the Proposed Project as the
amount of residential space added exceeds the reduction in the amount of office space in the
alternatives. The amount of parking space needed for the alternatives could affect the total
building area, but it is still reasonable to conclude that the larger amount of floor space involved
with more residential units indicates that the building heights will probably be greater for the
alternative Plans with more housing than for the Proposed Project.
The Proposed Project and the two alternatives reflect not only different numbers of housing
units, but also differences in the size of the housing units. The 800 units included in the Hills at
Vallco project emphasized small units, averaging only 800 square feet within each unit. That size
is assumed here for the Proposed Project alternative. Larger units, averaging about 1,000 square
feet in size (1,250 square feet including common areas, corridors and amenities) are anticipated
for the 2,640 units in the General Plan Buildout alternative. Finally, the 4,000 units in the Retail
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and Residential alternative are anticipated to average 825 square feet in size (about 1,000 square
feet with common areas, corridors and amenities included).
It should be understood that these scenarios of the residential development that could occur are
not forecasts of such development. There are no project design plans on which to make such
forecasts. Development could vary significantly from these assumptions. The scenarios are
drawn not to forecast development, but to investigate the differences that the amounts of the
various land uses would tend to encourage. And, it should be noted, the differences and their
calculated impacts are not at all precise.
Student Generation
The project is located within the school district service areas of Cupertino Union Elementary
School District (CUSD or Cupertino District) and Fremont Union High School District (FUHSD
or Fremont District). It is located within the Collins Elementary School and the Lawson Middle
School attendance areas, both part of CUSD. The project is in the Cupertino High School
attendance area within the FUHSD, but also fairly close to Lynbrook High School. Students
residing in the Cupertino High attendance area have the option of choosing to attend Lynbrook.
This report considers the enrollment impacts on these schools and the fiscal impacts on the two
districts.
A projection of new student enrollment resulting from each of the Specific Plan scenarios is the
critical factor identifying the potential impact of the proposed development on the impacted
schools. Student generation rates (SGRs), the average number of students per new housing unit,
are the key factor for the projection of enrollment into the future. (For example, 20 elementary
students residing in 100 housing units exhibit an elementary school SGR of 0.20 students per
unit.) Multiplying the number of new units by an appropriate SGR results in a projection of the
number of students from the units that will be generated by the units.
Different housing types generate different SGRs. Single family detached units with private yards
usually generate the most students. Within the range of apartments and condominiums, however,
student generation can vary significantly, with the sizes, the design and the marketing of the
units being major factors. The majority of apartments and condominiums in the Cupertino area
are not designed for families. Most of these units are smaller, ranging from studio and loft units
to predominantly one and two-bedroom units. They are usually in multi -story buildings and lack
private yards. However, if located in a highly rated school district, relatively large apartments
and condominiums, especially if they are in a family -friendly setting, can generate as many
students as single family detached units.
SGRs of Recent Residential Development in Cupertino
Enrollment Projection Consultants (EPC) has been the demographer for both the Cupertino
District (elementary and middle school enrollments) and the Fremont District (high school
enrollment) for many years. As part of its work the firm determines student generation (counts
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the number of students) for a large number of relatively new housing units of various housing
types.
The EPC surveys are the logical place to start in estimating the SGRs for Vallco alternatives. The
most recent survey covered 284 attached units (units in multi -unit buildings). One and two-
bedroom units dominate the sample. (A limited number of buildings with generally larger units
and/or that appear to be designed to accommodate families are not included in this sample; they
have been grouped with single family homes in a separate sample for EPC's analysis.)
The survey by EPS found an average SGR for the CUSD (kindergarten through eighth grade) of
0.32 students per multi -family residential unit, or approximately one student in every three
homes. The average high school SGR (for the CUSD portion of FUHSD) was 0.08 per unit in
multi -family buildings. (The buildings analyzed include some below market rate (BMR) units,
but no buildings entirely of BMR units.)
Unfortunately, these averages are for only two buildings, the only multiple -unit buildings that
have been completed in the last few years. The individual SGRs of these buildings are also
relevant. Table I-1 shows the SGRs of the two developments and their combined SGR (weighted
by their number of units).
Table I-1
SGRs in Comparable Developments
Development
Unit
Characteristics
Number of
Units
CUSD SGR
FUHSD SGR
Nineteen800/Rose Bowl
large
apartments
204
0.33
0.10
Biltmore Addition
average size
apartments
80
0.28
0.04
Both Projects
284
0.32
0.08
Sources: Enrollment Projection Consultants.
The "Nineteen800 apartment complex, also known as the "Rose Bowl", is adjacent to the Vallco
Special Area. Its 204 units have 68 CUSD students, an SGR of 0.33 and 21 FUHSD students, an
SGR of 0.10. It should be noted that these units are on average significantly larger than the
average size of units built in the decade before them, indicating that the Nineteen800
development SGRs are higher than new units of more average size are likely to be. The 80 new
units in the Biltmore apartment development at the intersection of Blaney Avenue and Stevens
Creek Blvd. have significantly lower SGRs, 22 CUSD students, an SGR of 0.28, and three
FUHSD students, an SGR of 0.04. These SGRs are lower, especially for the middle school and
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high school grades levels, presumably reflecting the more average size of the units. In both cases
most of the tenants moved in a couple of years ago. Rents have escalated significantly since then;
it should be expected that units coming on the market in the next few years are likely to have
even fewer households with children.
SGR Variations
We know from many studies that certain characteristics are often associated with adult oriented
complexes (and hence relatively few students). These include:
■ The developments include more studios and one -bedroom units than larger units with two
or three bedrooms;
■ The units are relatively small, in particular lacking larger kitchen/family eating areas, but
expensive. Families can usually get more for their money in older buildings and
alternative locations;
■ They tend to be in taller buildings, with fewer or no units at the ground level;
■ They are generally in a mixed-use, and not a residential, environment;
■ They lack yards and have limited access to play structures and areas for pre-school
children, and/or lack open spaces with turf for elementary school-age children;
■ There is generally no more than one assigned parking space per unit;
■ They are marketed for their sophisticated adult life style;
■ To make living at such a high density attractive, they include features such as physical
fitness centers, party lounges, business centers, gated entrances, etc., all oriented to adult
preferences, but adding to the price. They do not include child care facilities.
The development under the Vallco Specific Plans are generally likely to match the characteristics
listed. The General Plan envisions the development in the Vallco Special Area to be in a mixed-
use format with residential uses on upper floors with retail and active uses on the ground floor
and encouraging a mix of units for young professionals that would like to live in an active "town
center" environment. Since the proposed units, whatever the alternative, will be situated in the
midst of an urban commercial environment; they are more likely to appeal to adults than to
families with children. The buildings are envisioned to be three to seven or more stories tall, with
the ground floor being commercial.
Most important, the units will likely be expensive. The market for apartments is a primary
consideration. The wild success of technology (including internet) firms, many of them young
companies, has created a demand for young engineers and entrepreneurs, with relatively large
salaries as a result. The housing supply is inadequate and rents have escalated tremendously.
Many of these tech employees can afford the high rents, though many have to co -rent up to do
so; for example, two people sharing a two-bedroom unit, or four people sharing a larger unit,
each with his/her own room/space. It has become very difficult for young families to complete
for units in the heart of Silicon Valley.
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Since detailed plans for the residences are not available for the proposed scenarios, we do not
know about the features and amenities that will be included. These will be determined by their
target market, including whether the units will be marketed to younger families. However, the
development could include a fitness center and a swimming pool(s). Most of the projects built
during the last decade have generally not seen families as their target market; it is probable that
these units will not either. (None of the many pictures shown on internet sites for the
Nineteen800, Biltmore, Hamptons and Main Street projects show a child or children -specific
amenities, whether within a unit or elsewhere in the complex.)
Assumptions have been made about the size of the units, as discussed above, and, as noted
above, this is a factor that strongly influences student generation. Studios and one -bedroom units
relatively seldom satisfy the needs of a household with school-age children. Two-bedroom units
provide a bedroom for one or two children, and with more children a three-bedroom unit is
almost a necessity.
The interiors of the units in the Proposed Project are anticipated to average 800 square feet.
(Unless otherwise stated, the unit sizes here are for the interiors of the units.) This size suggests a
scenario of mostly small one -bedroom units or a mix where the number of two-bedroom units is
approximately offset by the number of studio units. The Retail and Residential alternative has an
assumed average unit interior size of 825 square feet, much like the Proposed Project alternative.
These unit sizes would be comparable to those in the nearby Biltmore, Main Street and Hampton
Apartments. The one -bedroom units in these developments seem to be mostly between 700 and
900 square feet and the two-bedroom units average about 1,000 square feet.
The assumed average size of the units in the General Plan Buildout alternative is about 1,000
square feet. The two-bedroom Nineteen800 units, in contrast average 1,200-1,300 square feet in
size (partially because they typically contain two bathrooms).
These scenarios of units suggest that the Proposed Project and the Retail and Residential
alternative would tend not to offer units that meet the needs of households with children. The
units in the General Plan Buildout with Maximum Residential alternative would have more bed-
rooms for children, but households with children would have to compete for the very expensive
units with other potential tenants often with multiple high incomes.
The above analysis leads to the SGR projections for the three scenarios shown in Table I-2. The
SGRs shown are not those found in any of the scenarios described above, but are based on the
SGRs of those projects adjusted for the differences in the three scenarios.
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Table I-2
Vallco Specific Plan and Alternatives
Projected SGRs
High School FUHSD SGR 0.04 0.06 0.04
Source: Schoolhouse Services.
In summary, the high prices and the small size of the premises make the likelihood of households
with students quite low for the Proposed Project and the Retail and Residential alternative. The
scenario for the General Plan Buildout with Maximum Residential alternative provides larger
units likely to attract moderately more households with students. However, the high prices of the
units would still hold down the number of households with children, despite the attractiveness of
the school districts.
Enrollment Impacts
With appropriate SGRs we can proceed with the calculation of the enrollment generated from the
Proposed Plan and alternatives. Table I-3 shows the calculated student enrollment impact
resulting from the project three to ten years after construction of the units.
Table I-3
Estimated Enrollment Impact*
Proposed General Plan Retail and
Project Buildout Residential
Elementary (K -S) 104 528 520
Middle (6-8) 32 158 160
Total CUSD 136 686 680
FUHSD 32 158 160
Source: Schoolhouse Services.
Given the assumptions described above, the three Proposed Plan and alternatives are projected to
generate for Cupertino Union Schools approximately 136 students in the Proposed Project to
about 680 students in the General Plan Buildout with Maximum Residential and Retail and
Residential alternatives. The three scenarios are projected to generate for Fremont Union Schools
from approximately 32 students in the Proposed Project to about 160 students in the General
Plan Buildout with Maximum Residential and Retail and Residential alternatives.
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Proposed
General Plan
Retail and
Project
Buildout
Residential
Elementary (K -S) SGR
0.13
0.20
0.13
Middle (6-8) SGR
0.04
0.06
0.04
Total CUSD SGR
0.17
0.26
0.17
High School FUHSD SGR 0.04 0.06 0.04
Source: Schoolhouse Services.
In summary, the high prices and the small size of the premises make the likelihood of households
with students quite low for the Proposed Project and the Retail and Residential alternative. The
scenario for the General Plan Buildout with Maximum Residential alternative provides larger
units likely to attract moderately more households with students. However, the high prices of the
units would still hold down the number of households with children, despite the attractiveness of
the school districts.
Enrollment Impacts
With appropriate SGRs we can proceed with the calculation of the enrollment generated from the
Proposed Plan and alternatives. Table I-3 shows the calculated student enrollment impact
resulting from the project three to ten years after construction of the units.
Table I-3
Estimated Enrollment Impact*
Proposed General Plan Retail and
Project Buildout Residential
Elementary (K -S) 104 528 520
Middle (6-8) 32 158 160
Total CUSD 136 686 680
FUHSD 32 158 160
Source: Schoolhouse Services.
Given the assumptions described above, the three Proposed Plan and alternatives are projected to
generate for Cupertino Union Schools approximately 136 students in the Proposed Project to
about 680 students in the General Plan Buildout with Maximum Residential and Retail and
Residential alternatives. The three scenarios are projected to generate for Fremont Union Schools
from approximately 32 students in the Proposed Project to about 160 students in the General
Plan Buildout with Maximum Residential and Retail and Residential alternatives.
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The number of students generated by the Proposed Project is significantly fewer than for the
alternatives, reflecting both the fewer number of units and the lower student generation of the
smaller units. For the two alternatives with the larger number of units, the smaller units in the
Retail and Residential alternative offsets the greater number of units in that alternative.
It should be remembered that these estimates are reasonable for the alternatives. However, many
characteristics of the units are unknown and the market is uncertain; the actual enrollment
generated could vary up or down from these numbers, especially since we are talking about
perhaps 10 years and further into the future. In particular, it should be remembered that student
generation is still falling as rents and condo prices are increasing; thus, the number of students
projected for each alternative are more likely to be too high than to be too low.
Enrollment and Capacity of Cupertino Union District Schools
District -wide Enrollment
A discussion of the capacity of schools needs to start with a consideration of the pattern of
capacity versus enrollment of the district as a whole. The Cupertino District has been a rapidly
growing school district. Enrollment has increased almost every year, going from 15,571 in the
fall of 2001 to 19,194 in the Fall of 2013, an increase of more than 20% accommodated without
additional schools in the District. This increase in enrollment overcrowded many of schools,
particularly in the northern and northeastern portions of the District.
A different enrollment trend has become evident in the last four years and is projected for the
next five years (the period of Enrollment Projection Consultants projections for CUSD). The
EPC Fall 2017 study shows an October 2017 enrollment of 18,001, a decline of almost 1,200
students over the last four years. Without counting any students that would be attending from
Vallco development, the firm projects a further decline of 1,478 students district -wide over the
next five years, for a total drop of about 14% from when enrollment peaked. (EPC's report
shows a decline of 1,257 students, but that includes 221 students from an assumed 700 Vallco
units, an assumption EPG cautions as speculative.)
Two main factors appear to be responsible for this decline. One is a long understood and
anticipated maturation of households whose students are graduating and moving on. This process
has been ongoing over the last decade, particularly in the southern half of the district, but the
resulting loss of students was in the past more than compensated for by the growth in young
families in the northern portion of the district.
The other factor causing a loss of students is relatively new and accounts for the majority of the
decline. Rapidly rising rents are resulting in young families being priced out of the district.
Rising home prices are also making it much more difficult for young families to move into the
district, though they do not price out existing homeowners and thus have less effect. Many of the
households with the financial resources to move into the district are young tech employees, many
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not yet married and relatively few with school age children. EPC sees this factor continuing to
reduce enrollment over the next five years.
This is the second year that the EPC report has not forecast growth beyond the five-year period,
reflecting the firm's uncertainties about the mid and longer term picture. In the long term, the
young tech workers will be older; a decade from now, many will be married and with children in
the household. Additionally, rising values could lead to more home sales by older households in
the district, with the buyers being tech employee households, including workers who currently
choose to live in San Francisco because of its more urban life style, but with school-age children
will likely come to prefer a more suburban environment with good schools.
Elementary Schools
Against the district -wide overall picture, attention must be given to (1) what is happening in the
elementary schools compared to the middle schools and (2) the differences in the various parts of
the district.
Without counting any students that would be attending from Vallco development, the firm
projects a further decline of 582 elementary students District -wide over the next five years. It
observes that this decline could be partially offset by a projected increase of 182 students from a
hypothetical 700 Vallco unit development, which would make the projected decline only 400
students. (EPC cautions that any assumption about the number of units built at Vallco in the next
five years is speculative.) The decline would be even greater except for the projected
construction of 1,200 housing units (not including units from the Vallco project), which EPC
projects to generate about 300 elementary students. (The projects containing the 1,200 units are
identified in EPC's report to the District.)
The rate of decline will not be the same throughout the district, differing among three areas of
the district. The majority of the schools north and northeast of I-280 (in the Hyde and the eastern
part of the Cupertino Middle School attendance areas) , where most of the new development is
occurring, will remain at about current enrollment from their attendance areas. Schools in the
central area lying below I-280 and Bollinger Road (the Lawson attendance area) are projected to
experience moderate enrollment declines from their attendance areas. The schools in the
southern portion of the district have already passed their peak enrollment and have a continued
decline projected in the future.
Wolfe Road is the dividing line between the Collins (Cupertino) and Eisenhower (Santa Clara)
attendance areas. The Vallco Special Area encompasses property on both the east and west sides
of Wolfe Road, but the alternatives do not have plans that specify the number of residences to be
located on each side. In any case, CUSD anticipates that, consistent with District practices, the
majority of the elementary students generated by the project would be enrolled at the Collins or
Eisenhower Elementary Schools, with others attracted to programs elsewhere in the District.
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The relationship between a school's enrollment and the count of students residing in the school's
attendance area needs to be explained. The Cupertino District has developed programs that are
located in schools with available capacity, generally schools in the south part of the district;
CLIP, the Chinese Language Immersion Program, is an example. Many students participating in
the program are drawn from attendance areas in the northern/northeastern and central tiers of the
district, lessening the pressure on these schools. Also, Special Day Class (SDC) programs are
located in the southern schools, again drawing some students from the more crowded schools.
Finally, there are situations in which students attend a school in a nearby attendance area,
shifting enrollment south and lessening the pressure on the over -crowded schools. All of these
practices have some inherent disadvantage, but it is a much more favorable resolution than either
having the northern schools even more crowded or having fewer voluntary choices of schools.
Collins Elementary currently has only 36 more students residing within its attendance area than
attend the school, perhaps about average for schools in the central portion of the District when
the factors in the preceding paragraph are considered. Looking ahead, the number of students
residing in its attendance area is projected to decline by 72 students over the next three years.
Eisenhower, in the northeast portion of the District, has more students (173) residing in its
attendance area than attend the school and it is projected to have about the same number of
students residing in its attendance area five years from now as it currently has.
Adding many of the 104 students projected for the Proposed Project alternative, even with a
modest continued decline in enrollment from existing housing, would take combined enrollment
at these schools back approximately to their current enrollments. It would be impossible to add
more than a relatively small portion of the over 500 students projected for the General Plan
Buildout with Maximum Residential and Retail and Residential alternatives to Collins and
Eisenhower enrollments. The accommodation of the large majority of the 500 plus students
would have to be viewed in terms in of the District -wide projected decline of about 600 students
(without any students from Vallco). To the extent the enrollment decline doesn't continue after
EPC's five-year forecast window, it would mean more pressure on schools in the northeast
portion of the District, requiring program enhancements and/or attendance boundary adjustments
to accommodate most of that enrollment in schools outside of the northeast schools.
Middle Schools
Growing enrollment in the school district was until recently threatening to overwhelm the
capacity of CUSD middle schools. Now that is changing. This school year's enrollment in the
middle schools is 339 student below last year's enrollment. Without counting any students that
would be attending from Vallco development, the firm projects a further decline of 896 middle
school students District -wide over the next five years. (An enrollment of 39 students from a
hypothetical 700 Vallco unit development, an assumption EPG cautions as speculative, would
reduce the decline to 857 students.)
The four largest middle schools (Cupertino, Kennedy, Lawson, and Miller) have Fall 2017
enrollments of between 1,228 and 1,427 students. The other school, Hyde, is much smaller, with
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an enrollment of 972 students. At the Lawson and Miller schools, that enrollment includes a
significant net in -migration of students, 127 and 149 respectively, from other school attendance
areas. Cupertino and Hyde Middle Schools export a similar net number of students to other
schools.
In the next three years, however, enrollment from the attendance areas of each of the large
middle schools is projected to decline, ranging from 120 to 227 students. (Enrollment from the
Hyde, a smaller school, attendance area is projected to remain at approximately the current
level.) These declines allow for more flexibility in distributing students generated by a large new
development, consistent with District practices, than would have been the case prior to the
change in enrollment trends.
The Vallco Special Area is in the Lawson Middle School attendance area. Enrollment from the
Lawson attendance area declined 122 students from 2016 to 2017 (October counts) and is
projected to decline by an additional 120 students by 2020. Seventeen classrooms of permanent
construction have been added in the past few years at the Lawson and the adjacent Cupertino
Middle School campuses, adding substantially, about 600 students, to their enrollment capacity.
and relieving overcrowding.
The additions at Lawson and Cupertino Middle Schools and the decline of almost 900 students
(without any development assumed at Vallco) suggests that the impact on the District's facilities
by the 32 middle school students that would be generated by the Proposed Project would be
insignificant. It also appears that the District has the capability to absorb the approximately 160
middle school student that would result from the General Plan Buildout with Maximum
Residential and Retail and Residential alternatives.
Enrollment and Capacity of Fremont Union High School District Schools
The Fremont Union High School District currently has an October 2017 enrollment of 11,000
students attending its five comprehensive high schools. Enrollment Projection Consultants
expects this to remain essentially constant for the next two years. At that point the enrollment
decline described above for the middle schools will begin moving to the high school level.
Assuming no development at Vallco and therefore, no students being generated, a decline of 990
students residing in the District is projected for the next four years, October 2019 to October
2023. (EPC's report shows a decline of 901 students, which includes a projected increase in 89
students from a hypothetical 1,110 Vallco units, including 410 units in the sixth year, an
assumption EPG again cautions as speculative.)
The Vallco Special Area is located in the Cupertino High School attendance area. Enrollment
from the Cupertino attendance area is projected to decline by 187 students over the next six
years, not including any students from Vallco development. (EPC's projections for FUHSD are
for six years, to the 2023/24 school year.) Lynbrook High School attendance area is adjacent to
the Cupertino attendance area. Enrollment from the Lynbrook attendance area is projected to
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Vallco Specific Plan School Impact Analysis
decline by 334 students over the next six years, which (not considering any other factors) would
drop the school to an enrollment of about 1,500 students. The "Lynbrook Supplemental School
Assignment Plan" adopted by the FUHSD addresses this matter, including allowing students
from the Cupertino High School attendance area to choose to attend Lynbrook High School.
Staff have calculated the enrollment capacity of these five schools to be 11,272 students;
capacity is slightly above current enrollment. It should be understood that this capacity reflects
various factors, especially including current financial constraints. For example, it assumes that
average class size for almost all classes is 30.1 students. This is significantly above the national
average and, presumably, the FUHSD would lower class sizes, and thus require more
classrooms, if more adequate funding were available.
Cupertino High School is calculated by District staff to have an enrollment capacity of 2,566
students. Fall 2017 enrollment at Cupertino High School is 2,273 students, moderately below
that capacity. A total of 2,370 FUHSD students reside in its attendance area. It is projected that
in the Fall of 2023, the attendance area will have about 98 fewer students in its attendance area,
bringing its enrollment to 2,175 students (assuming 97 students continue to attend elsewhere in
the District).
While increasing enrollment has brought FUHSD to full utilization of the capacity of its schools,
the enrollment decline of about 1,000 students projected as the smaller grade cohorts move into
their high school years will free up some enrollment capacity. The Proposed Project impact of 32
high school students would be insignificant. The impact of 160 students from the General Plan
Buildout and the Retail and Residential alternatives would call for planning to accommodate it,
but doing so would not appear to be a problem since total enrollment would not exceed the total
enrollment capacity of the District.
Schoolhouse Services 14 April 2018
II. CAPITAL FACILITIES COST AND REVENUE IMPACTS
This section estimates the cost of facilities to house the number of students generated by
development under the three Specific Plan alternatives and the revenues generated by that
development. (It can be noted that the "no project" alternative, because it does not involve the
direct generation of any students, does not have any revenue nor any cost impacts.) It should be
understood that these are one-time costs and revenues, the revenues being statutory development
fees levied at the time of construction and the costs being school facility construction costs
incurred when enrollment capacity is provided. And it should be noted that, as only the broadest
definitions of the alternatives are available, the calculations are not precise.
Revenue Impacts - Development Fees
Development fees constitute the only mandatory capital facilities revenues to school district
resulting from development. California law provides for these fees on residential and non-
residential development as a partial source of funding for the costs of accommodating the
students resulting from the development. The maximum fee amounts were originally conceived
of as providing one-half of the cost of facilities to accommodate additional students, though they
typically fall short of this share.
The initial fees authorized by state legislation, effective beginning in 1987, are set forth in
Education Code Section 17620(a)(1), "The governing board of any school district is authorized
to levy a fee, charge, dedication or other requirement against any construction project ... for the
purpose of funding the construction or reconstruction of school facilities ...." Even more
critically, the section states "A city or county ... shall not issue a building permit for any
construction absent certification by the appropriate school district that any fee ... levied by the
governing board of that school district has been complied with, ...."
The imposition of these fees, now usually referred to as Level 1 fees, is subject to statutorily
prescribed rules. One of these limits the fees to maximum amounts. These amounts are adjusted
for inflation, most recently in January 2018 to $3.79 per square foot for residential development
and $0.61 per square foot for commercial/industrial (C/I) development, which includes almost all
private non-residential development. (There are also even lower fees for some very low
employment land uses, such as attendant -controlled parking structures.)
A minority of school districts in the state are eligible, based on factors such as overcrowding and
debt, to levy higher residential fees, referred to as Level 2 (and Level 3) fees. Few of the districts
in the Cupertino area are eligible to levy these fees. The same 1998 law that authorized these fees
set forth in Government Code Sections 65995.5 et seq., made it clear that a project's compliance
with a fee program adopted by a district constituted mitigation of the project's impact; no other
mitigation can be required.
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Impact fees are not taxes. They can only be levied if the governmental agency demonstrates that
its services will be negatively impacted if the impacts of the development are not mitigated. Both
CUSD and FUHSD have adopted documents justifying the fees they levy. For decades the
Cupertino Union and Fremont Union High School Districts have been pushed to have available
the capacity to accommodate a continually increasing enrollment; fees were levied for the
purpose of adding enrollment capacity beyond that provided by existing buildings. Now, as
described in the information about enrollment above, the Districts can look ahead and see that
enrollment from existing homes is projected to be decreasing. They will probably not, at least in
the near to medium distant future, be faced with the need to accommodate more students. This
has allowed them to focus on the need to replace and refurbish old and/or obsolete facilities.
The above analysis has made it clear that the primary task for CUSD and FUHSD in having
adequate capacity is replacing, refurbishing and enlarging existing facilities that will otherwise
become deteriorated or obsolete and unavailable to house students from new or existing homes.
Government Code Section 66001 (g) was amended specifically to recognize the inclusion of
costs "in order to (1) refurbish existing facilities to maintain the existing level of service" in the
determination and expenditure of fees to mitigate development impacts. A possible further need
is the addition of a small amount of capacity where possible at campuses that already have full
enrollment in order that additional students from new development will not cause or increase
overcrowding.
The State Allocation Board (SAB) adjusts maximum fee amounts biennially in January for
changes in the cost of construction, with the most recent adjustment having occurred in January
2018. (The Class B cost of construction index used by the state board rose about nine percent
between December 2015 and December 2017.)
Where two school districts, such as CUSD and FUHSD, each serve a portion of the kindergarten
through twelfth grades, the fee revenues are split between the districts. FUHSD and its
elementary feeder districts have an agreement as to how fee revenues are to be shared. Per this
agreement, CUSD is allowed to collect up to 60% of the $3.79 maximum fee amount, or $2.27
per square foot of residential development. FUHSD is allowed to collect 40% of the maximum,
or $1.52 per square foot of residential development. The maximum fees on non-residential
development are $0.37 and $0.24 per square foot for CUSD and FUHSD respectively.
Development Subject to Impact Fees
Table II -1 lists the building areas subject to development fees for the Proposed Project and the
two alternatives.
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Table II -1
Development Subject to Fees
(Square Feet)
Total Space 2,485,000 3,985,000 3,620,000
1Includes hallways, lobby, etc.
2 191 hotel rooms
3 Retail and restaurants
4 Governmental Offices, community meeting space or facilities
S Loading, facility, and security areas and central plant
Source: City of Cupertino
The information about the square footage of the various components of the project shown in
Table II -1 can be multiplied by the development impact fee amounts to calculate the fee revenue
that would be generated by Vallco development, as shown in Table II -2.
Voluntary Benefits
The law establishing the ability of school districts to levy impact fees was not intended to
provide revenue adequate to fully mitigate the impact. In a few cases, developers offer to provide
benefits in addition to the required fees to lessen the impact. The previously proposed Hills at
Vallco project was an example of this, as the developer offered to fund significant improvements
desired by CUSD and FUHSD. The project description with the Hills at Vallco project stated
intention was to provide resources to CUSD and FUHSD substantially in excess of the
development fee mitigation required by state law. CUSD and FUHSD made statements
expressing the view that the benefits offered would more than mitigate the impacts of the project.
Schoolhouse Services 17 April 2018
Proposed
General Plan
Retail and
Project
Buildout
Residential
Residential
Interior Space per Unit
800
1,000
825
Non -interior Space per Unit'
200
250
175
Number of Units
800
2,640
4,000
Total Residential Space
800,000
3,300,000
4,000,000
Non-residential
Office
2,000,000
1,000,000
0
Hotel2
120,000
120,000
120,000
Commercial/Retail3
600,000
600,000
600,000
Civic
65,000
65,000
0
Support Infrastructures
100,000
100,000
100,000
Creditfor Space Demolished
(1,200,000)
(1,200,000)
(1,200,000)
Net Non-residential Space
1,685,000
685,000
(380,000)
Total Space 2,485,000 3,985,000 3,620,000
1Includes hallways, lobby, etc.
2 191 hotel rooms
3 Retail and restaurants
4 Governmental Offices, community meeting space or facilities
S Loading, facility, and security areas and central plant
Source: City of Cupertino
The information about the square footage of the various components of the project shown in
Table II -1 can be multiplied by the development impact fee amounts to calculate the fee revenue
that would be generated by Vallco development, as shown in Table II -2.
Voluntary Benefits
The law establishing the ability of school districts to levy impact fees was not intended to
provide revenue adequate to fully mitigate the impact. In a few cases, developers offer to provide
benefits in addition to the required fees to lessen the impact. The previously proposed Hills at
Vallco project was an example of this, as the developer offered to fund significant improvements
desired by CUSD and FUHSD. The project description with the Hills at Vallco project stated
intention was to provide resources to CUSD and FUHSD substantially in excess of the
development fee mitigation required by state law. CUSD and FUHSD made statements
expressing the view that the benefits offered would more than mitigate the impacts of the project.
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Table II -2
Development Impact Fee Revenue
Proposed
Project
General Plan
Buildout
Residential and
Retail
Residential Square Feet 800,000
3,300,000
4,000,000
CUSD Fee Revenue @ $2.27 $1,816,000
$7,491,000
$9,080,000
FUHSD Fee Revenue @$1.52 $1,216,000
$5,016,000
$6,080,000
Non-residential Square Feet
1,685,000
685,000
-380,000
CUSD Fee Revenue @ $0.37
$623,450
$253,450
-$140,600
FUHSD fee revenue @$0.24
$404,400
$164,400
-$91,200
CUSD Total Fee Revenue
$2,439,450
$7,744,450
$8,939,400
FUHSD Total Fee Revenue
$1,620,400
$5,180,400
$6,004,400
Total Fee Revenue
$4,059,850
$12,924,850
$14,928,200
CUSD students
136
686
680
CUSD Revenue per Student
$17,937
$11,289
$13,146
FUHSD students 32 158 160
FUHSD Revenue per Student $50,638 $32,787 $37,430
Facilities Costs
This section of the report addresses the cost of accommodating students from each of the Vallco
Specific Plan alternatives as described in the last few paragraphs and compares the cost with the
development fee revenue the project will generate for CUSD and FUHSD. The analysis of
school enrollment impacts above shows that from 104 to 528 additional elementary, from 32 to
160 middle school students, and from 32 to 160 high school students would be generated by the
Vallco Specific Plan alternatives.
The discussion above described the primary approach that will be taken by CUSD and FUHSD
to house these students will be to refurbish and replace aging and/or obsolete existing buildings,
an approach specifically set forth as acceptable in California law. CUSD has completed projects
in the last three years that provide information on the cost of this approach. The replacement of
the old CUSD offices with a new two-story building with 20 classrooms and a music room at
Lawson Middle school provides a comparable for the cost of replacement with a new building of
permanent construction. The 21 rooms cost $9.6 million in hard construction costs and $2.8
million in associated "soft" costs, for a total cost of $12.4 million. That cost was incurred
beginning four years ago. Based on the cost of construction index used by the California State
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Vallco Specific Plan School Impact Analysis
Allocation Board (SAB), which oversees state school grants and developer fee limits, its
currently would cost 16.6% more due to inflation, a cost of $14.46 million. Classrooms average
very close to 1,000 square feet per room; adding 10% for hallways, etc. would bring the square
feet of building space to 23,100 square feet. The cost is therefore estimated at $626 per square
foot. This is comparable to costs of other permanent construction projects in the two districts.
Much of what CUSD has to do to have adequate capacity in the future is to replace aged
relocatables (also referred to as portables or modulars). It purchased and installed 10 modular
classrooms at a cost of $3.39 million in 2015 and 2016. With an estimated 10,000 square feet of
space in the units, the cost is $339 per square foot. The SAB's construction cost index has
increased 10.3% from the average of 2015 and 2016 costs to the 2018 cost, increasing the current
cost to replace aged modular classrooms to $374 per square foot.
Capital projects within the FUHSD also provide information about the cost of refurbishing or
replacing educational space to maintain enrollment capacity in the future. This information is in
the form of costs for projects to be undertaken in 2018 and 2019. A list of planned projects
includes four classroom buildings, only one of which, the addition of four classrooms, does not
involve demolition of an older building. Another project involves the demolition of six
classrooms. An equal number of planned projects involve renovation or replacement of space in
buildings such as gym/field house, cafeteria, etc. (some of which have a minority of the space
devoted to classrooms).
The per square cost of the three buildings are very similar and average $726 per square foot. The
fourth classroom project, the four -room building, has a much higher cost per square foot. The
refurbishment (including installing up-to-date technology) in non -classroom building projects
generally have much higher per square foot costs, more often than not making refurbishment
more expensive in the long run, than replacement with new construction. The cost of $726 per
square foot is conservatively used as the basis for determining the capital cost impact of students
from new development. This cost is in the same range as the $626 cost of similar CUSD projects.
We do not know what proportion of projects in the two districts will be modular/relocatable and
what percentage will be permanent construction. To have a reasonable number that can be used
to compare cost for the three Specific Plan alternatives, we use a simple average of the three
costs, implicitly assuming modular buildings will account for one third of the square feet
refurbished or built by the districts. The assumed cost is therefore $575 per square foot. The
assumption that enrollment capacity needs will be met through refurbishing and replacement
means that no cost for land is included.
The California Department of Education (CDE) uses floor space per student guidelines as a
component in determining the dollar amounts in its new construction grant program and these
numbers can be used to project the amount of floor space necessary to accommodate students
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Vallco Specific Plan School Impact Analysis
from new development. The floor spaces are 73 square feet for elementary, 80 square feet for
middle school students, and 95 for high school students.
The above information allows for calculation of an estimated capital facilities cost for the three
General Plan alternatives. Table II -3 repeats Table I-3, showing the number of students at each
grade level generated by the Proposed Project and the two alternatives.
Table II -3
Enrollment Impact
Proposed General Plan Retail and
Project Buildout Residential
Elementary (K -S) 104 528 520
Middle (6-8) 32 158 160
Total CUSD 136 686 680
FUHSD 32 158 160
Source: Schoolhouse Services.
The estimated enrollments shown in Table II -1 are converted into the amount of educational
space needed to be refurbished or replaced to maintain its availability for the students. This is
shown in Table II -4.
Table II -4
Space Impact
(Square Feet)
Source: Schoolhouse Services.
Schoolhouse Services 20 April 2018
Square Feet
Per Student
Proposed
Project
General Plan
Buildout
Retail and
Residential
Elementary (K -S)
73
7,600
38,500
38,000
Middle (6-8)
80
2,600
12,700
12,800
Total CUSD
10,200
51,200
50,800
FUHSD
95
3,000
15,000
15,200
Source: Schoolhouse Services.
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Vallco Specific Plan School Impact Analysis
The last step is to convert the square feet of space into cost impact, utilizing the average cost
estimate of $575 per square foot. The results are shown in Table II -5.
Table II -5
Cost Impact
(millions of dollars)
Cost per
Square Foot
Proposed
Project
General Plan
Buildout
Retail and
Residential
Elementary (K -S) $575
$4.37
$22.16
$21.83
Middle (6-8) $575
$1.47
$7.29
$7.36
Total CUSD
$5.84
$29.45
29.19
FUHSD $575 $1.75 $8.65 $8.74
Source: Schoolhouse Services.
Comparison of Capital Facilities Costs and Developer Mitigation
Table II -6 below shows the calculation of the difference between the development impact fees
likely to be generated by the Specific Plan alternatives and the Construction Cost Index adjusted
facilities costs per student for each of the alternatives.
Table II -6
Development Impact Fees Versus Facilities Costs*
(millions of dollars)
FUHSD
Fee Revenues $1.62 $5.18 $6.00
Facility Costs $1.75 $8.65 $8.74
Net Capital Impact ($0.13) ($3.47) ($2.74)
*Both fee and revenue costs are one-time, rather than annual
Source: Schoolhouse Services
Schoolhouse Services 21 April 2018
Proposed
Project
General Plan
Buildout
Retail and
Residential
CUSD
Fee Revenues
$2.44
$7.74
$8.96
Facility Costs
$5.84
$29.45
$29.19
Net Capital Impact
($3.40)
($21.71)
($20.23)
FUHSD
Fee Revenues $1.62 $5.18 $6.00
Facility Costs $1.75 $8.65 $8.74
Net Capital Impact ($0.13) ($3.47) ($2.74)
*Both fee and revenue costs are one-time, rather than annual
Source: Schoolhouse Services
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Vallco Specific Plan School Impact Analysis
The table shows that impact fees do not cover the cost of facilities, particularly for CUSD. The
deficits are significantly larger for the General Plan Buildout with Maximum Residential and the
Retail and Residential alternatives than for the Proposed Project, reflecting the larger enrollments
generated by the two alternatives with many more housing units.
The impacts reflect the relatively high cost of school facilities at CUSD and FUHSD campuses.
The deficits would be even higher, if not for the substantial fee revenue from the non-residential
development portion of the project. The deficits also reflect the design of California law that
development fees are only intended to partially mitigate development impacts on school districts.
Schoolhouse Services 22 April 2018
III OPERATING REVENUE AND COST IMPACTS
Operating Costs
Operating costs are annual costs and are matched with revenues received annually. Almost all
operating costs tend to increase with enrollment, if educational standards are to be maintained.
These costs include personnel costs like salaries and benefits for certificated and classified
employees, which comprise the large majority of a district's budget. Therefore, the cost per
student estimate is simply a calculation of the revenues available for operating expenditures
divided by the number of students, as shown in Table III -1.
Table III -1
Per Student Operating Costs
Operating
Number of
Per Student
Budget
Students
Cost
CUSD $185.2 million
18,001
$10,290
FUHSD $146,900,000
11,042
$13,300
Sources: CUSD and FUHSD 2017-18 budgets and Schoolhouse Services
The cost impact of the Proposed Project, and each alternative, on each district is calculated as the
cost per student times the number of students. This is shown in Table I1I-2.
Table III -2
District Operating Costs
Proposed General Plan Retail and
Project Buildout Residential
CUSD Students 136 686 680
CUSD Costs (@ .$10,290 per student) $1,400,000 $7,06,000 $7,000,000
FUHSD Students
32 158 160
FUHSD Costs (@ $13,300 per student) $430,000 $2,100,000 $2,130,000
Source: Schoolhouse Services.
Operating Revenues
Additional students generated by development in the Vallco Special Area, under any of the
scenarios, will affect the revenues and costs for the two districts in very different ways.
Cupertino Union School District
CUSD is a "revenue limit" district. Like other revenue limited districts in the state, its property
tax revenues are sufficiently low that it is eligible to receive supplemental funding from the
state's operating grants program. (Ninety -plus percent of the students in California public
schools attend revenue limit districts.) This grant program is now in its fifth year; it folds about
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40 funding programs into a single grant program and generally allows districts to allocate the
revenue as they see fit. The program can be briefly summarized as follows. Based on the state
budget allocation to K-12 education for the fiscal year, it is the public school funding level
(property tax revenues plus grants) that the state can support in all California districts. Then the
state budgeted money supplies the additional funds necessary to each district to fill the gap. For
each district, the state specified funding level (the Local Control Funding Formula or LCFF)
depends on total enrollment and the percentage of the enrolled students that are learning English
or eligible for free or reduced price lunches.
The result of the program's structure is that the total district revenue, i.e., revenues from property
taxes plus the revenue limit program, increases proportionately as enrollment increases. Another
reality for a revenue limit district is that the increase in property tax revenue from new homes is
offset by a comparable reduction in the money from the state; thus higher property taxes do not
affect the total of property tax and state revenue limit funding. It should also be understood that
the above analysis is based on the current state grant funding program; this program could be
modified in coming years. CUSD total revenue (taxes plus the state grant) due to the current
program totals $148 million in this fiscal year, or $8,200 per student.
The federal and state government also supply other funding, generally for categorical programs,
and these also tend to increase as enrollment increases, as do the relatively small revenues from
several local sources (e.g. interest and transportation fees). CUSD operating revenues from these
sources total $37 million, or $2,100 per student for the 2017-2018 school year.
Fremont Union High School District
FUHSD is one of the relatively few districts in the state that is not a revenue limit district. Its
property tax revenue is moderately above the amount below which the state Local Control
Funding Formula (LCFF) comes into play and provides grants supplementing property tax
revenue. Because there is no state supplement to property tax revenues (in contrast to the CUSD
situation), District revenue does not increase when additional students are enrolled. However,
when new development generates additional property taxes, the District's revenues increase. The
increase in property tax revenue is equal to the District's share of the property tax rate times the
fair market value established by the Santa Clara County Assessor.
Table III -3 shows the calculation of the assumed assessed valuation for the Proposed Project and
the General Plan Buildout with Maximum Retail and Retail and Residential alternatives. The
assessed values are based on per unit and/or per square foot market values estimated by
Schoolhouse based on recent property sales. However, it should be noted that at this time, the
markets are changing rapidly. Current sales are to a large extent dependent on a very strong
market, but also on historically low interest rates and uncertainty about alternative investments.
These, and other, factors could change before construction of the buildings is completed. Also,
there are uncertainties as to how value will be allocated among the buildings; the central plant,
for example, has little value in itself, but it is necessary for the income generating buildings.
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Therefore these estimates should be understood to reflect judgment as much as they reflect
statistical data. And the lack of precision in the estimated assessed values should not be
overlooked.
The estimated total fair market value of the buildings of the scenarios, as shown in Table III -3, is
in the same range, from a little over $4.2 billion to a little over $5.1 billion dollars. The basic
property tax rate per California law is one percent of assessed value; the annual maximum
property tax (without voter approved bonds and special taxes) that is estimated to be generated
by development of the Vallco Specific Plans is from $42 to $51 million.
Table III -3
Assessed Value
Total Assessed Value ($ millions) $4,240 $5,140 $4,570
1 Table H-1
2 Not including any Civic, Support Infrastructure, and Parking space, their assessed value is minor in
comparison and is implicitly included in the value of the other land uses
Source: Schoolhouse Services
FUHSD's share of the base one percent property tax in the 13-301 tax code area in which the
project is located in is 16.7% of the base tax revenue it would range from $7.1 million to $8.6
million, as shown in Table III -4. This tax revenue generated by the Vallco Proposed Project and
the two alternatives amounts to from $48,000 to $221,000 for per student from Vallco.
It should be understood that these large numbers for these scenarios reflect (1) the very large
property values in prime locations in San Francisco and the Peninsula and (2) the fact that
residential development is balanced by a large amount of non-residential. The differences in the
projected property tax revenue per FUHSD student reflect the difference in the smaller number
of students in the Proposed Project compared to the larger number of students in the General
Plan Buildout with Maximum Residential and Retail and Residential alternatives, which generate
many more students.
Schoolhouse Services 25 April 2018
Proposed
General Plan
Retail and
Project
Buildout
Residential
Residential
Interior Space (square feet)'
640,000
2,640,000
3,300,000
Assessed Value per Square Foot
$1,100
$1,100
$1,100
Residential Assessed Value ($ millions)
$700
$2,900
$3,630
Non-residential
Office, Hotel, and/or Commercial/Retail'
2,720,000
1,720,000
720,000
Assessed Value per Square Foot
$1,300
$1,300
$1,300
Non-residential Assessed Value (S millions)
$3,540
$2,240
$940
Total Assessed Value ($ millions) $4,240 $5,140 $4,570
1 Table H-1
2 Not including any Civic, Support Infrastructure, and Parking space, their assessed value is minor in
comparison and is implicitly included in the value of the other land uses
Source: Schoolhouse Services
FUHSD's share of the base one percent property tax in the 13-301 tax code area in which the
project is located in is 16.7% of the base tax revenue it would range from $7.1 million to $8.6
million, as shown in Table III -4. This tax revenue generated by the Vallco Proposed Project and
the two alternatives amounts to from $48,000 to $221,000 for per student from Vallco.
It should be understood that these large numbers for these scenarios reflect (1) the very large
property values in prime locations in San Francisco and the Peninsula and (2) the fact that
residential development is balanced by a large amount of non-residential. The differences in the
projected property tax revenue per FUHSD student reflect the difference in the smaller number
of students in the Proposed Project compared to the larger number of students in the General
Plan Buildout with Maximum Residential and Retail and Residential alternatives, which generate
many more students.
Schoolhouse Services 25 April 2018
Vallco Specific Plan School Impact Analysis
Table III -4
FUHSD Property Tax Impact
Proposed General Plan Retail and
Project Buildout Residential
Property Taxes
Assessed Value ($ millions) $4,240 $5,140 $4,570
Maximum Tax Levy (I% of assessed valuer) $42,400,000 $51,400,000 $45,700,000
FUHSD Property Tax Revenue
FUHSD Share of Maximum Tax Levy (16.68%) $7,080,000 $8,580,000 $7,630,000
Number of Vallco generated students 32 158 160
Property Tax Revenue per Student $221,300 $54,300 $47,700
r State law (per Proposition 13) limits the base tax levy to one percent of assessed value.
There can be additions to this limit for debt service on voter approved bonds.
Source: Schoolhouse Services
FUHSD receives a modest amount of funding, about 13% of their total revenue, from sources
other than its property taxes. These can most conveniently be estimated of a per capita basis; the
2017-18 budget anticipates $1,700 per student from these sources.
FUHSD Students
Table III -5
FUHSD Other Revenues
Proposed General Plan Retail and
Project Buildout Residential
32 158 160
Other Revenues (@$1,700perstudent) $50,000 $270,000 $272,000
Property Taxes $7,080,000 $8,580,000 $7,630,000
Total Revenue Impact $7,135,000 $8,850,000 $7,900,000
Source: Schoolhouse Services.
Other CUSD and FUHSD Revenues
The voters of both CUSD and FUHSD have approved bond issues for campus improvements.
Debt service on the bond issues is spread among property tax payers proportional to assessed
value. The current tax rate for CUSD is $0.000496 per dollar of assessed value. As shown in
Table I1I-6, the revenue paid by Vallco property owners if developed per the Proposed Project
for debt service on CUSD bonds is projected at $2.10 million. The debt service levied on Vallco
development for the General Plan Buildout with Maximum Residential and the Retail and
Residential alternatives is projected to be $2.55 million and $2.26 million respectively.
Schoolhouse Services 26 April 2018
Vallco Specific Plan School Impact Analysis
Similarly, the current tax rate for the Fremont District is $0.000464 per dollar of assessed value
and the revenue levied for debt service on District's bonds is projected to be about 93% of the
amounts for CUSD. It should be understood, however, that these revenues do not increase the
funds available to the districts. The bond issues and associated debt service are fixed amounts.
The assessed value of new development increases the total assessed value, spreading the debt
service among a larger tax base; it does not increase the revenue to the districts. It does decrease
by from $4.1 to $4.9 million annually the amount other tax -payers in the districts have to pay.
Table III -6
School District Bond Debt Service
Proposed General Plan Retail and
Project Buildout Residential
Assessed Value ($ millions) $4,240 $5,140 $4,570
CUSD Bonds (at 0.0496% of assessed value) $2,100,000 $2,53RMW,440 $2,260,0082,264,736
FUHSD Bonds (at 0.0464% of assessed value) $1,970,000 $2,380,000 $2,120,000
Per Student
CUSD Bonds $15,500 $3,700 $3,300
FUHSD Bonds $61,500 $15,100 $13,200
Source: Santa Clara County Tax Collector and Schoolhouse Services
There is one local CUSD funding source (other than the property taxes) that does not increase
proportionally with enrollment, parcel taxes. Parcel taxes, which total approximately 10% of
total District general fund revenues, flow from measures approved by the voters. These taxes
continue until the expiration of the voters' authorization, though it is reasonable to expect that
they will probably be renewed at that time.
Parcel taxes are levied on a per parcel basis. The number of parcels constituting the non-
residential land uses is minimal, and that would also be the case if the residential units are
apartments, with each building a parcel. In contrast, if the units are platted and sold as
condominiums, each unit would be subject to the CUSD parcel tax of $250 per parcel (housing
unit). The annual revenues in that case would be $200,000, $660,000 and $1,000,000 for the
Proposed Project, General Plan Buildout with Maximum Residential and Retail and Residential
alternatives respectively.
Voters in the FHUSD, like voters in the CUSD, have approved a parcel tax; the amount is $98
per parcel. But again, the small number of parcels involved if the residential units are apartments
would make parcel tax revenue from the project negligible. However, if the units are
condominiums, the annual revenues would be $78,000 for the Proposed Project, and $259,000
and $392,000 for the General Plan Buildout with Maximum Residential and Retail and
Residential alternatives respectively.
Schoolhouse Services 27 April 2018
Vallco Specific Plan School Impact Analysis
The developers of the proposed The Hills at Vallco project in 2015 had agreed to pay both the
CUSD and the FHUSD parcel taxes per unit on the 800 apartment units proposed, making them
equivalent to condominiums for this purpose. However, while this is possible, it is an unusual
commitment and it is not assumed for any of the scenarios in this analysis.
Comparison of Operating Costs and Revenues
Table III -7 shows the operational revenues and costs anticipated for both districts as a result of
the Proposed Project and the General Plan Buildout with Maximum Residential and the Retail
and Residential alternatives. This shows the net fiscal impact for each of the three scenarios and
allows for a comparison of the fiscal impacts between them.
The net fiscal impact in each case is negligible for CUSD; both revenues and costs increase
approximately proportionately to the increase in the number of enrolled students. For FUHSD,
there is a large fiscal impact surplus under all three scenarios, due to the very large property
values and, hence, property taxes in the Cupertino area. For both districts, bond debt service is
based on assessed value and is, thus, in the same order of magnitude in each case. If parcel taxes
apply, the revenue increases proportional to the number of units.
Table III -7
Operational Cost Versus Operational
Revenue Impacts*
Proposed
General Plan
Retail and
Project
Buildout
Residential
CUSD
Revenue' $1,400,000
$7,06,000
$7,000,000
Costs' $1,400,000
$7,06,000
$7,000,000
Net Impact 0
0
0
Bond Debt Service' $2,100,000
$2,55$;Q609,440 $2,2$0,L3W4A&,736 $2,5,93 ,736
Possible Parcel Taxes' $200,000
$660,000
$1,000,000
FUHSD
Revenue $7,140,000
$8,850,000
$7,900,000
Costs' $430,000
$2,100,000
$2,130,000
Net Impact $6,710,000
$6,750,000
$5,770,000
Bond Debt Service' $1,970,000
$2,380,000
$2,120,000
Possible Parcel Taxes' $80,000
$260,000
$392,000
* All costs and revenues shown are annual costs and revenues
1 CUSD Revenues and costs and FUHSD costs increase approximately proportionately to enrollment
' Debt service payments (a part of property taxes) do not go to the districts; they reduce the
amounts other taxpayers have
to pay.
s Condominiums pay parcel taxes; apartments do not (unless by agreement with developer)
Sources: Revenues and costs from the CUSD and FUHSD 2017-2018
budgets, Schoolhouse Services
Schoolhouse Services 28
April 2018