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Appendix-H-Student Generation/Enrollment ReportsAPPENDIX H STUDENT GENERATION / ENROLLMENT REPORTS APPLE CAMPUS 2 SCHOOL IMPACTS on the CUPERTINO UNION SCHOOL DISTRICT Prepared by Schoolhouse Services May 2012 ENROLLMENT IMPACTS AND ENROLLMENT CAPACITY Development of the Apple Campus 2 is projected to increase employment on the site from a little less than 5,000 employees to up to 14,200 employees. Non-residential development is considered, by economists and by the State of California, to be a joint cause of student generation along with the homes in which the employees live. Worksites require homes in which the workers can live just as housing requires jobs for the residents who work. Both residential and non-residential developments are required both residential and non-residential developments to contribute to mitigation of their impacts on schools facilities. There is no doubt about the nexus between residences of Apple employees and the local schools their children attend; students will generally attend the local school in the attendance area in which they reside. The children of Apple employees, however, will not usually attend the school in the attendance area in which the worksite is located and probably, in the majority of situations, not even a school in the district in which it is located. Apple employees will sort out their residences based on a number of preferences and constraints and as a result will spread out over multiple school districts. Since the school districts of future employees are generally unknown at the time a workplace is developed, the mitigation usually goes to the local district, whether it will receive most of the enrollment impact or only a minority of the impact. The Apple Campus 2 project is anticipated to have significant enrollment impacts on the Cupertino Union School District (also referred to as the District and CUSD). This section analyzes these enrollment impacts in light of the capacity of the District's school facilities. The following section assesses the school facilities needed for the District to house the students and the cost of these facilities. A precise forecast of the future is not possible at this time. This analysis should rather be seen as a scenario that illustrates the factors linking Apple employees, their enrollment impact, and the consequent need for investments in school facilities. In so doing, it offers an order -of -magnitude picture of the enrollment impact and its cost. The scenario shows 178 students as an estimate of the enrollment impact on the Cupertino Union School District from the increase of more than 9, 000 employees, about one student for every SO additional employees. The cost of facilities to house the 178 students is estimated at $3.4 million. Again, this is to be regarded as an order -of magnitude estimate, though the estimates of student generation and construction costs are conservative and no land costs are included. Project Description The Apple Campus 2 site is bounded by Homestead Road on the north, the Interstate 280 freeway on the south, Wolfe Road and the Hamptons Apartments on the west and North Tantau Avenue on the east plus some parcels on the east side of Tantau, a total of 176 acres. An adjacent area on the other (south) side of Interstate 280 is related in that it consists of former Hewlett Packard office buildings now occupied by Apple, but is not part of this assessment. The parcels that make up the site are already developed but at a relatively low density that will allow for redevelopment to create a significantly greater amount of floor space. Apple proposes to demolish 26 buildings with 2.66 million total square feet of space. These would be replaced Schoolhouse Services I May 2012 Apple Campus 2 Impacts Cupertino Union School District with new buildings with a total of 7.83 million square feet. The iconic 2.82 million square feet "ring-shaped" office building with a 2.46 million square foot parking garage underneath would be the principal building on the new campus. Other buildings (containing 597,000 square feet) and a separate parking garage (1,650,000 square feet) would complete the currently proposed facilities. Apple is also requesting a reservation for development of an additional 300,000 square feet; there is no plan, design or location for this possible additional space at this time. The impacts of Campus 2 would arise from the difference between the pre -project situation and the campus with the greater amount of development, in particular the difference between pre - project employment and employment after the new campus is completed and occupied. The impact on school facilities would result from the home location decisions of Apple employees and the impacts thus generated on school enrollment. Construction is expected to be spread over a number of years. The impacts on employee workplace relocations will occur over a longer period of time. At the present time Hewlett- Packard employees on the site are being relocated to the Palo Alto area following its sale of the property. Apple employees who have moved into the buildings are being relocated in preparation for planned demolition of the buildings. Apple is planning on locating many of the groups (departments) expected to be at the new campus in temporary locations for up to five years while demolition and the new construction takes place. Then these groups, and other groups in the area, are expected to be relocated onto the new campus as the buildings are completed, a process that would occur over a number of years. The relocation of employee residences would occur over an even more extended period of time. The employee workplace relocation would be expected to become significant when employees are moving onto the new campus, and then to taper off until a decade or more later until a steady state is reached. As a result the school districts would expect to continue experiencing the enrollment impacts over a long period of time with almost all of the impacts from the project having been experienced approximately 15 years in the future. The current buildings on the site housed 4,844 Hewlett Packard (HP) employees prior to the project, 3,070 of them (63%) working in buildings north of Pruneridge Avenue. It is likely that many of them have lived in the area for many years. A total of up to 14,200 employees are projected at the new campus, an increase of about 9,350 employees from the pre -project level. (Up to 9,800 employees could be accommodated in the present buildings, though at an employee density twice the existing level and at a density higher than planned for the new buildings.) The Apple employees, with many engineers, are expected to be fairly young, on average. They will be well paid, but there is no information that suggests they will be paid at a higher or lower level than the former employees on the site. We do not have information about the housing locations of the employees previously working at the site. And we do not have information about the extent to which the transition to the Apple Campus will result in these employees changing their place of residence. Certainly many reside in the Cupertino School District. Most will still have jobs with HP and their workplaces will be relocated to its Palo Alto facilities. It would seem that many would remain in their current homes, at least for the time being. Schoolhouse Services 2 May 2012 Apple Campus 2 Impacts Cupertino Union School District Many of the future Apple employees are, of course, already living in Silicon Valley, probably a significant number of them in the Cupertino School District; for these employees there would presumably be little impact from the change in their work location. For other employees, including those hired from outside the valley in the future, the Cupertino community would be a housing option. Their characteristics will be such that residing in the Cupertino School District would be attractive to a large portion of them. It would make for a short commute. The high quality of the District's (and the Fremont Union High School District's) schools would be very much valued by the type of people working for Apple, and they would be relatively able to afford the community's high prices. Of course, many younger, single employees and couples would prefer a more urban environment; San Francisco is home to many young Silicon Valley employees for this reason. Yet five to ten years later many of them would have children and some are likely to find their preference shifting to the Peninsula and to the Cupertino Community in particular. A total of 1,660 employees out of the total increase of 9,400+ employees at Apple Campus 2 are projected to reside in the Cupertino Union School District. With adjustments for multiple employees in a household and allowing for vacant units, we estimate here the change in student generation for 1,456 housing units, less than three percent of the units in the district. (See the Appendix for the details of this projection.) Some of the employees will live in new units. The strong market presence of Apple employees will encourage developers to proceed with otherwise marginal projects and they will target marketing at Apple employees interested in moving to the community. However, the housing market is such that most of these units would have been constructed even without the impetus of the Apple project. Since housing development is subject to its own policy considerations, any impact through new housing is not quantified in this assessment. Student Generation The impact on school enrollment analyzed here thus arises from the students generated by 1,456 units with occupancy changed to households with an Apple employee. Student generation rates (SGRs) are the ratio of students to number of units. (For example, 100 students residing in a group of 200 homes reflect a student generation factor of 0.50.) The impact on enrollment is the change in student generation rates resulting from the change in occupancy. Enrollment Projection Consultants (EPC) has been the demographer for both the Cupertino District (elementary and middle schools) and the Fremont District (high schools) for many years. As part of its work the firm determines public school student generation (counts the number of students) attending the Cupertino District for a large number of relatively new housing units of various housing types. Many of the Apple employees buying or renting in Cupertino will have children; the employees without children could get more house for their money in another school district. Many of the people leaving will not have children; only 38% of the existing heads of households in the City of Cupertino are under 45 years of age. Most of those with children will remain until the children finished their schooling (though some will be moving because of job changes). Schoolhouse Services 3 May 2012 Apple Campus 2 Impacts Cupertino Union School District Exchanging households with the head of household over 45 years of age for households with the head under that age will result in more children in the homes. The last few years have been a period of growing employment in and around the Cupertino School District and the effects can be seen in District enrollment. The effect of housing turnover (sales or rentals to new tenants) on enrollment is evident in the increase from enrollment in a given grade one year to enrollment the following year in the next higher grade. Enrollment Projection Consultants analyzes these increases broken down by neighborhoods with different types of housing (omitting neighborhoods with new development in the last few years). The average increase in student generation from a sale or re -renting of a unit in the Cupertino District is 0.122 students. (The Appendix sets forth the data and the calculations involved.) This statistic understates the actual SGR increase resulting from changes of housing occupants. It reflects all changes in occupancy, not just changes to young households. Furthermore, the figure reflects only the increase in enrollment from students already in the first grade; families are more likely to move prior to the time children enter school. The student then is present in the first grade counts and does not show up as an increase. Similarly, and perhaps even more important, a younger sibling never appears in the progression ratios as an increase due to turn -over, though it was the family's move into housing in the District that resulted in the student's enrollment in the District. The reasonableness of the magnitude of this increase is confirmed by EPC finding changes of a similar magnitude in studies of SGRs before and after home sales in three other Peninsula school districts with lesser increases in employment. The result of the change in occupancies of 1, 456 homes would then be an additional 178 students in CUSD schools. The reasonableness of this projection can be seen in the District's records. They indicate that Apple is listed as the parent's place of employment for 596 current students. Apple currently has about 12,000 employees in the area. That is one student for every 20 Apple employees. The projection of 178 students for the increase of 9,356 employees at the Apple 2 Campus is about one student for every 52 employees, more than twice the ratio for current employees. Schoolhouse Services 4 May 2012 Apple Campus 2 Impacts Cupertino Union School District Enrollment Capacity of Cupertino District Schools Cupertino Union is a rapidly growing school district. Enrollment has increased every year in the last decade, going from 15,571 students in the fall of 2001 to 18,645 in the fall of 2011, an increase of 20% that has been accommodated in the same schools. The schools are crowded. Most of the schools are housing far more students than their design capacity, primarily by adding modular classrooms. School classroom support facilities - cafeteria/general purpose spaces, administrative offices, support classrooms for music/art or for students with targeted needs, playground space and facilities, etc. - are stressed. Elementary Schools The recent Enrollment Projection Consultants study projects an increase of 180 elementary students District -wide by next fall. Then, assuming that the rapid addition of young families in the District begins to abate, enrollment is projected to begin a significant decline, reflecting a downward trend from a number of years with low birth rates. By the year 2021 enrollment is projected to be above the current level of enrollment. However, and most importantly, the trends over the last few years, and as projected to continue for the next few years, are different in the three areas of the District. The schools north and northeast of Stevens Creek Blvd., the area in which the Apple Campus is located, are experiencing strong growth resulting in very serious capacity shortfalls. Schools in the central tier lying below but near Stevens Creek are crowded, though not to the extent of the northern schools, and are experiencing increases in enrollment which will last for another year or two. The schools in the southern portion of the District have already passed their peak enrollment and are projected to continue declining in the near future. The analysis to this point offers no insight into how the residences of the 178 students resulting from the Apple would be spread among the attendance areas of the District's 30 schools. All of the schools are within an easy commute of the new Apple Campus. It would appear that every school would receive at least a few students, but it would be a challenge to make a forecast more accurate than a distribution equal to that of the present students. The enrollment capacity of the schools is dependent upon the average class size. Due to financial and classroom capacity constraints, the District increased the maximum size in the first through third grade at the start of this school year, raising class sizes in these grades up to 24 students. It is only because of this change that most of the elementary schools in the northern and central tiers have accommodated this year's enrollment. Even with the increased capacity resulting from larger classes, several schools can accommodate their current enrollment only by housing significantly more students than the number for which they were designed. The five closest schools to the Apple Campus, including Eisenhower, the school in whose attendance area a portion of the campus is located, have a total enrollment of 3,783, an average of 750 students per school. The schools were typically designed for enrollments of about 500 students. Even beyond this overcrowding of these schools, their enrollments would be much larger except that many students living in these two attendance areas are attending other schools. The five schools have a total of 4,801 students living in their attendance areas, 1,018 more than attend the schools. The schools would have an average Schoolhouse Services 5 May 2012 Apple Campus 2 Impacts Cupertino Union School District enrollment of over 950 if students were not attending other schools. The forecast is for 115 additional students residing in the attendance areas of these five schools by 2015, bringing the number of students residing in each school's attendance area to an average of nearly 1,000 students per school, double the approximate design capacity of the campuses. The District's capacity can also be looked at from a district -wide perspective (though this overlooks the problems at the schools in the northern tier). Its elementary schools have capacity for 11,932 students. For grades one through three, capacity is based on the standard of the State of California class size reduction program, in which the District has participated since its inception. Kindergarten rooms have a class size standard of 33 students, with half of the students coming early and the other half coming later and staying after the first group has left. The fourth and fifth grade classes have a standard of 32 students per classroom. A total of three rooms are standard at each school for enrichment (special rooms for art, music, computer labs, etc.) and special needs pull-out classes (RSP, Title 1, etc.), (and possibly for intervention, students who need to be out of the classroom for behavior issues). The number also assumes that about 60 older modular classrooms will continue to be used and that other leased modular classrooms will continue to be available. Table 1 shows the comparison of this capacity with enrollment. Space is needed for 660 additional students; room is currently available only because the District increased kindergarten through third grade class sizes this year due to space and financial constraints. Middle Schools The increase in over -enrollment relative to capacity in the local schools is even more challenging in the middle schools. Three of the schools have over 1,300 students enrolled and the other two have over 1,000 students. Enrollment Projection Consultants is expecting an increase of 600 students between now and the fall of 2015. Because the five middle school attendance areas are much larger, and therefore spread across both growing and stable attendance areas, the burden of overcrowding is spread more evenly among the schools, though overcrowding is more of a problem in the three schools in the northern part of the District. The current facilities are overloaded at their current enrollment. Without added facilities they could not accommodate their future projected enrollment, let alone additional students resulting from the Apple Campus. Table 1 also shows the District -wide academic capacity of the five middle schools assuming an average of 25 students per class. Additional space will be needed to house the current enrollment plus 600 more students. Table 1 District Capacity and Enrollment Data School Level Academic 2011-2012 Capacity* Enrollment 2015 Projected Enrollment All District Elementary Schools 11,932 12,593 12,258 All District Middle Schools 5,492 6,052 6,657 Total 17,424 1 18,645 1 18,915 *Academic capacity assumes appropriate support space allocated, state recommended loading of classrooms, and continued use of older and leased modulars. Schoolhouse Services 6 May 2012 CAPITAL FACILITIES COST AND REVENUE IMPACTS A school district adding a significant number of students usually needs to incur one-time upfront costs for capital facilities to house the students. California law provides for development fees, usually paid at the time a building permit is issued, as a partial source of funding for such expenditures. This section addresses the cost of accommodating students resulting from development of the Apple Campus and compares this cost with the one-time development fees the project will pay to the CUSD. The development of the Apple Campus 2 will have a relatively neutral impact on the District annual budget, as the state provides funding to bring the District's revenues up to a specified amount per student, whatever the local costs and revenues. Facilities Costs Elementary School Costs The analysis of elementary school capacity in the first section showed that the majority of the elementary schools in the District do not now, and will not in the foreseeable future, have room to accommodate additional students in their existing facilities. Overcrowding will be a major problem, especially in the five schools closest to the Apple Campus. The District's preferred option for housing the increased enrollment would be a new school in the northern portion of the District. However, this does not appear to be a realistic possibility. The primary reasons are the lack of a suitable site and, if one were available, the funds to acquire it. The assumption made here is therefore that the increased enrollment will be housed by construction of one or more classroom wings at several of the over -crowded schools, along with improvements in the support facilities to allow the campus to function with a significantly larger enrollment than the campus design anticipated. It will be a challenge to add additional classrooms on the existing campuses. They were designed for smaller enrollments and the sites are typically far smaller in size than are appropriate for their enrollments. The School Facilities Planning Division of the California Department of Education makes available a "Guide to School Site Analysis and Development" which includes recommendations for size of campus for various enrollments. The guide recommends 13.1 acres for an elementary school of 750 students without a class size reduction program and 13.8 acres with class size reduction. Accommodating about 750 students on a much smaller campus involves placing classrooms on areas the state guide plans for other uses, such as recreation (6-7 acres recommended). The assumption used here is that the classroom wings would have two stories to minimize the ground area required and that the enlargement of support facilities would also be designed to minimize the compromise with recreational space. The State Allocation Board uses a cost of educational facilities as the basis for calculating state funding grants for new school facilities. The cost for elementary students, as of January 2012, is $18,910. (This number would be even higher if the school costs for SDC students, those with special needs, were averaged in.) School districts regard the state costs as "bare -bone" in nature; Schoolhouse Services 7 May 2012 Apple Campus 2 Impacts Cupertino Union School District construction costs are generally higher in the Bay Area, and the cost of two-story buildings with stairs, elevators and hallways are much higher. Nevertheless, the state cost is conservatively used here. This cost is also conservative in that no land cost is included. Middle School Costs All of the Cupertino District's middle schools are projected to have enrollments substantially in excess of the capacity of their current facilities. A new campus is even more out of the picture for a middle school, as the campus size would be about twice that of an elementary school. The District has plans for possible improvements at several of the middle schools. Lawson middle School has the largest potential for additional enrollment capacity. The plans for that campus include two possible two-story classroom buildings, one with 16 rooms and the other with eight rooms; building these, however, would require that the District's adjacent administrative offices be moved to another site. The plans for the Cupertino campus include a possible two-story 22 - room classroom building. Because of the other support and recreational space improvements included, the total cost of the improvements for both campuses is about $50 million, not including the cost of alternate space for the administrative space. The site plan for Hyde shows a possible single -story four unit classroom addition; staff has recognized the need for it to be two stories on the same footprint. These three schools have a problem with limited campus space due to their enrollments being above the level for which they were designed. The "Guide to School Site Analysis and Development" published by the Department of Education has a standard of 20.9 acres for a school of 900 students and 23.1 acres for a school of 1,200 students. Hyde has a current enrollment of 1,005 students and a site size of 14.0 acres; Cupertino has a current enrollment of 1,293 students and the size of its campus is 20.4 acres; and Lawson's enrollment is 1,030 and its campus is 13.4 acres in size, though the addition of the land occupied by the administrative buildings would be a significant improvement. These size constraints are a factor contributing to the relatively high costs of the planned improvements. The picture is even more unsatisfactory, if projected future enrollments are considered. (It should be noted that the CUSD Board of Education has not reviewed or adopted plans for construction of any of these improvements.) It seems appropriate again to use the state cost figures to calculate the cost impact of the students from the Apple project. The state cost is $19,998 as of January 2012. Table 2 lists the per student cost and the cost of facilities for Apple Campus students for both of the grade levels. Table 2 Cost of Additional Capacity Cupertino Union School District Grade Level Elementary School Middle School Total Source: Schoolhouse Services. Per Student Cost Number of Total Cost Students $18,910 119 $2,250,000 $19,998 59 $1,180,000 178 $3,430,000 Schoolhouse Services 8 May 2012 Apple Campus 2 Impacts Cupertino Union School District Development Impact Fee Revenues The legally mandated (California Code Section 17620) impact fee revenue to the Cupertino School District, the source of school capital improvements funding, will depend on the buildings in the portion of the project located within the District, essentially those buildings south of the current location of Pruneridge Avenue. Table 3 lists the various types of development in this area of the project with the projected square footage of each. Table 3 Square Feet of Development Square Feet ?rtino Union (CUSD) Portion of Campus Office/Research East of Tantau 300,000 Corporate Auditorium (portion) 28,200 Security/Reception Buildings 2,000 Parking Structure 1,650,000 Central Plant Utilities 75,000 Totally Occupied Area 330,200 Total Unoccupied Area 1,725,000 Total Area in CUSD Portion of Campus 2,055,200 a Clara Unified Portion of Campus Totally Occupied Area 2,820,000 Total Unoccupied Area 2,651,800 Total Area in CUSD Portion of Campus 5,471,800 2 (not designed or located at this time) 300,000 Campus 7,827,000 Source: Apple CUSD (along with Fremont Union High School District,) has demonstrated the need to levy Level 1 development impact fees on new residential and commercial/industrial development. California law sets forth a maximum fee amount; both districts have documents justifying their need to levy the maximum amounts, as do most California school districts. The maximum Level 1 residential fee that CUSD and FUHSD together are currently allowed to levy is $3.20 per square foot of development. Fees can usually be levied on non-residential development because of the role of employment in causing a need for residences where employees and their children live. The maximum fee for commercial/industrial (non-residential) development is $0.51 per square foot. FUHSD and CUSD have an agreement as to how fee revenues are to be shared. Per this agreement, CUSD will be allowed to collect up to 60% of the maximum fee amount, or $1.92 per square foot of residential development. (FUHSD is allowed to collect 40% of the maximum, Schoolhouse Services 9 May 2012 Apple Campus 2 Impacts Cupertino Union School District $1.28 per square foot of residential development in the Cupertino Union School District area.) The maximum fees on commercial/industrial development are $0.31 and $0.20 per square foot for CUSD and FUHSD, respectively. The maximum fees are scheduled to be adjusted for inflation again in January 2014. Three factors, other than the total size of Campus 2, affect the amount of development fees to be paid by Apple to the Cupertino Union District to mitigate its impact. The first is the location of the buildings on the campus. The development site lies across the boundary line between CUSD (and the Fremont Union School District) and the Santa Clara Unified School District. Almost half of the current building area is in CUSD. However, only about one-quarter of the Apple Campus building area will be located in the portion of the campus within the boundaries of CUSD (and FUHSD). The large majority of the space will be located in the Santa Clara District. The second factor that affects the fee revenues CUSD is expected to receive involves the number of employees projected to be working in the buildings located within CUSD boundaries (south of the current Pruneridge Avenue boundary). Apple's main ring-shaped shaped building will be in the Santa Clara School District. Information from Apple indicates that only 16% of the square feet in buildings in the CUSD portion of the site will be occupied by employees. The large majority of the space will be a parking garage and the central utilities plant, neither of which will have more than a minimal number of employees. With a minimal number of employees, the potential development fees for schools on these buildings would be minimal. The fee amounts usually levied on the buildings that Apple indicates would be occupied by employees would equal $102,000 (330,200 square feet times $0.31 per square foot). (The amount would be higher if all of the buildings in the CUSD portion of the campus were considered as a unity, i.e. the employment treated as arising from the buildings as a group.) The third factor involved is the demolition of the existing buildings on the site. The number of square feet on the whole Apple 2 campus will increase significantly. However, the employment and occupied square feet in the buildings on the portion of the campus in CUSD will decrease. As a result of the reduction in occupied space, and the other factors mentioned, it is probable there would be no development fees to mitigate the impacts on CUSD from the development of 2.055 million square feet (330,200 of it occupied) within its boundaries and 5.472 million square feet (2.820 million of it occupied) on the other side of the District's border. Schoolhouse Services 10 May 2012 Apple Campus 2 Impacts Cupertino Union School District Appendix Enrollment Impact of Apple 2 Campus Employees Apple 2 Employees Residing in the Cupertino Union School District Ten percent of the employees at Apple Campus 2, about 936 of the increase in employees at the site, are projected to reside in the City of Cupertino. (Sources: City of Cupertino planners and LSA Associates, Inc., the firm preparing the EIR, with residence data for employees provided by Apple.) The Cupertino Union Elementary School District includes all of that city except for the portion of the Apple Campus 2 site north of Pruneridge Avenue and the adjacent senior apartment complex on the east side of Wolfe Road. It also includes parts of the cities of Los Altos, San Jose, Santa Clara, Saratoga and Sunnyvale. CUSD files show 596 students with the emergency contact being a person employed at Apple. Of these 336 students reside in the City of Cupertino and 260 students, an additional 77.4%, reside in one of the other cities served by the district. Assuming the Apple 2 employees will be apportioned in the same ratio, a total of 1,660 Apple 2 employees will move into the Cupertino School District. It is not to be expected that each employee living in the community would occupy a separate housing unit. In some cases more than one Apple employee will reside in a unit and other units will have an Apple employee living with someone employed elsewhere, resulting in housing location decisions only partly due to the Apple Campus. Census statistics show that housing units average roughly 1.5 employees per unit, setting a lower limit of Apple employee occupied units equal to two-thirds of the number of employees, which could only occur if all employed persons in the households worked at the Apple Campus. Given that Apple employees are less than five percent of employed City of Cupertino residents, it seems reasonable that no more than one out of six household would have two or more Apple employees. Student generation rate data is for dwelling units (both occupied and vacant units). Allowing for a five percent vacancy rate, the net result is 1,456 units (88% of the number of employees residing in CUSD) related to the increased employment at the Apple 2 Campus. This is less than three percent of all units in the Cupertino District. Increase in Student Generation Upon Occupancy by Apple 2 Employees It should first be understood that the large majority of the student generation impacts of Apple employees would occur from the same number of employees of other technical companies moving into housing in CUSD. Households with employed persons, particularly those employed in technical fields, are a little younger than all households moving into the district, certainly as they do not include retired households and probably also due to the average younger age of employees in the technology companies. In the City of Cupertino, US Census statistics show 18% of the householders to be 65 years or older and another 44% to be between 45 and 65 years of age. Many young household moving into the district replace other young households, but also many replace older households who no longer have school-age children. The analysis of the impacts of the increase of Apple employees uses 0.122 students as the average increase in student generation, an increase of about one student for every eight households moving into the district when a housing unit is sold or re -rented. This is the average Schoolhouse Services 11 May 2012 Apple Campus 2 Impacts Cupertino Union School District increase whenever a house is sold or rented to new occupants in the district. Following is the data and the calculations on which this average was determined. The effect of housing turnover (sales or rentals to new tenants) on enrollment is evident in the increase from enrollment in a given grade one year to enrollment the following year in the next higher grade. Enrollment Projection Consultants analyzes these increases broken down by neighborhoods with different types of housing (omitting neighborhoods with new development in the last few years). The average cumulative increase from the first grade to the eighth grade for single-family detached units is 23%. (There is no prior year for kindergarten and some students enter the first grade after staying in nursery school for kindergarten, so transition into these grades is not included in the analysis.) This is an average increase of 3.0% compounded over seven years. The average length of time occupants have been in their single-family homes according to U.S. Census data is 17.3 years. Compounding the 3.0% increase over 17.3 years yields an average increase in student generation at sale of 67%. For students from condominium and apartment units (attached units), the average cumulative change from the first grade to the eighth grade is a decrease of 11%. The decrease has, to at least some extent, been due to the rapid increase in rents over the last few years and it is doubtful that that will be a deterrent to Apple employees. The district's enrollment statistics show that the decrease is primarily due to families with school-age children moving to larger units, in many cases single-family homes, as they require more space and their financial resources improve. In such cases, they may be replaced by younger households, often with pre-school children. Kindergarten enrollment from all attached units in neighborhoods without new housing has increased 37.5% in the last five years. (These are exactly the same units that show a slight loss in students as the classes move through the grades.) There are problems in using the kindergarten change statistics to calculate accurately the increase in enrollment from change in occupancy; therefore, conservatively, no increase is assumed here. The 67% change for single family units and multi -family changes together, weighted by the number of each type of unit (59% single family and 41% attached), yields an average increase of 39.4% in student generation on sale or rental to new tenants of housing units. The average SGR across all housing units in CUSD is 0.369 students per unit (18,643 students in 50,572 dwelling units). The average SGR gain is 0.123 students per home as it goes from below the average of all units to above. Information on student generation of homes prior to and after sale or rental to new tenants would be a quicker and more easily understood approach than the above analysis. Such data is not available for Cupertino or the Cupertino School District area. It is available, however, for three San Francisco Peninsula school districts. Schoolhouse Services 12 May 2012 Apple Campus 2 Impacts Cupertino Union School District Appendix Table Student Generation Change Upon Sale School District # sales period SGR before SGR after % change BelmontlRedwoodShor, 886 '06 —'09 0.16 0.28 70% 422 '07 —'10 0.05 0.18 130% Los Lomitas Menlo Park 746 '06 —'09 0.18 0.28 55% Source: Enrollment Projection Consultants. The table shows average increases in student generation upon sale ranging from 55% to 130%. The increases derived from CUSD's enrollment data, 67% for single family homes, is in the lower part of this range. Schoolhouse Services 13 May 2012 APPLE CAMPUS 2 SCHOOL IMPACTS on the FREMONT UNION HIGH SCHOOL DISTRICT Prepared by Schoolhouse Services May 2012 ENROLLMENT IMPACTS AND ENROLLMENT CAPACITY Development of the Apple Campus 2 is projected to increase employment on the site from a little less than 5,000 employees to up to 14,200 employees. Non-residential development is considered, by economists and by the State of California, to be a joint cause of student generation along with the homes in which the employees live. Worksites require homes in which workers can live just as housing requires jobs for residents who work. Both residential and non- residential developments are therefore required to contribute to mitigation of their impacts on school facilities. There is no doubt about the nexus between residences of Apple employees and the local schools their children attend; students will generally attend the local school in the attendance area in which they reside. The children of Apple employees, however, will not usually attend the school in the attendance area in which the worksite is located and probably, in the majority of situations, not even a school in the district in which it is located. Apple employees will sort out their residences based on a number of preferences and constraints and as a result will spread out over multiple school districts. Since the school districts of future employees are generally unknown at the time a workplace is developed, the mitigation usually goes to the local district, whether it will receive the most of the enrollment impact or only a minority of the impact. The Apple Campus 2 project is anticipated to have significant enrollment impacts on the Fremont Union High School District (also referred to as the District and FUHSD). This section analyzes these enrollment impacts in light of the capacity of the District's school facilities. The following section assesses the school facilities needed for the District to house the students and the cost of these facilities. A precise forecast of the future is not possible at this time. This analysis should rather be seen as a scenario that illustrates the factors linking Apple employees, their enrollment impact, and the consequent need for investments in school facilities. In so doing, it offers an order -of -magnitude picture of the enrollment impact and its cost. The scenario shows 105 students as an estimate of the enrollment impact on the Fremont Union High School District from the increase of more than 9, 000 employees, about one student for every 85 additional employees. The cost of facilities to house the 105 students is estimated at $2.7 million. Again, this is to be regarded as an order -of magnitude estimate, though the per student construction costs are very conservative and no land costs are included. Project Description The Apple Campus 2 site is bounded by Homestead Road on the north, the Interstate 280 freeway on the south, Wolfe Road and the Hamptons Apartments on the west and North Tantau Avenue on the east plus some parcels on the east side of Tantau, a total of 176 acres. An adjacent area on the other (south) side of Interstate 280 is related in that it consists of former Hewlett Packard office buildings now occupied by Apple, but is not part of this assessment. The parcels that make up the site are already developed but at a relatively low density that will allow for redevelopment to create a significantly greater amount of floor space. Apple proposes to demolish 26 buildings with 2.66 million square feet of floor space. These would be replaced Schoolhouse Services I May 2012 Apple Campus 2 Impacts Fremont Union Hieh School District with new buildings with a total of 7.83 million square feet. The iconic 2.82 million square feet "ring-shaped" office building with a 2.46 million square foot parking garage underneath would be the principal building on the new campus. Other buildings (containing 597,000 square feet) and a separate parking garage (1,650,000 square feet) would complete the currently proposed facilities. Apple is also requesting a reservation for development of an additional 300,000 square feet; there is no plan, design or location for this possible additional space at this time. The impacts of Campus 2 would arise from the difference between the pre -project situation and the campus with the greater amount of development, in particular the difference between pre - project employment and employment after the new campus is completed and occupied. The impact on school facilities would result from the home location decisions of Apple employees and the impacts thus generated on school enrollment. Construction is expected to be spread over a number of years. The impacts on employee workplace relocations will occur over a longer period of time. At the present time Hewlett- Packard employees on the site are being relocated to the Palo Alto area following its sale of the property. Apple employees who have moved into the buildings are being relocated in preparation for the planned demolition of the buildings. Apple is planning on locating many of the groups (departments) expected to be at the new campus in temporary locations for up to five years while demolition and the new construction takes place. Then these groups, and other groups in the area, are expected to be relocated onto the new campus as the buildings are completed, a process that would occur over a number of years. The relocation of employee residences would occur over an even more extended period of time. The employee workplace relocation would be expected to become significant when employees are moving onto the new campus, and then to taper off until a decade or more later until a steady state is reached. As a result the school districts would expect to be experiencing the enrollment impacts over a long period of time with almost all of the impacts from the project having been experienced by approximately 15 years in the future. The current buildings on the site housed 4,844 Hewlett Packard (HP) employees prior to the project, 3,070 of them (63%) working in buildings north of Pruneridge Avenue. It is likely that many of them have lived in the area for many years. A total of up to 14,200 employees are projected at the new campus, an increase of about 9,350 employees from the pre -project level. (Up to 9,800 employees could be accommodated in the present buildings, though at an employee density twice the existing level and at a density higher than planned for the new buildings.) The Apple employees, with many engineers, are expected to be fairly young, on average. They will be well paid, but there is no information that suggests they will be paid at a higher or lower level than the former employees on the site. We do not have information about the housing locations of the employees previously working at the site. And we do not have information about the extent to which the transition to the Apple Campus will result in these employees changing their place of residence. Certainly many reside in the Cupertino School District. Most will still have jobs with HP and their workplaces will be relocated to its Palo Alto facilities. It would seem that many would remain in their current homes, at least for the time being. Schoolhouse Services 2 May 2012 Apple Campus 2 Impacts Fremont Union Hieh School District Many of the future Apple employees are, of course, already living in Silicon Valley, probably a significant number of them in the Cupertino School District; for these employees there would presumably be little impact from the change in their work location. For other employees, including those hired from outside the valley in the future, the Cupertino community would be a housing option. Their characteristics will be such that residing in the Cupertino School District would be attractive to a large portion of them. It would make for a short commute. The high quality of the District's (and the Fremont Union High School District's) schools would be very much valued by the type of people working for Apple, and they would be relatively able to afford the community's high prices. Of course, many younger single employees and couples would prefer a more urban environment; San Francisco is home to many young Silicon Valley employees for this reason. Yet five to ten years later many of them would have children and some are likely to find their preference shifting to the Peninsula and to the Cupertino Community in particular. A total of 1,660 employees out of the total increase of 9,400+ employees at Apple Campus 2 are projected to reside in the Cupertino Union School District. With adjustments for multiple employees in a household and allowing for vacant units, we estimate here the change in student generation for 1,456 housing units, less than three percent of the units in the district. (A report similar to this one was prepared for the Cupertino Union School District. See the Appendix of that report for the details of this projection.) The Fremont Union School District is roughly double the size of the Cupertino District in land area (assuming open space in the hills up to Skyline Boulevard is not included); in other words, roughly half of the area of the high school district is the Cupertino Elementary District and the other half is other elementary districts, almost all in the Sunnyvale Elementary School District. According to the 2010 U.S. Census, 60% of the housing units in FUHSD are also in CUSD and 40% in the Sunnyvale District. Based on the elementary school enrollment, the portion of the Fremont High School District outside of the Cupertino District generates only roughly a quarter of the high school enrollment; i.e., the total Fremont high school enrollment is about 133% of its enrollment from the Cupertino District area. A report prepared for the Cupertino Union School District projected that 178 additional students would be enrolled in the district as a result of the 9,000 plus increase in employees at the Apple Campus. These students would attend FUHSD schools after they graduate from the eighth grade. The impact of these students can be calculated as follows. The 178 students spread across nine grades (kindergarten plus grades one through eight) is equal to 19.8 students per grade. That will equal 79 students in the four high school grades. There is currently one high school student from the Sunnyvale portion of the District for each three students from the CUSD portion. The Cupertino District portion would be a preferred location for Apple employees with children though, to a large extent, that is already the case with families currently choosing between the two areas. The other part of the perspective is that the Sunnyvale Elementary portion of FUHSD has two-thirds of the number of housing units that the Cupertino Union portion has, meaning it has the potential to increase above one in four the percentage of FUHSD students residing in the Sunnyvale Elementary portion. This perspective is supported by the increase in test scores in Sunnyvale District schools, particularly in the Schoolhouse Services 3 May 2012 Apple Campus 2 Impacts Fremont Union Hieh School District southern part of the District, those nearer to the Apple site. It would thus appear that the proportions will, as a minimum, be maintained, that there will be one student from the household of an Apple employee in the Sunnyvale portion of the District for every three in the CUSD portion of the District. Since there will be 79 from the CUSD portion, it is projected there will be 105 additional students throughout the whole District. Data about the number of Cupertino District students generated by current Apple employees offers insight into whether the 105 students projected in this scenario is a reasonable estimate. The Cupertino District currently has 596 students with Apple listed as the parent's place of employment. With only four grades compared to the nine Cupertino District grades, the number would be comparable to about 265 high school students, even if we assumed no students with Apple parents in the Sunnyvale Elementary portion of the District. Two hundred sixty-five students from 12,000 Apple employees is one FHSD student for every 45 employees. The projection of 105 students from Apple households moving into the District is equal to about one student for every 89 additional employees atApple 2, about half the ratio of current employees. Enrollment Capacity of Fremont Union High School District Schools Fremont Union High School District is a rapidly growing district. Enrollment has increased every year but one in the last decade, going from 9,023 in the fall of 2001 to 10,496 in the fall of 2011, an increase of 16% that has been accommodated in the same schools. Enrollment Projection Consultants (EPC) has been the District's demographers for many years. Its recent study projects an increase of 128 high school students District -wide by next fall, an increase of 664 students over the next five years, and an increase of 1,589 students over the next decade. The District plans for the next few years use 10,702 students for the 2012-13 school year enrollment and 10,597 for the following year, both numbers about 100 students above EPC's forecasts. The increase in enrollment is overcrowding the schools. Most of the schools are housing more students than their design capacity, primarily by adding modular classrooms. School classroom support facilities - cafeteria/general purpose spaces, administrative offices, support classrooms for students with targeted needs, playground space and facilities, etc. - are over -crowded or unavailable. Given its overcrowded facilities, Fremont Union staff have prepared careful evaluations of the enrollment capacity of its five comprehensive high schools. Their capacity is 9,850 students for the current school year; improvements already underway will bring the capacity to 10,064 by next fall. The five schools have a current enrollment of 10,469 students. Schoolhouse Services 4 May 2012 REVENUE AND CAPITAL FACILITIES COST IMPACTS Operating Budget Impacts The addition of 105 students will add a little over $1.0 million to the District's operating costs. The effect on revenues is difficult to estimate without more information. About two million square feet of construction is projected within the District, but 84% of it is in the form of a large parking garage. This will replace 1.25 million square feet of office space. The loss of the office space on the tax rolls could be of the same magnitude as the gain from the new facilities. The increase in property tax revenue from the main office building on the Apple Campus 2 will be substantial, but it will go to the Santa Clara Unified School District. Facilities Costs A school district adding a significant number of students usually needs to incur one-time upfront costs for capital facilities to house the students. California law provides for development fees, usually paid at the time a building permit is issued, as a partial source of funding for such expenditures. This section addresses the cost of accommodating students resulting from development of the Apple Campus and compares the cost with the development fees the project will pay to the Fremont Union High School District. The information about school enrollment and capacities in the first section showed that the schools in the District do not now, and will not in the foreseeable future, have room to accommodate additional students in their existing facilities. Overcrowding will be a major problem. The District does not consider it feasible to plan for a new high school. It does plan to add capacity by construction of additional classrooms at each of the schools, along with improvements in the support facilities, new expanded cafeterias in particular, to allow the campuses to function with a significantly larger enrollment than their design anticipated. The primary funding for these improvements is coming from the voter -approved Measure B. Partially because of the challenges involved in fitting new construction into an already developed campus including, in many cases, demolishing existing structures, the cost is estimated to be above $450 per square foot. The State Allocation Board uses a cost of educational facilities as the basis for calculating state funding grants for new school facilities. The cost for high school students, as of January 2012, is $25,442. (This number would be even higher if the school costs for SDC students, those with special needs, were averaged in.) The state assumes 92 square feet per student; the implicit cost is thus under $300 per square foot. School districts regard the state costs as "bare -bone" in nature; construction costs are generally higher in the Bay Area, and the cost of two-story buildings with stairs, elevators and hallways are much higher. Despite the fact that it is unrealistically low, the state cost is conservatively used here. Schoolhouse Services 5 May 2012 Apple Campus 2 Impacts Fremont Union Hieh School District Table 1 shows the per student cost and the cost of facilities for Apple Campus students. Table 1 Cost of Additional Capacity Fremont Union High School District Per Student Cost Number of Total Cost Grade Level Students High School $25,442 105 $2,671,000 Source: Schoolhouse Services. Development Impact Fee Revenues The legally mandated (California Code Section 17620) impact fee revenue to the Cupertino School District, the source of school capital improvements funding, will depend on the buildings in the portion of the project located within the District, approximately those buildings south of the current location of Pruneridge Avenue. Table 2 lists the various types of development in this area of the project with the projected square footage of each. Table 2 Square Feet of Development Square Feet Cupertino Union (CUSD) Portion of Campus Office/Research East of Tantau 300,000 Corporate Auditorium (portion) 28,200 Security/Reception Buildings 2,000 Parking Structure 1,650,000 Central Plant Utilities 75,000 Totally Occupied Area 330,200 Total Unoccupied Area 1,725,000 Total Area in CUSD Portion of Campus 2,055,200 Santa Clara Unified Portion of Campus 5,471,800 Phase 2 (not designed or located at this time) 300,000 Total Cam us 7,827,000 Source: Apple FUHSD (along with CUSD) has demonstrated the need to levy Level 1 development impact fees on new residential and commercial/industrial development. California law sets forth a maximum fee amount; both districts have documents justifying their need to levy the maximum amounts, as do most California school districts. The maximum Level 1 residential fee that FUHSD and CUSD together are currently allowed to levy is $3.20 per square foot of development. Fees can Schoolhouse Services 6 May 2012 Apple Campus 2 Impacts Fremont Union Hieh School District usually be levied on non-residential development because of the role of employment in causing a need for residences where employees and their children live. The maximum fee for commercial/industrial (non-residential) development is $0.51 per square foot. CUSD and FUHSD have an agreement as to how fee revenues are to be shared. Per this agreement, FUHSD will be allowed to collect up to 40% of the maximum fee amount, or $1.28 per square foot of residential development. (CUSD is allowed to collect 60% of the maximum, $1.92 per square foot of residential development.) The maximum fees on commercial/industrial development are $0.20 and $0.31 per square foot for FUHSD and CUSD respectively. The maximum fees are scheduled to be adjusted for inflation again in January 2014. Three factors, other than the total size of Campus 2, affect the amount of development fees to be paid by Apple to the Fremont Union District to mitigate its impact. The first is the location of the buildings on the campus. The development site lies across the boundary line between FUHSD (and the Cupertino Union School District) and the Santa Clara Unified School District. Almost half of the current building area is in FUHSD. However, only about one-quarter of the Apple Campus building area will be located in the portion of the campus within the boundaries of FUHSD (and CUSD). The large majority of the space is located in the Santa Clara District. The second factor that affects the fee revenues FUHSD is expected to receive involves the number of employees projected to be working in the buildings located within FUHSD boundaries (south of the current Pruneridge Avenue boundary). Apple's main ring-shaped building will be in the Santa Clara School District. Information from Apple indicates that only16% of the square feet in buildings in the District portion of the site will be occupied by employees. The large majority of the space will be a parking garage and the central utilities plant, neither of which will have more than a minimal number of employees. With a minimal number of projected employees, the potential development fees for schools on these buildings would be minimal. The fee amounts usually levied on the buildings that Apple indicates would be occupied by employees would equal $66,000 (330,200 square feet times $0.20 per square foot). (The amount would be higher if all of the buildings in the USD portion of the campus were considered as a unity, i.e. the employment treated as arising from the buildings as a group.) The third factor involved is the demolition of the existing buildings on the site. The number of square feet on the whole Apple 2 campus will increase significantly. However, the employment and occupied square feet in the buildings on the portion of the campus in the District will decrease. As a result of the reduction in occupied space, and the other factors mentioned, it is probable there would be no development fees to mitigate the impacts on FUHSD from the development of 2.055 million square feet (330,200 of it occupied) within its boundaries and 5.472 million square feet (2.820 million of it occupied) on the other side of the District's border. Schoolhouse Services 7 May 2012