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Agenda Bill 08/24/2009
a MA9 CALIFORNIA CITY OF PET A L U d"i~~~st 24,9 2®®9 g ~ ~ 7 ~~~1'~ J~~ ~~~ Agenda 'T'itle: Public Hearing and Discussion of Silk Mill Fiscal and Meeting Date: August 24, 2009 Economic Impact Assessment Pursuant to City Council Resolution No 2008- (Special Meeting) 189 N.C.S., "Establishing a Policy and Procedure for the Preparation, Review and Use of Fiscal and Economic Impact Assessments for Specified Meeting Time: ®7:00 PM Development Projects in the City of Petaluma", adopted October 6, 2008. The subject property is located at 450 Jefferson street, APN 007-163-002 Category: ^ Presentation ^ Consent Calendar X Public Hearing ^ Unfinished Business X New Business Department: Director: Contact Person: Phone Number: Planning Geoff Bradley- Irene T. Borba-Senior 707-778-4301 Planning Manager Plan. ~~~~~1-cam Cost of Proposal: N/A Name of Fund: N/A Amount Budgeted: N/A Account Number: N/A Recommendation: It is recommended that the City Council take the following action: Hold the required public hearing, take public comment on and discuss the contents of the Fiscal and Economic Impact Assessment (FEIA) for the proposed Silk iVlill Development in accordance with the provisions of City's adopted FEIA policy (Resolution 2008-189 N.C.S.; attached) Summary Statement: On October 6, 2008, the Council adopted Resolution No. 2008-189 N.C.S. which required preparation of a Fiscal and Economic Impact Assessment for projects involving general retail, grocery, hotel. or building and landscape materials that standing alone, or in combination with any other uses, has a total floor area of 25,000 square feet or more. The Resolution required that the City Council hold a public hearing to consider and discuss the FEIA prior to the granting of any land use entitlements. The purpose of the hearing is to have a public discussion with the City Council, applicants and the public; it is not intended to require or result in separate findings, conclusions or approvals regarding the project. The information in the FEIA can be used by the applicable City decision-making bodies during the subsequent entitlement process for the project. The FEIA was prepared under the City's direction by Bay Area Economics (BAE). A representative from BAE will be at the meeting to present the overall conclusions of the FEIA and respond to any questions. Attachments to Agenda Packet Item: A. Resolution No. 2008-189 N.C.S. Establishing a Policy and Procedure for the Preparation, Review and Use of "Fiscal and Economic Impact Assessments" for Specified Development Projects in the City of Petaluma. B. Silk Mill Hotel FEIA. .Reviewed by Admin. Svcs. Dir: Reviewed b Cit. Attorney: A ro ed b Cit Manager: ~~j~ ~:- ~ ~ Date: Date: Date: ~ -~ ~U Rev. # ~ Date Last Revised: 8/12/09 File: s:\planning\city council\silk mill FEIA staff report 2009 CITY ®F' PETALIJIVIA, CALIF®RNIA August 24, 2009 AGENDA REPORT FOR PUBLIC IIEARING AND DISCUSSION OF SILK MILL IIOTEL FISCAL AND ECONOMIC IMPACT ASSESSMENT PURSUANT TO CITY COUNCIL RESOLUTION NO 2008-189 N.C.S., "ESTABLISIIING A POLICY AND PROCEDURE FOR TI~IE PREPARATION, REVIEW AND USE OF FISCAL AND ECONOMIC IMPACT ASSESSMENTS FOR SPECIFIED DEVELOPMENT PROJECTS IN TIIE CITY OF PETALUMA", ADOPTED OCTOBER 6, 2008. 1. RECOMMENDATION: .Hold the required public hearing, discuss and take public comment the contents of the Fiscal and Economic Impact Assessment (FEIA) for the proposed Silk Mill Hotel Development in accordance with the provisions of City's adopted FEIA policy (Resolution 2008-189 N.C.S.; attached). 2. BACKGROUND: General Plan 2025 Goal 9-G-1 is to "establish a diverse and sustainable local economy that meets the needs of the community's residents and employers". In order to ensure that new commercial development will have a net positive impact on the community, Program "A" of General Plan Policy 9-P-2 recommended that the City consider the need fora "fiscal/economic impact analysis as a component of the project's entitlement process". The City Council adopted Resolution No. 2008-189 N.C.S. in October of 2008, which required the preparation of "Fiscal and Economic Impact Assessments" for certain commercial uses of a given size and type that are likely to have significant impacts on the local economy. The resolution outlines the information required from the applicants, the process by which the FEIA consultant is selected and managed, the content and use of the. FEIA, and public hearing and noticing requirements. The selection of a consultant to prepare the FEIA is modeled after the process used by the City for selecting environmental consultants. In general, the consultant is selected and managed by the City; however, the applicant is responsible for paying all costs associated with the preparation and administration of the FEIA. In this particular instance, the consultant selected by the City was Bay Area Economics because of BAE's familiarity with the City of Petaluma and its ready access to data that necessary for the FEIA. BAE utilizes data gathered from a variety of sources to assess anticipated impacts from the project. These include data from public agencies including Sonoma County Tourism bureau, the Sonoma County Economic Development Board, the California Travel and Tourism Commission, the Association of Bay Area Governments, and the California Employment Development Division. Also used are data purchased from Smith Travel Research, a leading provider of historical market data regarding the hotel market. Finally, first hand data was collected from existing hotels in the ~" market area, including interviews with three of the general managers of existing hotel properties located in Petaluma. Whereas the analysis focuses on a proposed hotel development rather than a retail development, it differs from other economic impact analyses previously prepared pursuant to Resolution No. 2008- 189. As the lodging market is driven by visitor (tourist and business traveler) spending, this analysis examined lodging expenditures in Petaluma vis-a-vis other Sonoma County cities to indicate the extent to which the City is over/under performing compared to its peers in the capture of lodging expenditures. The analysis also examines the ability of Petaluma to absorb additional hotel rooms, given the performance of existing facilities and the potential for additional visitor spending in the city. A public hearing on the FEIA is required to be held before the City Council prior to any land use entitlements being granted for the project. As stated in Section 10 of the FEIA resolution, "The purpose of the Council FEIA hearing is to have public discussion of project FEIA's with the City Council, applicants and the public before project land use entitlements are granted." The hearing is not intended to require or result in separate findings, conclusions or approvals for a project. The FEIA may be used by deciding bodies during the normal course of project review and the entitlement process "in determining project consistency with General Plan economic goals, policies and programs, including whether the project will have a net positive impact on Petaluma's economy, existing businesses, city finances and quality of life". During the entitlement process the deciding bodies :may accept and adopt the information, analysis, and conclusions of the FEIA as findings in support of their action concerning the project. Therefore, no specific action is required or expected from the Council. at this time; and there is no requirement that the FEIA is subject to subsequent amendments, responses to comments or further City Council review. Comments made during the course of the public hearing on the FEIA are part of the record that subsequent decision-makers-can draw on during the consideration of project entitlements. 3. DISCUSSION: Purpose of Study An application has been submitted to the City of Petaluma for the reuse. of the old Silk Mill property as a 100-room frill service hotel. Organization of lZeport In response to Resolution No. 2008-189 N.C.S, this FEIA report for this project contains three primary sections, as summarized below: Motel Market Impact Analysis. Examines supply and demand conditions for the lodging market in Petaluma and Sonoma County, and studies the potential for Petaluma to absorb additional hotel rooms. The following hotel market impact analysis f ridings are based on trends in hotel room rates and occupancies; trends in visitor spending on accommodations; existing lodging market conditions in Petaluma, and estimates of Petaluma's ability to capture future increases in visitor spending on lodging. • Sonoma County has experienced a long-term increase in visitor spending on accommodation, outpacing the 13ay Area and California as a whole. In 2007, the County realized $240 million of spending on accommodations, a 75 percent increase since 1992, reflecting along-term. average annual rate of 3.8 percent. In comparison, the Bay Area and state have seen a 3.3 percent and 3.0 percent average annual increase, respectively, over the same time period. • In per capita terms, Petaluma realizes significantly lower hotel expenditures than similar Sonoma County communities. Petaluma. has .among the lowest lodging expenditures of any jurisdiction in the County, collecting $265 per resident during 2007. The countywide average was $447 per capita in 2007. In order to be on par with Santa Rosa in terms of per capita expenditures, the City would have had to realize an additional $700;OQ0 of expenditures per year. To be on par with Rohnert Park, the City would have had to realize an additional $4.6 million in expenditures. Translated into additional hotel rooms, the City would require approximately 20 additional hotel rooms to realize per capita expenditures equal to Santa Rosa and approximately 135 additional rooms to realize per capita expenditures equal to Rohnert Park. • The countywide pipeline of planned and proposed hotels points to substantial growth in the supply of hotel rooms within the market area, regardless of what occurs in Petaluma. There are currently more than 1,250 units in various stages of planning in communities throughout Sonoma County, including the proposed project. This suggests that Petaluma's share of countywide visitor spending will likely decline. below current levels if it does not increase. its supply of hotel rooms. •>• Past. performance of Petaluma hotels indicates a healthy ,and profitable local market. Based. on a review of market data and interviews with local hotel operators, Petaluma hotels have performed well over the. past several years with revenues. generally above identified operating goals at larger hotels and with average occupancies above industry norms for profitability. Petaluma hotels saw an average occupancy rate of 68.7 percent between 2004 and 2008. According to industry standards, upscale hotels have an average breakeven occupancy rate of approximately 65 percent. Mid-range and extended stay properties have a breakeven occupancy rate of approximately 50 percent; while economy properties need an occupancy rate of approximately 40 percent. • Current market conditions are challenging but manageable for major hotel operators in Petaluma that would directly compete with the proposed project. Over the past 12 months, operators have reported markedly lower revenues, with occupancies and average daily rates both down approximately seven percent, compared to the same period a year earlier. Nonetheless, at 64.5 percent, occupancies remain at or above the average breakeven point for most hotel types, with general managers of local major hotels reporting that they have been able to withstand the downturn with only minimal changes to staffing plans. •e• Continuing growth in countywide hotel spending indicates opportunities to expand the local supply of hotel rooms. Notwithstanding current economic conditions, long-term trends of growing visitor spending on accommodations in Sonoma County point to opportunities to expand the local supply of hotel rooms. If Petaluma is to continue to capture its current percentage of countywide spending on accommodations, there is sufficient demand to expand the supply of hotel rooms in the City by approximately 12 rooms per year. As no new hotel construction has occurred in Petaluma since 2002, trends point to an opportunity to add approximately 100 rooms -the proposed size of the Silk Mill project - by 2010. Given these findings, in the long-run, the proposed project would have a minor impact on larger, chain hotel properties in Petaluma, and a potentially significant impact on sanaller boutique properties. Based on an analysis of past and current market conditions and forecasts for future demand, the project would be expected to have a modest impact on larger,.. chain hotels. These properties have generally operated above required profitability thresholds and would be able to absorb any temporary declines in occupancies and room rates;. caused by the opening of a new property. Any negative impacts would mainly occur in the short-term, as the broader economy remains weak, and. visitor spending is low. Delaying Phase II of the proposed project would give further opportunity for visitor spending to grow and the broader economy to recover, helping to limit any impacts on other local hotels. Although they serve a distinct market than the proposed project, an interview with a local operator suggests that smaller boutique properties maybe vulnerable to the opening of new hotels. These properties may experience greater declines in revenues due to increased competition, while lacking the financial resources to weather these declines. Employment Impact Analysis. This analysis assesses the' number of jobs and types of employment generated, as well as likely wages and benefits relative to industry standards and/or the City's Living Wage. The second major component of the FEIA is an analysis ofpotential employment impacts in the City of Petaluma, including number of jobs and types of employment generated, likely wages and benefits relative to industry standards and/or the City's Living Wage. The analysis. of employment characteristics begins on page 13 of the FEIA. The summary of employment impacts includes the following: • The Silk Mill Hotel project is estimated to result in 32 to 39 permanent jobs upon project completion. Building of the first phase of the project will generate 24 construction jobs, and the second phase will generate 19 construction jobs. Based on a 30 hour week, approximately 70 percent of the hotel and restaurant workers will be full-time. The market impacts analysis suggests that Petaluma can support an additional hotel of this type and size with minimal long-term impacts on local major operators. As such, any job losses associated with the proposed project would be modest, and are difficult to estimate with any precision. In terms of impacts on boutique properties, if the Metro Hotel is forced to close in response to the proposed project, this would impact a total of three employees (including the proprietors). • Based on published state employment data, the wages in the project are generally in the range that is typical for these occupations in Sonoma County. However, the available data indicate that some of the workers will not earn wages at the level of the Petaluma Living Wage, particularly wait staff and housekeepers. Projected wages in 2009 dollars range from a low of $8 per hour to $22+ per hour. The lower-paying occupations are the direct service-related occupations such as servers, stewards, and room attendants. • benefits for some workers, particularly part-time employees working under 30 hours per week, do not meet the standard set by the Living Wage ®rdinance. In terms of benefits, full time employees (i.e., working 30+ hours per week) receive health care after three calendar months of employment, with the employer paying 90 percent or more of the insurance cost for employees for medical, dental, and vision coverage. Medical coverage is not available for part- time employees. Full-time employees also get holiday time and accrue paid leave, combined vacation, sick leave, and holidays in the first year of employment. This leave time totals 19 days, increasing to 24 days or more after two years at work. The Living Wage Ordinance calls for 22 days of leave time annually, of at least which 12 should be paid. Thus, the full-time workers achieve the 12 paid days of leave within their first year, but do not achieve 22 days of total leave until after two years. Part time workers do not accrue leave time. Fiscal ><mpact Analysis. This section evaluates the fiscal impact of the proposed project on the City's General Fund, and estimates non-General Fund cost and revenue items. as well. The third major component of the FEIA is an analysis of potential fiscal impacts on the City of Petaluma. The fiscal impact analysis estimates the balance of municipal revenues and service costs associated with the proposed Silk Mill Hotel project at build-out. The primary focus of the analysis is the City of Petaluma General Fund, which receives the City's revenues for discretionary expenditures and funds the City's primary public municipal services. Non-General Fund revenue and cost items are also explored as part of this analysis. Methodology The analysis uses a combination of techniques to estimate the increases in costs and revenues generated by the proposed project. All cost and revenue estimates are in current, 2009 dollars. Where possible, the increases in revenues are modeled following the manner in which they are collected and allocated to the City. For example, increases in property tax revenues are based on an estimate of the increase in assessed valuation associated with a given project component. In other cases, where this type of detailed modeling is not possible due to lack of adequate data, this analysis utilizes revenue multipliers that represent the City's current average revenue per service population. The same general approach applies to the service cost portions of the model. Generally; this methodology presents a moderately conservative analysis of the potential fiscal impacts of the proposed project. Projected General Fund Revenues This portion of the analysis projects the anticipated annual increase in the City of Petaluma General. Fund revenues from the proposed commercial development. These revenue sources include ® Sales taxes; ® Property taxes; ® Property transfer taxes; ® Property taxes in-lieu of vehicle license fees; ® Franchise fees; ® License, permits, and fees; ® Fines, forfeitures, and penalties; © Business license fees; and ® Transient occupancy taxes. As shown in Table 28 of the FEIA report, the analysis estimates that the proposed project generates a net fiscal surplus of approximately $334,271 annually to the City of Petaluma General Fund, owing largely to the transient occupancy taxes generated. e This surplus represents 0.9 percent of the City's General Fund revenue budget, indicating that the proposed project would have a relatively minor positive impact: on the City's overall fiscal position. The cost estimates presented here are based on the City's Fiscal Year 2008-2009 Budget. To the extent costs in subsequent fiscal years decline (due to service reductions), the project would generate lower service costs than this analysis suggests. Surnrnary of Non-General Fund Revenues and Costs The City's development impact fees were recently updated in May 2008, so fees of approximately $2.1 million should support any capital costs associated with the proposed project. The Petaluma Redevelopment Agency should also receive approximately $29,192 annually in tax increment at project build-out, as the project is in the Petaluma CommunityDevelopment Area. As of this writing, the City does not expect to receive benefits from any developer contributions such as land dedication or off-site improvements. Currently, the City has no plans to make any public contributions such as land write-downs, tax rebates or refunds, below-market or contingent loans to the project, or to pay for any other costs associated with the development of the project. Overall, staff has finds that the contents and analysis in the Silk Mill FEIA conform to the requirements contained in Section 6 of Resolution 2008-189 N.C.S.. The FEIA further complies with the policy direction and intent expressed by Section 2, and does "provide an objective evaluation of the potential economic impacts of [the] specified retail/commercial project." 4. FINANCIAL IMPACTS: As required by the FEIA policy resolution, the overall assessment of the proposed Silk Mill hotel/restaurant proposal will generate an estimated $334,271 annually to the City of Petaluma General fund, owing largely to the transient occupancy taxes generated. Resolution No. 2008-189 N.C.S. of the City of Petaluma, California ESTABLISHING A POLICY AND PROCEDURE FOR THE PREPARATION, REVIEW AND USE OF "FISCAL AND ECONOMIC IMPACT ASSESSMENTS" FOR SPECIFIED DEVELOPMENT PROJECTS IN THE CITY OF PETALUMA WI-IEREAS, in 2008, the City of Petaluma adopted General Plan 2025 ("General Plan"), which included an entire chapter on economic health and sustainability (Chapter 9); and, WHEREAS, Goal 9-G-1 of the Genera! Plan is to "establish a diverse and sustainable local economy that meets the needs of the community's residents and employers;" and, WI-IEREAS, policies and programs under Goal 9-G-1 of the General. Plan focus on attaining a diverse and sustainable local economy, including Policy 9-P-2 concerning ensuring that new commercial development will have a net positive impact on the community; and, WHEREAS, Program "A" of General Plan Policy 9-P-2 recommends that the City consider the need fora "fiscal/economic analysis, as a component of the project's entitlement process, of the impacts on Petaluma's economy, existing businesses; local workforce and city finances" when reviewing commercial development proposals; and, WHEREAS, on June 16, 2008, the City Council held a discussion regarding the means by which the City could begin to implement the various General Plan policies and programs related to the goal of establishing a diverse and sustainable local economy; and, WHEREAS, the City Council's June 16, 2008, discussion of general plan economic policies concluded with City Council support for completion of a City-wide economic development strategy, and an immediate requirement for certain commercial uses of a given size and type that are particularly likely, given their size and nature, to have significant impacts on the local economy, to prepare a "fiscal and economic impact assessment" pursuant to Program "A" of Policy 9-P-2 prior to the granting of any required land use entitlements; and, WHEREAS, on July 7, 2008, and August 4, 2008, the City Council considered and received public comment on proposed policies and procedures for the preparation and review of frscal and economic impact assessments; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma as follows: 1. Recitals Made Findings. The above recitals are hereby declared to be true and correct and incorporated in this resolution as findings of the City Council of the City of Petaluma. Kesolution No. 2008-189 N.C.S. 2. Fiscal and Economic lmpact Assessment Policy Established. The City Council of the City of Petaluma hereby establishes this policy and procedure for the preparation, review and use of Fiscal and Economic Impact Assessments ("FEIAs") for specified development projects within the City of Petaluma ("City"). The purpose of this policy and procedure is to provide an objective evaluation of the potential economic impacts of specified retail/commercial projects within the City. Such evaluation, together with all other available information in the public record, is intended to help the decision making body determine project consistency with General Plan economic goals, policies and programs, including Policy 9-P-2 concerning ensuring new commercial development will have a net positive impact on Petaluma.'s economy, existing businesses, city .finances and quality of life. This policy and procedure implements General. Plan Program 9-P-2 (A), regarding consideration of the need when reviewing commercial development proposals over a specific size in building area per occupant, to obtain a fiscal/economic analysis of the. impacts on Petaluma's economy, existing businesses, local workforce and city finances as a component of the project's entitlement process. FEIAs required pursuant to this resohrtion may also be used as appropriate by project applicants, the City Council, the Petaluma Community Development Commission, and City staff to assist in identifying projects that may merit City and/or Commission assistance, such as through negotiation of development agreements, direct Commission assistance for eligible projects, and other assistance. 3. Covered Projects and 'l'ime for Submission of FEIAs Any applicant for a "General Retail," "Grocery," "Hotel," or "Building and Landscape Materials" use, as defined by the City of Petaluma Zoning Ordinance, as amended from time-to- time, that standing alone, or in combination with any other uses, has a total floor area (including, where applicable, the area used for outdoor sales) of 25,000 square feet or more of "General Retail," "Grocery," "Hotel," and/or "Building and Landscape Materials" uses shall be required to prepare and submit an FEIA to the City for consideration in accordance with this resolution. To the maximum extent permitted by law, this requirement shall apply to any new development or any redevelopment, as defined in California Health and Safety Code Sections 33020 and 33021 as amended from time to time, that meets the use and size requirements specified in this section. Subject to applicable law, FEIAs in accordance with this resolution must be submitted to the City for consideration prior to the granting of any required land use entitlements for the project If current economic impact assessment information already exists for a project, and that information analyzes and discusses one or more of the FEIA factors identified in Section 6(a-g) of this resolution, then that existing information may be used by the City or its. consultants in the preparation of the FEIA. The City may elect to obtain peer review of existing economic impact assessment information. The source for all data arid studies relied upon by the FEIA shall be identified, including materials submitted by the applicant and/or the public. Preliminary Information 12equired from. Applicants Prior to commencing an FEIA, applicants for projects subject to this resolution shall submit to the City the following information in a form acceptable to the City: a. Complete applicant and project manager contact information. Resolution Ni>. 2p08-189 N.C.s. b. Descriptions of proposed uses, where those uses are know. n, by area (square footage), owner(s), and tenancies. Where owner(s),, tenancies and/or users are not known, reasonable assumptions regarding proposed types of retail users (e:g., home electronics; furniture, clothing; etc.) may be substituted. FEIA Costs Applicants for projects subject to this resolution shall be responsible for all costs associated with the preparation, administration and processing of the FEIA, including the' cost of consulting services, noticing, and any subsequent analysis in accordance with this resolution. Applicants shall file with the City a deposit against Consultant costs for the preparation of the FEIA and the City's administration and processing costs in an amount to be determined by the City. To avoid delayed FEIA preparation. and processing, applicants must update deposits when and as directed by the City. 6. 1FEIA Contents FEIAs shall. analyze and discuss each of the following factors in sufficient detail to assist City officials and bodies responsible for project review and entitlement determinations in assessing project consistency with General Plan economic goals, policies.and programs, including whether the project will have a ,net .positive impact on Petaluma's .economy, existing businesses, City finances and quality of life in accordance with Policy 9-P-2 of the General Plan and this resolution... FEIAs shall include a separate section on each of the factors and a summary discussio~l on potential impacts to the local economy. For each factor, FEIAs shall analyze project impacts for afive-year period from the estimated completion of the project. FEIAs required pursuant to this resolution may analyze and discuss in addition to the following factors, any additional factors or information an applicant deems important or relevant for a meaningful assessment of the project's economic impact. a: 1'he existing local retail market conditions for market sectors proposed for the project, including project primary and significant secondary market sectors ,leakage of sales to other communities in those market sectors, regional market competition in the project market sectors, and population, demographic and related data for the project market sectors. b. Estimated retail sales by project retail sectors or merchandise categories per square foot, including estimated. captured leakage. c. Current and estimated. retail supply and demand for each project retail sector or merchandise category. d. The following estimated employment characteristics: i) the estimated number and type of jobs, including construction related, permanent, part-time and full-time of the proposed project for the period covered by the FEIA; ii) whether the proposed project witl result in significantly :increased or decreased permanent part-time jobs. (3:5 hours or less per week), or permanent 1~ull-time jobs (more than 35 ho~irs per week), or a combination. of permanent and full- time jobs, compared to or. using applicable local or regional employment projections, such as those Y'rom the Association .of Bay Area Governments ("ABAG")' for Petaluma for the: period covered by the FEIA; iii} estimated .employee wages, benefits, .and employer contributions for the proposed project compared with or using relevant data for the Petaluma community, such as living wages established in the Petaluma Municipal. Code, or California Employment Resolution No. 2003-13~J N.C.S. j~ ~~ Development Department occupational wage data for the Santa Rosa-Petaluma, Metropolitan Statistical Area for the period covered 'by the FEIA. e. The estimated impacts of the proposed project on existing retail businesses, including the potential. for opportunities for business renewal and growth due to new businesses locating in the Petaluma community, as well as the potential for negative impacts such as reduced sales or closures. f. The estimated project impacts on current and projected public revenues, including: sales tax, use tax, base property tax; tax increment, transient occupancy tax, development fee proceeds, benefit assessments, land dedication, exactions, developer=funded improvements, and other public revenue benefits. g. The estimated cost of public contributions, services and infrastructure required by the project,. including: tax rebates or refunds, land right-downs, below market or contingent loans, site acquisition or preparation costs, fee waivers or payments; and unfunded infrastructure and public improvement costs, and whether the estimated project public revenues will equal or exceed estimated project public contribution, services, and infrastructures costs. 7. FEIA. Preparation Consultants preparing FEIAs must be designated or approved by •the City. Project applicants may propose FEIA consultants. City .staff will coordinate with project applicants and FEIA consultants to :avoid conflicts among FEIAs that are being prepared at the same time, or that involve related or overlapping market studies, or that.otherwise could conflict. 8. Treatment of FEIA and Other Project Information. The contents of FEIAs; and other project information supplied in accordance'with this resolution, will be available to members of the public, except to the extent such information is exempt from disclosure or the disclosure of such information is prohibited pursuant to the California Public Records Act. and%or other applicable law. 9. Notice of FEIA Availability and Council Hearing on FEIA Upon receipt of the completed FEIA, the Community Development Department shall provide a public notice of its completion and availability for public review. Notice shall be provided in the form. of a one-ei'ghtfi page display advertisement in the City'-s adjudicated' newspaper of general . circulation, and. by mail to all property owners and residents within 1,000 feet of the project site and' to all- others that have requested such notice in writing. Additional information shall be provided on the City's website and at designated City facilities. Th'e notice shall appear at least thirty days prior to the City Council hearing on the FEIA. The. notice shall contain the time and place of the City Council hearing on the FEIA. l0. City Council Hearing and Use of FEIAs Before a project subject to .this resolution is granted any required. land use entitlements, the City Council will hold a public hearing, noticed in accordance with Section 9, to consider and discuss the FEIA and the project, and to permit project applicants, FEIA consultants, .and the public to comment on the FEIA and the project. The FEIA hearing before the City Council is not intended Resolution No. 2008-189 N.C.S. to require or result in. separate findings, conclusions or approvals regarding a project. The purpose of the Council FEIA hearing is to have public discussion of project FEIAs with the City Council, applicants and the public before required project land use entitlements are granted. The City officials and/or bodies responsible .for project" review and entitlement determinations shall, in the normal. course of their .project review and entitlement determination responsibilities, use the FEIA to assist them in determining project consistency with General Plan economic goals, policies and programs, including whether the project will have a net positive impact on Petaluma's economy, existing businesses, city finances and quality of life. In the normal course of their project review and entitlement determination responsibilities and after due consideration of the information, analysis and conclusions contained in the FEIA, the City officials and/or bodies responsible for project review and entitlement determinations may accept and adopt the information, analysis, and conclusions of the FEIA as tlndings of the officials or bodies in support of their action concerning the project. However, nothing in this resolution requires reviewing bodies to make findings concerning project consistency with the General Plan economic goals, policies .and progrars separate from or in addition to findings required by law or that are part of the City's existing entitlement process. 11. No Private Right of Action. Nothing in this resolution creates or shall be construed as creating a private right of action. Under the power and authority conferred upon this Council by the Charter of said City. REFERENCE: I hereby certify the loregoing Resolution was introduced and adopted by the f A~iproved as to Council of the City of Netaluma at a Regular meeting on the G'h day of October, j }.. form: 2008, by the following vote: i~ ~'1 AYES: Barrett, I-laeris, Nau, Vice Mayor Rabbits, Mayor "I'orliatt NOES:. Freitas, O',Brien ABSENT: None ABSTAIN: None ATTEST: 1 City Clerk ..., .,. Attorney Resolution No. 2008-189 N.C.S. '~ Fiscal and Economic Impact Analysis for Proposed Silk Mill Hotel Submitted to: Headquarters 1285 66th Street San Francisco Bay Area Sacramento New York Washington, D.C. Emeryville, CA 94608 The City of Petaluma Final Draft June 2009 Bay Area Economics 510.547.9380 fax 510.547.9388 bael@bael.com bayareaeconomics.com l3 ~~~c~~~~~ ~~~~°~ Purpose o~ stray BPR Properties has submitted an application to the City of Petaluma for the reuse of the old Silk Mill property as a 100-room full service hotel. Concerned about the size and scope of potential large-scale commercial developments in the City, the Petaluma City Council passed Resolution No. 2008-189 N.C.S. requesting the preparation of a Fiscal and Economic Impact Analysis (FEIA) for projects such as the Silk Mill, tb address issues of concern to the City and. its citizens. These concerns fall into three areas: (1) impacts on the lodging market and other hotel operators in Petaluma; (2) types of employment generated, including likely wages and benefits relative to a living wage; and (3) fiscal impacts, comparing revenues generated with costs of services required by the new development. In Apri1.2009, the City of Petaluma retained Bay Area Economics (BAE) to conduct the FEIA for the Silk Mill project. This report contains the methodology and findings of the FEIA, addressing the project's market, employment, and fiscal impacts. Project ®escription The subject project involves the redevelopment of the Silk Mill property, located at the southeast corner of Jefferson Street and Wilson Street. The proposed hotel contains 100 rooms to be built in two phases. Phase 1, with an area of 37,120 square feet, will contain 70 rooms and involve rehabilitation of the existing historic structure. Phase II will contain 30 'rooms and consist of 10,900 square feet of new construction. Altogether, the built=out project will total 48,020 square feet with 80 surface parking spaces and 23 underground spaces. The plans call for afull-service hotel, with a 2,100 square foot restaurant (1,200 to 1,400 square feet dining area), two small meeting spaces; oversize guest rooms with light kitchen facilities (e.g:, microwave, mini-fridge), and an on-site fitness center. The hotel aims to attract business travelers and tourists, and will serve both the standard and extended-stay markets. To take advantage of the property's unique architectural features, demolition and modifications of the Silk Mill will be minimized, and the design will expose as much of the historic qualities of the existing building as possible. i~ ~~b~~ ®~ ~®Ir~$elr~~S Executive Summary ........................................................................................................... i Introduction .......................................................................................................................1 Purpose of Study ...................................................................................................:................... 1 Organization of Report .............................................................................................................. 1 Project Description ..................:................................................................................................. 1 Hotel Market Impact Analysis .......................................................................................... 3 Methodology ..............:.............................................................................................................. 3 Visitor Spending on Accommodations ...........:.................................:....................................... 1 Analysis of Lodging Expenditures by Jurisdiction ................................................................... 1 Planned and Proposed Hotel Development ............................................................................... 2 Overview of Local Hotel Market Conditions ............................................................................ 4 Demand for Additional Hotel Rooms ....................................................................................... 8 Summary of Key Findings ...................................................................................................... 11 Employment Impact Analysis .................................................................................:......13 Employment .................................................................................................................:.......... 13 Wages and. Benefits ................................................................................................................. 14 Summary of Employment Impacts .......................................................................................... 17 Fiscal Impact Analysis ............................ ....... .............................19 Methodology ..........:................................................................................................................ 19 Projected General Fund Revenues .......................................:.................................................. 20 Projected General Fund Costs ................................................................................................. 27 Summary of General Fund Fiscal Impacts .............................................................................. 32 Non-General Fund Revenues and Costs .................................................................................. 33 Appendix A: Benefits Matrix for Silk Mill Hotel Workers ........................................... 38 ~5 H®tel IVlarket Impact Analysis The following findings are based on trends in hotel room rates and. occupancies; trends in visitor spending on accommodations; existing lodging market conditions in Petaluma, and estimates of Petaluma's ability to capture future increases in visitor spending on lodging. ^ Sonoma County has experienced a long-term increase in visitor spending on accommodation, outpacing the Bay Area and California as a whole. In 2007, the County realized $240 million of spending on accommodations, a 75 percent increase since 1992, reflecting along-term average annual rate of 3.8 percent: In comparison, the Bay Area and state have seen a 3..3 percent and 3.0 percent average annual increase, respectively, over the same time period. ^ In per capita terms,: Petaluma realizes significantly lower hotel expenditures than similar. - Sonoma-County-communities.-Petaluma-has-among-the-lowest lodging-expenditures-of-any jurisdiction in the County, collecting $265 per resident during 2007. The countywide average was $447 per capita in 2007. In order to be on par with Santa Rosa in terms of per capita expenditures, the City would have .had to realize an additional $700,000 of expenditures per year. To be on par with Rohnert Park, the City would have had to .realize an additional $4.6 million in expenditures. Translated into additional hotel rooms, the City would require approximately 20 additional. hotel rooms to realize per capita expenditures equal to Santa Rosa and approximately 135 additional rooms to realize per. capita expenditures equal to Rohnert Park. ^ The countywide pipeline of planned and proposed hotels. points to substantial. growth in the supply of hotel rooms within the. market area, regardless of what occurs in Petaluma. There are currently more than 1,250 units in various stages of planning in communities throughout Sonoma County, including the proposed project. This suggests that Petaluma's share of countywide visitor spending will likely decline below current levels if it does not increase its supply ofhotel rooms. ® Past performance of Petaluma hotels indicates a healthy and profitable local market. Based on a .review of market data and interviews with local hotel operators, .Petaluma hotels have performed well over the past several years with. revenues generally above identified operating goals at larger hotels and with average occupancies. above industry norms for profitability. Petaluma hotels saw an average occupancy rate of 68.7 percent between 2004 ~ Each hotel room is estimated to generate revenues of approximately $33,500 per year, assuming an average occupancy of 68 percent and an average daily rate of $135, which are based on historical performance of Petaluma hotels. i ~' and 2008. According to industry standards, upscale. hotels have an average breakeven occupancy rate of approximately 65 percent. Mid-range and extended stay properties have a breakeven occupancy rate of approximately 50 percent; while economy properties need an occupancy rate of approximately 40 percent. ^ Current market conditions are challenging but manageable for major hotel operators in Petaluma that would directly compete with the proposed project. Over the past 12 months, operators have reported markedly lower revenues, with occupancies and average daily rates both down approximately seven percent, compared to the same period a year earlier. Nonetheless, at 64.5 percent, occupancies remain at or above the average breakeven point for most hotel types, with general managers of local major hotels reporting that they have been able to withstand the downturn with only minimal changes to staffing plans. ^ Continuing growth in countywide hotel spending indicates opportunities to expand the -- local-supply of-hotel-r-ooms._Notwithstanding_current_economc_eonditions, long=term trends of growing visitor spending on accommodations in Sonoma County point to opportunities to expand the local supply of hotel rooms. If Petaluma is to continue to capture its current percentage of countywide spending on accommodations, there is sufficient demand to expand the supply of hotel rooms in the City by approximately 12 rooms per year. As no new hotel construction. has occurred in Petaluma since 2002, trends point to an opportunity to add Z approximately 100 rooms -the proposed size of the Silk lvlill project -. by 2010. ^ Given these findings, in the long-run, the proposed project would have a minor impact on larger, chain hotel properties in Petaluma, and a potential)y significant impact on smaller boutique properties. Based on an analysis of past and current market conditions and forecasts for future demand, the project would be expected to have a modest impact. on larger, chain hotels. These properties have generally operated above required profitability thresholds and would be able to absorb any temporary declines in occupancies and room rates, caused by the opening of a new property. Any negative impacts would mainly occur in the short-term; as, the broader economy remains weak, and visitor spending is low. Delaying Phase. II of the proposed project would give further opportunity -for visitor spending to grow and. the broader economy to recover, helping to limit any impacts on other local hotels. Although they serve a distinct market than the proposed project, an interview with a local operator suggests that smaller boutique properties still remain vulnerable to the opening of new hotels. These properties may experience greater declines in revenues due to increased competition, while lacking the financial resources to weather these declines. Z 2002-2010 spans an eight yeaz period. At 12 rooms/yeaz, there is "pent up" demand for 100 rooms. I~ Employment Impact Analysis The Silk Mill I3otel project is estimated to result in 32 to 39 permanent. jobs upon project completion. Building of the first phase of the project will generate 24 construction jobs, and the second phase will generate 19 construction jobs. Based on a 30 hour week, approximately 70 percent of the hotel and restaurant workers will be, full-time. The market impact analysis suggests that the proposed project would have minimal long-term impacts on local large-scale hotels. As such, any job losses associated with the proposed project would be modest, and are difficult to estimate with any precision. In terms of impacts on boutique properties, if the Metro Hotel is forced to close .in response to the proposed project, this would impact a total of three employees (including the proprietors). ^ Based on published. state employment data, the wages in the project are generally in the range, that is typical: for these occupations in Sonoma County. However, the available data indicate that some. of the workers will not earn wages at the level of the Petaluma Living Wage, particularly wait staff and housekeepers. Projected wages in 2009 dollars range from a low of $8 per hour to $22+ per hour. The lower-paying occupations are the direct service-related occupations such as servers, stewards, and room attendants. Benefits for some workers, particularly part-time employees working ,under 30 hours per week, do not meet the standarcl'set by the Living Wage Ordinance. In terms of benefits, full time employees (i.e., working 30+ hours per week) receive health care after three calendar months, of employment, with the employer paying 90 percent or more of the insurance cost for employees for medical, dental, and vision coverage. Medical coverage is not available for part- time employees. Full-time employees also get holiday time and accrue paid leave, combined vacation, sick leave, and holidays in the first year of employment. This leave time totals 19 days, increasing to 24 days or more after two years at work. The Living Wage Ordinance calls for 22 days of leave time annually, of at least which 12 should be paid. Thus, the full-time workers achieve the 12 paid days of leave within their first year, but do not achieve 22 days of total leave until after two years. Part :time workers do not accrue leave time. n Staffing at Metro'Hotel as reported in phone interview on June 2, 2009. Fiscal Impact Analysis The proposed project is expected to have a net positive impact on the City General Fund. As shown in Table A, this .analysis estimates that the proposed project would generate a net fiscal surplus of approximately $334,271 annually to the City of Petaluma General Fund, owing largely to the transient occupancy taxes generated. This surplus represents 0.9 percent of the FY 08/09 City's General Fund revenues, indicating that the proposed project would have a a relatively minor positive impact on the City's overall fiscal position. Table A. Net Fiscal Impact 2009 Revenues Dollars Sales Tax Revenues $5,460 Property Tax Revenues $1,600 -Property Transfer-T-ax Revenues $590- ILVLF Revenues $3,154 Franchise Fee Revenues $598 Licenses, Permits, and Fees Revenues $145 Fines,.Forfeitures, and'Penalties-Revenues $151 Business License Revenues $90 Transient Occupancy Tax (TOT) $330,143 SUBTOTAL: Revenues $341,932 Costs 2009 Dollars Police $4,022 Fire $1,948 Public Works $1,066 Parks and Recreation (a) $0 Community Development $93 General Government $532 SUBTOTAL: Costs $7,661 Net Fiscal Impact ~ $334,271 (a) As the development does not include any new residential units, and visitors will have a minimal impact on Parks and Recreation facilities, this analysis assumes that the project would have no fiscal impact. Source: BAE, 2009. The City will also receive additional non-General Fund revenues in the form of impact fees and tax increment to the Redevelopment Agency. The City's development impact fees ~ The cost estimates presented here are based on the City's Fiscal Year 2008-2009 Budget. To the extent costs in subsequent fiscal years decline (due to service reductions), the project would generate even lower service costs than this analysis suggests. i~ have been recently updated in May 2008, so the fees of approximately $2.1 million should effectively cover any capital costs associated with .the proposed project. The Petaluma Redevelopment Agency should also receive approximately $29,-192 annually in tax increment at project buildout, as the project is in the Petaluma Community Development Area. As of this writing, the City does not expect to receive benefits from any developer contributions such as land dedication or off-site improvements. .Currently, the City has no plans to make any public contributions such as land write-downs, tax rebates or refunds, below-market or contingent loans to the project, or to pay for any other costs associated with the development of the project. aD ~n~r®~oact~®~ Purpose- of Study BPR .Properties has submitEed an application to the City of Petaluma for the reuse of the old Silk Mill property as a 100-room full service hotel. Concerned about the size and- scope of potential large-scale commercial developments in the City, the Petaluma City Council passed Resolution No. 2008-189 N.C.S. requesting the preparation of a Fiscal and Economic Impact Analysis (FEIA) for projects such as the Silk Mill, to address issues of concern to the City- and its citizens.. These concerns fall into three areas: {1) impacts on the lodging market and other hotel operators in Petaluma; (2) types of employment generated, including likely wages and benefits relative to a living wage; and (3) fiscal impacts, comparing revenues generated with'costs of services required by the new development. - -In-Apr-il-2009,-the-C-ty=of-P-etaluma-retained-Ba-y- -Area-Economies-(BAE)_to_conduct_the~'EIA__for the Silk Mill project. This report contains the methodology and findings of the FEIA,. addressing the project's market, employment,.and fiscal impacts. Organization of Ftepor$ In response to Resolution No. ~ 2008-189 N.C.S, this FEIA contains three primary sections, as summarized below: ^ Hotel Market Impact Analysis. Examines supply and demand conditions for the lodging market in Petaluma and Sonoma County, and studies the potential for Petaluma to absorb additional hotel rooms. ® Employment .Impact Analysis. Assesses the number of jobs and types of employment generated; as well as likely wages and benefits relative to industry standards and/or the City's Living Wage. ® Fiscal Impact Analysis. Evaluates the fiscal impact of the proposed project on the City's General Fund, and estimates non-General Fund costand revenue items as well. Project ®escription The subject project involves the redevelopment of the Silk Mill property, located of the southeast corner of Jefferson Street:-:and Wilson Street: The proposed hotel contains 100 rooms to be built in two phases.. Phase 1, with an area of 37,120 square feet,. will contain 70 rooms and involve rehaliilfation of the :existing historic structure. Phase II will contain 30 rooms and consist of ~~ 10,900 square feet ,of:new construction. Altogether, the, built-out project will total 48,020 square feet with 80 surface parking spaces and 23 underground spaces. The plans call for afull-service hotel, with a 2,100 square foot restaurant (1,200 to 1,400 square feet dining .area); two small meeting spaces, oversize guest rooms with light kitchen facilities (e.g., microwave, mini-fridge), and an. on-site fitness center. The hotel' aims to attract business travelers and tourists, and will serve both the standard and extended-stay markets. To take advantage of the property's unique architectural features, demolition and modifications of the Silk Mill will be minimized, and the design will expose as much of the historic qualities of the existing building as possible. ~~ Comparison to Living Wage The City of Petaluma adopted a Living Wage Ordinance in January 2007, which is intended to ensure that City employees and employees of City contractors ..earn an hourly wage that is sufficient to live with dignity and. ao achieve self-sufficiency. Although the Living Wage Policy does not apply to private sector employers who do not do business with the City, it serves as a standard against which to compare wages when undertaking an FEIA. The current. living wage, which. was updated on January 1, 20Q8, is $13.64 per hour without an employee medical benefit'plan arid'$12.14 per hour with an employee medical p1an..The average wage data presented in Table .11 above indicate that some~of the workers will not earn_wages at this level, particularly .wait staff.and housekeepers. Additionally, medical coverage is not available for part-time employees working less than 30 hours per week; these workers are expected to comprise approximately 30 percent of the workers at the project. The Living Wage. Ordinance. specifies a ' level of hourly contribution to health insurance; the precise evel of coverage on an hourly basis is not available but as noted above the coverage includes 90 percent of the cost for the employee_ _ _ _ The Living Wage Ordinance also requires 22 days of leave,. of which 12 must be paid. Full-time employees (i.e., working more than 30 hours) get holiday time .and accrue paid leave, combined vacation, sick leave, and holidays in the first year totaling 19 days,. This leave increases to 24 days or more after two years at work. Thus the full-time workers achieve the 12 paid days of leave within their first year and but only achieve over 22 days of total leave after two years. Part time workers do-nof accrue leave time. Summary of Employment Impacts The Silk Mill Hotel project is estimated to result in 32 to, 39 permanent jobs upon project completion. Building of the first phase of the project will generate 24 construction jobs, and the second phase,will generate 19 construction jobs. Based on a 30 hour week, approximately 70 percent' of the hotel and restaurant workers will be full-time. The market impacts analysis suggests that Petaluma can support an additional hotel of thi's type and size with minimal long- term impacts on local major operators. As such, .any job losses .associated with the proposed project would be modest, and are difficult to estimate with any precision. In terms of impacts on boutique properties, if the Metro Hotel is forced to close in response to the proposed project, this would impact a total of three employees (including the proprietors). Based on published. state employment data, the wages in the project are generally in the range that.is typical. for these occupations in Sonoma County. However, the .available data indicate that some of the workers will not earn wages at the level of the Petaluma Living Wage, particularly wait staff and housekeepers. Projected wages in 2009 dollars range from a low of ~3 $8 per hour to $22+ per hour. The lower-paying .occupations are the direct service-related occupations such as servers,: stewards, and room attendants. Benefits for some workers, particularly part-time employees working under 30 hours per week, do not meet the standard set by the Living Wage Ordinance. In terms of benefits, full time employees (i.e., working 30+ hours per week) receive health care after three calendar months of employment, with .the employer paying 90 percent or more of the insurance cost for employees for medical, dental, and vision coverage. Medical: coverage is not available for part- time employees. Full-time employees also get holiday time and accrue paid leave, combined vacation, sick leave, and holidays in the first year of employment: This leave tiime totals 19 days, increasing to 24 days or more after .two years at work. The Living Wage Ordinance calls for 22 .days of leave time annually, of at least which 12 should be paid. Thus; the full-time workers achieve -- the--l-2-paid-days-of-leave.-within-their-first_yeac,_but_do not_achieve22_day~_of_total_leave-until. after two years. Part time workers do not accrue leave time. ail. ~~~c~~ ~~~~ ~~~9y~a~ The third major component of an FEIA as requested per the Council Resolution is an analysis of potential fiscal impacts on the City of Petaluma. The fiscal :impact analysis estimates the balance of municipal revenues and service- costs associated with the proposed Silk Mill Hotel project at buildout. The primary. focus of the analysis is the City of Petaluma General Fund, which receives the City's revenues for discretionary expenditures and funds the City's primary public municipal services. Non-General Fund revenue and cost items are also explored as part of this analysis. IViethodology This analysis uses a combination of techniques to estimate the increases in costs and revenues generated by the proposed project. All cost and revenue estimates are in current, 2009 dollars. Where possible,. the increases in -revenues are modeled following the manner in which they are collected-and-allocated-to the-City.--For-example; increases-in-property-tax revenues~re-based-on an estimate of the increase in assessed valuation associated with a given project component.. In other cases, where this type of detailed. modeling is not_possible due to lack of adequate data, this analysis utilizes revenue multipliers -that represent the City's current average revenue per service population.~b The same ,general :approach. applies to the service cost portions of the model. Generally, this methodology presents a reasonably conservative analysis of the .potential fiscal impacts of the proposed. project: Table 13 presents the development°plan summary, including estimates of the number of employees as derived above, as well as thetotal number of proposed businesses. 16 Service population,equals the resident population plus one half of the number of employees. This scaling of employees represents the lower service demand of employees relative to residents. as Table 13. Proposed SiIkMiII Hotel Development Plan Square New # of New Feet Employees Busihesses Building Phase 1 Hotel Phase 1 Restaurant Phase 2 Hotel Total Parking Phase•I`SurfaceSpaces Phase if Surface'Spaces Phase II Garage Spaces Total Additional Service Populatiom(a) 19 (a) Service population equals resident population plus one-half the employment population. Sources: Arris Studio Architects, 2009; BAE, 2009 Plrojecfed Genelrai Fund Revenues This portion ofthe analysis projects the anticipated annual increase in the City of Petaluma General Fund revenues from the proposed commercial development. These revenue sources include ^ Sales taxes; ^ Property taxes; ^ Property transfer taxes; ^ Property taxes in-lieu of vehicle license fees; ® Franchise fees; ^ License, permits, and fees; ^ Fines, forfeitures, and penalties; ^ Business license fees; and ^ Transient occupancy taxes. Sales Tax Revenues The hotel restaurant is the only portion. of the proposed project that will generate sales tax. According . to the developer and estimates. from HdL Companies, the proposed restaurant should generate sales of approximately $400 per square foot,. of which 1DO.percent will be taxable. The City receives 0.975 percent of all taxable sales as sales tax revenues. Thus, the proposed project should generate approximately $5,460 in annual sales tax revenues for the City General Fund. Table 14 shows the projected sales taxrevenues from the proposed project. 35;020 17 1 2,100 12 1 •10;900 8 48,020 37 2 83 23 106 ~~ Table 14. Projected Sales Tax Revenue Total Percent Taxable Development Summary Square Feet!(a) Sales b Taxable Sales Restaurant 1 X400 $560,000 100% $560,000 Sales Tax Revenues New Taxable Sale§ $560,000 City's Share of Taxable Sales 0:975% Total Sales Tax Revenues $5,460 Notes: (a) Represents leasable square feet. (b) Estimate of projected annual sales $400 per SF Based on developerestimates and HdL retail store taxable sales estimates: Sources: City of Petaluma, 2009; Arris Studio Architects, 2009; HdL Companies, 2007; BAE, 2009. Property Tax Revenues Basic property taxes are equal. to one percent of total assessed value.I~ Since the project site is located within the Petaluma Community Development (PCD) area, the City's Redevelopment Agency receives the majority of the property tax increment from increased: assessed value. However, the City's redevelopment consultant indicates that the' City will receive a portion of the tax increment, per statutory pass-through requirements under California Redevelopment ..Law. Starting in FY 09/10, other taxing entities, including the City Gerieral Fund, will receive a pass through equal to 20 percent of the' properly tax increment.I$ Since the City of Petaluma General Fund's Pre-Education Revenue Augmentation Fund (ERAF) allocation is .13.55 percent, the City will receive 13.55 percent of the 20 percent allocated to other taxing entities.19 As redevelopment allocation agreements were written before ERAF legislation, and the redevelopment agency passes the'increment through to the City, the City's share is based on its pre- ERAF allocation. .However, it should be noted that the State has begun asking redevelopment agencies to .contribute to ERAF:Z° Should the State amend Redevelopment Law to require ERAF payments, the City could receive less property tax revenues than this analysis projects. n Although many properties are assessed taxes greater than one percent of assessed valuation, these additional taxes are for specific•voter-approved purposes and are not available to the General Fund. IB Seifel Consulting, 2009. 19 Ibid. zo Ibid. ~~ To estimate the value of improvements, this analysis uses a construction cost method for determining the assessed .value of the improvements. Per square. foot construction costs were provided by fhe~project sponsor; based on preliminary cost estimates. This analysis indicates that the proposed project would'generate .approximately $1,600. in annual property tax revenues for the City. Table 15 shows the projected property tax revenues from the proposed project. . Table 15. Projected Property Tax Revenues Property Ta~cRevenues Net Incremental Assessed Value (a) $5,904,300 Basic Property Tax as % of Assessed Value'(b) 1.0% Other Taxing Entities Share 20.00% City's Share of 20% to Other Taxng Entities (c) 13.55% Total Property Tax Revenues $1,600 (a) Assessed-values based on construction costs for Phase 1 (epsting building) and fog<Phase 2-(new.-bwldin~g .combined: Estimated construction cosYper`square foot for Phase 1: $90 per+SF Estimated construction,cost'p"ersquare foot for Phase 2: $125, per SF Estimated cost,persurface parking space $2,000 Estimated cost.pergarage;parking space $45;000 (b) Property..tax increment'goes to Redevelopment Agency with some pass throiigfi tiack~to City General Fund. (c) Based on City's base allocation, 13:55%. Sources: City of Petaluma,,2009; Sonoma:County:Auditor-Controller, 2009; Sonoma County Assessor's 0ffice,:20.09; Seifel Consulting, 2009; BAE, 2009. Property Transfer Tax Revenues When a property changes ownership, the City collects property transfer. taxes.. These taxes total $3.10 per $.1,000 of assessed value;. of which the City. collects $2.00. The County collects the remaining. $1.10. This analysis assumes that.. commercial 'property changes ownership every 20 years, or turns over at an annual rate of five percent. Thus; as shown in Table 16, the City would anticipate annual average property 'transfer tax revenues of approximately $590. . In reviewing this,analysis, it is important fo note that the project sponsor reports no intention to sell the proposed property following development. If in fact no sale occurs; the project would not generate any transfer taxes for the City General Fund. as' Table 16. Projected Prroperty Tax"Transfer Revenues Property Transfer Tax Revenues New Assessed Value Annual.Commercial Turnover Rate (a) $5,904,300 5% Amount of Assessed Value Subject to Turnover Transfer Tax Rate (b) Net Increaseto City Property TransferTax.f2eyenues $295,215 $2.00 per $1,000 in value $590 (a) Shows the amount ofsassessed value'subjecf to turnover in a given year Assumes ihaYcommercial space is transferred on average every 20 years. (c) The property transfer tax rate is $3:10 per $1,000 in value, $2.00 of which goes to the City, while$1:10 goes'to the!County, Sources: City of Petaluma, 2009; Sonoma County Auditor-Controller, 2009; Sonoma County (Assessors Office, 2009; BAE, 2009. _ Property Tax In-Lieu:of VLF Revenues Beginning in the 2005-2006 :fiscal year, the State ceased to provide backfill funds to counties and cities in the form of Motor Vehicle In-Lieu Fees (VLF) as they had through the 04-OS fiscal year. As a result of complicated financial restructuring enacted as part of the State's budget balancing process, counties and cities now receive revenues from the State. in the form of what is known as property tax in-lieu of vehicle license fees, or ILVLF. This State-funded revenue source is tied to a city's total assessed valuation. In 2005-06, former vehicle license, fee revenues were swapped for ILVLF revenues;. which set the local. jurisdiction's ILVLF "base." The base increases each year thereafter proportionate to the .increase in total assessed valuation within the jurisdiction. Thus, if total assessed valuation increases by ten percent from one year to the next, the ILVLF base would increase by ten percent. To calculate the increment in ILVLF revenues that would result from the construction of the proposed project, the analysis first determines the total assessed value within the City, and the City's current year ILVLF revenues.. Thee analysis then determines the percentage by which the project would increase the City's assessed valuation and applies that percentage increase to the current year's ILVLF revenues to determine the incremental amount of ILVLF attributable to the new development. The improvements from .the proposed project would generate a 0.08 percent :increase the City's total assessed value, resulting in project-generated ILVLF revenues of approximately $3;154. It should be noted Ghat the State could modify these revenue calculations between the current .year and buildout. Table 17 shows the projected ILVLF revenues from the proposed project based on the current allocation formula. a9 Table 17. Projected Property Tax In-Lieu of VLF (ILVLF) Revenues ILVLF Revenues Net Incremental Assessed Value $5,904,300 2008/09 Total Citywide Assessed Value $7,486,941,480 Percent Change in Total AV resulting from Development 0.08% 2008 ILVLF Revenues $4,000,000 Percent Increase from New Development 0.08% Net Increase to City ILVLF Revenues $3,154 Sources: Cityo€Petaluma, 2009;Sonoma CountyAuditor-Controller, 2009; Sonoma County Assessors Offce; 2009; BAP, 2009. Franchise Fee Revenues The City collects franchise fees on utility usage. This analysis assumes that the proposed project would use garbage, cable,'and gas and electric services provided. within the City. In total, the City collects $2.4 million in .franchise fees, which translates into approximately $32 per service - population. As the proposed project would generate. a 19-person .net service population increase, the City can expect to generate approximately $598 in additional franchise fees. Table 18 shows the projected annual franchise fee revenues from the proposed project. Table 18. Projected Franchise Fee Revenues FY 08109 Bud4et Revenues Waste $1,200,000 Cable $750,000 ElectriGGas $440,000 Total Franchise Fee Revenues $2,390,000 Total Service Population (a) Resident Population Employment 73,900 57,739 32,323 Total Franchise F,ee Revenues Per Service Population $32.34 New FranchiseFee Revenues Associated with New Development Net New Employment. 37 Net New Service Population 19 Revenue Per Service Population $32.34 Total New Franchise'Fee.Revenues Associated with New Development $598 (a) Seniice Population estirimated based on ABAG estimates. Based on annual growth rate of one percent between 2005 and 2010. Service population equals the resident population plus one-half the employment population. Sources: ABAG, 2007; City of Petaluma FY 08/09 Budget; BAP, 2009. via License, Permit, and Fee Revenues The City collects revenues via assorted licenses, permits, and fees. The .City budget projects that in Fiscal. Year 08/09, the City will .collect approximately $580,000 in license, permit; and fee revenues, which translates into $7.85 per service population. As the proposed project would generate a 19-person net service population increase, the City can expect to generate approximately $145 in additional license, permit, and fee revenues. Table 19 shows the projected annual license, permits, and fees revenues from the proposed project. Table 19. Projected Licenses, Permits, and Fees Revenues FY 08109 Budget Revenues Total Licenses; Permits, and Fees ReverSui:s $580,000 Total Service Population (a) Employment 73,900 57,739 32,323 Total Licenses, Permits, and Fees Revenues Per Service Population $7.85 New Licenses, .Permits, and. Fees Revenues Associated with New Development Net"Nevi Employment 37 Net New Service'Population 19 Revenue Per Service. Population $7.85 Total New,Licenses, Permits, and Fees Revenues Associated with New Development $145 (a) Service Population,estimated based on ABAG estimates. Based oh annual:growth rate of one percehE between 2005 and 2010. Service population equals the resident population plus one-half the employment population. Sources: ABAG, 2007; City of Petaluma FY 08/09 Budget; BAE, 2009. Fine, .Forfeiture, and Penalty Revenues The City collects revenues through various. fines, forfeitures, and penalties. The City budget projects that in Fiscal Year 08709, the City will collect approximately $603,000 in fine, forfeiture, and penalty revenues, which translates. into $8.16 per service population. As the proposed project would generate a 1'9-person net service population increase, the City can. expect to generate approximately ,$ 151 in additional fines, forfeitures, and penalties revenues. Table 20 shows the projected annual fines, forfeitures, and penalties revenues from the proposed project. ~' Table 20. Projected. Fines,. Forfeitures, and Penalties Revenues FY 08/09 Budget Revenues Total Fines, Forfeitures, and Perialties Revenues $603;000 Total Service Population (a) Resident Population Employment 73;900 57,739 32,323 Total Fines, Forteitures, and Penalties,Revenues Per Service Population $8.16 New Fines, Forteitures, and Penalties Revenues Associated with New Development Net New Employment 37 Net New Service Population 19 Revenue Per Service Population $8.16 Total New Fines, Forteitures, and Penalties Revenues Associated with New Development $151 (a) Service Population estimated based`on ABAG estimates. Based on annual growth rate of -- --- one percent between 2005 and-20T0Service population equals the resident-population plus one-half the employmentpopulation. Sources: ABAG, 2007; City of Petaluma FY'08/09 Budget; BAE, 2009. Business License Revenues The proposed expansion wotzld~slightly increase the business license fee revenues for the City of Petaluma. ,This analysis assumes that both the proposed hotel. and the restaurant would pay $45 per year for business licenses totaling $90 in annual City revenues (see Table 21 ). Table 21. Projected Business ~L`icense Revenues Business License Revenues Annual Business License Revenues per New of Existing Business $45:00 New Business License Revenues Associated with New Development Numberbf New Businesses 2 Revenue Per Business $45.00 Total New Business License Revenues,Associated with New Development $90 Sources: City of :Petaluma, 2009; BAE, 2009. Transien#: Occupancy'Tax Revenues The City assesses a 1D percent transient occupancy tax (TOT) per night per room for commercial lodging. Assuming an average rate of $135 per night and a 67 percent occupancy rate; the proposed hotel would` generate approximately $330,143 of TOT revenue per year {see Table 22). a~ The occupancy rate. and average rate per room was based on historic and current data from comparable ]?etaluma and southern Sonoma County hotels.21 Table 22. Projected Tcansient'Occupancy Tax Revenues Average Rate Per Room Night (a) $135 Occupancy Rate (a) 67% Numberof Rooms 100 Nights per Year 365 Available Room Nights Per Year 36,500 Total Annual Taxable Revenue Per Year $3,301,425 Transient Occupancy Tax Rate 10% Transient Occupancy7ax Revenues $330,143 Notes: (a) Based on an average occupancy and rates of a sample of comparable ---~ Petaluma and°~outhem-Sonoma.County°hotels Sources: Smith Travel Research, 2009; BA E, 2009. Projected General Fund Costs This portion of the analysis. estimates the costs for the City of Petaluma General Fund to extend ongoing services to the proposed project site. These costs include: ® Police services; . ® Fire. services; ^ Public Works; ® Community Development; ^ General Government; and ^ Parks and Recreation. Police Services The Petaluma Police Department provides protective services to all City residents and workers. In total, the City .spends approximately $16.1 million of discretionary funds on police services annually, which translates into approximately $217 per service population. .Since, the proposed project would: generate a 19-person net service population increase, the proposed project would generate an increase of approximately $4,022 annually in police services. 21 As a conservative.measure, the Fiscal Analysis assumes a lower room rate and,occupancy rate than the Hotel Demand Analysis. The Demand Analysis, in turn, conservatively uses higher rates ($150/night, 70% occupancy) to avoid overstating the demand for new rooms. 3.~ In reviewing this finding, it is important to .note that, according to Captain Dave Sears. of the City of Petaluma Policea Deparhnent; tfie, proposed. project probably would not lead fo a significant increase in service demand for police: There would likely be additional .traffic and parking calls, .but the Captain commented that. these calls should have a minimal impact on service demand. Thus, the above estimate .for new service demand associated with.the proposed project is relatively conservative: Table 23 shows tfie_ projected police costs associated with the proposed project. Table 23. Projected Police-Gusts FY 08109 Budget;Expenditures Administration ' $1.,651,450 Communications $'1,3,08,700 CAD/RMS $379,750 Crime~BreVention $438,800 Investigation $1,072,650 Patrol -$9;060,850 Traffic Safety Parking Enforcement Records TotatPolice Department'Expenditures Total Service Population (a) ResidentiPopulation Employment Total•Police Department Expenditures Per Service Population ~ $1,124,500 $298;450 $588,650 New Police_Department Expenditures Associated. with New Development Net New Employment Net New Service. Population Expenditure Per,Seryice,Population Total Police Department Expendfares:Associafed with New Development $16,067,100 73,900 57,739 32,323 $21.7.42 37 19 •$2.17.42 $4,022 (a) Seiice Population,estimated based~on ABAG estimates: Based on annual growth rate of one percent beiween2005>and'2010. ~Seivice;population equals the residenYpopulation plus one-half the employmen_t:population. Sources: ABAG, 2002; City of Petaluma FY 08/09 Budget; BAE, 2009. Fire Services The Fire Department. in Petaluma provides fire protection services: to `all City residents, and dispatch services for all :EMS calls within the City. In total, the City, spends approximately $7.8 million of discretionary funds on fire services annually, which. translates. into approximately $ lA5 per service population. As `the proposed project would generate; a 19-person net service population increase, it would also result in an increase of approximately $1,948• annually in fire services. ~1 According to ChiefLarry Anderson of the City of Petaluma Fire Department, the_proposed project would not likely lead to a significant increase in service demand for the Fire Department, since the project constitutes infill development and. an established footprint.. The Chief commented that existing stations should be able to serve the project. As such,. this analysis represents a conservative cost estimate, similarly to the police services analysis. Table 24 shows the projected fire costs associated withthe proposed project. Table 24. Projected Fire Costs ' FY 08/09 Budget Expenditures Administration $569,750 Disaster Preparedness $6,650 • Hazardous Materials $138,850 Prevention $306,250 Suppression $6,529,900 Suppression -Apparatus $105,550 Suppression -.Building/Grounds $28,450 " - Suppression = Commurncations "- -- $2;000 - -- Suppresson -.Supplies $56,750 Suppression -Training ~ $37,650 Total Fire°Department Expenditures $7,781,800 Total Senvice Population (a) ~ 73,900 Resident Population 57,739 Employment 32,323 Total Fire Department Expenditures Per.Service Population $105.30 New Fire Department.Expenditures Associated with New Development Net New Employment, 37 Net New Service Population 19 Expenditure Per Service Population $105.30 Total Fire Department Expenditures Associated with New Development $1,948 (a) Service Population,estimated,based on ABAG estimates. Based on annual growth ;date of one percent between 2005 and 2010. Service population equals the resident population plus one-half the employment:popLlation. Sources: ABAG, 2007;. City of Petaluma FY 08/09 Budget; BAE, 2009. Public Works The Public Works Department provides engineering, traffic, and maintenance to public infrastructure within the City. Currently; the City spends approximately $4.3 million annually on Public Works services, or approximately $58 per service population. With the addition of 19 net new service- population persons, the proposed project would generate approximately $1,066 in costs to" the City annually. Table 2S shows the projected Public Works Department costs associated with the proposed project. 35 Table 25. Projected Public Works Gosts FY 08/09 Budget Expenditures. Total Public Works Expenditures (a) $4,259,700 Total Service Population (b) Resident Population Employment 73,900 57,739 32,323 Total Public Works Expenditures Per Si:rvice Population $57:64 _New Public Works Expenditures-Associated with New Development Net New Employment 37 Net New Service. Population . 19 Expenditure Per Service Population $57.64 Total Public Works Expenditures Associated with New Development $7;066 _ ~ _____ (a) Does not include CIP expenditures. _ _____ (b) Service Population estimated.,based on ABAG estimates. Based on annual growth rate of one percent between 2005 and 2010. Service population equals the residenT population plus one-half the employment.population. Sources: ABAG, 2007; City of Petaluma FY 08/09 Budget; BAE, 2009. Community Development Department The Community Development. Department for 'the City of Petaluma is responsible for providing planning and building services for the City. Currently, the :city spends approximately $370,100 annually on these services, or:approximately five dollars per service population. With the addition of 19 net new service population persons from development, the proposed project would generate approximately $93 in costs to the' City annually. Table 26 shows the projected costs to the Community Development Department.associated with the proposed project. - . 3~ Table 26. Projected Community Development Costs FY 08109 Budget`Expenditures Total Community DevelopmentExpenditiires $370,100 Total Service Population (a) 73,900 Resident Population 57,739 Employment 32,323 Total Community Development Expenditures Per Service Population $5.01 New Community?Development Expenditures Associated with New Development Net New Employment 37 Net New Service Population 19 Expenditure Per Service Population $5.01 Total Community Development.Expenditures Associated with New Development $93 (a) Service Population estimatedbased on ABAG estimates: Based on annual;growth rate of --one percehf-between-2005 and-201D.~ervice-population-equals:the_resident:population_pius___ _-_-_ one-half he`employment population. ` Sources` ABAG, 2007; City of Petaluma FY 08/09 Budget; BAE, 2009. General Government General Government refers to the administrative functions of the City, including the City Council, City Manager, City Attorney, City .Clerk, Finance, and Human Resources. This analysis assumes that as non-general government: functions. increase within the City, General Government functions would increase proportionately. In this case, the General Government functions account for approximately 7.5 percent of all General Fund expenditures. Thus, a $100,000 increase in other City services would result in a $7,5.00. increase in General Government- services. Table 27 shows the General Government expenditures as a percentage of non-General Government expenditures. Given the estimated costs of non-General Government functions from the increased service population, General Government costs would be approximately $532 annually. 3~ ®~~6 ~~~~ 9~~~~~ ~o~~~~~~~ The following section provides a market impact analysis of the proposed Silk Mill Hotel development pursuant to City of Petaluma Resolution No. 2008-I89. Included,are a description of current supply and recent trends in hotel room rates and occupancies; an overview of trends in visitor spending on accommodations; an overview of existing lodging market conditions in Petaluma; and an analysis of expected impacts to existing businesses. I~ethodoiogy This analysis utilizes data gathered from a variety of sources to assess anticipated impacts from the project... These include data from public agencies including Sonoma County Tourism Bureau, the Sonoma County Economic Development Board, the California Travel and Tourism Commission, the Association of Bay Area Governments, and the California Employment Development Division. Also used are data purchased from Smith Travel Research, a leading provider of historical market - -data-regarding-hotel-mar-ket performance-Finally,-fir-sthand-data-were_collected_from_existing hotels in the market. area,. including interviews with three of the general managers of existing hotel 5 properties located in Petaluma. Whereas this analysis focuses on a proposed lodging development, rather than a retail development, it differs from other economic impact analyses prepared pursuant to Resolution No. 2008=189.. In particular, it does not present a "leakage analysis.." A leakage analysis refers to a comparison of spending potential for retail goods generated by local residents compared against actual retail spending within a community. This calculation determines whether sales are "leaking" outside of the community to retail outlets in nearby areas. As the lodging market is driven primarily by visitor (tourist and business traveler) spending, this analysis examines lodging expenditures in Petaluma his-a-vis other Sonoma County cities to indicate the extent to which the City is overiunderperforming compared to its peers in the capture oflodging expenditures. It also examines the ability of Petaluma to absorb additional hotel rooms, given the performance of existing facilities and the potential for additional visitor spending in the City. s BAE contacted. the Sheraton, Best Western, and Quality Inn hotels. in Petaluma, which are considered the most comparable properties to the proposed project. General Managers from two of these properties agreed to be interviewed for this atudy. BAE also interviewed the owner of the Metro Hotel, which as a boutique property; 'is a differenf product type from the proposed project, but which nonetheless competes against the project to<some extent. 3 Analysis of Competitive Supply Petaluma is part of a larger.hoteT market area that stretches along Highway 101 approximately 20 miles north. to .Santa Rosa and. approximately 20 miles south to Novato and San Rafael. This market area is typified by a range of economy, mid-range, and full-service, upscale hotel offerings, but does not include the luxury--hotel products that are found in the Sonoma and Napa Valleys. The project is envisioned as an extended stay hotel product, that would offer a price point somewhere 'between amid-range and afull-service, upscale hotel. Among the most prominent ' brands operating in this segment -are the Residence Inn by Marriott; the Homewood. Suites by Hilton, and the'Staybridge Suites by Intercontinental. As is typical for these brands, the project would offer somewhat larger hotel rooms than traditional properties and a somewhat higher percentage of suites than a traditional property. As it is currently envisioned, rooms- would not include kitchenettes. However, there would be an on-site restaurant. as well, as a buffet area, where such properties typically offer a complimentary breakfast service. Extended stay properties are often-marketed-to-business--travelers-needing-to-stay-far-one_week_or_longe~and_familieswith children who may prefer the larger room sizes, but. in general compete head-to-head with traditional hotel properties offering rooms at or near the same price point. Considering these characteristics; Table 1 lists the competitive .hotel supply, in the larger hotel market area: As shown, there are approximately 2,900 rooms in the mid-range and upscale categories, not .including, small boutique properties. Overall the project would represent a 3.5. percent increase in competitive .hotel supply in the larger market. area and a 27:3 percent increase in supply in these categories compared to what already exists in Petaluma. Based on the age of properties, quality of rooms, and amenities; the project is anticipated to most directly compete. with the Sheraton in Petaluma, the Double Tree in Rohnert Park, and the Hampton Inn Suites in Rohnert Park (see Table 2). Among these properties, average daily rates (ADRs) for summer 2009 range from $,150 to $160, which would be consistent with an annual ADR between $135 and $145. During a more typical .year -not during arecession -annual ADRs for this set of hotels are estimated to be in the range of approximately $145 to $155 and the project would be expected'to offer rooms in this. price range b The proposed project would also compete to a lesser extent with nearby mid-range properties, which general offer a lower price point and a more limited set of amenities, including-the Quality Inn in Petaluma and the Best Western.Inns in Petaluma and Rohnert Park. Table 2 contains market infotmation:on each of these facilities. 6'~ Based on -historic: market data from Smith Travel Reseazch; summer ADRs are approximately 10 percent higher'than annual ADRs, while current ADRs during the recession are approximately seven percent lower than tlieiraverage during'the pievious five years. 39 Table 1. Competitive Supply, Petaluma Hotel Market Area, 2008 No. of City/ Property Name Type Full/Limited Rooms Petaluma Sheraton Hotel Sonoma County Upscale Fuil=Service 183 .Best WestermPetaluma Inn Mid-Range Limited-Service 73 Quality Inn Petaluma Mid-Range Limited-Service 110 Rohnert Park Doubletree Sonoma County Upscale Full=Service 245 Hampton Inn Suites Sonorrra County Upscale Limited-Service 102 Best Western Inn Rohnert Park Mid-Range Limited=Service 143 Santa Rosa Hyatt Vineyard Creek Upscale Full-Service 155 Hilton Sonoma Wine County Upscale Full-Service 250 Hotel La Rose Upscale Full-Service. 49 Flamingo Resort Hotel Upscale Full-Service 170 Fountain Grove Inn Upscale Full=Service 124 Courtyard Santa Rosa Upscale Limited-Service 138 Comfort Inn Santa Rosa. Mid-Range Limited-Service 100 Ramada,Limited Santa Rosa, Mid-Range Limited-Service 34 Holiday lnn Express Santa Rosa Mid-Range Limited-Service 96 -- Quality nn & Suites Santa Rose Mid=Range - Limited=Service 61 Best Western Garden Inn Mid-Range Limited-Service 78 Novato/San Rafael Four Points San Rafael Upscale Full-Service .235. Embassy Suites Marin County Upscale Fuil-Service ~ 235 Inn Marin ~ Upscale Full-Service 67 Courtyard'Novato Upscale Limited=Service 136 Best Western Novato Oaks Inn Mid-Range limited-Service 107 Total Rooms 2,891 Note: Hotel§ have been grouped`according toprice range and full versus limited service. In general upscale hotels.ih the Petaluma-iMarket Area have ADRs of $150 or higher. Full-service hotels have on-site restaurants and generally offer room service. Limited-serdice hotels may offer no food service or only a limited breakfast service. This list does not include small boutique properties with fewer than 50 hotel rooms. Sources: Smith TraveGResearch, 2009; BAE, 2009. ya Table 2. Comparable-Hotel Properties, Petaluma Hotel Market Area, 2009 Type./ Date No. of Summer2009 Photo Hotel 8: Address Services Opened Rooms .Avg. DailgRate (a) Amenities °~~ T~ Sheraton Hotel Upscale Jun-02 183 $150.16 Pool ~'"` r ~ s~ - , 745 Baywood Drive Full-Service Meeting Space stn r f Petaluma, CA Restaurant and Louhge . s ~ 94954 Room Service ~. Valet service T -----, Hampton Inn Suites Upscale .Oct-07 102 $161.96 Pool ~-~se~rr,~.,t`~' --1 6246;Redwood Dr Limited-Service Meeting Space " ^" a Suites Available ~ ~ l ' S S r Rohnerf Park, CA ~_ ~~ 94926 Valet Service ~. _ - p ~~; Doubletree Hotel Upscale Dec-87 245 $162.80 (b) Pool, Jacuzzi, Tennis Courts l ' 1 a {~~ , 'One<Doubletree Drive FuIIFService Meeting Space '~- ~ . ~~ .~-~~, ;Rolinert Park, CA Restaurant and Wine Bar .. ;a ~. ,~: ~' -cam.*` ~.ooo Airoort Shuttle Service Best Western Inn ''.Mid-Range Jun-60 73 $134.39 (c) Pool. '-~![, ' z- ,.+q 200SMcDowelfBlvd Limited-Service ' ~ Petaluma, CA ' 7~' ~, ~„ ..a~, ~' 94954 -i' " Quality Inn '~._, ~ Mid-Range Aug-85 110 $121.24 (c) Poof _ q ~ 5100 Montego Way - ~~"n ~ Petaluma, CA Limited-Service 6 - 94954 ~n ~~ Best :'!estem Inn e ,s-ta` Mid-Range Jun-79 143 $103.04 Pool ~ 6248 Redwood Dr. -~ ~ Limited-Service ~ r ~s rr Rotinert Park, CA ~ ~ 94928 ~ },r, x Notes: (a) Summer 2009 Rates takedfrom respective hotel websites on Friday May 1, 2009. Summer2009 Rates average hotel costs over three months, equalry distributed between weekday- and weekend- rates. Dairy rates taken for the following dates: June 24 & June 27, July 22 & 25, August 26 & 29. These dates represent fhe last Wednesday and Iasi Saturday of each,month: Rate given for two double beds: Tax induded. (b) No rooms were available on Saturday June 27, 2009. Average Summer Rate takenfirom remainingdates. (c) Weekend Rate: There'is a two day minimum stay for hotel guests. The dairy Rate listed is for one night's slay onry. Sources: Smith Travel, 2009; BAE, 2009. ~~ . Visitor Spending on Accommodations Based on data prepared by the California Travel and Tourism Commission, Table 3 shows long- term trends in visitor spending.. on accommodation in Sonoma County, the Bay Area, and the state. As of 2007, the County realized '$240 million of spending on accommodations, a 75 percent increase since 1992; reflecting along-term ,average annual :rate of 3.8 percent. In comparison, the Bay Area and state have seen a 33 percent and 3.0 percent average annual increase, respectively, over the same time period. Table 3. Accommodation Expenditures, 1992-2007 (in millions of $'s) Sonoma County Bay Area (b) California Annual Rate Annual. Rate Annual Rate Year Amount of Change Amount of Change Amount of Change 1992 $137 $2,563 $1.0,493 __ 2002 $187 3.2% $3,307 2:6% $13;485 2.5% 2003 $186 -0:5% $3,173 -4:1% $13,410 -0.6% 2004 $193 3,6% $3,340 5:3% $14,159 5.6% 2005 $209 8:0% $3,584 7.3% $14,969 5.7% 2006 $227 8:7% $3,887 8:5% $1'5,736 5.1% 2007 $240 5.7% $4,195 7.9% $16,400 4.2% Avg. Annual Rate of Change 1992 to 2007 3i8% 3.3% 3.0% 2002 to 2007 5:0% 4.9% 4.0% Notes: (a) All figures have been inflated to 2007.values using U.S. Consumer Price Index. (b) Bay Area includes Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano; and Sonoma Counties. Sources: California Travel & Tourism Commission, "California Travef Impacts By County," April 2009; Consumer Price Index, 2007; BAE, 2009 . Analysis•of Lodging Expenditures by Jurisdiction Table 4 summarizes visitor .expenditures on lodging, in Sonoma. County cities, as well as the unincorporated county. Lodging expenditures are calculated based on transient occupancy tax (TOT) revenues and, 'theapplicable local rates. As shown, there were $IS million in lodging expenditures in the City• of Petaluma_during 2007. Overall, the City had the third highest lodging expenditures of any city in the County, behind Santa Rosa and Sonoma; capturing 7.0 percent of taxable lodging expenditures countywide. yz While lodging expenditures are fundamentally driven by visitor rather than resident spending, it can nonetheless be useful to think about lodging expenditures in per capita terms in order to assess how a jurisdiction is doing.relative to its size in capturing a share of expenditures within its market area. In per capita terms, Petaluma has among the lowest lodging expenditures of any jurisdiction in the County,, collecting $265 .per resident during 2007. As shown, only Cloverdale had fewer lodging expenditures per capita. ' In order to be on par with'Santa Rosa in terms of per capita expenditures the City would have had to realize an additional $700,QOQ of expenditures per year. In order to be on par with Rohnert Park, the City would .have had to realize an additional $4.6 million in expenditures. Translated into additional hotel rooms, the City would require approximately 20 :additional hotel rooms to realize per capita expenditures equal to Santa Rosa and approximately 135 additional hotel rooms to realize per capita expenditures equal to Rohnert Parka -Table 4-Transient Oceupanc~ Taxes-and-L-odging-Expenditures-by_Jur-isdiction,_2007 Total Share of Lodging Lodging Countywide TOT Expenditures City TOT Rate TOT Revenue Expenditures Expenditures Population Per Capita Per Capita Cloverdale 10°~ $152;578 $1,525,780 0.7% 8;479 $18 $180 Healdsburg 12% $1;766,004 $14,716,700 6.9% 11,654 $152 $1,263 Petaluma 10% $1,505;118 $15,051,180 7.0% 56,743 $27 $265 Rohnert Park 12°~ 57,775,457 $14,795,475 6.9% 42,772 $42 5346 Santa Rosa 9% $3,932;375 $43,748,611 20.4% 157,319 $25 $278 Sebastopol 10% $325,456 $3,254,560 1.5% 7,727 $42 $421 Sonoma 10% $2,538,335 $25,383,350 11.8% 9,898 $256 $2,564 Windsor 8% $749,136 $9,364,200 4.4% 26,315 $28 $356 Unincorporated County 9% $7,809,534 $86,772,600 40.4% 1.51,258 $52 $574 Countywide Total $20,558;993 $214,612,456 100.0% 479,668 $43 $447 Sources: Sdnoma County Economic DevelopmenQBoard, Annual Tourism RepoA, 2008; BAE„2009 Planned ar>IC@ Piroposea~ Hotel ®evelopa~ent In response to the ongoing increases`in visitor spending described above, there is substantial hotel development .planned and proposed in Sonoma County over the next several years. Including the project, which. would add 70 rooms in 'its first phase and 30 in a subsequent phase, and a 20-room boutique hotel proposed at the corner of'Petaluma Boulevard and B Street in downtown Petaluma, there are part of more than 1,000 new units currently in the pipeline countywide, in addition to approximately I70 `units planned as expansions of existing properties (see . Table 5). Conservatively :assuming annual growth in accommodation spending of $6.4 million per year (i.e., ~ Each.~hotel room 'is^estimated to generate revenues of approximately $33,500 per yeaz; assuming an average occupancy of ti8.percent and an average daily rate of $135, based on historical performance of Petaluma hotels. L./ based on 3.0 percent annual growth, consistent with statewide levels), the County could add approximately 1,67 hotel rooms per year. Hence, the County has more than a seven year supply of additional rooms in various stages of planning. Almost certainly, not all hotels currently under exploration will be built over the next several years. Nonetheless, the current pipeline of ,hotel products demonstrates continued strong interest in Sonoma County as a growing lodging market. Moreover, the data indicate that whether additional rooms are added in Petaluma or riot, .supply within the market area will continue to grow, absorbing demand while providing new competition for existing Petalumahotels. -P. Table 5. Plarined (and Proposed. Hotels, Sonoma County, 3Q 2008 City & Project Name. .Petaluma Silk Mill Hotel Jones Boutique Hotel Cloverdale Alexander Valley Resort • Hea Id ab urg Saggio Hills Foss Creek Inn Garden Courtlnn Santa Rosa Fairtield Inn Holidaylnn Express Hotel Sonoma Jone s Vacation Rental Town of Windsor. Springfield Suites -Maniott Unlncdrpd(ated Sonoma County Sonoma Countryinn Guemewood Park Resort Sonoma Vineyard-Estates Jack Ldndon Village. Thiessen-FOrestvi Ile P laza W iId up S to bles'B &B Vigne B&B Srhomp B&B Powell BBB. Latgmg .,~ .~ ~....~~~~ ,,,,,,,,,,,,,,,, Classitication AddresslLocaSon Proposed Year (Est) Full Service 450 Jefferson Street 70 2010 Limited Service Petaluma 8oulevardandB Street 20 N/A Full Service Southeast Cloverdale 150 2012 LuxurylResort/Spa 91 Acres in N. Healdsburg. 130 2011 Gimited,Service 219 Healdsburg Ave 38 ~ 2010 Limitedc5ervice 146 Healdsburg Ave. 23 2011 Limited Service„ 111 Commercial Court 108 2009 Limited Service 3745 Airway Drive. 143 N/A Rental 151 E. Napa St 4 N/A Limited Service 8755 Old Redwood Hwy 64 N/A LuxurylResort . 7945 Highway 12, Kenwood 50 2010-2011 Luxury/Resort 17155 Highway 116, Guerneville 120 2009-2010 i uriuvlRacort 5750 Staae Gulch Road: Sonoma 52 2011-2012 Full ServiceB86 14211 Am old Drive, GIen,Ellen 46 2010-2011 Limited Service Front St. and Highway 116;;FOrestville 18 2009-2010 ggg 4900 Carriage Lane, Larkfield 3 2009-2010 688 20775 Geyserville Ave; Geyserville 20 2006-2009 B88 501 Sandrelto Drive; Sebastopol 3 N!A B&B 17061 Highway 116, Guerneville 3 2008-2009 Total New Rooms: 1,085 t_ - _ _ , . Lodging Rooms AddYl Completion City& Projecti,Name ClassficaUon AddresslLocation Proposed Year (Est.) Unincorporated,Sonoma County Silk Mill Hotel. Limited'Service 450 Jefferson Street, Petaluma 30 NA Lodge ea Ranch S LuxurylResort 60 Sea Walk Drive; Sea Ranch 40 2009-2010 , , Morton s Warm Springs Luxury/Resort 1651 Warm Springs Road, Glen Ellen N/A 2009-2010 Vintner's Inn 4300 Bames Road, Santa Rosa 36 N/A 8odega,Harborlnn LimiletllService 1345 Bodega Ave;;BOdega Bay 6 2007-2008 Bodega Coast Inn Limited Service 521' Highway 1, Bodega Bay 12 2009-2010 ChanslorRanch Limited Service 2660. Highway 1, Bodega Bay 24 N/A Highland Inn 14000 Woodland'Drive, Guerneville 6 2007-2008 Farmhouse Inn B88 7871 River Road, Forestville 9 2008-2009 Kenwood Inn B88 .10400 Highway 12, Kenwood 6 2010-2011 Total Expansion Rooms: 169 Sources: Sonoma County Economic Development BoardTransient Occupancy Tax:Report, 302008; BAE, 2009. Oveavie~nr of Loca9 Hotel Market Conditions Petaluma enjoys an enviable .location as a lodging destination. Situated 30 miles north of the Golden Gate Bridge'in.sotzthern Sonoma County, the City is close to world class wineries n'tle Sonoma and Napa Valleys and is only a half hour drive from the coast and Point. Reyes National ..Seashore: .Moreover; aocated within 20 miles of the cities of Santa Rosa, Rohnert Park, Novato, and San Rafael, Petaluma.is a convenient`lodging choice for business travelers working in southern Sonoma and riortfiern Marn Counties. Inventory of Existing Supply Petaluma is .currently home ,to six hoteUmotel properties that are generally comparable to the proposed project offering a total. of 564 rooms (see Table 6). These include the Sheraton. Sonoma County, afull-service, upscale property with an onsite restaurant, bar, and meeting room facilities; two mid-range properties, the: Best Western Inn and Quality Inrr; two economy properties, Motel 6 and America's Best. Value Inn; and a small boutique property, the Metro Hotel. Hotel supply in . a Petaluma has been stable since the Sheraton opened in 2002. Table 6. Petaluma Hotels Year No. of Property Name Type Full/L`imited Opened Rooms Sheraton HoteLSonoma County Petaluma Upscale Full-Service 2002 183 Quality Inn Petaluma Mid-Range Limited-Service 1985 110 Best Western Petaluma Inn Mid-Range Limited-Service 1960 73 -wletr~l~et - outique Limited=Service NA BS MoteL6 Petaluma Economy Limited-Service 1985 121 America's Best Value Inn<and Suites Petaluma Economy limited-Service 1973 62 Total 564 Note: Hotels have been grouped according'to price range and full versus limited service. Full-service hotels have on-site,restaurants and offer room service. Sources: Smith Travel' Research, 2009; BAE, 2009. Five-Year 1lbarket Trends Table 7 presents data regarding the performance of Petaluma. hotels over the previous five years, compared to data for hotels countywide. These data were obtained' from Smith Travel Research and blend together room rate and ~occtzpancy data for upscale, mid-range, and economy properties located in the City. As shown, in: Petaluma ADRs have remained. relatively stable across the previous five years, averaging approximately $101 per night, in inflation adjusted terms, while occupancies rates have av..craged 68.7 percent between 2004. and 2008. By comparison, ADRs in the County have averaged approximately $121 and have shown somewhat more variability than in the. City. Accounting ;in part for the difference in ADRs between Petaluma and the county is the composition of hotel_.room. supply in Petaluma, which is tilted toward economy and mid-range properties, with only 32 percent of rooms located in afull-service property. By comparison, of the approximately 6,300 hotel rooms countywide, 40 percent are in full-service properties.9 Occupancies rates for the County have generally been lower than in Petaluma, averaging 62.6 percent. $ The America's Best Value Inn property sold in 2006. It was formerly the Dollaz Inn. 9 Sonoma County Tourism Bureau. Sonoma Country Fact Sheet. Apri12008. ~~ Table 7. Hotel Occupancies and. ADRs, 2004 to 2008 Petaluma Occupancy Average Year Rate Dally Rate 2004 63.8% $96.01 2005 68.6% $100:87 2006 72.4% $103.35 2007 71.7% ~ $105.46 2008 (a) 67.2% $99.19 Average 68.7% $100.98 Sonoma County Occupancy Average Rate Daily Rate 59.0% $111.50 62.3% $121.28 64.6% $125.71 64.3% $127.08 62.6% $121.60 62.6% $121:44 Notes: (a) County data for 2008 are a p[eliminary extrapolation based on data for theifirst 10 months of the year. (b) All figures have been adjusted to 2009 dollars using the Bay Area'Consumer,Price Index. Smith Travel, 2008; BAE, 2009 To understand whether these data .reflect a healthy local .hotel market, it is useful to understand industry norms for hotel performance. PriceWaterhouseCoopers has published widely cited studies of "breakeven" occupancies for hotels, based on nationwide operating data obtained from Smith Travel Research.~° According to their findings, upscale hotels,. which have higher average operating costs than mid-range and economy properties, have the highest average breakeven occupancy rate at approximately 65 percent. Mid-range and extended stay properties without food require an occupancy rate of approximately 50 percent to breakeven; while economy properties need an occupancy rate of approximately 40 percent. Hence, with.citywide occupancies averaging approximately 69 percent across the past five years,'and only once dipping below 65 percent, local market data are consistent with a healthy and profitable local hotel market. Interviews with local hotel general. managers of larger upscale and mid-range properties confirm findings based on the above data. They indicated strong performance for Petaluma hotels during most of the previous five years with average daily rates (ADRs) and occupancies generally above operating goals leading to strong profitability from 2003 through 2007. As .discussed in more detail. below, revenues began to decline .below historic norms starting in the second half of 2008, related to financial crisis `and recession. U A breakeven occupancy is the average annual occupancy that a hotel requires in older to breakeven. Since the 1980s,, the breakeven occupancy has been slowly declining as hotel efficiencies have improved. According to PriceWaterhouseCoopers latest report on the topic, the average breakeven occupancy for hotels nationwide was 53 percent. ~~ Current Market Conditions While general managers of larger mid-range and upscale hotels. were bullish about the medium- and long-term future for their properties, they were nonetheless cautious about near-term prospects, noting a sharp decline in revenues that began in the summer of 2008 and has continued into 2009. Figure 1 shows monthly occupancy data for 2008 through Apri120U9. As shown, 2008 began as a relatively strong year for Petaluma hotels with occupancies exceeding their historic averages for most months from January to May. However, beginning in June 2008, occupancy levels at Petaluma hotels dropped below historic norms. Over the previous. 12 months from May'2008 to Apri12009, the average occupancy level has averaged 64:5 percent, a substantial decline compared to an average of 71.5 percent .during the same period a year earlier, but still generally at or above the breakeven point for most hotel types. As is typical during times of declining occupancies, local hotels have-also lowered room rates, such that~DRs_are approximately_seyen_percent lower over the previous 12 month compared to the ~~ same period a year earlier. Nonetheless, these data suggest that .hotels are operating neartheir breakeven point -even in the midst of a deep recession. Moreover, general managers of larger upscale and mid-range properties indicated. that they have been able to withstand the dowritutn in revenues with only minimal changes to their staffing plans..Qne hotel, for instance, reported its -first ever layoff, while another indicated an intention to higher fewer temporary seasonal staff, related to lower than normal summer bookings. Overall, occupancy and ADR data from recent years point to a local hotel market that is supply- constrained, healthy, and relatively well performing in the mid-range and upscale segments, even in the midst of asevere economic downturn. ~~ .ADRs from`May 2008 to April 2009 are $97 compared to $104 (adjusted for inflation)' for the same period a year earlier. 4S Figure 1. Monthly Occupancies Jan '08 to Apr'09 Compared to 5-Year Historic Average O 0 ~p0 `p0 tp0 00 p0 `pb ~0 00 ~p0 Jp'b 40~ O A mph `A~ `pA ~a Fe ~`a PQ ~a~ hoc )J p°~ 6eQ 0° ~° O~ ~a ~~ ~'~ PQ Source: Smith Travel Research, 2009; BPAE,.2009. ®emand for A-ddi$ional Hote9 Roorns In order to determine the impact of a new hotel on existing hotel properties in Petaluma, it is helpful to calculate'the demand for additional demand for hotel rooms that is generated by growth in countywide spending on accommodations. As shown in Table 8; :there were approximately $215 million in taxable lodging expenditures in Sonoma County in 2007, of which Petaluma captured 7.0 percent or approximately $15 million. Based on long=term data; expenditures countywide have increased:, steadily, growing by an average annual rate of 5`.0 percent countywide from 2002 to 2007. Assuming more modest growth going forward of only 3.0 percent per year, consistent with the long-termstatewide trends, the county will see an annual increase in accommodation expenditures of $6.4 million (see Table 6 for accommodation spending trends). Long-term data. for the. County and Bay Area show 3.8 percent and 3.3 percent average annual increases in accommodation ,expenditures, suggesting that more robust growth is possible. Hq Whether Petaluma captures its share of additional accommodation expenditures will depend in part on whether the City. adds additional -hotel rooms. If the City' does not, over the long-term, local ADRs and occupancies may rise in response to the supply-constrained market. Simultaneously, the City's share of countywide accommodation expenditures will fall, as additional supply is added elsewhere. Table 8 presents three potential scenarios regarding the future demand for hotel rooms in Petaluma, based on low, mid, and high assumptions about the City's .future capture of countywide accommodations expenditures. If the City continues to capture 7.0 percent of taxable accommodation expenditures, it wily realize an additional $450,000 of hotel spending on average each year. With awell-performing hotel able to generate approximately $38,500 of revenue per room each year, the City could add approximately 12 hotel rooms per year on average. Otherwise stated, the City could absorb a 100-room.hotel approximately every eight years. As the last hotel in Petaluma was built in 2002, by 2010 -the proposed project's opening year -there are eight years - of"pent-up"-demand-that-could-be-captored_as_a_news0.0~oom~acility This_analyss assumes an annual average occupancy rate of 70 percent, the target rate for hotel operators on the scale of the proposed project. This assumption provides for enough room capacity to allow monthly occupancies to increase to 80+ percent during summer peak season, capturing demand from Petaluma and Sonoma County visitors. With a long and stable history of increasing accommodation expenditures countywide, this analysis suggests ongoing demand for additional hotel rooms in the City, and the capacity to absorb another 100-room facility with limited impacts on existing major operators. These findings are consistent with the strong performance of existing hotels in Petaluma, as discussed above; even in light of the current economic downturn. Delaying Phase II of the proposed project. would give further opportunity for visitor spending to grow and the broader economy to recover, further limiting any impacts on other local hotels. It is worth noting, however, that smaller boutique properties may experience some negative effects from a major new hotel in Petaluma.. An interview with the owner of the 15-room Metro Hotel indicated that while larger properties may be performing well, it.continues to be a challenge for a small independent. operator to compete. According to the owner, over the previous several years, the property has operated near its breakeven point and would be very susceptible to closure if additional hoteLrooms occurred in the City. It is difficult to precisely assess the impacts of a new 100-room full-service extended stay facility on a boutique property such as the Metro Hotel, simply because they have distinct services; marketing strategies, and guest segments. However, the Metro owner believes the Metro could ~~ lose two to three rooms per night to a new hotel located at the Silk Mill location, leading to a 20 to 3O,percent drop in revenues, and potentially forcing the hotel to close. Table 8. Estimated Demantl for Atltlitional Hotel Rooms iri Petaluma Countywide Taxable Accommodation Expenditures, 2007 $214,61.2,456 Estimated Annual Growth Rate for;Accommodation Expenditures (a) 3.0% Average Annual Increase in Taxable Accommodation Expenditures $6,438,374 Petaluma Taxable Accommodation Expenditures, 2007 Current City Capture Rate of Countywide Expenditures (b) Potential Annual Increase, in Accommodation Expenditures (c) Low Scenario Mid Scenario (Current,City Capture Rate) High Scenario $15,051,780 `7.0% Annual Demand for City Increase in Additional Capture Rate ~ Expenditures (d) Rooms (e) 5t0% $321,919 8.4 7.0% $451,535 11.8 9.0% $579,454 15.1 Note: a) The estimated growth rate for accommodation expenditures is based on the long-term trend in the State of California from 1992 to 2007. b) City's current sharetof taxable;accommodation..expenditures within the-County. c) Various scenarios are shown regarding;additional:demand for hotel rooms in the City, assuming the City sees its share of Cduhtywide accommodation expendituresdeciine, remain constant, orincrease in future years. d) Calculated"by applying the City's:assumed capture rate to the annual increase in'Countywide expenditures. e) Demand for additional rooms is calculated. based on the following revenue assumptions, which are consistent with a well-performing hotel in the mid= to upper--scale range: ADR $150 Occupancy 70% AnnuaLRevenue Peri2oom $38,325 Sources: Sonoma County Economic Development Board, Annual Tourism Report; 2008; BAE, .2009. ~/ SulnoYaaly of ~c~y Findings ^ Sonoma County has experienced a long-term increase in visitor spending on accommodation, outpacing the Bay Area and California as a whole. In 2007, the County realized $240 million of spending on accommodations, a 75 percent increase since 1992, reflecting along-term average annual rate of 3.8 percent: In comparison,. the Bay Area and state have seen a 3.3 percent `and 3.0 percent average annual increase, respectively, over the same time period. ^ In per capita terms; Petaluma realizes significantly lower hotel expenditures than similar Sonoma County communitie§. Petaluma has among the lowest lodging expenditures of any jurisdiction in the County, collecting $265 per resident .during 2007. The countywide average was $447 per capita in 2007: In order to be on par with Santa Rosa in terms of per capita expenditures, the City would have had to realize an additional. $700;000 of expenditures per year.To be-on~ar -with-Rohri~rt P-ar-k,-the-City-would-have-had-to-realize-an-addtional_$_4.6 million in expenditures. Translated into additional hotel rooms, the City would require approximately 20 additional hotel rooms to realize per capita expenditures equal to Santa Rosa and approximately 135 additional hotel rooms to realize ,per capita expenditures equal to Rohnert Park. ^ The countywide pipeline of planned and' proposed hotels ,points to substantial growth in the supply of hotel rooms within the market area, regardless of what occurs in Petaluma. There are currently more than 1,250 units in various stages of planning in communities throughout ,Sonoma County, :including the proposed project.. This suggests that Petaluma's share of countywide visitor, spending will likely decline below current levels if it does not increase its supply of hotel rooms. ^ Past performance of Petaluma hotels indicates a healthy and profitable .local market. Based. on a review of market data and interviews with local hotel operators, Petaluma hotels have performed well over the past several years with revenues generally above .identified .operating goals at larger- hotels and with average occupancies above industry norms for profitability: Petaluma hotels saw an average occupancy rate of 68.7 percent between 2004 and 2008: ~ According to industry standards, upscale .hotels have an average breakeven occupancy .rate of approximately 65 percent: Mid-range and extended stay properties have a breakeven occupancy rate of approximately 50 percent; while economy properties need an occupancy rate bf approximately 40 percent. ^ Current. market conditions are challenging 'but manageable. for major hotel operators in Petaluma that would directly compete with the proposed project. Over the' past 1-2 months, J~ operators have reported markedly lower revenues, with occupancies and average daily rates both down approximately seven percent, compared to the same period a year earlier. Nonetheless, at 64.5 percent, "occupancies remain at or above the average breakeven point for most hotel types, with general managers of local major".hotels reporting that they have been able to withstand the downturn with only minimal changes to staffing plans. Continuing growth in countywide hotel spending indicates opportunities to expand the local supply of hotel rooms. Notwithstanding current economic conditions, long-term trends of growing visitor spending on accommodations in Sonoma County point to opportunities to expand the local supply of hotel rooms. If Petaluma is to continue to capture its current percentage of countywide spending on accommodations, there is sufficient demand to expand the supply of hotel rooms in the City by approximately 12 rooms per year. As no new hotel construction has occurred in Petaluma since 2002, trends point to an opportunity to add ,z approximately 1"00 rooms -the proposed size of the Silk Mill project - by 2010. Given these findings, in the long-run, the proposed project would have a minor impact on larger, chain hotel properties in Petaluma, and a potentially greater impact on smaller boutique properties. Based on an analysis of past and"current market conditions and forecasts for future demand, .the project would be expected to have a modest impact on larger, chain hotels. These properties-have generally operated above required proftability thresholds and would be able to absorb any temporary declines in occupancies and room rates, caused by the opening of a new property. Any .negative impacts would mainly occur in the short-term, as the broader economy remains weak, and visitor spending is low. Delaying Phase II of the proposed project would give further opportunity for visitor spending to grow and the broader economy to recover, helping to limit any impacts on other local hotels. Although they serve a distincf market than the proposed project, smaller boutique properties such as the Metro ..Hotel still remain more vulnerable to the opening of new hotels. These properties may experience greater declines in revenues due to increased competition, while lacking the financial resources to weather these declines. ~Z 2002-2010 spans an eight year period. At 12 rooms/year, there is "pent-up" demand for 100 rooms. 53 ~9~3~~0~~~~~ ~~~~~ ~B'1~~~~~~ The second major component of ari FEIA as requested per the Council Resolution is an analysis of potential employment .impacts in the City of Petaluma,. including number of jobs and types of employment generated,, likely wages and benefits relative to industry standards and/or the City's Living Wage. This chapter assesses those impacts to the extent, possible with available data. Employment Job Creation The Silk Mill Hotel. project will create temporary and permanent jobs in Petaluma. Assuming the project has aone year construction period, the project will create an estimated 24 temporary jobs in I3 construction-related fields.in its first phase, and 19 jobs in the.second phase, as shown in Table 9. Table 9. Constrtaction Employment Estimate Construction Budget Employment (a) Phase 1 $3,506,800 24 Phase 2 $2,397,500 19 (a) Assumes each phase takes one year; irrbther words, this effort ._ estimates employee-years. A highernumber of:employees could be assumed if the: project timeline is shortened. Sources: IMPCAN; BAE, 2009. The permanent.. jobs created will. be in the accommodation and food service sectors. According to the project sponsors; the hotel will operate with a staff of 22 to 25 workers and the restaurant will have a staff of 10 to 12~workers. Thee project sponsors estimate that 70 percent of the workers will be full-time, with; full time defined as 30 or more hours per week. Part-time .workers are expected to. work 20 hours per week on average. National ::data from the Current Population Survey indicate that .for the Leisure and Hospitality sector, out of a total of approximately 1.1.7 million workers, approximately 42 percent work part " This estimate: was arrived at using IMPLAN, an input-output model. IMPLAN assumes a certain value of construction,per employee-year in a given area such as Sonoma County. Since. construction has been assumed to take! 12 months; employee-years in this case are equivalent to the number of employees. The cost of the construction is derived from the fiscal impact analysis below (see Table 15). 5y time.14 This is a higher proportion than the 30 percent for the proposed project, but is based on a stricter definition of full-time work (35 hours vs. 30 for the information from the project sponsors). While the differences in these def nitions make comparisons more difficult, it appears that the project will not lead to a significant increase in the number or proportion of part-time workers in Petaluma. Occupational Mix The project sponsors have also provided a breakdown of projected total employment by occupation, as shown in Table 10. Table 10. Projected Occupational Mix Estimated Number of Employees Occupation Low High. Cooks 4 4 Counter Staff 4 4 Maintenance Workers 4 4 Managers 5 5 Housekeeping 8 12 Accounting 1 2 Total Jobs 32 39 Source: Arris Studio Architects, 2009. Net Employment Impacts The market impacts analysis suggests that Petaluma can support an additional hotel of this type and size with minimal long-term. impacts on local major operators. As such, any job losses associated with the proposed project are difficult to estimate with precision., In, terms of impacts on boutique properties, if the Metro Hotel is forced. to close in response to-the proposed project, this would impact a total of three employees (including the proprietors).15 1/Vages and benefits Wages In addition to the above information on overall. employment and occupations, the project .sponsors have provided data on the estimated wages by job title for the proposed project. Wages range from 14 2008 Current Population Survey, Characteristics of the Employed;, Table 21, Bureau of Labor Statistics. Note that according _to this same table, less than 20 percent of those working part time aze doing so .for economic reasons,(e:g., unable to find full-time work). is Staffing at Metro-Hotel as reported in phone interview on June 2, 2009. SS a low of $8 per hour for banquet servers and restaurant servers/btxssers/room service to $22+ per hour for executive administrators and. accountants (see Table T1). The lower-paying occupations are the direct service-related occupations such as servers, stewards, and room attendants. Table 11. Wage Range:by Job Class for Hourly Staff Title Low High Accountant $16.48 $22.20 Executive Administrator $22.00 $22.00 HR Assistant $18.00 $18.00 Banquet Captain $11.00 $12:75 Banquet Server $8.00 $8.00 Restaurant Bartender $10:50 $12.00 Restaurant Host $10.00 $10.00 Restaurant Sever/Busses/Room Service $8.00 $8.00 -Night-Auditor - $1:4-42- $x$:84 Resenrationist $13.38 $16.00 Front Desk:Supervisor ' $15.00 $15.00 Front Desk•Agent $13.00 $15.48 Gellman $10.00 $10.50 Lead Cook . $16.90 $17.11 Cook $11.39 $14.89 Lead Steward $12.75 $12.75 Steward $9.00 $11.07 Houseperson Supervisor $11.50 $11.50 Room Attendant/Houseperson $9:77 $11.24 Maintenance Helper $14.96 $16.07 Based on wages at Crowne Plaza Cabana Palo Alto, an existing property with the same operator. Source: BPR Properties While an exact match. of occupations was not always possible, Table 12 presents data on similar occupations from the California Employment Development Department Occupational Employment Survey. Generally,. it appears that the proposed wages for the project-are in the range of prevailing wages by occupation for Sonoma County. For example, the "Executive Administrator" job for the project is likely equivalent to "Lodging Manager." The $22 per hour estimated wage for Executive Administrator falls between the median and mean for Lodging Manager. The server categories for banquets and the restaurant are listed at minimum wage, which is the;25~' percentile for the County for waiters and waitresses (but it is legally the minimum also). 'For housepersons, the low range wage for the project is above the 50''' percentile for housekeepers in Sonoma County, and the high range wage is approximately that of the 75~' percentile. 5~ Table 12. Selected Occupations & Wages in Sonoma County'.'1st Quarter 2008 2008 -1st QuarterWages 50th 25th Percentile 75th Mean Percentile (Median) Percentile Hourly Hourly Hourly Hourly Occupational Title ., Wage Wage Wage Wage: Lodging Managers $25.13 $17.45 $20:40 - $29.48 Accountants and Auditors $32.54 $24.50 $30.10 $38.82 Chefs and Head Cooks $23.41 $16.88 $23.96 $29.16 First-Line SuperHSOrs/Managers of'Food Preparation and Serving Workers ~ $14.91 $10.96 $14.44 $18.18 Cooks, Restaurant $11.49 $9:70 $11.23 $13.04 Food Preparatioh Workers $11.13 $8.96 $10.60 $12.87 Bartenders $10.21 $8.50 $9.57 $11.14 Combined Food Preparation and Serving Worfcers;,IncludingFast:Food $9.95 $8.23 $9.04 $10.21 Waiters and Waitresses $9.54 ,$8.00 $8.56 $9.44 Dishwashers $9:07 $8.00 '$8.65 $9.77 Hosts and.Hostesses,.Restaurant, lounge, and;Cofieer;Shop $9.73 $8.08 $8.90 $9.98 Food Preparation+andrServing Related ' Workers„Ail' Other $8.50 $8.00 $8.20 $8.93 Maidsand Housekeeping Cleaners $10:21 $8.55 $9.61 $11.27 Baggage Porters and Bellhops $10.09 $9.33 $10:12 $1L10 Hotel, Motel, and Resort°6esk Clerks $11:23 $9.69 $11.19 $12.94 Helpers-Installation, Maintenance, and Repair Workers $13.16 $9.95 $12.99 $14.87 These surv2y data'are from the 2007 Occupational Employment Statistics. (OES),sur~ey. The wages have all been updated'~to the first quarter of 2008 by applying the US DepaRment of Labor's Employment Cost Index to the 2007 wages. Occupations are classified using the Standard Occupational`Ciassification (SOC) codes. For details of the methodology, seethe Orentew.of the OES Survey at htt p: //www: laborm arketi nfo. edd. ca. gov. Source: CA Employment Development-Departmenf Benefits Benefit packages associated with different positions will vary by tenant for part-time and full-time employees. Appendix A provides detail on coverage by position and number of hours. As shown, benefits are very invited for -part-time workers at less than 30 hou"rs weekly: .For full time employees, benefits include health care after three calendar months of employment, with the employerpaying a 90 percent hare for the employee and 40,percentfor°additional family members for. HMO coverage: Similar benefits are. available for dental and, vision coverage. Additional details regardng;icoverage are found in the Appendix, which covers holiday time, sick and vacation time accrual, incentive: programs, and room and food discounts. J. Table 27. Projected General Government Costs FY 08109 Budget Expenditures City Council City Manager City Attorney Gty Clerk (a) Fnance Human Resources Total General Government Expenditures Total Non-General Government General Fund Expenditures Total General GovernmentExpenditures as a Share of Non-General Government Expenditures New General GovernmentExpenditures As"sociated with New Development (b) $147,400 $338,000 $399,850 $234;700 $1.,283,800 $341,100 $2,744,850 $36,802,800 7.5% $532 (a) Does not include elections expenditures, as the proposed project does noYihdudenew residential units. (b).Applies 7.5"/o to other costs analyzed.in this study. Sources: ABAG, 2007; City of Petaluma FY 08N9 Budget BA E, 2009. Parks and Recreation Although the City of Petaluma provides. park and recreation services to the City, these services are .mostly used by "residents., Scott"Brodhun, Director of the City's Parks and Recreation Department, commented that there is sufficient ~ capacity to accommodate visitors at the City's park and recreation facilities. In fact, he suggested that. if any impact were to occur as a consequence of the proposed. project, it would result' in more revenues from visitor use of the Petaluma Swim Center. Mr. Brodhun also commented.that.since the proposed project does not include any new residential development, the City should. not anticipate additional service costs .resulting from the proposed project. Surnrnary of General Fuu~d Fiscal 6rnpacts As shown in Table. 28, this analysis estimates that the proposed project generates a net fiscal surplus of approximately $334;271 annually to the City of Petaluma'General Fund, owing largely to the transient occupancy taxes generated. This surplus represents 0'.9 percent of the City's General Fund revenue budget, indicating that the proposed project would have a relatively minor positive impact on the City's overall fiscal position. The cost estimates presented here are based on the City's Fiscal Year 2008-2009 Budget. To the extent costs :in subsequent fiscal years decline (due to service reductions), the project would generate even lower service costs than this analysis suggests. s~ Table 28. Net Fiscal Impact 2009 Revenues Dollars Sales Tax Revenues $5,460 Property Tax Revenues $1,600 Property Transfer Tax Revenues $590 ILVLF Revenues $3,154 Franchise Fee Revenues $598 Licenses, Permits, and Fees,Revenues $145 Fines, Forfeitures, and Penalties Revenues $151 Business License Revenues $90 Transient Occupancy Tax (TOT) $330,143 SUBTOTAL: Revenues $341,932 2009 Costs Dollars --Rolice- $4,022_ Fire $1,948 Public Works $1,066 Parks.and Recreation (a)` $0 GommunityDevelopment $93 General Government $532 SUBTOTAL: Costs .87,661 Net Fiscal Impact $334,277 (a) As the`development'does not include any, new,residential units, and visitors will haven mihimal impact on Parks.and Recreation facilities, this analysis assumes that the project would have no fiscal impact. Source: BAE, 2009. fVon-General Fund Revenues and Costs . This section of the analysis evaluates the potential impacts to non-General Fund costs and revenues including development impact fees, other public revenue benefits; and public contributions. Development Impact Fees In addition to providing ongoing municipal services to the new development, the City of Petaluma may also need to increase its capital facilities to maintain current service standards and serve new development. The City uses development impact fees to fund these improvements. The fee per new :,development must meet the nexus requirements set forth in AB 1600. AB 1600, adopted in 1.987 'as tfie "Mitigation Fee Act," requires that new development only pay its fair share of capital facility needs. Cities generally update. their fees every .few years to keep in compliance with AB 1600 requirements as infrastructure and facility needs change. Sys In May 2008, the City of Petaluma adopted a series of impact fee mitigation studies that set citywide development impact' .fees. Table 29 shows the development impact fees that the City would collect from the Silk Mill Hotel project... Fees are estimated to total, approximately $2.1 million. As AB1600 requirements limits the amount of development, fees a city can charge based on the nexus between new development and capital facility needs. Based in the City's recently adopted fee structure, the City should not. suffer any capital facility shortfalls between need and fees collected resulting from :the proposed development. ~O Table 29. Projected. Development Impact Fee Revenues Unit of Total Fee Type Land Use Type Fee Measurement Unit Fee Aquatic Center Facilities Commercial $62 1,000'squarefeet 48,020 SF $2,977 CommeraalLinkage Commercial $2.08 Square Foot 45,920 SF $95,514 Retail $3.59 Square Foot. 2,100 SF $7,539 Community Center Facilities Commercial $261 1,OOOsquarefeet 48,020 SF $12,533 Rre Suppression Fadlities Commercial Lodging $512 Unit 100 Units $51,200 Retail $144 1 ,000 square.feet 2,100 SF $302 Law Enforcement Faalities Commercial Lodging $773 Unit 100 Units $77,300 Retail $217 1,OOOsquarefeet 2,100 SF $456 Library Facilities Commercial $111 1,OOOsquarefeet 48,020 SF $5,330 uisition-(a) ace-Ac O n-S Commercial $.1 -12Z -Unit _ 101 Units $113,827 _._ q -- - pe p - , Park Land Acquisition Commercial $608 1,000 square feet 48,020 SF $29,196 Park Land Development Commercial $1,041 1,000squarefeet 48,020 SF $49,989 PublicFaalities Commercial $248 1,OOOsquarefeet 48,020 SF $11„909 Traffic (b) Hotel/Motel $12,993 Room 100 Rms $1,299,300 Was water (c) Non-residential $22 9,0 00 WaterCapaatjr (d) Any 3" Compound Water Meter $72,000 Storm Drain (e) Commercial $9,000 Acre 1.58 Acres $14,220 Public Art Commercial 1 % Construction Budget $5,904,300 $59,043 GRAND TOTAL $2,131,635 (a) Based on 100 hotel rooms, plus restaurant (b) Provides the more conse rvative traffic impact fee estimate of "Caltrans Preferred" over"Locally Preferred." (c) Estimate from Petaluma Water Resources and Conservation Dept Includes credits from ebsting square footage. (d) Estimate from Petaluma WaterResources-arid Conservation Department. (e} Assumes mabmum fee vrould apply. Sources: Cityof Petaluma, 2009; BAE, 2009. ~. Other Public Revenue Benefits The proposed project would also generate additional benefits from property tax increment accruing to the Redevelopment Agency . or through developer land dedication, exactions, or developer- funded improvements. Redevelopment Funds. Since the proposed project is located within the Petaluma Community Development (PCD) Area redevelopment area, the City's Redevelopment Agency would receive the major share of the property tax increment generated by new development. According to the City's redevelopment consultant, the Redevelopment Agency collects the property tax increment, which equals one. percent of the net new assessed value. The Agency then passes a portion of the increment through to' other agencies, including the County for administrative services,. the County General Fund and County Library, based on contractual pass through agreements with the Redevelopment Agency. As Table 30 shows, the Redevelopment .Agency retains approximately 49 percent of the total property tax increment. From. the proposed project, ,this amounts to ____._ approximately_$29;192~based on the assumed valuation at buildout. _ __ _ Table 30. Projected Redevelopment Agency Revenues Property Tax Revenues ' Property Tax Increment New Assessed Value (a) $5,904,300 Basic Property Tax asa; Percentage of Assessed, Value 1.0% Total Property Tax lnaement $59,043 Less: County Admin Share 1.278% Less: Other Taxing Entities Share, Statutory Pass Throughs (ti) 20.000% Less: Contractual Pass Throughs (c), 29280% Redevelopment Agency's Share of Properly Tax Increment 49.442% Total Redevelo pment Age ncy Revenues $29,192 (a) Assessed values based on construction costs for Phase 1 (e~sting building) and for Phase 2 (new building) combined: 'Estimated construction cost persquare foot for Phase L $90 per SF Estimated construction cosf,per square foot for Phase 2: $125 per SF (b)Othertaxing entities includeallgovemmententites entitledto a share of the base property tax if'this were note Redevelopment Area, excepting those with contractual agreements as shown.innext.item footnote. Ciiy share of this 20% is shown in Table 15. (c) County General Fund and County Library contractually get pass'throughs equal to 96 percent of theirbaseatloca6ons (28.1i and 1:9,percent respectively). Sources: City of Petaluma, 2009,; Sonoma County Auditor-Controller, 2009; Sonoma County Assessor's Office,.2009; Merlone Geier Partners, 2009; Seitel Consulting, 2009; BAE, 2009. Developer `Contributions. According to the City Engineer, Curt Bates, the City does not expect any conditions of approval from the proposed project that require substantial off-site improvements or upgrades above and beyond minor improvements such as street trees and street lighting. These ~~ comments remain preliminary, and the City reserves the right to require additional improvements and developer contributions as a condition of approval. Public Contributions. to' Proposed Project Finally, this analysis: examines the cost to the City of public contributions. Such contributions could include land write downs; tax rebates. or refunds, below market or contingent loans, .site acquisition or preparation costs; fee waivers or payments, and unfunded infrastructure and public improvement costs. According to Community Development Director Mike Moore, the City is currently not: planning to extend any of these payments to the. Silk Mill Hotel project. Thus, no public contribution costs should accrue to the City. Summary of Non-General Fund Revenues and Costs The City's development impact fees have been recently updated in May 2008, so the fees of approximately $2.1 million should effectively cover any capital costs associated with the proposed -project. The-Petaluma-Redevelopment Agency-should--also-receive approximately $29,.192,_.. ______. annually in `tax increment at project buildout, as the project is in the Petaluma Community Development. Area. As of this writing, the City does not expect to receive benefits from. any developer contributions such as land. dedication or off-site improvements. Currently, the Gity has no plans to make any public contributions such as land write-downs, tax rebates or refunds, below-market or contingent loans to the project; or to pay for any other costs associated with the development of the project. 403 ~~~~~~~~ ~~~ ~~~e~ ~a ~e~~~o~~ ~~ro~z ~®r So9~ ®r[~~r~ w+ Appendix A• Benefits Matrix for Silk Mill Hotel Workers _ Benefit PThourl FT hou Manager Executive Committee Under:30 hours/week 30+ hourslweek Sala Exempt Salary Exempt Introductory eriod 1st90 days of employment 1st 90 days: of employment No introductory period No introductory period 8 paid Holidays after introductory period is completed: New Year's 8 paid Holidays: New Year's Day, 8 paid Holidays: New Year's Day, Day, Presideht's Day, Memorial Presidents Day, Memonal Day, President's Day, Memorial Day, Day,,lndependence Day, Labor Independence Day, Labor Day, Independence D.ay, Labor Day,. Day; Thanksgiving Day, Thanksgiving Day, Christmas Thanksgiving Day, Christmas Paid Holidays N/A Christmas Day, Floating.Birthday Day, Floating Birthday Day, Floating Birthday Accrualastart immediatelybut use is onty after completing of Accruals start immediatey but ~ Accruals start immediately but introductory period. Based on use is onlyafter completing of use is onty after completing of Full-time scheduled hours. 1 yr-5 introductory period. 1-4 yrs=10 introductory period. 1-4 yrs=10 pd days, 2-4 yrs=10 pd days (15 pd days (15days cap), 5-14 pd days (15 days cap), 5-14 days,cap), 5-14 yrs=15 pd days yrs=l5 pd days:(22.5 dayscap), yrs=15 pd days (22.5 days cap), (22.5 days•cap), 15+yrs=20 pd 15+yrs=20 pd days(30 days 15+yrs=20 pd days (30 days Vacation . N/A days (30 days cap). cap). ~P)• Accrue 6 days per calendar year. Accrue 6 days per calendar year: Accrue 6 days per calendar year. Accruals stag immediately but Accruals~start immediatey but Accruals start immediately but use allowed afterintroductory use allowed afterintroductory use allowed after introductory period is completed and is period iscompleted and is period is completed and is prorated.., Medical evidence of prorated. Medical evidence of prorated. Medical evidence of illness is required on 3rd day illness is'required on 3rd day illness is required on 3rd day missed in,a row. Medical missed,in a row. Medical missed in:a row. Wledicai -- --- ------ - - ----- certificationof your-fitness-to certification-ofyour-fitness-to-. certification of your_fitness_to return to:work may be required. return to work.may be required. return to work maybe required. To promote our family Topromote our family To promote our family environment employees may use environment employees may use environment employees may use their sick leave for "Kin Care" (a their sick leave for `'Kin-Care"(a theirsick leave for "Kin Care" (a child, parent, spouse, domestic child, parent, spouse, domestic child, parent, spouse, domestic Sick Days N/A partner). partner). partner). t lstday of month after 3 calendar' 1st day of month after 3 calendar 1st day of month after 3 calendar months ot'FT-employmentand monttis:of FT employment and- months of FT employment and employee:contribution is paidpre employee contribution is paid'pre employee.contnbution is paid pre taz, BPR pays 90% of employee; tax: BPR pays 9Q%d of employee, tax. BPR pays 90% of employee, 40% for additional family 40% for additional~family 40% for additional family membersforHMO. PPO is EE members for HMO. PPO is. EE members for HMO. PPO is EE Medical N/A buy up option. buy up option. buy up option. 1st-day of month after &calendar 1st day of month after 3 calendar 1 st day of month after 3 calendar months of FT employmentand; months,of FT employmentand monihs of FT employment and employee contribution is paid pre employee:contribution is paid pre employee contribution is paid pre tax. ,BPR pays'90% of employee, tax.. BPR pays 90% of employee, tax. BPR pays 90% of employee, 40% for additionatfamily 40% foradditional family 40% for additional family members for DMO. DPO is EE members forDMO. bP0 is EE members for DMO. DPO is EE Dental NIA buy'up option. ~ buy up option. buy up option. 1st day of month after 3 calendar 1st day of month,after3 calendar 1st day of month after 3 calendar months of FT employment and months of FT employment and months of FT employment and employee contribution is paid pre employee contribution is paid pre employee contribution is paid pre tax. BPR pays 100% of tax. BPR pays 100"/° of tax. BPR pays 100% of employee. Employee 100% employee. Employee 100% employee. Employee 100% Vision N/A responsible for family. responsible for family.. responsible for family. 1 st day of month after completion of introductory period of FT 1st dayof month after start of 1st day of month after start of employmentand employee employment and employee employmentand employee contribution is paid pre-tax. BPR contribution is paid pre-tax. BPR contribution is paid pre-tax. BPR Life and ADBD N!A pays 100% pays 100% pays 100%° May be eligibleforSales Executive,incentive Program incentive Program or Chef • (20% max, may be eligible for Incentive Program N/A N/A Incentive Program Sales Incentive Program / 5 A endix A: 'Benefits Matrix;for Silk Mill Hotel .Workers Semi-Monthly on 5th & 20th: Pay Semi-Monthly on 5th & 20th. Pay Semi-Monthly on 5th & 20th. Pay Semi-Monthly on 5th & 20th. Pay `period'from 1-f5 pays on 20th. period-from 1-15•pays on 20th. period from 1-15 pays on 20th. period from 1-15 pays on 20th. 6-3T.pays on Pay period from 1 Pay period from'16-31 pays on Pay period from 16-31 pays on Pay period from 16-31 pays on Pa Da , 5th A free meal per:6±•,hour shift;irr 5th 1 free:meal peF6+ hour,shifCiri 5th 1 free meal per.6+ hourshift in 5th 1 free meal per 6+ hour shift in Meal Breaks the cafeteria. ~ Based:on availability at' the cafetena - Based,on availability at. the cafeteria. Based,on.availability at the cafeteria. Based on availability at participating"hoteb:brandsafter participating.hotel'brands!after participating hotel brands after- participating hotelbrands after introductory period is;completed._ introductory period is completed: introductory period'is completed. introductory period is completed. See Revenue Manager;. See'Revenue Manager, See Revenue;Manageq See Revenue Mahager, Room Discount DirectDeposif approved by GM ~:_ Available immediately upon hire' approved,by GM Available immediatelyupon hire' approved liyGM Available immediately upon;hire approved by GM Available immediately upon hire Uniform. Cleaning Free'to employee Free to Employee ~ N/A N/A Dry Cleaning/ Discount program, some Laundry Discount program Discount program_ exceptions Free for business attire 25%=discounton food &° 25%discounY.on food & 25% discount on food & 25% discount on food.& Restaurant beverages in BPR'full service 6everagesin BPR full service beverages'ih BPR full service beverages in BPR full service Discounts hotels hotels` hotels hotels Hotel will provide cell phone & Cell Phone N!A N/A N/A For each MOD shift worked, 1 pay cost Foceach MOD shift worked, 1 comp dayto be used within 3' comp day to be used within 3 MOD Gomgtime Parking N/A , Complimeritary whenavailable N/A Complimentary when available months- ~ Complimentary.when available. months Complimentary wherravailable Team Member $100 once introductory period is $100 once introductory period is $100 once introductory period is _ Referral, completed completed completed NIA Source: BPR Properties