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ELF Financing Strategy San Mateo County ELF Study‐2016 February 21, 2017 Prepared by Brion Economics Team Final Report 27 of the cost to build the facilities. This huge employer investment in facilities and subsidized care once the center is up and running is what allows these programs to succeed.29 Expanded employer‐based care in San Mateo County could help alleviate the current child care shortage and address the future and increasing demand for child care. PROPOSED FINANCING STRATEGY The above discussion outlines several possible funding mechanisms that could be used to develop new child care facilities in the County. These are options that would need to be considered in more depth or would apply to specific projects or cities. In the case of developer impact fees, this mechanism would need to be adopted by each city, and the County separately. The recent effort in San Mateo County to create a grand nexus study for affordable housing fees (both commercial and residential) is one model that could be applied to child care impact fees. A grand nexus study or model could be created that each city would adapt to their own circumstances. Other mechanisms such as community benefit zoning, development agreements, or employer‐based care need to be reviewed on a city‐by‐ city basis. These mechanisms could be of benefit but it is difficult to quantify how many spaces might be provided via these options. With CBPs, developers have a range of community benefits that they can offer up and there is no guarantee that they would choose child care. The three main methods that could be applied and quantified, as discussed above include: parcel taxes, and sales taxes for existing shortfalls, and development impact fees for growth and new development. The following provides an example of how these mechanisms could be used to fund the child care needed today, in the near future, or the next 10 years in the County. For this analysis, we assume the entire “need” is funded but the County and cities could decide to fund less than the full requirement. Table 9 summarizes the potential funding strategies quantified above by existing and future development, and by source – sales tax, parcel tax, and impact fee. For existing development, a countywide sales tax add‐on and parcel tax could total $327.2 million in child care funding. Impact fees on new development totaling $101.2 million would cover much of the costs of new demand from 2015 to 2025. Finance and administrative costs for all sources total $354.3 million. Combined capital and financing costs total $782.8 million, utilizing all three financing options and including financing costs. As discussed in above, this is a comprehensive cost estimate and assumes public financing of all existing need and future need over the next 10 years. In reality other methods and funding mechanisms may be employed to meet the existing and future demand for child care. These include employer‐based and financed care, low or no‐interest loans from the State, grants or other foundation funding, private child care funding, school district funding and other development contributions through CBPs and DAs. The purpose of this analysis is to show the totality of the need, and costs, and demonstrate that if the County and cities were to employ these three common funding mechanisms, it 29 NPR Program “Child Care Scarcity Has Very Real Consequences For Working Families” on All Things Considered, January 3, 2017. http://www.npr.org/sections/health‐shots/2017/01/03/506448993/child‐care‐scarcity‐has‐very‐real‐consequences‐ for‐working‐families 8.C. - Page 46