AgdaPkt 2005-10-24 - Laserfiche WebLink

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%./4 CB RICHARD ELLIS CONSULTING Sedway Group CBRE CB RICHARD ELLIS Mr. Larry Carr September 15, 2005 Page 2 non-profit entity, this change would result in reduced property tax revenues for Redwood City as well as other taxing agencies for the duration of Stanford's ownership. For comparative purposes, the analysis assumes both an R&D and a traditional office tenant scenario. The traditional office tenant scenario is conservative given existing and prospective central San Mateo office and R&D market conditions 1. As of year-end 2004, the central San Mateo R&D vacancy rate registered 15.9 percent compared to 19.6 percent for office. Despite the higher office vacancy rate, it is anticipated that the central San Mateo County office market will have higher average rental rates and will experience market recovery before the R&D market, which has historically experienced low annual levels of absorption. While the Stanford Hospital and Clinics use arguably will result in fewer tax revenues for Redwood City, Stanford Hospital and Clinics employees, patients, and visitors will spend retail dollars in Redwood City, which will help support the local economic base. The sales taxes from these expenditures will directly benefit the City's General Fund. In addition, some non-local visitors to the Hospital and Clinic will require overnight accommodations related to medical procedures, generating transient occupancy taxes. There will be additional public benefits attributable to Stanford that could further offset the loss of tax revenues to the City. Stanford seeks to analyze the effects of occupancy of the site, from both a fiscal and economic perspective. This would include both the fiscal revenue benefits as well as prospective economic benefits. This analysis quantitatively probes these issues. SUMMARY OF FINDINGS The present value findings for the two comparative uses indicate that the R&D tenant is projected to generate $2.6 million and the traditional office tenant is projected to generate $2.8 million in revenues to the City of Redwood City General Fund over a 20-year period. In comparison, Stanford Hospital and Clinics is projected to generate revenues of $2.9 million over 20 years. These results indicate that any perception that the City of Redwood City is incurring an opportunity cost if the Excite@Home space is transitioned to quasi-public use is unfounded. Instead, Stanford Hospital and Clinics has the potential to outperform traditional office tenants with respect to local revenue generation and the associated support of local City services through revenues flowing to the General Fund. In addition to strong local government revenue generation, Stanford Hospital and Clinics will directly and indirectly make significant contributions to the economic base of Redwood City. This will occur as a result of the local spending of employees, patients, and Stanford Hospital and Clinics itself. By 2008, when the medical facility will be fully operational for an entire year, local retail spending attributable to the facility will total $2.7 million, comprising the following2: . $1.2 million in employee spending; and $1.4 million in patient expenditures (includes retail spending and estimated room revenue). . These expenditures will serve to expand the local economic base of Redwood City, supporting local businesses and in turn, local employment. Thus, not only will the government of Redwood City , Cify of Redwood Cify is a submarket of the central San Mateo Counfy market. 2 May not total due to rounding.