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REDWOOD CITY FAIR AND AFFORDABLE HOUSING ORDINANCE <br /> <br />Economic & Planning Systems, Inc. 46 Impact on City Finances <br />Table 18. Startup Costs and Interfund Loan Repayment <br /> <br />Operating Reserve <br />City staff also indicated that the program would establish an operating reserve <br />funded through landlord fees. A reserve is appropriate because the proposed <br />Ordinance would create a new program with uncertain expenditure and revenue <br />patterns and it does not allow any General Fund support should revenues fall <br />short. Early-year workload, fee collection, registration compliance, petition <br />volume, hearing activity, legal services demand, and enforcement activity may <br />differ from initial estimates. <br />City staff proposed a reserve equal to two months of expenditures, funded over <br />two years through landlord fees. This assumption is consistent with Government <br />Finance Officers Association (GFOA) best practice guidance recommending a <br />minimum unrestricted fund balance equal to at least two months of operating <br />expenditures. <br />Once the reserve is fully funded, it would not need to be replenished on an <br />ongoing basis except to maintain its value relative to program costs. As annual <br />program administration costs increase over time, including adjustments for <br />inflation or CPI-based cost growth, the reserve target would need to be adjusted <br />accordingly to remain equal to two months of operating expenditures. This would <br />require periodic incremental contributions through fees to ensure the reserve <br />remains aligned with current program costs. <br />Minimum Average Maximum <br />One-Time Startup Costs <br />Tenant Improvements $165 per sq. ft. [1]$218,755 $377,486 $586,904 <br />Equipment $100,000 per office [2]$100,000 $100,000 $100,000 <br />Human Resources Costs Table 17 $364,183 $364,183 $364,183 <br />One-Time Startup Costs $682,938 $841,669 $1,051,087 <br />Interfund Loan Repayment 5 years at 3.81%$152,589 $188,054 $234,844 <br />Intrafund loan payment per unit 16,168 Units $9 $12 $15 <br />[1] Tenant improvement costs based on Cushman and Wakefield Office Tenant Improvement Cost Guide <br />[2] Equipment cost based on Burbank rent control 9212 report <br />Cost Assumption <br />Level of Enforcement <br />8.A. - Page 105 of 168 <br />115