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HomeMy WebLinkAbout2003-02-19 e-packetSPECIAL MEETING CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 MUNICIPAL SERVICES BUILDING CITY COUNCIL COMMUNITY ROOM 33 ARROYO DRIVE FEBRUARY 19, 2003 5:00 P.M. NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, the City Council of the City of South San Francisco will hold a Special Meeting on Wednesday, the 19th day of February, 2003, at 5:00 p.m., in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California. Purpose of the meeting: 1. Call to Order 2. Roll Call 3. Public Comments - comments are limited to items on the Special Meeting Agenda 4. Study Session: a) Mosquito Abatement District - proposed annexation b) South San Francisco Fee and Competitive Business Study 5. Adjournment LOCAL AGENCY FORMATION COMMISSION 455 COUNTY CENTER, 2ND FLOOR ·REDWOQD CITY, CA 94063-1663 · PHONE (650) 363-4224 · FAX (650) 36~-4849 January 22, 2003 TO: San Mateo County San Mateo County Office of Education SMC Dept. of Environmental Health Cities of: Brisbane, Colma, Daly City, Half Moon Bay, Pacifica San Bruno, South San Francisco San Mateo County Resource Conservation District Midpeninsula Regional Open Space District San Mateo County Harbor District Brisbane Sanitary District Broadmoor Police Protection District Coastside County Water District Colma Fire Protection District Granada Sanitary District Half Moon Bay Fire Protection District Montara Sanitary District North Coast County Water District Peninsula Health Care District Point Montara Fire Protection District Sequoia Health Care District Skyline County Water District Westborough Water District Woodside Fire Protection District SUBJECT: LAFC0-'File No. 03-01--Proposed Amendment to the Sphere of Influence of the San Mateo County Mosquito Abatement District and Annexation to Make District Boundaries Coterminous with County Boundaries Notice is hereby given that an application for the proposed change of organization listed above has been received by the San Mateo Local Agency Formation Commission. The application involves approximately 284 square miles and includes the Cities of Brisbane, Colma, Daly City, Half Moon Bay, Pacifica, San Bruno and South San Francisco and all unincorporated areas north and west of the District's current boundaries (Millbrae on the north and Skyline on the west). The proposal consists of the following proposed organizational changes: City or District Ch~nqe of Organization San Mateo Co. Mosquito Abatement District Annexation The proposal application and map are attached for your information. Please submit comments to the LAFCo office by February 19, 2003 to assure your input to preparation of the Executive Officer's Report. If you have any questions about this proposal, please contact this office. Martha Poya=os Executive Officer APPLICATION FOR A C]tANGE OF ORGANIZATION OR REORGANIZATION TO TIlE SAN MATEO IJOCAL AGENCY FORMATION COMMISSION Ao 2, GENERAL INFORMATION Briefly describe the nature of the proposed change of organization or reorganization. The proposal is to annex territory to the San Mateo County Mosquito Abatement District (hereafter '~District"). An application for a change of organization or reorganization may be submitted by individuals in the form of a petition or by an affected public agency in the form of a certified resolution. This application is submitted by (check one): X Landowners or registered voters, by petition An affected public agency, by resolution (If this application is submitted by petition of landowners or registered voters in the affected territory, complete the petition form.) What are the reasons for the proposal? The purpose of the proposal is to protect public health by including in the District territory within San Mateo County that will benefit from District services, prevent and combat human illnesses and disease and implement the District's "Integrated Vector Management Program" and promote orderly governmental b ourtdaries. Giving urgency to this application is the threat to human health being caused by the rapid spread of the West Nile Virus, which is known to be transmitted by mosquitoes. The pr/me mosquito season begins in the spring. Does this application have 100% consent of l~downers in the affected area? Yes X No Estimated acreage: The District presently includes approximately 166 square miles. Following annexation the District will encompass the entire County of San Mateo consisting of approximately 450 square miles. The annexation area therefore consists of approximately 284 square miles. B. SERVICES 1. List the name or names of all existing cities and special districts whose service area or service responsibility would be altered by the proposed change of organization or reorganization.. San Mateo County Mosquito Abatement District List all Changes to the pattern of delivery of local services to the affected area. For each service affected by the proposed change(s) of organization, list the present source of service (state "none" if service is not now provided), the proposed source of service and the source of funding for construction of necessary facilities (if any) and operation. Example is given on the first two lines of the space provided for your response. SERVICE Vector Management Services, including Surveillance of vector populations, habitats, disease pathogens and public distress associated with vectors; Public Education to encourage and assist reduction or prevention of vector habitat; Minor Vegetation Management to provide access to vector breeding sites and improve surveillance; Distribution to the public of mosquito eating fish and other methods to combat mosquitoes. PRESENT SOURCE These services are not provided at all in the annexation area or in minimal levels by the County of San Mateo's Health Services Agency. PROPOSED SOURCE San Mateo County Mosquito Abatement District FUNDING SOURCES Construction District capital improvements are funded by the. District through its operating budget. The District has no existing long-term debt other than a bond issue to fund construction of its office. This cost is being paid by standard sources of District revenues, primarily property taxes and special taxes. No capital improvements will result from the annexation other than increases in the District vehicle fleet and other incident costs to equip the increased staff to provide services in the expansion area. Operating Within its boundaries the District is funded in major part by a portion of the property tax and by an existing special tax of $3.74 per parcel. It is proposed that within the annexation area the District receive a portion of the property tax and that the existing special tax be apphed to annexed parcels 2 PROJECT PROPOSAL INFORMATION Please describe the general location of the territory, which is the subject of this proposal. Refer to major highways, roads and topographical features. The current District boundaries include a portion of San Marco County on the San Francisco Bay side of the County, encompassing thirteen incorporated cities and a portion of the unincorporated County area. The cities within the District include Atherton, Belmont, Burlingame, East Palo Alto, Foster City, Hillsborough, Menlo Park, Millbrae, Portola Valley, Redwood City, San Carlos, San Mateo and WoodSide. The proposed annexation consists of the remainder of San Mateo County including the seven incorporated cities of Brisbane, Colma, Duly City, Half Moon Bay~ ?acifica, San t~nmo and South San Francisco and the remainder of the incorporated County area. A map of the County showing the current District is enclosed. Describe the present laud use(s) in the subject territory. Land uses within the annexation vary, and include residential, commercial, industrial, institutional, open space and agricultural uses. There will be no change in land use as a result of this proposal. How are adjacent lands used? The annexation area is bordered by the Pacific Ocean on the west, urbanized City of San Francisco on the north, the existing District on the east which consists of a variety of developed and open space uses and by Santa Clara County on the south, consisting of open space and developed lands. Will the proposed change of organization result in additional development? If so, how is the subject territory to be developed? The annexation will not result on any additional development. The District does not provide services on which development is dependent. It provides public health, and protection services for existing populations and land uses. What is the general plan designation of the subject territory? The annexation area includes the general plans of the seven cities to be annexed and unincorporated area, which is subject to the County general plan. General plan designations include a mixture of residential, commercial, industrial, institutional, open space and agricultural uses. There will be no change in general plan designations use as a result of this proposal. What is the existing zoning designation of the subject territorY? The annexation area includes the variety of zoning designations as permitted by the general plans md including mixtures of different residential, Commercial, industrial, institutional, open space and agricultural uses. There will be no change in zoning designations as a result of this proposal. 3 10. What prezoning, environmental review or development approvals have already been obtained for development in the subject territory? There are no zoning or pre-zoning changes related to this annexation. The District has prepared and certified a Mitigated Negative Declaration for its Integrated Vector Management Program, which includes the proposed annexation of the remainder of San Mateo County. This environmental document is enclosed as part of this application. What additional approvals will be required to proceed? The annexation of territory is the only approval needed to enable the District to provide services for the proposed District expansion area. The District's general operations are subject to an array of health regulations and procedures, which will apply equally in.the annexation area. Does any portion of the subject territory contain any of the following --agricultural preserves, sewer or other service moratorium or wetlands subject to the State Lands Commission jurisdiction? Portions of the annexation area do or may contain land in these designations however they will not be adversely affected by the annexation o~' the services, which may be provided by the District following the completion of the annexation. If no specific development projects are associated with this proposal, will the proposal increase the potential for development of the property? If so, how? This particular annexation will not increase the potential for development. The services provided by the District are not services upon which development is dependent, nor will annexation increase the likelihood of land use changes witbir~, the annexation area. LAFCo will consider the person si~ing.this application as the proponent of the proposed action(s). Notice and other communications regarding this application (including fee payment) will be directed to the proponent at: NAM~ & ADDRESS Robert Gay, District Manager San Marco County Mosquito Abatement District 1351. Rollin~q Road, Burlingame CA 94010 TELEPHONE: 650-344-8592 ext 12 AFFeCTeD PUBLIC AGEnCIeS Please complete this section ff this application is submitted by resolution of one or more affected public agencies. Certified copies of resolutions listed be low must accompany this application. The names and resolutions of agencies applying for the change of organization or reorganization described above are as follows: San Mateo County Mosquito Abatement District M - 03- 03 January 8, 2003 Does this application have 100% consent of landowners in the affected area? Yes X No (I/Yes, include proof of consent.) PLAN FOR PROVIDING SERVICES Enumerate and describe the services to be extended to the affected territory. The District will provide Vector Management Services to the annexation areas similar to those provided within the existing District. These are described more fully in the Integrated Vector Management Program and in the District's Annual Report for 2001-02, copies of which are enclosed. These services include Surveillance of vector populations, habitats, disease pathogens and public distress associated with vectors; Public Education to encourage and assist reduction or prevention of vector habitat; Minor Vegetation Management to provide access to vector breeding sites and improve surveillance; Distribution to the public of mosquito eating fish and other methods to combat mosquitoes. Describe the level and range of those services. The level and range of these services will be similar to level and range of services currently provided within the existing District service area and as described in the District Annual Report Indicate when those services can feasibly be extended to the affected territory. The District is prepared to provide the services as soon as the annexation is completed Indicate any improvements or upgrading of structures, roads, sewer or water facilities, or other conditions to be imposed or required withi~ the affected territory. None. Describe financial arrangements for construction and operation of services extended to the affected territory. (Attach proposed operations, budget if available) Will the territory be subject to any special taxes, charges or fees? (If so, please specify.) Attached is the proposed District budget for providing services within the annexation area. It is proposed that the auuexation area he subject to the same special tax as properties witb~u the existing District boundaries, which are presently $3.74 per parcel per year. In as much detail as required to give a clear explanation, explain why this proposal is necessary at this time. The District exists to reduce the risk of vector-borne disease or discomfort due to certain insects and animals that may transmit to humans a number of ctiseases. These are described in the District's Auuual Keport. The threat of West Nile Virus as au emerging risk to humans is one motivation for initiating the annexation at this time. The Board of Supervisors in reco~ition of this situation has endorsed the District's plan for combating the threat to San Mateo County residents, which includes the proposed annexation of the portions of the County that are not within the District. THIS SECTION COIVI?LETED BY Robert Gay, District Manager 6 Burlingame San M~,eo County Mosquito Abatement District Mosquito Abatement. District Annexation Area Environmental Services Agency I & Building Division · San Mateo County · California Montara San Marco Moss Beach Miramar Belmont Redwood Menlo Woods/de mosquito abatement district (unincity v8).cdr I \23\03 ss SAN MATEO COUNTY MOSQUITO ABATEMENT DISTRICT 1351 Rollins Road Burlingame, California 94010-2409 (650) 344-$592 FAX (650) 344-3843 www.smcmad.org January 21, 2003 Martha Poyatos Executive Officer San Marco LAFCo 455 County Center, 2nd Floor Redwood City CA 94063 Subject: Proposed Annexation to San Mateo County Mosquito Abatement District Dear Ms. Poyatos: The undersigned hereby requests approval of the proposal described in the attached materials. It is proposed to process this application under the provisions of the Cortese/Knox/Hertzberg Local Government Reorganization Act of 2000 (Government Code Section 56000 et seq.). Enclosed in support of this proposal are the following: Resolution of application adopted by the Board of Trustees of the San Mateo County 'Mosquito Abatement District on January 8, 2003. (1 copy) LAFCO Application for a Change of Organization (Original and 24 copies). Completed Municipal Service Review and Sphere of Influence Information Form (original and 24 copies) Certified Mitigated Negative Declaration (14 copies) and Notice of Determination (1 copy) 5. LAFCO processing fee payable to "LAFCO" for $3,000. We understand that there may be a supplement fee charged to revise the District sphere of influence and prepare a Municipal Service Review. Please note that a descripL,on of the annexatiOn area is appended as an exhibit to the resolution of application. A map and metes and bounds description does not appear to be needed to file this annexation with the State Boarit of Equalization since .the "area to be annexed adheres to existing boundaries of local agencies. It is therefore requested that the standard requirement for a map and metes and bounds description be waived. If you have any questions regarding this proposal, please contact the undersigned. Sincerely, SAWN MATEO COUNTY MOSQUITO ARATEMENT DISTRICT 1351 Rollins Road BurHngame, California 94010-2409 (650) 344-8592 FAX (650) 344-3843 ~vww. smcmad.org Resolution M - 03 -03 RESOLUTION OF THE BOARD OF TRUSTEES OF TIlE SAN MATEO COUNTY MOSQUITO ABATEMENT DISTRICT INITIATING PROCEEDINGS FOR AN ANNEXATION OF TERRITORY TO THE DISTRICT (Countywide Annexation) WHEREAS, the Board of Trustees of the San Mateo County Mosquito Abatement District desires to initiate an annexation of territory to the District as specified herein; NOW, THEREFORE, the Board of Trustees of San Mateo County Mosquito Abatement District resolves: o This proposal is made, and it is requested that proceedings be taken, pursuant to the Cortese/Knox/Hertzberg Local Government P,-eorganization Act of 2000, commencing with section 56000 of the California Government Code. This proposal is an annexation of territory to the San Mateo County Mosquito Abatement District. A description of the affected territory is set forth in Exhibit A, attached hereto and by reference incorporated herein. It is desired that the proposal be subject to the following terms and conditions: The subject territory shall be liable for taxes, charges, fees or assessments that are levied On similar properties within the current District boundaries. Upon completion of the annexation, each city that is within the annexation 'area shall be invited to appoint a member to the Board of Trustees of the District. The reasons for the annexation are to safeguard the health and comfort of citizens and landowners with~u the annexation area though a planned program to monitor and reduce mosquitoes and other vectors, to facilitate a countywide approach to providing mosquito control and other District programs and to promote orderly governmental boundaries. f It is requested that the Disffict sphere of influence be expanded to encompass the entire County of San Marco to accommodate this annexation. The DistriCt hereby consents to the waiver of conducting authority proceedings. PASSED AND ADOPTED this 8th day of January 2003 by the following vote: AYES: NOES:. ABSENT: Dennis Preger, Presic~ent ATTEST: Leon Nickolas, Secretary EXHIBIT A Annexation Territo _ry The annexation area consists of the entire County of San Mateo, excepting that certain territory that is w~tb~u the boundaries of the San Mateo County Mosquito Abatement District on the date the annexation becomes effective. To: Sanuary 9, 2003 Office of Plenning and Research 1400 Tenth ~trect, Room 121 Sacr~ne~to, CA 95g14 County Clerk, & l~order San Mateo County Kedwood City, CA NOTICE OF DETERMiNATiON 'i From: San Mateo County Mosquito Abatement District · - 1351 Rollins Rd. .. Burlingame, cA 94010 . Subject: Fil/ng of Notice of Determ/nat/on in Compliance with Section 211 ~8 or 21152 of the california Public Resources Code. ' Project Title: EXTENSION OF THE INTEGRATED VECTOR MANAGEMENT I~ROGRAM OF THE SAN MATEO COUNTy MOSQUITO ABATEMENT'DISTRICT TO ALL PARTS oF SAN MATEO COUNTY State ClearinghOuse No. Lead Agency Contact Person 2002122015 Chindi A. Peavey, Ph.D. Project Location: The whole of San Marco County .' Area Code/Telephone/Extension (650) 344-8592 em 32 Project Description: l The project consists of(a) expanding tho District's .sphere ofinfinence to include all of San Marco County, Co) annexing into the District that portion of San Marco' County that is not presently w/thin the Diaxict and (o) provision of the following types of activit/es within the entire expanded District: 1) Surveillance for vector populations, vector habitats, disease pathogens, and public distress associated w/th ve~ors; this includes~irapPing and laboratory analysis of vectors to evaluate populations and disease threats,, direct visual inspection of known or suspected vector habitats, the use of all-terrain vehicles, maintenance of paths, and public sqtweys; 2) PabHe Education to encourage and assist in the reducfien or prevention ofveL'~, habitat on private and publ/c property;, 3) Minor Vegetation Msnagement'to provide access to vector breeding.sites and improve Surveillance; 4) Provision to the public of the "mosquito fish"Gambusia affinis;, application of the bacterium Bacillu# ~hae~t~us, or the fungus Lagentdium giganteUm, and. POssibl~ other predators or pathogens of mosquitoes ("Biological Control"); and 4) Appli~ion of non-persistent selective insecticides'to reduce populations of larval or adult mosquitoes and other invertebrate threats to public health ('Chemical Control"). This is to advise that the San Marco County'Mosqulto Abatement Distri~ as the CEQA Lead Agency, .has approved the above described Project on Sannary 8, 2003 and has made the ~ollowing determination regarding the above' described projects. 1. The prOject D~'n°t .have a significant effect on the environment. . 2. A Negative ecmrauon was prepared for this project pursuant to theProvisions of CEQA. 3. Mitigation measures Were made a condition of the approval of the project. 4. A statement of Overriding Considerations was not'adopted for this project, This is to cer~y that the final Mitigated Negative Declaration with corem ents and responses and record of project approval is available to the General Public at the San Marco County Mosquito Abatement District. ~?~'nature (l~tblic Agency} Chindi Peavey, Ph.D. Date received for filing and posting at OPR: Vector Ecologist Date 01/09/03 COUNTY, APPLICATION FOR A CHANGE OF ORGANIZATION OR REORGANIZATION TO THE SAN MATEO .}~OCAL AGENCY FORMATION COMMISSION o o Ao ° GENERAL INFORMATION Briefly describe the nature of the proposed change of organization or reorganization. The proposal is to annex territory to the San Mateo County Mosquito Abatement District (hereafter "District"). An application for a change of organization or reorganization may be submitted by individuals in the form of a petition or by an affected public agency in the form of a certified resolution. This application is submitted by (check one): X Landowners or registered voters, bY petition An affected public agency, by resolution (If this application is submitted by petition of landowners or registered voters in the affected territory, complete the petition form.) What are the reasons for the proposal? The purpose of the proposal is to protect public health by including in the District territory within San Mateo County that will benefit from District services, prevent and combat human illnesses and disease and implement the District's "Integrated Vector Management Program" and promote orderly governmental boundaries. Giving urgency to this application is the threat to human health being caused by the rapid spread of the West Nile Virus, which is known to be transmitted by mosquitoes. The prime mosquito season begins in the spring. Does this application have 100% consent of landowners in the affected area? Yes X No Estimated acreage: The District presently includes approximately 166 square miles. Following annexation the District will encompass the entire County of San Mateo consisting of approximately 450 square miles. The annexation area therefore consists of approximately 284 square miles. SERVICES List the name or names of all existing cities and sPecial districts whose service area or service responsibility would be altered by the proposed change of organization or reorganization. San Mateo County Mosquito Abatement District List all changes to the pattern of delivery of local services to the affected area. For each service affected by the proposed change(s) of organization, list the present source of service (state "none" if service is not now provided), the proposed source of service and the source of funding for construction of necessary facilities (if any) and operation. Example is given on the first two lines of the space provided for your response. SERVICE Vector Management Services, including Surveillance of vector populations, habitats, disease pathogens and public distress associated with vectors; Public Education to encourage and assist reduction or prevention of vector habitat; Minor Vegetation Management to provide access to vector breeding sites and improve surveillance; Distribution to the public of mosquito eating fish and other methods to combat mosquitoes. .PRESENT SOURCE These services are not provided at all in the annexation area or in minimal levels by the County of San Mateo's Health Services Agency. PROPOSED SOURCE San Mateo County Mosquito Abatement District FUNDING SOURCES Construction District capital improvements are funded by the District through its operating budget. The District has no existing long-term debt other than a bond issue to fund construction of its office. This cost is being paid by standard sources of District revenues, primarily property taxes and'special taxes. No capital improvements will result from the annexation other than increases in the District vehicle fleet and other incident costs to equip the increased staffto provide services in the expansion area. Operating Within its boundaries the District is funded in major part by a portion of the property tax and by an existing special tax of $3.74 per parcel. It is proposed that within the annexation area the District receive a portion of the property tax and that the existing special tax be applied to annexed parcels 2 o C. PROJECT PROPOSAL INFORMATION 1. Please describe the general location of the territory, which is the subject of this proposal. Refer to major highways, roads and topographical features. The current District boundaries include a portion of San Mateo County on the San Francisco Bay side of the County, encompassing thirteen incorporated cities and a portion of the unincorporated County area. The cities within the District include Atherton, Belmont, Burlingame, East Palo Alto, Foster City, Hillsborough, Menlo Park, Millbrae, Portola Valley, Redwood City, San Carlos, San Mateo and Woodside. The proposed annexation consists of the remainder of San Mateo County including the seven incorporated cities of Brisbane, Colma, Daly City, Half Moon Bay, Pacifica, San Bruno and South San Francisco and the remainder of the incorporated County area. A.map of the County showing the current District is enclosed. Describe the present land use(s) in the subject territory. Land uses within the annexation vary, and include residential, commercial, industrial, institutional, open space and agricultural uses. There will be no change in land use as a result oft/tis proposal. How are adjacent lands used? The annexation area is bordered by the Pacific Ocean on the west, urbanized City of San Francisco on the north, the existing District on the east which consists of a variety of developed and open space uses and by-Santa Clara County on the south, consisting of open space and developed lands. Will the proposed change of organization result in additional development? If so, how is the subject territory to be developed? The annexation will not result on any additional development. The District. does not provide services on which development is dependent. It provides public health and protection services for existing populations and laud uses. What is the general plan designation of the subject territory? The annexation area includes the general plans of the seven cities to be annexed and unincorporated area, which is subject to the County general plan. General plan designations include a mixture of residential, commercial, industrial, institutional, open space and agricultural uses. There will be no change in general plan designations use as a result of this proposal. What is the existing zoning designation of the subject territory? The anneXation area includes the variety of zoning designations as permitted by the general plans and including mixtures of different residential, commercial, industrial, institutional, open space and agricultural uses. There will be no change in zoning designations as a result of this proposal. 3 What prezoning, environmental, revi.'ew or development approvals have already been obtained for development in the subject territory? There are no zoning Or pre-zoning changes related to this annexation. The District has prepared and certified a Mitigated Negative Declaration for its Integrated Vector Management Program, which includes the proposed annexation of the remainder of San Mateo County. This environmental document is enclosed as part of this application. 8. What additional approvals will be required to proceed? The annexation of territory is the only approval needed to enable the District to provide services for the proposed District expansion area. The District's general operations are subject to an array of health regulations and procedures, which will apply equally in the annexation area. Does any portion of the subject territory contain any of the following --agricultural preserves, sewer or other service moratorium or wetlands subject to the State Lands Commission jurisdiction? Portions of the annexation area do or may contaha land in these designations however they will not be adversely affected by the annexation or the services, which may be provided by the District following the completion of the annexation. 10. If no specific development projects are associated with this proposal, will the proposal increase the potential for development of the property?. If so, how? This particular annexation will not increase the potential for development. The services provided by the District are not services upon which development is dependent, nor will annexation increase the likelihood of land use changes within the annexation area. LAFCo will consider the person si~ning this application as the proponent of the proposed action(s). Notice and other communications regarding this application (including fee payment) will be directed to the proponent at: NAME & ADDRESS Robert Gay, District Manager San Mateo County Mosquito Abatement District 1351 Rollins Road, Burlingame CA 94010 TELEPHONE: 650-344-8592 ext 12 Si~inature0Proponent Do o o o o AFFECTED PUBLIC AGENCIES Please complete this section ff this application is submitted by resolution of one or more · affected public agencies. Certified copies of resolutions listed be low must accompany this application. The names and resolutions of agencies applying for the change of orgauization or reorganization described above are as follows: San Mateo County Mosquito Abatement District M - 03- 03 January 8, 2003 Does this application have 100% consent of landowners in the affected area? Yes X No (If Yes, include proof of consent.) PLAN FOR PROVIDING SERVICES Enumerate and describe the services to be extended to the affected territory. The District will provide Vector Management Services to the annexation areas similar to those provided within the existing District. These are described more fully in the Integrated Vector Management Program and in the District's Annual Report for 2001-02, copies of which are enclosed. These services include Surveillance of vector populations, habitats, disease pathogens and public distress associated with vectors; Public Education to encourage and assist reduction or prevention of vector habitat; Minor Vegetation Management to provide access to vector breeding sites and improve surveillance; Distribution to the public of mosquito eating fish and other methods to combat mosquitoes. Describe the level and range of those services. The level and range of these services will be similar to level and range of services currently provided within the existing District service area and as described in the District Annual Report Indicate when those services can feasibly be extended to the affected territory. The District is prepared to provide the services as soon as the annexation is completed Indicate any improvements or upgrading of structures, roads, sewer or water facilities, or other conditions to be imposed or required within the affected territory. None. Describe financial arrangements for construction and operation of services extended to the affected territory. (Attach proposed operations budget if available) Will the 'territory be subject to any special taxes, charges or fees? (If so, please specify.) o Attached is the proposed District budget for providing services within the annexation area. It is proPosed that the annexation area be subject to the same special tax as properties within the existing District boundaries, which.are presently $3.74 per parcel per year. In as much detail as required to give a clear explanation, explain why this proposal is necessary at this time. The District exists to reduce the risk of vector-borne disease or discomfort due to certain insects and animals that may transmit to humans a number of diseases. These are described in the District's Annual Report. The threat of West Nile Virus as an emerging risk to humans is one motivation for initiating the armexation at this time. The Board of Supervisors in recognition oft/tis situation has endorsed the District's plan for combating the threat to San Mateo County residents, which includes the proposed annexation of the portions of the County that are not within the District. THIS SECTION COMPLETED BY Robert Gay, District Manager 6 Municipal Service Review and Sphere of Influence Information Form San Marco County Mosquito Abatement District Proposal to expand the District sphere of influence to be Countywide. Section 56425(h) requires that when adopting, amending, or updating a sphere of influence for a special district, the Commission shall: Require a district to file a written statement specifying the functions or classes of services provided by the district; and estabhsh the nature, location, and extent of any functions or classes of services provided by the district. Please enumerate all functions or classes of services that your agency is authorized to provide under your enabling legislation The District's enabling statute, Health & Safety Code Section 2040 specifies the' following types of authorized services: Witbi, the district's boundaries or in territory that is located outside the district from which vectors and vectorbome diseases may enter the district, a district may do all of the following: (a) Conduct surveillance programs and other appropriate studies of vectors and vectorborne diseases. (b) Take any and all necessary or proper actions to prevent the occurrence of vectors and vectorbome diseases. (c) Take any and all necessary or proper actions to abate or control vectors and vectorborne diseases. d) Take any and all actions necessary for or incidental to the powers granted by this chapter. Please enumerate which services your agency is currently performing and the current and proposed geographic area for service provision: The District provides all of the enumerated services within its boundaries. It is proposed to provide these services throughout San Mateo County following the approval of the proposed annexation. Pursuant to Government Code Section 56430, the commission must conduct a municipal service review prior to the update or amendment of a sphere of influence. To assist LAFCo in conducting the municipal service review for the PropoSed San Mateo County Mosqu/to Abatement District please respond to the following: Municipal Service Review Page 2 (1) Please list any infrastructure needs or deficiencies related to the services proposed for the sphere amendment and annexation There are no infrastructure needs or deficiencies related to the services proposed for the sphere expansion area. The District provides services through a professional staff and fleet of vehicles. It will be necessary to increase the District inventory of vehicles and equipment based on the larger response and service area. (2) . Growth and population projections for the affected area. (3) The growth and population projections for the sphere expansion area are not relevant to the proposed annexation, nor does future population growth depend on the completion of the armexation. The services are intended to benefit the existing population and any future population in the affected area. Please list financing constraints and opportunities related to the services proposed. Please include existing and potential revenue sources including grants. The District's ability to provide adequate levels of service, similar to those provided within the existing District, is dependent upon sufficient revenues. It is proposed that the District receive in the sphere expansion area a portion of the general property tax and revenues from the District's special tax, which exists within the current District. (4) Please respond to the following as they relate to cost avoidance opportunities. b) Do District's services/facilities overlap or duplicate the those of other agencies (Public and Private) No. The District is the only agency in San Mateo County that offers this range and level of vector control services. The County Health Services Agency has some responsibilities in the area of vector control however there is a working arrangement and cooperation between the District and County that avoids any duplication of services. Will additional service result in a negative effect on resources, service level in existing or proposed service area or in areas served by other special districts or cities? Municipal Service Review Page 3 c) Not if sufficient revenue sources are provided to the District in conjunction with the proposed sphere expansion and annexation. There .will be no negative effects on other special districts or cities as a result of the expansion nor will there be any overlap or duplication of services with other agencies. Opportunities for rate restructuring. The District's special tax is predicated on the current level of service and available property tax revenue. If the annexation occurs and there is sufficient economy of scale for the District to provide Countywide services as a lower per~ capita cost than at present, the potential exists to lower the current $3.74 per parcel charge to an amount that is lower. (5) Please list: a) Any existing practices of shared facilities: No. b) Any recommendations on opportunities for shared facilities No. The District occupies a office and maintenance yard complex in Burlingame, which is sufficient for the District's purposes but is not sized for sharing with other public or private agencies, nor does the District foresee at this time a need to share other agency facilities in providing services. (6) (7) Please list agencies (public or private) that provide the proposed service in the study area and any recommendations for alternate government structure options including joint power agreements, mergers or consolidations of districts or cities (government structure options). The District is the only local agency that provides vector control services in the County. Mergers or other reorganizations do not appear to be indicated by the current situation. Please provide information on number of planned number of full-time positions proposed to serve study area and information on your agency's organizational structure. (Evaluation of management efficiencies) The District's staffing plan related to the proposed expansion of boundaries is attached to this response for your reference. Municipal Service Review Page 4 (8) Please list your board composition, regular meeting schedule, newsletters, websites, availability of budget data and any other ways your agency promotes local accountability and governance. The District Board of Trustees consists of 13 members, one of who is appointed by the Board of Supervisors and the others are appointed by each city'in the District. It is anticipated that the Board of Trustees will be enlarged following the annexation as the new cities in the District appoint members to the Board. The District operates au active Public Education program with classroom presentations at local high schools, participation in a number of local community events and fairs and provides brochures and media releases during the year. The District Board of Trustees meets monthly, on the second Wednesday at 7:00 p.m. at the District office. Board meetings are open and public participation is encouraged. The District maintains au informational website at www.smcmad.°rg and distributes an Annual Report describing District services and activities. SAN MA.T-EO COUNTY MOSQUITO ABA TEMENT DISTR---7' PROPOSED BUDGET FOR FY 2003..04 . FUND NO. 02706 07/01/03 loflo Acct No. SALARIES & EMPLOYEE BENEFITS 4111 4161 4311 4321 4412 4415 4422 4431 4442 4451 Regular Full-Time Positions Regular Part-Time Positions Social Security County Retirement Plan Health Insurance Medicare Insurance Dental Insurance Vision Insurance Plan Long Term Disability Unemployment Insurance Sub Total SERVICES & SUPPLIES 5111 5121 5156 5171 5199 5233 5331 5416 5428 5472 5631 5635 5721 5856 5966 6712 6725 6731 Agricultural (insecticides) Clothing Household Medical/Laboratory Office Special Tools/Instruments Membership (Association fees) Gasoline/Oil/Grease Miscel. Repairs - Maintenance Equipment General Maintenance Electric/Gas Water/Sewage Disposal Meetings/Conferences Services/Consultations District Special Expense Telephone Insurance Workers' Compensation 1,018,000 35,000 2,200 105,000 110,000 15,000 22,000 3,500 11,000 2~000 1,323,700 106,657 15,900 2,200 3,600 21,370 10,600 11,825 21,000 25,900 4,150 15,000 4,000 52,300 80,150 13,700 17,000 1,200 0 7211 7311 8611 8612 Sub Total FIXED ASSETS Structures & Improvements Equipment Sub Total TOTAL OPERATIONAL BUDGFT CONTINGENCIES 9% of Operational Budget/Fixed Assets Budget GENERAL RESERVES 60% of Operational Budget/Fixed Assets Budget 406,552 0 4w000 4,000 1,734,252 156,083 1,040,551 TOTAL BUDGET 2,930,885 SAN M,~ 3 COUNTY MOSQUITO ABA TEMENT DISTR, CAPITAL PROJECT FUND BUDGET. FUND NO. 02705 Summary 07/01/02 8 of 10 5188 5233 5834 5856 5966 7211 7311 SERVICES Other Misc Expenses (C.O.P. Payment) Special Tools/Instruments Legal/Admin Fees (C.O.P.'s) Services/Consultations District Special Expense Sub Total FIXED ASSETS Structures & Improvements ' Equipment .Sub Total 300,000 0 2,000 19;000 2~000 323,000 9,000 142,500 151,500 TOTAL BUDGET 474,500 SAN MATEO COUNTY MOSQUITO ABATEMENT DISTRICT · BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS · JUNE 30, 2002 ASSETS: Petty cash Cash in county treasury Cash - Held' In Trust Investment in VCJPA Inventory Land Building ' ' Structures and improvements Equipment Amount to be provided for Long Term Debt TOTAL ASSETS LIABILITIES AND FUND EQUITY: Liabilities: Accounts payables Accrued vacation Aeemed liabilities Bond Payable-Long Term Total Liabilities Fund Equity: InveStment in general fixed assets Fund balances: Reserved for VCJPA Reserved for Inventory Unreserved: Designated for sick leave Designated for Capital Projects Undesignated Total Fund Equity TOTAL LIABILITIES AND FUND EQUITY GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS ACCOUNT GROUP GENERAL GENERAL LONG FIXED ASSETS TERM DEBT TOTALS (MEMORANDUM 200 $ 1,061,148 1,472,905 ' 228,323 388,858 . 49,387 91,167 2,880.177 254,091 636,908 200 · 2,534,053 228,323 '388,858 49,387 91,167 2,880,177 254,091 636,908 2oo5ooo ~ $ 29,902 $ $ 29,284 31,322 . 60 606 .___~29 902 29,902 29,284 ' 31,322 2.O95.0OO '2 095 000 2095000 ~ 388}858 49,387 6,177 994 565 3,862,343 1,67'1,326 . i 6_,_~326 3 8_.,.~343 3,862,343 388,858 49,387 6,177 1,671,326 $~1.499.593 $ 2.095.000 See accompanying notes to financial statements. 2 SAN MATE~O COUNTY MOSQUITO ABATE1V~ ,NT DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES FOR THE FISCAL YEAR ENDED JUNE 30, 2002 REVENUES: Property taxes Special mosquito control tax Other taxes Investment income Dividend Income Miscellaneous revenue Total Revenues EXPENDITURES: Salaries and employee benefits Services and supplies Capital outlay Total Expenditures EXCESS OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out Proceeds from Issuance of Long Term Debt Proceeds from Sale of Vehicle Total Other Financing S, ources (Uses) EXCESS OF REVENUES AND OTHER FrNANCING SOURCES OVER EXPENDITURES AND OTHER FINANCING USES FUND BALANCES -JULY 1,2001 FUND BALANCES -JUNE 30, 2002 CAPITAL GENERAL PROJECTS TOTALS ('MEMORANDUM ONLY) $ 1,106,605 $ $ 1,106,605 458,182 . 458,182 61,622 . · 61,622 57,838 52,797 110,635 20,000 20,000 46,523 . 46,523 _ 1,730,770 72,797 1,803,567 787,052 . 787,052 316,877 141,422 458,299 - 1,802,276 1,802,276 1,103,929 1,943,698 3,047,627 _ 626,84.1 .(1,870,901) (1,244,060) 4o0,ooo 400,000 (400,000) . (400,000) .,, (4oo,ooo) 400,000 .. 226,841 (1,470,901) (1,244,060) 1,212,147 .. 3,142,227 .4,354,374 $1.438,988 $1,671,326 $ 3,110,314 See accompanying notes to financial statements. sAN xau o cotrm os trrro I)m aCT STATEMENT OF REVENUES, EXPENDITURES .AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2002 REVENUES: Property taxes ' Special mosquito control tax Other taxes Investment income Miscellaneous revenue Total Revenues EXPENDITURES: Salaries and employee benefits Services and supplies Total Expenditures EXCESS OF REVENUES OVER EXPENDITUP,.ES OTHER FINANCING SOURCES (USES): Operating transfers out Total Other Financing Sources (Uses) EXCESS OF REVENUES OVER EXPENDITURES AND OTHER FINANCING USES FUND BALANCES - JULY 1, 2001 FUND BALANCES -JUNE 30, 2002 BUDGET ACTUAL VAR/ANCE FAVORABLE (UNFAVORABLE) 963,254 $ !,106,605 460,000 458,182 12,215 61,622 35,000 57,838 33,000 46,523 $143,351 (!,818) 49,407 22,838 13,523 _ 1,503,469 1,730,770 227,301 840,560 787,052 53,508 _ 374,612 316,877 57,735 1,215,172 1,103,929 111,243 626,841 (400,000) (400,000) 226,841 1,212,147 $1.438,988 See accompanying notes to financial statements. 4 SAN MATE~O COUNTY MOSQUITO ABATE1WI?.N~ T DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 SIGNIFICANT ACCOUNTING POLICIES A. The District The San Mateo County Mosquito Abatement District (the District) is a special district established in 1916 empowered to take all necessary and proper steps for the extermination of mosquitoes, flies or other insects within the District. An operating budget is adopted annually. The District is an integral part of the County of San Mateo (the County) and the accompanying financial statements are included as a component unit of the general purpose financial statements prepared by the County. The County performs certain administrative services such as maintenance of accounting records. The District is not charged for these services. B. Description of Funds and Account Groups The accounts of the District are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operatiOns of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures as appropriate. Government resources are allocated .to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which the activities are controlled. The general fund is used to account for all financial resources except those to be accounted for in another fund or accountgroup. The capital project fund is used to account for financial resources to be used for the acquisition or constructiOn of major capital assets. Fixed assets used in governmental fund type operations (General Fixed 'Assets) are accounted for in the general fixed assets account group, rather than in govemmental funds. General fixed assets purchased are recorded as expenditures in the applicable fund at the time of purchase. Such assets are capitalized at cost, except those assets for which historical costs are not available, which are stated at estimated historical cost. Gifts .or contributions are recorded in the general fixed assets account group at fair market value in the year received. SAN MATEO COUNTY MOSQUITO ABATEME ~NT DISTRICT lw'OTES T.O FINANCIAL STATEMENTS JUNE 30, 2002 C. Basis of Accountin~ Do The District uses the modified accrual basis of accounting; consequently, revenue is recognized when it becomes measurable and available and expenditures are. generally recognized when the related liability is incurred. Budget The District annually adopts a budget for its general fund to be effectiVe July 1 for the ensuing fiscal year.. The District's Board may amend the' budget by resolution during the fiscal year and approves all budgetary transfers. E. Inventories Inventories of insecticides, herbicides and oil are valued at cost on a first-in first- out basis. F. .ComPensated Absences The District has set up a liability of $29,284 for accrued vacation at June 30, 2002. The District has also designated $6,177 of its fund balance for sick leave. If sick leave and vacation is not used by the employee during the term of employment, compensation is payable to the employee at the time of retirement calculated in accordance with District policy. Such compensation is calculated at employees' then prevalent hourly rate at the time of retirement or termination. Whereas vacation is compensated at 100% of accumulated hours, sick leave is accrued and compensated only at retirement based on the years of employment with a maximum limitation of $7,500..On termination, 'only accrued vacation is. compensated and not the sick leave. G. Interfund Transaction.q Amounts may be transferred from one fund to another by the District. These interfund ti'ansactions occur as follows: Operating Transfers - transactions to allocate resources from one fund to another fund. These transactions are recorded as Other Financing Sources (Uses). · ~ COUNTY MOSQUITO ABATEI~f~-- ~T DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 PROPERTY TAX LEVY COLLECTION AND MAXIMUM RATES The State of California (the State) Constitution Article XIIIA provides that the combined maximum property tax rate on any given property may not exceed 1% of its assessed value unless an additional amount has been approved by voters. Assessed value is calculated at 100% of market value as defined by Article XIIIA and may be increased by no more than 2% per year unless the property is sold or transferred. The State Legislature has determined the method of distribution of receipts from a 1% tax levy among counties, cities, school districts and other special districts. Counties, cities and school districts may levy such additional tax as is necessary to provide for voter aPproved debt service. The County of San Mateo assesses properties, bills, and collects property taxes as follows: Valuation dates Lien/levy dates Due dates Delinquent as of Secured March 1 July 1 50% on November 1 50% on February 1 December 10 (for November) April 10 (for February). Unsecured March 1 July 1 Upon receipt of billing August 31 The term '~msecured" refers .to taxes on property not secured by liens on real property. Property taxes levied are recorded as revenue when received, in the fiscal year of levy, because of the adoption of the "alternate method" °fproperty tax distribution, known as the Teeter Plan, by the San Mateo County Mosquito Abatement District and the County of San Mateo. The Teeter Plan authorizes the auditor-controller of the County of San Mateo to allocate 100% of the secured property tax billed but not yet paid. The County of San Mateo remits tax monies to the District in three.installments, as follows: 50% remitted on December 15 40% remitted on April 15 10% remitted on June 30 TOTALS (MEMORANDUM ONLY] The "Totals (Memorandum Only)" column represents an aggregation of the individual combined financial statements. The totals column is presented for overview' information purposes and' does not represent consolidated financial information. 7 .SAN MATI COUNTY MOSQUITO ABATEM,._. ~T DISTRICT NOTES TO FINANCIAL STATEMENTS ' JLrNE 30, 2002 CASH AND INVESTM~,NTS Cash and investments at June 30, 2002 consisted of.' Petty cash Cash in county treasury Cash - Held In Trust Investment in vCJPA Total $ 20O 2,534,053 228,323 ... 388,858 The District's cash is deposited With the Treasurer of the County of San Mateol The Treasurer invests the cash under policy guidelines established by the County. Credit risk information regarding the cash held by the Treasurer is included in the Comprehensive Annual Financial Report of the County of San Mateo. The credit risk regarding the pooled investment in the Vector Control Joint-Powers Agency is included in the general purpose financial statements of the Vector Control Joint Powers Agency. FIXED ASSETS Changes in fixed assets are as follows: J~uly 1, 2001 Additions Deletions June 30, 200? Land $ 91,167 $. Construction In. Progress 1,573,481 . New Building -. " 2,880,177 Structures and improvements 123,346 130,745 Equipment 479,789 161,028 Total $ $ 911167 (1,573,481) " 2,880,.177 254,091 (3,909) 636,90g 2 267 783 3 '.171 950 1 577 390 3 862 343 During the fisCal year ended June 30, 2002, the District completed construction on their new building. The district received the occupancy permit in January of 2002. SAN MATE_~ COUNTY MOSQUITO ABATEM"~T DISTRICT NOTES TO FINANCIAL STATEMENTS YUNE'30, 2002 LONG TERM DEBT In APril 2001, the District issued certificates of participation in the moUnt of $2,275,000 with interest rates ranging from 4.35% to 5.18%. Proceeds from the certificates are used for the construction of the new building. The District is committed to make principal and interest payments at June 30 as well as interest payments at December 31, pursuant to an agreement with BNY Western Trust Co. At JUne 30, 2002, the principal balance outstanding was $2,095,000~ The certificates mature through 2011 as follows: Year Ended June 30~ _Principal Interest Totals 2003 $ 190,000 $101,163 $ 291,163 2004 200,000 90,713 290,713 2005 210,000 79,713 289,713 2006 220,000 68,163 288,163 2007 235,000 56,063 291,063 Thereafter L040,000 118~800 1,158~800 Totals. $2.095,000 $514.615 $2,609,615 FUND BALANCE RESERVES AND DESIGNATIONE Fund balance consists of reserVed and unreserVed amounts. Reserved fund .equity represents that portion of a fund balance, which has been appropriated for expenditure or is legally segregated for a specific future use. The remaining portion' is unreserved. Fund balance reserVes are described below: VCJPA 'represents amoUnts held' in the Vector Control Joint Powers Agency, which is explained in note 8 of these financial statements. INTERFUND TRANSFERS Interfund operating transfers during the fiscal year ended June 30, 2002, were as follows: ..FUnd Transfers in Transfers Out General $ ' $ 400,000 Capital Projects $ 400,000 $ _ SAN MAT,. ~ COUNTY ~ATEM.~NT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 SELF-INSURANCE AND JOINT POWERS AGENCY The District participates with other districts in a joint venture under a joint powers agreement which establishes the Vector Control Joint Powers Agency (VCYPA). The relationship between' the District and the VCJPA is such that the VCJPA is'not a component unit of the District for financial reporting purposes. The District is covered for the first $1,000,000 of each general liability claim and $250,000 of each worker's compensation claim through the VCJPA. The District has the right to receive dividends or the obligation to pay assessments based on a formula which, among other expenses, charges the District's account for liability losses and workers'. compensation losses Under their individual self-insured retention (SIR). The VCJPA participates in an excess pool, which provides general liability coverage above $1,000,000 for each occurrence to $3,000,000 and purchases excess insurance from $3,000,000 to $10,000,000. The VCJPA also participates in. an excess pool, which provides workers' cOmpensation coverage from $250,000 to $500,000 to the statutory limit.. The VCJPA is a consortium of thirty-one districts located throughOut California. It was established under the provisions of California Govement Code Section 6500 et seq. The VCJPA is'governed by a Board of Directors, which meets 4-5 times per year, consisting of one member from each of the four regions (Coastal, Sacramento Valley, San Joaquin Valley, and Southern 'California) and two members from the Trustee Advisory Council. The financial position and results of operations for the VCJPA as of June 30, 2002, is as follows: Total Assets 'Total Liabilities Fund Balance Total Revenues Total Expenditures Net Increase in Fund Balance _VCJPA $18,611,495 12,772,804 5,838,691 2,311,829 1,994,733 317,095 The Districfis share of the VCJPA's Members Trust Fund balance at June 30, 2002, was · $388,858. Such balance is interest earning and may be withdrawn upon leaving the plan with a sixty-day notice. At termination of the joint powers agreement and after all claims have been settled, any excess or deficit will be divided among the 'Districts in accordance with its governing documents. SAN MATEO__.COUNTY MOSQUITO ABATE1WE~[T DISTRICT MOTES TO FINANCIAL .STATEMENTS JUNE 30, 2002 10. DEFERRED COMPENSATION The District offers its employees deferred compensation plans created in accordance with Internal Revenue Code Section 457. The plans, available to all District regular full time employees, permit them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, resignation, retirement, death or an unforeseeable emergency. All amounts of compensation deferred under the plans, all property and rights purchased with those amounts, and all income attributed to those amounts, property or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the District (without being restricted to the provisions of the benefits under the plans), subject only to the claims of the District's general creditors. Participants' rights under the plans are equal to those of general creditors of the District in an amount equal to the fair market value of the deferred account for each participant. It is the opinion of the District Manager that the District has no liability for losses under the plans but does have the .duty of due care that would be required of an ordinary prudent investor. The District believes that it is unlikely that' it .will use the assets to satisfy the claims of general creditors in the future. In previous financial statements, deferred compensation plan assets were shown as an Agency fund of the District. This was due to prior law, Internal' Revenue Code Section 457, in which plan assets legally remained the assets of the sponsoring government. At June 30, 2002, in accordance with Small Business Job Protection Act of 1996, all deferred compensation plan assets are held in trust for the exclusive benefit of participating employees and are not accessible by the District or its creditors. Accordingly, these assets have been removed from the District's financial statements. 11.. DEFINED RETIREMENT CONTRIBUTION PLAN The District is a member of the San Marco County Employees Retirement AssociationPlan I and Plan II, which provides pension benefits for all of its regular full-time employees through a defined contributionplan. In a defined contribution plan, benefits 'depend solely on amounts contributed to the plan, plus investment earnings. Employees are eligible and required to. participate from the date of employment. Contributions to the retirement system for Plans I, II, and IV are made by both the member and the District. Thc rate of contribution for a member is determined by age at entrance into the system and when they were hired. Any new employee hired on or after July 6, 1980 is under retirement Plan II and any employee hired before that date is under Plan I. Employees hired after July 12, 1997 are under Plan IV. II SAN MATE,O'-COUNTY MOSQUITO ABATE/VII -' NOTES Ti9 FINANCIAL STATEMENTS JUNE 30, 2002 DiSTRiCT The retirement fund is a' trust fund created for the sole purpose of'providing benefits to . retirees and future retirees employed by the District. An employee who terminates and withdraws their contributions is not entitled to receive any of the District's contributions. The contributions, by law, can only be received at the time of retirement in the form of a lifetime, monthly retirement allowance to the employee and Ns/her beneficiary named at the time of retirement. The District's total payroll for the fiscal year ended June 30, 2002, was $612,705. The District's contributions were Calculated using the base salary amount of $612,705. Both the District and'the covered employees made the required contributions totaling $63,690 and $35,302, respectively. 12. COMMITMENTS & CONTINGENCIE,q The District completed construction on its new building in the fiscal ye~ JUne 30, 2002. The District issued a Certificate of Participation to fund the project (see Note 6) and has completed 100% of the project (see Note 5). 12 DATE: TO: FROM: SUBJECT: February 19, 2003 Honorable Mayor and City Council Marty Van Duyn, Director of Economic and Community Development SOUTH SAN FRANCISCO FEE AND COMPETITIVE BUSINESS STUDY RECOMMENDATION: It is recommended that the City Council conduct a study session on the South San Francisco Fee and Competitive Business Study and provide comments as appropriate. BACKGROUND: Since the mid-1990s, the City of South San Francisco has experienced a significant growth in research and development, office, and residential development. Since adoption of the General Plan in October 1999, the City Council has implemented several policies that are designed to improve the quality of life for both residents and employees in South San Francisco. The City Council has also adopted policies, projects and standards that improve access to housing and childcare services, reduce traffic congestion, increase sewer capacity, encourage amenities in the East of 101 area, and develop new parks. Many of the projects have required the City Council to adopt new development fees to fired the projects. South San Francisco has a reputation creating proactive strategies that support business development attraction and retention. With the current economic downmm, the City commissioned the "South San Francisco Fee and Competitive Business Study" to evaluate how the city can retain its competitiveness with San Francisco and other cities in San Mateo County. DISCUSSION: Since 2000, the San Francisco Bay Area has experienced a recession that has seen the loss of significant, high-wage, employment in the high technology sectors, with some business activity relocating to other states and overseas. Despite the recession, South San Francisco has benefited from a healthy biotechnology sector. However, cities that formerly sought dot-com, software and telecommunication companies now are aggressively meeting with biotechnology companies that are currently operating in the city. City staff commissioned the Fee and Competitive Business Study to answer the following questions: Staff Report To: Honorable Mayor and city Council From: Marty Van Duyn, Economic and Community Development Director Subject: South Francisco Fee and Competitive Business Study Date: February 19, 2003 Page 2 Are South San Francisco's current development impact fees competitive with nearby cities? · To what degree, if any, is South San Francisco's fees discouraging new development? · If the City implements new development fees, would South San Francisco remain competitive with other cities and still attract key businesses? Fee Study Conclusions The Fee and Competitive Business Study incorporates information that is important to both City officials and site selection professionals. For City officials, the Study compares each city's design review fees, development impact fees and business license fees. For company officials, the Study compares long-term business costs, such office rental rates, land purchase costs, construction costs, transportation costs, and other site selection criteria. The Study makes the following points that identify both the City's advantages and disadvantages: · South San Francisco has the lowest design review fees (business license, planning review, building permit and engineering review fees) · South San Francisco has the highest total development impact fees in San Mateo County. Only San Francisco has higher fees. · Due to the City's efforts to reduce traffic congestion, South San Francisco has the highest transportation, traffic and transit fees in San Mateo County. Only San Francisco has higher fees. The Study emphasizes that these fees actually reflect the City's proactive approach with working with businesses to improve the infrastructure. · South San Francisco and San Francisco are the only cities with a Child Care Impact fee. · South San Francisco has the highest office vacancy rate and one of the lowest R&D vacancy rates in San Mateo County and San Francisco. The Study concludes that development fees are not the most important criteria in determining a company's site location decision for companies that propose to build a 40 million dollar project. Company officers consider the labor market, business climate (the time it takes to process a permit and the attitude of City officials), infrastructure (streets, power and sewers), location near universities, and quality of life to determine the best sites. Based on interviews with companies and other cities, the Report indicates that companies are attracted to South San Francisco because the business climate is good and the City supports biotechnology and high technology companies (considered to be the major growth industries in California). CONCLUSION: The Consultant for the Economic and Community Development Department has prepared a comparative fee and competitive business study. The goal of the study is to target key decisions that can be made by the City to 1) encourage new business and developers to locate in South San Francisco and 2) keep existing businesses in South San Francisco. It is recommended that the City Council conduct a study session on the South San Francisco Fee and Competitive Business Study Staff Report -- -' To: Honorable Mayor aha City Council From: Marty Van Duyn, Economic and Community Development Director Subject: South Francisco Fee and Competitive Business Study Date: February 19, 2003 Page 3 and provide comments as appropriate. By: ~and Community Development ~,l~i~hael X. wi~, City Manager ATTACHMENTS: 1. South San Francisco Fee and Competitive Business Study SOUTH SAN FRANCISCO FEE & COMPETITIVE BUSINESS STUDY COMPARATIVE ANALYSIS AND RECOMMENDATIONS Submitted to: City of South San Francisco Submitted by: Biotechnology/Pharmaceutical Services 1667 Van Buren Street San Mateo, CA 94403. Tel. (650) 574-1264 www.bpharm~aol.com October 10, 2002 Fee a,.._ Competitive Business Study October 10, 2002 Executive Section 1. Section 2. TABLE OF CONTENTS Summary Introduction Background Project Purpose Project Methodology Report Organization Development Impact Fee Analysis Development Impact Fees: Results & Trends Other Fees and Rates: Results & Trends Recommendations Page 1 1 1 1 2 3 3 4 6 Section 3. Section 4. Section 5. Real Estate Analysis Bay Area Office Rental & Vacancy Rates-Class A Bay Area R&D Rental & Vacancy Rates Bay Area Land Purchase Trends Construction Cost Analysis Bay Area Construction Costs and Trends Site Selection Criteria Hard Criteria Soft Criteria 7 7 7 8 9 9 10 10 10 Section 6. South San Francisco Site Selection SSF Site Selection Advantages SSF Site Selection Disadvantages & Recommendations 11 11 12 Prepared by: Biotechnology/Pharmaceutical Services Fee ax. .ompetitive Business Study October 10, 2002 APPENDIX List of Tables & Figures TABLES Table 1. Comparison of Estimated Development Impact Fees FIGURES Figure 1. Total Development Impact Fees Figure 2. Transportation/Traffic/Transit/Overpass Impact Fee Figure 3. Low Income Housing Impact Fee Figure 4. Child Care Impact Fee Figure 5. School Impact Fee Figure 6. Sewer/Sewer Undercrossing/Drainage Impact Fee Figure 7. Bayfront Development Impact Fee Figure 8. SF Bay Area Office Rental Rates-Class A Figure 9. SF Peninsula R&D Rental Rates Figure 10. SF Bay Area Office Vacancy Rates-Class A Figure 11. SF Peninsula R&D Vacancy Rates Figure 12. SF Bay Area Construction Costs Prepared by: Biotechnology/Pharmaceutical Services l~c_ .~nd Competitive Business Study October 10, 2002 Executive Summary Summary of Key Results Development Impact Fees · South San Francisco has the highest total Development Impact Fees ($598 thousand) on the Peninsula. Of the comparison cities, only San Francisco had higher Fees ($2 million). · South San Francisco has the highest Transportation/Traffic/Transit/Overpass Impact Fees ($392 thousand) on the Peninsula. Of the comparison cities, only San Francisco had higher Fees ($500 thousand). · San Francisco is the only comparison city with a Low Income Housing Impact Fee ($1.4 million). In addition to South San Francisco, San Mateo is considering implementing a Low Income Housing Fee. · South San Francisco and San Francisco are the only Cities with Child Care Impact Fees at $50 thousand and $100 thousand, respectively. Other Citi Fees · Cities are beginning to move to a "cost recovery" system rather than fixed fees for Planning Department services. All comparable cities, including South San Francisco, charge "actual cost" for traffic studies. · South San Francisco has the lowest Design Review Fees. · Cities are beginning to charge "actual cost" for environmental work (Negative Declaration) rather than a fixed fee. South San Francisco is "ahead of the game", charging actual costs for all environmental services to protect the community and pass costs on to the developers. Payroll Tax · San Francisco is the only comparable city with a payroll tax (1.5% of total payroll). The payroll tax is a major detriment to San Francisco's efforts to attract BioPharma companies to San Francisco. Utility Rates · Water rates are expected to go much higher in the upcoming years due to widely publicized water system and infrastructure repairs needed on the Bay Area water system. This will be a critical issue for SSF companies that rely on large volumes of clean water at a reasonable price. · Sewer rates are expected to increase a great deal in the upcoming years due to capacity limits for existing sewage treatment plants and also expensive sewage treatment plant upgrades to comply with increased environmental standards and capital maintenance requirements. Sewage piping infrastructures will also require upgrades in nUmerous cities. South San Francisco, by contrast, has already built a new $50 million sewage treatment plant using developer fees and w/Il be in a more competitive position to attract business. Real Estate Rental & Vacancy Rates · Since the economic downturn started 18 months ago, rents and occupancy rates have plummeted. Areas of highest vacancy tend to be in "dotcom concentrated cities" (SOMA south, Redwood City and San Carlos) and in cities with cities with new construction completed during the past 18 months (South San Francisco, Redwood City and San Mateo). · South San Francisco has the most expensive R&D rental rates of the Peninsula comparison cities at $2.00/sq.ft.-month. For comparison, Palo Alto and Menlo Park R&D rents are $2.00/sq.ft.-month and $1.40/sq.ft.-month, respectively. · South San Francisco has one of the lowest Office rental rates on the Peninsula at $2.30/ft.sq.-month. However, SOMA South Office space is renting for $1.99/fcsq.-month. i. Prepared by: Biotechnology/Pharmaceutical Services Fe~ and Competitive Business Study October 10, 2002 Summary of Key Results-continued · South San Francisco has the highest Office vacancy rate at 41% (in part due to completion of the 611 Gateway office complex which is currently vacant and 250,000 square feet; total SSF office space, both vacant and occupied, is 2.2 million square feet). The closest vacancy rate is SOMA South at 32%. By contrast, South San Francisco has one of the lowest R&D vacancy rates (8%) of the Peninsula comparison cities. Recommendations Development Impact Fees · Recommend South San Francisco hold Development Impact Fees steady (no increases) until either the economy begins to show signs of improvement or other Peninsula Cities (San Mateo) first add Low Income Housing Fee. This recommendation is based on South San Francisco having the highest Development Impact Fees on the SF Peninsula during a local and national economic downturn. Other Fees · Recommend South San Francisco hold Planning Fees steady. Recommend increasing South San Francisco Design Review Fees by adding Plan Check Fee. Continue South San Francisco's policy for Negative Declaration Fees, Utility Fees, Utility Rates, Transient Occupancy Tax and Budget per Resident. Next Steps The following Consulting Studies will ensure South San Francisco's business competitiveness and retention: · Study: South San Francisco Ferry Service Implementation Project Parmership Study. Goal: Implement Ferry Service in South San Francisco, in the near term, connecting SSF with thc East Bay and SF. Study: Goal: Northern California Fee and Competitive Business Study. Assess Hayward-Fremont, Alameda-Berkeley, Palo Alto-Sunnyvale and Vacaville corridors' competitiveness with South San Francisco. Study: Goal: U.S.A BioPharma Fee and Competitive Business Study. Assess San Diego, Boston, Research Triangle Park (NC), and Seattle corridors' competitiveness with South San Francisco. Study: SSF BioPharma Concerns Study (Survey and Interviews). Also, update Bioscience Industry Study completed in 1997. Goal: Business retention and growth. Study: SSF Small Business Study (Survey and Interviews). In addition, perform study to discover what keeps (and is needed to keep) purchased SSF BioPharma Companies in SSF. Goal: Business retention and growth. Study: Developer study for upcoming goals, business strategies and needed assistance from City. Goal: Encourage Developers to continue to do business in South San Francisco and offer assistance t~om the City. needed Study: Mission Bay (San Francisco) study to assess for BioPharma business attraction. Goal: Assess Mission Bay's competitiveness with South San Francisco. ii. Prepared by: Biotechnology/Pharmaceutical Services Fee a~,_ dompetitive Business Study October 10, 2002 Section 1. Introduction Background South San Francisco has a reputation for being proactive in its business development attraction and retention strategies. With the current economic strains facing businesses, thc City has commissioned this study to evaluate its competitiveness. Project Purpose The purpose of this study is to provide up to date benchmarking data, analysis and recommendations on the "Cost &Doing Business" in South San Francisco relative to San Francisco (SF) and "comparable SF Peninsula cities" also seeking to attract new and retain existing businesses in similar industries. The benchmarking data will be used to better understand South San Francisco's strengths and weaknesses to attract new and retain existing businesses. Specifically, South San Francisco will be armed with data to assist in understanding its strengths and weaknesses and targeting key decisions to increase its competitiveness. Development Impact Fees were collected for South San Francisco, San Francisco and "comparable SF Peninsula cities" to provide Benchmarking data to determine South San Francisco's Development Impact Fee competitiveness. Specifically, the Development Impact Fee analysis goals follow: · Are South San Francisco's current Development Impact Fees competitive with nearby cities? · To what degree, if any, is South San Francisco's Development Impact Fees discouraging development? Does South San Francisco need to increase &/or decrease its current Development Impact Fees to be more competitive with nearby cities? · If new Development Impact Fee(s) now under consideration by South San Francisco are implemented (Low Income Housing Fee), would South San Francisco's Development Impact Fees be competitive with nearby cities? "Comparable Cities" were selected by the City based on their likelihood to attract similar size and types of businesses (including biotechnology and other industries) that are currently located in South San Francisco. Comparable cities studied include: San Francisco, Burlingame, San Mateo, Foster City, San Carlos, Redwood City and South San Francisco. Development Impact Fees were compiled during the summer 2002. Project Methodology Development Impact Fees were collected from San Francisco, Burlingame, San Mateo, Foster City, San Carlos, Redwood City and South San Francisco. Development Impact Fee collection included: Traffic Impact Fee, Transportation Fee, Transit Impact Fee, Oyster Point Overpass Fee, Low Income Housing Fee, Child Care Fee, School Fee, Sewer Impact Fee, Sanitary Sewer Undercrossing of Hwy. 101 Fee, Marina Lagoon Drainage Facility Fee and Bayfront Development Fee. Prepared by: Biotechnology/Pharmaceutical Services Fee aa,. 2ompetitive Business Study October 10, 2002 In addition to Development Impact Fees, Planning Fees were collected. Planning Fees included Conditional Use Permit, Traffic Studies, and City Attorney (deposit). Design Review Fees were collected included Plan Check, Building Permit, Fire Permits & Inspection and Engineering Plan Check (MEP). Negative Declaration Fees (environmental) were collected. Water Connection Fees, Sewer Connection, Water Permit Fees and Sewer Permit Fees were gathered. Water and Sewer Rates were calculated. Finally, Transient Occupancy Tax (hotel tax), Payroll Tax and Budget per Resident were gathered. Fees were calculated assuming a case study for a $25 million project, 100,000 square foot building with 130,500 square foot site, and office/industrial use. These Fees were collect through numerous interviews with respective city officials and/or master fee schedules during the summer 2002. Some fees may have increased since this time. These fees utilize a number of assumptions and are for planning purposes and comparison only. They may not apply to specific projects or parcels. Data was collected for Office and R&D Rental Rates in addition to Office and R&D Vacancy Rates (source: CB Richard Ellis Q2-02). Land Purchase Trends were analyzed and discussed. Construction Cost Analysis was also presented in this report. Report Organization The report is organized with text chapters that analyze extensive data and graphs found in the report's Appendix. Prepared by: Biotechnology/Pharmaceutical Services Fee m. 2ompetitive Business Study October 1 O, 2002 Section 2. Development Impact Fee Analysis Development Impact Fees: Results and Trends Total Developmental Impact Fees Results: South San Francisco has the second most expensive Total Development Impact Fees (after San Francisco) and has the most expensive Total Development Impact Fees on the SF Peninsula for the Comparison Cities (refer to Table 1. Comparison of Estimated Development Impact Fees and Figure 1. Total Development Impact Fees). Specifically, the summary of Total Development Impact Fee results are (from most expensive to least expensive Total Development Impact Fee Cities): San Francisco (not San Francisco downtown district) with $2MM fees; South San Francisco with $598k fees; San Marco with $499k fees; Redwood City with $379k fees; Burlingame with $196k fees; Foster City and San Carlos with $34k and $33k fees, respectively. Trends: Cities seem very hesitant to add Development Impact Fees while the economy remains slow and/or stagnant. Transportation/Traffic/Transit/Overpass ("Transportation ',) Impact Fees Results: South San Francisco has the second most expensive Transportation Impact Fees (after San Francisco) and has the most expensive Transportation Impact Fees on the SF Peninsula. San Francisco has the most expensive fees estimated at $500k while South San Francisco is at $392k. Redwood City and Burlingame's fees are $281k while Burlingame, Foster City and San Carlos do not have Transportation fees. Table 1. Comparison of Estimated Development Impact Fees shows the exact breakdown between Transportation, Traffic, Transit and Overpass Impact Fees, respectively, for each of the comparison cities. Trends: Additional Cities may consider adding Transportation Impact Fees after the economy begins to improve. Low Income Housing Impact Fee Results: San Francisco is the only study City with a Low Income Housing Impact Fee. While San Francisco charges a hefty $1,375,000 for low income housing (refer to Figure 3), this fee is subject to specific project review by the San Francisco Planning Commission. Trends: Both South San Francisco and San Mateo are considering adding Low Income Housing Impact Fees and other Cities may follow suit after the economy begins to recover. Child Care Impact Fee Results: Only San Francisco and South San Francisco have Child Care Impact Fees which are estimated at $100k and $50k, respectively (refer to Figure 4). Trends: No other cities interviewed have expressed strong belief that their cities will implement Child Care fees in the near furore. Prepared by: Biotechnology/Pharmaceutical Services Fee and Competitive Business Study October 10, 2002 School Impact Fees Results: School Impact Fees are basically uniform for SF Peninsula Cities studied at roughly $34k (refer to Figure 5). San Francisco has the lowest estimated School Impact Fees estimated at $25k. Sewer/Sewer Undercrossing/Drainage ("Sewer'I) Impact Fees Results: San Mateo, South San Francisco, and Redwood City all have Sewer Impact Fees estimated at $184k, $123k, and $64k*, respectively (refer to Figure 6). San Francisco, Burlingame, Foster City and San Carlos do not have Sewer Impact Fees. *Note: Redwood City's Sewer Impact Fee may be as high as $235k, depending on wastewater biological oxygen demand (BOD) and suspended solids (SS) assumptions. Trends: Huge Sewage Impact Fee increases (and/or Sewage Rate increases) and/or Sewage Treatment Plant and Piping Infrastructure problems anticipated for all study cities (except South San Francisco and perhaps San Mateo) due to aging sewage plants/infrastructure and inadequate funds set aside for repairs and replacements. Burlingame is in the process of increasing its Sewer Rates to assist with required sewer infrastructure repairs. Bavfront Development Impact Fee Results: Burlingame is the only city with the Bayfront Development Impact Fee which is estimated at $163k (refer to Figure 7). Trends: No other cities interviewed have expressed interest in implementing this fee. Other Fees and Rates: Results & Trends Planning Fees Results: Planning Fees from comparable cities are shown in Table 1. Specifically, San Francisco has a very high Conditional Use Permit (CUP) fee at $77,827 for the case study. San Mateo and Foster City focus on actual cost for CUP while other cities have fixed fee CUP. Trends: Cities are beginning to move to a "cost recovery" system rather than fixed Planning Fees (including CUP). Comparable cities, including South San Francisco, charge "actual cost" for traffic studies. Traffic studies are required for all major projects. South San Francisco and San Carlos require deposits for City Attorney costs. This will be a trend for other cities as city budgets begin to feel constraints. Design Review Fees Results: Design Review Fees from comparable cities are shown in Table 1. South San Francisco has the lowest Design Review Fees. Design Review Fees, from highest to lowest follow: San Mateo ($350k), San Francisco ($218k), Redwood City ($178k), Burlingame ($170k), San Carlos ($152k), Foster City ($134k) and South San Francisco ($96k). Trends: There is a trend to charge a Plan Check Fee. South San Francisco may want to add a fee for this service to be comparable with other cities. 4 Prepared by: Biotechnology/Pharmaceutical Services Fee au_. Competitive Business Study October 10, 2002 Environmental Fees Results: The range of Negative Declaration fees is shown in Table 1. Specifically, San Francisco has a very high Negative Declaration fee at $41,431 for the case study. South San Francisco, San Mateo and Foster City charge "actual cost" while Burlingame, San Carlos and Redwood City charge fixed fees. Trends: The trend, which South San Francisco is "ahead of the game", is to charge actual costs for all environmental services to protect the community and pass costs on to the developers. Utilit~ Fees Results: Utility Fees, including Water Connection Fee, Sewer Connection Fee, Water Permit and Sewer Permit, are shown in Table 1 for Comparison Cities. The key Utility Fee difference is found in the Sewer Connection Fees. In general, cities with little "raw land" tend toward lower sewer connection fees due to the proximity to existing sewer infrastructure cities while cities with raw land tend toward higher sewer connection fees due to the complexity and distance involved with tying into the existing sewer infrastructure. South San Francisco and San Carlos have higher Sewer Connection Fees, estimated at $200k and $237k, respectively, while the other cities have lower fees. Trends: These fees will drop as available raw land becomes fully utilized and connections to existing sewer infrastructure systems become less complex with shorter connection distance. Utiliti Rates Results: Utility Rates, including Office/R&D Water and Sewer Rates, are shown in Table 1 for Comparison Cities. Specifically, these rates are for general guidance only as the rates vary based on assumptions for Flow Rates, Biological Oxygen Demand (BOD) and Suspended Solids (SS). In general, Foster City, San Francisco and South San Francisco have lower estimated Water Rates while Burlingame, San Mateo, San Carlos and Redwood City have higher estimated Water Rates. In general, Foster City, San Carlos and Redwood City have lower estimated Sewer Rates while San Francisco, Burlingame, South San Francisco and San Mateo have higher estimated Sewer Rates. Trends: Water Rates are expected to go much higher in the upcoming years due to the widely publicized water system and infrastructure repairs needed on the Bay Area water system. This will be a critical issue for companies that rely on large volumes of clean water at a reasonable price Coiotech and technology companies). Sewer system rates are also expected to increase a great deal in the upcoming years due to capacity limits for existing sewage treatment plants and also expensive sewage treatment plant upgrades to comply with increased environmental standards and capital maintenance requirements. Sewage piping infrastructures will also require upgrades in numerous cities. South San Francisco, by contrast, has already built a new $50 million sewage treatment plant using developer fees and will be in a more competitive position to attract business. Transient Occupancy Tax Results: The Transient Occupancy Tax (TOT) for Comparison Cities is shown in Table 1. San Francisco has the highest TOT at 14%. Most SF Peninsula Cities have a 10% TOT with the exception of Redwood City (8%) and South San Francisco (8%+$2.50/room-night). Prepared by: Biotechnology/Pharmaceutical Services 5 Fee a~,_ Competitive Business Study October 10, 2002 San Francisco utilizes their TOT in the following way: GF unallocated (53.3%), Conventions (21.7%), Arts & Culture (18.8%), Housing (3.1%), Redevelopment (3.0%) and Administration (0.1%). South San Francisco utilizes the $2.50/room-night portion of the tax to fund the SSF Convention Center. Trends: While the TOT has increased in recent years for a number of Cities, this tax will probably hold firm during the current economic and travel slow down. Budget per Resident Results: The Budget per Resident for Comparison Cities is shown in Table 1. It may be difficult to compare Budget per Resident accurately from city to city due to the actual content of each city's "budget". However, based on City's' self reported information, San Francisco has the highest budget per resident, followed by Foster City, Burlingame, Redwood City, South San Francisco, San Carlos and San Mateo. Trends: This number will tend to shrink during the currently economic downturn and increase again as the economy picks up steam again. Payroll Tax Results: San Francisco is the report's only comparable city with a payroll tax (1.5% of total payroll). The payroll tax is a major detriment to San Francisco's efforts to attract BioPharma companies to San Francisco. Trends: It is not anticipated that other comparable cities will add a payroll tax and is not recommended. Recommendations Development Impact Fees Recommend South San Francisco hold Development Impact Fees steady (no increases) until either the economy begins to show signs of improvement or other Peninsula Cities (San Mateo) first add Low Income Housing Fee. This recommendation is based on South San Francisco having the highest Development Impact Fees on the SF Peninsula during a local and national economic downturn. Other Fees Recommend South San Francisco hold Planning Fees steady. Recommend increasing South San Francisco Design Review Fees by adding Plan Check Fee. Continue South San Francisco' s policy for Negative Declaration Fees, Utility Fees, Utility Rates, Transient Occupancy Tax and Budget per Resident. Prepared by: Biotechnology/Pharmaceutical Services Bay Bay Fee a~,_ Competitive Business Study October 10, 2002 Section 3. Real Estate Analysis Area Office Rental & Vacancy Rates-Class A Results: San Francisco's SOMA South has the lowest Office Rental Rates at $1.99/sq. ft.- month and 32% vacancy. This is followed by Burlingame and South San Francisco with $2.25/sq. ft.-month (15% vacancy) and $2.30/sq. ft.-month (41% vacancy), respectively. San Carlos' Office Rental Rate is $2.50/sq. ft. (27% vacancy) while San Mateo and Redwood City's Office Rental Rates are $2.60/sq. ft.-month with 20% and 27% vacancy, respectively. Foster City's Office Rental Rate is the highest at $2.75/sq. ft. and 24% vacancy. In contrast, Palo Alto and Menlo Park Office Rents are $4.25/sq. ft.-month (20% vacancy) and $4.00/sq. ft.-month (20% vacancy), respectively. Source: CB Richard Ellis Q2-02 data. Refer to Figure 8. Bay Area Office Rental Rates and Figure 10 for Bay Area Office Vacancy Rates. Note: South San Francisco has the highest Office Vacancy Rate of all comparison cities at 41% (in part due to completion of the 611 Gateway office complex which is currently vacant and 250,000 square feet; total SSF office space, both vacant and occupied, is 2.2 million square feeO. Trends: Since the economic downturn started 18 months ago, Rents and Occupancy Rates have plummeted. Areas of highest vacancy tend to be in "dotcom concentrated cities" (i.e. SOMA South, Redwood City and San Carlos) and in cities with new construction completed during the past 18 months (South San Francisco, Redwood City and San Mateo). Demand had dried up for large blocks of space and a small market remains for "plug and play" space less than 10,000 square feet. Q2-02 vacancy levels continued to increase and rental rates continued to drop. Countywide Class A rates fell 35 cents from $3.19 to $2.86 during Q2-02. With sublease space still comprising 42% of available inventory, numerous landlords have dropped asking rates to compete with the low rates offered for sublease. Future Office Rental Rates are expected to reflect both local and national economic trends, following absorption of newly constructed office space. Area R&D Rental & Vacancy Rates Results: South San Francisco has the most expensive R&D Rental Rates of the SF Peninsula comparison cities. Specifically, South San Francisco's R&D Rental Rate is $2.00/sq. ft.- month (8% vacancy) while Foster City (21% vacancy), Burlingame (14% vacancy) and Redwood City (16% vacancy) all rent for $1.50/ sq. ft.-month. San Carlos R&D space rents for $1.40/ sq. ft.-month (8% vacancy) and San Mateo R&D rents for $1.25 sq. ft.-month (0% vacancy). For comparison, Palo Alto and Menlo Park R&D rents are $2.00/sq. ft.-month (8% vacancy) and $1.40/ sq. ft.-month (14% vacancy), respectively. Figure 9 shows R&D Rental Rates and Figure 11 shows SF Peninsula R&D Vacancy Rates. Source: CB Richard Ellis Q2-02 data. Refer to Figure 8. Bay Area Office Rental Rates and Figure 10 for Bay Area Office Vacancy Rates. Note: South San Francisco has one of the lowest R&D Vacancy Rates of all comparison cities. Trends: The biotech sector remains strong, with South San Francisco home to the largest concentration ofbiotech companies in the world. It is no wonder that there is a great effort by many Cities and States to retain and attract the biotech industry. Comparing S.F. Peninsula real estate vacancy rates, the average R&D Vacancy Rate is 10% while the average Office Vacancy Rate is nearly 25%. Hence, a desire by many landlords to convert existing vacant office space to R&D space, if the building specifications, infrastructure and floor to ceiling heights permit. While there is a demand for R&D space, average asking rates fell to levels not seen since 1997. Q2-02 R&D vacancy levels and asking rates continue to drop. Prepared by: Biotechnology/Pharmaceutical Services 7 Fee a~. Competitive Business Study October 10, 2002 Bay Area Land Purchase Trends Results: Due to lack of available "raw land" on the Peninsula and in San Francisco, it was not possible to provide accurate land purchase comps. South San Francisco is one of the only cities with raw land available. Also, South San Francisco has a supportive "development friendly" community and a natural segregation between its industrial and residential areas. Numerous South San Francisco warehouses have been converted to industrial applications in recent years. During the 200 ! time frame, South San Francisco warehouse/industrial property in the East of 101 area sold for an estimated $3.2- 4.3MM/acre, depending on site, location and structure. Trends: South San Francisco will continue to be attractive to developers seeking raw land for development when the local and national economies improve. Also upon economic improvement, South San Francisco warehouses in the East of 101 will continue to be converted to industrial use. South San Francisco offers an advantage of real estate flexibility for small growing companies looking for nearby land for future expansion. Prepared by: Biotechnology/Pharmaceutical Services Fee ax ;ompetitive Business Study October 10, 2002 Section 4. Construction Cost Analysis Bay Area Construction Costs and Trends Results: Construction costs for comparison cities are estimated to be nearly consistent. Of course, construction can be quite complex in congested or residential areas, hence, added costs. Figure 12 shows SF Bay Area Construction Costs. In summary, for warm shell construction, average construction rates follow: office ($55-85/sq. ft.), R&D labs ($160-250/sq. ft.), vivarium ($300-400/sq. ft. and manufacturing ($500-2,000/sq. ft). Trends: Actual project construction costs vary depending on complexity of construction. For example, small complex manufacturing areas may cost as much as $5,000/sq. ft. Also, office construction costs will increase as more expensive interior finishes and infrastructure are selected. Construction costs have been dropping during the past 12 months and are expected to rise upon economic improvement. 9 Prepared by: Biotechnology/Pharmaceutical Services Fee a~ ~mpetitive Business Study October 10, 2002 Section 5. Site Selection Criteria The following lists provide site selection criteria listed by both "hard" (quantifiable) and "soft" (non-quantifiable) criteria. Hard Criteria: · Leasing Rates · Land Costs & Availability (& "environmentally clean" land) · Furore Growth Allowance (adjacent land, warehouse and office space) · Permitting Difficulty · Environmental Regulations & Requirements · Zoning (separation industrial and residential uses) · Taxes (includes property taxes, employee payroll taxes, development impact fees) · Utilities: Power & Water (cost, reliability & high quality water) · Earthquake Zone · Flood Zone · Airport Proximity · Public Transportation Availabihty & Ease of Use (Bart, Ferry, Cal Train & Shuttle) · Traffic Congestion · Employee Commute Distance & Time · Housing Availability & Cost · Child Care Availability & Cost · Employees' Children's Education (public & private)/School Ratings · Worker Availability (Educated & Skilled) · World Class Universities Proximity (parmerships) · Educational Opportunities (for employees) · Venture Capital Funding/Investor Proximity · "Clustering Effect" (biotech's adjacent Genentech and prestigious universities) · Privacy (protection of patent technology) · Seclusion (animal research and biotech/chemical manufacturing desire to avoid hostile activists & security concerns) · Incubator Facilities · Document Storage Proximity and Warehouse Availability · Safety & Security · City Incentives (tax credits/training) · City Services (fire/police) · Service Industries Proximity (freight/shipping/distribution/chemicals/supplies) Soft Criteria: · · · · · · · · · "pro-Business" or "Anti-Business" Community/City Government "pro-Development" or "Anti-Development Community"/City Government Quality of Life Arts & Cultural Activities Outdoor Recreational Opportunities Athletic Facilities Vibrant community center (downtown) Restaurants (formal & casual) and Hotels Employee Support Services (shopping, dry cleaning and errands) 10 Prepared by: Biotectmology/Phammceutical Services Fee ax ;ompetitive Business Study October 10, 2002 Section 6. South San Francisco Site Selection The following lists provide South San Francisco's site selection opportunity/advantages and disadvantages with associated recommendations. SSF Site Selection Opportunity · Opportunity: Incubator Facilities. Recommendation: City of SSF encouraging and assisting developers with empty buildings to consider short term technology start-up incubator use. SSF Site Selection Advantages · "Pro-Business" City Government · "Pro-Development" City Government · Leasing Rates · Land Costs & Availability · Future Growth Allowance (adjacent land, warehouse and office space) · Permitting Ease · Environmental Regulations & Requirements · Zoning (separation industrial and residential uses) · No employee payroll taxes (San Francisco has employee payroll tax) · High quality water (desired for laboratory and manufacturing industries) · Not a Flood Zone · Airport Proximity · Public Transportation Availability & Ease of Use-SSF Bart extension opens 2003, Cal Train and Shuttle Services · Child Care Availability & Cost-SSF's innovation and commitment to fund and build East of 101 Child Care Center · Worker Availability (educated & skilled) · World Class Universities Proximity (partnerships) · Strong Community College (Skyline College)-educational opportunities for existing and future employees · Venture Capital Funding/Investor Proximity · "Clustering Effect" (biotech's adjacent Genentech and prestigious universities) · Privacy (protection of patent technology) · Seclusion (animal research and biotech/chemical manufacturing desire to avoid hostile activists & security concerns) · Document Storage Proximity and Warehouse Availability · Service Industries Proximity (freight/shipping/distribution/chemicals/supplies) · High Quality Hotels · SSF Convention Center · Arts & Cultural Activities (proximity to San Francisco) · Outdoor Recreational Opportunities (San Francisco Bay Area) 11 Prepared by: Bioteclmology/Phanmceutical Services Fee ah :ompetifive Business Study October 10, 2002 SSF Site Selection Disadvantages and Recommendations 1. Disadvantage: Highest Development Impact Fees for comparison cities on the Peninsula (excludes San Francisco). Recommendation: Consider waiting to implement "Low Income Housing" development impact fee after the economy begins to improve (or after other Peninsula Cities add Low Income Housing Development Impact Fee). Disadvantage: "Environmentally Unclean" Land. Recommendation: Attract and encourage developers to clean up contaminated sites with City assisting in permitting process, where possible and appropriate, in a "matchmaker" role. Disadvantage: Earthquake Zone (Bay Area relative to Vacaville). Recommendation: No solution proposed. Disadvantage: Water costs expected to increase significantly (relative to Vacaville). Recommendation: Utilize City contacts in Sacramento and Business Associations to encourage responsible and cost effective Hetch Hetchy infrastructure upgrades. Disadvantage: Public Transportation Availability & Ease of Use---no Ferry Service. Recommendation: Conduct studies and surveys advocating Ferry Service to SSF; work with Industry, Government and Non-Profits to lobby SSF Ferry Service (including Ferry Service to/from South San Francisco and the East Bay). Disadvantage: Traffic Congestion. Recommendation: Advocate additional Public Transportation and Ferry Service. Disadvantage: Employee Commute Distance and Time. Recommendation: Advocate additional Public Transportation and Ferry Service. Disadvantage: Housing Availability and Cost. Recommendation: No direct housing solution proposed at this time. Advocate additional Public Transportation and Ferry Service. Work on county-wide "low income housing" solutions. Consider implementing "Low Income Housing" Development Impact Fee after the economy begins to improve (or after other Peninsula Cities add Low Income Housing Development Impact Fee). Disadvantage: City Incentives-tax credits/training (relative to Vacaville). Recommendation: No City Incentives proposed at this time. 10. Disadvantage: Athletic Facilities. Recommendation: Attract high quality gym(s) to the East of 101 area (and secondarily to the downtown area) for East of 101 employee use. Possibly team up with the SSF Parks and Rec. Dept. to enhance athletic opportunities for the East of 101 area. Sponsor community/business races (1 Ok races and bike races) utilizing area adjacent SF Bay and/or San Bruno Mountain. 12 Prepared by: Biotechnology/Pharmaceutical Services Fee a~ _;ompetitive Business Study October 10, 2002 11. 12. Disadvantage: Safety and Security Concerns. Recommendation: SSF East of 101 area has safety and security concerns, particularly at night and on weekends. Increase police cars patrolling East of 101 area at night and on weekends. Locate police substation in the East of 101 corridor area. Create additional police and fire department partnerships with East of 101 companies. Disadvantage: Vibrant community center (downtown). Recommendation: Encourage additional "formal" restaurants downtown and East of 101 areas for business lunches and dinners. Encourage high quality employee support services (coffee shops, bike repair, shopping, dry cleaning and beauty shops) in the downtown and East of 101 areas. Provide additional community outreach programs with thc East of 101 business community to improve misconception regarding downtown safety record during nights and weekends. Bicycle patrol during the summer is a strong asset. 13 Prepared by: Biotechnology/Pharmaceutical Services Fee a,.~ Competitive Business Study October 10, 2002 APPENDIX Prepared by: Biotechnology/Pharmaceutical Services Table 1. Comparison of Estimated Development Impact Fees So. San Francisco Burllngame San Mateo Foster City San Carlos Redwood City San Francisco Type of Fee (in $) (100,000 ft2) (100,000 fi2) (100,000 ft2) (100,000 ft2) (100,000 fi2) (100,000 ft2) (100,000 ft2) Traffic Impact Fee 171,000 0 0 0 0 0 0 Transportation Fee 0 0 281,000 0 0 281,250 0 Transit Impact Fee 0 0 0 0 0 0 500,000 O)'ster Point Overpass Fee 221,493 0 0 0 0 0 0 Low Income Housing Fee 0 0 0 0 0 0 1,375,000 Child Care Fee 50,000 0 0 0 0 0 100,000 School Fee 33,000 32,800 34,000 34,000 33,000 34,000 25,000 Sewer Impact Fee 123,000 0 133,200 0 0 64,041 0 Sanitary Sewer Undercrossing of Hwy 101 Fee 0 0 48,800 0 0 0 0 Madna Lagoon Drainage Facilities Fee 0 0 2,168 0 0 0 0 Ba font Development Fee 0 163,300 0 0 0 0 0 Conditional Use Permit $650 200 2,006 deposit 900 or Actual Cost 737 400 77,827 '~Actual Cost ~t $112/hr.I (=$65/hr.+O/H+Mats) Traffic Studies 0 Actual Cost Actual Cost Actual Cost Actual Cost Actual Cost Actual Cost + OH City Attorney (deposit) 5,000 0 0 0 $175 or Actual Cost 0 0 r Plan Check 0 60,586 73,700 52,786 55,138 49,709 53,951 Building Permit 70,865 93,209 110,000 81,209 84,828 71,012 156,733 Fire Permits & Inspection 14,173 60 1,450 80 2,219 Irmluded (En~lr. Plan Ck. 7,243 Engineerin~ Plan Check IMEPI 11,450 15,950 165,000 Included Ifees aboveI 9,621 56,809 Inctuded (fees above Negative Declaration Consultant Cost + $75 100 2,006 Deposit + $125 or 1,171 1,500 41,431 Consultants Fees Actual Cost Water Connection Fee (2 inch) 0 2,750 0 14,000 0 3,750 4,114 Sewer Connection Fee 199,515 5,600 12,672 60,000 237,000 2,550 0 Water Permit 0 35 0 0 310 0 0 Sewer Permit 0 45 0 0 58 0 0 Water Rate (S/month) 2,590 3,697 3,094 2,338 3,094 2,883 2,420 Sewer Rata, r,t$/month I 4,507 7,596 4,396 2,631 3,063 3,242 8,584  8%+$2.50/room-ni ht 10% 10% 10% 10% 8% 14% 0 0 0 0 0 0 1.5% Assumption: $25 million project value (building valuations); 100,000 square foot building with 130,500 square foot site; office/industrial. Each project uses same Planning and Environmental fees including: Conditional Use Permit, Traffic Study and Negative Declaration. Source: Various Cities. Represents current fees in each City as of Summer 2002; some fees may have increased. Note: These fees utilize a number of assumptions and are for planning purposes and comparison only; they may not appry to specific projects or parcels. October 10, 2002 Prepared by: Biotechnology/Pharmaceutical Services Figure 1. Total Development Impact Fees E 700,000 600,000 500,000 400,000 300,000 200,000 100,000 598,493 San Francisco So. San Francisco 499,168 379,291 196,100 San Mateo Redwood City Burlingame Comparison Cities 34,000 33,000 Foster City San Carlos Assumption: $25 million building valuation and 100,000 square foot facility. Prepared by: Biotechnology/Pharmaceutical Services Figure 2. Transportation/Traffic/Transit/Overpass Impact Fee E 500,000 400,000 300,000 200,000 100,000 0 500,000 San Francisco 392,493 0 0 0 So. San Francisco Redwood City San Mateo Burlingame Comparison Cities Foster City San Carlos Assumption: $25 million building valuation and 100,000 square foot facility. Prepared by: Biotechnology/Pharmaceutical Services Figure 3. Low Income Housing Impact Fee 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 1,375,000 0 0 0 0 0 0 San Francisco So. San Burlingame San Mateo Francisco Foster City San Carlos Redwood City Comparison Cities Assumption: $25 million building valuation and 100,000 square foot facility. Prepared by: Biotechnology/Pharmaceutical Services Figure 4. Child Care Impact Fee 100,000 80,000 60,000 40,000 20,000 100,000 50,000 0 0 0 0 0 San Francisco So. San Francisco Burlingame San Mateo Comparison Cities Foster City San Carlos Redwood City Assumption: $25 million building valuation and 100,000 square foot facility. Prepared by: Biotechnology/Pharmaceutical Services Figure 5. School Impact Fee E 35,000 30,000 25,000 20,000 15,000 10,000 5,000 34,000 So. San Francisco 34,000 34,000 33,000 33,000 32,800 T r T t Burlingame San Mateo Foster City San Carlos Redwood City Comparison Cities 25,000 San Francisco Assumption: $25 million building valuation and 100,000 square foot facility. Prepared by: Biotechnology/Pharmaceutical Services Figure 6. Sewer/Sewer UndercrossinglDrainage Impact Fee 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 184,168 San Mateo 123,000 64,041 0 0 0 0 So. San Francisco Redwood City Burlingame Foster City Comparison Cities San Carlos San Francisco Assumption: $25 million building valuation and 100,000 square foot facility. Prepared by: Biotechnology/Pharmaceutical Services Figure 7. Bayfront Development Impact Fee E 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 163,300 0 0 0 0 0 0 Burlingame So. San Francisco San Mateo Foster City Comparison Cities San Carlos Redwood City San Francisco Assumption: $25 million building valuation and 100,000 square foot facility. Prepared by: Biotechnology/Pharmaceutical Services Figure 8. SF Bay Area Office Rental Rates-Class A 2.95 2.75 2.55 2.35 2.15 1.95 1.75 2.60 2.60 2.50 1.99 San Francisco (SOMA South) 2.25 Burlingame 2.30 So. San Francisco San Carlos San Mateo Comparison Cities 2.75 Redwood City Foster City Source: CB Richard Ellis Prepared by: Biotechnology/Pharmaceutical Services Figure 9. SF Peninsula R&D Rental Rates 2.20 2.00 1.20 1.00 1.50 1.50 1.50 1.25 ? San Mateo 1.40 San Carlos Burlingame Foster City Comparison Cities 2.00 Redwood City So. San Francisco Source: CB Richard Ellis Prepared by: Biotechnology/Pharmaceutical Services Figure 11. SF Peninsula R&D Vacancy Rates 25 20 ¢ 15 > ~0 0 14 San Mateo San Carlos So. San Francisco Burlingame Comparison Cities 16 Redwood City 21 Foster City Source: CB Richard Ellis Prepared by: Biotechnology/Pharmaceutical Services Figure 12. SF Bay Area Construction Costs 600 5OO 400 300 2OO 100 400 250 85 55 Office 160 R&D Labs Construction Type 300 Vivarium 5OO Manufacturing Prepared by: Biotechnology/Pharmaceutical Services