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AECOM 5 1. Summary of Findings AECOM conducted a peer review of “MainPlace Mixed-Use Project: Apartments, Hotel, and Retail: Net Fiscal Impact & Economic Benefit Analysis Santa Ana, CA,” prepared by Kosmont Companies (hereafter referred to as “Consultant”) for Centennial Real Estate Company LLC (Developer) in December of 2018. AECOM generally agrees with the consultant’s conclusions. Overall, they are reasonable and consistent with industry practice. In some cases the study contains assumptions and methodologies that could be clarified to give the City of Santa Ana (City) a better understanding of the scope of fiscal and economic impacts of the development. 1. The report does not analyze the net new operational impacts of the project. Net new impacts are quantified by subtracting the estimated operational impacts of the existing land uses from the estimated operational impacts of the project. This would allow a more complete assessment of the magnitude the project would potentially put the City on stronger footing compared to the existing land uses. More complete information would help inform the City’s decision-making process. 2. Economic Benefits – The application of the IMPLAN model is based on sound methodology and the results appear consistent with other studies involving similar project size. Additional clarity on the study ’s assumed City capture rates would be helpful for understanding the results. 3. Fiscal Revenues – Many of the assumptions about fiscal revenues (Property Tax, Business Tax, etc.) are in line with comparable studies and provide reasonable estimates for the impact of the Development. 4. Sales Taxes – The estimates for sales per square foot are optimistic but within the range for comparable properties in Southern California. Capture Rates for employee spending are also near the upper limit for comparable assumptions. 5. Hotel Visitors Tax – The Average Daily Rate (ADR) used to approximate tax revenue is derived from the Orange County Market, but the ADR for the sub-region containing the City is notably lower. 6. Expenditures for Service Population – While the pro rata expenditure for the new service population is a reasonable application of the City’s Adopted Budget, assumptions about a below average household size for new residences could greatly underestimate the actual costs to the City. 2. Economic Impacts The Consultant uses an IMPLAN input/output model to estimate the economic impacts of both the construction and stabilized operations of the Development. IMPLAN modeling is a well-established methodology to forecast economic impacts on a regional level that combines direct inputs with localized industry sector and employment data to generate estimates for employment and economic production. While the County-wide measures are largely in line with similar studies in Southern California, the estimated City capture rate of economic benefits could use some clarification. Table 1.1 shows the estimated capture by the City of the employment, labor income and economic output of the combined direct, indirect and induced economic benefits for both the Construction and Operations phases of the Development. Table 1.1: Estimated City Capture of Economic Benefits Employment Labor Income Economic Output Construction Phase 1 60% 69% 66% Full Buildout 61% 70% 69% Operations Phase 1 76% 68% 71% Full Buildout 67% 73% 64% Source: Kosmont Companies Given the peripheral location of MainPlace Mall within the City, the proposed capture rates of 64%-71% for these economic outputs would need to be substantiated. It is possible that the assumption is well founded or that this is a direct output of the IMPLAN model but this is not detailed in the study. As an illustration, Figure 1.1 shows 5 and 10 minute drive time radii around MainPlace Mall, which include substantial sections of Orange, Anaheim, Garden Grove and Tustin. Similarly, Citywide capture of employment and labor income indicates the place of employment is within the City, and not that jobs would be held and income earned by Santa Ana residents. In fact, the most recent data from the US Census Longitudinal Employer-Household Dynamics Survey (2015) reveal that of the approximately