HomeMy WebLinkAbout18 LONG RANGE TUSTIN LEGACY FINANCIAL MODELINGDocusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6
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Agenda Item 18
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AGENDA REPORT Reviewed: Q�
City Manager
Finance Director
SEPTEMBER 17, 2024
ALDO E. SCHINDLER, CITY MANAGER
JENNIFER KING, FINANCE DIRECTOR/CITY TREASURER
LONG RANGE TUSTIN LEGACY FINANCIAL MODELING
As requested by the City Council in the Spring of 2024 during the last budget
review/adoption process, a preliminary long range Tustin Legacy financial model tool is
being created. The comprehensive model will enable valuable insight into potential
financial impacts related to buildout of Tustin Legacy on the City's overall fiscal position.
RECOMMENDATION:
It is recommended that the City Council receive a presentation from staff and the consultant
regarding the model's framework and intended value as an effective evaluation tool and
provide staff with feedback and direction.
FISCAL IMPACT:
The City has contracted with a municipal advisor, Fieldman Rolapp & Associates, to
prepare this comprehensive financial model. The project is estimated to cost up to $50,000,
and sufficient funding is available in the current fiscal year's budget to cover this expense.
CORRELATION TO THE STRATEGIC PLAN:
The development of a comprehensive Tustin Legacy financial model supports the fulfillment
of two goals from the City's Strategic Plan: Goal A Economic and Neighborhood
Development, item 1 Develop critical phases of Tustin Legacy; Goal C Financial Strength,
sustain long-term financial strength with adequate reserves and enhanced capacity to
provide a sustainable level of City services.
BACKGROUND AND DISCUSSION:
The City Council faces numerous complex and critical policy decisions regarding the
buildout of Tustin Legacy. A long range comprehensive financial model will serve as a tool
to assist the Council in better understanding the impacts and opportunities associated with
the buildout of Tustin Legacy.
Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6
City Council Agenda Report
Legacy Long Range Financial Modeling
September 17, 2024
Page 2
The following categories summarize the basic elements of the model's framework — all of
which can be adjusted on an individual "scenario" basis:
• One-time revenues: Tustin Legacy land sale revenues (from City owned property
dispositions) and backbone infrastructure fees will continue to fund necessary
capital improvement projects for viable developments.
• One-time expenditures: Tustin Legacy's capital projects will focus primarily on
infrastructure to support future residential and commercial development including,
but are not limited to, grading, utilities, streets, parks, pedestrian bridges, and public
facilities. The list of capital projects is expected to be extensive, requiring long-term
planning. Project timing may be influenced by various factors, such as development
priority, funding availability, staff or contractor constraints, and the timing of the
Navy's conveyance of certain areas.
• Recurring revenues: The General Fund will benefit from recurring revenues
generated by additional Tustin Legacy development, which will support ongoing
public services. Anticipated recurring General Fund revenues include, but not limited
to, sales and property taxes, Special Tax B (for public services), real property
transfer tax, and building/planning permit fees. Increases in property tax, Special
Tax B, real property transfer tax, and building permit fees will result from the
development of additional units and square footage. Sales tax revenue is expected
to rise with population growth from residential and commercial development.
Legacy's development may also introduce new project types, such as hotel
developments and leasable properties, potentially generating new revenues for the
General Fund.
• Recurring expenditures: Staff anticipates a gradual increase in public service
levels as the Legacy continues to be built out. Ongoing service costs will be
associated with building/planning permit issuance, police and fire emergency
responses, maintenance of street, storm drain, parks, public facilities, and utility
usage. Additionally, there will be ongoing cost for support services such as legal and
administrative functions. All these expenses will be considered in conjunction with
development and population growth.
The financial modeling tool will also help to improve the accuracy of assumptions utilized
during the City's annual budget review/development process.
Signed by:
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Jennifer King
Finance Director/City Treasurer