14 BMR housing
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
(408) 777-3308
FAX (408) 777-3333
CITY OF
CUPEI\IINO
Community Developmerit Department
Housing Services
Summary
Agenda Item No. ~
Agenda Date: Februarv 27, 2006
Subject:
Consider adopting a resolution updating the Nexus Study and new mitigation fees for the
Cupertino Below Market Rate (BMR) Housing program and direct staff to draft an
inelusionary housing ordinance, Resolution No. 06- oy!:
Recommendation:
The Cupertino Housing Commission recommends Council adopt new updated Nexus Study
and adopt new mitigation fees in April, when adopting the user fees, for the Cupertino BMR
progr<:JTl and direct staff to draft an Affordable Housing Ordinance per attached Resolution
06-Qjl.
Background:
Below Market Rate Program:
Since June 1992, the city of Cupertino has operated a Below Market Rate program. During the
1993 General Plan update, the city approved an inelusionary housing program requiring 10%
of all new developments to be affordable. This percentage was increased to 15% in October
2001 when the City Council approved the new Housing Element of the General Plan.
Approximately 192 of the city's 323 affordable units have been created through the BMR
program.
The residential component of the BMR program has two parts, rental and ownership.
Currently, the program requires 50% of the required rental units to be affordable to very-low
income, 50% of median income, and the other 50% affordable to low income, 80% of median
income, households. In the case of ownership units, 50% must be affordable to median income
households with the other 50% being affordable to moderate-income, 120% of median,
households.
Linkage Fee Component:
A linkage fee was created in 1992 to offset the housing needs created by the development of
office and industrial development. Revenue generated through this program is used to
support the development of affordable housing for families and individuals working in
IY-{
Consider adopting updated Nexus Study and new mitigation fees for the Cupertino Below Market Rate (BMR)
Housing program and direct staff to draft an inclusionary housing ordinance.
January 17,2006
Page 2
Cupertino. For example, these funds have been used to assist in the development of the
Cupertino Community Services (CCS) Vista Village project, the purchase of surplus CaITrans
property on Cleo Avenue and the purchase of a four-plex by CCS on Greenwood Court. In
addition, a small percentage of the fund is used for administration of the Below Market Rate
program by CCS. Currently, the fee is set at $2.25 a square foot and is assessed against office
and industrial development only. When establishing this component of the housing program
in 1991, the City Council opted to exelude hotels and retail development from the fee.
Discussion:
Nexus Study:
A nexus study was prepared in 1992 to demonstrate the linkage between the non-residential
development and the demand for affordable housing and to provide a legal basis for the fee.
Since this study was prepared more than ten years ago, the City made it a goal in the new
General Plan Housing Element to update the nexus analyses. Keyser Marston Associates
(KMA) was retained to complete this task. The updated nexus analysis addresses office, retail
and hotel development.
The purpose of a nexus analysis is to document the linkages among the construction of
workplace buildings (such as office buildings, retail stores and hotels), the employees that
work in them, employees households, and the housing demands of these households.
Because the employees in the office building, hotels and commercial developments represent
many different income levels by virtue of compensation level and household size, their
housing demands will cover a range of affordability levels. The nexus analysis quantifies the
households in various housing affordability categories and the cost of creating housing for
these households.
The entire nexus analysis is attached for review and is organized by Keyser Marston into five
sections as follows:
· Section I: Summary of the nexus concept and key issues surrounding nexus analyses
for jobs and housing.
· Section II: An overview of the historical and projected growth of jobs and housing in
the City.
· Section III: An analysis of jobs and housing relationships associated with prototypical
buildings.
· Section IV: A summary of the cost of developing housing units affordable to
households at the various income levels and a calculation of the total housing nexus
cost, or maximum fee level.
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Consider adopting updated Nexus Study and new mitigation fees for the Cupertino Below Market Rate (BMR)
Housing program and direct staff to draft an inclusionary housing ordinance.
January 17,2006
Page 3
· Section V: Background and information to assist in evaluating appropriate fee levels for
Cupertino.
· Appendices: Provide additional support information and more documentation on data
sources and analysis assumptions.
Industry Input:
Staff and Keyser Marston met with Christine Giusiana, Executive Director of the Cupertino
Chamber of Commerce, and explained in depth the nexus analysis. The Chamber, Valko
management, the Home Builders Association of Northern California and Sobrato
Development were distributed a copy of the draft study and informed of the Cupertino
Housing Commission meeting schedule for discussion of this item.
Housing Commission Discussion and Recommendation:
One member of the Cupertino Chamber of Commerce, Mark McKenna with Stevens Creek
Quarry, appeared at the April 14, 2005 Housing Commission meeting to voice displeasure
with the program in general and felt that it would discourage development of housing, office
and retail development. Staff explained that the program had been in place for more than ten
years with minimal effect on office and housing development. Additionally, staff explained
that the purpose of the study was to reevaluate the office/ industrial fee, the residential in-lieu
fee and consider whether commercial (retail) and hotel development should be assessed a fee.
Mr. McKenna stated that he had a strong opposition to raising any fees or creating fees.
The Housing Commission reviewed the Nexus Study over the course of one year and made
their final recommendations to the City Council at their April 14, 2005 Housing Commission
meeting. The Housing Commission recommends the following:
· Retail and hotel should be assessed a fee at the same rate as the office/industrial
development.
· The new fee for retail, office/industrial and hotel shall be $4.75 per square foot.
Compared to other fee programs in California, Cupertino's current fee is at the lower
end of the spectrum and the proposed adjustment would place it nearer the mid portion
of the spectrum (please see Table V-4 of the attached Nexus Study).
· Redevelopment Project Areas shall be exempt from the fees for retail, office/ industrial
and hotel. However, they would still be obligated to produce affordable units under
the City's inelusionary housing (BMR) program.
· To encourage mixed use development along the major corridors, projects containing
2/3 residential and 1/3 retail/ office, would be exempt from paying the impact fees for
Il{ - 3
Consider adopting updated Nexus Study and new mitigation fees for the Cupertino Below Market Rate (BMR)
Housing program and direct staff to draft an inclusionary housing ordinance.
January 17,2006
Page 4
the commercial. The project would still be required to produce affordable housing units
as part of the BMR program.
Affordable Housing Ordinance:
Keyser Marston and Associates and staff also recommend that the City Council direct staff to
draft and Affordable Housing Program Ordinance detailing the Housing Impact Fee program.
By placing the information in the form of an ordinance, the information will be more accessible
to the general public and more detailed than what is currently in the General Plan Housing
Element.
PREPARED BY:
Vera Gil, Senior Planner
APPROVED FOR SUBMITTAL:
Dovid ~p, City Mo=ge<
Steve Piasecki, Director
of Community Development
Attachments:
Resolution No. 06-
Draft Jobs Housing Nexus Update
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RESOLUTION NO. 06-045
DRAFT
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
ADOPTING AN UPDATED JOBS HOUSING NEXUS STUDY AND NEW MITIGATION
FEES AND DIRECTING STAFF TO DRAFf AN AFFORDABLE HOUSING PROGRAM
ORDINANCE
WHEREAS, the City has conducted a Jobs Housing Nexus Study in 1992; and
WHEREAS, the Housing Element of the 2005 General Plan states that an updated Jobs
Housing Nexus Study shall be conducted; and
WHEREAS, the Keyser Marston and Associated conducted a "Jobs Housing Nexus
Update" pursuant to the State Mitigation Fee Act (Government Code Section 66000, et seq.); and
WHEREAS, the "Jobs Housing Nexus Update" has found that there is a nexus between
new retail, hotel and office/industrial development, the creation of jobs and the demand for very-
low, low, median and moderate income housing for the employees; and
WHEREAS, a fee will can legally be assessed on said development; and
WHEREAS, the fee will be used solely to increase and improve the supply of housing
affordable to very-low, low, median and moderate income employees;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Cupertino
hereby approves the aforementioned "Jobs Housing Nexus Update" and directs staff to discuss
and/or amend the impact fee at the City Council meeting in which the fee schedule would be
adopted.
NOW, THEREFORE, BE IT FURTHER RESOLVED that the following uses shall be
exempt !Tom the impact fee, but still required to provide Below Market Rate Housing as part of a
residential development: projects in a redevelopment project area and mixed use projects
providing two thirds residential and one third retail/office.
NOW, THEREFORE, BE IT FURTHER RESOLVED that the City Council directs staff
to prepare an Affordable Housing Program Ordinance detailing the housing impact fees.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Cupertino this 27th day of February 2006 by the following vote:
Vote Members of the Citv Council
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
APPROVED:
City Clerk
Mayor, City of Cupertino
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DRAFT
Jobs Housing Nexus
Update
Prepared for:
City of Cupertino
Prepared by:
Keyser Marston Associates, Inc.
October 2004
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TABLE OF CONTENTS
Executive Summary
Introduction
I
The Nexus Concept and Major Issues
II.
Macro Economic Jobs Housing Analysis
III
Micro Economic Jobs Housing Analysis
IV.
Affordability Gaps and Total Linkage Cost
V.
Materials to Assist in Fee Setting
Appendices
Appendix A: ,Tables
Appendix B: Suppiemental Nexus Model Documentation
List of Tables
Table 11-1
Table 11-2
Table 11-3
Table 11-4
Table 111-1
Table 111-1A
Table 111-2
Table 111-3
Table 111-4
Table IV-1
Table IV-2
Table IV-3
Table IV-4
Table IV-5
Table V-I
Table V-2
Table V-3
Table V-4
Job Growth, 1990-2000
Residential Permitting Activity (1990-2003) and Affordable Unit Production
Historical Relationship: Employment Growlh, Residential Unit Demand
Projection: Employment Growth, Residential Unit Demand
Net New Employees and Occupation Distribution by Building Type
Estimate of Qualifying Households by Income Level
Worker Households by Affordability Level
Worker Households by Affordability Levei After Commute Adjustment
Housing Demand Nexus Factors Per Square Foot of Building Area
Residential Prototype - Rental Housing
Residential Prototype - Ownership Housing
Affordable Rents
Supportable Housing Prices
Total Housing Nexus Cost
Office/High Tech Prototypes - Total Development Costs
Hotel Prototypes - Total Development Costs
Retail Prototypes - Total Development Costs
Other ,lobs Housing Linkage Fee Programs
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27
39
49
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Appendix Table 1
Appendix Table 2
Appendix Table 3
Appendix Table 4
Appendix Table 5
Appendix Table 6
Appendix Table 7
Appendix Table 8
Income Definitions by Household Size
Occupations Included in the Analysis by Land Use
2002 National Hotel Worker Distribution by Occupation
Average Annual Compensation, 2003 - Hotel Worker Occupations
2002 National Office Worker Distribution By Occupation
Average Annual Compensation, 2003 - Office Worker Occupations
2002 National Retail Worker Distribution by Occupation
Average Annual Compensation, 2003 - Retail/Entertainment Worker
Occupations
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EXECUTIVE SUMMARY
This report is an economic nexus analysis; it demonstrates the relationships among
construction of new buildings, employees, households and affordable housing demand The
report has been prepared by Keyser Marston Associates, Inc. for the City of Cupertino to
assist in updating and revising its linkage program to mitigate lhe impacts of non-residential
deveiopment on affordable housing demand. The report is a "nexus" analysis 10 meet the
legal requirements for linking new construction of workspace buildings with an obligation for
affordable housing.
The City of Cupertino first established its Housing Mitigation program in 1992. The program
established a fee for new office and industrial development. This report covers new office
space, new hotels, and new retail/entertainment development should the City wish to expand
the program.
This analysis also covers four income categories or tiers per a directive from' the City. The
tiers are Very Low Income, which is under 50% Area Median Income (AMI), Low Income or
50% to 80% AMI, Moderate Income or 80% to 120% AMI, and Workforce Income or 120% to
150% AMI, all of which face affordability obstacles in Cupertino policymakers may design the
program to include the upper tiers, if they so choose.
A review of past employment growth and housing production demonstrates that housing
production has not kept pace with the demands assoclaled with employmenl growth and new
worker households, even before affordability is taken into account Nor is there evidence that
housing production, and particularly affordable housing production, will be able to meet the
demand generated by new worker households in the future.
The nexus analysis concludes with coefficients expressing the number of housing units by
affordability level that are linked to each square foot of building area, by building lype
(office/high tech, retail and hotel/other lodging). When these housing demand coefficients are
multiplied by the affordability gap for each income category, the totai housing nexus cost is
determined, as follows:
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Keyser Marston Associates, ¡nc
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Total Housing Nexus Cost (Per Square Foot Building Area)
Very-Low Low Moderate Workforce
Building Type Income income Income Income Total
Office/High Tech $4.71 $5.10 $8.84 $1.22 $19.87
Retail $20.66 $3.34 $2.08 $0.15 $26.23
Hotel $16.61 $1.92 $1.19 $009 $19.80
These costs express the total linkage or nexus cost for each of the three building types.
These total nexus costs represent the legal ceiling for potential fees. Total nexus costs are
not recommended fee levels; they represent only the maximums established by this
analysis, below which fees or other requirements may be set.
Fee Setting Approaches
.
The report provides information to assist in selecting fee levels for the update program.
Several alternative approaches are described with examples as follows:
· Set the fees as a percent of the nexus cost - such as 25%. Office al 25% of the
nexus cost of $19.87 is $4..96, etc.
· Evaluate fees in the context of total development costs. If office development costs
$265 to $365 per square foot In Cupertino, then a fee that adds 2% would be in the
range of $5.30 to $7.30 per square foot.
· Review fee levels in housing linkage programs elsewhere. grouped by higher fee
jurisdictions at over $9 per square foot, moderale fee jurisdictions in the $4 to $9 range
and the low fee group A number of Silicon Valley jurisdictions are now in the
moderate and higher fee groups.
· Set all commercial fees al the same level or set each fee independently, based on
policy considerations and not on a specific formula.
As part of the update program, the City may wish to consider other revisions such as minimum
size thresholds, specific use exemplions (such as child care centers) or geographic area
special treatment (such as redevelopment areas, etc.).
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INTRODUCTION
The following report presents the findings of an analysis of the relationship between
commercial development and housing demand in the City of Cupertino. The report has been
prepared by Keyser Marston Associates, Inc. for the City of Cupertino, pursuant to a contract
to prepare a nexus analysis and assist in updating and revising a linkage fee.program that
mitigates the impacts of non-residential development on affordable housing demand.
Background
The City of Cupertino first established a linkage fee in 1992 10 "acknowledge housing needs
created by the development of office and industrial projects and provide nominal fees to
support the development of affordable housing for families and individuals who work in
Cupertino but live elsewhere.'" The fee currenlly is set at $2.25 per square foot and applies to
office and industrial developments oniy; the City decided against establishing a fee for retail
development or hotel development. The fee program was supported by a nexus study
prepared in 1991 that demonstrated the linkage between non-residential development and the
demand for affordable housing.
Keyser Marston Associates (KMA) was retained by the City to update the nexus analysis
based on current market conditions. The updated nexus analysis addresses office, retail and
hotel developments.
Purpose
The purpose of the nexus analysis is to document the linkages among the construction of
workplace buildings (such as office buildings, retail stores and hotels), the employees that
work in them, employee households, and the housing demands of these households. Since
workers in all types of buildings represent a range of income levels, by virtue of workers'
compensation levels and size of the household, their housing demands cover a range of
affordability levels. The analysis quantifies the number of households in various housing
afford ability categories.
The analysis also quantifies the cost to deliver housing units affordable to the households at
various affordability levels, which we refer to as the cost of mitigation
Analyses of this type are called linkage or nexus analyses.
1 "Housing Mitigation Procedural Manual:' City of Cupertino, November 18. 2002
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Process
Prior to initiating work on the analyses, KMA met with a City staff group to determine the
parameters of the analysis
For purposes of analysis, it was aweed that the following types of workplace buildings would
be analyzed:
· Office/high tech
· Retail and entertainment
· Hotel and other lodging
The household income or affordability categories to be analyzed were agreed to include:
· Very low income (under 50% of median income)
· Low income (50% to 80% of median income)
Moderate (80% to 120% of median income)
· Workforce (120% to 150% of median income)
The City may wish to consider a program that eliminates some of these building types or
income levels. The goal has been to conduct the analysis for a broad range of options
Report Organization
The report is organized into five sections as follows:
· Section I - presents a summary of the linkage or nexus concept and some of the key
issues surrounding nexus analyses for jobs and housing.
Section II - is an overview of the historical and projected growth of jobs and housing in
the City.
· Section III - is an analysis of jobs and housing relationships associated with individual
prototype buildings. It is a "micro economic" analysis that concludes with a
determination of the number of households at each income level associated with each
type of building.
· Section IV - summarizes the cost of delivering housing units affordable to households
at the various income levels thai are the subject of the analysis. It concludes with the
calculation of the maximum allowable fee level.
· Section V _ provides information to assist in evaluating appropriate fee levels for
Cupertino.
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· Appendices - provide additional support information and more documentation on data
sources and analysis assumptions.
Data Sources and Qualifications
The analyses in this report have been prepared using the best and most recent data available.
Local data was used wherever possible. Other sources such as the 2000 US Census and
the California Employment Development Department were used extensively. While we believe
all sources utilized are sufficiently accurate for the purposes of the analysis, we cannot
guarantee their accuracy. Keyser Marston Associates, Inc. assumes no liability for information
from these other sources.
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SECTION I: THE NEXUS CONCEPT AND MAJOR ISSUES
Introduction
This section outlines the nexus concept and some of the key issues surrounding linking new
office, retail/entertainment and hotel/motel development to the demand for new residential unitse
The nexus analysis and discussion focus on the relationships among development, growth,
employment, income and demand for housinge The analysis yields a causal connection between
new construction of office/industrial, retail/entertainment and hotel/motel buildings and the need
for additional affordable housing, a connection that is quanlified both in terms of number of units
and in terms of subsidy assistance needs to make units affordable.
The Legal Basis and Context
The first housing linkage programs were adopted in the cities of San Francisco and Boston in the
mid-1980's. To support the linkage, the City of San Francisco commissioned a short analysis to
show the relationships, or what might now be characterized as an early version of a nexus
analysis. Since that time there have been several court cases and California statutes that affect
what local jurisdictions must demonstrate when imposing impact fees on development projects.
The most important U.S. Supreme Court cases are Nollan v. California Coastal Commission and
Dolan v. City of Tigard (Oregon)e The rulings on these cases, and others, help clarify what
governments must find in the way of the nature of the reiationship between the problem to be
mitigated and the action contributing 10 the problem
Following the Nollan decision in 1987, the California legislature enacted AS 1600 which requires
local agencies proposing an impact'fee on a development project to identify the purpose of the
fee, the use of the fee, and to determine that there is a reasonable relationship between the fee's
use and the development project on which the fee is imposede The local agency must also insure
that there is a reasonable relationship between the fee amount and the cost of mitigating the
problem that the fee addresses. Studies by local governments designed to fulfill the requirements
of AS 1600 are often referred to as AB 1600 or "nexus" studies.
One cûurt case that involved housing linkage fees was Commercia! Builders of Northern
California v. City of Sacramento. The commercial builders of Sacramento sued the City following
the City's adoption of a housing linkage feee Both the US District Court and the Ninth Circuit of
Appeals upheld the City of Sacramento and rejected the builders' petition. The U .Se Supreme
Court denied a petition to hear the case, letting stand the lower court's opinione The authors of
this nexus study were the authors of the Sacramento study.
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The Nexus Methodology
An overview of the basic nexus concept and methodology is helpful to understanding the
discussion and concepts presented in this section. This overview consists of a quick "walk
through" of the major steps of the analysis. The nexus analysis links new commercial buildings
(or other workplaces) with new workers in the City; these workers demand additional housing in
proximity to the jobs, a portion of which needs to be affordable to the workers in lower income
households.
The methodology used in this analysis is a "micro" analysis, which examines individual buildings.
The micro nexus readily lends itself to quantification that serves as a basis for quantifying the
nexus cost, or basis for the fee amount.
To illustrate the micro nexus, very simply, we can walk through the major calculations of a
building. We begin by assuming a prototypical 1 00,000 sq.ft. building and then make the
calculations as follows:
·
We estimate the total number of employees working in the building based on average
employment density experience.
·
We use occupation and income information for typical job types in the building to calculate
how many of those jobs pay compensation at lower and middle income levels.
·
We know from the Census that most of these lower income employees are members of
households where more than one person is employed; we use various factors to calcuiate
the number of households represented and how multiple earners produce the household
income.
· Combining our findings from above, we conclude how many of the lower and middle
income households (divided into several subsets by income level) are associated with the
building and divide by 100,000 square feet to arrive at coefficients of housing units per
square foot of building area.
· In the last step, we multiply the number of households per square foot by the costs of
delivering housing units affordable to these income groups.
The factors and relalionships utilized in the analysis refiect long-term average conditions. Short-
term conditions, such as a' recession or a vigorous boom period, are not an appropriate basis for
estimating impacts over the life of the building.
The Relationship Between Job Growth and Population Growth
The social issue driving this analysis is growth in mid to lower income households New
population growth in most U.S. regions occurs primarily as a result of job growth. Over the long
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term, the vast majority of growth in the State of California and its sub-regions is job driven. The
arrival of new population creates "secondary" demand for jobs in retail outlets and services that
follow. Growth in the greater Bay Area and in Cupertino is predominantly job driven. Most
people coming to the region would not come if they could not expect to find a job. People born in
the local area would not stay without jobs This is the long-term pattern. In the short-term,
economic cycles and other factors can result in population growth without jobs to support the
growth. If an economic region in the U.S does not maintain job growth, there is an out-migration
to regions where job growth is occurring. Many cilies in the Midwest during the 70's and 80's are
examples.
The Relationship Between Construction and Job Growth
If population growth, especially lower and middle income population, is predominantly job driven
in the greater Bay Area. the question arises as to the source or "cause" of employment growth
itself.
Simplistically we can say that employment growth does not have "one cause". Many factors
underlie the reasons for growth in employment in a given region; these factors are complex,
interrelated, and often associated with forces at the national or even international level. One of
the factors is the delivery of new workspace buildings. The nexus argument does not make the
case that the construction of new buildings is solely responsible for growth. However, especially
in the Bay Area, new construction is uniquely important, first, as one of a number of parallel
factors contributing to growth, and second, as a unique and essential condition precedent to
growth
As to the first, construction itself encourages growth. When the state economy is growing, the
most rapidly growing areas in the state are those where new construction is vigorous as a vital
industry. In regions such as the Bay Area where mulliple forces of growth exist, the political and
regulatory environment join forces with the development induslry to attract growth by providing
new work spaces, particularly those of a speculalive nature. The development industry frequently
serves as a proactive force inducing growth to occur or be attracted to specific geographic areas
or locations.
Second, workplace buildings bear a special relationship to growth, different from other parallel
causes, in thai buildings are a condition precedent to growth. Job growth does not occur in
modern service economies without buildings to house new workers. Unlike other factors that are
responsible for growth, buildings play the additional unique role Ihat growth cannot occur without
them Conversely, it is well established that the inability to construct new workplace buildings will
constrain or even halt job growth.
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Addressing the Housing Needs of a New Population vs. the Existing Population
The City of Cupertino's Consolidated Plan 2003-2005 and other reports have clearly documented
that the housing needs of the existing lower income households are not being met. This existing
housing shortage, especially at the lowest income levels, is manifested In numerous ways such
as payment of far more than the percentage of income for housing set forth in federal and state
guidelines, overcrowding and other factors which are extensively documented by the Census and
City reports
This nexus study does not address the housing needs of the existing population. Rather, the
sludy focuses exclusively on documenting and quantifying the housing needs of new households
where an employee works in a new workplace building, such as an office or industrial building
This analysis finds that new housing affordable to lower and middle income households is not
being added to the supply in sufficient quantity to meet the needs of new employee households
associated with new buildings. If this were not the case and significant numbers of units were
being added to the supply to accommodate all income groups, or if residential units in Cupertino
were experiencing significant vacancy levels, particularly in units affordable to lower and middle
income households, then the need for new units would be questionable.
Substitution Factor
Any given new building in Cupertino may be occupied partly, or even perhaps totally, by
employees relocating from elsewhere in Cupertino or the Bay Area. Buildings are often leased
entirely to firms relocating from other buildings in the same jurisdiction. However, when a firm
relocates to a new building from elsewhere in the region, there is a space in an existing building
that is vacaled and released to another firm That building in turn may be filled by some
combination of newcomers to the area and existing residents Somewhere in the chain there are
jobs new to the region The net effect is that new buildings bring in new employees, although not
necessarily inside of the new buildings themselves
Indirect Employment and Multipliers
The Micro Economic Nexus Analysis, which examines prototype buildings, addresses direct
"inside" employment only. In the case of the office building, for example, direct employmenl
covers the various managerial, professional and clerical people that work in the building; it does
not include the janitorial workers, the window washers, the security guards, the delivery services,
the landscape maintenance workers, and the many others that are associated with the normal
functioning of an office building These indirect employees tend to be the many service workers
at the lower end of the pay scale. 1'10 good data sources were located that deal with indire~t
employees in various type buildings. If one thinks about who the lowest income workers are, one
can observe that lower income workers include a whole host of service workers who do not work
in any type of building as regular employees but whose jobs are associated with such structures.
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In other words, any analysis that ties lower income housing to the number of workers inside
buildings will continue to understate the demand. Thus, confining the analysis to the direct
employees does not address all the lower and middle income workers associated with each land
use (or type of building) and significantly understates the impacts.
If the concept of indirect employees were introduced into the analysis, one could take the analysis
further and deal with the question of multipliers. Multipliers refer to lhe concept that the income
generated by certain types of jobs recycles through the economy resulting in additional jobs. For
purposes of producing a conservative nexus amount, this study omits such multiplier effects.
It should also be noted that the analysis excludes all consideration of construction employment.
Special Adjustments in Cupertino Analysis
There are several special adjustments in the analysis specific to Cupertino and the time at which
the analysis has been prepared.
Changes in Labor Force Participation
In the 1960's through the 1980's there were significant increases in labor force participation,
primarily among women. As a result, a portion of new workers were reentering the labor force
and already had local housing, thus reducing demand for housing associated with job growth. In
the 1990's, however, labor force participation rates have slowed to the point lhey are nearly
stabilized. As such, an adjustment for increase in labor force participation is no longer warranted
in a nexus analysis.
Discount for Changing Industries
It is general practice in the preparation of a nexus analysis to examine the major sectors of the
local economy and determine if there are long term lrends in employment suggesting either
decline or restructuring. In the case of long-term decline of one or more industries or sectors,
it is appropriale to recognize that all new jobs may not be net new jobs_ In some regions there
may be changes occurring due to, for example, the decline in federal aerospace and defense
spending. In San Francisco, by way of another example, there has been major long-term
economic decline in the industrial land use activily sectors, as evidenced by the decline of the
Port and its related activities During the 1980's in lhat city, for every job gained in an office
building, there was 0.6 of a job lost in the industrial sector. Short-term upheavals such as the
closing of a military base or single large manufacturing plant may also warrant an adjustment
in the analysis.
In Cupertino, the analysis of employment growth during the 1990's decade found employment
increases in most industries, with the exception of a slight decline in manufacturing
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An adjustment to recognize declining industries is important in a nexus analysis because new
jobs added in office, retail/entertainment and other type spaces are, to some extent,
replacement of jobs lost in other categories If an underlying premise of a jobs housing nexus
is labor force mobility - i.e., workers are attracted to areas where jobs are made available, in
part through the delivery of work spaces, then it must also be recognized that loss of jobs
means workers either leave the area or become employed in another activity. A discount
adjustment is used to recognize these changes within the local economy.
Other Cupertino Affordable Housing Programs
The City of Cupertino is committed to creating new opportunities for affordable housing as well
as preserving the existing affordable housing stock. The City was one of the first to implement
a jobs-housing nexus fee, and also implemented a Below Market Rate Housing Program
(BMR program). The City's Consolidated Plan 2003-2005 demonstrates the City's
commitment to housing. The housing nexus fee is but one of many programs to assist lower
and middle income households and increase the supply of affordable housing in the area
A summary of the City's existing housing initiatives and programs are listed below.
Consolidated Plan
The Consolidated Plan is a comprehensive planning document that identifies the City's overall
needs for affordable housing as well as presents strategies to meet those needs. The City just
recently took responsibility for the Consolidated Plan from Santa Clara County, as the City
now qualifies as a COBG entitlement jurisdiction. Cupertino's goals, as articulaled in the
Consolidated Plan, include expanding the supply of housing, addressing the housing needs of
a diverse population, enhancing residential neighborhoods, and improving services for special
needs households. The Plan identifies the housing nexus fee as a key component to
addressing the housing needs of the diversity of income levels in Cupertino.
Fair Housing Study
The jurisdictions that make up Santa Clara County commissioned a recently completed study
examining the delivery of fair housing services in the County The report, Fair Housing in
Santa Clara County: An Assessment of Cûndítions and prograrns, 2000-2002, indicates that
fair housing conditions are generally good throughout the County. A primary problem
identified in the sludy is the lack of affordable housing; the housing nexus fee works to
improve the affordability of housing in Cupertino
Below Market Rate Housing Program
The City of Cupertino's BMR program requires that 15% of all housing units constructed be set
aside for moderate or low income families. Projects with fewer than 10 units are allowed to
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pay an in-lieu fee instead. If the developer is constructing "for-sale" housing, half of the BMR
units must serve median income families (80%-100% of area median income) and haif must
serve moderate income (100%-120% of median) households. If the units being constructed
are rental units, then 40% of the BMR units must be affordable to low income households
(50%-80% of median) and 60% to very-low income households «50% of median). The units
must remain affordable for 99 years'>
The BMR program has resulted in 300 units of affordable housing since its inception.
Mortgage Credit Certificate (MCC) Program
The City of Cupertino participates in the Mortgage Credit Certificate Program, which provides
a tax credit to first-time homebuyers for the purchase of single-family homes, townhomes and
condominiums in Santa Clara County.
Funding
The City also takes advantage of funding programs available to municipal jurisdictions, such
as CDBG and Housing Set-Aside funds, to assist in the financing of affordable housing units.
These City controlled funds can be used to leverage additional monies in partnership with non-
profit housing providers.
As this summary shows, the housing nexus fee is merely one piece of a larger strategy that
works to pull resources together in a coordinated effort in order to increase the supply of
affordable housing
Qualifiers to the Analysis
The analysis presented in this report has been based on readily available information. The
1990 and 2000 U.S. Census were frequently utilized. The California Employment
Development Department and the U.S. Department of Labor were principal sources. Local
data was taken into account whenever available.
It should be recognized that any analysis of this nature, no matter how in-depth, conlains a
great many numbers and judgments relating to them. It will always be possible to take issue
with a specific number. We do not believe, however, that adjusting one, or several, individual
numbers would fundamentally alter the conclusions of the analysis.
2 Note that the Cily is currently updating ils BMR program and these requirements may change
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SECTION II: CITY-WIDE JOBS HOUSING ANALYSIS
This section provides an overview of the relationships that underlie the jobs housing linkage in
Cupertino. In particular, the history of building construction, employment growth, and
affordable housing production are reviewed. The overall relationship between construction
and employment growth is analyzed to establish the nexus. The history of housing production,
particularly affordable housing production, compared with the demand generated by new
workers is also examined,
In addition to historical data, this section contains a projection of jobs and dwelling units, as
indicated by local and statewide planning agencies, such as the Association of Bay Area
Governments (ABAG) It must be emphasized, however, that the nexus relationships as
established in this analysis are not contingent upon a specific projected level of employment
growth being realized, The relationships linking construction, employment, and affordable
housing are critical to the nexus, but the specific projected levels of growth are not. If
employment growth occurs more slowly than projected, conslruction and housing demand will
also be less than projected,
In addition, we emphasize that the quantification of the maximum nexus fee does not rely on
the city-wide analysis; instead, it merely demonstrates the relationship that justifies levying a
jobs-housing nexus fee. In the micro-economic analysis, we quantify linkages on a per square
foot basis and they are not based on projections from ABAG or any other source (Section III),
Employment History and Trends
Employment data is collected primarily by the California Employment Development
Department (EDO) and also by the U.S, Department of Commerce. ABAG utilizes both these
sources to develop total figures for the decade and mid decade and prepares projections for
approximately 20 years in the future. ABAG is the most widely used data source by local
planning agencies in the Bay Area.
According to ABAG, employment growth in Cupertino during the 1990's decade registered a
net increase of 6,070 total jobs. While job growth was slow between 1990 and 1995 with just
170 new jobs, a total of 5,900 jobs were gained between 1995 and 2000 This is in part due to
the recovery from the economic recession of the early 1990's as well as the high-tech boom in
Silicon Valley and the San Francisco Bay Area. Between 1990 and 2000, ABAG's estimates
for jobs in Cupertino are:
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Year
Total Jobs 1
1990
1995
2000
39,260
39,430
45,330
1. City of Cuperlino Sphere of Influence (See Table 1!~1 footnote.)
In addition to total job growth, it is also necessary to examine job growth by industry, as total
employment figures obscure the dynamics and shifts that have occurred within individual
sectors of the Cupertino economy.
ABAG data for 1990 and 2000 was used to examine employment change across industries in
Cupertino. KMA examined the following specific industries at a citywide level:
· Manufacturing;
· Retail;
· Service; and
· Other jobs (construction, transportation, communications, utilities; finance, insurance,
real estate; and government).
Employees in these industries are occupants of the building types subject 10 this analysis -
office/high-tech, retail/entertainment, and hotel. Retail/entertainment buildings basically add
jobs in the retail category; holels in the service category, and as described below, office high-
tech jobs in the manufacturing, service, and "other" categories.
According to ABAG, jobs in the service industry grew by 61 % during the 1990's decade.
Following the service industry, retail and "other" jobs regislered a growth of 14% and 0.3%,
respectively. During the same period, manufacturing jobs decreased by 1%. This information
is presented in Table 11-1 found at the end of this section.
Characteristics of Cupertino Employees and Their Households
This section examines several key characteristics of Cupertino employees and their
households, particulariy those that are relevant to the jobs-affordable housing linkage. Thase
characteristics include:
· The number of workers per worker household on average;
· Income characteristics: and
· Commute patterns
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Each of these factors impacts how many new workers in Cupertino buildings will seek housing
within the City. These characteristics become key inputs in the micro economic analysis of the
linkage between workspace buildings and affordable housing demand.
Workers per Worker Household
The workers per household characteristic provides the link between the number of employees
and the number of households associated with the employees, recognizing that most
households today have more than one worker. The number of workers per household in a
given geographic area is a function of household size, labor force participation rate and
employment availability.
Historically, Ihe national labor force participation rate rose steadily for three decades since the
early 1960's as more and more women entered the labor force. The rate appears to have
leveled off in the 1990's. Nexus studies prepared in the late 1980's and early 1990's often
made an adjustment for increases in labor force participation to recognize lhat some
employment growth already was living locally and had housing. As noted earlier, we no longer
malΠsuch an adjustment.
For lhe nexus analysis, the characterislic of most direct interest is the number of workers per
worker household. Worker households are defined as those households with a wage or salary
income, as reported in the 2000 U.S. Census. In other words, worker households are
distinguished from total households in that the universe of worker households does not include
elderly or other households in which members are retired or do not work for other reasons.
Full-time student households and unemployed households on public assistance are also
excluded from worker households.
According to the 2000 US Census, the number of workers per worker household in the City of
Cupertino was157. In Santa Clara County, the average was 1.72 workers per worker
household. Compared to the 1990 U.S. Census, the workers per worker household ratio
declined in both the city and the county. This trend probably reflects smaller average
household size, particularly more single person households. Single person households are
both a result of demographic trends and the strong economy, which enabled more single
people to live alone. In this analysis, we use the county-wide figure to reflect the fact that most
of Cupertino's workforce commutes from outside of the city and therefore are more likely to
reflect the demographics of the County as a whole.
Wages and Salaries of Cupertino Workers and Household Income
The average wage or salary of Cupertino workers and the income of households formed by
the 1.72 workers determines the household's ability to afford housing. The California
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Employment Development Department reports information on average wages and salaries
paid to Santa Clara County workers, by occupalion type.
A summary of the occupations associated with each building was developed from the 2002
National Industry-Specific Occupational Employment Estimates, produced by the Bureau of
Labor Statistics, which cross references occupations by industry. Appendix Tables 3,5, and 7
presents summaries for each building type.
The following is a summary table of average salary levels for major occupation groups by
building type. A detailed summary of wages and salaries for occupations in each building type
is provided in Appendix Tables 4, 6, and 8.
Compensation by Occupation for Building Type
(Santa Clara County)
Building
I'Li?Q
Maior Occupation Groups
% of
Employment
Average
Annual Income
Office
Office and Administrative Support
Business and Financial Operations
Management Occupations
Computer and Mathematical Science Occupations
35%
10%
9%
8%
$37,800
$73,000
$115,700
$80,700
RetaillEntertain men t/Resta u rant
Sales
Food Preparation and Serving
Office and Administrative Support
34%
30%
11%
$28,700
$19,400
$32,500
Hotel
Building and Grounds (incl. Housekeeping)
Food Preparation and Serving
Office and Adminislrative Support
30%
29%
'17%
$20,600
$19,500
$28,900
Sources: California Employment Development Department. 2002 Occupational Employment Statistics Survey, Wages 3rt! Qumter
2003, Santa Clara County.
Household Income
When workers in these occupations form households, their income, either alone or in
combination with other workers, produces the household income. In addition, of course,there
may be children and/or other household members who are not employed. According to the
California Department of Housing and Community Development (HCD), the annual median
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income of a four-person household in Santa Clara County for the year 2004 is $105,500. This
analysis focuses on four classifications of household income:
· Very Low-Income -less than 50% of Median Income
· Low-Income - 50%-80% of Median Income
· Moderate-Income - 80%-120% of Median Income
· "Workforce" - 120%-150% of Median Income
The income classifications for two, three and four person households in Santa Clara County
for 2004 appear in the table below. More complete income data is found in Appendix 1.
Two Person HH
2004
50% of Median Income
80% of Median Income
Median Income
120% of Median Income
150% of Median Income
$42,450
$67,900
$84,400
$101.300
$126.600
Three Person HH
50% of Median Income
80% of Median Income
Median Income
120% of Median Income
150% of Median Income
$47,750
$76,400
$94,950
$113,950
$142,425
Four Person HH
50% of Median Income
80% of Median Income
Median Income
120% of Median Income
150% of Median Income
$53,050
$84,900
$105,500
$126,600
$158,250
Source; Cafífornia Department of Housing and Communily Development, using data from the U_ S, Department of Housing and
Urban Development.
The above income levels are the levels set and utilized by HUD and the State for most
housing programs.
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Commute Relationships and Trends
This section provides a brief summary of commute trends and relationships. The major
relationship of interest in a nexus analysis is the share of Cupertino jobs held by Cupertino
residenls. The major source of information regarding commute relationships is the U.S.
Census.
Accordingly, in 2000 there were 4.476 Cupertino residents who aiso worked in Cupertino. For
the same year, ABAG reports there were a total of 45,330 jobs. From this, we estimate that
Cupertino residents held 99% of the total jobs in Cupertino.
It is important to recognize that the above relationship does not necessarily represent the
demand for housing in Cupertino. Taken to the extreme, one can hypothesize a city with very
few workers living in it because there is very little housing (for example, Emeryville pre-1990)
or because the housing is very expensive.
It should be noted that even if housing were available and affordable, it is unlikely that 100% of
people would live and work in the same city. Secondly, the choice of where one lives depends
on many additional factors (schools, style of housing, types of amenities, local taxes, and
services, etc.) as well as where one works. The commute relationship as utilized in a nexus
analysis (Section III) is largely a policy choice influenced by past trends and policy objectives.
The 9.9% finding is already a reflection of housing market conditions and affordability
constraints. With no intervention or increase in the supply of housing affordable to workers,
the percentage may decrease further. Some cities view the percentage share as a policy
target that reflects lhe share of new demand that the city would like to accommodate locally.
Absent a directive, the existing commute relationship is utilized in the analysis.
Housing
Al the beginning of this section, we examined employment and determined from ABAG
historical employment data that there were 6,070 jobs gained over lhe decade ending in 2000.
This section provides a brief summary of selected characteristics of the housing market that
affecl the ability of new worker families to find housing in Cupertino This section also
examines growth in housing units in Cupertino to meet the demand of new worker households
Housing Production
According to the 2000 Census, Cupertino had 18,682 housing units, a 16% increase in
dwelling units from the 1990 Census. According to the Cupertino Housing Element, 2,014 new
units were built during the 1990s decade. According to building permit data collected by the
Construction Industry Research Board, annual building activity greatly varied over this period.
The high year was 1996 when 592 new units were permitted and the low year was 1993 when
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only 15 new units were permitted On average, 195 units were permitted annually during this
period. For more information on residenlialunit construction in Cupertino during the 1990
decade see Table 11-2
As noted earlier, during this same time frame, ABAG estimates that 6,070 new jobs were
created in Cupertino. With approximately 1.72 workers per worker household, 6,070 new jobs
can be equaled to 3,530 households demanding housing somewhere within commuting
distance to a job in Cupertino. Since Cupertino added 2,074 net new units over the period we
can say that of the total new units in demand, the city accommodated approximately 59% of
them. Other ways of expressing the relationship are indicated below and in Table 11-3.
1990-1999
Increase in Jobs (from Table 11-1)
Increase in Worker Households (New Units in Demand) @ 1.72
Residential Construction in Cupertino
Relationship of New Housing Units to New Worker Households
Shortfall for 1: 1 ratio
6,070
3,529
2,074 units
0.59:1
(1,455 units)
In an evaluation such as the one above, it is important to note that housing demand generated
by new employment is not equivalent to total housing demand. Each communily experiences
demand for its housing by people who work in other jurisdictions as well. Finally, there is a
share of total demand attributable to non-working households. Every time a household leaves
the labor market, such as upon retirement, if that household remains in the same housing unit.
that unit is removed from the pool of units for working households, thus resulting in demand for
a new unit even though there is no employment growth.
Housing Production by Affordability Level
Based on data compiled by the City, there were 300 affordable units produced through the
city's Below Market Rate housing program. Assuming these units were built since 1990, this
represents approximately 11 % of new dwelling units permitted since 1990, with the remaining
new dwelling units available at market rate prices See Table 11-2 for more information on
housing production by affordabilily level
Affordability of Housing Supply
Despite the recent downturn in the economy, the demand for housing opportunities throughout
the State continues to be strong and sales prices continue to rise while apartment rents have
been flat or declining in recent years, as lower mortgage rates have enabled many renters to
purchase homes Like other Bay Area cities, Cupertino underwent significant economic
growth in the late 1990's fueled by population and job growth throughout the entire region.
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The City's Housing Element shows that this growth has resulted in increased housing prices
with many lower income households paying more than 30% of their income on housing.
Silicon Valley and the greater Bay Area prevail in national surveys as among the most
expensive housing markets in the country. According to the Real Estate Report, a service that
tracks home sales, the median home price in Cupertino in 2003 and 2004 hovered around
$800,000.3
In terms of rental rates, prices have fallen since a peak in 2000, although they remain high. In
2003, rents for Cupertino apartments averaged about $1,500 a month, down from a high of
$2,t60 in 20004 The longer-term average rent, since 1996, is $1,700
In summary, market rate housing is out of reach for many households and housing production
over the last decade has not kept up with demand. This shortage in supply coupled with huge
growth of the high-technology fields in the region has consequently resulted in dramatic
increased housing costs for both for-sale and rental units While the downturn in the economy
has taken some pressure off of the rental market, rents are still out of reach for many
households The housing market continues to thrive despite the downturn, with strong growth
in prices. While there is speculation that an increase in interest rates may cool the for-sale
housing market, current prices are so expensive that any drop in the market is unlikely to have
a significant effect on middle-income households' ability to purchase a home
This review of housing conditions and production only serves to briefly summarize the situation
and to demonstrate that housing costs are increasing at a rapid pace and that production has
not kept pace with demand, particularly at the lower income levels. Other materials prepared
by the City and other organizations further documenl housing conditions in Cupertino and
Silicon Valley.
Future Projections
The jobs housing nexus relationship in support of requiring new workspaces to contribute to
new housing is based on the assumption that current trends and relationships in Cupertino will
continue. In this context, projections of employment and households are provided in this
section The methodology for calculating the impact does not, however, rely on any specific
set of projections for employment or housing growth (See Section 111.)
J 12 month moving average for Cupertino median sales price, ,January 2003 - May 2004 from the Real Estate Report Available at
hllp:/Jrereport.comlscc
.4 RealFacls, February 2004.
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Employment Projections
ABAG provides a projection series of employment for the entire Bay Area region. The most
recenl available is Projections 2003 Employment projections for Cupertino are estimated as
follows:
Year
Total Jobs
2000
2010
Total Increase
45,330
51.120
5,790
The ABAG projection for this time period envisions job growth at a slower pace than occurred
during the 1990s (13% growth over the current decade versus 15% growth over the previous
decade)
Jobs and Housing Projections Relationship
The ABAG projections for new jobs can be translaled into new worker households using the
estimate of workers per worker household (1.72) discussed previously. Dividing 5,790 by
1.72, we estimate that between 2000 and 2010, the new jobs in Cupertino will generate
demand for approximately 3,350 new housing units (see Table 11-4).
The ABAG projections for new households in Cupertino estimate that between 2000 and 2010,
1,500 new households will locate in Cupertino presumably in new housing units. If these
projections hold true, Cupertino will have produced just 0.45 housing unils for each new
worker household. There is a shortfall of over 1,800 housing units.
Again, these figures are without consideration for affordability. The production of affordable
units relative to demand is an even greater problem. Despite the efforts of the City, there is
little to suggest that production of affordable units in the future will in any way be able to keep
pace with demand. The affordability structure of demand associated with job growth is the
focus of Section III of this report.
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TABLE 11-1
,OB GROWTH, 1990 - 2000
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
Total Jobs
City of Cupertino Sphere of Influence
Job
1990' 2000' Growth % Chanç¡e
Agriculture & Mining 290 270 (20) -7%
Manufacturing Jobs' 18,920 18,680 (240) -1%
Retail Jobs 7,770 8,820 1,050 14%
Service Jobs 8.610 13,880 5,270 61%
Other Jobs' 3,670 3,680 10 0.3%
Total/Average 39,260 45,330 6,070 15%
,
ABAG Employment Estimates for 1990, (Projections 2002)
ABAG Employment Estimates for 2000. (Projeclions 2003)
Includes high technology jobs
!ncludes construction, transportation, communications, utilities, office (finance. insurance, real estate. and
government). and government
Note: The Cupertino Sphere of Influence (SOl) includes the annexed Rancho Riconada area In 2000, lIlere were 420 jobs
located within the SOl but outside of the jurisdictional boundary. ABAG Projeclions 2003 does not include the level of detail
necessary to compile the data in lhis lable by jurisdictional boundary
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TABLE 11·2
RESIDENTIAL PERMITTING ACTIVITY AND AFFORDABLE UNIT PRODUCTION'
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
NET INCREASE IN HOUSING UNITS 1990-2003'
Year Total
1990 384
1991 106
1992 19
1993 15
1994 60
1995 94
1996 592
1997 355
1998 283
1999 139
2000 165
2001 84
2002 375
2003 43
Total 2,724
Annual Avg 195
Affordable Units J
301
TOTAL UNITS BY AFFORDABILlTY LEVEL
Affordability Level1 Total Affordable
Units % Share
Low and Ver¡ Low: < 80% Median Income" 256 85%
Moderale: 80 - 120% Median Income' 45 15%
Total Affordable Units 301 100%
1 Affordable units do nol include markel rate rentals which arc mosl1y affordable 10 the moderate category (80% \0 120%)
2 Source: Construction Industry Research Board Permitted housing units
J Source: City of Cupertino
~ Source: Cily of Cupenino
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TABLE 11-3
HISTORICAL RELATIONSHIP: EMPLOYMENT GROWTH, RESIDENTIAL UNIT DEMAND
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
ABAG HISTORICAL DATA
Sphere of Influence
Jobs
Job Growth - Per ABAG '
1990
2000
39,260
45.330
Increase
6,070
Worker Households @ 1.72 2
3.529
Growth in Households/Housing Units, Per Housing Element J
New Units 1990 - 2000
2,074
Relationship of Housing Units to New Worker Household,
Deficit for 1: 1 Ratio
0.59 :1
(1,455)
See Tab!e !1·2 ABAG Projeclions 2002 and Projections 2003
Workers per worker household from US Census Data for Santa Clara County
The Cupertino General Plan Housing Element
Note: The Cupertino Sphere or Innuence (SOl) includes the annexed Rancho Riconada area In 1990. there were 50 jobs located within
the SOl but outside of tile jurisdictional boundary In 2000, there were 420 jobs located within the SOl bul outside or [he jurisdictional
boundary
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TABLE 11-4
PROJECTION: EMPLOYMENT GROWTH, RESIDENTIAL UNIT DEMAND
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
ABAG PROJECTIONS
Sphere of Influence
Projected Job Growth· Per ABAG 1
2000
2010
45.330
51.120
Increase
5.790
Worker Households @ 1 72 '
3,366
Projected Households/Housing Units ~ Per ABAG 1
2000
2010
18,990
20.490
Increase
1.500
Relationship Housing Units to New Worker Households
Detldl for 1:1 Ratio
0.45 :1
(1,866)
ABAG Projections 2003
Workers per worKer household from US Census Data for Santa Clara Counly
Nole: The Cupertino Sphere of Influence (501) inc1udes ¡he annexed Rancl1Q Riçonada area In 2000, there were 420 Jobs
located within the SOl but outside of the jurisdictional boundary ]n 2010. ABAG projects Ihere will be 660 jobs in the SOl but
outside of the jurisdictional boundary
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SECTION III - MICRO ECONOMIC JOBS HOUSING ANALYSIS
This section presents a summary of the analysis of the linkage between three types of
workplace buildings and the estimated number of households in the income categories that
will, on average, be employed within those buildings. This section should not be read or
reproduced without the narrative discussions presented in the previous sections.
Analysis Approach and Framework
The micro analysis estabiishes the jobs housing linkages for individual building types or land
use activities using the relationships presented and discussed in Section II.
The analysis approach is to examine the employment associated with the development of
100,000 square foot building modules. Then. through a series of linkage steps, the number of
employees Is converted to households and housing units by affordability level. The findings
are expressed in terms of numbers of households related to building area. In the final step, we
convert the numbers of households back to the per square foot level.
The building types or land use activities addressed in the analysis are:
· Office/h ig h tech
· Hotel including other lodging lypes that serve the visitor industry
· Retail/entertainment type uses, which include some of the services that locate in retail
type space.
Section II presented information on the income categories addressed in this analysis. For a
four person household, these income levels are:
· Very Low Income - Up to 50% of Area Median Income: Up to $53,050
· Low Income - 50%-80% of AMI: $53,051-$84,900
· Moderate Income - 80%-120% of AMI: $84,901-$126,600
· Workforce Income -120%-150% of AMI: $126,601-$158,250
The analysis is conducted using a computerized model that KMA has developed for
application in many jurisdictions for which the firm has conducted similar analyses The model
inputs are all local data to the extent possible and are fully documented.
Analysis Steps
Tables 111-1 through 111-4 at the end of this section summarize the nexus analysis steps for the
three building types. Following is a description of each step of the analysis:
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Step 1 - Estimate of Tota/ New Emp/oyees
The first step in Table 111-1 identifies the total number of direct employees who will work at or in
the building type being analyzed,
Employment density factors are used to make the conversion. The density factors used in this
analysis are:
· Office _ 300 square feet per employee Average office density is usually found in the
range 200 to 300 square feet per employee depending on the character of the office
activity (corporate headquarters vs back office to illustrate extremes), The City of
Cupertino has assumed 300 square feet per employee in other analyses based on
informal surveys of office buildings in the City.
· Hotel and other lodging - One employee per room and 500 square feet per hotel room,
or 500 square feet per employee, This rate covers a cross section of hotel types from
lower service hotels where rooms may be smaller than 500 sq. ft. to higher service
convention hotels where average room size (inclusive of the meeting space, etc.) is
larger but the number of employees per room is higher.
· Retail/entertainment uses - 350 square feet per employee. This category covers a
broad range of experience from high service restaurants where densities are far
grealer to some retail uses such as furniture stores where densities are far lower. Big
box retailers also fall within the range, The density range is also applicable to most
entertainment uses such as cinema, video rentals, live music venues, etc,
All density factors are averages and individual uses can be expected to be fairly divergent
from the average from time to time. (An ordinance provision usually addresses the possibility
of a building that is so divergent from the average so as to need special treatment.)
For ease of analysis and understanding, KMA conducted the analysis on protolype buildings at
100,000 square feet. We have used this size building in order to count jobs and housing units
in whole numbers that can be readily communicated and understood. At the conclusion of the
analysis, the findings are divided by building size to express the linkages per square foot,
which are very small fractions of housing units. Based on the density factors outlined above,
the number of employees in our hypothetical 100,000 square foot building is as follows: the
office will house 333 employees. the hotel 200 employees, and the retail/entertainment 286
employees.
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Step 2 - Adjustment for Changing Industries
This step is an adjustment to take into account any declines, changes and shifts within all
sectors of the local economy and to recognize that new space is not always 1.0.0% equivalent
to net new employees. As discussed in Section II, Cupertino experienced expanding
employment in the 199.o's across all industry sectors except manufacluring.5 For this analysis,
a 5% adjustment is utilized to recognize the possibility of further declines and other internal
economic adjustments. An ordinance provision will address demolition of major buildings as
an offset to any impacts of the proposed construction.
In the 1.0.0,.0.00 square foot office building, the 5% adjustment reduces the 333 employees to
317 net new employees.
Step 3 - Adjustment from Employees to Employee Households
This step (Table 111-1) converts the number of employees to the number of employee households
that will work at or in the building type being analyzed. This step recognizes that there is, on
average, more than one worker per household, and thus the number of housing units in demand
for new workers must be reduced As noted in Section II, the workers per worker household ratio
has eliminated from the equation all non-working households, such as retired persons, sludents.
and those on public assistance. The Santa Clara County average of 1.72 workers per worker
households is used in the analysis.
For the office building, the 317 net new employees translate to 184 net new employee
households.
Step 4 - Occupational Distribution of Employees
The occupational breakdown of employees is the first step to arriving at income level. Using
the 2.0.02 National Industry-Specific Occupational Estimates, a cross-matrix of "industries" and
occupations produced by the Bureau of Labor Statistics (BLS), we are able to estimate the
occupational composition of employees in the three types of buildings. We first select a set of
industries for each building type; the set is designed to reflect the mix of activities expected to
be accommodated in new office, hotel, or retail buildings in Cupertino and are listed in
Appendix 2. Using this mix of industries, the BLS data allows us to estimate the mix of
occupations in each of the building types. The occupations that reflect the expected mix of
industries are presented in Appendix Tables 3. 5 and 7 and summarized below.
5 There was also a decline in agricultural and mining jobs, although they are a very small portion of Cupertino jobs Source:
ABAG
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· For office buildings, we selected a broad set of high tech and professional service
activities including software and telecommunications, business and financial
operations, insurance, architecture and engineering, computer and mathematical,
legal, management, and healthcare. Office and administrative support occupations are
the most common occupations for lhese industries, at 35% of all office related
employment.
· Hotels employ workers primarily from three main occupation categories: building and
grounds (including maid service), food preparation and serving related, and office and
administrative support. Together, these occupations account for 76% of all hotel
related employment
· For retail establishment, we selected a broad set of industries, including car
dealerships, apparel and home furnishings stores, grocery stores, restaurants,
personal care services, dry cleaners, etc. Retail employment is dominated by three
main occupation groups: sales, food preparation and serving related, and office and
administrative support Together, these occupations account for 75% of all retail
related employment
The numbers in Step #4 (Table 111-1) indicate both the percenlage of total employee households
and the number of employee households in our hypothetical 1 00,000 square foot buildings.
Step 5 _ Estimates of Employee Households Meeting the Lower Income Definitions
In this step, we translate occupation to income based on recent Santa Clara County wage and
salary information for the occupations associated with each building type. The wage and salary
information indicated in Appendix Tables 4, 6 and 8 provide the income inputs to the model.
Service workers in office buildings, for example, were assigned different average income levels
than service workers in hotels due to differing compositions of workers. This step in the analysis
calculates the number of employee households who fall into each income' category for each size
household.
Individual employee income data was used to calculate the number of households that fall into
these incûme categories by assuming that multiple earner households are, on average,
formed of individuals with similar incomes. Employee households not falling into one of the
major occupation categories per Appendix Tables 4,6, and 8 were assumed to have the same
income distribution as the major occupation categories.
See Appendix B for more information on Steps 5, 6, and 7.
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Step 6 - Estimate of Household Size Distribution
In this step, household size distribution is input into the model In order to estimate the income and
household size combinations that meet the income definitions established by HlJD, as used by
the State (HCD) and the City (presented in Section II). The household size distribution utilized in
the analysis is that of Santa Clara County since the workers are more representative of the larger
universe (the Counly) than the City of Cupertino
Step 7 _ Estimate of Households that meet HUD Size and Income Criteria
For this step we had to build a matrix of household size and income to establish probability
factors for the two criteria in combination, For each occupational group a probability factor was
calculated for each of HUD's income and household size levels. This step is performed for each
occupational category and multiplied by the number of households
Table 1I1-1A shows the result after completing Steps 5, 6, and 7. The calculated numbers of
households that meet HUD size and income criteria shown in Table 11I-1A are for the Very Low
Income, or under 50% of Area Median Income, category. The methodology is repeated for each
income tier (See Table 111-2).
Summary by Income Level
Table 111-2 indicates the results of the analysis for the other three income categories for the three
prolotypical 100,000 square foot buildings. The upper half of the table is the number of
households in each affordability category and the tolal number up to 150% of median,
The table below summarizes the percentage of total new worker households that fall into each
income category. As indicated, nearly all retail and hotel worker households are below the 150%
of median income level. Office worker households have the highest income with only 13% of
worker households below 50% of median and 22% earning greater than 150% of median,
Percent of Worker Households by Income Category
Under 50% 50% to 80% 80% to 120% 120% to 150% :rotal
Office
Hotel
Retail
12,5%
73.6%
64.1%
26,7%
16,7%
20.4%
27,3%
6,1%
7.5%
11.7%
0,8%
1.4%
78%
97%
93%
Adjustment for Commute Relationship
Table 111-3 indicates the results of the analysis both before and after an adjustment for
commute relationship, As discussed in Section II, residents of Cupertino currently hold 9.9%
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of the jobs in Cupertino If the existing commute relationship were to hold for new employee
households, 9_9% would be expected to reside in Cupertino. The estimales of households for
each income category in a prototypical 1 00,000 square foot building are adjusted downwards
by this commute factor_
Summary by Square Foot Building Area
The analysis thus far has worked with prototypical buildings of 100,000 square feel In this step,
the conclusions are translated to the per-square-foot level and expressed as coefficients. These
coefficients state the portion of a household, or housing unit, by affordability level with which each
square foot of building area is associated (See Table 111-4.)
This is the summary of the housing nexus analysis, or the linkage from buildings to employees to
housing demand by income level We believe that it is a conservative approximation (understates
the low end) of the households by income/affordability level associated with these building types_
See end of Section IV for a list of conservative assumptions_
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TABLE 111·1
NET NEW HOUSEHOLDS ANO OCCUPATION DISTRIBUTION BY BUILDING TYPE
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO, CA
DRAFT
Prolotypfcal100,OOO Sq,FL Buildings
RETAIL I
OFFICE HOTEL ENTRTNMNT
Step 1· Estimate of Employees per 100,000 Sq F!
Employee Density Fador (SF per employee) 300 500 350
Number of Employees 333 200 286
Slep 2 - Adjustment rOf Changing Industries 317 190 271
Replacement Factor (5%)
Step 3 - Adjustment for Number of Households (172) 184 111 158
SLep 4 - Occupation Distribution'
Management Occupations 9 1% 50% 35%
Business and Financial Opera lions 104% 12% 07%
Com puler and Mathematical 82% 01% 03%
ArchHeclure and Engineering 45% 00% 01%
Lire. Physical. and Socia! Science 17% 00% 00%
Community and Social ServIces 03% 00% 00%
Lega! 32% 00% 00%
Educalion. Tr¡¡Îning. and Library 02% 00% 00%
Arts, Design. Entertainment. Sports. and Media 18% 04% 06%
Heauhcare Practitioners and Technical 73% 0.0% 11%
Heallhcare Support 37% 02% 03%
Prolective Service 03% 20% 04%
Food Preparalion and SelVing Related 03% 291%. 303%
Building and Grounds Cleaning and Maint 15% 302% 09%
Personal Care and Service 04% 41% 20%
Sales and Related 64% 24% 335%
Office and Administrative Support 350% 172% 109%
Farming. Fishing. and Forss!f'j 00% 00% 01%
Construction and Exlraction 05% 02% 03%
Inslallation. Maintenance. and Repair 30% 40% 52%
Production 11% 23% 30%
Transporta!ion and Maleriat Moving 0.7% 1.6% 6.9%
Totals 100.0% 100.0% 100.0%
Management Occupations 168 55 57
Business and Financial Operations 192 13 11
Computer and Mathematical 150 02 04
Architecture and Engineering 83 00 01
life. Physical. and Social Science 31 00 00
Community and Sodal Services 06 00 00
Legal 59 00 00
Education. Training. and Library 05 00 01
Aris, DesIgn. EnterialnmenL Sports, and Med!a 33 04 09
HeaHl1care Pradilioner$ and Tf:chnical 135 00 17
HeaUhcare Support 69 02 04
Protedive Service 06 23 06
Food Preparation and Serving Related 06 32 1 478
Building and Grounds Cleaning and Maint 28 333 14
Persona! Care {)nd Service 08 45 32
Sales and Related 11.7 27 529
O!~ce and Administrative Suppor1 645 190 171
Farming. Fishing_ and Forestry o 1 00 01
Conslruclion and Extraction 10 02 04'
Installation. Maintenance, and Repair 55 44 82
ProducHon 20 25 47
Transportalion and Materia! Moving .Li 1J! ..1JU!
Totals 184 111 156
·1 employeo pßrroom@500sqll/room
1See Aooand!x Tables 2 4 and 6 for addiliooal informalion fronl which \l1e oorccn!aoa dislribulions were derivod
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Prep"redby:KeyserMarslonAssoc!;¡!es.lnc
Fitan¡¡ma: Cup·Maln Modcl-135_100; 111·1 Households; 1011~12004; dd
TABLE 11I·IA
ESTIMATE OF QLlALlFYING HOUSEHOLDS BY INCOME LEVEL
JOBS HOLlSING NEXUS ANALYSIS
CITY OF CUPERTINO, CA
DRAFT
Prototypical 1 OQ,OOO Sq.Ft. Buildings
Analysis for Households Earning Less than 50% Median
OFFICE
HOTEL
RETAIL!
ENTRTNMNT
Step 5, 6, & 7 _ Households in Major Occupation Categories Earning Less than 50% Median'
Management 045 019 0.03
Business and Financial Operations 0.01 000 000
Computer and Mathematical 000 000 000
Architecture and Engineering 001 0.00 000
Life, Physical and Socia! Science 000 000 0.00
Community and Social Servìces 000 000 000
Legal 002 000 000
Education Training and Library 000 000 000
Arts, Design, Entertainment, Sports, and Media 000 000 000
Heallhcare Practitioners and Technical 0.00 000 000
HeaHhcare Support 128 000 000
Protective Service 000 000 000
Food Preparation and Serving Related 000 2935 44 14
Building Grounds and Maintenance 000 2932 0.00
Personal Care and ServIce 000 2.87 000
Sales and Related 290 0.00 35.85
otnce and Admin 1552 1025 674
Farm. Fishing, and Forestry 0.00 000 000
Construction and Extraction 0.00 000 000
Installation Maintenance and Repair 075 079 1 90
Production 0.00 000 000
Transportation and Material Movìng 0.00 0.00 6.66
Talal HH earning less than 50% Median - Major Occupations 20.96 72 76 9532
HH earning Jess Il1an 50% Median· "aU other" occupations 2.10 8.56 5.82
Total Households Earning Less than 50% of Median 23.1 81.3 101.1
ISee Aooendix Tables 1 3 and 5 for additional Information on Malar Occuoatlon Cateaories
Prepared by: Key~er Marston Associates, Inc
Filename: Cup-Main Model-135_100; IIJ-1A Households: 10/15/2004; dd
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TABLE 111-2
WORKER HOUSEHOLDS BY AFFORDABILlTY LEVEL
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO, CA
DRAFT
Analysis for Households Before Commute Adjustment
Per 100,000 sq. ft. of building area.
RETAIL!
Household Income Level OFFICE HOTEL ENTRTNMNT
Under 50% Median Income 2306 8132 10114
50% Lo 80% Median Income 4909 18.47 32.18
80% to 120% Median Income 50.20 6.74 11.83
120% to 150% Median Income 2152 1.51 2.61
Total 143.88 108.04 147.75
Tolal New Worker Households 184 III 158
Under 50~/o Median Income 125% 736% 64.1%
50% lo 80% Median Income 267% 16.7% 20.4%
80% to 120% Median Income 27.3% 6.1% 7.5%
120% to 150% Median Income 11.7% 0.8% 1.4%
Total 78% 97% 931Jjo
Noles:
I Before commute adjustment
Prepared by: Keyser Marston Associates, Inc
Filename: Cup-Main Model-135_100; 111·2 AffordabUity; 10/15/2004; dd
(I..f.~l/)
TABLE 111·3
WORKER HOUSEHOLDS BY AFFORDABILlTY LEVEL AFTER COMMUTE ADJUSTMENT
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO, CA DRAFT
PROTOTYPICAL 100,000 SQ. FT. BUILDING
BEFORE COMMUTE ADJUSTMENT
INCOME CATEGORY
Under 50% of Median Income
50% to 80% of Median Income
80% to 120% of Median Income
120% to 150% of Median Income
AFTER 9.90% Commute Adjustment
INCOME CATEGORY
Under 50% of Median Income
50% to 80% of Median Income
80% to 120% of Median Income
120% 10 150% of Median Income
"
Per 100,000 sq. ft of buildin9 area
Number of Households 1
Office Hotel Rll.IEnl.
2306 8132 101 14
Total
49.09 18.47 32.18
5020 6.74 11.83
21.52 ill 2.61
143.88 108.04 147.75
Number of Households 1
Office Holel RtI.lEnl.
228 8.03 9.99
4.85 1.82 3.18
496 0.67 117
2.13 0.15 0.26
14.21 10.67 14.59
Total
Prepared by: Keyser Marston Associates, Inc.
Filename: 11413.Q06\Cup-Main Model-135_100; \11-3 ModeJ Summary; 10/15/2004; dd
¡'{-\..fCc
TABLE 111·4
HOUSING DEMAND NEXUS FACTORS PER SQ.FT. OF BUILDING AREA
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO, CA
DRAFT
WITH COMMUTE ADJUSTMENT AT 9.90%
Number of Housing Units per Sq.Ft. of Building Area'
RETAIL!
OFFICE HOTEL ENTRTNMNT
o 00002277 0.00008030 0.00009987
o 00004848 0.00001824 0.00003177
o 00004957 0.00000665 0.00001168
0.00002125 0.00000149 0.00000258
0.00014207 0.00010668 0.00014589
Under 50% Median Income
50% to 80% Median Income
80% to 120% Median Income
120% to 150% of Median Income
Total
1CalculaLed by dividing number of household in boltom left portion of Table 1\1-3 by 100.000 to convert households per 100,000 sq n 'building to
households per 1 sq ft of buiJding
Prepared by: Keyser Marston Associates, {nc
Filename: Cup-Main Madel-135_100; 111-4 Demand; 10115/2004; dd
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SECTION IV: TOTAL HOUSING LINKAGE COSTS
This section takes the conclusions of the previous section on the number of households in the
lower income categories associated with each building type and identifies the tolal cost of
assistance required to make housing affordable The previous seclion identified the number of
households by affordabilily level associated with the three building types in Cupertino. This
section puts a cost on each unit at each affordability level to produce the "total nexus cost"
A key component of the analysis is the size of the "affordability gap" - the difference between
what households can afford and the cost of producing additional housing in Cupertino_ This
analysis uses a standard methodology to determine what households can afford. and compares
that to the cost of developing housing.
The analysis is conducted for the four affordability levels addressed in this assignment: Very Low
Income, Low Income, Moderate Income and Workforce Income_ We assume that the two lower
categories would be housed in rental apartment units and the two more middle income categories
would be housed in ownership units_
Income and Household Size Assumptions
Income definitions for housing programs are established by HUD and issued by the State
Department of Housing and Community Development (HCD) for each county for varying
household sizes, as presented in Section 11 and Appendix t In order to determine the
affordability gap, we must match a household of each income level with a unit type and size
according to governmental regulations and policies_ The prototypical project for both rental and
ownership units represent the lower end of the average range for what the private sector is
currently developing in Cupertino _ The average three person household is assumed to be
accommodated in a two bedroom unit
The unit type for the two lower income categories is a three to four story, wood frame apartment
complex built at a density of 40 units per acre with covered surface parking at 2_0 spaces per unit.
The average unit size is 1,100 sq. ft.
The ownership product is a condominium project developed at 34 units per acre_ The
construction is wood frame over underground parking. There is also surface parking on the site;
together, the parking equates to 2_0 spaces per unit. The average unit size is 1,100 sq - ft.
In this analysis, the midpoint of the income ranges for qualifying households in each category has
been utilized to calculate affordable home prices. For households earning between 120% and
150% of AMI, we estimate their affordable home price using 135% of AMI. For households
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earning between 80% and 120% of AMI, we use 100%. For low income households earning
between 50% and 80% of AMI, we use 65% and for under 50% of AMI, we use 40% of AMI.
Development Costs
The cost of developing new residential units in Cupertino was assembled from a number of
sources. The City provided information on recent developments in Cupertino in order to
determine the design of the prolotypes. KMA reviewed current data on rent levels of new
projects and sales activity for attached ownership projects. Finally, KMA is actively working on
a number of rental and condominium projects at various locations in Silicon Valley and has
recent developer pro forma financial analyses.
From the above sources, KMA prepared a summary of total development costs, broken down
into the major cost components: land, direct construction costs (including parking), and indirect
costs, such as design and engineering, fees, financing, etc. The table below presents the
costs for a two bedroom apartment and condominium on a per-unit basis.
Apartments
Size
Land
Direct Construction
Indirect/Financing
Total Costs
Per Sq. Ft.
1,100Sq.Ft
$55,000
$145,000
$59,000
$259,000
$235
Co ndo m i niumsrr own homes
Size
Land
Direct Construction
Indirect/Financing
Developer's Profit
Total Costs
Per Sq. Ft
1,100 Sq. Ft
$90,000
$222,500
$118,150
$47,850
$478,500
$435
See Tables IV-1 and IV-2 for more information.
Affordability Gap
The affordabilily gap is the difference between the cost of developing a residential unit and, the
amount a household can afford to pay. The next step in determining the affordability gap is' to
calculate the maximum rent level or sales price affordable to each of the four income groups.
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This step is basically driven by formula per federal and state standards and local policies. The
key standards in this analysis are:
· A three person household in a two bedroom unit;
· For rental units, 30% of monthly income available for rent and utilities;
· For ownership units, 30% of monthly income available for mortgage, property taxes,
insurance and homeowners association and;
· For ownership units, the mortgage assumption is a 5% down payment, a 6.5% interest
rate, and a 30 year fixed mortgage
Rental Units
The affordable rent calculations for the very low and low income households are provided in
Table IV-3. The lhree-person households at very low income can afford $896 per month in rent;
the same size household at low income can afford $1,489 per month in rent.
In order to calculate the affordability gap. we must first convert rental income into a value
supported per unit. The first step is to establish the net operating income per unil, or income after
other miscellaneous income (laundry, etc) and adjustment for normal vacancy and operating
expenses. Again, based on our research, the operating expense and vacancy allowance is
estimated at $7,1 00 per unit per year, which includes property management, property taxes, and
certain other expenses. The annual net operating income (after operating expenses) from an
apartment unit is an annual figure, which must be converted to a one time capital cost. To make
the conversion, a 7% capitalization rate is used. The resulls are shown below.
Annual Operating Affordable
Income Cateqory Rent Expenses Net Income Unit Value 1
Very Low Income (Up to $10,700 $ 7,100 $3,600 $ 52,100
50% AMI) ($900/mo.)
Low Income (50% to 80% $17,900 $ 7,100 $10,800 $153,800
AMI) ($1,490/mo)
1. Net Income capilalized at 7%
The affordability gap is the difference between the result of lhis analysis and the cost of
development. The calculations for the two income levels are shown below.
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Income Cateqory
Development Affordable Unit Affordabilitv
Cost Value Gap
$259,000 $ 52,100 $206,900
$259,000 $153,800 $105,200
Very Low Income (Up to 50% AMI)
Low Income (50% to 80% AMI)
Ownership Units
A parallel analysis is conducted for ownership units. The value supported, or sales price
affordable, is based on 30% of income spent on housing related expenses and the assumptions
listed above concerning mortgage financing: 6.5% interest on a 30-year fixed rate mortgage with
5% down. Annual homeowners association charges and other utility costs are estimated at
around $300 per month. Property taxes are estimated based on the affordable unit price.
Table IV-4 summarizes the analysis.
The moderate income household (100% of AMI) can afford a unit that costs $300,000 and the
workforce income household (135% of AMI) can afford a unit that costs $421,000. The
affordability gaps are the differences between these sales prices afforded and the costs of
development, as follows:
Income Cateqory
Development
Cost
Affordable
Unit Price
Affordability
Gap
Moderate Income (80% to 120% AMI)
Workforce Income (120% 10150% AMI)
$479,000
$479,000
$300,000
$421,000
$179,000
$ 58,000
Total Linkage Costs
The last step in the linkage fee analysis marries the findings on the numbers of households at
each of the lower income ranges associated with the three types of buildings to the affordability
gaps, or the costs of developing housing for them in Cupertino.
Table IV-5 summarizes the analysis. The numbers of households associated with each building
type by income category, indicated on the left side of the table, assume 100,000 square foot
buildings. The Affordability Gaps are from the prior discussion. At the right the "Nexus Cost Per
Square Foot" shows the results of the calculation: number of units times affordability gap, divided
by 100,000 sq.. ft. to bring the conclusion back to the per square foot level. The total nexus costs
are calculated for the total impact, as indicated in the upper portion of the table, and after an
adjustment for the fact that only a share of the worker households will seek housing in Cupertino
(the "Commute Adjustment").
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The Table IV-5 analysis conclusions, after adjusting for households who commute to Cupertino,
are as follows:
Office
Hotel Retail/Entertainment
Under 50% Median Income
50% to 80% Median Income
80% to 120% Median Income
120% to 150% Median Income
Total
$471
$510
$884
$1.22
$19.87
$16.61
$1.92
$1.19
$0.09
$19.80
$2066
$334
$2.08
$0.15
$26.23
These costs express the total linkage or nexus costs for the three building types. These total
nexus costs represent the ceiling for any requirements placed on new construction for affordable
housing. The totals are not the recommended levels forfees; they represent only the maximums
established by this analysis, below which fees or other requirements may be set.
In establishing the total nexus cost many conservative assumptions were employed in the
analysis that result in a total nexus cost that is probably understated. These conservative
assumptions include:
· The commute adjustment, or target, assumes that only 9.9% of all new employee
households are largeted to be accommodated in Cupertino. This is the existing condition
already driven by affordability constraints The City could readily adopt a policy to house
more than 1 0% of its new worker households.
· The methodology for discounting double income households essentially removes almost
all two-i'ncome households from lhe lower income strata (by assuming the multiple
incomes place the households in higher income categories).
· No Census or other hard data was available enabling a distinction between the household
size composition of office/high tech workers, hotel workers and retail sales people.
Anecdotally one can observe that there are probably some significant differences.
· Only direct employees are counted in the analysis. Many indirect employees are also
associated with each new workspace. Indirect employees in an office building, for
example, include janitors, window washers, landscape maintenance people, delivery
personnel, and a whole range of others. Hotels do have many of these workers on staff,
but hotels also "contract out" a number of services that are not taken into account in the
analysis.
In summary, many less conservative assumptions could be made that would result in higher
linkage costs
1 <-{-Y3
19092008\001·003; 1011512004, ORAFT
Keyser Marston Associates, Inc.
Page 43
TABLE IV-1
RESIDENTIAL PROTOTYPE -- RENTAL HOUSING
JOBS HOUSING LINKAGE ANALYSIS
CITY OF CUPERTINO
DRAFT FOR DISCUSSION ONLY
Development Program
Number of Units
Number of Stories
Total Rentable Sq. Ft.
Site Size
Dwelling Units/Acre
Construction Type
Parking:
Type
Spaces
Spaces/Unit
Unit Mix & Size
One Bedroom
Two-Bedroom
Three-Bedroom
Average Unit Size (rounded):
Development Cost
Land
Construction (incl. Parking)
In directs/Financing
Tolal Development Cost
100
3-4 stories
109.000 SF
25 acres 109,000 SF
40 du/ac
Wood Frame
Covered Surface
200
2 per unit
20
60
20
100
850 sq fl
1,100 sq ft
1.300 sq fl
1.100 sq fl
Cost Per Unit
$ 55,000
$ 145,00lJ
$ 59,000
$ 259,000
Prepared by Keyser Marston Associates. Inc
Filename: 11413006\Res Prototypes;rentaI4; 1 O/15/2004;MTN
Equals $50/SF of land area.
Equals $132/SF of rentable area.
Equals 41 % of direct construction costs
Equals $235/SF of rentable area.
(\.{ -51
TABLE IV-2
RESIDENTIAL PROTOTYPE - OWNERSHIP
JOBS HOUSING LINKAGE ANALYSIS
CITY OF CUPERTINO
DRAFT
Development Program
Number of Units
Number of Slories
Site Size
Dwelling Units/Acre
Construction Type
Parking:
Type
Spaces
Spaces/Unit
Unit Mix & Size
Two Bedroom
Two Bedroom
Two Bedroom
Two Bedroom
Development Cost
Land
Construction (incl Parking)
Indirects/Financing
Developer's Profit
Total Development Cost
46
2-3 stories
1.35 gross acres
34 du/gr.ac
Wood Frame
Underground and Surface
92 Total (60 underground/32 surface)
2.00/ Unit
10
12
10
14
46
938 SF
973 SF
1,088 SF
1,198 SF
1,100 SF
Cost Per Unit
$ 90,000
$ 222,500
$ 118,150
$ 47,850
$ 478,500
Equals $70/SF of land area
Equals $35,000 for parking per unit and $170/SF
of livable area
Equals 53% of construction costs (including atl
fees, insurance. cost of sales, etc.)
Equals t 0% of sales price; industry standard
Equals $435/SF of setlable area
Prototype based on Tra Vigne Villas (with adjusted parking ratios); costs based on pro
formas for comparable projects with adjustments made for time and location.
Prepared by Keyser Marston Associates, Inc.
Filename: 11413006\Res Protolypes;condo;10/15/2004;MTN
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( l{ - )5'
SECTION V - MATERIALS TO ASSIST IN SELECTING FEE lEVELS
The purpose of this sedion is to provide information to assist policymakers in updating the
Jobs Housing Impact Fee program in Cupertino. As indicated at the end of the previous
section, the nexus analysis establishes maximum levels supported by the analysis
Recognizing a variety of Ci.ty objectives, policymakers may set the fees or other obligations at
any level below the maximum and may design other program features to meet local goals and
objectives
The materials in this seclion have nothing to do with establishing the nexus. Instead this
section provides an assembly of materials that helps answer questions frequenlly asked when
designing a fee program: How can a fee level be selected? How do we evaluate when a fee
will slow development? How much revenue will be produced? What do other cities do in their
programs?
Current Fee Program
The current fee program has been in place since 1993 and applies to all office and "industrial"
development throughout the city. The fee was initially sel at $2.00 per square foot with the
provision that it could be adjusted annually per the Consumer Price Index. The City has made
a few adjustments to the point at the current level is now $2.25 per square foot. The fees are
payable upon issuance of building permit for all new space classified as office or industrial.
This section of the report provides information 10 assist in determining a more substantial
adjustment to the fee level and possibly expanding the program to include hotel and retail
building types.
Fees as a Percent of the Nexus Amount
Policy makers may establish fees at any level below the maximum for the three building types
in the analysis - office, hotel, retail/entertainment - in the same proportion to the nexus or
may independently select the fee for each building type, weighing policy considerations
separately for each one. Most jurisdictions now select the latter approach. The proportion to
nexus cost approach is illustrated below:
Buildinq Type
Nexus Cost
Fee @ 25%
Office
Hotel
Retail/Entertainment
$19.87
$26.23
$1980
$4.96
$6.56
$4.95
I <t ~ )7
190920081001-003; 10115/2004. ORAFT
Keyser Marston Associates, Inc
Page 49
The principal advantage of this approach lies in its simplicity and avoidance of addressing
each fee independently The disadvantage is that there could be a disproportionate burden on
one building type. Alternatively, there could be a lost opportunity in not charging a higher fee
on a building type that could clearly sustain it in the interest of working from the lowest
common denominator.
It is noted that the total nexus cost is comprised of four separate income tiers - very low
income, low income, moderate income. and "workforce" income. The workforce tier, which is
120% to 150% of Area Median Income was included in the analysis per City staff direction, in
the event that policy makers wish to include this tier In the program. If policy makers do not
want this tier included the nexus costs would be lowered. (See Table IV-5 and subtract the
row of numbers for the 120% to 150% category. For example, the office total nexus cost is
reduced to $1865.) The decision as to whelher to include the tier should be made to be
consistent with how the City wishes to spend fee revenue dollars. If the City wishes to Include
assistance to "workforce" income level households as part of the program, then the income tier
should be included in the nexus analysis.
Total Development Cost Evaluation
One way to evaluate the impact of alternative fee levels on the development of commercial
and industrial projects is to examine total development costs. The chief concern of policy
makers in deliberating housing linkage fees is whether the fee will have a negative impact on
development activity. Most cities want more financial resources for affordable housing but not
at the expense of driving desirable development activity outside the city borders.
The three building types addressed in the nexus analysis have been further expanded into
subsets to reflect several different configurations or conditions in Cupertino. In the office/high
tech building type we look at small infill and large office prototypical projects. For
retail/restaurant, we look at a freestanding restaurant and a prototypical strip retail space. For
hotel building types, we look at an extended stay/lirnlted service hotel and a more upscale, full
service hotels.
The purpose is to evaluate alternative fee levels In light of total development costs to ascertain
to what extent costs wouid be increased assuming, for a moment, all othei costs 8í8 fixed.
Total development costs have been assembled inclusive of land, building construction, tenant
improvements, and indirect or "soft" costs such as architectural and engineering, fees,
financing, etc. A key variable in each configuration Is the parking, both the number of spaces
relative to building area and the location of the parking - at grade or structured. As with the
residential total development costs, the City provided us with information on proposed af)d
recently developed projects. Using actual City projects as a baseline, KMA drew from our
extensive experience on projects located within Silicon Valley to estimale development costs.
(I.{ -IPð
Keyser Marston Associates, Inc
Page 50
11413 006\001-003; 10/15/2004. DRAFT
Office/High Tech
Two configurations of office projects were evaluated. The configurations represent a large and
a small building, one with structured parking and one with surface parking. One prototype is a
large office complex, which encompasses two five-story buildings or 100,000 square feet of
building area. A 2.5 FAR and subterranean parking is assumed for this large project based on
a recent submittal to the City. The second prototype is a small 20,000 square foot two-story
infill project with a 0.5 FAR and surface parking.
Land has been assumed available in the $50 to $100 per square foot range, which is
consistent with recent estimates for Cupertino The "all in" cost range is $270 to $375 per
square foot, or about $275 to $375 per square foot. (Table V-1)
Hotel/Lodging
Hotel and other lodging costs are summarized as per room costs, per the practice of the
industry. Two prototypes are examined - a full service upscale hotel of five or more stories
and predominantly subterranean parking, and a limited service or extended stay product of
four stories with split surface and below grade parking. Total "all in" costs range from
$165,000 per room for the limited service product and $200,000 per room for the full service
hotel Due to the different density characteristics of hotels, the "all in" per square foot cost is in
the range of $335 to $340 per square foot. Land costs are the same range as the high-end
office/high tech (Table V-2).
RetaillEntertainment
Retail and entertainment uses present a particular problem at this point in time because many
of these uses are not feasible due to the dramalic increase of officeihigh tech land value that
occurred during the late 1990's (During the current recession there may be a drop in values,
but for the most part short term recessions are marked by an absence of transactions). We
have shown total development costs of two projects. One is a free-standing restaurant with
surface parking and an FAR of 0.18. The other is a retail project located in a small cluster of
shops. Land is estimated at $40 to $60 per square foot to reflect that these eslablishments
are typically located in less prominent areas of the city. The restaurant prototype is particulariy
expensive to build, with costs estimated at around $475 per square foot, more than half of
which is land due to the amount of parking required. The strip retail is estimated to cost
around $330 per square foot.
r\{ ~ & (
18092008\001-003; 10115/2004. DRAFT
Keyser Marston Associates, Inc
Page 51
Summary
In summary, total development costs generally fall in the range of $300 to $400 dollars per
square foot for the three building types under consideration. As noted, many types of
retail/restaurant projects are not feasible at this time due 10 these costs.
Total cost ranges and fee ranges per square foot, per this approach would be as follows:
Total Development Cost
Fee @. 1%
Fee @. 2%
Office/High Tech
Hotel
Retail
$270-$375
$330-$350
$275-$550
$2.70-$3.75
$3.30-$350
$2.75-$550
$5.40-$750
$6.60-$700
$5.50-$1100
We do not recommend setting fees in this manner, but do believe the cost burden approach
examining the 1 % to 2% range is helpful for bracketing a range to consider.
Impact on Land Values
The evaluation of total development costs assumes, for the moment. that all costs are fixed.
While most costs of development are relatively fixed, or at least not subject to adjustment as a
result of local policies, land cost is not Land cost is the variable in the equation that adjusts to
reflect the income capacity of the market forces. Rents and values generally act independent
of costs. As a result, an increased cost of development due to a local fee will not be directly
translated to a higher rent being achievable. The variable that adjusts is land value. If costs
are increased as a result of a local fee, land values are theoretically decreased by a
corresponding amount.
In a project built at a Floor Area Ratio (FAR) of 1, a $5 fee will theoretically reduce land value
by $5 per square foot. At an FAR of 0 5: 1 or 50% coverage factor, the $5 fee will depress
values by $2.50. At 2: 1 FAR, the $5 fee will theoretically depress land values by $10 per
square foot.
The word theoretically is dispersed throughout the discussion. in the reai world, other forces,
most particularly market demand, drive land values far more powerfully than fees do. Between
1995 and 2000, land values doubled, and in places tripled, in Silicon Valley as a result of
market pressures. As the economy cooled, further escalations tapered off with some
retreating to former levels of not so long ago. Any fee that Cupertino is likely to assess will
have only a marginal impact on these far broader fluctuations.
{1.{~bL
Keyser Marston Associates, Inc
Page 52
11413006\001-003: 10/15/2004, ORAFT
Other Ordinance or Program Features
A Housing Impact Fee Program may have other features to address specific policy objectives
or concerns The most common ones are:
Minimum Size Threshold
A minimum size threshold sets a building size over which fees are in effect. Many programs
have no such threshold, as has been the case with the Cupertino program. In general, the
programs with the higher fees tend 10 have more significant thresholds. Programs with low
fees often have no thresholds and all construction is subject to lhe fee.
Geographic Area Variations
Some cities with linkage fee programs exclude specific areas such as redevelopment areas
and enterprise or empowerment zones. Cupertino did not establish geographic area variations
in its current program. However, City staff has indicated their concern that establishing a fee
for new retail space could adversely impact the Vallco Shopping Center, which is located in a
redevelopment area Exempting the redevelopment area would be one way for Cupertino to
address this concern.
Specific Use Exemptions
The most common exemptions are child care centers and non-profit institutional uses,
particularly cultural and religious ones. Reasons for exemption are as follows:
· Minimize cost impacts on a particularly desirable type of project, such as child care
centers
· Recognition that most projects are developed by the public sector which is not subject
to the fees in any case.
· Recognition that meaningful averages to cover a broad range of institutional type uses
(outside of medical and educational) are very difficult.
· The necessary administrative time 10 process customized fees and variances for uses
in this category.
· The volume of construction of such uses is minimal, resulting in minimal fee revenue
loss.
For some or all of these reasons, most programs do not attempt to charge fees on non-profit,
institutional uses other tllan medical and educational.
l L( ~~ 3
19092008\001-003; 10/15/2004, DRAFT
Keyser Marston Associates, Inc
Page 53
Other Jurisdiction Housing Linkage Programs
.
It is always of interest to policy makers to know what other cities and counties have in place in
the way of similar programs. As a generality, compared to inclusionary programs, linkage
programs are far fewer in number and are far less complex
Table V-4 is a two-page chart summarizing the programs in California jurisdictions. The
organization of the chart is by fee amount The top tier is cities with fees of $10 per square
foot or more - San Francisco, Palo Alto, and Menlo Park, all cities with very powerful market
conditions, the current recession notwithstanding.
The second tier is jurisdictions that have programs in the $4 to $9 per square foot range
Several Silicon Valley cities are in this category. A number of jurisdictions have update
programs underway and will likely move into this tier.
The third tier is the lower fee jurisdictions where lhe Cupertino program is currently placed.
The chart provides information on a number of program features in addilion to the fee amount.
Summary
This section of the report has provided materials to assist in deliberating an adjustment to the
Cupertino program fee levels All fee levels likely to be considered are far below the "total
nexus cost," the only legal constraint to setting the fees. Fees should be established based on
the nexus and any combination of policy consideralions that the City wishes to bring to bear.
In Cupertino, some of the choices could be:
· Increase past fees by a consistent amount across the board, such as doubling or
tripling them;
· Apply a percentage to the total nexus cost, such as the 25% example;
· Apply a percentage to the total development costs estimates; and
· Select fee levels independently based on policy considerations, using no formula, but
drawing on all of the above approaches. One frequent simplification is to set fees on
buildings with similar nexus and development costs at a single fee level- such as
Cupertino has done with its program thus far.
All approaches have validity; there is no one correct way to select fees, beyond a careful
consideration of local policies and goals.
II..{ -{; Y
Keyser Marston Associates. Inc.
Page 54
11413.006\001.003; 10/15/2004, DRAFT
TABLE V·1
OFFICE/HIGH TECH PROTOTYPES
TOTAL DEVELOPMENT COSTS
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
Land
(Per sf land)
(Per SF bui!ding area)
Direct Costs
Indìrects & Financing @ 25%
Permits & Fees
Parking Cost (psI bldg. area)
(Cosl per space)
(Number of spaces) (2)
Total
(Per SF building area)
100.000 SF
5 stories
Subterranean parking
25:1 FAR
(1,
$80 $100
$32 $40
$150 $170
$60 $65
$8 $12
$88
$2S.000 /space
351
·1 space per 28S SF
$340 - $375
/SF
(1) Direct costs include construction, on-sites and tenant improvements
financing costs
(2) As required by Cily code (1 space per 285 square feel)
Prepared by I<eyser Marston Associates. Ifle
Section V;aflic6: 1 0/15/2004; hgr
20.000 SF
2 stories
Surface Parking
05:1 FAR
$50 $80
$100 $160
$125 $145
$35 $40
$5 $g
$5
$1.S00 Ispace
71
1 space per 285 SF
$270 - $360 ISF
Indirect costs include soft costs and
(L{ -fp J
TABLE V·2
HOTEL PROTOTYPES
TOTAL DEVELOPMENT COSTS
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
Development Costs ($IRoom)
Parking
Limited Service!
Extended Stay
4 Slories/120 Rooms
097:1 FAR
20% al grade
80% Subterranean
Full Service MidøRise Hotel
5 Slories/140 Rooms
1.5:1 FAR
10% at grade
90% Subterranean
(Per sf land area)
(Per sf Bldg area)
$40,000
$80
$83
$40,000
$100
$67
Land
Direct Costs
Sile Work
Building
FF&E
$3,000
$65.000
$12,500
$80,500
$3.000
$7S,000
$25,000
$103.000
Indirects & Financing @ 30%
$24,150
$30.900
Permits & Fees
$550
$105,200
$900
$134,800
Parking Cost (psf bldg. area)
(1 sp/room plus 1 sp/employee)
$20,000
$27,000 l'¡
Total, including Land (rounded)
$165,000 :':
$202,000 :':
Per Sq FI Bldg Area
(Sq FI/Room)
$341 ISF
500 SF
$337/SF
600 SF
1 Parking costs are higher because of a higher parking spaces per room ratio and because a larger percentage of the spaces
are underground The parking space/room ratio is higher because there are more employees at the full service ¡lote!.
Prepared by: Keyser I'v\¡Jrs\on Associates. Inc
Seclion IJ\Hotel Protolypes:10/15/200'1;hgr
I \.{ .-& {ç
TABLE V-3
RETAIL PROTOTYPES
TOTAL DEVELOPMENT COSTS
JOBS HOUSING NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
Development Costs ($/SF building area)
Free-Standing
Restaurant
Strip Retail
Surface Parking
8,300 SF
380 seats
018:1 FAR
Surface Parking
11,000 SF
025:1 FAR
Land
(Per sf land area) $40 $60 $40 $60
(Per sf Bldg area) $223 $335 $150 $240
Direct Costs
Site Work $5 $5 $5 $5
Building Shell $70 $80 $55 $6S
Tenant Improvement $60 $70 ~ $35
$135 $155 $85 $i05
Indirects & Financing @ 30% $40 $47 $25 $32
Permits & Fees $3 ~ ~ $7
$178 $208 $114 $144
Parking Cost (psf bldg. area) $17 $6
(Cost per space) $1,500 $1,500
(Number of spaces) ,,, 96 44
Total, including Land
$418 - $560
$280 . $390
(1) As required by City code (1 space per seat (rest) and I space per 250 SF (retail))
Prepared by: Keyser Marston Associales, Inc
Section VlRelan Prototypes; 10/15/2004; hgr
Ilt" ~~l
TABLE V-4
OTHER JOBS HOUSING LINKAGE PROGRAMS
HOUSING IMPACT FEE NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
HIGH FEE CITIES
Yr. Adopted Thresholds & Build Optionl Market
Jurisdiction IUpdated Current Fee Levels per SF Exemptions Other Strength Comments
City of Palo Alto 1984 · Commercia! & Industrial No Minimum Threshold. Yes Very Fee is adjusted annually
Updated in $15.58 Churches; colleges and Substantial based on CPl.
March 2002. universities; comm'l recreation;
hospitals, convalescent
facilities; private clubs, lodges,
fraternal org. 's; private
educational facilities; and
public faci!ilies are exempt.
City and County of 1981 · Office $14.96 25,000 gross SF threshold. Yes, may Very $40 million raised
San Francisco Updated fees · Hote! $11.21 Excludes: redevelopment contribute land Substantial
in 2002. · Retail $13.95 areas and Port. for housing.
City of Menlo Park 1998 · Commercial & Industrial 10,000 gross SF Threshold. Yes, may Very Fee is adjusted annually
$10.00. Churches, private clubs, provide housing Substantial ased on CPI.
· Warehousing, printing, l~dgeS' fralernal orgs and on- or off-site.
assembly $5.45. public facilities are exempt.
MEDIUM FEE CITIES
Yr. Adopted Thresholds & Build Optionl Market
Jurisdiction ¡Updated Current Fee levels per SF Exemptions Other Strength Comments
City of Santa Monica 1984 · Office only 15,000 sf exemption for new N/A Very Includes fee for open
· $4.37 per square foot for first construction, 10,000 sf Substantial space as we!l. Fees
15,000 sf exemption for additions. djusted quarterly based
· $9.72 per square foot in n CPI. No
excess of 15,000 sf. omprehensive update
ince adoption.
City of Sunnyvale 1984 · Industrial & Office $8 Applies only to the portion of NA Very Fee had not changed
Updated in the project that is in excess of Substantial ince the 1980's, until
2003. allowable FAR (typically ee was recently raised
0.35:1). rom $7.19.
County of Marin 2003 · Office/R&D $7.19 No minimum threshold. Yes. Substantial
· Retail/Rest. $5.40
· Warehouse $1.95
· Hotel/Motel $1 ,746/room
· Manufacturing $3.74
ity of Mountain 2001 · Officef1ndustrial $6.00 Fee is 50% less if building is Yes Very
iew · Hotel $2.00 under thresholds: Substantial
· Retail $2.00 Office 10,000 sf
Hotel 25,000 sf
Retail 25,000 sf
City of Walnut Creek 2005 · Office, retail, hotel and First 500 sf no fee applied. Yes Very
medical $5.00 Substantial
own of Corte 2001 · Office $4.79 No Minimum Threshold. NA Substantial
Madera · R&D lab $3.20
· Light Industrial $2.79
· Warehouse $0.40
· Retail $8.38 '.
· Com Services $1.20
· Restaurant $4.39
· Hate! $1.20
Prepared by Keyser Marston Associates, Inc.
11413.006\JH Fees Other Cities -Cupertino.doc; 1131/2006, Page 1
It.( .-{ .r
TABLE V-4 (cont'd)
OTHER JOBS HOUSING LINKAGE PROGRAMS
HOUSING IMPACT FEE NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
City of Oakland 2002 · Officel Warehouse $4.00 25,000 sf exemption Yes - Can build Moderate Fee due in 3
units equal to nstaUments. Fee
total eligible sf djusled with an annual
times .0004 escalator tied to
residential construction
ost increases.
City of Berkeley 1993 · All Commercial $4.00 7,500 SF threshold. Yes. Substantial. Fee has not changed
· Industrial $2.00 ince 1993: may
negotiate fee downward
ased on hardship or
reduced impact.
City of 81. Helena 2004 · Office $3.40 Small childcare facilities, Yes, subject to Substantial.
· Comm.lRetail $4.30 churches, non-profits, City Council
· Hotel $3.14 vineyards, and public facilities approval.
· Winery/Industrial $1.05 are exempt.
Low FEE CITIES
Yr. Adopted Thresholds & Build Option/ Market
Jurisdiction IUpdated Current Fee Levels per SF Exemptions Other Strength Comments
City of Alameda 1989 · Office $3.63 No Minimum Threshold. Yes. Program Moderate Fee may be adjusted by
· Retail $1.84 specifies CPt.
· Warehouse $0.63 number of units
· Hotel/Motel $931 per room per 100,000
square feet.
City of West 1986 · Non-residential $2.85 NA NA Substantial ees adjusted by CPI
Hollywood ach year.
City of P!easanton · Commercial. Office & No Minimum Threshold NA Moderate Fee increased in 2003.
Industrial $2.31
City of Cupertino 1993 · Office & ~")' $225. .. No Threshold.:' NA . . Very Fee is adjusted annually
.> .'. Substantial ased on CPL Update
..... '. . . .. .. ,..' . .. n process.
City of Peta\uma 2003 · Commercial $2.08 * Fee is 50% less if located in NA Moderate' Fee phased-in over 3
· Industrial $2.15 * redevelopment project area Substantial ears beginning 2005.
· Retail $3.59 * leees listed are full fees,
(See Comments) tarting in 2007.
County or Napa County - · Office $2.00 No Minimum Threshold. Units or land Moderate/ here is a companion
(Also City of Napa) Updated 2004 · Hotel $3.00 dedication; on a Substantial ee of 1 % of construction
City 1999 · Retail $2.00 Non-profits are exempt. case by case osts on all residential
· Industrial $1.00 basis. ¡construction. Napa City
· Warehouse $0.80 rates not updated to
hese !evels yet.
City of Sacramento 1989 · Office $1.79 No Minimum Threshold. Pay 20% fee Moderate Fees listed in effect as of
Most recent · Hotel $1.70 plus build at lJuly 2005.
update, 2005. · R&D $1.52 Service uses operated by non- reduced nexus.
· Commercial $1.43 profits are exempt. (Not meaningful North Natomas area has
· Manufacturing $1.12 given amount of eparate fee structure.
· Warehouse/Office $0.65 fee).
· Warehouse $0.49
City of San Diego 1990 · Office $1.06 No Minimum Threshold. Can dedicate Substantial Since 1990, $33 million
Fees reduced · Hotel $0.64 land or air raise9' Update in
in mid 90s; · R&D $0.80 No exempted uses. Does rights in lieu of rocess. Office
have not been · Retail $0.64 exclude some geographic fee. reposed to go to $1.50
readjusted. · Manufacturing $0.64 areas. $1.80 range.
· Warehouse $0.27
Prepared by Keyser Marston Associates, Inc.
11413.006\JH Fees Other Cities -Cupertino.doc; 1/31'2006, Page 2
/4-b7
TABLE V-4 (conl'd)
OTHER JOBS HOUSING LINKAGE PROGRAMS
HOUSING IMPACT FEE NEXUS ANALYSIS
CITY OF CUPERTINO
DRAFT
City of Livermore 1999 · Retail $0.81 No Minimum Threshold. Yes; negotiated Moderate
· Service Retail $0.61 on a case-by-
· Office $0.52 Church; private or public case basis.
· Hotel $397 per foom schools.
· Manufacturing $0.25
· Warehouse $0.07
· Business Park $0.52
· Heavy Industrial $0.26
· Ught Industrial $0.16
City of Folsom 2002 · Office, Retail, Ught Industrial, No Minimum Threshold Yes. Moderate! Fee is adjusted annually
Heavy Industrial, and Substantial based on construction
Manufacturing $1.20 Select non profits, small child ost index.
· Up to 200,000 SF, 100% of care centers, churches, mini
fee. 200,000·250,000 SF, storage, parking garages,
75% of fee; 250,000- private schools, etc.
300,000 SF. 50% of fee:
300,000 and up, 25% of fee.
County of 1989 · Office $0.97 No Minimum Threshold. Pay 20% fee Moderate Currently in the process
Sacramento · Hotel $0.92 plus build al f updating.
· R & D $0.82 Service uses operated by noo- reduced nexus.
· Commercial $0.77 profits are exempt. (Not meaningful
· Manufacturing $0.61 given amount of
· Indoor Recreational Centers fee).
$0.50
· Warehouse $0.26
City of Elk Grove 1988 · $30 flat fee plus: No Minimum Threshold Pay 20% fee Moderate ity may update fee
(Inherited from · Office $0.97 plus build at fier County of
County when · Hotel $0.92 Membership organizations reduced nexus. acramento updates its
incorporated) · R & D $0.82 (churches, non-profits, etc.), (Not meaningful ee.
· Commercial $0.77 mini-storage, car storage, given amount of
· Manufacturing $0.61 marinas, car washes, private fee).
· Indoor Recreational Centers parking garages and
$0.50 agricultural uses exempt.
· Warehouse $0.26
City of Rancho 1988 · $30 - $100 flat fee plus: No Minimum Threshold. No build option, Moderate
Cordova (Inherited from · Office $0.97 but developer
County when · Hotel $0.92 can dedicate
incorporated) · R & D $0.82 land to city in-
· Commercial $0.77 lieu of fee.
· Manufacturing $0.61
· Indoor Recreational Centers
$0.50
· Warehouse $0.26
City of Citrus 1988 · Office $0.97 No Minimum Threshold Moderate
Heights (Inherited from · Hotel $0.92
County when · R & D $0.82 Agriculture, auto smog
incorporated) · Commercial $0.77 inspections, car storage,
· Manufacturing $0.61 private parking garage, mini-
· Warehouse $0.26 storage, churches, non-profit
membership organizations
Prepared by Keyser Marston Associates, Inc.
11413.006\JH Fees Other Cities -Cupertino. doc: 1/31f2006, Page 3
I~~ ID
(~-II
[This page left intentionally blank_]
fl..{-7L
Keyser Marslon Associales, Inc
Page 58
11413006\001-003; 1011512004, DRAFT
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APPENDIX TABLE 2
OCCUPATIONS INCI.UDED IN ANALYSIS
JOBS HOUSING LINKAGE ANALYSIS
CITY OF CUPERTINO, CA
DRAFT
The occupational breakdown of employment by land use is based on the
200 1 Nationallndu5try~Specific Occupational Employment and Wage Estimates
For these Industries/NAICS codes:
Office
511200 - Software Publishers
516100· Internet PUblishing and Broadcasting
517100 ~ Wired Telecommunications Carriers
517200· Wireless Telecommunications Carriers (except Satellite)
517300· Telecommunications Rese!\ers
517900 - Other Telecommunications
518100 -Internet Service ProvIders and Web Search Portals
518200 - Data Processing, Hosting, and Related Ser\lices
519100· Other Information Services
522100 - Depository Credit Intermediation
522200· Nondeposilory Credit Intermediation
523900 - Other Financial Investment Activities
5241 00 ~ Insurance Carriers
524200 - Agencies, Brokerages, and Other Insurance Related Activities
531100 - Lessors of Real Eslale
531200 - Offices of Real Eslale Agents and Brokers
531300 - Activities related to Real Estate
541100 - Legal Services
541200 - Accounting, Tax Preparation, Bookkeeping, and payrol1 Services
541300· Architectural, Engineering, and Related Services
t>414UU ~ :specIalIzed ueslgn t:iervlces
541500 - Computer Systems Design and Re!ated Services
541600 - Management, Scientific, and Technical Consulting Services
541700 - Scientific Research and Development Services
541800 - Advertising and Related Services
541900 - Other Professional, Scientific, and Technical Services
551100 - Management of Companies and Enterprises
621100 - Offices of Physicians
621200 - Offices of Denlisls
621300 - Offices of Olher Heailh Praclilioners
Hotel
7211004 Traveler Accommodation
Source: Bureau of Labor Statistics
Prepared by: !<eyser Marston Associates. Inc
Filename: Cup-Main Model-135_100; NAICS; 10/15/2004; dd
Ill.. ~ ? J
APPENDIX TABLE 2
OCCUPATIONS INCLUDED IN ANALYSIS
. ~BS HOUSING LINKAGE ANALYSIS
Y OF CUPERTINO, CA
DRAFT
Retail
Including NAICS classificaUons:
441100 - Automobile Dealers
441200 - Other Motor Vehicle Dealers
441300 - Automotive Parts, Accessories, and Tire Stores
442100 - Furniture Stores
442200 - Home Furnishings Stores
443100 - Electronics and Appliance Stores
444100 - Building Material and Supplies Dealers
444200 - Lawn and Garden Equipment and Supplies Stores
445100 - Grocery Stores
445200 - Specialty Food Stores
445300 - Beer, Wine, and Liquor Stores
446100 - Health and Personal Care Stores
447100 - Gasoline Stations
448100 - Clothing Stores
448200 - Shoe Stores
448300. Jewelry. Luggage, and Leather Goods Stores
451100. Sporting Goods, Hobby, and Musical Instrument Stores
451200 - Book, Periodical, and Music Stores
452100 - Department Stores
452900· Other General Merchandise Stores
453100 . Florists
453200 - Office Supplies. Stationery, and Gift Stores
53300 - Used Merchandise Stores
453900. Other Miscellaneous Store Retailers
722100 - Fu!!-SeNice Restaurants
722200 - Limited-Service Eating Places
722300 - Special Food Services
722400 - Drinking Piaces (Alcoholic Beverages)
811100 - Automolive Repair and Maintenance
811200 - Electronic and Precision Equipment Repair and Maintenance
811400 - Persona! and Household Goods Repair and Maintenance
812100 - Personal Care Services
812200 - Death Care Services
812300 - Drycleaning and Laundry Services
812900 - Other Personal Services
Source: Bureau of Labor Slalis!ics
Prepared by: Keyser Marston Assoç\ales. !nc
Filename; Cup~Maln Model-135_1 00; NAICS; 10{15{2004; dd
/ ~ ~ 70
APPENDIX TABLE 3
2002 NATIONAL HOTEL WORKER DISTRIBUTION BY OCCUPATION
JOBS HOUSING LINKAGE ANALYSIS
CITY OF CUPERTINO, CA
DRAFT
2002 National
Hotel Industry
Occupation Distribution
Major Occupations (3% or more)
50%
Management Occupations 81.980
Food Preparation and Serving Related Occupations 475,690
Building and Grounds Cleaning and Maintenance Occupations 493.760
Personal Care and Service Occupations 66,600
Office and Administrative Support Occupations 281.830
Installation. Maintenance. and Repair Occupations 65,080
All Other Hotel Related Occupations 172,290
INDUSTRY TOTAL 1,637,230
Source: Bureau of Labor Statistics
Prepared by: Keyser Marston Associates. Inc
Filename: 11413006\Cup-Hote!: Major Occupations Matrix; 10/15/2004; dd
29 1%
30.2%
41%
172%
4.0%
10.5%
1000%
Ie.¡ -7l
>PENDIX TABLE 4
. .vERAGE ANNUAL COMPENSATION, 2003
HOTEL WORKER OCCUPATIONS
JOBS HOUSING LINKAGE ANALYSIS
CITY OF CUPERTINO, CA
ORAFT
Occupation J
Management Occupations
General and Operations Managers
Sales Managers
Financial Managers
Food Service Managers
Lodging Managers
An Other Management Occupations
Weighted Mean Annual Wage
Food Preparation and SelVing Related Occupations
First~Line Supervisors/Managers of Food Preparation and Serving Workers
Cooks, Restaurant
Food Preparation Workers
Bartenders
Waiters and Waitresses
Food Servers. Nonreslauranl
D!ning Room and Cafeteria AlIendanls and Bartender. He!pers
Dishwashers
Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop
All Other Food Preparalion and Serving Related Workers {avg aU categories}
Weighted Mean Annual Wage
Building and Grounds Cleaning and Main/enance Occupation.s
Flrsl.Line Supervisors/Managers of Housekeeping and Janitorial Workers
Janitors and Cleaners, Except MaIds and Housekeeping Cleaners
Maids and Housekeeping Cleaners
All Other Building and Grounds Cleaning and Maintenance Workers
Weighted Mean Annual Wage
Personal Care and Service Occupations
First-Une Supervisors/Managers or Personal Service Workers
Amusement and Recreation,Altendants
Baggage Poners and Bellhops
Concierges
Fitness Trainers and Aerobics Instructors
Recreation Workers
Personal Care and Service Workers, All Other
Weighted Mean Annual Wage
Source: Bureau of Labor Slalistlcs
Pn:!pared by: Keyser MÐrslon Associates. Jnc
~., . _ _. ....,.., ",,"',(',,'"'-.....,.,1,,1· (',.,mnRns",lion: 10/15/2004: dd
2003 AV9·
Compensation 1
% of Total
OccupatIon
Group Z
% of Tota!
Hotel
Workers
$128200
$131.100
$112.800
$49.700
$44.600
$95 300
$83,600
188%
108%
5.4%
14,7%
315%
18.8%
100.0%
09%
05%
03%
07%
16%
0.9%
5.0%
$30.700 42% 12%
$23.200 11.5% 33%
$20.800 4.1% 12°/a
$18,700 8,2% 2-4%
$17.500 293% 8.5%
$21,100 85% 2.5%
$16.700 9,4% 27%
$16.900 83% 24%
$20.000 46% 13%
$20 000 11.9% 3.5%
$19.500 100.0% 29.1%
$35.300 65% 20%
$23,300 99% 30%
$18.800 787% 237%
$25 300 4.9% 1.5%
$20,600 100,0% 30.2%
$52.600 50% 02%
$21,200 126% 05%
$20.200 36.1% 1,5%
$27,600 106% 04%
$46.300 44% 02%
$30.400 48% 02%
$28,200 26.5% ~
$26,500 100.0% 4.1%
'.
/I.(-?k
Occupation J
Office and Administrative Support OccupaUons
Firsl-Une Supervísors/Managers of Office and Administrative Support Workers
Switchboard Operators. Including Answering Service
Bookkeeping. Accounting. and Audi\íng Clerks
Holel. Motel. and Resort Desk Clerks
Reservalíon and Transportation Ticket Agents and Travel Clerks
All Other Office and Admin Support OccupaUons (avg at! categoríes)
WeIghted Mean Annual Wage
{ns{al/alion, Mainlenance, and Repair OccupaOons
First-LIne Supervisors/Managers of MechanIcs, Installers, and Repairers
Maíntenance and Repair Workers, General
Installation, Maintenance. and Repair Workers. AI! Other
Weighted Mean Annual Wage
% of Tota! % of Total
2003 Avg. Occupation Hotel
Compensation 1 Group 2 Workers
$54.600 6.5% 1.1%
$28,800 4.1% 0.7%
$38,900 7.6% 13%
$22.300 58.1% 100%
$25.200 44% 0.8%
$37,200 19,2% 3.3%
$28,900 100,0"/" 17.2%
$63.200 68% 03%
$40,500 82.3% 33"/"
$36.400 ~ 0.4%
$41,600 100.0% 4.0%
a95%
1 The methodology utilized by the California Employment Development Department (EDD) assumes that hourly paid employees are employed full-lime
Annual compensation is calculated by EDO by mul1ìplying hourly.wages by 40 hours per work week by 52 weeks
Z Occupation percentages are based on the 2002 National Industry - Specific OccupalloniJ! Employment survey compiled by the Bureau of Labor StalisUcs Wages h¡¡ve
been updated to 3rd Quarter 2003 DES 2002 - San .Jose MSA (Santa Clara County)
3 IncludIng Dccupalions represen!ing 4% or more of Ihe majoroccupaUon group
Source: Bureau of labor Statistics
Prepared by: Keyser Marslon Associates. Ine
¡;;¡"""",,,,. 11.<111 nnfilf;lrn-Hotel: Compensation; 10f15/Z0Q4; do
(l{-71
APPENDIX TABLE 5
?~02 NATIONAL OFFICE WORKER DISTRIBUTION BY OCCUPATION
BS HOUSING LINKAGE ANALYSIS
GITY OF CUPERTINO. CA
DRAFT
2002 National
Office Industry
Occupation Distribution
Major Occupations (3% or more)
Management Occupations 1,774.680
9.1%
Business and Financial Operations Occupations 2,027,520
Computer and Mathematical Science Occupations 1,588.100
Architecture and Engineering Occupations 880,960
legal Occupaiions 618.360
Healthcare Practitioner and Technical Occupations 1,424,980
Healthcare Support Occupations 728.640
Sales and Related Occupations 1,239.130
Office and Administrative Support Occupalions 6,820,590
Installalion, Maintenance, and Repair Occupations 585,930
All Other Office Related Occupations 1.773.790
INDUSTRY TOTAL 19,462,680
Source: Bureau of Labor Statistics
Prepared by: Keyser Marston Associates, !nc
Filename: 11413 006\cup-Office: Major Occupations Matrix; 10/15/2004: dd
104%
82%
45%
32%
7.3%
3.7%
6.4%
350%
3.0%
9.'1%
100.0%
14 -rD
APPENDIX TABLE 6
AVERAGE ANNUAL COMPENSATION, 2003
OFFICE WORKER OCCUPATIONS
JOBS HOUSING LINKAGE ANALYSIS
CITY OF CUPERTINO, CA
DRAFT
OccupatJan 1
Management Occupations
ChierExocuh\les
General and Operations Managers
Marketing Managers
S¡J1esManagers
Adm!nlslr<llive Services Managers
Compu!er and Inform811on Syslems MJnagers
Financial Managers
Engineering Managers
Proper1y. Real Estate. and Community Assocla!1on Managers
All Other M¡¡nagemen! Occupations
Weighted Mean Annual W.lgC
Business and Financial Operations Occupations
Claims Adjusters. Examiners. and Invesllga!ors
Management AnaJysls
Accountanlsand Auditors
Financial Analysis
Insurance Underwriters
LoanOfncers
All Other Business and Financial Opera !Ions Occupations (a\lg aU categories)
Welgh/ed Mean AnnuiJl Wage
Computar and MelhomrJlical Science OccupaUon,s
Computer Programmers
Computer Sollware Engineers. Applications
Computer Software Engineers. Systems SolJware
Compu!er Suppor1 Specialisls
Computer Systems Analysts
Network and Computer Systems Administrators
NetwDTk Systems and Data Commun!C.!Itlons Analysts
All Other Computer and Malhematical OccupaHons (a\lg all categories)
Welghwd MCùn Annual Wage
Architecture and Engineering OccuprJtions
Architects. Except Landscape and Nava!
Surveyors
Civil Eng!neers
Eleclrical Engineers
Electronics Engineers. Except Compuler
Mechanical Engineers
Architectural and Civil Oral1ers
Ctvil Engineering Technicians
Electrical and Electronic Engineering TechnIcians
Surveying iJnd Mapping Teclmicians
All Other Architec!ure and Engineering Occuporions (avg all categories)
Walg/lled Maan Annual Wilgo
Legal Dccupalions
Lawyers
Paralegals and Legal Assisl"n!s
Tille Ex<!miners_ Abstractors. and Se¡¡rchers
All OllleT Legal and Related Occupations
Weighted Mean Annual Wilgc
SOUf(;O: 8vrc¡¡uofLaborSlillIslic5
Pro/J<!T(]{ by: Koyser Mar.<;!on Assod¡¡h:~s, Inc
<"t__"_~. "."'" 11f1~,,.,tl1.r;ln~,..· r."m~¡nl1s¡¡li{Jl1; 1011512004: dd
2003 Avg.
CompQn!latlon I
% of Total
Occupation
Group 1
%orTolal
Ome(
Workars
S1ß1.200 77% 07%
5128.200 230% 21%
5130.100 47% 04%
5131.100 47% 0.4%
$82.800 48% 0.4%
5130.800 78% 07%
$112,800 138% 13%
5145,400 41% 04%
$42,800 72% 07%
595300 22.1% 2.0%
$115,700 1000% 9.1%
552.900 92% 10%
S104.900 111% 12%
560_200 209% 22%
582.100 49% 05%
577.500 45% 05%
564.500 90% 09%
571500 4115% 4.2%
$73,000 100.0% 10.4%
579.400 171% 14%
594.100 158% 13%
598.400 104% 08%
551.300 146% 12%
575.200 156% 13%
$75.000 79% 06%
578.200 5_0% 0.4%
5B<1100 13.7% 1.1%
$80,700 1000% 02%
S93_000 86% 0.4%
560.900 48% 02%
S77.000 123% 06%
590.300 57% 03%
584.900 43% 02%
58'1.200 55%. 02%
544.700 86% 0.4%
551.200 43% 02%
553.300 50% 02%
S55.100 44"/" 02%
577 200 36.4% 1.6%
S73,100 100.0% 45%
5154.400 610% 19%
557.200 258% 08%
554.400 68% 02%
553000 8.4% D.2-%
$'16,000 1000% 32%
I L{ ~r I
Occupation J
Hea!lhcDra Practitioner and Technical Occupations
Dantisls
Family and GE!neral Prac!llionE!rs
RE!glslered Nurses
Dental Hygienists
licensed Practical and Licensed Voc¡]!ional Nur~es
AI! o!hcr HetlUhcare Prac!ì(ìoners and Technical Occupations (avg all calegories)
Wclghr~d Mean Annual Wage
Heall/JcarB Support Occupations
OenlaJAssislanls
Medical Asslslanls
Medical Transcrip/;onisls
Veterinary Ass!stanls and Laboralory Animal Carelakers
All Other Hea!lh Care Support OccupaHons (8'19 all categories)
Welgh/ed Mean Annual Wagt!
Sales and Rala/ad Occupations
First-Lina Supervisors/Managers 01 Non·Retail Sales Walkers
Rei.,!! Salespersons
Insurance SalasAgenls
Sacur!lles. Coml1lodilies and Financial Services Sales Agenls
Sales Reprasenlallves. Wholesale and Mal1ufadurlng. Techl1leal al1d Sc;!entínc Products
Sales Representatives. W!10lesala and Manulaeiurll1g Except Technical and Scientific Produc
Real Estate Sales Agenl~
Telemarkeiels
All Other Sales and Related Occupalions (avg aU calegories)
Welgh/ed Mean Annual Wage
Office and Adminislraliva Support Occupations
Fir:¡I-Llne Superv¡:¡ors/Managcls of Qlfica and Administrative Support Workers
Bookkeeping. Accounting. and Auditing Clerks
Tellers
Cuslomer Service Represenlatlves
Recep!1onJsIs and Inrormation Clerks
Executive Sacrclaries and Adminlslral1ve Asslslants
Secrelaries. Except Legal. MedicaL and Execut!ve
Omee Clerks. Genera!
An Olher Of rice and Admin Support·Occupallons (avg all calegorlcs)
Wefghled Mean Annual Wage
Inslai/alion. Main{enance, and Repair Occupaliol1s
Flrsl-Llne Supervisors/Managers of Mechanics. \nslallers. and Repairers
Telecommunications Equ1pmenl Installers and Repairers. Except line Inslallers I
Maln/ananee <Jnd Repair Workers. General
Telecommunications Line InslaUers and Repairers
All Dlher Inslall<llion. MalntenancEl. and Repair Occupallons (avg all calegories)
Wefghtad Mean Annual Wag!]
200JAvg.
Componsatlon 1
%ofTo!al
Occupation
Group ~
%ofTolal
omco
Workors
5167.500 60% 04%
592.900 52% 04%
570.100 17 5% 1 J%
591.700 101% 07%
$45.200 69% 05%
568300 5<\.2% 4,0%
$76,700 100.0% 7.3%
537.400 351% 1 J%
5J5.500 351% 1 J%
$36.100 53% 02%
527.200 78% 03%
$31200 16.7% 0.6%
$34,800 1000% J7%
583.200 50% 03%
525.900 51% OJ%
570.200 217% 14%
saO,100 43% 03%
590.200 46% OJ%
560.300 72% 05%
551.400 aO% 05%
540.900 72% 05%
543500 36.9% 2.4%
$56,300 100.0% 6.4%
S54.600 72% 25%
$38:900 71% 25%
S25.700 73% 25%
$44.100 108% 38%
529.200 68% 24%
$47.800 68% 24%
536.700 6_8% 2.4%
529.800 107% 37%
537200 J6.5% 12.8%
$37,800 1000% 35.0%
563.200 76% 02%
543,200 195% 05%
540.500 404% 12%
546.200 108% 03%
54J 200 21,7% 0.7%
$44,000 1000% J.O%
90,9%
, Tim mclt!odology Ulili!cd by (he California Employmcf\\ Davc1opmOf\l D(!partm~ml (EDD} "ssllmcs Ihal hourly piJld employeos ¡no employad lull-limo
Af\f\UDI compCnSDUOf\ Is c¡¡lclllated by EDD by mlllliplylno hourly IVilge$ by 40 hours pcr work WC1!k by 52 weo~s
Oc;r;upallon percenlagos ale lJosed on Ih!! 2.002 NeUon¡¡llnduslry· Sþ1!dlic: Occupationol EmploynHml SUNßY compll~d by thß Bure;:¡u 01 Labor Slali~lIcs Wages
h¡¡vo LJe~n upd¡¡!od (f) 3nJ QUMlJf 2003. OES 2002· S¡m ,Josa MSA (5an10 Clara County)
3 inctuding OC;cup¡¡ljon~ repres!.!f1Uf\g 4% or mora 01 tho m;:¡ or occup¡¡Hon group
. Waoo dala not ¡¡v¡¡ililOlo: oslimatcd based Of\ thß av<!rilQo W3{ ß lor if\sl"lIallon, maintcmlnco ¡¡nd ¡upall occupallof\s
SOultO: []ufoau 0/ Labor S!¡¡lisiic~
Propomd by: Koyser MIII~lon A5S0cJ~lc5. Inc
. ~'" ._. '~~~_~n~·,H",,· 1nl: SI?nn4: dd
/C{ -0 L
APPENDIX TABLE 7
2002 NATIONAL RETAIL WORKER DISTRIBUTION BY OCCUPATION
JOBS HOUSING LINKAGE ANALYSIS
CITY OF CUPERTINO, CA
DRAFT
2002 National
Retail Industry
Occupation Distribution
Major Occupations (3% or more)
Management Occupanons
932,560
3.6%
Food Preparalion and Serving Related Occupations
7,798,060
30.3%
Building and Grounds Cleaning and Maintenance Occupations
225,470
09%
Sales and Related Occupations
8,628.920
335%
Office and Administrative Support Occupations
2.792,750
109%
Installation, Maintenance, and Repair Occupations
1.334,850
52%
Production Occupations
762,540
30%
Transportation and Material Moving Occupations
1,781.940
6.9%
All Other Retail Related Occupations
1.481.360
5.8%
INDUSTRY TOTAL 25,738.450
1000%
Source: Bureau of labor Statistics
Prepared by: Keyser Marslon Associales. Inc
Filename; 1413 006\Cup-Relail; Major Occupalions Malrix; 10f15/20Q4; dd
(\.{ ~t3
APPENDIX TABLE ß
AVERAGE ANNUAL COMPENSATION. Z003
RETAIL WORKER OCCUPATIONS
Joas HOUSING LINKAGE ANALYSIS
CITY OF CUPERTINO, CA
DRAFT
'/,o(TotQI '!.ofTotal
200JAv!J. OCcup;¡Uon Rol;¡1I
Componso!lon' Group' Workors
5181,200 52% 02%
$128,200 491% 16%
5131.11J1J 72% 03%
$-I9.71J0 21J9% 05%
59531J0 g~ Q..~
$.108,900 tOO_O"l. 36"1,
531J.701J 65% 20%
51$,900 73% 22%
$23.2.00 79% 24%
520,800 67% 20%
$16.700 42% 13%
517-700 230% 70'/.
51ij,900 42% 13%
517,51J0 228% 69%
516.!J00 49% 15%
520.000 g~ J.-~
Sj9,400 100,0% 30.J·,~
$45.000 123% 41%
$21700 35,2% 11a%
525.900 41,a% 1010%
~500 107% lQf¡z
$28,700 100.0"1. 335%
554JiOO 52.% 0_6%
536.900 94% 1,0%
5-14_100 64% 09%
$30,900 65% 07%
526,200 365% 4_0%
529.000 9,8% 11%
532.2.00 24,2'/;' ~
$.31,500 100_0% 10,9%
563.200 70% }4'Yo
$42.000 12,0% 0_6%
542.300 415% 2.2.%
$20.000 53'10 03%
540,$00 n% 0.2%
ill-.!QQ ~ 12Th
SJ1.000 100.0% $,2.%
$26,000 10A% 01%
$39.700 '10% 03%
52.9.700 159% 11%
523.9001 41% OJ%
523.900 4 9~. 03%
$19.800 130% aD%
523.1)00 177% 12%
SnOOD 163% 11%
ill·1M 11.I1D: Q.·IDh
$2G,JOO 100.0'/. IÎ<J%
004'';'
Occup~tton )
I.IMa!JGmonIO~çlJpalion5
ChlafExOClJUvOS
Goncraland Opcr3Uon~ManD90rs
SalosMÐnllgcrs
FoodScrviçcManaQcls
All O\l1of Managcmcrll Ocwpallons
WcIUJ¡iodMaonAnnuoIW¡¡O'"
Food Propar.JIÎDf! and Sarvlng Ralalad oçcup¡¡lions
Flrst.Uno Supcf\iiscrs/Managcr5 cl Food Pr(!parolJon ¡¡nd Sef\ilng Workors
Cooks. Fast Food
Cooks,Rcst~\ir¡¡nl
FoodPreparaUonWorkcrs
Bartonders
Combinod Food Prepôral10n and SOr\lln!J WorkerG. Induding FJSI Food
Counlur AHondanls, C,:¡lelc¡io Food ConC01sslon and ColfeD Shop
Woilcrs.mdWQilressos
Oishwashers
All Olhor FODd Pwp;¡wlion ond SONing Rcl¡¡I~\J OccuPQljol15
WelUhCod MOiln Annuol WU[l1I
Salos ond Rolarod Oççupalions
FIrSI.lInc supervisor:¡JMllna!JDrsof Ralail Sales workers
CQshlors
RQrailS¡¡laspctsons
AIIOthol Salas and Rcl¡¡lcd OccupaUons (avg all c,"Jlcgorlcs)
WclghlodMo;¡n Annuøl Wilgo
Offiço ond Admlnir.lmUvo Suppon On:¡¡palions
Firsl.Line SupcrvisorslM¡¡n¡¡gcrs of Olr.cu and AdmlnisJr¡¡lIve Support Workers
BookkeepIng, Accounling_QndAudHlrlgClcrk:;
Cus!omelServlcc RoprO:;Qnli11ivc5
Sh!ppln!J. Reœivin9 and Tr;¡lfic Clelks
S!ockClc¡ksondOldcrFil!ors
OfOcaClerks_Gcneml
All Olnar OI(;CII ¡¡nu Adminlslr¡¡livQ Support Occup¡¡(ions
WeIghted MOJI1 Annual WaGo
Ins/a/lalion. Malnlanancc, and RQpair Ocç¡¡p;)I(QI¡~
First-Uno SUPQrvisor:llMol\ogersof Mechi1nlc.r.. Inslol1ofS. ondRcp¡¡irers
Au\omoliVQ 8ody¡¡nd Rclaled Repilirel5
AUlomolivc Sorvico Tochnlcii1ns and MechDnics
Tilll RepQlmf5 ondCharlgals
MQinlananCo¡¡nuRcpoJtWOrkars.Goner;¡1
AU Olherlnsliltl¡¡l1on. MQinlcnonco and RQpalr OçcuplIUons
Wolu/!/odMuilnAn/Ju;)/Wi1go
TI;¡nsporl¡¡lion ;¡nd Malarial Moviflg Oçwpallons
Dt!verlSoJosWolkols
TJ1JckO¡ivcrs. HOiJvy¡¡ndTr¡¡çlor.Trililcr
TJ1JckDrivers UllhlOIDcllvcrySQrviC01s
Palklng Lot Auondanls ('IJ
SorvlcoSt¡¡lIonAUond¡¡nls
CIOQnel5 olVehlc!es and Equlpmcnl
LaborolsQI'I\J Fralghl, Slock. ¡¡nd Malcriol Movcm. Hand
Pockcr¡¡Q!1dPackogors, H¡¡nd
All OlhQr Tr¡¡n:;port¡¡lion and Maler\¡¡( Moving OCl:Up¡¡lio!1S
Weigh rod Moon Annuill Wag!?
, TI,o methQ\JolOUY "Iinz(!d by Ihu Colllalnlo Ef"playf"ul'Il DovolopmonL Department ¡eDD) o~:;um(l~ ¡hol hourtypold omployooooro omp!oyou lull-llmQ
AUI'IUQI compo".alion 10 eOIOJI,lt( (j by EDO by mulllplY;IIO lIourty w~Oo~ by 40 houro por wark wook b~ 52. w..ck~
, OCOJpnllon roreonl~oe' arO bo~e~ on IJ\O 2002 N~lIonoJ I"dvotry" Sroclric Occupatlonol Emr10ymunl OUNOy eompilod by Iho ßIJlOOV 01 Lobor S];¡li.lle~ WOQ!lO
¡IoWO boo" updolod 10 Jrd QUolnof 200J. O~S ~002 - San 1000 ~ISA (S"nIQ Clom Counj~!
3 ¡"cludlng Qccvpou,ms roplo~onling 4% or maio of 11\0 mojor ocevpollon Q'OUP
. No wage Information avoilobta; woon$ cSlimllled from -SQNtee Slallon Qllendanls .
Source; B'lw,w of lobar Sloti5l1c~
PWllorod b~: Koyoo, ',I"r.rou A!;,ocloiol, Inc
_.. ."'"n"n......~ O..,."-C'"",M",.'U"" HIJ\S¡;J004:dd
r~ -tv
Appendix B
Ill. ~t(
APPENDIX B: SUPPLEMENTAL NEXUS MODEL DOCUMENTATION
This appendix provides additional information on the methodology incorporated into the nexus
model as presented and summarized in Section III of this report. Steps #4, #5 and #6 of the
model address the income and household size combinations of worker households. Because
data is not available that allows us to directly estimate how the workers in each occupation are
distributed in terms of household income and the category definitions (such as 30% to 50%
median), we developed a model to estimate the distribution based on U.S Census
information.
To briefiy recap the prior steps:
. Step #1 is the estimate of number of employees based on a density factor
Step #2 is an adjustment for changing employment composition.
. Step #3 is an occupational distribution of the employees by building type.
Step #4 - Estimate of Employees Meeting the Lower Income Definitions
The percent of employees in each occupation category that fall at or below the respective
income thresholds is estimated in Step #4.
The data source is the California Employment Development Department average
compensation survey by detailed occupational calegory. The 2002 survey was the most
recent available at the time of analysis preparation. The composition of each occupational
group (such as share of hotel service workers that are maids vs food preparation workers,
etc.) was evaluated to estimate averages for the occupational category by land use/building
type overall.
The four income categories that are the focus of this analysis - under 50% of median, 50% to
80% of median, 80% to 120% of median, and 120% to 150% - were charted for each
household size up to six person households, using the HUD income levels. Using the
compensation data by occupation, the share of employees that fall at or below the income
level was estimated.
Step #5 - Estimate of Household Size Distribution
Since the HUD criteria for income definition is dependent on a household meeting a
combination of income and size requirements, the household size distribution ranging fr~m
one person to six person households was input into the model.
I Lt ~J1
19092008\001-003: 10/15/2004, ORAFT
Keyser Marston Associates, !nc
Appendix 8 - Page 1
For the Cupertino analysis, the household size characterislics of the county was utilized since
workers in the City live allover the County area and are more similar to the larger area than
the characteristics of those who live in the City.
Step #6 - Estimate of Employee Households that Meet Income and Size Criteria
This step calculates the number of employee households that meet HUD criteria for each
income category, separately analyzed for lhe employees associated with each building type,
Using a matrix format, a probability factor was calculated for each of the income subgroups
(based on the U.S. Census), and then totaled, This number represents the probability that a
household in a given occupation category will meet both income and household size criteria
established by HUD.
(L\ -t1
Keyser Marston Associates, !nc
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