This study will examine the potential fiscal impacts of operating the unincorporated Midcoast under two alternative scenarios of local government organization: incorporation, and annexation to the City of Half Moon Bay. For the purposes of this study, the Midcoast is defined as the unincorporated area north of Half Moon Bay and within the urban-rural boundary established in the Local Coastal Program.

The primary aim of this study will be to gather cost and revenue data for both scenarios from the appropriate government agencies and present this data in the form of a city budget, showing projected costs and revenues for the first year of operation. Analysis of budget impacts in subsequent years would require speculative assumptions regarding the amount and type of new development in the Midcoast, and in particular, a sophisticated analysis of retail sales capture, and is thus outside the scope of this study. The following sections describe the study methodology and key assumptions in further detail.

Both the incorporation and the annexation scenario assume that the Midcoast will provide the same municipal services that are currently provided by the City of Half Moon Bay. These services include:

• General Government and Administration
• Legal counsel
• Police
• Animal Control
• Planning and Building Inspection Services
• Public Works Administration and Maintenance
• Parks and Recreation

Under the incorporation scenario, it is assumed that police services will be contracted out to the City of Half Moon Bay or the County of San Mateo. The study assumes willingness to enter into such contracts with the new city.

Service costs are a function of the levels at which a city provides services and each serviceâs per unit maintenance and operations costs. Service levels are generally measured by how much of a service (such as police officers or acres of parks) will be provided per 1,000 residents. Unit costs include all maintenance and operations costs of providing a unit of service, and exclude capital facilities costs. Examples of unit costs are the salary of a police officer or the cost per acre of maintaining parkland.

Under the incorporation scenario, with the exception of parks and recreation facilities, assumed levels of service and unit costs will be based on existing standards and costs for services the County of San Mateo provides to the study area. Parks and recreation service levels and costs for the incorporation scenario will be based on those in Half Moon Bay. For the annexation scenario, all assumed levels of service and unit costs will be based on existing Half Moon Bay service levels and costs.

Revenue projections will be based on data provided by the State Board of Equalization, State Controllerâs Office, and the County of San Mateo. Revenue estimates will be calculated in accordance with California Government Code Section 56842, and will assume revenue neutrality and any necessary mitigation payments to the County, pursuant to Government Code Section 56845 (see attached sections of the California Government Code for details). Further, property tax revenue estimates will take into account required contributions to the Educational Revenue Augmentation Fund (ERAF).

To the extent possible, the study will estimate capital costs associated with each scenario. Under the incorporation scenario, the study will assume necessary capital facilities to include a city hall, administrative offices, parks and recreation facilities, and a public works corporation yard. A police station will not be required under the incorporation scenario because police services will be assumed to be contracted out to either the City of Half Moon Bay or the County of San Mateo.

Under the annexation scenario, assumed capital facility expansions will be based on existing capital facility standards in the City of Half Moon Bay. In general, these standards will be calculated on a square feet per 1,000 residents basis. Accepted per square foot standards will be used to estimate facility costs.

This study will include a section describing methods that could be used to close any identified revenue/expense gap. In particular, the study will address general and special taxes, fees, and the full range of assessment districts that could be used. In addition, the study will determine the revenue generating potential for various land uses that could potentially be located in the Midcoast. The costs, revenues, and net fiscal impacts for each land use type will be presented in table format, and land uses will be ranked in terms of their revenue generating potential. The specific land uses that will be analyzed are as follows:

• Single-family dwellings
• Multi-family dwellings
• Retail
• Restaurants
• Hotels
• Business/Professional offices
• Low impact manufacturing
• Research and development

In accordance with State law, for the purpose of calculating State-shared revenues for the incorporation scenario, the study areaâs population will be estimated at three times the registered voter count. All other population estimates used for the fiscal analysis will be based on projections published by the Association of Bay Area Governments (ABAG) in Projections Î96. Interpolation of ABAG Projections Î96 data for the study area yields a 1998 population estimate of 12,800.

The study assumes that funds and authority of county dependent Montara and Granada Highway Lighting Districts will be transferred to the City of Half Moon Bay or a newly incorporated city pursuant to Streets and Highway Code Sections 19270 et. seq. The fiscal impacts of the reorganization of independent special districts will not be addressed by this study. Budget data for independent special districts will be provided in an appendix.