One of the most serious constraints pertaining to future economic development in Novato is the limited amount of vacant, suitable land for expansion or development. While many small vacant parcels can be found in the City, they are often perceived as not suitable for development due to such factors as size, shape and location. As might be expected, the limited supply of land, in conjunction with strong demand, has led to price increases, particularly in the past five years. Land prices have risen so sharply that, in most cases, only commercial development can support these prices. In addition to its cost, the difficulty in assembling land for economic development is further compounded by small parcel sizes and fragmented ownership. In spite of these problems, the demand for land is strong, and its limited supply will ensure its ever increasing price. Higher land prices will essentially dictate commercial development rather than industrial development, since the latter, in general, cannot support current land prices, or anticipated increases in land costs. Nevertheless, retention of existing commercial businesses, as well as facilitating their expansion within Novato, should be a high priority.
The City can and does intervene indirectly in the market place through its regulatory and financing powers. It can determine what kinds of uses can be developed at certain locations. These powers can also be used to promote certain land uses by restricting other competing land uses, e.g., limiting industrial zones to industrial uses only. In this manner, the City can use its regulatory powers to encourage those land uses at those locations where it feels it will help to achieve its economic development objectives. However, regulatory and administrative reform is necessary to make more cost-effective and time-certain the application and permitting process without compromising environmental review and citizen participation.
Educational and Employment Opportunities. Unlike previous generations, today's residents may have as many as 10 different employers over the span of their employment years. To remain employed, education has become a life-long process. The coordination of education and training programs, oriented to continuous, lifetime learning and retraining can provide the labor force with marketable skills which can be used to continue employment in the region and perhaps in the City. There is a significant work force base within the City that represents a substantial number of employment opportunities. However, long term shifts in the types of jobs have occurred which affect the labor force.
This demands that additional education and training are provided to ensure their competitiveness. Still, not all jobs in the service industry require high skills. Many employment opportunities are provided in the retail, eating and health services for those with lower skills. The City should work with other public agencies and organizations to identify and provide educational opportunities.
Sustainable economic development that is consistent with environmental protection and improving the quality of life and community requires providing equal economic and high quality educational opportunities to all. This means bringing new employment tools and skills (i.e., computer literacy and global information access) to all citizens regardless of previous employment or educational attainment. In addition, a community offering high quality educational opportunities can attract businesses which require employees with high quality educational attainment.
Another employment concern is the mismatch between the skill requirements of existing and future jobs and the skill levels of the work force. It may not be possible or desirable to create jobs for existing skill levels. It may be more desirable to raise or instill skill levels to meet the needs of existing and future jobs, since inadequate skills are a major barrier to employment.
Employment opportunities in the City will continue to increase primarily due to the growth of existing businesses and development of new office space. In addition to this direct employment, indirect employment will result from stimulation of the local economy through business purchases of goods and services from other businesses.
Office development not only impacts employment directly but indirectly creates related employment opportunities. There are complementary relationships between office space, restaurants and shopping facilities. Eating and shopping facilities complement office employee needs and desires, which in turn expands employment opportunities for low and semi-skilled workers in non-manufacturing industries.
Improved Representation of Local Labor Force in Local Jobs. There are methods of expanding the percentage of local jobs that are filled with local labor force. These include close monitoring of employment needs and job openings and active promotion of the local labor force. Another positive approach would be for the City to have the capability to offer a prospective employer a pool of potential employees trained to meet his or her needs.
Another approach is to identify housing and quality of life opportunities so that more of the local jobs will be held by people moving into the City.
However, given residential preferences and the general pattern of job mobility, it would be unreasonable to expect a significant increase in the percentage of locally-employed residents without strong General Plan objectives in collaborating with other public and private entities to achieve this goal.
Alternative Opportunities for Job Training. This is, perhaps, the most difficult employment issue to address in today's economic and political climate. With the loss of traditional resources for job training programs in the face of growing needs, the problem of adapting the local labor force to meet the requirements of a changing economy may soon reach crisis proportions. Job skills obsolescence rather than the lack of jobs appears to be the critical employment issue of the day.
With the shrinking resources, local government and educational agencies must look at closer coordination and sharing of resources with private sector participation inasmuch as they have a vested interest in having a skilled workforce trained to meet their needs (e.g., College of Marin/Indian Valley Campus "contract training" for employers) if they are to meet the challenge of training or retraining the labor force for a changing economy. A skills community training center is an example of this coordination, but this concept needs to be expanded to include private sector and non-governmental organization participation.
Also, the private sector can be encouraged to play a more active role in job training. In other parts of the country, it has either undertaken job training programs on its own without government assistance or has contracted with educational institutions, governmental and non-profit agencies to carry out job training programs with a guarantee that graduates would be hired.
Jobs from Economic Development Versus Jobs for Novato Residents. Given the interdependence of cities within the Bay Area, it is not possible nor even desirable that each community become insular and attempt to meet its individual job needs within its borders, one must assume a regional perspective.
While it is true that a great many of the jobs being created by current economic development efforts are going to non-Novato residents, by the same token, other communities are providing jobs for Novato residents, as is pointed out by the 1995 census finding that 70 percent of the local labor force work outside the City. Still, in view of the fact that Novato is "importing" ever greater numbers of employees, it is not unreasonable to seek somewhat improved performance in that regard. A greater percentage of jobs held by resident labor force would result in less traffic congestion and greater sense of community. From the employer's standpoint it could mean less absenteeism and possibly greater employee performance and productivity.
A primary constraint on economic development and productivity is transportation and traffic congestion. The long cherished transportation solutions of expanding roads, bridges and public transit are not, by themselves, going to solve gridlock, air pollution or fuel shortages, even if they could overcome serious financial and political problems. Some new ideas such as disincentives for solo drivers have had only very limited success. The idea of linking transportation and telecommunications first emerged in the mid-1970s when telecommuting, taking the work to the worker via telecommunications, was first described. In 1991, the California Engineering Foundation held a conference and issued a report titled "Transportation Redefined: Moving People, Goods and Information." The report urged the use of telecommunications as part of the transportation mix and shifting transportation subsidies and incentives. This evolving concept sees technology and electronic highways as both an alternate transportation mode and a means of maximizing use of traditional transportation systems. Going beyond just "bringing the work to the worker," this view sees the definition of mobility expanding through telecommunications to bring services to a broad mix of consumers and taxpayers, moving information and services rather than people. Examples include education, health care and government information. New Federal legislation is supportive of this movement. For example, the National 1991 Intermodal Surface Transportation Efficiency Act (ISTEA) encourages broader thinking on mobility and provides State, regional, and local governments the flexibility to choose from among a variety of transportation modes, including additional transit, transportation demand management strategies, clean fuel vehicle fleets, telecommunications substitutes for transportation, and other options to improve their transportation systems, reduce congestion, and improve air quality. State and regional groups actively funding development and implementation projects to help local communities relieve the constraints on economic development imposed by traffic congestion through the use of new telecommunications technologies include: Bay Area Air Quality Management District, Bay Area Council, California Air Resources Board, California Energy Commission, California Department of Transportation, and Metropolitan Transportation Commission. For Novato, acquisition of new fiber optic cable systems, two-way satellite and other wireless linkages to global information resources, and increased phone system capabilities present major challenges and issues for the community.
- It recognizes that ecology and economics are interdependent;
- It makes economic decisions about growth, development, or business activity based on the long-term effects of those decisions, both in the economic benefits to and the environmental effects on the community;
- It encourages a full range of economic activities that incorporate conservation, reuse and recycling of resources and capital, and the prevention of pollution or degradation of resources;
- It builds on the characteristics unique to the locality to create economic diversity and self-sufficiency; and
- It recognizes the City's interdependence with neighboring communities and other public agencies.
Strategies for sustainable economic development include the provision of incentives to influence private investment decisions. These typically consist of allocating sufficient developable land designated for office, commercial, retail and industrial uses; establishing incentives to attract new businesses and retain existing businesses; and implementing expedited processing of development plans.
It is also necessary to promote Novato as a desirable place to do business. Efforts to create a good business climate in which there exists close public-private sector cooperation will yield positive results.
The City can influence or otherwise affect local and regional economic development in many ways. However, the primary responsibility for achieving a healthy, sustainable economy rests with the private sector, and with national and regional trends that are beyond the City's influence. Cooperation among entities with different mandates, responsibilities and powers is essential to making sustainable economic development effort successful. EC Table 4 summarizes the City's potential influence on economic variables as they relate to the General Plan.
EC Table 4: The City's Influence on Economic Variables Variable Yes Some-
whatNo Indirectly General
PlanDemand for goods and services X Local demand X -- Extra-local demand X -- Characteristics of the labor force X Size of the working age population X Age composition X Education/skills X Labor force participation X Commute patterns X Novato's competitive position compared to the Bay Region X Local natural resources that are economic inputs X Affordable housing supply X Affordable land X Gateway to outdoor recreation X Tourism X Quality of life X Distance to major markets X -- Novato's ability to accommodate regional growth X Land with proper plan and zoning designations X Land served by infrastructure X Land served by adequate access/egress routes X Regulations governing site development X Development fees X Government attitudes toward development X National conditions X Supply of natural resources and other industrial inputs X -- Productivity trade-offs between labor and capital X -- Interest rates X -- Availability of construction financing X Availability of operating capital X The policies and programs in the next section are intended to coordinate local government efforts in a deliberate and planned manner with the private sector and other public and private organizations to accomplish the goals of this Chapter. It seeks to establish working relationships between business, government and the community.
Other chapters of this plan contribute to sustainable economic development:
- The Land Use Chapter contains policies and programs to encourage additional housing Downtown which would enlarge the market for Downtown businesses and foster increased nighttime use of the center of Novato. The Neighborhood Commercial and Mixed Use land use designations permit mixed residential and commercial uses. This increases local shopping opportunities, reducing the need for travel, and provides a larger local market. The Commercial/Light Industrial Land use designation specifies land uses and densities to facilitate the preservation and enhancement of existing light industrial and home-supply businesses north of "Old Town."
- The Transportation Chapter seeks to ensure that the City's transportation system will not become overloaded, because traffic congestion seriously affects local economic activity. Alternatives to the single occupant vehicle are combined with programs for improvements to the roadway system. Ensuring that people and goods can continue to move efficiently throughout Novato is essential to a healthy local economy.
- The Housing Chapter contains programs to ensure that additional affordable housing will be built. Employers typically look for communities that can provide a variety of housing for their work force.
- The Environment Chapter continues the City's policies of having a generous amount of parks, trails and recreation facilities to serve all sectors of the community. This chapter also contains policies to ensure that Novato's unique environmentally sensitive areas are preserved. Restored or preserved wetlands in the North Bay region may generate tourism activity for the City.
- The Community Identity Chapter recommends establishing design guidelines to improve the appearance of existing and future development throughout the City; programs to preserve and enhance historical buildings and sites; and programs to strengthen Novato's unique sense of place.
III. Objectives, Policies, and Programs for Economic Development
| EC Objective 1: | Foster Economic Development |
EC Policy 1 Economic Development Commission. Create an Economic Development Commission to replace the current City/Chamber of Commerce Joint Economic Advisory Committee to foster public and private cooperation and to lead in the implementation of the following programs and policies.
EC Program 1.1: Identify means to provide staff support and resources to assist the Economic Development Commission.Responsibility: Central Administration
EC Program 1.2: Present annual recommendations of the Economic Development Commission to the Planning Commission and City Council.
Responsibility: Central Administration
EC Program 1.3: Consider developing an Economic Development Master Plan.
Responsibility: Central Administration
The purpose of this plan would be to develop economic development strategic plans and means of implementation and to determine the economic, financial and fiscal impacts of alternative development proposals and the effectiveness of the policies and programs of this Chapter.
EC Program 1.4: A study should be conducted of Novato's small businesses to determine the factors that encourage and discourage small businesses from seeking or moving from Novato locations; to profile Novato's existing small business community to identify obstacles to small businesses; and to make recommendations for action the City can take to encourage small businesses.
Responsibility: Central Administration
EC Program 1.5: Propose an annual local report to the City Council on progress in implementing a vital sustainable economy. The report would include information on job creation, business development, the amount of remaining vacant and underdeveloped commercially designated land, and the results of other economic development strategies and how these are implementing General Plan goals and policies. (A month will be designated for receipt of this annual report.) Statistics on availability of commercially designated land will be included in said report.
Responsibility: Central Administration
| EC Objective 2: | Maximize the capacity for employment-generating uses in areas designated for non-retail business. |
The supply of land suitable for commercial and major office development is limited. To preclude these lands from being used inappropriately or inefficiently, a number of policies and programs will be adopted.
EC Policy 2 Commercial Lands. The City should encourage the development of commercial lands primarily for economic activities that contribute to local employment and income.
EC Program 2.1: In reviewing development plans for commercial and major office development, encourage the use and/or reuse of floor space primarily for production of goods and services.EC Program 2.2: Allow in commercially designated areas only those uses that provide either business and professional services directly supportive to workplace uses, or convenience goods, restaurants, and other food and beverage and services needed by local workers.
EC Program 2.3: The City shall review, and amend as necessary, the allowed and conditional uses in the appropriate sections of the Zoning Ordinance to ensure that lands zoned for light industry and offices are developed predominantly for workplace uses.
EC Program 2.4: Amend the Zoning Ordinance to specify those retail uses that may be allowed in industrial districts with conditional use permits.
EC Policy 3 Employment Intensity. Consider allowing employment intensity to increase over time to reflect changes in technology and workplace organization.
EC Program 3.1: Through the work of the Economic Development Commission or other body, investigate opportunities to increase employment in the City.EC Program 3.2: Consider the need for changes in zoning and other development regulations in order to allow future increases in employment intensity.
Any changes which would permit development intensities to exceed the maximums stated in LU Table 2 would require General Plan amendments.
| EC Objective 3: | Encourage businesses, particularly targeted businesses, that provide a variety of employment opportunities. |
Novato's commercial lands should be used as efficiently as possible. Average employment intensity should build over time through an increase in the employment intensity of new and alternative workplace uses (both commercial and office) and telecommuting. In particular, the City should seek new jobs that employ Novatans so as to increase the number of people who both live and work in Novato.
EC Policy 4 Regulatory Environment. Create a regulatory/administrative environment that will retain or attract to Novato workplace uses (targeted businesses) that meet criteria set by the Economic Development Master Plan and are commensurate with the pay and skill levels of Novato residents.
EC Program 4.1: Review the design of new commercial development and encourage the potential for future increases in employment intensity, and including methods for realizing Policies 3 and 4.EC Program 4.2: Create a development review process that will attract rather than discourage nonresidential development.
EC Program 4.3: Identify in the Economic Development Master Plan tools and incentives for nonresidential development such as redevelopment, tax exempt financing and industrial development bonds.
With new development and with intensification of land use, land values will rise in Novato. Commercial sites initially developed at relatively low intensities may be converted to higher intensity uses, if the site and building plans can accommodate the increase in parking brought on by the intensification, or if alternative Transportation Systems Management (TSM) measures are implemented.
EC Policy 5 Economic Growth. Novato shall primarily pursue economic growth through the development of local employment opportunities, particularly in targeted businesses as defined in the Economic Development Master Plan.
Examples of businesses which would be encouraged in Novato include:
- Information/Knowledge based: including CD-ROM, multimedia and software development, telecommunications for entertainment and education;
- Biotechnology, Including biomedical services;
- Green Industries, including products from recycled materials, services/ products for
energy conservation, green waste processing, organic and native plant agriculture/farming, and environmental restoration;
- Professional home-based business;
- Small service businesses, including desktop design/publishing/printing;
- Ecotourism and environmentally sensitive recreation.
EC Policy 6 Business Encouragement. The City shall actively encourage new and existing targeted businesses to locate in Novato, increasing employment opportunities for Novatans.
EC Policy 7 Employment Opportunities. Encourage an increase in the number and type of jobs that would enable people to live and work in Novato, consistent with the goals and policies of the General Plan.
EC Program 7.1: Identify programs that could reduce the number of residents working outside of Novato.EC Program 7.2: Encourage employers to locally advertise new job opportunities.
Responsibility: Central Administration
EC Program 7.3: Support or jointly sponsor local job, trade and business fairs.
Responsibility: Central Administration
EC Program 7.4: Encourage coordination among employers, developers, and training and educational institutions to improve the match between emerging job opportunities and training programs.
Responsibility: Central Administration
EC Policy 8 Workplace Alternatives. Promote the establishment and expansion of workplace alternatives, including home occupations, telecommuting businesses and technology-transfer based businesses.
EC Program 8.1: Review and revise as feasible existing land use regulations to encourage workplace alternatives. Identify incentives encouraging this type of use.EC Program 8.2: Work with educational institutions to provide employment training, re-training, and vocational education for potential employees of Novato businesses.
Responsibility: Central Administration and Community Development
This program could include facilitating the establishment of an employment training center on the site of the existing Indian Valley Campus and/or another suitable site.
EC Policy 9 Live/Work Uses. Provide additional opportunities for combined residential and work uses.
Live/work units provide several important incentives to sustainable economic development. They enable "incubator" or starter businesses to get established while at the same time providing affordable housing. Live/work units reduce the need to travel and often enliven the neighborhoods where they are located.
EC Program 9.1: Adopt a live/work ordinance with performance standards for noise, dust, odors, traffic, and related potential nuisances; specific standards relating to the proportion of living versus workplace space; and other regulations to ensure that the live/work uses do not displace, but complement and are compatible with, the land use designations where they will be located.The ordinance should specify which land use designations would be appropriate for live/work units.
| EC Objective 4: | Retain and Attract Businesses |
Studies of job creation have found that small businesses create the majority of new jobs. Small businesses also contribute to economic diversity, which expands job opportunities and provides resilience during economic downturns. Locally-owned businesses provide economic strength to a community because they are more likely to buy local materials and services, help create a sense of place, and provide for more community involvement.
EC Policy 10 Small and Locally Owned Businesses. Encourage the establishment of small and locally-owned businesses, and give this sector of the local economy a high priority.
EC Program 10.1: Target small businesses in promotional economic programs.Responsibility: Central Administration
EC Policy 11 Retention of Existing Businesses. Retain, upgrade, and increase the vitality of existing Novato businesses.
EC Program 11.1: Consider establishing an administrative program to facilitate the renovation of existing commercial buildings to meet current code.EC Program 11.2: Develop an economic development strategy for Novato as part of the Economic Development Master Plan. Consider implementing the following as part of the Economic Development Master Plan:
- Survey Novato businesses to determine why they located in the City, whether they would do it now, the advantages and disadvantages of their location, and their current and future needs.
- Review existing City policies to determine whether changes are needed to respond to concerns identified in the survey. Submit necessary changes to the Planning Commission and City Council, as appropriate.
- Assemble and maintain an updated inventory of sites available for commercial and industrial development, noting characteristics that respond to the location-related, decision-making factors identified in the business survey. Publish a brochure for describing these sites.
Responsibility: Central Administration
EC Program 11.3: Make mapping and other land use information available at a reasonable cost to local businesses seeking to relocate in Novato.
EC Program 11.4: Consider fee reductions for processing of lot assembly applications for non-residential uses.
This change would remove one obstacle to creating larger sites suitable for larger and more modern development projects, in the Downtown area and other developed areas of Novato.
EC Policy 12 Attracting New Businesses. Encourage new targeted businesses as defined by the Economic Development Master Plan.
EC Program 12.1: Work with public and private entities to identify, publicize, and promote sites available for targeted businesses.Responsibility: Central Administration
EC Program 12.2: Assist in publishing and distributing promotional brochures and information about Novato to attract businesses to the City.
Responsibility: Central Administration
EC Program 12.3: Assist in instituting a promotional marketing program and tours for targeted businesses. Provide information to private decision makers (including industrial developers and realtors) on site, services, amenities, housing availability and the City's commitment to providing needed facilities and to reduce project approval time.
Responsibility: Central Administration
EC Program 12.4: Work with the Marin County Economic Commission in its educational, informational, and development activities.
Responsibility: Central Administration
EC Policy 13 Information Infrastructure. The City shall take action to provide the information infrastructure necessary to retain and attract targeted businesses.
EC Program 13.1: Work with telecommunications companies and the PUC to encourage state-of-the-art telecommunications capabilities, including fiber optic, satellite, wireless, cable lines and other new emerging technologies capable of transferring data digitally.EC Program 13.2: Consider establishing a targeted business program to assist businesses wishing to relocate and/or expand in Novato.
EC Program 13.3: Assist our educational systems, particularly through public/private partnerships, in achieving and maintaining state of the art proficiency with regard to information, computer, and communications technologies and the education, re-training, and infrastructure required to fulfill this objective.
EC Policy 14 Environmental Standards. Continue to require high environmental standards in the development and operations of all businesses. (See Chapter IV: Environment.)
Novato's environmental quality is an essential factor in attracting and retaining businesses and employees.
| EC Objective 5: | Revitalize the Downtown Area |
The City is preparing a Downtown Specific Plan to revitalize Downtown and ensure that it becomes the economic, social and cultural center of Novato.
EC Policy 15 Downtown. Improve the economic vitality of Downtown.
EC Program 15.1: Implement the adopted Downtown Specific Plan.EC Program 15.2: Support and facilitate special events such as the Farmer's Market, Art & Wine Festival, July 4th Parade, and holiday-related promotions downtown.
Responsibility: Central Administration
EC Program 15.3: Explore various financial programs to encourage existing businesses to renovate/retrofit existing commercial structures to meet market needs and thereby stay in Novato.
Responsibility: Central Administration
Refer to the Community Identity Chapter for policies and programs relating to design guidelines consistent with Downtown Specific Plan Guidelines.
EC Policy 16 Tourism. Encourage the development of tourism in Novato.
EC Program 16.1: Sponsor and/or support public events downtown that draw visitors from outside of Novato.Responsibility: Central Administration
The policies and programs in the Downtown Specific Plan are intended to create a sense of place and environment which will attract additional visitors and tourists to downtown. Refer to the Community Identity Chapter which contains programs relating to the downtown and to public art.
EC Policy 17 Retail Development Downtown. Encourage additional retail development downtown.
The City is giving a high priority to supporting the economic vitality of downtown businesses, while improving the important linkages among different business areas within the City.
EC Program 17.1: Assist in evaluating the market for desired retail uses. Identify incentives to attract targeted retail uses downtown.Responsibility: Central Administration
| EC Objective 6: | Encourage Sustainable Local Economic Activity |
EC Policy 18 Sustainability. Encourage businesses which emphasize economic sustainability. Consider analysis of economic impacts before approving major development projects.
EC Program 18.1: Assist in establishing an educational program for Novato businesses on ways to profit from sustainable environmental business practices, including recycling of manufactured goods and other materials; incentives to travel by means other than the single-occupant automobile; eco-efficiency, and water and energy conservation.Responsibility: Central Administration
EC Program 18.2: Develop a strategy to target sustainable environmental businesses (green industries) in the Economic Development Master Plan.
Responsibility: Central Administration
EC Program 18.3: Review, and revise as needed, the recommendations and proposed programs of the Economic Development Commission to ensure that the goal of developing sustainable economic development is being achieved.
Responsibility: Central Administration and the Community Development Department
EC Policy 19 Administrative Reform. Reform and improve administrative processes as identified in the Economic Development Master Plan relating to business in order to foster the spirit of cooperation, understanding, consensus and partnership between government and business.
EC Program 19.1: Review and recommend, where necessary, changes to all ordinances, regulations and regulatory processes as they relate to a sustainable local economy as identified in the Economic Development Master Plan.Responsibility: Community Development Department
EC Policy 20 Attracting Shoppers. Attract shoppers to Novato's destination retail center(s) from within Novato and beyond.
EC Policy 21 Compatible Retail and Commercial Uses. Promote compatible retail and commercial combined uses/concentrations to improve business retention and attraction and reduce vacant or underutilized sites.
One of the issues influencing Novato's economic sustainability is its heterogenous land use patterns, which includes incompatible uses, vacant parcels, and underutilized space. As opportunities arise to address these problems, timely consideration of compatibility and concentration of use and their cumulative effects should be made. The City should seek to reduce land use incompatibilities while at the same time improving the mix of uses.
EC Policy 22 Existing Retail Base. Novato's existing retail base, and the existing scale of retail development should be maintained and expanded. Cluster retail and related uses so that they are concentrated rather than dispersed. Take steps to maintain existing and promote new auto dealerships.
EC Program 22.1: The City will prepare an inventory of vacant commercially-zoned parcels fronting on major arterials, and will estimate the annual absorption of such parcels in order to advise the Planning Commission and City Council regarding the adequacy or excess of commercial zoning in those locations.EC Program 22.2: City agencies will cooperate with the Chamber of Commerce and other public/private organizations in supporting promotional activities that emphasize Novato retailing.
EC Program 22.3: Encourage new retail and commercial uses to locate in appropriately zoned areas, and require applicants for new retail and related commercial uses to find existing zoned sites.
Section 2: Fiscal Vitality
Novato, like other municipalities, faces a challenging financial future. There are opportunities and strategies available to achieve the long term financial health of the City, ensuring the maintenance of City services and facilities and a high quality of life. However, until the State of California deals effectively and comprehensively with State-wide problems including potential changes to the existing tax system, the future of municipal budgets and the vital services they provide are not certain. In the interim, cities are forced to pursue various strategies to fund the maintenance of and increasing demand for programs and services.
The Fiscal Vitality section highlights the fiscal condition of the City under the General Plan and projects future fiscal conditions under the General Plan over the next 20 years. Overall, the fiscal projections for the General Plan indicate that operating revenues will exceed costs in the earlier years of the 20 year study period, but predicts that for the later part of the period, the City will operate at a deficit. The purpose of the Economic Development and Fiscal Vitality Element, among other reasons, is to present objectives, policies, and programs to minimize or eliminate that deficit.
I. Existing Conditions
- Fiscal Conditions of City (Current)
Novato's current fiscal condition is the balance of costs incurred and revenues generated by the City's existing development, population and employment, given the City's ability to generate those revenues and level of service delivery. Although Novato's budget must be balanced, revenues to expenditures, the City remains below average in both revenues and expenditures relative to comparable Bay Area cities.
| EC Table 5: Municipal Revenues & Costs, Novato and Other San Francisco Bay Area Cities of Similar Size, Fiscal 1992/93 | ||||||||||
| MUNICIPAL REVENUES AND COSTS, NOVATO AND OTHER S.F. BAY AREA CITIES OF SIMILAR SIZE, FISCAL 1992/93, EXCLUDING FIRE DEPARTMENTS | ||||||||||
| (000) Omitted | Novato | San Rafael | So. S.F. | Pleasanton | Union City | Palo Alto | Milpitas | Petaluma | Average | Novato % of Average |
| County: | Marin | Marin | San Mateo | Alameda | Alameda | Santa Clara | Santa Clara | Sonoma | ||
| Population, Jan. 1993 | 48,897 | 52,122 | 56,613 | 54,348 | 56,753 | 57,324 | 56,671 | 45,709 | 47,604 | 102.7% |
| REVENUES: | ||||||||||
| Functional Revenues | 19,903 | 10,049 | 22,276 | 25,201 | 8,192 | 66,637 | 19,722 | 22,626 | 24,326 | 81.8% |
| General Revenues | 10,721 | 14,320 | 17,986 | 25,694 | 10,654 | 26,156 | 16,415 | 12,529 | 16,809 | 63.8% |
| Total | 30,624 | 24,369 | 40,262 | 50,895 | 18,846 | 92,793 | 36,137 | 35,155 | 41,135 | 74.4% |
| EXPENDITURES: | ||||||||||
| Operating Expenditures | 16,349 | 22,043 | 40,934 | 39,534 | 16,414 | 84,133 | 35,308 | 26,576 | 35,161 | 46.5% |
| Capital Outlays | 7,132 | 3,363 | 15,207 | 5,363 | 1,285 | 19,675 | 15,705 | 971 | 8,588 | 83.0% |
| Total | 23,481 | 25,406 | 56,141 | 44,897 | 17,699 | 103,808 | 51,013 | 27,547 | 43,749 | 53.7% |
| INCOME SOURCES: | ||||||||||
| Taxes | 9,651 | 11,821 | 16,101 | 23,179 | 8,401 | 20,660 | 10,448 | 10,903 | 13,895 | 69.5% |
| Special Benefit Assessments | 102 | 1,630 | 811 | - | 2,138 | - | - | 110 | 599 | 17.1% |
| Licenses and Permits | 700 | 663 | 589 | 1,041 | 566 | 1,420 | 2,063 | 1,231 | 1,034 | 67.7% |
| Fines and Forfeitures | 114 | 456 | 398 | 128 | 99 | 939 | 209 | 235 | 322 | 35.3% |
| Revenue from Money and Property | 1,020 | 787 | 2,650 | 1,391 | 768 | 11,595 | 5,122 | 818 | 3,019 | 33.8% |
| Intergovernmental | 5,191 | 3,320 | 8,597 | 4,265 | 4,523 | 4,471 | 3,787 | 2,781 | 4,617 | 112.4% |
| Current Service Charges | 3,270 | 5,302 | 9,369 | 19,394 | 1,670 | 53,171 | 14,079 | 13,537 | 14,974 | 21.8% |
| Other Revenues | 576 | 390 | 1,727 | 1,497 | 681 | 537 | 429 | 2,796 | 1,079 | 53.4% |
| Other Financing Sources | 10,000 | - | 20 | - | - | - | - | 2,744 | 1,596 | 626.7% |
| Total | 30,624 | 24,369 | 40,262 | 50,895 | 18,846 | 92,793 | 36,137 | 35,155 | 41,135 | 74.4% |
| OPERATING EXPENDITURES | ||||||||||
| General Government | 2,951 | 1,859 | 3,403 | 2,644 | 1,732 | 5,770 | 3,914 | 2,340 | 3,077 | 95.9% |
| Public Safety | 5,768 | 9,323 | 9,050 | 10,133 | 8,108 | 16,247 | 10,729 | 7,516 | 9,609 | 60.0% |
| Transportation | 2,071 | 3,440 | 3,399 | 2,992 | 2,483 | 4,735 | 1,494 | 2,988 | 2,950 | 70.2% |
| Community Development | 3,011 | 2,347 | 4,725 | 5,122 | 1,444 | 7,403 | 2,378 | 2,353 | 3,598 | 83.7% |
| Health | - | - | 13,094 | 7,779 | 137 | 20,555 | 6,713 | 3,796 | 6,509 | 0.0% |
| Culture and Leisure | 2,548 | 5,074 | 7,263 | 4,976 | 2,510 | 16,499 | 3,758 | 2,673 | 5,663 | 45.0% |
| Public Utilities | - | - | - | 5,888 | - | 7,670 | 6,322 | 4,890 | 3,096 | 0.0% |
| Other | - | - | - | - | - | 5,254 | - | 20 | 659 | 0.0% |
| Total | 16,349 | 22,043 | 40,934 | 39,534 | 16,414 | 84,133 | 35,308 | 26,576 | 35,161 | 46.5% |
| Source: California State Controller's Office, Financial Transactions Concerning California Cities, Annual Report 1992/93 | ||||||||||
Novato's general revenues are 63.8% of the average for comparable Bay Area cities and operating expenditures are 46.5% of the average.
| 1992/93 POPULATION | TOTAL GENERAL REVENUES | REVENUES PER CAPITA | |
| SAUSALITO (Resident) | 7,430 | 3,821,604 | $514.00 |
| SANTA ROSA | 123,806 | 46,830,440 | $378.00 |
| MILL VALLEY | 13,456 | 6,010,288 | $447.00 |
| PETALUMA | 45,709 | 12,529,285 | $274.00 |
| SAN RAFAEL | 52,122 | 14,320,340 | $275.00 |
| LARKSPUR | 11,917 | 4,154,867 | $349.00 |
| CORTE MADERA | 8,459 | 6,036,714 | $714.00 |
| NOVATO | 48,897 | 10,720,566 | $219.00 |
| Source: California State Controller's Office, Financial Transactions Concerning California Cities, Annual Report 1992/93. | |||
Novato's General Fund revenues per capita are lowest when compared to other cities in the North Bay area. This low revenue per capita condition is an issue of concern which is addressed in the objectives, policies and programs of both the Economic Development section and the Fiscal Vitality section of this Element.
- Trend/Projected Fiscal Condition of City
| Major Revenue Sources | 1992/93 | 1993/94 | 1994/95 | Projected 1995/96 |
| Sales & Use Tax | $4.49 | $4.71 | $4.95 | $4.92 |
| Property Tax | $2.81 | $2.65 | $2.98 | $2.49 |
| Motor Vehicle In-Lieu Fees | $1.66 | $1.73 | $1.80 | $1.71 |
| Recreation Services Income | $0.96 | $1.07 | $1.16 | $1.58 |
| Licenses & Permits | $0.70 | $0.60 | $0.48 | $0.81 |
| Franchise Taxes | $0.54 | $0.55 | $0.55 | $0.61 |
| Business License Taxes | $0.31 | $0.48 | $0.52 | $0.52 |
| Transient Occupancy Tax | $0.16 | $0.15 | $0.20 | $0.18 |
| Property Transfer Tax | $0.11 | $0.13 | $0.12 | $0.13 |
| Fines, Forfeits/Penalties | $0.11 | $0.10 | $0.10 | $0.10 |
| 1990/91 | $13.80 | |
| 1991/92 | $15.50 | |
| 1992/93 | $14.70 | |
| 1993/94 | $14.50 | |
| 1994/95 | $15.20 | |
| 1995/96 | $15.80 | Projected |
| Function | 1989/90 | 1990/91 | 1991/92 | 199/2/93 | 1993/94 | 1994/95 |
| Community Services | $1.00 | $1.30 | $1.60 | $1.70 | $1.90 | $1.90 |
| Central Administration | $1.70 | $1.90 | $1.70 | $1.80 | $2.60 | $2.80 |
| Community Development | $3.50 | $5.10 | $6.10 | $6.20 | $5.20 | $5.30 |
| Police Department | $4.00 | $5.10 | $5.40 | $5.20 | $5.70 | $5.70 |
| Total | $10.20 | $13.40 | $14.80 | $14.90 | $15.40 | $15.70 |
Year | Net Assessed Value | Annual Increase | % Increase |
| 1984-85 | $1,399,969,936 | - | - |
| 1985-86 | $1,603,447,728 | $203,477,792 | 15% |
| 1986-87 | 1,662,842,014 | 59,394,286 | 4% |
| 1987-88 | 1,827,075,481 | 164,233,467 | 10% |
| 1988-89 | 1,980,338,970 | 153,263,489 | 8% |
| 1989-90 | 2,233,636,697 | 253,297,727 | 13% |
| 1990-91 | 2,502,477,511 | 268,804,814 | 12% |
| 1991-92 | 2,696,946,233 | 194,468,722 | 8% |
| 1992-93 | 2,903,807,432 | 206,861,199 | 8% |
| 1993-94 | 3,050,955,351 | 147,147,919 | 5% |
| 1994-95 | 3,221,408,947 | 170,453,596 | 6% |
| 1995-96 | 3,329,684,500 | 108,275,553 | 3% |
| Source: Marin County Assessor's Office | |||
- Projected Fiscal Conditions of City
The following projected fiscal conditions for this General Plan are drawn directly from the Fiscal Analysis of the Preferred Plan (Revised) November 1995 prepared by Mundie and Associates.
The fiscal model developed for this analysis is based on various land use assumptions and projects revenues and costs for a 20 year period, beginning in 1995/96 and ending in 2014/15, using the historic growth rate and ABAG 94 growth rate scenarios.
- The Historic Growth Rate projection assumes that growth will proceed at about the same pace as it did between 1980 and 1990. During that period, Novato's population increased at an average annual rate of 0.35 percent while employment grew at an average annual rate of 1.89 percent. This amount of growth is permitted by this General Plan.
- The ABAG 94 Growth Rate Projection for this General Plan assumes that growth will occur at about the same rate as anticipated in ABAG's Projections 94 for the period 1995 through 2010, but the fiscal analysis extends that projection through the year 2015. In this scenario, the City's population will increase at an average annual rate of 1.03 percent per year, or nearly triple the rate experienced between 1980 and 1990.
ABAG projects that employment will grow at an average annual rate of 4.08 percent per year, substantially faster than the historic rate of 1.89 percent per year. The scenario evaluated for this General Plan assumes that all employment-related land uses-that is, commercial, industrial and office-grow at this rate until development capacity available under this General Plan is used up. The land use designations of this General Plan effectively limit the amount of commercial and office (but not industrial) development to less than will occur if the growth rate of 4.08 percent per year is sustained. With limits on commercial and office space equal to full General Plan buildout, employment will increase at an overall average annual rate of 2.47 percent.
EC Table 9 summarizes the amount of development and the changes in population and employment that will occur as provided by either the historic growth projection or the ABAG 94 growth rate projection.
| This General Plan Projected, 2015 | |||
| Existing 1995 |
Historic Growth Rate Projection: | ABAG 94 Growth Rate Projection: | |
| Population | 54,498 | 58,410 | 66,888 |
| Change | 3,912 | 12,390 | |
| Percent Change | 7.2% | 22.7% | |
| Residential Development (Housing Units) | |||
| Single Family | 15,943 | 17,087 | 19,568 |
| Change | 1,144 | 3,625 | |
| Percent Change | 7.2% | 22.7% | |
| Multi-Family | 4,554 | 4,881 | 5,589 |
| Change | 327 | 1,035 | |
| Percent Change | 7.2% | 22.7% | |
| Employment | 17,360 | 25,242 | 28,285 |
| Change | 7,882 | 10,925 | |
| Percent Change | 45.4% | 62.9% | |
| Nonresidential Development (Sq. Ft.) | |||
| Industrial Building Space | 241,352 | 350,934 | 536,867 |
| Change | 109,582 | 295,515 | |
| Percent Change | 45.4% | 122.4% | |
| Commercial Building Space In Vintage Oaks | 590,000 | 623,000 | 623,000 |
| Change | 33,000 | 33,000 | |
| Percent Change | 5.6% | 5.6% | |
| Outside Vintage Oaks | 5,498,532 | 8,229,932 | 8,765,335 |
| Change | 2,731,400 | 3,266,803 | |
| Percent Change | 49.7% | 59.4% | |
| Office Building Space | 1,178,076 | 1,712,962 | 2,307,638 |
| Change | 534,886 | 1,129,562 | |
| Percent Change | 45.4% | 95.9% | |
| SOURCE: MUNDIE & ASSOCIATES, BASED ON INFORMATION
FROM CITY OF NOVATO AND PAS & ASSOCIATES *Includes sphere of influence. | |||
EC Table 10 compares the amount of land (in acres) that will be developed in the future according to the different growth rates to the extent of current development.
| Projected, 2015 | |||
| Existing 1995 | Historic Growth Rate Projection | ABAG 94 Growth Rate Projection | |
| Residential Development | |||
| Single Family | 6,123 | 7,147 | 9,367 |
| Multi-Family | 421 | 458 | 539 |
| Non-Residential Development | |||
| Industrial | 17 | 28 | 48 |
| Commercial In Vintage Oaks | 52 | 56 | 56 |
| Outside Vintage Oaks | 560 | 789 | 834 |
| Office | 107 | 161 | 220 |
| SOURCE: MUNDIE & ASSOCIATES, BASED ON INFORMATION FROM CITY OF NOVATO AND PAS & ASSOCIATES | |||
Fiscal Projections. The City's revenue and cost relationships used in the fiscal model are described in the Fiscal Analysis document and have been applied to the General Plan development potential. The incremental revenues and costs associated with new development are combined with the revenues and costs associated with existing development to yield a comprehensive picture of total revenues and costs, and net fiscal balance, in five year increments through the projection period.
Projected Fiscal Condition with this General Plan
Below are excerpts from a fiscal model developed by Mundie and Associates to assist in the identification of the fiscal impacts to the City from the various General Plan alternatives. It is important to understand that the information below should be viewed within the context of the strengths and weaknesses of the model. For example, the ability of this model to accurately predict results becomes less reliable for results modeled further from the present. In addition, the disparity in growth rates has an impact on the model results. The annual historic growth rate is .35 percent, while the ABAG 94 projected annual growth rate is 1.03 percent. The ABAG rate is almost three times the historic rate, which in the world of modeling can be a vast difference. What is important to note from the information presented below is: 1) new development will improve Novato's fiscal condition for a time, but eventually the increase in costs will outpace the increase in revenues; 2) as the rate of growth increases, beyond a certain point, the fiscal condition of the City becomes worse faster; and 3) this will occur unless some action is taken, but there is time to take action.
The Historic Growth Rate Projection
If new development occurs according to the Historic Growth Rate Scenario, revenues will grow more rapidly than costs, until about 2002-03. In 1995-96, the first year of the projection period, revenues will exceed costs by an estimated $300,000. By 2001-02, the annual surplus will be more than $520,000 (in inflated dollars). After 2002-03, costs would begin to increase more rapidly than revenues and costs will exceed revenues beginning in 2009-10. By 2014-15, the costs will exceed revenues by about $6.5 million (in inflated dollars).
During the years in which the General Fund experiences more revenues than costs, the City will be able to accumulative a sizable surplus. EC Table 11 summarizes the cumulative balance in inflated and discounted dollars, in five year increments. It shows that the General Fund will have accumulated approximately $4.2 million ( $3.4 million in discounted dollars by the year 2009-10). The cumulative balance will turn negative in 2009-10 and will increase to $23.8 million ($19.5 million in discounted dollars) in 2014-15.
| Inflated Dollars | Discounted Dollars | |||
| Year | Balance This Year | Cumulative Balance | Balance This Year | Cumulative Balance |
| 1995-1996 | $0.24 | $0.24 | $0.23 | $0.23 |
| 1999-2000 | 0.60 | 2.28 | 0.49 | 1.88 |
| 2004-2005 | 0.05 | 4.17 | 0.04 | 3.42 |
| 2009-2010 | -2.06 | -1.15 | -1.70 | -0.95 |
| 2014-2015 | -6.55 | -23.78 | -5.38 | -19.54 |
| SOURCE: MUNDIE & ASSOCIATES | ||||
The ABAG 94 Growth Rate Projection
If growth in Novato occurs at the more rapid rate anticipated by ABAG's Projections 94, then the General Fund can expect revenues to exceed costs through the year 2001-02, or about seven years less than with the historic growth rate. In 1995-96, the City will have a positive balance of about $0.4 million. The annual surplus will peak in 1998-99, at about $560,000, and then will decline as costs begin to grow more rapidly than revenues. Beginning in 2002-03, the fiscal balance will turn negative as costs exceed revenues for the first time; by 2014-15, the end of the projection period, the annual deficit will top $14 million.
| Inflated Dollars | Discounted Dollars | |||
| Balance This Year | Cumulative Balance | Balance This Year | Cumulative Balance | |
| 1995-1996 | $0.40 | $0.40 | $0.38 | $0.38 |
| 1999-2000 | 0.51 | 2.58 | 0.42 | 2.12 |
| 2004-2005 | -1.06 | 1.29 | -0.87 | 1.06 |
| 2009-2010 | -5.43 | -15.74 | -4.46 | -12.94 |
| 2014-2015 | -14.03 | -66.63 | -11.53 | -54.76 |
| SOURCE: MUNDIE & ASSOCIATES | ||||
II. Issues and Concerns Facing the City
- Increasing Demands for City Services/Decrease in City's Revenue
Many factors contribute to increasing demands for city services and declining city revenues. Unfunded mandates imposed on local government from state and federal levels increase the city's ongoing work program but with no corresponding ongoing revenue to fund the additional work. State revenue shift from cities to Education Revenue Augmentation Fund (ERAF) for schools has reduced ongoing city revenue further impacting ongoing funding for city services. As the city approaches buildout the cumulative impacts on existing public services and facilities are not sufficiently funded from new development. Aging infrastructure and deferred maintenance of public facilities has led to an overwhelming unfunded future expense necessitating a serious look at alternative funding options. Maintenance of police response time and impacts on crime prevention continue to be a high community priority. Costs to recruit and retain qualified public employees and remain competitive in the marketplace are increasing. Keeping up with the requirements for information infrastructure capabilities contributes to competition among scarce funding resources.
- Fiscal Impacts of Development
The fiscal impacts of new development in Novato are determined by the amount of revenue the new development generates for the City, as compared with the costs of providing the development with City services and facilities. The City obtains revenues from property and sales taxes, fees charged for licenses and permits, rent on City-owned facilities, interest on City investments, transfers from federal and state agencies, recreation fees, and other service charges. The City incurs costs by 1) providing ongoing, everyday services (e.g., police protection, parks and recreation, community development, public works, general government) to residents and businesses; and 2) funding capital facilities, including both the construction and acquisition of new facilities such as a police station or community center, and major repair or reconstruction of existing facilities, such as road extensions or rebuilding.
New residential and employment-related development allowed by the General Plan will require the provision of both new capital facilities and new ongoing services, which will, in turn, generate new revenue for the City. New development is considered to be "paying its own way" if the amount of revenue it delivers to the City of Novato equals or exceeds the City's cost of delivering services to it. Revenue may be contributed directly by the development (e.g., through property or sales taxes) or by the people who live or work in it (e.g., through sales taxes, business licenses and other fees). Similarly, costs may result from services provided directly to the property (e.g., building inspections or police response to a burglary), or to the people who live or work there (e.g., recreation programs).
Generally, most types of higher cost housing and most types of non-residential development are expected to generate more revenues than costs for City governments. This depends on a number of factors, however, such as the City's share of property taxes received, the types of City services provided and the level at which they are provided, and the City's costs in delivering the services it provides. (43)
Other uses, such as public facilities and low-, moderate-priced housing generate more costs than revenues. Some of these uses, particularly public facilities such as parks, playgrounds, and community buildings, may provide other benefits for which residents and businesses are collectively willing to pay. The benefits provided by other fiscally non-profitable uses may be less direct. Lower-value housing, for example, provides a place for people employed in the community to live, and thus helps to reduce travel times and traffic congestion. Providing places for workers to live may also attract businesses to the community.
- Estimated Costs of General Plan Implementation
The Land Use, Transportation, Housing, and other chapters of the General Plan have a significant impact on future City revenues and costs. The General Plan affects the City's fiscal future by:
- Defining land use. The different types of land uses designated by the General Plan generate different revenues and costs for the City. The General Plan also designates permitted densities for residential development and intensities for non-residential development, both of which affect the balance between City revenues and costs.
- Setting standards for public services delivery. The City allocates funds to public
services in order to meet the standards established by the General Plan.
- Identifying required capital improvements. The General Plan identifies improvements to streets and other public facilities that will be necessary to accommodate existing and future land uses. These capital improvements add to the City's costs.
- The Public Facilities and Services Chapter suggests the City consider establishing development impact fees to pay for major new facilities, and/or the expansion and increased maintenance requirements for current facilities.
- The Transportation Chapter calls for the establishment of a transportation impact fee to pay for needed additional roadway improvements related to new development and new transportation systems designed to meet the increasing demands of the residents of the City; and
- The Land Use Chapter contains growth management policies to ensure that new development and City infrastructure are kept in balance.
Although the City has adopted a policy to recover costs associated with development processing and installation of "hard" infrastructure (such as streets, sewer and water system) needed to serve new development, it has not historically charged new projects for other types of facilities and services that are necessary to assure a continued high quality of life. For example, Novato has to date not levied a transportation impact fee for roadway improvements; neither does it require non-residential developers to devote a percentage of their project budgets for facilities. Imposing these types of fees on new development would generate funds for the specified public improvements and facilities.
Levying new fees requires compliance with Government Code § 66000. The following steps must be taken before fees are established: determine the benefit from the public facility; the impact individual projects will have on the public facility; and the proportionate share of the costs attributable to a particular development project, which is frequently termed "nexus." In most cases, specific studies are required to assess costs and impact in order to establish the actual amount of fee charged to a given development project.
At City Buildout/New Services & Costs/Cumulative Impacts
As the City approaches buildout, the increase in revenue generated by new development relative to the revenue generated by existing development is not sufficient to fund the cumulative burden on all existing services and facilities.
- Defining land use. The different types of land uses designated by the General Plan generate different revenues and costs for the City. The General Plan also designates permitted densities for residential development and intensities for non-residential development, both of which affect the balance between City revenues and costs.
- Existing/New Sources of Revenue
Among the existing and traditional revenue sources to fund city services and facilities are property tax, sales tax, franchise tax, services charges, user fees, grants, State subventions, licenses, permits, and fines. However, there are serious issues with respect to the viability of these sources. Property tax revenue is constrained by the limitations/cap set by Proposition 13. Other City revenues are being progressively redirected by State government and as a result cities are less able to control their revenue sources. Sales tax revenue is determined by point of sale of establishments; cities have some control and influence (as described earlier in the Economic Development Section) over the location and retention of sales tax generating uses; and, sales tax is susceptible to the economic cycle. Property tax is one of the most stable sources of revenues for the City, and for various reasons its influence of stability has been eroding over the years. During the 1985/86 fiscal year property tax represented 24.48% of City revenues. During 1994/95 property tax was 17.39% of revenues. The City has come under the influence and vagaries of the economic cycle and the influence is increasing. There are several ways to bring part of the stability back. First and most immediately under City control is establishing reserves for the General Funds. These reserves would provide needed financial resources during time of emergencies or when the reason for the reserves occurs, and provide interest income to the General Fund. During low revenue times, if the reserves are adequate, the reserves can be used in place of the revenues that are temporarily absent.
Some City services can be financed through various types of assessment districts. Median island maintenance is a good example. These districts would provide a consistent service level uninterrupted by the economic cycle or a difficult State government.
Also, the financing of capital improvements, both new and replacement improvements, can significantly impact the General Fund; often that impact is unanticipated. A funding mechanism to capture from development its appropriate share of capital improvement costs is integral to any well financed capital improvement program. In addition, using debt financing such as general obligation bonds or revenues bonds is an effective means of financing capital improvements that are not related to any development project. These types of capital financing techniques create stability in General Fund services and create a dependable and efficient service delivery infrastructure.
In recent years, cities have been competing with one another to attract and retain high sales tax generating uses within their jurisdictions. New potential revenue sources need to be developed in order to maintain city services and facilities under increased demand and a high quality of life for all citizens. Potential revenue sources available to local government are in the form of taxes (bond measures, parcel tax, etc.) requiring voter approval, development and impact fees, and redevelopment and other special assessment districts funding. Impact and development fees offer cities an opportunity to assess new development not only for its direct cost impact on the need for new facilities and services but also for a proportionate share of "buy in" into existing facilities and in some cases services based on an appropriate finding of nexus. Redevelopment and other special assessment districts provide locally controlled and locally generated funds for capital improvements/facilities/infrastructure once appropriate findings of need and benefit are made. Under limited conditions, Mello-Roos Community Facilities Districts can be formed to fund certain operating costs as can Landscaping and Lighting Districts.
- Administrative Reform & Accountability
Benefits can be realized from fostering a working environment within city government that rewards/recognizes creativity and initiative in service to the community. The City's tax payers expect a reasonable return on their "investment" in the community. Periodic public review of how city government delivers services and programs can provide some measure of accountability and cost-effectiveness to the community. Furthermore, citizens and Council can better determine service delivery priorities if a system is established within government that provides information which is understandable and identifies in a measurable manner the cost and productivity of services and work products delivered. All City services should be reviewed.
- Regional Planning
Many issues facing Novato's residents and businesses often require regional analysis and decision-making. Transportation, employment, and environmental issues are interconnected with neighboring municipalities and jurisdictions. Because of this interconnection, inter jurisdictional planning will be required to provide comprehensive solutions. More efficient governmental organization processes are needed to facilitate effective regional cooperation without loss of critical local control.
- Public/Private Partnerships/Privatization
Opportunities may exist for privatization of certain city services as well as the joint use and maintenance of public facilities by both public and private entities. In addition public/private partnerships may provide methodologies for implementing regulatory requirements and services or reducing the need for imposing costly regulations.
III. Objectives, Policies, and Programs for Fiscal Vitality
| EC Objective 7 | Focus future City policy making on the relationship between workplace uses and Novato's fiscal condition. |
Novato's economic development should enhance rather than be a burden on local fiscal resources. New economic development should recompense its own capital costs and pay its fair share of operating costs. The policies and programs below ensure that new development pays its fair share of costs.
EC Policy 23 Development Fair Share of Capital Expenses and Existing Facilities. Ensure, although not to the exclusion of the goals and policies of this element and other elements of this General Plan, that new capital facilities and expansion to and operation of existing capital facilities required to accommodate new development are paid for by that development.
Capital facilities and improvements include both the construction and acquisition of new facilities, such as police stations or a community center, and roads. Capital costs are usually one-time costs that may be paid all at once or, alternatively, paid over time. These costs can be paid out of the City's general fund, but also may be covered by special levies rather than property taxes.
EC Program 23.1: Continue to require that development provide necessary infrastructure for the project at their cost.EC Policy 24 Capital Funding for Other Agencies. Assist other agencies and districts providing services to Novato residents to obtain adequate funding for needed capital facilities to serve new development.EC Program 23.2: Establish annexation fees. Ensure that annexation fees are set at a level that would require future annexations to buy into existing facilities intended to serve them and for which they have not paid, such as police headquarters, City administrative buildings and various recreation facilities.
Responsibility: Administrative Services
EC Program 24.1: Require as a condition of project approval, as appropriate, that warranted capital improvements are guaranteed prior to issuance of a building permit.
The City should work closely with the Fire Protection District, the Novato Unified School District and other agencies providing services to Novato residents to assure that adequate funding mechanisms are in place that will allow them to provide adequate facilities to serve present and future Novato residents. Please refer to Public Facilities and Services Program 3.7 which relates to ensuring adequate infrastructure.
EC Policy 25 Fiscal Impact Assessment. Evaluate the fiscal impacts of new development proposals on the City's fiscal situation, paying particular attention to the day-to-day ongoing costs of City operations.
EC Program 25.1: Carry out fiscal impact analysis of projects as appropriate.
The Land Use Chapter calls for an analysis of the fiscal impacts of proposed annexations. This Program would extend this to any development proposal that the City determines would have significant fiscal consequences.
Different land uses have different fiscal impacts on the City. It is not necessary that every project generate more revenues than costs. In cases where proposed projects would generate more costs than revenues, the City should not simply deny the project. Instead, the City should work with project developers to investigate strategies and special mechanisms for reducing their negative fiscal impacts on the City's fiscal conditions. A list of funding strategies is included in EC Table 13.
EC Policy 26 Project Fiscal Impact One of Several Factors. Consider fiscal impacts of development proposals one of several factors to be evaluated.
There are projects and types of land uses that do not generate net fiscal benefits. Other factors that are required to be evaluated in assessing development projects, apart from fiscal impact, must include consistency with the entire set of General Plan goals and policies.
EC Policy 27 City Fees. Ensure that City fees accurately reflect the actual costs.
EC Program 27.1: Continue to evaluate City fees to assure they are current and reflect actual costs to the City.Responsibility: Administrative Services
EC Program 27.2: Investigate additional revenue sources to cover operating costs.
Responsibility: Administrative Services
EC Program 27.3: Consider reevaluating City fees for attracting targeted businesses.
Responsibility: Administrative Services
EC Policy 28 Capital Facilities. Ensure that there are adequate funds for planned capital facilities.
EC Program 28.1: Periodically review the City's funds allocated for planned capital facilities.Responsibility: Administrative Services
The City currently has the funds for planned capital facilities such as the community center and/or performing arts center. Over time, the purchasing power of those funds may be eroded by inflation or other factors. To assure its ability to pay for facilities when they are to be built, the City should periodically review its funding sources and, if necessary, adopt measures to supplement available funds. Possible funding sources are indicated in EC Table 13. Refer to the two Background Reports on fiscal issues for detailed information on funding sources.
| EC Table 13: Funding Options | ||||
| Financing Tools/ Revenue Source | Capital Costs | Operating Costs | ||
| Citywide Benefit |
Area- Specific Benefit | Citywide Benefit | Area- Specific Benefit | |
| General Fund Revenues | X | X | X | X |
| Special Taxes | X | |||
| Mello-Roos Community Facilities Districts | X | X | X | X |
| Infrastructure Financing Districts | X | |||
| General Obligation Bonds | X | |||
| Revenue Bonds | X | X | ||
| Leasing Arrangements | X | X | ||
| Community Development Block Grants | X | X | ||
| Special Assessment | X | X | ||
| Tax Increment (Redevelopment) Financing | X | |||
| Development Impact Fees and Exactions | X | |||
| Source: Fiscal Issues Report, prepared by Mundie & Associates, June 1993. | ||||
| NOVATO GENERAL PLAN Guide to Economic and Fiscal Goals, Objectives, Policies, Programs, and Implementation | ||||
| Objective | Policy | Program | Body Responsible for Implementation | |
| Goal 1: Provide Jobs | ||||
| 2 | 2 | 2.1 | Encourage use/reuse of commercial/office areas for production of goods and services. | CDD |
| 2 | 2 | 2.2 | Allow in commercial areas, only commercial uses that directly support workplace uses. | CDD |
| 2 | 2 | 2.3 | Ensure areas zoned for light industry and offices are developed for workplace uses. | CDD |
| 2 | 2 | 2.4 | Specify retail uses allowable in industrial districts with conditional use permit. | CDD |
| 2 | 3 | 3.1 | Investigate opportunities for future increases in employment intensity. | CDD |
| 2 | 3 | 3.2 | Consider zoning and other development regulation changes to allow for future increases in employment intensity. | CDD |
| 3 | 4 | 4.1 | Review design of new commercial development and encourage potential for future increases in employment intensity. | CDD |
| 3 | 4 | 4.2 | Create a development review process to attract non-residential development. | CDD |
| 3 | 4 | 4.3 | Identify tools/incentives for non-residential development. | CDD |
| 3 | 7 | 7.1 | Encourage employers to advertise locally new job opportunities. | CA |
| 3 | 7 | 7.2 | Sponsor local job/trade/business fairs. | CA |
| 3 | 7 | 7.3 | Encourage coordination to improve match between emerging jobs and training programs. | CA |
| 3 | 8 | 8.1 | Review/revise land use regulations and identify incentives to encourage workplace alternatives. | CDD |
| 3 | 8 | 8.2 | Work with educational institutions providing training/retraining/vocational education for potential employees for Novato businesses. | CA & CDD |
| 3 | 9 | 9.1 | Adopt live/work ordinance. | CDD |
| Goal 2: Strengthen Retail Activities/Areas | ||||
| 6 | 22 | 22.1 | Inventory vacant commercially-zoned parcels along major arterials; assess annual absorption; advise on adequacy/excess of commercial zoning. | CDD |
| 6 | 22 | 22.2 | Cooperate with Chamber of Commerce/other public/private organizations in promotional activities emphasizing Novato retailing. | CA |
| 6 | 22 | 22.3 | Encourage new retail and commercial uses to find existing zoned sites. | CDD |
| Goal 3: Retain Existing Businesses/Attract New Business | ||||
| 4 | 10 | 10.1 | Target small businesses in promotional economic programs. | CA |
| 4 | 11 | 11.1 | Consider regulatory administrative program to facilitate renovation to code of commercial buildings. | CDD |
| 4 | 11 | 11.2 | Develop economic development strategy for Novato as part of Economic Development Master Plan. | CA |
| 4 | 11 | 11.3 | Provide mapping/land use information at reasonable cost to local businesses for relocation. | CDD |
| 4 | 11 | 11.4 | Develop process to facilitate permit processing for expansion/relocation of Novato businesses in Novato. | CDD |
| 4 | 11 | 11.5 | Consider fee reduction for land assembly processing. | CDD |
| 4 | 12 | 12.1 | Identify/publicize promote sites for targeted businesses. | CA |
| 4 | 12 | 12.2 | Assist with promotional brochures to attract businesses to Novato. | CA |
| 4 | 12 | 12.3 | Assist in promotional marketing program/tours for targeted businesses. | CA |
| 4 | 12 | 12.4 | Work with Marin County Economic Development Commission in educational/informational/development activities. | CA |
| 4 | 13 | 13.1 | Work with telecommunications companies/PUC to encourage state-of-art telecommunications capabilities. | CA |
| 4 | 13 | 13.2 | Consider targeted business program to assist businesses to relocate/expand in Novato. | CA |
| 4 | 14 | 13.3 | Assist educational systems in achieving/maintaining state-of-art proficiency in information, computer and communications technologies. | CA |
| Goal 4: Enhance Downtown | ||||
| 5 | 15 | 15.1 | Implement adopted Downtown Specific Plan. | CDD |
| 5 | 15 | 15.2 | Support special events Downtown. | CA |
| 5 | 15 | 15.3 | Consider financial programs to encourage businesses to renovate/retrofit commercial structures to meet market needs and stay in Novato. | CA |
| 5 | 16 | 16.1 | Sponsor/support Downtown events drawing visitors to Novato. | CA |
| 5 | 17 | 17.1 | Assist in market analysis of desired retail uses and identify incentives to attract targeted retail uses. | CA |
| Goal 5: Implementation Strategies | ||||
| 1 | 1 | 1.1 | Provide staff support/resources to Economic Development Commission. | CA |
| 1 | 1 | 1.2 | Present annual recommendations to Planning Commission and City Council. | CA |
| 1 | 1 | 1.3 | Develop Economic Development Master Plan. | CA |
| 1 | 1 | 1.4 | Conduct study to develop profile of small Novato businesses and identify factors encouraging small businesses to locate in Novato. | CA |
| 1 | 1 | 1.5 | Prepare annual local report to City Council on progress in implementing a sustainable economy including job creation and economic development activities undertaken. | CA |
| 6 | 18 | 18.1 | Assist in establishing educational program for Novato businesses on profiting from sustainable environmental business practices. | CA |
| 6 | 18 | 18.2 | Develop strategy to target sustainable environmental businesses in Economic Development Master Plan. | CA |
| 6 | 18 | 18.3 | Review/revise programs to ensure progress toward sustainable economic development. | CA & CDD |
| 6 | 19 | 19.1 | Review/revise regulations related to sustainable local economy. | CDD |
| 7 | 23 | 23.1 | Development pays for necessary project infrastructure. | CDD |
| 7 | 23 | 23.2 | Establish annexation fees. | AS |
| 7 | 24 | 24.1 | Condition project approvals to guarantee warranted capital improvements. | CDD |
| 7 | 25 | 25.1 | Conduct fiscal impact analysis of projects, as appropriate. | CDD |
| 7 | 27 | 27.1 | Evaluate City fees regularly to reflect actual costs. | AS |
| 7 | 27 | 27.2 | Investigate other revenue sources for operating costs. | AS |
| 7 | 27 | 27.3 | Evaluate City fees for attracting targeted businesses. | AS |
| 7 | 28 | 28.1 | Review City's funds allocated for planned capital facilities. | AS |
| CDD - Community Development Department AS - Administrative Services EDC - Economic Development Commission CA - Central Administration MCEDC - Marin County Economic Development Commission | ||||
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