Why Petaluma's Ranier crossing project
2013-10-02 18:16:08.47416+02 by Dan Lyke 1 comments
Why Petaluma's Ranier crossing project is fiscally irresponsible: http://northbaydesignkit.blogs...80219656046#c2793633336305770780
2013-10-02 18:16:08.47416+02 by Dan Lyke 1 comments
Why Petaluma's Ranier crossing project is fiscally irresponsible: http://northbaydesignkit.blogs...80219656046#c2793633336305770780
comments in descending chronological order (reverse):
#Comment Re: Why Petaluma's Ranier crossing project made: 2020-01-02 20:39:05.034295+01 by: Dan Lyke
Copied because I keep going back to find this:
Anyway, I'm trying to figure out the numbers behind this. A reasonable ballpark for the cost of money is $600/month per hundred grand. That's about what a 30 year fixed mortgage costs, maybe you can get municipal bonds for less, we can talk about opportunity costs, but it's a good back-of-the-envelope. And 30 years is a reasonable time to depreciate infrastructure over, it'll need major maintenance after that time.
So for a $90 million project, that means $540k/month, or just under $6.5 million a year that the city has to gain for this project to make sense.
If we call sales tax 10%, that means that this bridge has to lead to $65 million dollars a year in additional sales. If we call property tax 1%, that means that this bridge has to lead to three quarters of a billion dollars in additional property value...
...*EXCEPT* that all of that has to be directed back to that one project. So a quick Googling, I'm writing this off-the-cuff and don't want to spend too many hours digging in right now, suggests that the city budget is between thirty and thirty five million a year, and road stuff is about ten percent of that.
So we can multiply those numbers by ten. And if the Ranier overcrossing really brings another six and a half billion dollars to property values, you'd expect that developers and landowners would be clamoring to pay higher development fees. Or an additional ten thousand dollars a year per Petaluma resident (and $650M is about the annual hospitality and tourism GDP for Sonoma County, and nearly half of the county's retail sector), from a town which can't really be a big-box store destination because of geographical transportation limitations.
Someone tell me where I'm wrong, because I sure can't see how this makes any sort of sense at all.
Two additions:
This Petaluma 360 article about questions on the Ranier process suggests that it isn't $90M, but $115M that we're talking about. Which would bring that 6.5 billion in necessary new value up to 8.3.
It also suggests that the costs will indeed be paid back from development fees. My brain isn't quite up to trying to figure out how to visualize what adding six and a half billion dollars in property values really means. If we just look at that in terms of new houses, the Quarry Heights homes are "Priced from $604,911 - $663,000", so let's call it $650k, that's ten thousand new homes. Except that we're talking additional value, so we have to discount current land values, but that's a reasonable order of magnitude and way to think about what the Ranier overcrossing will need to bring us.