Novato Hotel Analysis
City of Novato, CA
The City of Novato has experienced a surge in applications for lodging development, resulting in current proposals for three new hotel developments. The City retained BAE to provide fiscal evaluations for two of the proposed projects and to provide a peer review of a developer-provided fiscal analysis for the third project.
BAE prepared a General Fund fiscal impact model to project the net fiscal impacts for the two projects. This involved conducting independent research to establish various model inputs, including projected hotel occupancy and room rates, and the potential value of the completed development, for property tax projection purposes. In addition to analyzing the City budget to establish various cost and revenue multipliers, BAE also held consultations with the City staff from key service departments to determine whether there would be any anticipated service demands that are out of line with current service levels.
Once BAE completed the fiscal model for the two hotel projects and projected their net fiscal impacts, BAE then used the fiscal model to independently verify fiscal projections from the developer-provided analysis for the third hotel. BAE also reviewed the basic assumptions and methodologies from the third-party analysis and concluded that while some adjustments could be justified, the conclusions were generally reasonable and consistent with what BAE’s model would project. BAE concluded that all three projects would likely bring significant fiscal benefits to the City of Novato and that this conclusion would most likely hold even if the cumulative impact of constructing all three hotels was to bring citywide hotel occupancy below current levels.