USEPA REGION IX

TECHNICAL SUPPORT DOCUMENT

for

SJVUAPCD Rule 9510

ATTACHMENT 2
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 1

APPENDIX F

Socioeconomic Analysis for Proposed

Rule 9510 (Indirect Source Review) and

Rule 3180 (Administrative Fees for Indirect Source Review)

December 15, 2005
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 2

SOCIOECONOMIC ANALYSIS

PROPOSED INDIRECT SOURCE RULE: DRAFT 

RULES 9510 AND 3180

4 November 2005

Prepared for

San Joaquin Valley Unified Air Pollution Control District

1990 E. Gettysburg Avenue

Fresno, CA 93726

Prepared by

Applied Development Economics

2029 University Avenue • Berkeley, California 94704 • (510) 548-5912

1029 J Street, Suite 310 • Sacramento, California 95814 • (916) 441-0323

www.adeusa.com
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 3

CONTENTS

1. Executive summary................................................................................7

2. Introduction..............................................................................................9

3. Description of New Rules 9510 & 3180........................................10

4. Methodology...........................................................................................13

5. Impact to industries subject to New Rules 9510 & 3180 

(Indirect SourceRrule)........................................................................15

5.1 Regional demographic and economic trends.............................15

Regional Demographic Trends..............................................15

Regional Economic Trends.....................................................19

5.2 Description of affected industries.................................................21

Housing Trends in Select Cities.............................................22

Commercial-Industrial Trends............................................... 27

6. Socioeconomic impacts.......................................................................30

6.1 New rule 9510 and 3180 FEE ..................................................30

6.2 Business responses to proposed fees......................................32

6.3 Impacts on Affected Industries................................................32

Single-Family Dwelling Units................................................ 33

Multi-Family Dwelling Units.................................................. 37

Affordable Housing For Low-and Moderate Income 

Households.................................................................................. 41

Non-Residential Development.............................................. 44

6.4 Impact on Small Businesses .....................................................49

Off-Site Emission Reduction Fees, Minimum 

Household Income, and the Downpayment..................... 49

Small Business Disproportionate Impact Analysis and 

Prospective Homebuyers........................................................ 51

Small Business Disproportionate Impact Analysis and 

Non-Residential Developments............................................ 55
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 4

Appendix A: Economic Benefits Associated With Draft Rule 

9510 and 3180.......................................................................................58

Local Purchases...........................................................................58

Local Projects...............................................................................58

Job Creation .................................................................................59

TABLES 

1 Population Growth: San Joaquin Valley Region, 1993 - 2003 .16

2 Single-Family Residential Building Permit Trends: San Joaquin 

Valley, 1993-2003.................................................................................17

3 Multi-Family Residential Building Permit Trends: San Joaquin 

Valley, 1993-2003.................................................................................17

4 Average Value of Single-Family Unit Building Permit, San 

Joaquin Valley.......................................................................................18

5 Median Home Sale Prices: San Joaquin Valley, 2003-2005 

($2005).....................................................................................................19

6 Employment Profile Of The San Joaquin Valley Region 1998 

– 2003 ......................................................................................................21

7 Select Central Valley Cities By Type ................................................22

8 Population Trends of Select Cities in the San Joaquin Valley 

Region, 1993-2003...............................................................................23

9 Single-Family Dwelling Units Building Construction Permits, 

San Joaquin Valley Region 2000-2003 ..........................................24

10 Multi-Family Dwelling Units Building Construction Permits, 

San Joaquin Valley Region 2000-2003 ..........................................24

11 Average Selling Price of New Single-Family and Multi-Family 

Housing San Joaquin Valley Region 2005....................................25

12 Existing Fees On A Per Unit Basis................................................26

13 Home Prices, Construction Costs, Fees and Profit: Single 

Family Housing ....................................................................................26

14 Home Prices, Construction Costs, Fees and Profit: MultiFamily Housing ....................................................................................27

15 Commercial-Industrial Trends: San Joaquin Valley Region, 

2005..........................................................................................................29
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 5

16 Worst Case Estimate: Fee That Corresponds to A Typical 

Residential Development ..................................................................31

17 Worst Case Estimate: Fee That Corresponds To The Typical 

Industrial Development.....................................................................31

18 Worst Case Estimate: Fee That Corresponds To a Typical 

Commercial Development................................................................32

19 Impact Analysis of 2006 Air Quality Fee on Typical SingleFamily Development: $784 per unit ..............................................34

20 Impact Analysis of 2007 Air Quality Fee on Typical SingleFamily Development: $1,268 per unit..........................................34

21 Impact Analysis of 2008 Air Quality Fee on Typical SingleFamily Development: $1,772 per unit..........................................35

22 Median Home Sale Prices in Small to Medium Communities, 

2003-2005...............................................................................................35

23 Impact Analysis of 2006 Fee on Typical Multi-Family 

Housing Development: $784 per unit..........................................39

24 Impact Analysis of 2007 Fee on Typical Multi-Family 

Housing Development: $1,268 per unit .......................................39

25 Impact Analysis of 2008 Fee on Typical Multi-Family 

Housing Development: $1,772 per unit .......................................40

26 HUD Income Guidelines, 2005 ......................................................42

27 Affordable Monthly Rents................................................................43

28 Impact Analysis of 2006 and 2008 Fee on Typical 

Commercial-Industrial Project ........................................................46

29 2006 and 2008 Fee on Typical Commercial-Industrial Project: 

Affect of Fee on Monthly Rent.......................................................48

30 Potential Per Household Impact on Downpayment of Air 

Quality Mitigation Fees: Single-Family Units ........................4845

31 Potential Per Household Impact on Downpayment of Offsite Emission Reduction Fees: Multi-Family Units..............4846

32 Number of Establishments that Sell Discretionary Consumer 

Items: San Joaquin Valley Air Basin, 2002..............................4847

33 Aggregate Amount of Additional Dollars All Housholds Will 

Need To Set Aside As A Result of Air Quality Mitigation 

Fees .....................................................................................................4848

34 Impact on Net Profits of Retail and Select Services 

Establishments.................................................................................4849
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 6

35 Impact of Additional Rent Resulting From Proposed Air 

Quality Mitigation Fees......................................................................51

FIGURE

1 San Joaquin Valley Unified Air Pollution Control District 

(SJVUAPCD) Air Basin.......................................................................9
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 7

1. EXECUTIVE SUMMARY

The San Joaquin Valley Unified Air Pollution Control District 

(“District”) seeks to adopt New Rule 9510 and 3180 to meet 

certain United States Environmental Protection Agency (US 

EPA) mandates and timelines with regards to improved air 

quality in the region. This section of the report summarizes 

the findings of the socioeconomic analysis of Rules 9510 and 

3180. 

The analysis indicates that while the worst-case residential fee 

that a typical residential development would pay under Draft 

Rule 9510 and 3180 can increase the amount of household 

income required to finance the purchase of a new home, the 

estimated increase represents a small fraction of the original 

household income required to finance a new home in the 

event no air quality fees were in place. The affect of the fees 

on rents is similarly small.

The analysis also examines the question of housing 

affordability from the vantage point of low- and moderateincome households. The analysis demonstrates that, even 

before the imposition of an air quality fees, most low-income 

and households in the Central Valley are priced out of newly 

constructed multifamily unit market, the rents for which need 

to be at levels that account for price of land, development 

costs, developer fees, and an adequate level of profit, among 

other things. The analysis discusses how public subsidies can 

assist in enhancing the financial feasibility of a real estate 

project in which a certain portion of units are set-aside as 

below-market rental units.

The analysis also examines the impacts of proposed worstcase off-site emission reduction fees on commercial, 

industrial and institutional projects. While a typical nonresidential development can absorb the 2006 and 2008 fees, 

projects will have to recover the cost of the fee over a period 

of time.

It is important to note that any fee identified in the report is 

the estimated maximum fee in the worst-case scenario for a 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 8

typical development project, with the understanding that the 

actual fee will vary with the particulars of any project. Any 

fee in the report is presented for the purposes of analyzing 

potential impacts given costs associated with reducing 

quantifiable emissions resulting from what constitutes typical 

residential, commercial and industrial developments. It is 

also important to note that the developer may reduce fees by 

incorporating on-site emission reduction measures into the 

projects. There may or may not be costs associated with onsite measures. In any event, it is anticipated that the 

developer will choose the least costly option.
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 9

2. INTRODUCTION

This report describes the socioeconomic impacts of Rule 

9510 (Indirect Source Review – ISR) and 3180 

(Administrative Fees for Indirect Source Review). Following 

this introduction, the report summarizes the proposed 

amendments and describes the methodology for the 

socioeconomic analysis. In Section 5, the report describes the 

economic characteristics of sources affected by Rule 9510 

and 3180. The sixth section analyzes the socioeconomic 

impacts of compliance costs on the regional economy.

The report is prepared pursuant to the provisions of AB2051 

(Section 40728.5 of the California Health and Safety Code), 

which requires an assessment of socioeconomic impacts of 

proposed air quality rules. The findings in this report can 

assist District staff in understanding the socioeconomic 

impacts of Rules 9510 and 3180, and can assist staff in 

preparing a refined version of the rule. A final report will be 

presented at the Governing Board hearing by District staff in 

December 2005. Figure 1 is a map of the eight-county region 

that comprises the San Joaquin Valley Air Basin. As indicated 

in the map, Kern County is not completely in the District.

FIGURE 1

San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD) Air Basin
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 10

3. DESCRIPTION OF NEW RULES 9510 & 3180

The San Joaquin Valley Air Basin (SJVAB) is classified as a 

nonattainment area for the state and federal health based 

ambient ozone and PM 10 standards by the California Air 

Resources Board (ARB) and the U.S. Environmental 

Protection Agency (EPA). The SJVAB is currently classified 

as serious nonattainment for the 24-hour and annual National 

Ambient Air Quality Standards (NAAQS) for particulate 

matter 10 microns in size and smaller (PM10), extreme 

nonattainment for the federal 1-hour ozone standard, serious 

nonattainment for the new federal 8-hour ozone standard, 

and severe nonattainment for the 1-hour state ozone 

standard.

The San Joaquin Valley Unified Air Pollution Control 

District’s (District) adopted 2003 PM10 Plan projects 

attainment of NAAQS for PM10 at the earliest practicable 

date of December 31, 2010. The Indirect Source Rule1 (ISR) 

is one of the commitments contained in the 2003 PM10 Plan 

to achieve these emissions reductions. The ISR commitment 

will be implemented through Rules 9510 and 3180. The 

purpose of Draft Rule 9510 is to reduce emissions of NOx 

and PM10 from new development projects. The purpose of 

Draft Rule 3180 is to recover the costs of administering Draft 

Rule 9510. Implementation of these draft rules is expected to 

reduce NOx and PM10 emissions by 5.4 and 5.8 tons per day 

respectively.

The District identified several examples of air pollution 

agencies in California that are currently reviewing land use 

projects for indirect source impacts and/or collecting 

mitigation fees in their districts. District staff reviewed 

programs being implemented by the Mendocino County and 

Shasta County Air Quality Management Districts and the 

Great Basin, Colusa County, and Placer County Air Pollution 

Control Districts. District staff also considered a number of 

 

1

 Indirect Sources are land uses that attract or generate motor vehicle trips.
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 11

program types including District permitting, city/county 

review, District review, and simple fee.

Despite significant air pollution reductions from both mobile 

and stationary sources, the District exceeds state and federal 

air quality standards for ozone and PM10. Although today’s 

new cars pollute about 90 percent less than models produced 

25 years ago (due to California’s strict vehicle emissions 

standards), large increases in population and driving partially 

offset the benefits these cleaner-burning vehicles provide. 

The District’s total population increased by 22 percent 

between 1990 and 2000; and, California’s Department of 

Finance projects that the SJVAB’s population will increase by 

24 percent between 2000 and 2010. With increased 

population, there is an increase in emissions from area 

sources, such as consumer products, fuel combustion, 

landscape maintenance equipment, etc.

The total number of vehicle miles traveled (VMT) in the 

District has increased at a rate faster than population growth. 

The district witnessed a nine percent increase between 1999 

and 2002, and is expecting a 27 percent increase from 2002 to 

2010. Entrained and re-entrained paved road dust and 

corresponding PM10 emissions increase as VMT increases.

To reduce emissions of NOx and PM10, Draft Rule 9510 

would apply to development projects that will seek to gain a 

discretionary approval for projects that, upon full build-out 

will include any one of the following: 50 residential units, 

2,000 square feet of commercial space, 25,000 square feet of 

industrial space, 20,000 square feet of medical office space, 

39,000 square feet of general office space, 9,000 square feet 

of educational space, 10,000 square feet of government space, 

20,000 square feet of recreational space, or 9,000 square feet 

of unidentified space. Certain transportation projects, transit 

projects, reconstruction projects that result from a natural 

disaster, and development projects whose primary source of 

emissions are subject to District Rule 2201 or 2010 would be 

exempt from this Draft Rule. Also, development projects 

that have a mitigated baseline below two tons per year for 

each pollutant would be exempt from the emission reduction 

requirements of the rule.
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 12

Draft Rule 9510 would require new development project 

applicants to submit an Air Impact Assessment application to 

the District prior to or at application for a project’s final 

discretionary approval with a public agency. The application 

would include an assessment, project location and 

description, an on-site emission reduction checklist, a 

proposed Monitoring and Reporting Schedule (MRS), and a 

fee deferral agreement if necessary. The District would have 

10 days to determine whether or not the application is 

complete. After deeming an application complete, the district 

would have 30 days to approve the application and notify the 

applicant of the fee amounts.

Draft Rule 9510 would require developers to reduce 

cumulative NOx emissions in excess of 50 percent of the 

project’s first-year operational baseline emissions until the 

emissions reach 50 percent of the first-year baseline emissions 

(approximately 10 years). Developers would be required to 

reduce PM10 emissions equal to half of the first-year 

emissions after build-out for the same time period required 

for NOx reductions. Developers would also be required to 

reduce emissions from construction equipment NOx by 20%, 

and PM10 by 45% compared to the statewide fleet average. 

Emissions could be reduced through on-site emission 

reduction measures, by paying the District a fee to fund 

emission reduction projects off-site, or through a 

combination of the two.

To recover the costs of administering Draft Rule 9510, Draft 

Rule 3180 would include a non-refundable application filing 

fee to be paid when an application is submitted to the 

District. Once an application and application fee are 

received, District staff would log the total staff hours spent 

on the project. So that only the cost of the actual hours spent 

on the project is recovered, the cost of the hours spent on the 

project (hours multiplied by a weighted average labor rate) 

would be subtracted from the application fee. Draft Rule 

3180 would also contain a fee, payable when the off-site 

emission reduction fees are collected, equal to four percent of 

the off-site fees to recover the cost of administering off-site 

emission reduction projects.
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 13

4. METHODOLOGY

The socioeconomic analysis involves the use of information 

provided directly by affected sources, as well as secondary 

data used to describe the industries affected by the proposed 

provisions of Rule 9510 and 3180. The approach is briefly 

described below. 

This report relies heavily on the most current data available 

from a variety of sources. For commercial-industrial prices, 

this report relies on Dataquick, Loopnet.com and 

Realtor.com. For construction trends, this report relied on 

the Construction Industry Research Board. When estimating 

cost of construction, we used “Commercial Square Foot 

Building Costs: 2004”, by Deloitte Saylor Publication, as well 

as per square foot cost of construction estimates used by 

many cities when estimating the value of a project. For 

purposes of estimating profits, ADE relied on Dun and 

Bradstreet, as well as corporate reports of major home 

builders and developers of commercial-industrial space 

operating in California and the Central Valley.

With the above information, ADE was able to estimate profit 

ratios for sources affected by the draft rule. ADE calculated 

ratios of profit per dollar of revenue for affected industries. 

The result of the socioeconomic analysis shows what 

proportion of profits the compliance costs represent. Based 

on assumed thresholds of significance, ADE discusses in the 

report whether the affected sources are likely to pass on costs 

to consumers or to reduce jobs as a means of recouping the 

cost of rule compliance or as a result of reducing business 

operations. To the extent that such job losses appear likely, 

the indirect multiplier effects of the jobs losses are estimated 

using a regional IMPLAN input-output model.

When analyzing the socioeconomic impacts of proposed new 

rules and amendments, ADE works closely within the 

parameters of accepted methodologies discussed in a 1995 

California Air Resources Board report called “Development 

of a Methodology to Assess the Economic Impact Required 

by SB513/AB969” (by Peter Berck, PhD, UC Berkeley 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 14

Department of Agricultural and Resources Economics, 

Contract No. 93-314, August, 1995). The author of this 

report reviewed a methodology to assess the impact that 

California Environmental Protection Agency proposed 

regulations would have on the ability of California businesses 

to compete. The California Air Resources Board (ARB) has 

incorporated the methodologies described in this report in its 

own assessment of socioeconomic impacts of rules generated 

by ARB. One methodology relates to determining a level 

above or below which a rule and its associated costs is 

deemed to have significant impacts. When analyzing the 

degree to which its rules are significant or insignificant, ARB 

employs a threshold of significance that ADE follows. Berck 

reviewed the threshold in his analysis and wrote, “The Air 

Resources Board’s (ARB) use of a 10 percent change in 

[Return on Equity] ROE (i.e. a change in ROE from 10 

percent to a ROE of 9 percent) as a threshold for a finding of 

no significant, adverse impact on either competitiveness or 

jobs seems reasonable or even conservative.” 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 15

5. IMPACT INDUSTRIES SUBJECT TO NEW RULES 

9510 & 3180 (INDIRECT SOURCE RULE)

This section of the socioeconomic analysis describes 

demographic and economic trends in the San Joaquin Valley 

region. The first part of this section compares the San 

Joaquin Valley region against California as a whole, and 

provides a context for understanding demographic and 

economic changes that occurred within the San Joaquin 

Valley region between 1998 and 2003. Starting with subsection 5.2, the second part of this section narrows the focus 

of the socioeconomic analysis to industries affected by New

Rules 9510 and 3180. The second part of this section 

describes the economic characteristics of potentially impacted 

industries that might be subject to Rules 9510 and 3180. 

In this report, the San Joaquin Valley region is defined as 

Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislaus 

and Tulare counties. Data for Kern County in Tables 1 and 2 

are for all of Kern County, although Kern County is only 

partially in the San Joaquin Valley Air Basin. Starting with 

Table 3, data for Kern County are for the part of Kern 

County that is in the San Joaquin Valley Air Basin.

5.1 REGIONAL DEMOGRAPHIC AND 

ECONOMIC TRENDS

REGIONAL DEMOGRAPHIC TRENDS

The San Joaquin Valley region experienced tremendous 

population growth during the 1990s. Many came to this area 

because of affordable housing. As a result, population 

increased significantly. The eight-county region’s population 

increased by 22 percent (or approximately 2.0 percent 

annually), from 2.9 million in 1993 to 3.6 million in 2003. 

While the State of California’s population increased by 15 

percent (or approximately 1 percent annually), all the counties 

in the region experienced faster rates of growth, and two 

counties grew at rates that were triple the State’s growth rate, 

as Table 1 shows. While by many standards Madera County 

continues to be a small county– at 135,262 residents 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 16

according to the Department of Finance–it still experienced a 

35 percent growth in population during the last decade (or 

three percent annually). Kings County also grew by three 

percent per year. As demonstrated in the following section on 

regional economic trends, the demographic changes that 

occurred in the San Joaquin Valley region during the 1990s 

significantly influenced the economy of this eight-county 

region.

TABLE 1 

Population Growth: San Joaquin Valley Region, 1993 - 2003

1993 1998 2003

Distribution, 

2003

Annual 

Per. 

Chng

93-98

Annual 

Per. 

Chng

98-03

Annual 

Per. 

Chng

 93-03

California 31,303,452 32,670,019 36,144,267 1% 2% 1%

SJV Region 2,959,911 3,192,439 3,615,696 10% 2% 3% 2%

 Fresno 722,608 781,936 862,642 24% 2% 2% 2%

 Kern 593,087 637,227 724,883 20% 1% 3% 2%

 Kings 109,648 120,957 141,434 4% 2% 3% 3%

 Madera 100,297 114,137 135,262 4% 3% 3% 3%

 Merced 191,883 203,181 232,141 6% 1% 3% 2%

 San Joaquin 507,170 546,852 630,577 17% 2% 3% 2%

 Stanislaus 400,417 428,272 491,929 14% 1% 3% 2%

 Tulare 334,801 359,877 396,828 11% 1% 2% 2%

Source: Applied Development Economics, based on California Department of Finance

Housing construction in the San Joaquin Valley Air Basin has 

paralleled this increase in population. Low interest and the 

availability of land at prices lower than in coastal areas of 

California has fueled construction activity in the Central 

Valley. Tables 2 and 3 track building permits for singlefamily and multi-family homes. According to the California 

Construction Industry Research Board, home-builders 

typically take out building permits only when they are ready 

to construct housing. Thus, building permits is a good 

indicator of housing production. As Table 2 shows, the 

amount of single-family building permits increased by 14 

percent annually between 1998 and 2003 in the Central 

Valley, easily surpassing the statewide annual rate of eight 

percent. Almost forty percent of all single family building 

permits was for projects in San Joaquin and Stanislaus County 

in 2003. As the tables below show, the amount of new 

construction for single-family homes greatly exceeds new 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 17

construction for multi-family housing, for reasons related to 

market demand, availability of land, and historically lowinterest rates, among other reasons.

TABLE 2

Single-Family Residential Building Permit Trends: 

San Joaquin Valley, 1993-2003

---------- SFU Building permits ----------

1993 1998 2003

Distribution, 

2003

Annual 

Per. Chng 

93-98

Annual 

Per. Chng 

98-03

Annual 

Per. Chng 

93-03

California 69,901 94,298 138,762 6% 8% 7%

SJV Region 15,055 14,280 27,080 20% -1% 14% 6%

 Fresno 3,743 2,742 4,479 17% -6% 10% 2%

 Kern 3,082 3,025 5,529 20% 0% 13% 6%

 Kings 530 526 835 3% 0% 10% 5%

 Madera 694 473 1,144 4% -7% 19% 5%

 Merced 1,087 960 2,489 9% -2% 21% 9%

 San Joaquin 2,545 3,170 6,727 25% 4% 16% 10%

 Stanislaus 1,835 1,997 3,884 14% 2% 14% 8%

 Tulare 1,539 1,387 1,993 7% -2% 8% 3%

Source: Applied Development Economics, based on Construction Industry Research Board

TABLE 3

Multi-Family Residential Building Permit Trends: San Joaquin Valley, 1993-2003

---------- MFU Building permits ----------

1993 1998 2003

Distribution, 

2003

Annual 

Per. Chng 

93-98

Annual 

Per. Chng 

98-03

Annual 

Per. Chng 

93-03

California 14,755 31,409 56,920 16% 13% 14%

SJV Region 1,309 1,403 3,699 6% 1% 21% 11%

 Fresno 404 292 1,520 41% -6% 39% 14%

 Kern 314 428 583 16% 6% 6% 6%

 Kings 13 231 143 4% 78% -9% 27%

 Madera 105 160 90 2% 9% -11% -2%

 Merced 20 72 457 12% 29% 45% 37%

 San Joaquin 83 59 225 6% -7% 31% 10%

 Stanislaus 148 93 284 8% -9% 25% 7%

 Tulare 222 68 397 11% -21% 42% 6%

Source: Applied Development Economics, based on Construction Industry Research Board

While the value of single-family unit building permits in the 

Central Valley is lower by almost $40,000 than the value of 

single family building permits for the state as a whole, it is 

worth noting that between 1998 and 2003 average values rose 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 18

faster in the region as compared to the state (see Table 4). 

Using average construction cost figures adjusted for regional 

and historical variations, local officials estimate the value of 

single-family, multi-family and commercial and industrial 

building permits for reasons related to calculating fees and 

maintaining departmental budgets. The actual price of 

housing on the market is typically higher than the estimated 

value of the building permit, though changes in the value of 

building permits are a good indication as to the trajectory of 

change in the actual housing market.

TABLE 4

Average Value of Single-Family Unit Building Permit, San Joaquin Valley

---------- Average Value ----------

1993 1998 2003

Annual 

Per. Chng 

93-98

Annual 

Per. Chng 

98-03

Annual 

Per. Chng 

93-03

California $183,559 $218,055 $217,271 4% 0% 2%

SJV Region $130,879 $141,956 $170,604 2% 4% 3%

 Fresno $135,736 $150,044 $183,122 2% 4% 3%

 Kern $130,191 $130,167 $149,816 0% 3% 1%

 Kings $141,740 $136,190 $119,485 -1% -3% -2%

 Madera $100,791 $102,214 $150,562 0% 8% 4%

 Merced $135,439 $140,674 $153,139 1% 2% 1%

 San Joaquin $143,809 $161,303 $197,209 2% 4% 3%

 Stanislaus $119,981 $143,309 $176,566 4% 4% 4%

 Tulare $118,658 $122,141 $153,456 1% 5% 3%

Source: Applied Development Economics, based on Construction Industry Research Board

Table 5 below identifies the median price for for-sale owneroccupied housing in the Central Valley. The data comes from 

Dataquick. In the last two years, the median selling price of 

homes sold on the market has increased substantially. 

Dataquick’s median housing price data cover transactions 

involving newly built homes, reselling of older homes, and 

condominiums and townhouses. At almost $300,000 the 

median price of a home in Madera County is almost twice 

what is was in July 2003.
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TABLE 5

Median Home Sale Prices: San Joaquin Valley, 2003-2005 ($2005)

July 2003 July 2004 July 2005 03-04 04-05

Fresno County $171,220 $220,955 $265,000 29% 20%

Kern County $136,353 $176,041 $236,500 29% 34%

Madera County $151,811 $242,638 $299,500 60% 23%

Merced County $207,151 $242,638 $335,000 17% 38%

San Joaquin County $247,295 $320,075 $403,000 29% 26%

Stanislaus County $245,165 $278,775 $360,000 14% 29%

Tulare County $131,494 $159,005 $215,500 21% 36%

$184,356 $234,304 $302,071 27% 29%

Source: Applied Development Economics, based on Dataquick

REGIONAL ECONOMIC TRENDS

The influx of people moving into the region in search of 

homes that are more affordable than homes in the San 

Francisco Bay Area affects more than the housing market. 

The affect of more people in the San Joaquin Valley region 

can also be seen in the changing economic profile of the 

region. 

Economic development practitioners and planners have 

traditionally divided economies into two broad industrial 

categories—the economic base and local support industries. 

Economic base industries are the drivers of local and regional 

economies in that these industries draw income into a local 

economy by selling products outside of the local economy, 

much like the export industries of a national economy. 

Accrued earnings then circulate throughout the local area in 

the form of wages and salaries, investments, purchases of

fixed assets, and goods and services, generating more jobs 

and wealth. 

The economic base is typically comprised of industries within 

the manufacturing, minerals-resource extraction, and 

agricultural sectors. There are also the “local support 

industries” such as retail or service sectors, the progress of 

which is a function of the economic base and demographic 

changes, and more so the latter than the former. As 

population increases in a given area, demand for services–

such as realtors, teachers, and healthcare–increases, as does 
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demand for basic retail items like groceries, gas for 

commuting, or clothing at the local apparel shops.

Agriculture is the economic base of the San Joaquin Valley 

region by virtue of the amount of goods this sector produces 

and exports throughout the nation and the globe. Fourteen 

percent of all workers in the region are employed by 

industries within agriculture, as Table 2 shows. However, in 

1998 the proportion of workers in agriculture was 18 percent. 

In fact, over the five-year period between 1998 and 2003, 

employment in agriculture declined by three percent per year, 

or by 15 percent over five years.

Between 1998 and 2003, local support industries gained in 

prominence within the San Joaquin Valley region. Servicerendering industries employed the most workers as a 

proportion of total employment in the region. As Table 2 

shows, excluding wholesale, retail and transportation, servicerendering industries comprise the largest employment sector 

in the region, at 647,100 or 53 percent of all jobs. With retail, 

transportation and wholesale, services accounts for slightly 

over 70 percent of all jobs. In 1998, service-rendering 

industries represented 50 percent of all jobs, and when 

including retail, wholesale and transportation in the mix, 67 

percent. 

Increases in employment in service-rendering industries are 

consistent with regional population growth. In the region, 

local support industries of construction, education and health, 

financial activities, and government increased annually by six 

percent, four percent, three percent and three percent 

respectively between 1998 and 2003. 
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TABLE 6 

Employment Profile Of The San Joaquin Valley Region 1998 – 2003

MAJOR SECTORS

San Joaquin 

Valley 

Region 

Employment 

1998

San Joaquin 

Valley Region 

Employment 

2003

San Joaquin 

Valley 

Region 

Employment 

Distribution, 

2003

Annual 

Percent 

Change 

1998 to 2003

California 

Employment 

Distribution, 

2003

Annual 

Percent 

Change 

1998 to 2003

Agriculture 204,200 174,900 14% -3% 3% -2%

Resources, Mining and Construction 57,400 78,100 6% 6% 5% 5%

Manufacturing 114,300 110,300 9% -1% 10% -4%

Wholesale 34,400 39,000 3% 3% 4% 1%

Retail 121,400 133,200 11% 2% 11% 2%

Transportation/Warehousing/Utilities 37,600 45,700 4% 4% 3% -1%

Information 15,000 14,200 1% -1% 3% -0.5%

Financial Activities 40,400 46,600 4% 3% 6% 3%

Professional and Business Services 88,000 95,100 8% 2% 14% 1%

Educational and Health Services 101,500 122,200 10% 4% 10% 3%

Leisure, Hospitality and Other Srvcs 112,500 116,400 9% 1% 13% 2%

Government 221,200 252,600 21% 3% 16% 2%

Total Employment 1,147,900 1,228,300 100% 1% 100% 1%

Source: Applied Development Economics, based on data from California Employment Development Department LMID

The emergence of local support industries in the San Joaquin 

Valley region mirrors and leads statewide trends, as Table 6 

shows. In the region, construction, health-education, and 

government increased annually by six percent, four percent 

and three percent, whereas, statewide, these industries grew 

by five percent, three percent and two percent per year 

between 1998 and 2003. In short, while agriculture remains 

the leading edge of the economy, the San Joaquin Valley 

region’s economy has become more diverse, with the growth 

occurring within population-driven local support industries 

rather than the export-focused economic base industries of 

manufacturing and agriculture. 

5.2 DESCRIPTION OF AFFECTED INDUSTRIES

The analysis below examines trends of industries that will be 

likely affected by Draft Rules 9510 and 3180. According to 

the rule, developers of applicable development projects will 

have to pay a fee to reduce emissions related to the project 

that are not reduced on-site. The analysis below seeks to 

understand the possible impact of the fee on the economics 

of a development project, particularly with respect to project 

profitability and with respect to impacts on the final user, 
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which, in the case of housing, is the homebuyer or renter. 

The report takes into consideration existing fees that are 

already in place, meaning that the analysis is on the 

incremental impact of the new fee on top of existing fees. 

The following section reviews residential and commercialindustrial trends in certain number of cities in the eightcounty region. The report focuses on 27 cities in the region. 

Table 7 below organizes the 27 cities into different 

typologies. The consultant obtained information regarding 

existing fees on residential and commercial development 

from many of these jurisdictions. In addition, the report 

references a report issued by State of California’s Housing 

and Community Development Department, called “Pay to 

Play.” This report also tracks residential development fees 

for many cities in the Central Valley.

TABLE 7

Select Central Valley Cities By Type

Type Cities

Large Urban Fresno, Bakersfield

Bay Area Commuter Shed Stockton, Modesto, Manteca, Lodi, 

Tracy

Medium Visalia, Clovis, Merced, Turlock, 

Hanford, Porterville, Tulare

Small/Med Bedroom 

Community

Ceres, Sanger, Atwater, Selma,

Linden

Small Rural/Farming

Mendota, Wasco, Firebaugh, 

Avenal, Taft, Orange Cove, 

Oakhurst, Shafter

Source: San Joaquin Valley Unified Air Pollution Control District

HOUSING TRENDS IN SELECT CITIES

Table 8 below identifies the population for the 27 cities that 

are the focus of this analysis. These cities consist of over 2 

million residents, or 55 percent of all people in the eightcounty San Joaquin Valley region. Between 1998 and 2003, 

population in these cities grew by three percent annually, 

which is consistent with annual population growth rates for 

the region as a whole (see Table 1).
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TABLE 8

Population Trends of Select Cities in the San Joaquin Valley Region, 1993-2003

------ Population ------

City County 1993 1998 2003 1993-1998 1998-2003

01 Large Urban 3 Bakersfield Kern 192,351 220,771 268,914 3% 4%

01 Large Urban 7 Fresno Fresno 385,914 409,070 450,614 1% 2%

578,265 629,841 719,528 2% 3%

02 Bay Area Commuter Shed 10 Lodi San Joaquin 52,936 55,844 60,317 1% 2%

02 Bay Area Commuter Shed 11 Manteca San Joaquin 42,833 47,256 57,485 2% 4%

02 Bay Area Commuter Shed 14 Modesto Stanislaus 176,241 182,929 203,498 1% 2%

02 Bay Area Commuter Shed 21 Stockton San Joaquin 222,992 241,777 262,553 2% 2%

02 Bay Area Commuter Shed 23 Tracy San Joaquin 39,913 47,687 69,987 4% 8%

534,915 575,493 653,840 1% 3%

03 Medium 5 Clovis Fresno 57,036 67,291 76,545 3% 3%

03 Medium 8 Hanford Kings 33,892 39,012 44,833 3% 3%

03 Medium 13 Merced Merced 59,270 61,705 68,155 1% 2%

03 Medium 17 Porterville Tulare 32,310 36,286 42,181 2% 3%

03 Medium 24 Tulare Tulare 37,342 40,848 46,538 2% 3%

03 Medium 25 Turlock Stanislaus 46,481 50,958 62,256 2% 4%

03 Medium 26 Visalia Tulare 84,725 93,856 99,460 2% 1%

351,056 389,956 439,968 2% 2%

04 Small/Med Bedroom Community 1 Atwater Merced 22,528 22,944 26,216 0.4% 3%

04 Small/Med Bedroom Community 4 Ceres Stanislaus 29,331 32,289 36,449 2% 2%

04 Small/Med Bedroom Community 9 Linden San Joaquin 1,090 1,068 1,046 -0.4% -0.4%

04 Small/Med Bedroom Community 12 Mendota Fresno 7,287 7,521 8,203 1% 2%

04 Small/Med Bedroom Community 18 Sanger Fresno 17,927 18,557 19,993 0.7% 2%

04 Small/Med Bedroom Community 19 Selma Fresno 16,462 17,937 21,003 2% 3%

94,625 100,316 112,910 1% 2%

05 Small Rural/Farming 2 Avenal Kings 11,459 12,178 15,428 1% 5%

05 Small Rural/Farming 6 Firebaugh Fresno 5,031 5,565 6,201 2% 2%

05 Small Rural/Farming 15 Oakhurst Madera 2,570 2,519 2,833 0% 2%

05 Small Rural/Farming 16 Orange Cove Fresno 5,709 7,095 8,782 4% 4%

05 Small Rural/Farming 20 Shafter Kern 10,771 11,182 13,443 0.8% 4%

05 Small Rural/Farming 22 Taft Kern 6,508 7,375 9,027 3% 4%

05 Small Rural/Farming 27 Wasco Kern 17,212 20,083 22,400 3% 2%

59,260 65,996 78,114 2% 3%

San Joaquin Valley Air Basin 1,618,121 1,761,601 2,004,360 2% 3%

Source: Applied Development Economics, based on California Department of Finance and US Census

Table 9 identifies the number of single-family dwelling unit 

building permits issued by the 27 cities. As the table shows, 

the cities issued 17,641 single-family building permits in 2003, 

which represents almost two-thirds of all single-family 

building permits issued in the eight-county region as a whole. 

Table 10 identifies the number of multi-family dwelling units 

issued by the 27 cities. The amount of these permits 

represents almost 80 percent of all multi-family building 

permits issued in the region as a whole in 2003. For these 

reasons, the cities are representative of the larger region.
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TABLE 9 Single-Family Dwelling Units Building Construction Permits, San Joaquin Valley Region 2000-2003

2000 2001 2002 2003 2000 - 2003

Nos. of 

Permits Avg. Value

Nos. of 

Permits Avg. Value

Nos. of 

Permits Avg. Value

Nos. of 

Permits Avg. Value

Annual 

Change in 

Permits

Annual 

Change in 

Avg. Value

01 Large Urban 3,381 $132,038 4019 $132,089 4083 $137,988 5162 $152,257 15% 5%

02 Bay Area Commuter Shed 6,223 $161,757 4699 $172,165 6084 $172,996 6208 $176,852 -0.1% 3%

03 Medium 2,705 $125,488 3585 $141,040 4178 $153,806 5218 $156,243 24% 8%

04 Small/Med Bedroom Community 365 $105,702 542 $112,427 651 $118,285 801 $128,044 30% 7%

05 Small Rural/Farming 190 $83,956 262 $87,732 314 $85,667 252 $98,046 10% 5%

12,864 $143,580 13107 $147,205 15310 $154,305 17641 $160,217 11% 4%

TABLE 10 Multi-Family Dwelling Units Building Construction Permits, San Joaquin Valley Region 2000-2003

2000 2001 2002 2003 2000 - 2003

Nos. of 

Permits Avg. Value

Nos. of 

Permits Avg. Value

Nos. of 

Permits Avg. Value

Nos. of 

Permits Avg. Value

Annual 

Change in 

Permits

Annual 

Change in 

Avg. Value

01 Large Urban 177 $67,079 182 $73,639 454 $61,259 1150 $67,333 87% 0%

02 Bay Area Commuter Shed 84 $56,183 368 $59,905 514 $65,380 275 $69,075 48.5% 7%

03 Medium 206 $63,512 27 $64,680 155 $76,627 1119 $77,362 76% 7%

04 Small/Med Bedroom Community 51 $48,135 7 $38,617 71 0 162 $22,627 47% -22%

05 Small Rural/Farming 83 $40,584 135 $36,997 4 $48,978 194 $56,369 33% 12%

601 $59,067 719 $59,052 1,198 $61,344 2900 $68,137 69% 5%

Source: Applied Development Economics, based on Construction Industry Research Board
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Table 11 identifies the average selling price of a new 3 to 4 

bedroom home in the select cities. As expected, housing 

prices in the Bay Area Commuter Shed tend to be higher, in 

large part because of the close proximity to the San Francisco 

Bay Area housing market. Prices there are on average 

$402,644 per 3-4 bedroom unit, versus almost $250,000 for

new units in Small/rural farming communities such as Avenal 

(Kings County) or Orange Cove (Fresno County).

TABLE 11 Average Selling Price of New Single-Family and Multi-Family Housing 

San Joaquin Valley Region 2005

------ Single-Family Units ------ ------ Multi-Family Units ------

Avg 3-4 BR 

SFU Values

Avg 3-4 

BR SFU 

Size

Lot Size 

3-4 BR 

SFU 

Value Per 

SQFT

Average 

MFU Values

Average 

MFU Size

Value Per 

SQFT

01 Large Urban $338,047 1,893 5,407 $179 $146,914 1,071 $137

02 Bay Area Commuter Shed $402,664 2,112 6,034 $191 $180,603 1,071 $169

03 Medium $296,428 1,779 5,083 $167 $137,357 1,071 $128

04 Small/Med Bedroom Community $314,030 1,883 5,379 $167 $136,062 1,071 $127

05 Small Rural/Farming $247,836 1,644 4,697 $151 $125,482 1,071 $117

$323,966 1,862 5,320 $171 $145,283 1,071 $136

Source: Applied Development Economics, based on Realtor.com, Dataquick, and California Housing and Community Development, "Pay to Play"

Table 12 identifies existing fees on residential development in 

the 27 cities. As the table shows, fees amount to 

approximately five to six percent of values for single- and 

multi-family units. Data for fees comes from a variety of 

sources, including local jurisdictions and the California 

Department of Housing and Community Development 

(HCD), which issued a detailed report on residential 

developer fees of many cities throughout California. In using 

the HCD figures, this report adjusted the amount for general 

inflation and housing price inflation.
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TABLE 12 Existing Fees On A Per Unit Basis

Existing Fees On 3-4 

BR SFU Unit

All Fees 

As Percent of 

Value

Existing Fees 

On MFU Unit

All Fees 

As Percent of 

Value

01 Large Urban $17,796 5% $6,149 4%

02 Bay Area Commuter Shed $24,576 6% $8,093 4%

03 Medium $19,266 6% $7,355 5%

04 Small/Med Bedroom Community $21,162 7% $11,883 9%

05 Small Rural/Farming $12,689 5% $5,969 5%

$18,552 6% $7,890 5%

Source: Applied Development Economics, based on Realtor.com, Dataquick, and California Housing and Community 

Development, "Pay to Play"

Tables 13 and 14 compare existing fees against other 

development costs, including the price of land, to estimate 

profit and a profit rate. The profit rates calculated below are 

similar to what would be found in corporate reports of 

national homebuilders, particularly Centex Homes, Kaufman 

and Broad, Lennar, and Pulte Homes, whose combined 

average profit rate is approximately eight percent.2

TABLE 13 Home Prices, Construction Costs, Fees and Profit: Single Family Housing

Community Types

Avg 3-4 

BR SFU 

Values 

Land 

Value 

Per 3-4 

BR SFU 

Unit

All Fees 

Per 3-4 

BR

SFU Unit

Site 

Development 

Cost Per 3-4 

BR Unit

Building 

Construction 

Costs Per 

3-4 BR Unit

TOTAL 

COSTS

Profit per 

Unit

Profit as 

% Value

Large Urban $338,047 $77,124 $21,759 $40,233 $167,600 $306,716 $31,330 9%

Bay Area Commuter Shed $402,664 $93,015 $26,957 $46,410 $200,828 $367,210 $35,454 9%

Medium-Sized Cities $296,428 $50,069 $19,266 $37,346 $159,484 $266,165 $30,263 10%

Small\Medium Bedroom Communities $314,030 $74,468 $21,162 $34,570 $157,136 $287,336 $26,694 9%

Small Rural\Farming Communities $247,836 $47,847 $12,689 $28,825 $131,024 $220,386 $27,450 11%

$323,966 $68,505 $20,367 $38,373 $166,739 $293,983 $29,982 9%

 

2 www.sec.gov see Form 10-K
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TABLE 14 Home Prices, Construction Costs, Fees and Profit: Multi-Family Housing

Community Types

Avg MFU 

Values 

Land 

Value 

Per MFU 

Unit

All Fees 

Per MFU 

Unit

Site 

Development 

Cost Per 

MFU Unit

Building 

Construction 

Costs Per 

MFU Unit

TOTAL 

COSTS

Profit per 

Unit

Profit as 

% Value

Large Urban $146,914 $12,999 $6,149 $20,324 $81,295 $120,767 $26,147 18%

Bay Area Commuter Shed $180,603 $14,794 $8,093 $23,116 $92,464 $138,467 $42,136 23%

Medium-Sized Cities $137,357 $10,831 $7,355 $19,519 $80,260 $117,964 $19,393 14%

Small\Medium Bedroom Communities $136,062 $12,868 $11,883 $19,435 $80,926 $125,113 $10,949 8%

Small Rural\Farming Communities $125,482 $10,955 $5,969 $17,085 $77,658 $111,666 $13,815 11%

$145,283 $12,489 $7,890 $20,140 $83,179 $123,698 $21,585 15%

Commercial-Industrial Trends

Table 15 below estimates the value, costs and profit 

associated with developing one acre of commercial, industrial 

and office development. Information for the table comes 

from a variety of sources, including Realtor.com and 

Loopnet.com for current price of new industrial and 

commercial projects in the Central Valley. When estimating 

cost of construction, we used “Commercial Square Foot 

Building Costs: 2004”, by Deloitte Saylor Publication, as well 

as per square foot cost of construction estimates used by 

many cities when estimating the value of a project. In 

determining the amount of fees on a commercial-industrial 

development, we asked building officials in five cities to 

calculate the amount of fees that would be generated by a 

10,000 square feet light industrial development on a 2.5-acre 

parcel and by a 10,000 square feet retail project on a similarlysized piece of land. We converted the fees into a per acre 

amount. The per acre values in the table below were 

calculated after having calculated the development costs, 

based on a profit of ten percent, and these values were 

checked against what we found on Loopnet.com and 

Realtor.com. The 10 percent profit is based on a review of 

Deloitte-Saylor’s “Commercial Square Foot Building Costs: 

2004.” It is also based on a review of corporate reports of 

Catellus (industrial developer) and ProLogis (warehouse 
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distribution developer). It should be noted that while data in 

the residential section above represents trends in 27 cities in 

the Central Valley, information in this section is for five cities 

that fit the different city types. 

As Table 15 shows, existing fees on commercial and office 

developments are significantly higher than on industrial 

projects. This is so because of the traffic generated by retail 

and office is much higher than traffic generated by industrial 

users, which then requires a corresponding amount of 

reduction via fees.
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TABLE 15 Commercial-Industrial Trends: San Joaquin Valley Region, 2005

Avg. Value 

Per Acre 

(Land and 

Building)

Unimproved 

Land Value Per 

Acre

Fees Per 

Acre

Site 

Development 

Cost Per Acre

Building 

Construction 

Costs Per Acre

TOTAL 

Costs per 

Acre

Est. Profit 

Per Acre

Profit As 

percent 

of Value

Large Urban

Industrial $1,594,742 $157,518 $14,726 $60,768 $1,202,256 $1,435,268 $159,474 10%

Commercial $1,910,201 $546,032 $35,306 $45,576 $1,092,267 $1,719,181 $191,020 10%

Office $2,828,107 $546,032 $35,306 $45,576 $1,918,382 $2,545,296 $282,811 10%

Bay Area Commuter Shed

Industrial $1,679,815 $200,905 $47,904 $60,768 $1,202,256 $1,511,833 $167,981 10%

Commercial $2,011,879 $522,536 $150,312 $45,576 $1,092,267 $1,810,692 $201,188 10%

Office $2,929,785 $522,536 $150,312 $45,576 $1,918,382 $2,636,807 $292,979 10%

Medium-sized Cities

Industrial $1,546,952 $100,000 $29,233 $60,768 $1,202,256 $1,392,257 $154,695 10%

Commercial $1,748,583 $303,178 $132,704 $45,576 $1,092,267 $1,573,724 $174,858 10%

Office $2,666,489 $303,178 $132,704 $45,576 $1,918,382 $2,399,840 $266,649 10%

Small/Medium Bedroom Community

Industrial $1,631,301 $130,700 $74,447 $60,768 $1,202,256 $1,468,171 $163,130 10%

Commercial $1,668,338 $280,576 $83,085 $45,576 $1,092,267 $1,501,504 $166,834 10%

Office $2,586,244 $280,576 $83,085 $45,576 $1,918,382 $2,327,619 $258,624 10%

Small Rural\Farming Communities

Industrial $1,877,846 $350,642 $76,395 $60,768 $1,202,256 $1,690,061 $187,785 10%

Commercial $1,653,475 $217,800 $136,292 $41,769 $1,092,267 $1,488,127 $165,347 10%

Office $2,567,106 $217,800 $132,444 $41,769 $1,918,382 $2,310,395 $256,711 10%
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6. SOCIOECONOMIC IMPACTS

This section of the report compares the economic 

characteristics of affected industries against the possible Rule 

9150 and 3180 air quality fees. The first part of this section 

discusses annual compliance cost. Section 6.2 discusses 

general business responses to compliance costs. Section 6.3 

analyzes the socioeconomic impacts of Draft Rules 9510 and 

3180.

6.1 NEW RULE 9510 AND 3180 FEE

Tables 16 through 18 identify the worst-case fees associated 

with New Rules 9510 and 3180. To reduce emissions of 

NOx and PM10, Draft Rule 9510 would apply to 

development projects that will seek to gain a final 

discretionary approval for projects that, upon full build-out 

will include any one of the following: 50 residential units, 

2,000 square feet of commercial space, 25,000 square feet of 

industrial space, 20,000 square feet of medical office space, 

39,000 square feet of general office space, 9,000 square feet 

of educational space, 10,000 square feet of government space, 

20,000 square feet of recreational space, or 9,000 square feet 

of unidentified space. Certain transportation projects, transit 

projects, reconstruction projects that result from a natural 

disaster, and development projects whose primary source of 

emissions are subject to District Rule 2201 or 2010 would be 

exempt from this Draft Rule. Also, development projects 

that have a mitigated baseline below two tons per year for 

each pollutant would be exempt from the emission reduction 

requirements of the rule.

It is important to note that any fee identified below are the 

estimated maximum fee in the worst case scenario for a 

typical residential, commercial and or industrial development, 

with the understanding that the actual fee will vary with the

particulars of any project. Any fee below is presented for the 

purposes of analyzing potential impacts given costs associated 

with reducing quantifiable emissions resulting from what 

constitutes typical applicable developments. The fee amounts 
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identified include all off-site emission reduction fees and all 

administrative fees.

In the worst case, the fee that a typical residential 

development will pay is estimated at $784 per unit starting in 

2006, climb to $1,268 the following year, and above $1,772 in 

the years starting in 2008. The fee could be lower depending 

on the strategies that a developer employs to reduce 

emissions.

TABLE 16 

Worst Case Estimate: 

Fee That Corresponds 

to A Typical Residential 

Development

Year Per Unit

2006 $784.12

2007 $1,268.09

2008 $1,772

TABLE 17

Worst Case Estimate: Fee That Corresponds To The 

Typical Industrial Development

2006

Use

Average 

Acres 

Corresponding 

Fee Total

Heavy Industrial 300.0 $357,394.75

Light Industrial 75.0 $240,508.75

Warehouses 25.0 $83,645.68

Misc. Industrial (industrial park) 39.0 $143.797.05

2008

Heavy Industrial 300.0 $747,626 

Light Industrial 75.0 $518,237 

Warehouses 25.0 $179,956 

Misc. Industrial 39.0 $309,965 
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TABLE 18 

Worst Case Estimate: Fee That Corresponds To a Typical Commercial Development

TYPE OF SHOPPING CENTERS SIZE RANGE

TYPICAL SIZE

 (sq ft)

Corresponding Fee 

Total

2006

convenience shopping center up to 30,000 20,000 $24,524.94 

neighborhood shopping center 30,000 to 100,000 50,000 $61,599.54 

community shopping center 100,000 to 450,000 150,000 $184,647.45 

super community shopping center 200,000 to 300,000 250,000 $403,546.91 

regional shopping center 300,000 to 700,000 450,000 $626,791.07 

superregional shopping center 500,000 to 2 million 900,000 $1,253,582.15 

2008

convenience shopping center up to 30,000 20,000 $52,971.24 

neighborhood shopping center 30,000 to 100,000 50,000 $131,689.99 

community shopping center 100,000 to 450,000 150,000 $397,483.34 

super community shopping center 200,000 to 300,000 250,000 $872,322.57 

regional shopping center 300,000 to 700,000 450,000 $1,353,824.12 

superregional shopping center 500,000 to 2 million 900,000 $2,708,116.82 

6.2 BUSINESS RESPONSES TO PROPOSED FEES

Industries impacted by the proposed new rule may respond in 

a variety of ways when faced with new regulatory costs. These 

responses may range from simply absorbing the costs and 

accepting a lower rate of return, to shutting down the 

affected business operation altogether and, where practical, 

shift from lower-value to higher-value product. Affected 

sources may also seek to renew efforts to increase 

productivity and reduce costs elsewhere in their operation in 

order to recoup the regulatory costs and maintain profit 

levels. Based on the discussion during a focus group meeting 

held in July, 2005, industries impacted by the new rules will in 

all likelihood seek to pass the costs on to homebuyers and 

renters in the case of residential fees, to the extent that the 

market allows.

6.3 IMPACTS ON AFFECTED INDUSTRIES

This section of the report analyzes revenues and profits of 

affected industries against anticipated costs associated with 
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Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 33

implementation of the draft rule. The analysis first examines 

impacts on builders of single-family homes. Then, it analyzes 

impacts on builders of multi-family units. In addition to 

impacts on homebuilders, the section analyzes how changes 

in price affect prospective homebuyers and renters. Finally, 

the section below examines impacts on non-residential 

developments, particularly commercial retail, industrial, and 

office projects.

Single-Family Dwelling Units

Tables 19 through 21 compare the fee that a typical 

residential development would pay in the year 2006, 2007 and 

2008, or $784, $1,268 and $1,772, against estimated profits. 

In calculating the impacts of the fee, we have included the 

additional $400 administrative cost associated with Rule 3180. 

As Tables 19, 20 and 21 show, the fees do not significantly 

impact affected builders of single-family homes in a negative 

manner. The fee amounts to approximately three, four and 

six percent of estimated net profits, meaning that affected 

stakeholders would still garner between 94 sand 97 percent of 

their original profit. Moreover, the impact is below the ten 

percent significance threshold employed in this analysis.
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Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

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 Rule 9510 and Rule 3180

F - 34

TABLE 19 Impact Analysis of 2006 Air Quality Fee on Typical Single-Family Development: $784 per unit

Community Types

(1) 

Profit as % 

Value

(2) 

Air Quality Fee 

on New Res. 

Cons. @ 

$.421/sqft

(3) 

Impact 

on Profit

(4) 

Impact 

Significance

(5) 

Modified 

Profit as 

Percent of 

Value

(6) 

Initial 

Home 

Value @ 

5.85%, 30 

yrs and 

20% down

(7) 

Home 

Value @ 

5.85%, 30 

yrs and 

20% 

down: 

With Air 

Fee

(8) 

Initial 

Home 

Value @ 

6.85%, 30 

yrs and 

20% down

(9) 

Home 

Value @ 

6.85%, 30 

yrs and 

20% 

down: 

With Air 

Fee

(10) 

Affect of 

Fee

(11) 

Affect of 

1% 

Change in 

Interest 

Rate

Large Urban 11.5% $797 -2.1% <significant 11.3% $93,624 $93,846 $101,737 $101,979 $223 $8,113

Bay Area Commuter Shed 10.8% $889 -2.1% <significant 10.6% $111,520 $111,768 $121,184 $121,454 $248 $9,664

Medium-Sized Cities 8.3% $749 -3.1% <significant 8.0% $82,097 $82,307 $89,212 $89,439 $209 $7,114

Small\Medium Bedroom Communities 8.5% $793 -3.0% <significant 8.2% $86,972 $87,194 $94,509 $94,750 $221 $7,537

Small Rural\Farming Communities 10.6% $692 -2.7% <significant 10.3% $68,639 $68,833 $74,587 $74,798 $193 $5,948

All Select Cities Average 9.3% $784 -2.6% <significant 9.0% $89,724 $89,943 $97,499 $97,737 $219 $7,775

TABLE 20 Impact Analysis of 2007 Air Quality Fee on Typical Single-Family Development: $1,268 per unit

Community Types

(1) 

Profit as % 

Value

(2) 

Air Quality Fee 

on New Res. 

Cons. @ 

$.681/sqft

(3) 

Profit as 

% Value

(4) 

Impact 

Significance

(5) 

Modified 

Profit as 

Percent of 

Value

(6) 

Initial 

Home 

Value @ 

5.85%, 30 

yrs and 

20% 

down

(7) 

Home 

Value @ 

5.85%, 30 

yrs and 

20% 

down: 

With Air 

Fee

(8) 

Initial 

Home 

Value @ 

6.85%, 30 

yrs and 

20% 

down

(9) 

Home 

Value @ 

6.85%, 30 

yrs and 

20% 

down: 

With Air 

Fee

(10) 

Affect of 

Fee

(11) 

Affect of 

1% 

Change in 

Interest 

Rate

Large Urban 11.5% $1,289 -3.3% <significant 11.2% $93,624 $93,983 $101,737 $102,127 $359 $8,113

Bay Area Commuter Shed 10.8% $1,438 -3.3% <significant 10.5% $111,520 $111,920 $121,184 $121,619 $400 $9,664

Medium-Sized Cities 8.3% $1,212 -5.0% <significant 7.9% $82,097 $82,435 $89,212 $89,578 $337 $7,114

Small\Medium Bedroom Communities 8.5% $1,282 -4.8% <significant 8.1% $86,972 $87,329 $94,509 $94,897 $357 $7,537

Small Rural\Farming Communities 10.6% $1,120 -4,3% <significant 10.2% $68,639 $68,951 $74,587 $74,925 $312 $5,948

All Select Cities Average 9.3% $1,268 -4.3% <significant 8.9% $89,724 $90,007 $97,499 $97,883 $353 $7,775
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

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 Rule 9510 and Rule 3180

F - 35

TABLE 21 Impact Analysis of 2008 Air Quality Fee on Typical Single-Family Development: $1,772 per unit

Community Types

(1) Profit 

as % Value

(2) 

Air Quality Fee 

on New Res. 

Cons. @ 

$.952/sqft

(3) 

Profit as 

% Value

(4) 

Impact 

Significance

(5) 

Modified 

Profit as 

Percent of 

Value

(6) 

Initial 

Home 

Value @ 

5.85%, 30 

yrs and 

20% 

down

(7) 

Home 

Value @ 

5.85%, 30 

yrs and 

20% 

down: 

With Air 

Fee

(8) 

Initial 

Home 

Value @ 

6.85%, 30 

yrs and 

20% 

down

(9) 

Home 

Value @ 

6.85%, 30 

yrs and 

20% 

down: 

With Air 

Fee

(10) 

Affect 

of Fee

(11) 

Affect of 

1% 

Change in 

Interest 

Rate

Large Urban 11.5% 1,802 -4.6 <significant 11.0% $93,624 $94,125 $101,737 $102,281 $501 $8,113

Bay Area Commuter Shed 10.8% 2,011 -4.6 <significant 10.3% $111,520 $112,079 $121,184 $121,791 $559 $9,664

Medium-Sized Cities 8.3% 1,694 -6.9 <significant 7.7% $82,097 $82,568 $89,212 $89,723 $471 $7,114

Small\Medium Bedroom Communities 8.5% 1,792 -6.7 <significant 7.9% $86,972 $87,471 $94,509 $95,050 $498 $7,537

Small Rural\Farming Communities 10.6% 1,565 -6.0 <significant 10.0% $68,639 $69,074 $74,587 $75,060 $435 $5,948

All Select Cities Average 9.3% 1,773 -5.9 <significant 8.7% $89,724 $90,217 $97,499 $98,035 $493 $7,775

TABLE 22 Median Home Sale Prices in Small to Medium Communities, 2003-2005

July 2003 July 2004 July 2005 03-04 Change 04-05 Change 03-04 Per Chg 04-05 Per Chg

Medium Merced (Merced) $204,341 $226,741 $322,500 $22,400 $95,759 11% 42%

Tulare (Tulare) $125,379 $161,146 $204,000 $35,767 $42,854 29% 27%

Turlock (Stanislaus) $240,088 $284,330 $369,500 $44,242 $85,170 18% 30%

Visalia (Tulare) $154,723 $185,938 $270,000 $31,215 $84,062 20% 45%

Small/Medium Bedroom Community Atwater (Merced) $207,009 $232,422 $324,250 $25,413 $91,828 12% 40%

Mendota (Fresno) $77,438 $120,000 $42,563 55%

Sanger (Fresno) $161,659 $171,734 $276,500 $10,075 $104,766 6% 61%

Selma (Fresno) $123,245 $177,158 $249,250 $53,912 $72,092 44% 41%

Small Rural/Farming Oakhurst (Madera) $209,143 $273,742 $306,000 $64,599 $32,258 31% 12%

Taft (Kern) $82,697 $77,474 $110,000 -$5,223 $32,526 -6% 42%

Wasco (Kern) $93,101 $103,299 $132,000 $10,198 $28,701 11% 28%

$160,139 $179,220 $244,000 $19,082 $64,780 12% 36%

Source: Applied Development Economics, based on Dataquick
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Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

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 Rule 9510 and Rule 3180

F - 36

A close review of Tables 19 through 21 reveals that the fees 

under consideration could potentially impacts different 

community types in different ways. For Medium-sized 

communities, Small\medium bedroom communities, and 

Small rural\farming communities, the impact of the possible 

fee on profits is slightly higher than impact to home builders 

operating in the large urban and Bay Area Commuter Shed 

markets. This is so because prices of new homes are higher 

in the latter markets. To understand the influence of the 

$784, 1,268 or $1,772 fee on home prices in the Mediumsized cities, Small\medium bedroom communities, and Small 

rural\farming communities, it is worthwhile to compare the 

fees against recent changes in home prices in cities in these 

three community types.

Table 22 above includes recent data from Dataquick. Among 

other things, it shows that between July 2003 and July 2004 

and July 2004 and July 2005, median prices of homes 

increased by $19,000 and $65,000 in specific cities in 

Medium-sized cities, Small\medium bedroom communities, 

and Small rural\farming communities. Table 22 includes all 

homes sold, not just newly constructed three-to-four 

bedroom homes. While the fee could raise home prices by 

$784 to $1,772, it is apparent that larger market forces are the 

primary culprit behind the increase in housing prices in these 

three community types. The fee associated with Draft Rules 

9510 and 3180 would amount to, at most, three percent of 

recent change in housing prices in these three community 

types (or $1,772 divided by $65,000).

Tables 19 through 21 above also include an analysis on how 

the $784, $1,268 or $1,772 fee would impact potential 

homebuyers. In other words, we assume that the 

homebuilder will pass this cost on to homebuyers to the 

fullest extent possible allowed by the market. As Table 11 

above previously showed, the price of a new three-to-four 

bedroom home in the San Joaquin Valley region is 

approximately $324,000. In large urban areas of Bakersfield 

and Fresno, the average price of a new three-to-four 

bedroom home is $338,000, while in the Bay Area Commuter 

Shed, it is even higher at $402,700. Housing is more 

affordable in rural communities such as Avenal, where the 
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Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

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 Rule 9510 and Rule 3180

F - 37

average price of a new home is $247,800 (see Table 11 

above).

In Column Six of Tables 19 though 21, we estimate the 

minimum household income required to qualify for 

conventional financing for new three-to-four bedroom 

homes in the different market types. We assume that the 

potential homebuyer is a first-time homebuyer, meaning that 

there are no proceeds from the sale of a previous home to 

put towards the purchase of the new home. We assume that 

the potential homebuyer will have a downpayment equal to 

20 percent of the market value of the unit. We also factor in 

a 5.85 interest rate, monthly bills, homeowners insurance, and 

property taxes when calculating the minimum household 

income needed to qualify for a new three-to-four bedroom 

home in the San Joaquin Valley. 

To qualify for financing for a $324,000 home in the Central 

Valley, a prospective first-time home buying household 

would need to earn approximately $89,724 annually. 

Columns Seven and Ten to the tables above show the extent 

to which the different fees raise the minimum qualifying 

household income. As a result of the $784, $1,268 and 

$1,772 fees, minimum qualifying incomes for the region as a 

whole would rise, on average, by $219, $353, and $493 

respectively. The $219 to $493 amount is less than one 

percent of the original income needed to qualify for a new 

three-to-four bedroom home in the Central Valley.

For comparative purposes, Tables 19 through 21 include 

Columns Eight and Eleven, which show what would happen 

if interest rates rose from 5.85 percent to 6.85 percent. If this 

occurred, the minimum qualifying income would rise from 

$89,724 to $97,499, or by $7,775. In other words, while the 

fees have the potential to increase the amount of income 

required to qualify for financing, larger market forces such as 

interest rates and market-driven price fluctuations play a 

significantly greater role in determining the income level 

needed to qualify for a new three-to-four bedroom home.

Multi-Family Dwelling Units

Tables 23 through 25 show the affects of the fees on 

construction of multi-family dwelling units. Small\medium 
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Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 38

bedroom communities and Small rural\farming communities 

are affected negatively more so than the other communities, 

because the price of multi-family dwelling units elsewhere are 

higher than in these community types. Columns Six and 

Seven in each of the tables below estimate the minimum 

income required to purchase a multi-family unit such as a 

condominium or townhouse, and the extent to which the 

impact fee could raise this amount, in the event developers of 

multi-family units pass costs onto the consumers. The fee 

could raise the minimum income needed to qualify for 

financing for the purchase of a condominium or townhouse 

valued at $145,300 (see Table 14 above), from $40,237 to 

$40,455 ($784 fee), $40,589 ($1,268 fee) or at most $40,696 

($1,772 fee), which represent at most a one percent change. 

Tables 23 through 25 below show that the fee would only 

slightly affect rents, in the event units were rented out as 

opposed to sold.
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Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

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 Rule 9510 and Rule 3180

F - 39

TABLE 23 Impact Analysis of 2006 Fee on Typical Multi-Family Housing Development: $784 per unit

Community Types

(1) 

Profit 

as % 

Value

(2) 

Air Quality 

Fee on New 

Res. Cons. @ 

.732/sqft

(3) 

Impact 

on Profit

(4) 

Impact 

Significance

(5) 

Modified 

Profit as 

Percent of 

Value

(6) 

Initial 

CondoTownhouse 

Value @ 

5.85%, 30 

yrs and 20% 

down

(7) 

CondoTownhouse 

Value @ 

5.85%, 30 

yrs and 20% 

down: With 

Air Fee

(8) 

Minimum 

Rent 

without 

Air Fee

(9) 

Minimum 

Rent with 

Air Fee

(10) 

Qualifying 

Rental 

Household 

without Air 

Fee

(11) 

Qualifying 

Rental 

Household 

with Air 

Fee

Large Urban 17.7% $788 -3.0% <significant 17.3% $40,689 $40,907 $1,150 $1,157 $41,453 $41,675

Bay Area Commuter Shed 23.3% $788 -1.9% <significant 22.9% $50,019 $50,237 $1,414 $1,420 $50,958 $51,180

Medium 14.1% $788 -4.1% <significant 13.5% $38,042 $38,260 $1,076 $1,082 $38,756 $38,978

Small/Med Bedroom Community 8.0% $788 -7.2% <significant 7.5% $37,683 $37,901 $1,065 $1,072 $38,391 $38,613

Small Rural/Farming 11.0% $788 -5.7% <significant 10.4% $34,753 $34,971 $983 $989 $35,405 $35,628

All Select Cities Average 14.9% $788 -3.6% <significant 14.3% $40,237 $40,455 $1,138 $1,144 $40,992 $41,215

TABLE 24 Impact Analysis of 2007 Fee on Typical Multi-Family Housing Development: $1,268 per unit

Community Types

(1) 

Profit 

as % 

Value

(2) 

Air Quality 

Fee on New 

Res. Cons. @ 

$1.184/sqft

(3) 

Impact 

on Profit

(4) 

Impact 

Significance

(5) 

Modified 

Profit as 

Percent of 

Value

(6) 

Initial CondoTownhouse 

Value @ 

5.85%, 30 

yrs and 20% 

down

(7) 

CondoTownhouse 

Value @ 

5.85%, 30 

yrs and 20% 

down: With 

Air Fee

(8) 

Minimum 

Rent 

without Air 

Fee

(9) 

Minimum 

Rent with 

Air Fee

(10) 

Qualifying 

Rental 

Household 

without Air 

Fee

(11) 

Qualifying 

Rental 

Household 

with Air Fee

Large Urban 17.7% $1,268 -4.9% <significant 16.9% $40,689 $41,041 $1,150 $1,160 $41,453 $41,812

Bay Area Commuter Shed 23.3% $1,268 -3.0% <significant 22.6% $50,019 $50,371 $1,414 $1,424 $50,958 $51,317

Medium 14.1% $1,268 -6.6% <significant 13.2% $38,042 $38,394 $1,076 $1,086 $38,756 $39,115

Small/Med Bedroom Community 8.0% $1,268 -11.6% significant 7.1% $37,683 $38,035 $1,065 $1,075 $38,391 $38,749

Small Rural/Farming 11.0% $1,268 -9.2% <significant 10.0% $34,753 $35,105 $983 $993 $35,405 $35,764

All Select Cities Average 14.9% $1,268 -5.9% <significant 14.0% $40,237 $40,589 $1,138 $1,148 $40,992 $41,351
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 40

TABLE 25 Impact Analysis of 2008Fee on Typical Multi-Family Housing Development: $1,772 per unit

Community Types

(1) 

Profit 

as % 

Value

(2) 

Air Quality 

Fee on New 

Res. Cons. @ 

1.655/sqft 

(3) 

Impact 

on Profit

(4) 

Impact 

Significance

(5) 

Modified 

Profit as 

Percent of 

Value

(6) 

Initial CondoTownhouse 

Value @ 

5.85%, 30 

yrs and 20% 

down

(7) 

CondoTownhouse 

Value @ 

5.*5%, 30 

yrs and 20% 

down: With 

Air Fee

(8) 

Minimum 

Rent 

without Air 

Fee

(9) 

Minimum 

Rent with 

Air Fee

(10) 

Qualifying 

Rental 

Household 

without Air 

Fee

(11) 

Qualifying 

Rental 

Household 

with Air Fee

Large Urban 17.7% $1,657 -6.3% <significant 16.7% $40,689 $41,148 $1,150 $1,150 $41,453 $41,920

Bay Area Commuter Shed 23.3% $1,657 -3.9% <significant 22.4% $50,019 $50,478 $1,414 $1,427 $50,958 $51,426

Medium 14.1% $1,657 -8.5% <significant 12.9% $38,042 $38,501 $1,076 $1,089 $38,756 $39,224

Small/Med Bedroom Community 8.0% $1,657 -15.1% significant 6.8% $37,683 $38,142 $1,065 $1,078 $38,391 $38,858

Small Rural/Farming 11.0% $1,657 -12.0% significant 9.7% $34,753 $35,212 $983 $996 $35,405 $35,873

All Select Cities Average 14.9% $1,657 -7.7% <significant 13.7% $40,237 $40,696 $1,138 $1,151 $40,992 $41,460
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 41

Affordable Housing For Low-and Moderate 

Income Households

The discussion above focused on how fees would affect firsttime homebuyers of single-family and multi-family units, as 

well as potential renters. In that context, housing 

affordability refers to the minimum income required to 

qualify for either a mortgage or the minimum income needed 

to pay a certain rent, with the understanding that the annual 

housing payment must not exceed one-third of annual 

household income. The federal agency called the 

Department of Housing and Urban Development (HUD) 

and private lenders use the one-third threshold as a way to 

gauge housing affordability. Anyone paying more than onethird of his or her income on housing is living in an 

unaffordable situation. 

Affordable housing also refers to the extent to which lowincome and moderate-income households can access housing 

at affordable rents. Every year, the federal government issues 

guidelines as to what constitutes low-income and moderateincome households, particularly for the purposes of 

qualifying households for federal housing programs such as 

Section 8 or the Low-Income Housing Tax Credit program. 

In turn, state and local agencies adopt these guidelines when 

carrying out their respective housing programs.

Table 26 below identifies the federal Housing and Urban 

Development’s (HUD) 2005 income guideline for most of 

the Central Valley, and this guideline adjusts for number of 

people in a household. A single individual earning no more 

than $27,500 is a low-income individual, while a single 

individual make $27,502 would be a moderate-income 

person. 
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Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

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TABLE 26 HUD Income Guidelines, 2005

Low Income Moderate

Minimum Maximum Minimum Maximum

1 person $0 $27,500 $27,501 $41,250

2 persons $0 $31,400 $31,401 $47,100

3 persons $0 $35,350 $35,351 $53,025

4 persons $0 $39,300 $39,301 $58,950

5 persons $0 $42,400 $42,401 $63,600

6 persons $0 $45,550 $45,551 $68,325

7 persons $0 $48,700 $48,701 $73,050

8 or more persons $0 $51,850 $51,851 $77,775

Source: Applied Development Economics, based on Department of Housing and Urban Development

More importantly for the purposes of this analysis, a single 

person making no more than $27,500 a year and who, at the 

same time, pays a rent that does not exceed one-third of her 

or his income lives in an affordable situation. Conversely, a 

single individual making no more than $27,500 who is paying 

a rent that exceeds one-third of his or her income is living in 

an unaffordable situation. Table 27 below calculates the rents 

that would be affordable to low- and moderate-income 

households. For the most part, rents that low-income 

households should pay are substantially below the rents that 

typical new multi-family units constructed in the region 

should command, even before the imposition of the air fee. 

For example, 2-person low-income households should pay no 

more than $785 on rent. As Tables 23 through 25 showed, 

rent for a newly constructed apartment unit should be $1,138, 

which is unaffordable to 2-person low-income households by 

standards established by HUD. On the other hand, a twoperson moderate-income household that paid the $1,138 

would be living in an affordable situation, since the maximum 

rent for purposes of calculating affordability is $1,178. A 

one-person moderate-income household should pay no more 

than $1,031 toward rent; thus the $1,138 rent calculated in 

Table 23 through 25 would constitute unaffordable housing.
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Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 43

TABLE 27 Affordable Monthly Rents

Affordable Rent: 

Low Income

Affordable Rent:

 Moderate Income

Minimum Maximum Minimum Maximum

1 person $0 $688 $689 $1,031

2 persons $0 $785 $786 $1,178

3 persons $0 $884 $885 $1,326

4 persons $0 $983 $984 $1,474

5 persons $0 $1,060 $1,061 $1,590

6 persons $0 $1,139 $1,140 $1,708

7 persons $0 $1,218 $1,219 $1,826

8 or more persons $0 $1,296 $1,297 $1,944

Without public subsidies to either the renting households or 

to housing developers, most low-income households in the 

Central Valley are priced out of newly constructed 

multifamily units, the rents for which need to be at a level to 

take into account price of land, development costs, developer 

fees, and an adequate level of profit, among other things. For 

the region as a whole, the market rate rent for a typical multifamily unit is calculated at $1,138, though rents are higher or 

lower depending on the community type, with Large Urban 

communities and the Bay Area Commuter Shed requiring 

higher rents (see Tables 23 through 25 Column Eight). 

Moderate-income households consisting of no more than 

three persons should be able to afford newly constructed 

multi-family units with monthly rents at or about $1,138, 

although the same cannot be said for moderate-income 

households consisting of four or more persons, who will 

need higher-priced living quarter with additional rooms.

There are a number of housing programs and policies that 

can assist low- and moderate-income households to live in 

market rate housing. Federal housing programs such as 

Section 8 provide the difference between the amount3 that a 

low-income household can pay and the actual rent for an 

apartment in the private sector that is willing to accept 

Section 8. However, local governments receive only a limited 

number of Section 8 vouchers from the federal government, 

 

3

 The amount that a Section 8 tenant contributes toward rent on an out of pocket basis must not exceed onethird of the tenant’s annual income.
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resulting in waiting lists consisting of many households 

waiting a relatively long time. Other public subsidies are 

aimed at encouraging the private sector to set-aside some, if 

not all, newly constructed housing as affordable to low- and 

moderate-income households. The federal Low-Income 

Housing Tax Credit (LIHTC) or, at the local level, the twenty 

percent housing redevelopment tax increment set-aside are 

just two revenue sources that can increase the feasibility of 

setting aside units at below market rents for low- and 

moderate-income households. Like the Section 8 program, 

there are some inherent limitations to the LIHTC and the tax 

increment set-aside programs. The financing via the federal 

LIHTC program is not readily available as it is accessed on a 

competitive basis. Not all cities have redevelopment 

agencies, and, of those with such agencies, it takes some time 

to generate the necessary amount of revenues (also known as 

tax increment) for a successful housing set-aside program. 

Some cities have what are called “inclusionary housing” 

policies, meaning that in order to obtain approval for this or 

that housing project, the developer must guarantee that a 

certain portion (typically 15 percent) is reserved for low- and 

moderate-income households. Some cities sweeten their 

inclusionary policies with public financing, and some do not. 

It is argued that “inclusionary housing” policies without 

public subsidies result in overall higher rents or home prices, 

as developers required to set-aside housing at below-market 

levels for some units make up the difference by driving up 

the price of rest of the bulk of the units in a project.4

Non-Residential Development

Table 28 below analyzes the impacts of the Draft Rule 9510

and 3180 commercial and industrial fees on a per acre basis. 

In 2006, the fee on a typical retail and office development will 

amount to $15,286 and $7,914 per acre respectively. In the 

year 2008, fees on a per acre basis are expected to increase to 

$33,008 (retail) and $17,099 (office). As the table shows, in 

 

4 Home Builders Association of Northern California - HBA News, ( www.hbanc.org/ news2000/ 

JulAug2001/ JulAug01feat2.html) / “The Inclusionary Housing Debate - Who Really Pays for Affordable ...” 

(www.realtor.org/sg3.nsf/Pages/housingdebatepays?OpenDocument)
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F - 45

the year 2006 possible off-site emission reduction fees on 

new typically-sized commercial and office developments will 

not exceed the threshold of significance. The possible offsite fee amounts to an estimated 21 percent of profits in the 

year 2006. In 2008, the possible air off-site fees on new 

typically-sized commercial retail developments will exceed the 

threshold of significance by six to ten percent, depending on 

the community in which development occurs. The dollar 

amount in excess of the threshold in the year 2008 ranges 

from $12,889 to $16,324 per acre for commercial 

developments.
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TABLE 28 Impact Analysis of 2006 and 2008 Fee on Typical Commercial-Industrial Project

Est. Fees Per Acre Est. Fees As % of Profit

Percent Above 

Significance 

Threshold

Dollar Amount 

Above Significance 

Threshold

Avg. Value 

Per Acre

Est. Profit 

Per Acre

Profit as 

percent of 

Value 2006 2008 2006 2008 2006 2008 2006 2008

Large Urban

 Industrial $1,594,742 $159,474 10% $1,880 $4,000 1% 3% < sig. < sig.

 Commercial $1,910,201 $191,020 10% $15,286 $33,008 8% 17% < sig. 7% $13,906 

 Office $2,828,107 $282,811 10% $7,914 $17,099 3% 6% < sig. < sig.

Bay Area Commuter Shed

 Industrial $1,679,815 $167,981 10% $1,880 $4,000 1% 2% < sig. < sig.

 Commercial $2,011,879 $201,188 10% $15,286 $33,008 8% 16% < sig. 6% $12,889 

 Office $2,929,785 $292,979 10% $7,914 $17,099 3% 6% < sig. < sig.

Medium-sized Cities

 Industrial $1,546,952 $154,695 10% $1,880 $4,000 1% 3% < sig. < sig.

 Commercial $1,748,583 $174,858 10% $15,286 $33,008 9% 19% < sig. 9% $15,522 

 Office $2,666,489 $266,649 10% $7,914 $17,099 3% 6% < sig. < sig.

Small/Medium Bedroom Community

 Industrial $1,631,301 $163,130 10% $1,880 $4,000 1% 2% < sig. < sig.

 Commercial $1,668,338 $166,834 10% $15,286 $33,008 9% 20% < sig. 10% $16,324 

 Office $2,586,244 $258,624 10% $7,914 $17,099 3% 7% < sig. < sig.

Small Rural\Farming Communities

 Industrial $1,877,846 $187,785 10% $1,880 $4,000 1% 2% not sig. not sig.

 Commercial $1,653,475 $165,347 10% $15,286 $33,008 9% 20% not sig. 10%

 Office $2,567,106 $256,711 10% $7,914 $17,099 3% 7% not sig. not sig.
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It is not clear how the development community will adjust to 

the additional costs. Rather than absorb the costs, the 

developer (or a subsequent owner of an affected project site) 

might seek to pass costs onto commercial tenants in the form 

of rent increases. Table 29 translates the amount of the total 

fee into a per square foot rent for significantly impacted 

commercial uses. While the 2006 fee does not significantly 

impact developers of commercial uses, the 2008 fee 

significantly impacts these developers to the tune of $13,905. 

This amounts to almost one cent per square foot, which 

developers will pass onto future commercial tenant.

It is worth noting that the 2006 and 2008 fee, in effect, sets 

the bar slightly higher with respect to lease rates on all new 

commercial developments in the region. Comparable office 

developments that have been in place prior to the new fees 

could conceivably raise monthly rents by one cent. In 

addition, comparable retail sites in place prior to the new fees 

could conceivably raise rents by two cents in 2008. 
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TABLE 29

2006 and 2008 Fee on Typical Commercial-Industrial Project: Affect of Fee on Monthly Rent

2006 Dollar 

Amount 

Significance 

Threshold

Fee as a 

Percent of 

Profit

Amount Above 

Significance 

Threshold

2006 Fee Per 

SqFt

2006 Per Sqft 

Fee As Monthly 

Rent Increase 

Over Typical 

Amortization 

Period 

(15 years)

2008 Dollar 

Amount 

Significance 

Threshold

Fee as a Percent 

of Profit

Amount Above 

Significance 

Threshold

2008 Fee Per 

SqFt

2008 Per Sqft 

Fee As Monthly 

Rent Increase 

Over Typical 

Amortization 

Period 

(15 years)

Large Urban

 Industrial < sig. 1% < sig. < sig. 3% < sig.

 Commercial < sig. 8% < sig. $13,906 17% 7% $1.28 $0.007 

 Office < sig. 3% < sig. < sig. 6% < sig.

Bay Area Commuter Shed

 Industrial < sig. 1% < sig. < sig. 2% < sig.

 Commercial < sig. 8% < sig. $12,889 16% 6% $1.18 $0.007 

 Office < sig. 3% < sig. < sig. 6% < sig.

Medium-sized Cities

 Industrial < sig. 1% < sig. < sig. 3% < sig.

 Commercial < sig. 9% < sig. $15,522 19% 9% $1.43 $0.008 

 Office < sig. 3% < sig. < sig. 6% < sig.

Small/Medium Bedroom Community

 Industrial < sig. 1% < sig. < sig. 2% < sig.

 Commercial < sig. 9% < sig. $16,324 20% 10% $1.50 $0.008 

 Office < sig. 3% < sig. < sig. 7% < sig.

Small Rural\Farming Communities

 Industrial < sig. 1% < sig. < sig. 2% < sig.

 Commercial < sig. 9% < sig. $16,473 20% 10% $1.51 $0.008 

 Office < sig. 3% < sig. < sig. 7% < sig.
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6.4 IMPACT ON SMALL BUSINESSES 

In addition to analyzing the various impacts of the Proposed 

Indirect Source Rule (Draft Rules 9510 and 3180) that are 

discussed above, state legislation requires that the 

socioeconomic analysis assess whether small businesses are 

disproportionately affected by air quality rules. This section 

discusses how fees that are assessed on developers of 

residential and commercial projects are typically passed onto 

the consumer. Because of the additional costs associated 

with the proposed off-site emission reduction fee, 

prospective buyers must either increase their respective 

household incomes or produce a downpayment that is larger 

than the typical 20 percent. Thus, prospective homebuyers 

may have to delay purchasing goods and services as a result 

of the need to raise additional downpayment, resulting in 

impacts to local stores, particularly small businesses. This 

section discusses potential small business impacts resulting 

from Draft Rule 9510 and 3180.

Off-Site Emission Reduction Fees, Minimum 

Household Income, and the Downpayment

As the analysis above demonstrated, the 2006, 2007 and 2008 

off-site emission reduction fee under consideration could 

slightly raise the minimum qualifying incomes for obtaining a 

conventional loan by, on average, $219, $353, and $493. In 

other words, to finance a new three to four bedroom home 

valued at $323,966 in the region, a first-time homeowner 

would need an income of at least $89,724.5 The 2006 fee 

could raise this minimum by a slight $219, to $90,217

What if a lender is inflexible and will not extend a loan to 

household that is $219 to $493 short of the minimum income 

needed to qualify for financing? In cases such as this, the 

prospective homeowner will have to produce a larger 

downpayment or pay a higher interest rate. The table below 

identifies the amount of additional downpayment above the 

 

5

 This minimum will change depending on the housing market, with households in Large Urban and Bay Area 

Commuter Shed communities needing more income than households in other part of the region.
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amount generated by the typical 20 percent downpayment 

rate. 

As Table 30 shows, in the region in general, a household with 

at least $89,724 in income can afford to purchase a newly 

constructed three to four bedroom unit priced at $323,966 so 

long it has a downpayment in the amount of $64,793, or 20 

percent of the value of the home. In general, the 2006 

through 2008 off-site emission reduction fees will require 

prospective homeowners to produce an additional $970 to 

$2,147 that will go towards the downpayment, in the event a 

lender is unwilling to exercise flexibility with respect to 

minimum income needed to qualify for a loan. The amount 

of additional downpayment differs between housing markets, 

with households in the Large Urban communities and the 

Bay Area Commuter Shed having to pay more.

Table 30 Potential Per Household Impact of Off-Site Emission Reduction Fees On 

Downpayment: Single Family Unit

Initial 

Qualifying 

Household 

Income 

Prior to 

Fee: SFU

Initial 

Downpayment

Additional 

Downpayment 

(2006 fee: 

$784)

Additional 

Downpayment 

(2007 fee: 

$1,268)

Additional 

Downpayment 

(2008 fee: 

$1,772)

Large Urban $93,624 $67,609 $1,008 $1,616 $2,231

Bay Area Commuter Shed $111,520 $80,533 $1,188 $1,906 $2,629

Medium-Sized Cities $82,097 $59,286 $894 $1,434 $1,980

Small\Medium Bedroom Communities $86,972 $62,806 $947 $1,519 $2,097

Small Rural\Farming Communities $68,639 $49,567 $761 $1,221 $1,686

All Select Cities Average $89,724 $64,793 $970 $1,556 $2,147

Table 31 is similar to Table 30, although it focuses on the 

additional amount of downpayment required of prospective 

buyers of townhouses and condominiums. In general, the 

2006 through 2008 off-site emission reduction fees will 

require prospective homeowners to produce an additional

downpayment ranging from $932 to $1,948.
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Table 31 Potential Per Household Impact of Off-Site Emission Reduction Fees On 

Downpayment: Multi-Family Unit

Initial 

Qualifying 

Household 

Income 

Prior to 

Fee: MFU

Initial 

Downpayment

Additional 

Downpayment 

(2006 fee: 

$784)

Additional 

Downpayment 

(2007 fee: 

$1,268)

Additional 

Downpayment 

(2008 fee: 

$1,772)

Large Urban $40,907 $29,383 $940 $1,529 $1,966

Bay Area Commuter Shed $50,237 $36,121 $1,119 $1,818 $2,336

Medium-Sized Cities $38,260 $27,471 $890 $1,447 $1,860

Small\Medium Bedroom Communities $37,901 $27,212 $883 $1,435 $1,846

Small Rural\Farming Communities $34,971 $25,096 $827 $1,344 $1,730

All Select Cities Average $40,455 $29,057 $932 $1,515 $1,948

Prospective Homebuyers and Small Business 

Disproportionate Impact Analysis

Faced with the need to increase the amount of downpayment, 

a household will have to save by cutting back on 

expenditures, which could result in a decline in purchases of 

discretionary items from local retail and services 

establishments. Consumers may stop spending altogether, or 

shift their spending toward lower-priced goods and services. 

As we shall see, there is ample reason to believe that impacts 

associated with the decline in spending that corresponds to 

the 2006, 2007 and 2008 fees will be temporary. Before 

engaging in that discussion, below is a brief summary of what 

constitutes a small business for the purposes of analysis.

For purposes of qualifying small businesses for bid 

preferences on state contracts and other benefits, the State of 

California defines small businesses in the following manner 6. 

To be eligible for small business certification, a business:

ß Must be independently owned and operated;

ß Cannot be dominant in its field of operation;

ß Must have its principal office located in California

 

6

 State of California. Department of General Services. “California Small Business Certification” (http: 

www.pd.dgs.ca.gov/smbus/sbcert.htm)
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ß Must have its owners (or officers in the case of a 

corporation) domiciled in California; and

ß Together with its affiliates, be either:

• A business with 100 or fewer employees, and 

an average gross receipts of $10 million or less 

over the previous tax years, or

• A manufacturer with 100 or fewer employees

Data is available as to the number of retail and services 

establishments in the eight-county region, and with this data 

we can estimate sales by stores with 100 or fewer employees. 

Table 32 below provides an estimate on the number of retail, 

accommodations-food services, and arts-entertainmentrecreation establishments in the region, including estimates 

on their respective sales. Data comes from the County 

Business Patterns and the US Economics Census. 

TABLE 32 

Number of Commercial Establishments That Sell Goods and Select Discretionary Services: San 

Joaquin Valley Air Basin, 2002

Total 

Establish 

ments Sales

Total Nos. 

Small 

Businesses

Sales By Small 

Businesses

Commercial

 Retail* 8,792 $21,790,159,759 8,601 $14,971,588,578 

 Accommodations and Food Services 627 $532,590,300 615 $365,953,623 

 Arts, Entertainment and Recreations 5,139 $3,048,315,000 5,108 $2,809,025,816 

 Gasoline stations 1,044 $2,909,895,000 1,044 $2,909,895,000 

15,602 $28,280,960,059 15,368 $21,056,463,017 

* Apparel, groceries, home improvement, specialty retail, auto (except gas stations)

As Table 32 shows, in 2002 there were 15,602 stores that sold 

consumer goods and select number of discretionary services 

(such as entertainment venues and restaurants) and, of these, 

15,368 employed less than 100 workers. These small stores 

generated approximately $21.1 billion in sales. Based on a 

review of ten-year’s worth of data from Dun and Bradstreet, 

we estimate that retail generates after tax net profits that 

amount to 2.2 percent of sales, while both accommodations-
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F - 53

food services and arts-entertainment-recreations generate 

returns of 5.1 percent of sales. Combined, these industries 

generated an estimated $548.6 million in net profits.

Table 33 estimates the aggregate amount of additional dollars 

that households will have to set aside as a result of the 2006, 

2007 and 2008 off-site emission reduction fees. The 

additional downpayment per household is multiplied against 

the number of new single-family units that are built in the 

region. According to the California Department of Finance, 

the eight-county region grew by an average of 15,000 singlefamily units per year between 1995 and 2005. This amount is 

somewhat consistent with data in Table 2, which shows that 

between 1993 and 2003, homebuilders took out building 

permits to construct 15,000 and 27,000 single-family homes 

in those years, for an annual average of 18,800 single-family 

homes. In calculating the aggregate amount of additional 

dollars that all households will need to set aside because of 

the air quality fees, we adjusted for the fact that not all are 

first-time homebuyers.7

TABLE 33 

Aggregate Amount of Dollars All Households Will Need to Set Aside As A Result of 

Off-Site Emission Reduction Fees

Additional 

Downpayment 

(2006 fee)

Additional 

Downpayment 

(2007 fee)

Additional 

Downpayment 

(2008 fee)

$970 $1,556 $2,147 

Scenario 1: Low 15,000 units $5,820,000 $9,336,000 $12,882,000

Scenario 2: Mid 19,000 units $7,760,000 $12,448,000 $17,176,000

Scenario 3: High 30,000 units $11,640,000 $18,672,000 $25,764,000

If 15,000 newly constructed single-family units are sold in 

2006, then the aggregate additional downpayment amount 

attributable to first-time homebuyers will equal $5.8 million, 

as Table 33 shows. If the number of units goes as high as 

30,000, then the additional downpayment will equal $11.6 

million. In the highest scenario in year 2008, the aggregate 

 

7

 Scenario 1 2006 fee = (15,000 x 40% rate of rentership) x $970 = $5,820,000
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F - 54

amount of additional downpayment could equal $25.8 

million. Thus, local retail and services establishments, 

particularly small businesses, could lose anywhere between 

$5.8 million to $25.8 million. 

Table 34 below compares the amounts in Table 33 against the 

estimated net profits of retail and services establishments that 

employ less than 100 workers. As the table shows, the 

aggregate amount of additional dollars that households will 

need to set aside as a result of the off-site emission reduction 

fee amounts to one to five percent of net profits of small 

retail and select services establishments. These impacts are 

below the ten percent threshold of significance employed in 

this and other socioeconomic analyses for the purposes of 

evaluating proposed air quality rules.8 It is worth noting that 

the analysis assumes that all of the dollars in Table 33 are 

spent at small business establishments, which, in reality, 

would not be the case. As a result, the table below overstates 

impacts on small businesses. Thus, the proposed rule does 

not disproportionately impact small businesses.

TABLE 34 

Impact on Net Profits of Small Business Retail and Select Services Establishments

Additional 

Downpayment 

(2006 fee)

Additional 

Downpayment 

(2007 fee)

Additional 

Downpayment 

(2008 fee)

$970 $1,556 $2,147 

Scenario 1: Low 15,000 units 1% 2% 2%

Scenario 2: Mid 19,000 units 1% 2% 3%

Scenario 3: High 30,000 units 2% 3% 5%

In all likelihood, the impacts identified in Table 34 are 

temporary. More than likely, the purchase of a new home 

will spur additional spending at retail and services 

establishments in excess of what is shown in Table 33. A 

 

8

 It should be noted that the report does not include a corresponding analysis for multi-family units because the 

impacts on net profits were significantly less than one percent, in large part because the number of newly 

constructed and sold new townhouses in the eight-county region is so low, ranging from 50 to 100 units per 

year.
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recent Pittsburgh Post-Gazette newspaper article on spending 

habits of new homeowners quotes the web-site of a 

marketing data company, which indicated that “New 

homeowners are golden opportunities for the enterprising 

businessman. These prospects are full of hope and ready to 

spend money.”9 Clickdata.com reports that many new 

homeowners purchase a new car within the first year at their 

new address.10 

New homeowners are in a spending mood not simply 

because of the number of new credit cards and or other 

financing instruments that lenders eagerly extend to 

households that have demonstrated the financial wherewithal 

to purchase something as significant as a new home. For 

some, a new home represents a new phase in the life cycle of 

a household, including the addition of new family members 

such as children or a spouse. Others simply need bigger and 

better space. Inevitably, the new stage in the life cycle 

involves corresponding needs for goods and services from 

retail and service establishments, including small businesses.

Small Business Disproportionate Impact Analysis 

and Non-Residential Developments

The section directly above examined potential impacts on 

small businesses that sell retail items to consumers, 

particularly as the impacts relate to how households shift 

from funds from spending to saving. The section concludes 

that impacts will be temporary and more than compensated 

for when a household purchases a home. New Rule 9510 

and 3180 could potentially impact small businesses in other 

ways as well. In particular, small business may not be able to 

absorb rent increases contemplated in Section 6.3 above. 

This section evaluates the impacts of rent increases discussed 

in Section 6.3 on small businesses, particularly those that 

occupy commercial developments. As Section 6.3 

demonstrated, new commercial development and are 

potentially significantly impacted by the proposed new rule. 

 

9Caitlin Cleary, “New homeowners welcomes with onslaught of new mail” (Pittsburgh Post-Gazette), 10-15-05

10www.clickdata.com/consumer/newequity.asp
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For purposes of analysis, commercial development refers to 

retailers, restaurants, and entertainment and recreation 

venues. 

The analysis below examines how all commercial small 

businesses are impacted, not just new ones. As Section 6.3 

noted, comparable commercial developments that have been 

in place prior to the new fees could conceivably have their 

monthly rents raised by one cent per square foot starting in 

2008. 

If small businesses cannot pass costs onto consumers, and if 

they are unable to increase sales, then these businesses will 

have to absorb the additional rent, resulting in a decline in net 

profits. Lease rates for new and older but well-maintained 

commercial space is approximately $1.50 per square foot in 

the San Joaquin Valley region. Scant data on arts and 

entertainment space suggest these areas go for $1.25 per 

square foot a month.11 Older buildings away from busy 

commercial corridors will in all likelihood command less than 

the $1.50 that new buildings in busy areas command. Thus, 

in using the $1.50 (retail and restaurants), $1.10 (gas stations) 

and $1.25 (arts and entertainment), we will overstate the cost 

in relation to net profits. 

Table 35 shows that the 2008 fee will impact net profits of 

commercial small businesses by 1.5 percent. The bulk of 

impacts are borne by small businesses because these entities 

comprise almost 98 percent of commercial businesses and gas 

stations in the region.12 However, the impacts are less than 

significant. Thus, small businesses are not disproportionately 

impacted by the rule.

 

11 For the purposes of analysis, we assume that all commercial spaces pay these rents. Similar to the analysis 

directly above, commercial space refers to retail and select services such as restaurants and arts and 

entertainment venues. Select services exclude office space for industries such as accounting, medical, legal 

assistance, etc., because office uses are significantly impacted by the rule, as shows in Section 6.3.

12 15,368dividedby15,602 = 98%
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TABLE 35 

Small Business Impact of Additional Rent Resulting From Proposed Air Quality 

Mitigation Fee

Total Number of Retail and Select Services Establishments 15,602

Total Number of Small Business Retail and Select Services Establishments 14,324

Total Number of Small Business Retail and Select Services: Sales $18,146,568,017 

Total Number of Small Business Retail and Select Services: Net Profits $485,376,512 

Dollar Amount of One Cent Rent Increase (2008 fee: commercial) $7,230,586 

Impact of One Cent Rent Increase on Net Profit of commercial uses (2008 fee) 1.5%

Impact of One Cent Rent Increase on Net Profit of commercial uses (2008 fee) Less than significant
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APPENDIX A: ECONOMIC BENEFITS ASSOCIATED 

WITH DRAFT RULE 9510 AND 3180

The San Joaquin Valley Air Pollution Control District 

(SJVUAPCD) will use the Off-Site Emission Reduction Fees 

will be used to fund off-site emission reduction projects 

located within the San Joaquin Valley. Besides providing a 

health benefit to all Valley residents by reducing overall 

emissions in the air basin, the funding projects would benefit 

the Valley’s economy. Potential projects for funding through 

this program are numerous and varied ranging from public 

works construction project such as road paving, procuring 

cleaner vehicles and equipment for businesses and local 

government agencies, to school bus upgrades. If all projects 

that go through the ISR program only reduce emissions 

through the off-site fee, the District may receive 

approximately $11 million dollars in 2006 and approximately 

$56 million in 2008 (allowing for fee deferrals) for use in the 

off-site emission reduction program. All of the money 

received as an off-site fee will be spent on projects within the 

region that make the air cleaner. The program would benefit 

the economy through three beneficial impacts: 

LOCAL PURCHASES

Projects that require a purchase of equipment, materials, or 

services will result in money being re-circulated into the 

regional economy. The District cannot guarantee that the 

manufacturer or provider would be located within the Valley, 

but it can be expected that the majority will be Valley 

businesses that benefit. For example, road-paving projects 

would require asphalt and similar materials that would be 

provided by Valley businesses. A project that buys a cleaner 

engine would benefit the Valley engine dealer that sells the 

engine.

LOCAL PROJECTS

It has already been stated that the program would fund local 

projects. This means that the school, city, industry or private 

group that receives the funding for an emission reduction 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 59

project would benefit economically from the program. For 

example, a school district may receive a new, cleaner school 

bus. A manufacturing facility may receive assistance in 

procuring a new, cleaner piece of equipment or pollution 

control device not required by District rules and regulations. 

A city or county would receive money that makes a roadpaving project possible or enables their fleets to operate 

cleaner new vehicles. 

JOB CREATION

The off-site funding program made possible by the ISR 

Program may also lead to short-term and perhaps long-term 

job creation. For a financially strapped company or public 

agency, the funding allows for the purchase and installation 

or construction of the item (be it a school bus or road 

project). The installation and construction aspects of the 

program may benefit the local economy through short-term 

job creation. Since the ISR program will provide ongoing 

funding as development occurs over time, it is expected to 

continue to provide this type of benefit while the rule is in 

effect. In addition, more efficient equipment may reduce 

costs and may allow for later expansion that can create longterm jobs.
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix F: Socioeconomic Analysis for Rules 9510 and 3180 December 15, 2005

Final Draft Staff Report for Proposed

 Rule 9510 and Rule 3180

F - 60

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