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Nexus-Based Affordable Housing Fee Analysis for Rental Housing Draft Report 02/26/18 This methodology recognizes that a range of occupations and incomes exist in a given industry sector. For instance, the methodology used to generate Tables B-1 to B-4 in Appendix B distinguishes between the typical incomes of workers in different types of retail stores (e.g., "food and beverage stores"versus"general merchandise stores"), rather than assuming all retail sector workers earn the same income. However, the average wage is used for each sub- category of industry employment and represents a reasonable proxy for the range of incomes in that group: while some employees will have higher wages and require lower subsidies, others will have lower incomes and require higher subsidies. Using the average approximates the total housing subsidy needed by workers in that industry. To calculate the number of households supported by the expenditures of market-rate housing units, EPS estimated the employees' household formation rates. Importantly, employees generated from the increase in housing units do not all form households; some employees, in the retail and food services industries in particular, are young workers and do not form households. Data from the Bureau of Labor Statistics indicates that 12.5 percent of retail/restaurant workers are age 16 to 19, but an average of only 1.9 percent of workers in the workforce overall. EPS applied these discounts to household formation by type of business to get a more accurate calculation of households formed by the employees and the average total incomes of those households. To get the overall households' income rather than the individual workers', the wages of workers forming households were multiplied by the average of approximately 1.67 workers per working household in Pleasanton.3 This assumption implies the workers in a given household will have roughly equivalent pay per hour. While certainly there will often be some variation in wages per employee within a household, on average this assumption is reasonable because it implies comparable levels of education and training among all workers in a household. The average household incomes then are allocated to various income categories to estimate the number of affordable housing units demanded in each income category (50 through 120 percent of AMI). A simplified example of these calculations follows: A. Number of Households (prototype project) 1,000 B. Average Household Income (in the project) $125,000 C. Aggregate Household Income (A x B) $125 million D. Average Income Spent on Food Away From Home (Consumer Expenditure Survey) $5,200 E. Aggregate Food Spending (A x D) $5.2 million F. Food Away From Home Gross Receipts: Payroll Ratio (Economic Census) 3.59:1 G. Estimated Retail Payroll (E- F) $1.4 million H. Average Food Service Wage (Economic Census) $16,900 I. Estimated Total Retail Jobs (G - H) 83.5 J. Percent Age 20+ (Bureau of Labor Statistics) 87.5% K. Total Retail Workers Forming Households 73 J. Average Workers/Household (Census Data) 1.67 3 Workers per working household based on American Community Survey (ACS) Census data. Although ACS data reported is based on historical figures, these figures can vary somewhat based on ongoing revisions to the ACS data. Economic&Planning Systems, Inc. 15 v:USI0005\invmkasamoor«\uenortMomank noosirgU51111reyorc02261erenrataoe(