Association of Local Government Auditors

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A study of the costs and revenues associated with the growing number of alcohol-serving establishments in the downtown area.

Since creating a restaurant overlay district in 2002, Fullerton has seen explosive growth in the number of restaurants and bars downtown. While this has made downtown more vibrant, the City's costs for police, fire, and maintenance services have skyrocketed. We were asked to see what the difference in revenue was compared to those increased costs.

SIGNIFICANT FINDINGS:

The City's costs have increased exponentially since 2003; we estimate we are spending $1.5 million per year in extra costs compared to generating about $500,000 in new revenue.

UNIQUE AUDIT METHODS:

This audit required us to examine revenue data from many sources, including state tax records. Our studies are usually confined to City data. Also, no other City in our area has a restaurant overlay district, so we had to create a whole new framework for comparing revenues and costs.

CONCLUSIONS:

When the City Council reviewed the report, it approved new restrictions on food establishments, limiting outdoor drinking areas, and authorized the City to explore new methods of raising revenue specifically tied to the overlay district.