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City of Pomona – Industrial Parcel Tax Capital Plan and Revenue Generation Scenarios
The City of Pomona engaged Willdan Financial Services to provide an analysis of revenue resulting from the implementation of a parcel tax imposed on industrial parcels in the City. The analysis also examines costs that could be funded with parcel tax proceeds. A parcel tax is a special tax on real property parcels within a geographically defined area. Parcel taxes are collected as part of a property tax bill. Parcel taxes cannot be based on the value of a parcel of property and are often imposed as a flat rate per parcel.
Parcel taxes can also be imposed based on the area of a parcel. To implement a parcel tax two-thirds of voters must approve the tax.
Infrastructure Costs
The City of Pomona Public Works Department provided planning level cost estimates for infrastructure needs related to industrial land uses throughout the City. All costs are presented in current 2022 dollars.
The quantity of various infrastructure needs was identified using the City’s GIS. In total, the City identified approximately $1.2 billion of capital infrastructure costs associated with industrial land uses in the City. Table 1 summarizes the industrial infrastructure capital plan.
To evaluate a realistic amount of capital needs that can be delivered this analysis assumes that 1.50% of total identified costs can be delivered annually. The resulting annual costs are subsequently compared to various revenue parcel tax generation scenarios. Table 2 displays the calculation of the annual industrial parcel tax cost scenario.
Table 1: Industrial Infrastructure Capital Plan
Unit Cost Units Quantity Total Cost
Paving 653$ Linear Feet 1,144,685 747,948,626$
Intersection Enhancements
Concrete approaches 1,400,000$ Each 173 242,200,000$
ITS technologies 150,000 Each 173 25,950,000
Traffic Signal upgrades 450,000 Each 173 77,850,000
De-emphasize (Curb Extension / Chicanes) 600,000 Each 143 85,800,000 Subtotal 431,800,000$
Street Lights (replace/relocate) 15,000$ Each 835 12,525,000$ Total 1,192,273,626$
Source: City of Pomona.
Attachment No.6
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Eligible Industrial Parcels
City of Pomona staff used the Los Angeles County parcel database and GIS analysis to identify parcels that may be subject to the industrial parcel tax. Potential tax revenue has been calculated for various categories of industrial parcels.
The City must define which parcels are subject to the tax. For example, the tax may be levied on all industrial zoned parcels. Or the tax could be levied on all occupied parcels with an industrial use code, regardless of zoning.
Table 3 summarizes various options the City has for identifying parcels eligible for the industrial parcel tax. Two primary options are presented. Option 1 includes all parcels that are zoned with industrial land uses, except those with residential use codes. Option 2 includes all parcels from the Option 1, plus parcels that contain industrial uses, but do not have industrial zoning. A brief description of the categories of relevant parcels follows.
Table 2: Annual Cost Scenario
Total Identified Project Costs 1,192,273,626$
Annual Capacity (% of Total Costs) 1.50%
Annual Cost 17,884,104$
Sources: Table 1; Willdan Financial Services.
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Industrial Zoned Parcels
A total of 1,397 parcels with industrial-related zoning were identified within the City limits. Of those 311 had residential uses and are excluded from the potential parcel tax, leaving 1,086 eligible parcels with industrial zoning. The area of the parcels in terms of square footage was also identified. Use codes were used to identify occupied and vacant parcels. Industrial zoning includes the following designations:
• Commercial Industrial (C-IND)
• General Industrial (M-2)
• Light Industrial (M-1)
• Mission 71 Specific Plan
• Special Industrial
Industrial Use Codes
The Los Angeles County parcel data includes a four digit use code for each parcel. The use code classifies the parcels by the various land uses found in the County. Industrial land uses are identified with use codes that begin with the number 3. A total of 1,038 parcels with an industrial use code were identified within the City limits. Parcels with an industrial use code may or may not be zoned industrial. There are 284 parcels with an industrial use code that do not have industrial zoning. Table 3 distinguishes between industrial use parcels that are zoned industrial, and not zoned industrial, respectively. Use codes were used to identify occupied and vacant parcels.
Table 3: Industrial Parcel Summary
Vacant
Parcels
Estimated
Square Feet
Occupied
Parcels
Estimated
Square Feet
Total
Parcels
Total
Estimated
Square Feet
Option 11
Industrial Zoned Parcels
Industrial Use Code 115 3,183,956 639 55,215,012 754 58,398,968 Other Use Code2 41 1,382,177 291 14,228,521 332 15,610,698 Total 156 4,566,133 930 69,443,533 1,086 74,009,666 Option 23
Industrial Zoned Parcels
Industrial Use Code 115 3,183,956 639 55,215,012 754 58,398,968 Other Use Code2 41 1,382,177 291 14,228,521 332 15,610,698 Non-Industrial Zoned Parcels
Industrial Use Code 60 7,324,655 224 11,347,497 284 18,672,152 Total 216 11,890,788 1,154 80,791,029 1,370 92,681,818 1 Includes parcels w ith industrial use code and non-industrial use codes. 2 Excludes 311 industrial zoned parcels w ith residential use codes. 3 Includes industrial zoned parcels, plus parcels w ith industrial use codes that are not in industrial zones.
Sources: City of Pomona; Willdan Financial Services.
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Annual Revenue Scenarios – Tax per Square Foot
Based on discussion with City staff, a parcel tax based on the area of each parcel was preferred to a flat tax per parcel. This approach is more equitable, as larger parcels which demand more infrastructure will pay a higher tax compared to smaller parcels. Willdan estimated potential annual industrial parcel tax revenue for each group of industrial parcels under four scenarios:
• Parcel tax per square foot of $0.05
• Parcel tax per square foot of $0.10
• Parcel tax per square foot of $0.15
• Parcel tax per square foot of $0.20
The resulting annual tax revenue is compared to the annual capital cost scenario from Table 2. The results are shown in Tables 4 through 8.
Tax per
Square
Foot Vacant Occupied Total
Option 1
Industrial Zoned Parcels
Industrial Use Code 0.05$ 159,198$ 2,760,751$ 2,919,948$ Other Use Code 0.05 69,109 711,426 780,535 Total 228,307$ 3,472,177$ 3,700,483$
Annual Infrastructure Cost 17,884,104$ 17,884,104$ 17,884,104$ % of Annual Cost Funded 1% 19% 21%
Option 2
Industrial Zoned Parcels
Industrial Use Code 0.05$ 159,198$ 2,760,751$ 2,919,948$ Other Use Code 0.05 69,109 711,426 780,535 Non-Industrial Zoned Parcels
Industrial Use Code 0.05 366,233 567,375 933,608 Total 594,539$ 4,039,551$ 4,634,091$
Annual Infrastructure Cost 17,884,104$ 17,884,104$ 17,884,104$ % of Annual Cost Funded 3% 23% 26%
Sources: Tables 2 and 3; Willdan Financial Services.
Table 4: Parcel Tax per Square Foot - Annual Revenue - $0.05 per Square Foot
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Tax per
Square
Foot Vacant Occupied Total
Option 1
Industrial Zoned Parcels
Industrial Use Code 0.10$ 318,396$ 5,521,501$ 5,839,897$ Other Use Code 0.10 138,218 1,422,852 1,561,070 Total 456,613$ 6,944,353$ 7,400,967$
Annual Infrastructure Cost 17,884,104$ 17,884,104$ 17,884,104$ % of Annual Cost Funded 3% 39% 41%
Option 2
Industrial Zoned Parcels
Industrial Use Code 0.10$ 318,396$ 5,521,501$ 5,839,897$ Other Use Code 0.10 138,218 1,422,852 1,561,070 Non-Industrial Zoned Parcels
Industrial Use Code 0.10 732,466 1,134,750 1,867,215 Total 1,189,079$ 8,079,103$ 9,268,182$
Annual Infrastructure Cost 17,884,104$ 17,884,104$ 17,884,104$ % of Annual Cost Funded 7% 45% 52%
Sources: Tables 2 and 3; Willdan Financial Services.
Table 5: Parcel Tax per Square Foot - Annual Revenue - $0.10 per Square Foot
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Tax per
Square
Foot Vacant Occupied Total
Option 1
Industrial Zoned Parcels
Industrial Use Code 0.15$ 477,593$ 8,282,252$ 8,759,845$ Other Use Code 0.15 207,327 2,134,278 2,341,605 Total 684,920$ 10,416,530$ 11,101,450$
Annual Infrastructure Cost 17,884,104$ 17,884,104$ 17,884,104$ % of Annual Cost Funded 4% 58% 62%
Option 2
Industrial Zoned Parcels
Industrial Use Code 0.15$ 477,593$ 8,282,252$ 8,759,845$ Other Use Code 0.15 207,327 2,134,278 2,341,605 Non-Industrial Zoned Parcels
Industrial Use Code 0.15 1,098,698 1,702,124 2,800,823 Total 1,783,618$ 12,118,654$ 13,902,273$
Annual Infrastructure Cost 17,884,104$ 17,884,104$ 17,884,104$ % of Annual Cost Funded 10% 68% 78%
Sources: Tables 2 and 3; Willdan Financial Services.
Table 6: Parcel Tax per Square Foot - Annual Revenue - $0.15 per Square Foot
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Example Taxes per Parcel
Table 8 below illustrates the annual parcel tax amount corresponding with the four annual tax per square foot amounts tested above for various sized parcels. The tax per square foot is multiplied by the parcel square footage to determine the annual tax for a given parcel size. The example parcel sizes range from a quarter of an acre to 55,865 square feet, which is the average sized industrial zoned parcel in the City.
Tax per
Square
Foot Vacant Occupied Total
Option 1
Industrial Zoned Parcels
Industrial Use Code 0.20$ 636,791$ 11,043,002$ 11,679,794$ Other Use Code 0.20 276,435 2,845,704 3,122,140 Total 913,227$ 13,888,707$ 14,801,933$
Annual Infrastructure Cost 17,884,104$ 17,884,104$ 17,884,104$ % of Annual Cost Funded 5% 78% 83%
Option 2
Industrial Zoned Parcels
Industrial Use Code 0.20$ 636,791$ 11,043,002$ 11,679,794$ Other Use Code 0.20 276,435 2,845,704 3,122,140 Non-Industrial Zoned Parcels
Industrial Use Code 0.20 1,464,931 2,269,499 3,734,430 Total 2,378,158$ 16,158,206$ 18,536,364$
Annual Infrastructure Cost 17,884,104$ 17,884,104$ 17,884,104$ % of Annual Cost Funded 13% 90% 104%
Sources: Tables 2 and 3; Willdan Financial Services.
Table 7: Parcel Tax per Square Foot - Annual Revenue - $0.20 per Square Foot
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Flat Parcel Tax Scenario
While City staff indicated the preferred method of imposing an industrial parcel tax is per square foot, for comparison purposes this memorandum examines a flat parcel tax. The flat tax per parcel is calculated for the total number of parcels corresponding with Options 1 and 2 from Table 3, to annually fund 1.5% of the total capital budget. Under Option 2, a flat parcel tax would be lower than under Option 1, as the annual costs are spread over more parcels. Table 9 presents the flat tax scenario.
Table 8: Example Annual Parcel Taxes
Parcel
Square
Feet
Parcel Tax
per Square
Foot
Annual
Parcel
Tax
Parcel Tax of $0.05 per Square Foot
1/4 Acre Parcel 10,890 0.05$ 545$
1/2 Acre Parcel 21,780 0.05 1,089
One Acre Parcel 43,560 0.05 2,178
Averaged Sized Industrial Zoned Parcel 55,865 0.05 2,793 Parcel Tax of $0.10 per Square Foot
1/4 Acre Parcel 10,890 0.10$ 1,089$
1/2 Acre Parcel 21,780 0.10 2,178
One Acre Parcel 43,560 0.10 4,356
Averaged Sized Industrial Zoned Parcel 55,865 0.10 5,587 Parcel Tax of $0.15 per Square Foot
1/4 Acre Parcel 10,890 0.15$ 1,634$
1/2 Acre Parcel 21,780 0.15 3,267
One Acre Parcel 43,560 0.15 6,534
Averaged Sized Industrial Zoned Parcel 55,865 0.15 8,380 Parcel Tax of $0.20 per Square Foot
1/4 Acre Parcel 10,890 0.20$ 2,178$
1/2 Acre Parcel 21,780 0.20 4,356
One Acre Parcel 43,560 0.20 8,712
Averaged Sized Industrial Zoned Parcel 55,865 0.20 11,173 Sources: Tables 4, 5, 6 and 7; Willdan Financial Services.
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Table 9: Flat Tax per Parcel
Total Identified Project Costs 1,192,273,626$
Annual Capacity (% of Total Costs) 1.50%
Annual Cost 17,884,104$
Option 1
Total Parcels 1,086
Flat Parcel Tax per Parcel 16,468$
Option 2
Total Parcels 1,370
Flat Parcel Tax per Parcel 13,054$
Sources: Tables 1 and 3; Willdan Financial Services.