ECONOMIC AND FISCAL BENEFITS ANALYSIS
CarMax, Visalia, CA
August 6, 2020
Prepared for:
CENTERPOINT INTEGRATED SOLUTIONS
Prepared by:
THE NATELSON DALE GROUP, INC.
P.O. Box 489
Yorba Linda, CA 92885
Telephone: (714) 692-9596
Fax: (714) 692-9597
Web: www.natelsondale.com
SUMMARY OF KEY STUDY FINDINGS
During its construction and operational phases, the proposed CarMax project would generate substantial economic and benefits to the City of Visalia and to the larger Tulare County economy. These benefits are summarized below by major category.
Construction-phase Impacts
• 51 one-year construction (and related) jobs, with an average annual salary of $40,000
• $6.6 million in construction-related spending (i.e., local purchases of construction-related goods and services) in Visalia
• An additional $2.2 million in construction related spending in other parts of Tulare County, resulting in a total countywide construction-phase impact of $8.8 million Fiscal Benefits to City and Other Agencies (annually recurring) • City of Visalia: approximately $683,500 per year in General Fund revenue for the City of Visalia
• Other agencies: an additional $60,400 in property tax revenue per year – over and above the amount going to the City’s General Fund – to various school districts and County agencies New Business Activity in Local Economy (annual recurring) • Visalia: $15.4 million in new annual business activity (i.e., local purchases of goods and services stemming from CarMax and its employees) captured within the City of Visalia
• Tulare County: An additional $6.9 million in new annual business activity in other areas of Tulare County, resulting in a total countywide impact of $22.3 million per year New Permanent Jobs
• Visalia: 52 full-time equivalent (FTE) jobs
• Tulare County: An additional 44 FTE jobs in other areas of Tulare County, resulting in countywide total of 96 new FTE jobs
• Average annual salary of $41,875 per year
The Natelson Dale Group, Inc. (TNDG) is an economics and land use consulting established in California in 1974. The firm serves public and private sector clients throughout the United States on a diverse range of economic analyses and development strategies. TNDG is widely recognized for its expertise in evaluating the economic, fiscal and competitive impacts of proposed retail development projects. In this regard, the firm has completed over 90 economic impact studies as part of CEQA processes (including two previous assignments in the City of Visalia). Among others, TNDG has completed economic impact studies for proposed Walmart, Target, and Costco stores. TNDG’s previous work in evaluating proposed automobile dealerships includes assignments in Norco, Santa Monica and San Luis Obispo.
Table of Contents
1. INTRODUCTION ..................................................................................................................................... 1
2. EXECUTIVE SUMMARY .......................................................................................................................... 2
3. ANALYSIS OF ECONOMIC IMPACTS ....................................................................................................... 5 Abbreviated Summary of Total City and Total County Economic Impacts ........................................... 7 Summary of One-Time Construction Impacts ...................................................................................... 9 Summary of City and County Ongoing Impacts .................................................................................. 12
4. FISCAL REVENUE IMPACTS .................................................................................................................. 15 Property Taxes .................................................................................................................................... 16 Sales Taxes .......................................................................................................................................... 17 Motor Vehicle in-Lieu Fees ................................................................................................................. 18 Franchise Fees..................................................................................................................................... 19 Business License Taxes........................................................................................................................ 19
Tables
Table 1. Summary of Construction Phase Impacts (Sum of Direct, Indirect, Induced), Visalia CarMax ....... 3 Table 2. Summary of Operations Phase Impacts (Sum of Direct, Indirect, Induced), Visalia CarMax .......... 3 Table 3. Summary of Fiscal Revenue Impacts, City of Visalia, Visalia CarMax.............................................. 4 Table 4. Breakdown of Property Tax by District/Agency, Visalia CarMax .................................................... 4 Table 5. Summary of Total Impacts for Visalia CarMax, Construction Phase ............................................... 7 Table 6. Summary of Total Impacts for Visalia CarMax, Operations Phase .................................................. 8 Table 7. Summary of One-Time Construction Impacts for Visalia CarMax ................................................. 10 Table 8. Top 10 Industries Affected by Employment, Construction Impacts, City of Visalia ...................... 11 Table 9. Summary of Ongoing Operational Impacts at Stabilized Sales Volumes, Visalia CarMax ............ 13 Table 10. Top 10 Industries Affected by Employment, Ongoing Operations Impacts at Stabilized Sales Volumes, City of Visalia ............................................................................................................................... 14 Table 11. Summary of Annual Fiscal Revenue Impact to City’s General Fund, Visalia CarMax .................. 15 Table 12. Summary of One-Time Fee and Permit Revenue, Visalia CarMax .............................................. 16 Table 13. Projected Annually-Recurring Property Tax Revenue by Fund, Visalia CarMax ......................... 17 Table 14. Projected Annually-Recurring Sales Tax Revenue, City of Visalia, Visalia CarMax ..................... 18 Table 15. Projected Annually-Recurring Motor Vehicle in-Lieu Revenue, City of Visalia, Visalia CarMax . 19 Table 16. Projected Annually-Recurring Franchise Fee Revenue, City of Visalia, Visalia CarMax .............. 20 Table 17. Projected Annually-Recurring Business License Tax Revenue, City of Visalia, CarMax .............. 20
THE NATELSON DALE GROUP, INC. Page 1
Economic and Fiscal Benefits Analysis
CarMax Project (Visalia, CA)
1. INTRODUCTION
This study evaluates the proposed CarMax auto dealership’s economic impacts, measured in terms of output (the value of industry production), local jobs and income created, in addition to fiscal revenue impacts. Separate calculations are provided for two categories of economic benefits:
a. Temporary (construction phase) benefits; and
b. Permanent benefits associated with the ongoing operation of the new on-site commercial operations.
Fiscal revenue impacts to the City of Visalia’s General Fund include the following:
a. New Property Taxes
b. New Sales Taxes
c. New Motor Vehicle in-Lieu Fees
d. New Franchise Fees
e. Business License Taxes
The report is organized as follows. First, an Executive Summary provides a summary of the study’s main findings. Following are sections that summarize the project’s economic impacts (Section 4) and fiscal revenue impacts (Section 5), along with technical appendices.
THE NATELSON DALE GROUP, INC. Page 2
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
2. EXECUTIVE SUMMARY
The proposed CarMax project would generate the following major categories of economic benefits:
Short-term benefits (construction phase)
• Construction jobs and construction-related spending at local businesses Permanent benefits
• Permanent jobs and other local business activity related to the ongoing operation of the project • Local General Fund revenue to the City of Visalia, including property taxes, sales taxes, franchise fees, and business license taxes
• Additional property tax revenue to Tulare County, School Districts, and other County districts and agencies
These benefits are briefly summarized below and on Tables 1 through 4.
Construction-phase Impacts
Construction jobs. The proposed project would create the equivalent of approximately 51 one-year construction (and related) jobs in the City Visalia.
Construction-related payroll. The 51 construction-related jobs would generate a total payroll of $2.0 million, or an average of approximately $40,000 per job.
Local business spending (“output”). Construction of the proposed project would generate a total of $8.8 million in new business activity (i.e., purchases of local goods and services) in Tulare County. Of this total, $6.6 million of the new business activity would be captured within the City of Visalia.
Permanent Impacts
Permanent jobs. Ongoing operation of the proposed project would support a total of 96 permanent jobs in Tulare County (through local purchases of materials, supplies, and services needed to operate the used car dealership). Of this total, close to 52 jobs would be in the City of Visalia.
Permanent local payroll. The 96 supported jobs would generate a total payroll of $4.0 million per year, or an average of approximately $42,000 per job.
Local business spending (“output”). Ongoing operation of the proposed project would generate a total of $22.3 million per year in new business activity (i.e., purchases of local goods and services) in Tulare County. Of this total, $15.4 million per year of the new business activity would be captured within the City of Visalia.
City of Visalia General Fund revenue. Once fully operational, the proposed project would generate about $683,500 in annually recurring revenue to the City’s General Fund.
THE NATELSON DALE GROUP, INC. Page 3
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Additional Property Tax revenue (accruing to other agencies in Tulare County). Along with the $7,600 in annual property tax revenue that would accrue to the City’s General Fund, the project would generate an additional $60,400 to various school districts and County agencies/districts.
Table 1. Summary of Construction Phase Impacts (Sum of Direct, Indirect, Induced), Visalia CarMax
Table 2. Summary of Operations Phase Impacts (Sum of Direct, Indirect, Induced), Visalia CarMax
Impact Category City of Visalia
Other Tulare
County
Total Tulare
County
Business Impact/Output $6,620,000 $2,170,000 $8,790,000 Employees 50.7 13.6 64. 3
Employee Compensation $2,030,000 $510,000 $2,540,000
Source: TNDG; IMPLAN
Impact Category City of Visalia
Other Tulare
County
Total Tulare
County
Business Impact/Output $15,410,000 $6,870,000 $22,280,000 Employees 51.8 44.2 96. 0
Employee Compensation $2,400,000 $1,620,000 $4,020,000
Source: TNDG; IMPLAN
THE NATELSON DALE GROUP, INC. Page 4
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 3. Summary of Fiscal Revenue Impacts, City of Visalia, Visalia CarMax
Table 4. Breakdown of Property Tax by District/Agency, Visalia CarMax
General Fund Category
Annual
Total
Property Taxes $7,600
Sales Taxes $666,900
Property Tax VLF Swap $6,900
Business License Tax $1,800
Franchise Fees $300____________
Total General Fund Revenue $683,500
Source: TNDG
Fund / Agency
Amount
City General Fund
$7,600
County Funds
$15,200
Library Fund
$1,000
School Districts
$25,100
ERAF
$16,600
Other Agencies
$2,500
________
Total
$68,000
Note: ERAF = Educational Revenue Augmentation Fund
Source: TNDG, Table 13.
THE NATELSON DALE GROUP, INC. Page 5
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
3. ANALYSIS OF ECONOMIC IMPACTS
Consistent with standard practice for these types of impact studies, our analysis considers the direct (i.e., onsite) impacts associated with the proposed CarMax project, as well as “multiplier” impacts within the larger Tulare County economy (these “indirect” and “induced” impacts are calculated both for the City of Visalia and Tulare County). These multiplier impacts have been projected using the IMPLAN model. The IMPLAN model was originally developed by researchers at the University of Minnesota and is widely used throughout the United States for economic impact analysis. The model estimates impacts at the city and county levels (based on data that are specific to Tulare County).
The programmatic data used in the IMPLAN analysis were derived by TNDG from construction cost summary data from the project applicant. Economic benefits were estimated through the following process.
• Construction Phase. Based on data from the project pro forma, the estimated construction values were matched to appropriate IMPLAN construction sectors. Construction costs do not include land acquisition costs, as this is simply an asset swap and does not produce any economic activity. Appendix A shows the distribution of construction costs among the IMPLAN construction industry-related sectors.
• Operations Phase. Operations-phase impacts are based on the projected number of employees and annual sales at the project’s onsite commercial operations at buildout year stabilized sales volumes. The projected number of employees and estimated annual sales are used as inputs in the IMPLAN model to estimate ongoing impacts associated with the proposed project1.
The project will generate the following types of economic benefits in the regional economy:
• Direct Benefits. Direct benefits relate to: a) the short-term business activity of general contractors involved in the project construction, and b) the ongoing business activity of retailers and other firms located within the developed project.
• Indirect Benefits. Indirect benefits will result when local firms directly impacted by the project in turn purchase materials, supplies or services from other firms. An example would include increased sales of building materials as a result of construction activity. • Induced Benefits. Induced benefits relate to the consumption spending of employees of firms that are directly or indirectly affected by the project. These would include all of the goods and services normally associated with household consumption (e.g., housing, retail purchases, local services, etc.).
The analysis quantifies the above benefits in terms of the following measures:
1 Projected annual sales are based on the applicant’s estimate for the Visalia store at full buildout stabilized sales volumes. Projected number of full-time employees was provided by the applicant. From the full -time employment estimates, TNDG estimated total store employment (full- and part-time) based on IMPLAN full-time equivalent (FTE) factors for the relevant IMPLAN industry sector (Sector 402-Retail-Motor vehicle and parts dealers). See Appendix A.
THE NATELSON DALE GROUP, INC. Page 6
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
• Total industry output – the increase in gross industry receipts2, representing the total economic activity generated by the project;
• Total value added – The difference between an industry’s total output and the cost of its intermediate inputs. It is the portion of total output that most accurately reflects local economic activity (i.e., local payrolls and profits, as distinct from gross output which may include the value of raw materials purchased outside the region);
• Employment – Expressed as new full- and part-time jobs; and • Employee compensation – Payroll and benefits associated with the created jobs, including wage and salary, all benefits (e.g., health, retirement) and payroll taxes (both sides of social security, unemployment taxes, etc.).
2 For Retail and wholesale trade, output = gross margin and not gross sales. Margin is calculated as sales receipts less the cost of the goods sold.
THE NATELSON DALE GROUP, INC. Page 7
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Abbreviated Summary of Total City and Total County Economic Impacts Table 5, below, provides a summary of the total one-time construction impacts, as described in the two sets of bullet points above, that would be generated by the proposed project.
Table 5. Summary of Total Impacts for Visalia CarMax, Construction Phase Category Amount1
Visalia
Output $6,620,000
Value Added $3,600,000
Employees 2 50.7
Employee Compensation $2,030,000
Remainder of Tulare County
Output $2,170,000
Value Added $1,160,000
Employees 2 13.6
Employee Compensation $510,000
Tulare County Total
Output $8,790,000
Value Added $4,760,000
Employees 2 64.3
Employee Compensation $2,540,000
1. Sum of direct, indirect, and induced impacts.
2. Part-ti me and ful l -ti me empl oyees
Source: TNDG; IMPLAN
Table 6, on the following page, provides a summary of the total ongoing impacts, resulting from project operations, which would be generated by the proposed project’s on-site commercial operations evaluated in this analysis. The impacts are shown at projected full stabilized sales volumes.
THE NATELSON DALE GROUP, INC. Page 8
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 6. Summary of Total Impacts for Visalia CarMax, Operations Phase Category
Amount1
($000s, except where noted)
Visalia
Output $15,410,000
Value Added $7,080,000
Employees 2 51.8
Employee Compensation $2,400,000
Remainder of Tulare County
Output $6,870,000
Value Added $3,590,000
Employees 2 44.2
Employee Compensation $1,620,000
Tulare County Total
Output $22,280,000
Value Added $10,670,000
Employees 2 96.0
Employee Compensation $4,020,000
1. Sum of direct, indirect, and induced impacts.
2. Part-ti me and ful l -ti me empl oyees
Source: TNDG; IMPLAN
THE NATELSON DALE GROUP, INC. Page 9
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Summary of One-Time Construction Impacts
The one-time economic benefits associated with the construction phase are summarized for the proposed project in Table 3 on the following page. These one-time economic benefits are based on the construction costs estimated in the project pro forma budget. See Appendix A for a breakdown of the construction costs by IMPLAN industry sector.
Table 8, on page 11, shows the top 10 industries affected by employment, in terms of direct, indirect, and induced impacts. The construction impacts would include the following:
Direct Benefits: During its construction phase, the proposed project would directly generate approximately $5.7 million in total economic activity, result in approximately $3.1 million in local value added, create approximately 44 full- and part-time jobs, and generate close to $1.8 million in employee compensation. Given that the project would be developed in the City of Visalia, just about all direct impacts would occur in the City3.
Indirect/Inducted Benefits: Along with its direct impacts to the City, the indirect/induced (“multiplier”) impacts during project construction would include about $960,000 in total economic activity, approximately $510,000 in local value added, approximately 7 jobs, and about $240,000 in employee compensation. Beyond the City’s boundaries, the construction phase would also generate additional multiplier impacts in other areas of Tulare County, as shown in Table 7.
Total Construction Phase Benefits: During its construction phase the project is projected to generate a grand total of approximately $6.6 million in total industry output, $3.6 million in local value added, 51 jobs, and about $2.03 million in employee compensation through direct, indirect and induced economic activity. See Table 7 for the total impacts in the remainder of the County.
3 The estimated small amount of additional direct impacts throughout the County results from permits/fees paid directly to the County as part of the project’s construction phase.
THE NATELSON DALE GROUP, INC. Page 10
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 7. Summary of One-Time Construction Impacts for Visalia CarMax Category Direct Indirect Induced Total
Output
Visalia $5,660,000 $470,000 $490,000 $6,620,000
Remainder of County 0 970,000 1,200,000 2,170,000_________ _________ _________ _________ Total County $5,660,000 $1,440,000 $1,690,000 $8,790,000 Total Value Added
Visalia $3,090,000 $250,000 $260,000 $3,600,000
Remainder of County 0 500,000 660,000 1,160,000_________ _________ _________ _________ Total County $3,090,000 $750,000 $920,000 $4,760,000
Employee Compensation
Visalia $1,790,000 $120,000 $120,000 $2,030,000
Remainder of County 0 230,000 280,000 510,000_________ _________ _________ _________ Total County $1,790,000 $350,000 $400,000 $2,540,000
Employees
Visalia 44.1 3.0 3.6 50.7
Remainder of County 0.0 5.6 8.0 13.6_________ _________ _________ _________ Total County 44.1 8.6 11.6 64.3
Source: TNDG; IMPLAN
THE NATELSON DALE GROUP, INC. Page 11
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 8. Top 10 Industries Affected by Employment, Construction Impacts, City of Visalia IMPLAN Sector Jobs
Empl oyee
Comp.
Val ue
Added Output
55 - Construction of new commercial structures 42.25 $1,674,700 $2,931,400 $5,400,000 457 - Archi tectural , engi neeri ng, and rel ated servi ces 1.07 $59,300 $89,200 $178,900 445 - Insurance agenci es, brokerages, and rel ated acti vi ti es 0.50 $23,300 $30,000 $98,200 447 - Other real estate 0.49 $3,300 $28,900 $86,300
472 - Empl oyment servi ces 0.41 $17,200 $27,700 $42,900 463 - Environmental and other technical consulting services 0.35 $15,000 $20,500 $32,400 544 - * Employment and payroll of local govt, other services 0.33 $31,900 $35,000 $35,000 456 - Accounting, tax prep, bookkeeping, & payroll srvcs. 0.23 $6,200 $14,400 $23,600 510 - Li mi ted-servi ce restaurants 0.22 $4,300 $8,600 $17,600 509 - Ful l -servi ce restaurants 0.19 $4,600 $8,100 $13,600 Note: Sum of direct, indirect, and induced impacts.
Source: TNDG; IMPLAN
THE NATELSON DALE GROUP, INC. Page 12
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Summary of City and County Ongoing Impacts
The ongoing economic benefits associated with the proposed project’s on-site commercial operations are summarized in Table 9 on the following page. These impacts are based on projected full year stabilized sales volumes for the proposed project. In addition, Table 10, on page 14, shows the top 10 industries affected by employment, in terms of direct, indirect, and induced impacts. The ongoing impacts – at stabilized sales volumes – would include the following:
Direct Benefits: From ongoing operations, the proposed project would directly generate approximately $12.9 million in total economic activity, result in approximately $5.9 million in local value added, create 35 jobs, and generate approximately $1.8 million in employee compensation. Given that the project would be developed in the City of Visalia, all direct impacts would be in the City.
Indirect/Inducted Benefits: Along with direct impacts to the City, the indirect/induced (“multiplier”) impacts would include approximately $2.6 million in total economic activity, about $1.2 million in local value added, approximately 17 jobs, and about $580,000 in employee compensation. Beyond the City’s boundaries, the construction phase would also generate additional multiplier impacts in other parts of Tulare County, as shown in Table 9.
Total Ongoing Benefits: On an annual basis, the project is projected to generate a grand total of approximately $15.4 million in total industry output, $7.1 million in local value added, 52 jobs, and about $2.4 million in employee compensation through direct, indirect and induced economic activity.
See Table 9 for the total impacts in the remainder of the County.
THE NATELSON DALE GROUP, INC. Page 13
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 9. Summary of Ongoing Operational Impacts at Stabilized Sales Volumes, Visalia CarMax Category Direct Indirect Induced Total
Output
Visalia $12,860,000 $1,770,000 $780,000 $15,410,000
Remainder of County 0 3,770,000 3,100,000 6,870,000_________ _________ _________ _________ Total County $12,860,000 $5,540,000 $3,880,000 $22,280,000 Total Value Added
Visalia $5,850,000 $850,000 $380,000 $7,080,000
Remainder of County 0 1,840,000 1,750,000 3,590,000_________ _________ _________ _________ Total County $5,850,000 $2,690,000 $2,130,000 $10,670,000 Employee Compensation
Visalia $1,820,000 $390,000 $190,000 $2,400,000
Remainder of County 0 900,000 720,000 1,620,000_________ _________ _________ _________ Total County $1,820,000 $1,290,000 $910,000 $4,020,000
Employees
Visalia 35.0 11.3 5.5 51.8
Remainder of County 0.0 23.3 20.9 44.2_________ _________ _________ _________ Total County 35.0 34.6 26.4 96.0
Source: TNDG; IMPLAN
THE NATELSON DALE GROUP, INC. Page 14
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 10. Top 10 Industries Affected by Employment, Ongoing Operations Impacts at Stabilized Sales Volumes, City of Visalia
IMPLAN Sector Jobs
Empl oyee
Comp.
Val ue
Added Output
402 - Retai l - Motor vehi cl e and parts deal ers 35.06 $1,824,400 $5,857,300 $12,863,600 445 - Insurance agenci es, brokerages, and rel ated acti vi ti es 2.38 $111,000 $143,000 $467,700 447 - Other real estate 1.91 $13,000 $112,800 $337,300 472 - Empl oyment servi ces 1.36 $57,500 $92,300 $143,100 456 - Accounting, tax preparation, bookkeeping, and payroll s 0.85 $22,700 $52,200 $85,800 476 - Services to buildings 0.84 $16,600 $32,700 $48,400 421 - Couri ers and messengers 0.48 $19,500 $28,500 $52,000 473 - Business support services 0.38 $14,900 $16,200 $27,500 509 - Ful l -servi ce restaurants 0.37 $8,900 $15,500 $26,100 422 - Warehousing and storage 0.37 $19,400 $22,500 $44,600 Note: Sum of direct, indirect, and induced impacts.
Source: TNDG; IMPLAN
THE NATELSON DALE GROUP, INC. Page 15
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
4. FISCAL REVENUE IMPACTS
The project would generate five primary sources of annually-recurring revenue to the City’s General Fund: Property Taxes, Sales Taxes, Motor Vehicle-in-lieu Fees, Business License Taxes, and Franchise Fees. Table 11, below, provides a summary of the annually-recurring revenue by category. On an annual basis, the proposed project is estimated to generate approximately $683,500 in new annually-recurring revenue to the City’s General Fund4.
Table 11. Summary of Annual Fiscal Revenue Impact to City’s General Fund, Visalia CarMax General Fund Category
Annual
Total
Property Taxes $7,600
Sales Taxes $666,900
Property Tax VLF Swap $6,900
Business License Tax $1,800
Franchise Fees $300____________
Total General Fund Revenue $683,500
Source: TNDG
Along with annually recurring General Fund revenue, the proposed project would also generate a significant amount of one-time revenue for permits and related impact fees. The fees would accrue to the City, the County, and local utility agencies. As shown in Table 12, these one-time fees would total approximately $267,000.
4 All fiscal revenue impacts are rounded to the nearest hundredth number.
THE NATELSON DALE GROUP, INC. Page 16
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 12. Summary of One-Time Fee and Permit Revenue, Visalia CarMax General Fund Category
Annual
Total
Entitlement Fees $12,000
Building Permits 20,000
Expeditor Fees 15,000
Impact Fees 200,000
Utility Fees 20,000____________
Total General Fund Revenue $267,000
Note: Totals may not sum due to rounding
Source: Project Applicant
Property Taxes
As shown on Table 13, below, the project would generate approximately than $7,600 in annually- recurring property tax revenue to the City’s General Fund. Based on the standard 1.0% property tax rate, the project would generate approximately $68,000 in total property tax revenue5. Along with the City’s General Fund, other funds (County funds, school districts, Library, etc.) would also receive property tax increment generated by the project, as shown on Table 13.
5 New assessed value is based on project construction costs, as estimated by the project applicant.
THE NATELSON DALE GROUP, INC. Page 17
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 13. Projected Annually-Recurring Property Tax Revenue by Fund, Visalia CarMax Variable Amount
Total New Assessed Value A $6,800,000
Base Property Tax Rate B 1.0%
Total NEW Property Tax Revenue C = A x B $68,000
Allocation by Fund Factor
City General Fund 0.112377 $7,600
County Funds 0.223210 $15,200
Library Fund 0.015277 $1,000
School Districts 0.368847 $25,100
ERAF 0.244185 $16,600
Other Agencies 0.036104 $2,500________ ________
Total 1.000000 $68,000
Note: ERAF = Educational Revenue Augmentation Fund
Source: Tulare County Auditor-Controller, Property Tax Division, 2019-20 See Appendix C for tax increment factor detail.
Sales Taxes
As shown on Table 14, on the following page, the project would generate approximately $666,900 in annually-recurring sales tax revenue to the City’s General Fund. New sales tax revenue will be generated by used vehicle and other taxable sales. Along with the standard 0.95% of taxable sales that is reimbursed by the State, Measures N and T, the City will receive an additional 0.75% of taxable sales that is generated by Visalia Residents6.
6 Estimated share of taxable purchases made by Visalia residents is based on data provided by the applicant.
Measure N authorized the City to enact an additional sales tax of 0.50 percent to fund general city services, while Measure T authorized the City to enact an additional sales tax of 0.25 percent to fund public safety.
THE NATELSON DALE GROUP, INC. Page 18
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 14. Projected Annually-Recurring Sales Tax Revenue, City of Visalia, Visalia CarMax Variable Amount
Dealership Sales
Total Taxable Sales 1 A $51,800,000
City Sales Tax Revenue
Local Sales Tax Rate B 0.95%
On-si te Sal es Tax Revenue C = A x B $492,100
Percent of Dealership Used Cars Purchased by City Residents 2 D 45% Used Vehi cl e Sal es Subject to Addi ti onal Measures N & T Sal es Tax E = D x A $23,310,000 Additional Measure N3 Sales Tax Rate F 0.50%
Additional Measure T4 Sales Tax Rate G 0.25%
Additional Measure N Sal es Tax Revenue I = E x F $116,550 Additional Measure T Sal es Tax Revenue J = E x G $58,275 Total On-site Sales Tax Revenue J = C + I + J $666,900
Notes : 1. Estimate provided by applicant
2. Factor derived from information provided by the applicant
3. Measure N authori zed the Ci ty ci ty to enact a 0.50% sal es tax for essenti al servi ces
4. Measure T authorized the City city to enact a 0.25% sales tax for public safety Source: City of Visalia Proposed Budget, Fiscal Years 202-21 & 2021-22; Project Applicant; TNDG Motor Vehicle in-Lieu Fees
Along with standard property tax revenues, the City also receives separate property tax payments from the State in lieu of Vehicle License Fee (VLF) revenues. This separate property tax line item accrues to the City’s General Fund. The amount the City receives from the State increases annually based on the percentage increase in the City’s total assessed valuation. As shown on Table 15, on the following page, the proposed project is estimated to generate approximately $6,900 annually-recurring Motor Vehicle in-Lieu Revenue.
THE NATELSON DALE GROUP, INC. Page 19
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 15. Projected Annually-Recurring Motor Vehicle in-Lieu Revenue, City of Visalia, Visalia CarMax Variable Amount
Incremental Assessed Val ue from Project A $6,800,000
City of Visalia
Property Tax VLF Swap, FY 2018-19 Actual B $11,578,941
City of Visalia A sse sse d Valuation, FY 2018-19 C $10,601,276,000 Percentage Increase over FY 2018-19 Base Assessed Val ue D = A / C 0.06% New Motor Vehi cl e i n-Li eu Fees E = B x D $6,900
Source : City of Visalia Com pre he nsive A nnual Financial Re port (CA FR), Fiscal Ye ar 2019; City of Visalia Proposed Budget, Fiscal Years 202-21 & 2021-22 Franchise Fees
Franchise fees accruing to the City are projected on a population-equivalent per capita basis. The relevant population for this calculation is the resident and daytime (employee) populations in Visalia. As shown on Table 16, on the following page, utility franchise fees in the FY 2018-19 budget were $2,700,206, or approximately $16.21 per capita (based on the relevant service area population of 166,562)7. The project is projected to generate onsite employment of 35 jobs, counted in this analysis at 50% (for a population equivalent of 17.5 jobs). By multiplying the project’s population-equivalent employment by the per capita factor of $16.21, TNDG forecasts that the project at buildout would generate approximately $300 per year in franchise fee revenue for the City.
Business License Taxes
Business license taxes are projected according to the City’s business license fee schedule. According to this schedule, retailers are charged a fee of $0.70 per $1,000 of gross receipts, with a maximum bound of $914.00 every six months. Based on the project’s projected gross receipts, it would be subject to the maximum fee, or about $1,800 per year.
7 The City collects franchise fees for the following services: Cable TV, Electric, Gas, and Water.
THE NATELSON DALE GROUP, INC. Page 20
Economic and Fiscal Impact Analysis
CarMax Project (Visalia, CA)
Table 16. Projected Annually-Recurring Franchise Fee Revenue, City of Visalia, Visalia CarMax Var iable Amount
Franchise Fees - General Fund 1
A $2,700,206
C ity Resident P opulation B 137,696
C ity Employ ee P opulation C 57,731
Employ ee Weighting Fac tor 2
D 0.50
Effec tiv e Ser v ic e Ar ea P opulation E = B + C*D 166,562 P er C apita/Employ ee Fac tor F = A / E $16.21
Projected onsite employ ment G 35
Population-equivalent jobs H = G*D 17.5
Total Franchise Fee Rev enue Generated by Project I = H*F $300 Notes : 1 . Inc lude C able TV, Elec tr ic , Gas, and Water Fr anc hise Fees
3. Midpoint of staffing model provided by applicant
Source:
2. Based on assumption that one job is equivalent to 0.50 residents in terms of impacts to C ity serv ices/rev enues
C ity of Visalia P r oposed Budget, Fisc al Year s 2 0 2 -2 1 & 2 0 2 1 -2 2 ; State of C alifor nia, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties and the State ; U.S. Census Bureau, OnTheMap; Project Applicant; TNDG.
Table 17. Projected Annually-Recurring Business License Tax Revenue, City of Visalia, CarMax Var iable Amount
Business License Tax - Fee per $1,000 of Gross Rcpt A $0.70 Maximum Fee/6 mo 1
B $914.00
Total Business License Tax Generated by Project C = B x 2 $1,800 Notes : 1. Giv en the lev el of projected sales, the C arM ax store would be subject to the maximum fee.
Source
C ity of Visalia, Business Tax Infor mation 2 0 2 0 Br oc hur e
APPENDIX A
IMPLAN MODEL INPUTS
CONSTRUCTION AND OPERATIONS PHASES
Construction Categories
IMPLAN Sector Model Input
55 – Construction of new commercial structures* $5,400,000 457 – Architectural, engineering, and related services $152,000 463 – Environmental and other technical consulting services $25,000 State/Local Govt Other Services 295,000
Total $5,872,000
* Includes the following definitions of construction activity, as defined by IMPLAN:
1. New buildings and structures
2. Additions, alterations, conversions, expansions, reconstruction, renovations, rehabi litations, and major replacements
3. Mechanical and electrical installations
4. Site preparation and outside construction of fixed structures
5. Fixed, largely site-fabricated equipment not housed in a building
6. Cost and installation of construction materials placed inside a building and used to support production machinery
Not modeled: land, soft costs purchased outside County, some Furniture, Fixtures, & Equipment ( FF&E) Source: IMPLAN; TNDG.
Operations Categories
Sales Category IMPLAN Sector Model Inputs*
Sales
($millions)
Employees Employee
Compensation
Used Vehicle Sales
and Other
Sales/Revenues
402 - Retail Motor vehicle and parts
dealers
51.8 35 $1,821,392
Source: IMPLAN; TNDG.
*Sales values derived from data provided by the applicant. Projected sales estimates are conservative in that they are about 65% of the companywide average per dealership, according to sales data from CarMax’s most recent Annual Report. Full-time employee estimates provided by the applicant were converted to estimated total employees based IMPLAN full-time equivalent (FTE) factors for this industry sector. Wage and salary estimates are based average levels per employee for this IMPLAN sector.
APPENDIX B
IMPLAN Model Glossary
The following provides technical definitions for measures of economic impacts evaluated in this analysis.
These definitions are excerpted from IMPLAN’s online glossary8.
Output – represents the value of industry production. In IMPLAN these are annual production estimates for the year of the data set and are in producer prices. For manufacturers this would be sales plus/minus change in inventory. For service sectors production = sales. For Retail and wholesale trade, output = gross margin and not gross sales.
Value Added – The difference between an industry’s or an establishment’s total output and the cost of its intermediate inputs. It equals gross output (sales or receipts and other operating income, plus inventory change) minus intermediate inputs (consumption of goods and services purchased from other industries or imported). Value added consists of (1) Labor Income (employee compensation and proprietor income), (2) taxes on production and imports less subsidies (formerly indirect business taxes and nontax payments), and (3) other property income (formerly “other value added”)9. Gross value added is the value of output less the value of intermediate consumption; it is a measure of the contribution to GDP made by an individual producer, industry or sector.
Employee Compensation – is the total payroll cost of the employee including wages and salaries, all benefits (e.g., health, retirement), and payroll taxes.
Jobs - A job in IMPLAN = the annual average of monthly jobs in that industry (this is the same definition used by QCEW, BLS, and BEA nationally10). Thus, 1 job lasting 12 months = 2 jobs lasting 6 months each = 3 jobs lasting 4 months each. A job can be either full-time or part-time.
8 Accessed at https://implanhelp.zendesk.com/hc/en-us/sections/115002653168-Glossary 9 A profits-like measure that includes corporate profits, net interest, business transfer payments, etc. 10 QCEW = Quarterly Census of Employment and Wages; BLS = Bureau of Labor Statistics; BEA = Bureau of Economic Analysis.
APPENDIX C
Fiscal Revenue Model Factors
(Property Tax Increment Factors)
Property Tax Increment Factors for Tax Rate Area (TRA) 006-013, City of Visalia District
Code District Name
Tax Rate Area
006-013
011 COUNTY GENERAL 0.177615
016 LIBRARY FUND 0.015277
099 EDUCAT REV AUG 92/93
114 LIBERTY EL MT 0.153510
146 TULARE JT HI MTCE 0.162869
151 COLL/SEQUOIA COM COLL 0.052468
198 COUNTY SCHOOL SER MT 0.024227
336 KAWEAH DELTA HOSPTAL 0.009351
338 KAWEAH DELTA WATER 0.024102
401 TULARE CO AIR POLLUT 0.000344
402 TULARE CO FLOOD CONT 0.002060
415 TULARE MOSQUITO 0.018964
418 VISALIA CEMETERY 0.001098
419 VISALIA CITY 0.112377
431 VISALIA MEMORIAL 0.001553
98 EDUCAT REV AUG 93/94 (ERAF) 0.244185____________
Total 1.00000000
Note: ERAF = Educational Revenue Augmentation Fund
Source: Tulare County Auditor-Controller, Property Tax Division, 2018-19