For Preliminary Discussion Purposes Only ATTACHMENT C
Fiscal Impact Analysis University Village is anticipated to generate revenue to the City of Carson’s General Fund at full build-out of approximately $1,900,000 in net recurring revenues. These projections are based on a several key assumptions; following are the six major ones we have made: 1) Build-out of approximately 2,000 market rate housing units, including some for faculty and staff; 2) Build-out of 650,000 gsf of Business Park/Technology Center; 3) Build-out of 55,000 gsf of retail; 4) All taxes and tax rates that now apply to the development would continue in the future; 5) Estimates are based on total projected market value; however, there exists the possibility that the Los Angeles County Assessor will determine the assessed value of the property to be lower than what our analysis suggests; and 6) The economy and real estate market will grow at a stable and moderate rate to 2020 and beyond. Several tax sources were estimated in the projections of annual revenue to the city. They include: Possessory Interest Tax, Property Tax in lieu of Vehicle License Fee (VLF), Sales and Use Tax, Utility Users Tax, Franchise Fees, Business Tax, and Licenses and Permits. A summary of total annual revenues is found in Appendix A. The following provides a summary of the specific projected revenues: Processory Interest Tax (like Property Tax)-- As mandated by California state law, Los Angeles County levies a 1% annual tax on a given property’s assessed valuation. This tax is collected by the County and is subsequently remitted to cities and other local agencies based on apportionment factors unique to the local area. The City of Carson receives 6.74% of the tax collected. Given the development characteristics of University Village, specifically the sum of land and construction costs, projected annual tax revenue to Carson is estimated at $570,950. Possessory Interest (Property) Tax in lieu of VLF – The Vehicle License Fee changed pursuant to State legislation in 2004. Most of the funds previously received by municipalities were swapped for additional property tax, now referred to as “Property Tax in Lieu of VLF.” This is a constitutionally protected revenue source provided to cities and counties in place of a backfill from the State General Fund on the VLF tax rate. RCLCO calculated the relationship of property tax in lieu of VLF revenues to the total assessed value of property in the City of Carson, and applied this relationship to the total development value of University Village to calculate the estimated revenue from the incremental University Village residents. At full development, University Village would yield approximately $447,050 annually.
Presented to the City of Carson October 25, 2017
For Preliminary Discussion Purposes Only
Sales and Use Taxes -- The City of Carson receives 1% of the state-collected sales tax on all taxable sales within city limits. The County and the State of California receive the balance. RCLCO calculated the expected annual sales tax revenue from the commercial elements of the University Village using the developed floor area and sales per square foot estimations . For sales tax revenue generated by the residential land uses, RCLCO calculated incremental sales taxes assuming: 1) annual rent represents 30% of household incomes for apartment renters and other onsite residents; and 2) taxable retail spending per household averages approximately 22% of household income, derived from a review of Consumer Survey Expenditure patterns. At build-out, the City of Carson would receive approximately $398,000 annually. Utility Users Tax -- Utility Users Tax in the City of Carson is levied at a rate of 2%, as established by voters in Measure C in 2009. The tax applies to University Village’s proposed commercial and residential uses. Applying average revenues per the resident equivalent population, RCLCO calculated the estimated Utility Users Tax revenue per resident-equivalent. At build-out, the City of Carson would receive approximately $342,040 in Utility Users Tax revenue annually. Franchise Fees -- The City levies franchise fees on privately-owned firms for the use of City streets and rights-of-way in providing utilities, pipelines, and other services to City businesses. At full development, University Village would yield approximately $40,830 in annual Franchise Fee revenue. Business Tax -- The City of Carson levies Business Taxes on all business establishments located within the City. Applying average revenues per resident-equivalent population on a city-wide basis, RCLCO estimated Business Tax revenue per resident-equivalent at University Village. At full development, University Village would generate approximately $66,040 in annual Business Tax revenue to the City of Carson. Licenses and Permits -- The category “Licenses and Permits” encompasses a vast number of smaller revenue sources within the various departments of the City of Carson. Examples of these miscellaneous sources include items like bingo fees, excavation/encroachment permits, and burglar alarm permit fees. Applying average revenues for this category per resident-equivalent population on a city-wide basis, RCLCO calculated the estimated Licenses and Permits revenue per resident-equivalent. At full development, University Village would yield approximately $5,400 annually.. Charges for Services – The City of Carson also receives revenues from various recreation fees and youth and senior services. Using the previously described methodology to apply average resident equivalent revenues for this category on a citywide basis, University Village would yield approximately $52,040 in revenues. Other Potential Benefits to Consider: During the construction phase, planned investment at the University Village development would provide $612 million in direct (equivalent to on-site) economic output leading to a
Presented to the City of Carson October 25, 2017
For Preliminary Discussion Purposes Only multiplier effect of over $1.04 billion in Los Angeles County. Planned construction could lead to direct employment of 3,380 jobs and a multiplier impact of 6,150 total jobs in the county.
Presented to the City of Carson October 25, 2017
For Preliminary Discussion Purposes Only
Summary of Potential Recurring City of Carson General Fund Revenue
ATTACHMENT C
Market Rate Apartments
Revenue Sources General Fund* Processory Interest Tax (Property Tax) Assessed Value** City Share of Tax*** Processory Interest Tax (Property) in lieu of VLF Sales and Use Tax**** Utility Users Tax (paid by users) Franchise Fees Tax Business Tax Licenses and Permits Business Permits Other Permits and Fees Charges for Services Youth/Senior Services Other Services
$6,926,900 $466,880 $365,560 $148,990 $249,350
$31,450 $12,580
Faculty/Staff Apartments $741,800 $50,000 $39,150 $18,560 $45,290
Business Park
TOTAL
Retail
$802,200 $54,070 $42,340 $40,160 $42,000 $36,160 $58,500
$183,090 $3,170 $2,730 $4,410
$570,950 $447,050 $390,800 $339,810 $38,890 $62,910
$2,130 $2,660
$160 $200
$2,290 $2,860
$5,720 $2,290
$37,170 $14,870 $1,907,600
TOTAL * Other sources of revenue may apply. **Real Property User Tax is 1.0% of projected assessed value ***The City of Carson receives 6.74% of the 1.0% assessed value ****Assumes annual household income of $95,000 for market rate housing and $78,000 for faculty/staff housing, that 50% of all expenditures are within the city limits of Carson
Presented to the City of Carson October 25, 2017
Source: RCLCO, City of Carson Finance Department